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

Wilson-Raybould's allegations today are very serious. For SNC, it's only more negative news which could cause SNC to fall further, since federal contracts may now fall further out of their grasp. Infrastructure is not the business he wants to be in, where bribes are not unheard of in certain parts of the world....US-China trade negotiations will still lead to a deal, he feels....Q3-2018 reports was a tough quarter while Q4 reports (currently) are entirely different, positive enough to keep him fully invested....Laurentian Bank, which got punished today with a bad report, has been a broken stock for a while. Otherwise, he's impressed with Canadian stocks now....Alberta's deficit is lower than expected, which is good news for all of Canada. He has no exposure there himself.

The TSX is up 16% since the low of Xmas Eve 2018. Shooting fish in a barrel. Copper is strong, hitting highs, and is a harbinger of a soft economic landing. Or this rally could be FOMO after de-risking in Q4-2018. We're starting to see wage inflation though nothing like int he 1970s. The Fed wants to get back to a neutral rate, and he takes Powell at his dovish word.

He thinks the US Fed will slow or pause rate hikes this year. He sees no reason to raise them. U.S. housing starts are down 11%; Millennials don't look at a house as a foundational asset (though in Canada we do). Long-term though, U.S. housing should be fine. He's not worried holding Home Depot. He was bullish in December; he doesn't see a recession coming. He's holding onto most of his positions and he's bullish this year. The VIX has fallen back to normal.

Warren Buffet's letter: Always interesting, since he's the Oracle. His large cash position has risen dramatically since 2015. Buffet is looking for undervalued stocks; his cash position has risen because he doesn't see much fundamental value. Berman agrees, doesn't think the markets are now cheap and that interest rates will stay low. Buffet doesn't care about the economical cycle, only in buying good companies at good prices. In the next downturn, Buffet will surely buy with his large cash position. Berman thinks we're in the early days of heading to a market top. China-US trade: Berman doubts there'll be any meaningful change to the intellectual property issue. The markets are pricing in these talks, though. What's interesting in China is include the A-shares in the global indexes, which he thinks is propelling Chinese stock markets up, rather than a trade issue resolution. Apparently, Trump asked some hedge-fund guys about how to raise the stock markets, and they told him to stop tweeting or to tweet positively--and that has happened. Trump is gaming the market and timing his tweets. Debt: the amount of world debt is staggering and at some point we'll have a major credit crisis which will make the inevitable downturn much worse. Nobody knows when this'll happen. Berman is very nervous about markets. Gold: he's most bullish on gold; he still sees 10-20% upside and would sell into that. Gold is his biggest overweight.

Educational Segment. New "defined-outcome" ETFs by Innovator from the U.S. Each quarter they issue a series of these ETF designed with targets in mind. They look one year out and write an option strategy to give you protection on the downside with various buffers: 9%, 15% and 30% that starts with at least a 5% loss. Depending on the cost of the bear put spread they're buying, they write a call to pay for it. This limits the upside potential; caps it. Essentially, they allow you to participate on the market upside in the coming year with a cap, but protects you on the downside. So, when the market rises to the level where you ultimately want to buy in, you sell these defensive protection-minded ETFs and buy back into the S&P 500. When the markets recover, you get much more of the upside. He loves these innovative ETFs which allow you to participate on the upside, yet protect you on the downside. Caveat: If the markets jump 15% from here, you've missed out on these, but if we enter a bear market, these will limit and protect your losses.

Consensus says we will inevitably hit another recession, but not necessarily. There's a lot of scar tissue from the last recession, he notes. Recoveries are long, and we've had several resets since the last recession. So, it's not so simple to frame current markets as end-of-cycle. True, now we have the lowest expectations for global growth, and December saw huge outflows from markets. The bar is very low for upside surprises. The U.S. has and will continue to underperform vs. the world; has done so since the Sept. 21, 2018 market peak in America.

Mutual funds vs. ETFs Nothing wrong to own both, per se, but you can build a globally diversified portfolio with ETFs.

Hedged vs. unhedged U.S. ETFs Currencies are like stocks and bonds: CAD was loved until 2012 just like bonds and stocks. The USD is entering a long topping pattern leading to secular decline. The believes that the strong USD after the recession is now over. Meanwhile, emerging market currencies have been beat up. So, he would hedge the USD (vs. CAD). But what's the catalyst for foreigners to buy the CAD?

We're still drinking from the Kool-Aid post-Christmas Eve. The TSX is up 12% year to date, leading North American indices except Nasdaq. He fears that we're getting starting to get overbought. The pendulum is swinging back. China is a good example of this. Canadian banks and telcos have come back in Canada. Canadian oil has lagged but is starting to come back. The Barrick-Newmont gold deal announce today is certainly interesting. Gold is usually a safe haven during chaos, but we don't have chaotic conditions now. Could gold sell off? The US Fed could do a rate cut this year. That's ludicrous to cut rates right after raising them. Then again, the Fed could raise rates fiven the current economy.

Market Outlook The market has a lot of volatility thanks to the Trump Administration, he thinks. The market is overly optimistic on a successful conclusion of the trade war with China. The likelihood of the US President pulling the rug out from under the negotiations is highly likely and will create a great buying opportunity as it is not expected by the market. Emerging markets were well over-sold last year and are due for recovery this year. In the oil markets he believes the market will be able to manage the shortage of Iranian barrels. He thinks the Canadian dollar offers good opportunity for investment, but Canada is too narrow a market to attract global investors.

NEB Approval of Trans Mountain Pipeline. At this point he believes the project is necessary to be able to get oil to new markets. He is in favour of the project, but believes it will be 4-5 years yet to go, because of the regulatory process -- considering the 156 conditions attached.

The S&P 500 (around 2,800 now) made three attempts before the fall correction to punch above 2,800 and failed. The challenge for the market now is that the markets are a little overbought short-term. Also, momentum is currently high. Gievn this, he's been raising cash. No, doom and gloom is not coming, but things are just a little overbought. Lately, the market has been moving in extremes with a sharp drop in December, but a huge gain in January. Since the start of the year, we've hardly had any down days--and he's worried. He doesn't like the stampede out and in,. and he prefers the more orderly ups and downs of a market.

Market. He is very bullish on copper. He sees upside into 2021. We just broke out of a sideways trading range. It needs to get to $3 and then break out. He does not think we will break through 2011 highs, but we could get up to $4. The secular bear market in commodities will continue for 5 to 10 years and it will be hard for copper to break through these highs. Commodities will have another downdraft in 2021. He is seeing a short term pull back to $50 on oil. That should be support and where you should step in. Materials will play catch up here. He is watching KEL-T. If we close above $5.03 we will see upside all the way to $5.74. We have a basing pattern going on.

The beauty of technical analysis is that you can apply it to any instrument where you have the history and the volume. Reduce exposure to the weakest stocks and sectors and increase for the strongest. The best stocks are trading above their 50 and 200 day moving averages. You can then go further and look at relative strength.

200 and 50 day moving averages. The 50 day is a great proxy for the short term and the 200 is a great proxy for the intermediate to long term trend. Focus on stocks that are above these moving averages.