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

Banks. In Canada the big banks are a big oligopoly and are pretty dominant in their markets. They should provide a bit more stability over the next little while. It is a place that investors should be looking.

Today, the market was focussed on Q1 earnings, and the S&P companies are expected to be strong. On the flipside lately have been geopolitical issues or trade wars which could derail markets. Today was positive. Valuations are looking more reasonable. At the end of 2017, valuations were a little high, particularly in the U.S. She has a longer-term view--economies are still improving which is encouraging. She's a long-term investor, not a trader. Sectors like energry prices have risen globally, but not in Canada because of take-away problems. Emerging markets will drive commodoties (i.e. copper, steel). She likes India and China given its per-capita GDP and improving economies long-term.

Gold She has little exposure to gold. Inflationary pressures have been benign; when inflation rises, so does gold. If she sees more geopolitical tension, then maybe she'll buy more gold. The gold price really hasn't recovered from previous peak.

Sell North American banks and buy foreign ones? She knows North American ones better than the foreign. Also, transparency with the former is stronger. The U.S. banks have led U.S. growth, while only in the past year has Europe been growing. Valuations of Canadian banks are attractive now, and are better regulated than U.S. ones. Canadian ones also maintain their dividends. She prefers North America.

Market. Since November, the run up in interest rate expectations has impacted many of the stable companies they like to invest in. These firms tend to hold slightly higher levels of debt, but it is part of their business and he is not concerned. He is now looking where to engage their cash position. He would be looking at pipelines. Owing Canadian real estate in general is great value – offering 7-8% rates of return.

Gold. Given all the chaos over the last two years, he would have thought gold would not be so stable. Cryptocurrencies are creating conspiracies that gold is out of favour. He looks at the price to see if it is profitable to run a business, at this level it looks fine.

Government ownership of TransMountain Pipeline. As an investor, he sees the issue as a regulatory issue and sees no room for government ownership. He thinks it highlights how the government has no idea how investment decisions are made in the market. He thinks it is crazy and is afraid it may chase money away from our country. He could accuse the government of forcing the project to drop in value and then buying it at the bottom -- hinting at securities fraud.

Market. [The guest was not able to appear at the beginning of the show so Catherine Murray spoke about an interview she would conduct following Market Call. The show started after this comment with the first caller.]

Market Outlook. Up until last week markets were rattle by the US-China trade tensions. A global trade war won’t help anybody, and the US knows that. Markets dip down to the 200-day moving average (for the S&P500) and turned out to be a good time to buy. Buying on dips makes sense for investors. The nice thing is that the S&P500 is down to 16 to 17 times forward earning, lower than it was a few months ago. We are going to see strong first quarter earnings. Likes Asia, both developed and emerging. In terms of sectors, cyclicals are the favorite. Technology is the second preferred sector for him. Rates are probably going to edge higher but for the time being markets seem to like these below 3% levels.

Con you recommend an ETF on US Banks? Some of the broad financials ones are Financial Select Sector SPDR Fund (XLF-N) and Vanguard Financials ETF (VFH-N) and SPDR KBW Bank (KBE-N). If you want Canadian dollars exposure BMO EQUL WGHT US BK INDX CAD UNT ETF (ZBK-T) would be one to consider.

Doesn't see much deterioration in his economic indicators, though he's watching the yield curve. He has moved from offence to neutral. Short/intermediate indicators have broken down, though long-term have held. He's building up his cash position to take advantage of any market drops. He's never in at the very top or out at the very bottom, though aims to be somewhere near those extremes. Some indicators point to overselling in the market which could lead to a bounce. Facebook as a long-term concern? Users haven't haven't dropped off, though regulation is a concern.

Market. He feels the market is in a range of 2800 on the upside and 2575 on the lower range for the S&P500. It has tested the lower range a couple of times and he now looks to 2800. Technology, financial, and consumer discretionary are the cyclical leaders currently and these generally put in higher lows during the recent market re-test. He holds 10-20% cash, higher than normal. He thinks the bull market is still intact.

Energy Stocks. He would avoid Canadian only companies, due to pipeline issues. He is not in love with energy. Integrated energy stocks have under-performed and he would avoid them. Russian sanctions may actually induce Russia to produce more, putting downward pressure potentially on oil prices. He would lean more to E&P and drillers instead.

Telecoms. In the telecom space the biggest risk is in interest rates. It is conceivable that we see inflation getting closer to 3%, so rate increases are likely. No matter the fundamentals, this sector will likely be hit.

Volatile times. Volatility doesn't give us a direction, but volatility runs in cycles. Be able to sell at the top, if markets are weak above a certain point. The market is running in a channel now with a top and bottom. Take your bets and accept a floor on your loss. We can see big drops as well as gains. Tech dominates U.S. markets. For Canadian oil, buy now. The potential for oil go up may be there, but have the discipline to sell off, too. Anytime you buy a stock, you're emotional. But discipline is fundamental to technical analysis. Look at price. Draw your horizontal lines--your exits--and adhere to them.