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

Is it a good moment to convert CAD into USD? - It is always very difficult to call on currency. She sees the CAD in a range of 1.25 to 1.35. We are kind of at the high end of that end of that range. Having said that she doesn't see the CAD appreciating as there is no reason for that.

Market Outlook Q4 was the worst for the resource sector since 2008. It is now setting us up for a good 2019. WCS differentials are likely unsustainable at these tight levels around $9. He expects the WCS discount to be $20-$25 US/bbl and light barrels to be discounted by $10-$15 US/bbl range. About 325,000 barrels per day is curtailed as part of the Alberta government policy -- about what the market is long in Canada right now. Then when Enbridge Line 3 comes on around later in the year it will also be supportive. The US dollar has come of its peaks and he thinks this will help gold prices -- he thinks gold will get to $1350 US/oz. This will be good for gold stocks in 2019.

Positive going into 2019? He was cautious going into 2018, de-risking portfolios, as we approached the late stages of the economic cycle. Some of those concerns came home to roost in the fourth quarter. Prices, valuation, and sentiment are markedly lower. Risks and rewards are more balanced for 2019. Recession risk is still out there, but we could still have a soft landing, and we have a cushion with contraction of P/E multiples last year.

Seeing buying opportunities? Yes. They have a blank sheet every single day. If they wouldn't buy it today, they wouldn't own it.

Market vs. US Fed. The minutes are signalling a certain amount of discord on the committee, which is not unusual. The vote needed to be unanimous to demonstrate solidarity and stand up to the bullying White House. Foreshadowing of less hawkishness going forward.

Canadian interest rates staying put. Represents the totality of all market conditions. It's more complex than just one variable. Extent of credit, bond yields rising, equity conditions all have an impact. When the markets, bank lending channels, and bond market are doing some of the tightening for you, you can take your foot off the brake.

Market. It's a tough market. Economic data points in Europe, and Germany specifically, are getting worst. PMIs are on a downtrend and cruising to contraction territory. Weakening in China. It's a been a long great run but the economics underpinnings are weakening. Historically when looking at the yield curve spread and recessions, when the yield curve inverses that means you are on average about 18 months from recession. The 1-2 year spread has inverted, the 2-5 year spread is just on 0 bip today and is inverting. The yield curve is flat or inverted. We are on borrowed time. You can still find spots to invest in, but we haven't seen any reversal yet. Sometimes sitting on your hands is the hardest thing to do, but sometimes it's the right thing to do if you don't want to lose your capital.

The Q4 sell-off caught many by surprise, and a lot of it was due to politics. The US Fed was tightening too quickly. Now, we have an opportunity where companies are much cheaper. We could see a little more downside but he's more optimistic now than in the past few years. The U.S. markets are acting like the U.S. economy is an island, untouched by the rest of the world. That was so in the 1940's, but not now. If China goes into recession, the impact will be huge for America (farmers, tech companies like, say, IBM). If Europe slows, it'll hurt the U.S. too. He needs to see one more interest rate hike in the U.S. to buy into emerging markets (telcos look attractive now). He's pivoting from growth to defensives. Samsung posted numbers today and slipped a bit. It's still too expensive for him. Semi-conductors are part of the phone business, which if it slows down, will directly impact semis. Apple is seeing peak-phone sales. But he's still watching Samsung.

WCS differential shrinking & outlook Alberta limiting supply is only a temporary measure. Much better is building a pipeline, but that requires a lot of political will and cooperation.

Which Japanese tech stock to buy? Nippon Telecom (NTT) that is a growth story that he owns, or Softbank which is a great performer.

Market. Market anxieties are still there. We got a bit of a Santa Clause rally. It came from a much lower level than he was expecting. He was not looking for support levels to break into well into 2019. It tells him that we ARE in a bear market and will eventually break into a recession. Into 2020 it will be very hard for markets to regain their highs. The market now has confidence that the Fed will not make errors. The markets may be okay for the next six months so play the rallies. He bought into the weakness at the bottom before the recent rally but as we go higher he is looking to go more defensive. A rate hike this week is completely priced out of the market.

Silver. Which ETF? SLV-N and SIL-N are the bigger ones and he would stick with the liquidity in this one. On the equity side XIL-N is the miners but has a lot more risk. Own the equities to be more aggressive than if you just own the bullion.

Educational Segment. Active or Passive ETFs? Guest: Raj Lala, CEO of Evolve ETFs. Their first set of ETFs were launched in September of 2017. They tried to serve two segments – actively managed ETFs and passive themes good for the long term. Their cyber security ETF was the country's top performing ETF. They also have a Future-of-the-Automobile ETF, an innovation ETF and a gender diversity ETF. Some sectors of the market don't warrant active management. Large caps are better passively managed. Preferred shares, high yields fixed income and small to mid caps benefit greatly from an active manager. Cyber security is very different than the FANG stocks and is an example of an actively managed ETF. The companies are creating the hardware and software to protect the fortune 500 companies and governments. Cyber crime will continue to increase and will cost the globe $6 Billion. It is a non-discretionary spend for a company. It is recession-proof.