A Comment -- General Comments From an Expert (A Commentary)

Geopolitical risk, BREXIT. Can low correlated assets become more correlated? He thinks so in public markets. Often when one market goes down, they all go down. You need to look at private assets.

U.S. market were cool today and having its weakest week so far in 2019. We need a little pause after a great run in America, while the TSX is outperforming them and holding at 16,000. If oil comes back, then Canada will really outperform. No, oil won't disappear in the next decade as soon advisors believe. Not at all. Europe will continue to have problems, lumping along, though Italy is a worry. Overall, Europe matters less and less in the big picture. Does Europe really affect us now? He's more interested in what happens in China, India, Korea and even Brazil. He's convinced there'll be a US-China deal and normal relations will return, though the Richardson canola oil ban is troubling. He feels the projections of growth in Canada are overstated; a rise in oil prices would help, of course.

The cannabis space Approach with great caution. The U.S. states and even federal may approve more cannabis use--and the U.S. market is far bigger than ours. Our cannabis stocks will likely go south. He would sell.

Canadian banks in 2019 In the past, he's been super-positive about Canadian banks. Recently, he's lowered GDP growth in Canada to below 2% this year. In terms of earnings, the glory days for ther banks have passed. Only BMO had recently good earnings. He took profits in his BMO holding. He's gone from positive to neutral about Canadian banks.

A quiet day today. The markets need a major headline to spark trading. He expects a China-US trade deal soon, and Trump will call it a victory regardless of the terms. A deal is priced in. The Bank of Canada held rates today, telling the market that they won't do anything in 2019. He's still more optimistic about interest rates in the U.S. which will push the USD a little higher. Canadian oil is not in an abysmal state, though the line 3 Enbridge news was a surprise. That said, he expects line 3 will happen. He prefers Canadian stocks tied to the U.S. (TD is his largest holding). In Canada, he likes utilities and REITs--the interest-rate sensitive yield plays.

Canadian perpetual preferred shares vs. rate-reset preferreds We're seeing trough interest rates now--they won't get lower than this. The rate-reset preferreds are benchmarked a 5-year government of Canada bond, sitting around 2.6%. If that moves up, it will benefit the rate-resets. In a portfolio of preferreds, he looks for reset issues that have a high reset spread, north of 350 basis points; abd a reset expiry of 3-4-years which gives time for interest rates to rise. Also, wait for new issues.

The Bank of Canada held interest rates and adopted a dovish tone today vs. a year ago when it sounded more aggressive. The rates won't go anywhere and the BOC will be cautious in tone. He's more positive on the US dollar. The rally's been great, but be cautious about the Canadian market. We had a really tough Q4, then up 19% from Xmas Eve to yesterday. There are reasons to be bullish and bearish, evenly mixed. Ultimately, Trump wants to see better markets and trade will be very big in this, including signing NAFTA and signing a deal with China. Wait and see how things shake out and don't take the wrong risk.

A senior wants to increase US dollar content in an RRSP, given Trump's decisions. Yes, beneficial to do this, to diversify. As a snowbird, you're probably going back and forth to the U.S., so holding more USD makes sense. But be really cautious in handicapping political outcomes, especially with Trump who is unpredicatable and keeps people off-balance. We are in the end of cycle, remember. There's a lot happening in trade, so see how that shakes out. He likes the software and services space. Energy is still shaky. Fintech is good. Don't go broad basket and be ready to exit if the wheels fall off (i.e. something wrong happens in trade).

PDAC, Toronto's major minerals conference happening now, is less busy this year because the show is charging investors to walk to the trade show floor and hitting booth traffic. The Barrick/Newmont/Goldcorp hostile takeover: there's a drive in this space to be bigger and relevant. Newmont would take on a lot of debt from Goldcorp, so there will be divestitures. The mid-tiers will watch the fall-out from the Newmont-Goldcorp deal if it happens. Brent Cook: It's musical chairs now with all the M&As, but this will slow down exploration in this sector and not add any new ounces to production profiles--that's a problem. Discoveries have been decreasing steadily since 2000. He's not sure what the mid-tiers will do in M&A this year.

Gold outlook Gold was oversold in mid-August, then overbought then back to oversold. Higher lows is a positive. When the market goes to pot, then people move to the US dollar again but that depresses gold. Brent Cook: It's all about the US dollar which is rolling over. The US has alienated allies. Foreign countries are buying fewer US bonds. He expects gold to rise in the next few years.

Market Outlook - The climate among old-timers in the industry is of cautious optimism. The companies that are doing well are getting noticed and funded and the others don't. The industry needs more mergers and acquisitions. Administrative expenses should come down. The major themes he sees now are M&A among companies intelligently valued. The second part of the M&A wave is the spin off of smaller companies that aren't important for the majors but are important for the juniors. The second theme is the royalties and streaming business. The third one is exploration. We haven't had an exploration cycle in the last 20 years, It is a lonely space though. The economic difficulties we are having at the moment are good for gold. The US dollar does well only in comparison to other fiat currency. He is a gold bull. He feels good in general in regards to precious metals.

Where uranium is going? Not for an impatient investor. The industry is making uranium for $60 / pound and sell it for $30 / pound. Either the lights go off or the uranium price goes up to the cost of production. He thinks that the scenario where the prices will go up is more likely. He loves this situations because it creates opportunity. There is significant upside based on past experience.

How much gold should you have in a portfolio? A little bit of gold goes a long way. You hold it as insurance. For most people should be 10%. The problem is that most people that subscribe to the narrative they over invest in gold.

Market. The US and China are in the final stage of negotiating a deal that could be announced later this month. He thinks we will see this every Monday morning. There is no new news here. It is mostly priced into the market, if not entirely. We will probably see a sell into the news. The Fed may be trying to engineer a soft landing but if Trump had his way they would never raise rates again. The Fed has said they would be willing to watch inflation emerge for a while longer but Larry thinks this is not a good thing.

Markets. He is cautious for a pull back. He thinks the bear market will play out. This is not a good time to put new money to work. He is more constructive on the Euro in the short term.