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

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Market. The S&P500 has been having the longest bull-run in its history. It is hard for investors to focus on beaten down areas, like resource stocks, when everything else is doing well. The US tax cuts and deregulation have contributed to a breath of fresh air to the market. A strong US market should be good for base metals globally, as long as we can wade through the tariff issues. With countries agreeing to reduce or eliminate Iranian imports, it should allow WTI to stay between $70-$80 per barrel.

End of the third quarter. In September, investors were fearful of a pullback, yet markets are clinging to their highs. Why? Because money is intelligent. Fairer trade is good for global growth. TSX fell off today on NAFTA concerns. Hopeful that after Quebec election, we might get more of a deal flow on NAFTA. There’s a lot of nervousness. The right deal is important. At the end of the day, the work will get done. The issues that divide US and Canada aren’t really that big. Dairy concessions might actually be more efficient for us.

Strongest quarter in years, but concentrated in a few names? Not as many global markets have done as well as the US, especially in tech. US is trading around 16x forward earnings, which is not actually that expensive. Canada is trading around 14.5x, and is a deal with the right catalyst. Europe is a good deal too. There’s some catch up for the rest of the world to the US.

Canadian energy. This too shall pass. He’s back in energy, not in a huge way, because he’s not sure how long it will last. A lot of really good Canadian companies in the oil patch paying good dividends, that are very cheap, and with just a few catalysts they are going to be winners.

Canadian banks, get out or stay in? These banks are still the place to be. Trading at reasonable multiples, very well capitalized. Really grown well in Canada. Don’t want to sell if you’ll be paying capital gains. On a PE basis, Canadian banks are cheaper. On price to book, US banks are cheaper. You want to own both.

Canadian market. Canadian investors have had a lot to grapple with, for example Trans Mountain and NAFTA. Our markets have not moved. His buy recommendations are motivated because things are cheap.

Market. Emerging Markets. They were very important a year ago for portfolio strategists. Now, the US has done well and the emerging markets have really suffered. Sometimes what did work will continue to work. He sees a year later that emerging market assets have become more expensive. Volatility is more pronounced in the emerging markets ETFs. The FANG stocks have been rock stars. There is a tendency to leave the capital there but you have to understand the risk. Investors should not place too much complacency on certain names just because they have been okay to date.

Principal protected notes. They are often abrogated products that often tend to be a partner product for those selling them and then buying them. You have to look at them for the possibility of making money and the probability. Many investors don't understand these investments.

Market Outlook Some companies are being beaten up because of the NAFTA uncertainty. Some sectors seem abandoned. She is fully invested in the US. She doesn’t own any Canadian cash. She has shorted some stocks like Saputo Inc. (SAP-T) but she can’t short all the names that could be affected. She doesn’t think that we are going to have a great day in the Canadian stock market. But to her, this would be a buying opportunity.

If you have 20% cash, where do you put it? - 20% is not that high. Historically in mid-term elections you have a weak period. October could be a sub-par month. Maybe you want to keep until later and then revisit it. She is in US dollars now.

Market. The S&P500 rally will event eventually and he thinks we are starting to the late cycle signs. The FOMC is starting to show hawkish signs, so he is starting to look to hunker down with stocks with good dividend yields. As short term bond yields go up to maybe 2.25% thanks to the FOMC, the long term rates are not moving up the same.

Marijuana Stocks. He is not in any marijuana stocks. He thinks this sector has all the hallmarks of a classic bubble story. Maybe Canada will be a first mover in the space, but he thinks it is too early to invest significantly. He points back to the Tulip bubble and tech stocks of the 90’s as examples. Most of his clients, who have liabilities to cover for at least another 20 years, he would be nervous on this sector.

He's bearish on the Canadian market. The CAD has been trending since its 2010 peak. He expects more USD upside, but forecasts low-$70's for the CAD within the next 12 months, though there will be a few rallies. The trendline to crack 80 cents hasn't happened. He sees 10% upside for the USD against world currencies. He's bullish US markets.