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

Market. Value is coming back into equity markets, albeit with higher volatility than last year. Economic growth has been tepid for the past 10 years, but at least it is still growing. He feels we are in a much more positive environment than before. This is a good time to be choosy when buying stocks – look for good management and balance sheets.

Bombardier Common versus Preferred Shares. Preferred shares will be much more sensitive to interest rate hikes. They have announced diversification of their aircraft fleet, but they still remain with a stressed balance sheet. He would not own either one.

There's a great wall of worry over markets, like Trump tariffs, Italy this week and tariffs, but GDP growth is strong and so is the US economy as well as global productivity. We're seeing more automation in factories. Yes, we're late in the cycle, but he still sees good several years ahead. He's more skeptical about Canada, due to political squabbling over oil. Ontario is heavily indebted though booming currently. The Bank of Canada didn't change rates today, but signalled a July hike--it's going to happen. Our economy needs a lower dollar. The BoC will be cautious. He's selective Canadian stocks. Canadian banks can continue to rise even if the economy and housing slow, especially those like TD with American exposure. In contrast, Scotiabank has suffered due to its heavy exposure to Canada.

What three companies to invest in for a first-time investor for a year? Don't put money in the market for a year. That's gambling. You need a 3-5, preferably 8-10 years. Buy solid, long-term growth companies like Facebook or a healthcare company or even Amazon. You need more than three names to properly diversify, at least 10.

American healthcare stocks have been struggling, why? The tailwinds are good: we're all getting older so there's demand. The issue is that governments are more involved in healthcare payments, and governments are struggling for money and squeezing costs. We're shifting from chemistry-based to genetic-engineered products. The payment system in the U.S. is convulated--we had Obamacare and now they're repealing it. U.S. health care costs are 15% of GDP much higher than other developed countries. All these stocks are cheap at 12-13x earnings. Good profit margins. If you own them broadly, then fine. It's a tough business now.

Trans Mountain Pipeline acquisition by the Federal Government. He is not happy with the oil situation and he thinks this acquisition is a tragedy and didn't have to happen. It is all the fault of the Trudeau government. The government went on and killed Northern Gateway, went a step further and said no tankers would be allowed on BC coast, they made the regulation such that Energy East had to be cancelled. Then they were left with Trans Mountain and it blew up. Trans Mountain could have been cancelled if the other projects had gone ahead. The Kinder Morgan stock is slightly up today, but there isn’t much left in Kinder Morgan to grow, there is some oil storage left, but there is not much left to grow, so it’s only going to go up so much.

Concerns about Italy potentially leaving the Euro. There was some sell off today amid concerns about Italian government could take country out of Euro. That would be very bad for Europe and for markets. They have been expecting the market to sell off and have improved their cash. This could be the catalyst and give an opportunity for people to move into value stocks and small caps and away from the market leaders.

U.S. Banks. He prefers U.S. banks vs Canadian banks. They are more interest rate sensitive. If rates go up, they benefit more, and they don’t have the housing situation that Canadian banks have to face.

When is the right time to buy utilities? The best time to buy them is when interest rate is going down not when interest rate is going up.

The 10-year U.S. bond yield is now below 3% has to do with recent volatility, US trade issues and Italian bonds. He always thought the curve would normalize away from near-zero rates as the economy recovers. He doesn't think inflation will be an issue, because there's over 3% global growth with historically low unemployment. But isolated events put strain on the economy, like dropping money supply, the technological distruption with AI replacing huiman jobs; and debt, both corporate and consumer. These will push the Bank of Canada to raise rates this year once more, but not tomorrow. The curve will range-trade. He doesn't see a 4% yield, because that would constrain the economy.

Market. We have had the strongest quarterly results since 2010 and the market said 'Blaw'. The earnings per share growth has been 26% year over and the revenue growth 9%. It could be a tired equity market that just can't keep going up. The PE in 2017 was rather high. The recent pull back brought back PE from 21 to 17 and so now the market is no longer overvalued. Trump's approach has always been to go in hard and heavy and then to reach an agreement. The goods impacted by tariffs is actually relatively small. The trade wars with China are actually patent wars. These fears that are keeping the markets down could be addressed and then what would be keeping it down?

Educational Segment. Hedging Credit Risk. He is concerned about the level of debt in the world. A high yield instrument involves taking the worst quality corporations out there. When the economy turns, and we are getting close to that, these things can get pretty nasty. In 2009 about a third of the high quality bonds were rated triple 'B'. Today it is almost 50%. Corporations have put their balance sheets in a place of high risk. In '08 government bonds did very well and corporate bonds did not. He is concerned now about corporate bonds. You can make money when bonds come off by being in the right fund, such as the SJB fund, which is an inverse ETF.

Market. The Ontario Election. He is disappointed in all the parties. Two of the parties don’t understand the fundamentals of economics. We cannot keep running deficits. Over the next couple of years the dollar could drift significantly lower if the liberals maintain a federal position and the NDP wins in Ontario. In the late '90s the loonie got into the .60s. The Italian president will not put in the anti EU prime minister. It looks like the current government will fall soon. There may be a more anti-EU leader coming out of that election. Italy and Europe are fragile due to political uncertainty and it is not good for economic growth. He thinks there will be no move this week by the BOC.

The Loonie. If you can wait 3 or 4 months there is a good chance oil prices will pull back a bit and the Canadian dollar should drift closer to 75 cents.

Logistics and transportation space recommendation for an ETF. IYT-N is the DOW transportation space. There is not one for logistics in North America.