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

Now, you have tailwinds vs. headwinds: solid economic data and corporate earnings from the U.S. vs. esclating trade tensions around the world. If there's easing of the latter, then we can see a longer bull-market ride. Be in cyclicals. The
defensives including telecoms have done well the past few months, but now he suggests moving into cyclicals. About 75% of his holdings are in the U.S., especially consumer discretionary. He's also being cautious by taking profits faster, and hecurrently holds 12-15% cash which is higher than his 5% norm. He holds FANG stocks like Facebook and Google and some semiconductor manufacturers. He has sold his Canadian oil stocks as the price rose. He's not sure that oil can continue to push higher.

Canadian vs. U.S. stocks: Given the exchange rate, is it worth buying U.S. stocks? He gets this question a lot. He says it's not a loss necessary. The U.S. has performed better than Canada in the past decade. He still likes the U.S. and holds most of his equities there. Tax reform and fiscal stimulus are tailwinds. NAFTA will be tougher on Canada than America. The S&P has returned twice as much than the TSX over the past two years.

Trump is the biggest influence on the market, both tailwind and headwind: the U.S. tax reform to lower corporate rates, then starts a trade war, creating a vacuum of uncertainty. Is he doing this to open markets down the road? If so, they should play out by the end of 2018, which is a good impetus for markets. Investors should look at assets not as impacted by trade, but benefit from the tax cuts, such as the banks and tech companies. He doesn't believe the US has huge trade surpluses as Trump claims, because so much of U.S. output is services.

Outlook for Canadian banks: Headwinds: Canadians have a high real estate market, a flattening yield curve and fears of a trade war.

Writing covered calls against the FANG stocks? He does this and it works very well for him. The premiums are in the second quartile, and these stocks are rising, which report earnings this month, which will be interesting.

What's a low-risk ETF for Canadian banks, and is this still a good ETF to be in now during a trade war? He doesn't think there will be a trade war, but banks are the safest place to be in Canada. They make a lot of money and pay good dividends around 4%. They should do okay during rising interest rates. Instead, if you have low/medium-risk, then diversify into fixed income as rates rise. Look at floating rate preferreds.

If you were to sell a covered call at 6 months out on the banks, like TD at $76, it doesn't get taken, then drops to $74 before the end of the contract, would you re-sell that $74 contract knowing you would lose money if you were to get called out? Probably not. You would lose your winners and retain your losers, which he doesn't advise. Otherwise, hang onto the stock.

Market. He thinks Canadian energy stocks should have performed much better given how oil prices, converted to Canadian dollars, has risen. Following the OPEC meeting and strong demand forecasted for the latter half of the year, he expects some catch up in the sector. He adds geopolitics in Libya, Venezuela and other others should add to the head winds. He likes the Canadian banks, trading at 10-12 times earnings and there have been reports of good earnings growth. He would be adding to his holdings in this space.

Do ETFs drive the market at the end of each trading day and therefore dictate how markets close each day? There are always order imbalances upon the close at the NYSE, like an extra $300 million in sell or buy orders, but that's not enough to move the markets, because they know this 30 minutes ahead of time (3:30 pm). These market makers try to match these orders in the last 30 minutes of trading and this generally works.

The taxation of puts. If I trade a lot, like 3-4 puts a day, will it effect my taxation? First, selling puts in the U.S. makes sense, especially stocks that sell dividends. If you do, say, three puts a day, be careful that CRA doesn't consider you a professional trader and tax you accordingly.

Market. He thinks the trade war, with Canada’s retaliatory response today, is not truly impacting the market as the Dow was still up 200 points following the news – the market does not really care. The impact on Canada should be small, in his opinion, given that most of the business between the two countries is in the service sector.

Market. TSX had its best quarter since 2013. How long will it last? Will energy improve in the rest of the year? In last 4 years, you’d have outperformed if you’d just traded oil according to OPEC cutting or increasing production. Silly to fight OPEC at this stage of the cycle.

Cohesive story with Enbridge’s Minnesota approval, Keystone XL, and Trans Mountain? Good to look at it as a whole market, because it will impact what Canadian oil prices trade at vs. the US. Incrementally positive. In Canada, pipeline constraints are already here, so we need pipelines built to allow industry to grow. The industry will continue to grow now. We could be at this same point a few years from now.

Will the differential between Western Canada Select vs. WTI continue to be volatile? Volatile as long as pipes are full. There will be big swings if any operational issues come up with the pipeline companies. This will continue until those new pipelines come on.

Millennial interest in marijuana sector? From a demand perspective, millennials are interested in a trend where they can make money.