A Comment -- General Comments From an Expert (A Commentary)
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Educational Segment. 5 ETFs he has discovered at his conference in Florida: DTEC is a disruptive technologies ETF. ULBR is a Long Libor ETN, playing the short term interest rate market. POCT uses a bunch of swaps and derivatives to track S&P on the upside but protects on the downside. PUTW is an S&P put write strategy and COMB is a broad commodity ETF.
Larry Berman CFA, CMT, CTAUnknown
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Market. The gong show continues in Washington but the companies he owns are showing good earnings. FB-Q had a great turnaround. He is convinced that the market is still in good shape. China: Its growth is slowing but the standard of living is rising. New entrants into the labor force will be slowing due to the one child policy. The growth rate is slowing to a pace where the rest of world wishes they could get up to. The ugly correction in the fourth quarter last year was just fear. There was a lot of panic selling.
Bruce MurrayUnknown
COMMENT
The U.S. Fed almost did this halt in interest rate hikes out of the blue. It was sudden. Also, quantitative easing is back on the table, perhaps for a long time. What on Earth has crossed Powell's desk to reverse course? Also, China-US trade concerns remain. Nobody can trust Washington or Beijing. In Canada, SNC Lavalin's problems have been coming for a while. When problems erupt, get out of the way of the stock. Who knows what'll happen to SNC? Whatever it is it will create a lot of bad feeling.
COMMENT
Market Outlook He thinks the US dollar is going to go a lot higher. The 2018 returns of Canadian investors benefited by about 7-8% he thinks, if you invested in US holdings. On US equities, he is cautious right now. After the big decline in December, he thinks it is a precursor of what is yet to come. 2019 will be a year of the Central Banks, who will have to maneuver to keep things going. This will make the equity market fraught with explosions and collapses. Last year the Trump tax incentive lead to massive earnings increases and he wonders how that can be followed.
Brian Acker, CAUnknown
COMMENT
Now is a logical point that the major markets should be pausing after pulling back from the TSX's and S&P's 200-day moving average yesterday. In a bull market trend, the 200-day moving average acts as a level of support where buyers take advantage of the dip and support the market for the next leg higher. We've been below the 200-day for over a month, so this level acts as resistance. Is this the final resistance? Who knows? We've had an impressive run-up since late-December of 16%. We've seen tremendous sentiment swings in the past year. December had the highest put-call ratio he's ever seen. Now, we're neutral with even split between the bulls and bears. The price of gold and REITs are still flying high. Trump won't meet China before the March 1 deadline. China wants something recipricol in this trade deal while Trump feels that the current trade situation favours China. He's not surprised to see caution among investors.
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Market. Multi asset funds have struggled over the last while. Last year was a whip saw year where we were up and down dramatically. He focuses on structural long term themes. In 1994 he learned not to get too aggressive on the sell side because the recovery comes so quickly. This is playing out again. He made a call to stay with his positions into year end and then they rallied back. Last December's exit from the markets dwarfed the worst 4 week period in 2008.
David BurrowsUnknown
COMMENT
Market Outlook - As macro managers they look at themes and asset allocation and big issues (China, Fed and Trump) is what is going to impact portfolios over the next 12 months. The Fixed Income market is artificial, you basically get 2%. It is in the state since the Financial Crisis. As long as Central Banks hold down rates, it is going to be good for Equities. The downside on Equities was seen in December. That was kind of the floor. It is trading in a channel in North America. International Developed and Emerging is where the value is. A typical client of his firm is between 35 and 40% in this space. International markets are very inexpensive. Single stock is a big risk. When you own an index the performance will track the earning growth. It is not an if, it is a when.
COMMENT
Can you comment on use of ETF for dividend benefit and growth - What you want is a balanced portfolio. 60 / 40 is the classic balanced portfolio. Now they are offered XBAL from iShares or VBAL from Vangard. These things are fantastic. You don't even have to re-balance. He would use this for 2/3 of the portfolio and then layer on top of that. Stay away from the leverage ETFs.
COMMENT
Can you comment on an ETF that reflects just a straight S&P 500 eliminating the dividend tax problem? - He uses the Horizons ETF swap a lot. It eliminates the dividend and transforms that into capital gains. These are total return ETFs. National Bank is the counter party so there is no risk there. Tax efficient.
COMMENT
Market Outlook He is seeing "coincident corporate credit spread tightening" -- the market is asking for less of a corporate premium over treasuries coincident with the market doing better. He thinks the global deceleration of the economy is not as bad as thought. He also sees the Fed in a holding pattern. These two factor don't usually follow. His number one job is capital protection as a result for his clients. He is still under-weight equities. He sees several sectors still not clearly showing things are rebounding. He is still cautious.
Cameron HurstUnknown
COMMENT
US Banking Sector People are watching interest rate futures for a signal of US Fed actions. It is so early in the year and only 5 weeks after the Fed loosened their language. He still sees the Fed keeping liquidity constrained. The US bank sector credit position is pristine right now. The problem is that the banks are not preforming well, relatively speaking. He wonders where the future growth will come from. He would look elsewhere.
Cameron HurstUnknown
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