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

Earnings season and the 10-year U.S. yield cracks 3%: The earnings were all that was advertised at 17%, though we're seeing 22% YOY increases so far. It's no secret that interest rates are rising, but how far? It's a psychological issue if investors think this bull run is over or not. There's a misconception among investors that things end, but they don't. There are weak and strong periods. How you manage the bad times defines you as an investor. It's easy to be an investor through the easy times. We value the upside more than the down, but the downside is the money-making side. He started in 2016-17 being strict with his asset mix including bonds and geographies, trimming his tech stocks last spring.

The 10-year U.S. bond yield breaking 3% today is not a massive risk to the market. It's about the velocity of that move, which was gradual--the market can digest this. The data out of the U.S. hasn't been as bad as Europe. So, he's not panicking and selling. To date, over 110 U.S. companies have reported and overall they are coming in ahead of expectations. Will we get 20% EPS this year? Likely not, but maybe 10%. Is this peak earnings now or part of a longer cycle? There are currently opprortunities in Canada and America to pick up industrial tech companies that he thinks have pretty good tailwinds.

Market. Commenting on a 1.55% selloff in the Dow, he said that one of the factors is the rise of the yield of 10-year Treasuries to 3%. Another factor is sell-on-the-news as investors see results. The profits have jumped significantly, but the rise last year were predicated on the expectations of a very high earnings increase this year. Good news is already priced into the stocks. He doesn’t expect much valuation expansion at the present multiples. He has been increasing his proportion of cash in the funds that he is allowed to do so in. He is hedging, shorting stocks, and imposing a higher burden on new investments. Investors need to be more defensive, to respond to higher volatility. He is looking for companies that have a dividend, solid cash flow, and other factors that make them resilient in the face of volatility.

Market. This consolidation is a re-pricing consolidation. It is premised on the bond market being much bigger than the stock market and people are watching it. People are focused on 3%. The market is grinding because there is a re-pricing going on. We have come up a long way since Trump has been president. Comparing the 10 year and utilities, if you are into income and need cash flow, the utilities stocks' line on the chart shows that utilities have to come down when bonds go up to reset the pricing against the bond market. He thinks utilities are finished re-pricing.

Sectors to invest in. So many tech stocks can do 20%+ growth. See top picks. You can feel comfortable with larger firms. There are no headwinds to speak of. Make sure you have some growth.

Market. The 10 year yield in the US is up to 3%. Friday the anxiety in the US on the rising yield reduced. There was a lot of coverage of the yield curve last week. Everyone is concerned. Long rates are going to go higher here and the curve will steepen out a little but the question is how high before things grind to a halt in the economy. We are starting to see some light on that. When the 10 year yield hit 3.05%, that is the key point and from there it moves to north of 5%, but he does not think we will see that. We are going to be tested here. He would want to buy into it rather than fear it. 1000 points could come off the S&P during the next recession.

ETF providers have monthly income funds. They are an ETF of ETFs. They are focused on yield and higher dividends. ZMI-T is an example. It is 61 basis points cost. It is global and managed by a portfolio manager.

Educational Segment. Digital Currency. In Sweden in the 1660s they were the first to issue paper currency. They are likely to be the first in the world to issue crypto currencies – a foreign, crypto backed digital currency. He thinks central banks will control it. The demand for paper currency went up after the financial crisis. Crypto currency solves the problem with negative interest rates.

The 10-year US yield at 3% doesn't mean very much. Would his clients accept US t-bonds at this rate? No. But as yields rise, it would make US stocks slightly less attactive. He's not selling stocks to buy more bonds, but pleased to receive slightly higher yields on bonds. It's a little better, that's all. Investors have been complacent given the strong markets of the past two years. Guess what? We'll have more 3-5% drops (like in early-February) to come. Own quality stocks and hold some cash to buy cheaper stocks. With dividends, those stocks will out-earn fixed income bonds.

General Market Comment. He is not deterred by the market move lately. He expects a little ebb and flow, but feels the economy is strong and interest rates will not be going into the stratosphere. Not a banner year, but he is not running for the hills. President Trump’s recent comments on $100 oil being too high is not going to change things, unless he releases from the petroleum reserves. A fair value of crude is $60-$80. Interest rates are not an issue until long term rates get up to 4-5% levels.

Oil prices. We have seen a nice recovery on oil prices. Saudi Aramco going public is likely leading to the bullish comments from them. Fundamentals still suggest a range of $60-$80.

Quantitative Easing and Market Levels. This may have been the catalyst for recovery since the last financial collapse. He thinks valuations are historically at the high end of the range, so he still feels the market is constructive and can sustain these levels. He prefers the Dow over the TSE.

Retired seniors. He has clients that are all equities. It depends on your circumstances. We have finished 35 years when it was always good in fixed income. Interest rates have bottomed. He is more interest in putting more into fixed income when interest rates have gone up.

Market. Tran mountain: What you've got is a premier that is in office with three green MPs that are keeping him in office. He is trying to protect his office. He does into care what is happening to the rest of the country. The head of the green party and his ego is bigger and he talks nonsense half the time. He is not open to anything and just says no. Norman's Levine's opinion is that: 'why not have a vote today and see if he gets re-elected'.

Market. In December we had a great tax cut in the US and everyone thought 2018 would be a great year. Unfortunately this is the worst fiscal and monetary mistake the US Government could make. The dead weight of debt on the economy starts to weigh it down and we have crossed the threshold in the US for it to do that. In the past when there have been tax cuts but no spending cuts, the debt to GDP ratio gets worse each time. The US debt to GDP ratio has flat lined for the last 10 years since the last tax cut. We can't take another tax cut in the US, meaning it was the worst mistake they could make. This does not mean another recession because Japan has been in this situation for 80 quarters.