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

Bitcoin is not an investment in Blockchain Technology. BLOK-N is an ETF that plays the Blockchain theme. It has MSFT-Q, INTL-Q and NVDA-Q for example. He thinks it is highly speculative. Valuation is stretched and challenged right now.

How did interest rate sensitive companies make money when interest rates were 10%? Pipelines have a huge cost to building the infrastructure. That was tougher when interest rates were higher. When you have a lot of debt on the balance sheet, margins are compressed. It's all relative.

Market. There is a push pull going on between cyclical and defensive themes. The market is hoping it can process these interest rates. Utilities and a few defensives are starting to percolate up now. He is not giving up on the pro-growth theme, however. We are seeing some value buying in the defensives. He won't commit to the theme until he starts to see the pro-growth theme slow more.

Educational Segment. Currency risk. Over 20-50 years it will cancel out but short that that, they will trend. Between 4.0 and 5.5% each year, currency either hurts or helps your performance regarding US dollar investments. With ETFs you can hedge and non-hedge currencies. With some other currencies in the world the effect can approach 9-11% either way.

It's one of the first months this year when the TSX was up while New York markets were flat or down, but the overall markers are still in a downtrend. The good news: this is a consolidation. He holds higher levels of cash and is investing small amounts of cash. He suggests holding cash. Berkshire, Boeing and Fedex still have strong fundamentals despite the recent sell-off. Sit tight and wait this out. On another note, the 3% 10-year U.S. yield is hurting, say, Canadian telcos, and of course companies that are heavily levered. That said, what will truly worry analysts and markets is a 3.5% yield.

Which energy stock in the US with growth to buy? He doesn't invest in this sector much. He did own Exxon for quite a while. He prefers an indirect energy play--the infratructure side like the OIH ETF or US Silica (SLCA-N). He prefers buying Canadian energy where he has many more choices.

Whart's a good income ETF? The problem is that Canadian ETFs are heavy in pipelines and banks which are in trouble and are flat, respectively. REITs are in the same boat. However, consider the TXF ETF, a basket of tech companies. Or: instead of high income, look at a low-vol BMO ETF.

What gold bullion ETF to buy? Gold has been dead for a while. That said, he's playing gold through the names like Franco Nevada. The old adage is that US dollar and gold don't correlate. But he would buy gold hedged to the USD or playing through a Canadian gold name.

Market. He thinks we have a new head wind this year – the threat of inflation and risk of higher interest rates. Consumers’ biggest asset is their home and real estate, so this is causing some concern. The good news is that valuations are nowhere near those of the late 1990s before the tech bubble bust.

Market. FB-Q is one of those names that are interesting but it is still down from its highs. GOOGL-Q and so on are all off their highs. People are concentrated in the fewer and fewer names that are working. People are looking for the names that are pounded down and considering those. In a rising rate environment, markets are a little more difficult. You should have some cash ready to put to work. Rising rates lead to higher spreads for banks but higher mortgage rates are squeezing people. We are getting returns from dividend companies and a lot of dividends come from the financials and if the economy slows, they will not be immune.

The Banks and a NAFTA Deal -- Is it being baked into prices this week? NAFTA has been a hangover in this market place that has put a damper on things. Its resolution could cause positive market sentiment, but what has been going on this week is more interest rate related. Banks will go up from a liquidity perspective rather than earnings but it won't hurt to have a NAFTA resolution.

Market Outlook. The market is adjusting to a bunch of different things. 2017 was a year when there were political reasons to be worry about as opposed to economic reasons. 2018 brings a confluence of different thinks. The Fed raising rates. This idea of inflation is coming back. Yields going higher. His view is that we are going to see a bumpy road but with global growth and inflation is being controlled. So that bodes well for the stock market. Low inflation, reasonable global growth, good top line growth and bottom line growth. There are good quality earnings coming out. In the long run, the stock market goes up or down because of earnings profile of companies. The current level of P/E for the S&P500 at 16 is higher than normal but not bubble or anything like that. The volatility can be your friend to find good opportunities. The fact that the 10-year yield moved over 3% doesn’t really matter in the big scheme of things.

Market. This market is US centric with earnings up 20% year over year. Now the bond market yields are looking good. Interest rates going up is a good sign for the economy – get used to it. There is nothing to fear about rising interest rates. We have been in a financial “repression” for the past 10 years. The cost of money is going up, which is healthy. The shorter end of the curve is also moving up -- 2.8% for the five year bond. A fair value for the S&P500 is 3450 in his opinion, based on strong earnings. Canada has good value too, but you have to hold your nose – it could become cheaper. He is very bullish on the US dollar and bearish on the CAD dollar.

Safe Canadian stock recommendations? He thinks it is hard to be safe in Canada as rising interest rates are hurting many dividends. Over the past 10 years people moved into telcos, utilities and pipelines to be paid to wait. Now these companies are overvalued and rising interest rates make it challenging for their fundamentals. He can’t give recommendations for Canada right now. The passing of the US Tax Act has made things more competitive there.

Canadian Interest Rates. The US has been leading the world after recapitalizing from the financial crisis. Although we didn’t have a similar collapse in Canada, the Bank of Canada is still being too easy on lending. Last year when rates did increase, the impact on the Canadian economy was negative. A lower Canadian dollar will help the economy, so don’t expect big interest rate increases here soon until we start to see 3% GDP growth annually.