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

Hope for Canadian energy sector? No. Alberta curtailing production has helped. But longer term, we have tax, transportation, and regulatory issues. No will at the federal level.

Canadian vs. US banks. Economic growth is one of the most important things for banks, both US and Canada. Growth is greater in the US, and will be for the foreseeable future. Banks also react to interest rates. When interest rates increase, profits should expand as well. Outlook for financial services in US is pretty good.

New Year's rally, too good to be true? Throw out January and December, and pretend we're at the end of November. We have a mid-teens multiple, Fed is supportive of higher equities, strong earnings, and economic activity is still pretty strong. An environment where stocks should be expensive, but they're not. Multiple expansion could give 10% lift, and we'll see 5-6% earnings growth. If market pulls back, use it as a buying opportunity, but be aware of China concerns and Trump's involvement.

TFSA investments. A tax shelter. You want to put in the most tax egregious instruments. So, interest, dividends, not so much capital gains. High yielding instruments. Avoid the home run stocks, because you could lose it all and your tax loss is stuck in the TFSA. Fairly safe things with big yields such as banks, utilties, pipelines.

Market. Guest Sid Mokhtari of CIBC world markets guest hosted the show in Larry's absence. Where it stands today, risk rewards are not that great. You are close to your 200 day moving average. The energy sector is still a relative laggard from a relative strength perspective and that is an issue for him. Expect volatility to persist. The message from last year's Q4 is that volatility will be with us for a while longer. In Canada we saw last year better technical characteristics in the resource sector, except energy. Larger caps are still the way to go in the Canadian resource sector.

ZWU-T or ZLB-T vs. covered call ETFs ZWC-T or ZWH-T. From a technician's point of view ZLB-T has established a double bottom. It has better upside tendencies relative to covered call strategies. These are the right area to approach the market in if you want less volatility.

What happens when governments stop buying their own bonds? Will there be enough buyers? The path of Governments buying their own bonds is still going on but will someday come to an end. Governments wind down their bond buying very slowly so as not to create a shock for the market. However eventually, he believes, there won't be a buyer for US treasuries.

US Dollar. There will continue to be significant divergences that will develop for the US $. In the short term you have been sitting against the 200 day moving average. But other signals he monitors suggest it will continue to decay.

Banks and the slowing housing market. How many houses have outstanding home equity loans and could they become a problem similar to sub-prime markets? He views the banks as market leaders for quite some time and you want exposure to them. It is a good thing. RY-T and TD-T are the leaders in his opinion.

Educational Segment. A Closer Look At The Rally on the TSX. Always take a closer look to see what exactly is leading the markets. Look at what volumes are taking the market higher or lower. The RSI on a daily basis has a lot of noise, but on a weekly or monthly basis is gives you a sense of how deep the oversold condition is. When you get a nine month RSI below 30 on the TSX, your returns tend to be very compelling 6 to 12 months out. Based on historical observations, investors should use any kinds of weakness to participate effectively.

Market. We had a big, strong recovery since the Christmas Eve low. You got your head handed to you in trying to time it. We have run into resistance right now. It was a pro-cyclical bent in the markets in January: Base metals, energy, technologies, financials and industrials. Defensives were much weaker like bonds, bond proxies, and consumer staples. Going forward we have to see the US dollar go a little lower. We need to see positive comments on the China/US negotiations.

Bond ETFs – does Technical Analysis apply, e.g. ZLC-T? Yes. The ZLC-T is a lot like the market. Corporate long bonds are a call on the market. If this one can break out then it would be a good place to be. If we eventually get rates rising, then this would be the first one to drop.

Amazon's Bezos has been executing his business plan for many years. Last week's earnings were phenomenal. Amazon has a lot of running room, and it will be around a lot longer than its nemesis Donald Trump. He likes tech companies because the healthcare space is ripe for disruption. Amazon has a good start in this space with some early investments. Bill Gross, the Bond King, retired. He endured a couple of tough years and lacked the team he needed in that time. He's also 74. An illustrious career. He put some money to work in December. The problems haven't gone away, but markets were comforted by the Fed saying they'll raise interest rates only if it merits that. Also, trade issues (China-US) have calmed down so markets have risen.

Consensus Consensus is a lagging indicator. Most research that retail investors access is from bank-owned dealers and this leads to a conflict of interest. So, he doesn't find consensus useful. When something happens to conflict with consensus, advisors just lower the price target. The whole ranking system is ridiculous and rife with conflict. Instead, contact individual investment counsels or do your own research.

Market Outlook The bull run in 1982 is following the same pattern of the 2009 bull run -- which is very bullish. There has not been the hysteria of the tech bubble on the upside in this run. He thinks the bull run will continue. The recent correction was too soon to be a signal of the end of the bull run.