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

A ticker for a US rate reset? If you are going to use US preferreds, you are not going to be getting the dividend tax credit. He doesn't know that he would be doing that. Any foreign income is treated as fully taxable income.

Market. The Trump trade lives on. It was the hoped for tax changes and deregulation that didn’t happen in 2017. Small caps, industrials, materials have benefited since September. He thinks we are entering the euphoria stage. There are opportunities but it is hard to argue the market is not expensive. Cannabis and Crypto sectors are indicative of the bubble Euphoria condition. Cannabis stocks have run ahead of themselves. The combined market cap compared to forward earnings result in huge multiples. There will be winners almost certainly – but only a handful. We don’t know how this will play out. He has been short energy for two years. Price momentum has been terrible for some time. But it is looking better from a price momentum point of view. This would be the best relative sector right now.

Chinese BAT stocks. They are caught up in a euphoric trade upswing and have over exceeded their valuation metrics. When they start to miss on earnings on the turn of a cycle, say in a year or so, you could really see a move down in these stocks.

Market. The markets are extremely strong. It's a dangerous game, and he is always ready for a correction. US banks ought to be able to stay out of a crisis mode, because they've been there. Commodities are making nice moves. Oil and gas is looking strong. He sees no real problems on the horizon.

Market. Thinks most people expected 2 to 3 hikes in interest rates, and he saw there were too many clouds in the future. That uncertainty is never good for the market. When the central banker doesn't know what the future holds, it causes a little concern. However, the Cdn$ dipped a little, but has now risen. The rate increase was small, so it is going to affect the mortgage holder, but not enough to create real problems. He is still concerned about NAFTA.

Market. Things are very good. The economy is rolling along nicely, which was validated by the government raising interest rates. Also, we have had the best job rate we’ve seen in 15 years. There has been very good retail sales. However, what happens after a long extension is that risk appetite starts running pretty hot, which is happening right now. It's always wise to take the long view and think about where you are in the cycle.

Market. We are at a point where some money might be taken off the table by people who want to put it aside. When he did a look-see at the stocks in New York, NASDAQ, AMEX and Toronto, there were far less things to add to his Stock Watch list. That list is at the lowest level in over 20 years. His "end of the year" buying was less than it has been in a decade. In terms of what he does, there is far less choice at this point in time. He is looking at stocks that are down at least 33% over the past 52 weeks, and then looking at the past 10 years. It is very, very difficult right now to find things worthy of being bought.

Market. The overall volatility has been really, really low. It's been a long time since we've had even a 3% correction in the market. Inter-day we are going to get choppiness, because there is so much quant driven money and computers looking for short-term trends. He tries to take advantage of that. If you focus on the fundamentals of your portfolio and you know that it is cheap, you buy on pullbacks, which is a great opportunity.

Market. He is bullish on natural gas and weary on oil. When we have winter things change very quickly. Mother nature takes down storage so quickly that it changes fundamentals very quickly. The price chart spiked up quickly in the winter of 2014. It is these weeks of 200 BCF draw downs that do it. It is again cool and if we have another cold spurt, every time you have had 4 historically, you have a spike up to $5 for gas. If cold weather persists we will see $3-$3.50 for gas. He is bearish on oil because US production will get back up overly quickly. ECA-T is saying they increased production 30% and will do so another 30% this year. OPEC is cheating. It is a percentage of honesty. They are producing more than quota already. Iraq has to get money in the door to perform repairs to the country. More capacity has to come online.

Market. Into 2018 the expectation for earnings growth is very high. It looks like the markets could creep higher but we could start to see more volatility in them. You have to be cautious on the market. Analysts can tend to be overly optimistic on companies they follow. A weaker US$ which we continue to see is good for corporate US earnings. Gold is a range trade for a number of years. He thinks we may get a bit of a breakout to the upside. He has been adding gold positions on weakness. A new survey on the ability of Canadians to service indebtedness may cause the BOC to be a bit dovish this week and to hold off on more increases for a year.

Zinc. From the beginning of where Trump was elected we saw a dramatic change in US$ expectations. This put a lot of upside price pressure on many commodities around the world, Zinc especially. He believes the US$ will not continue to weaken in a big way from where it is today. He would not chase base metals here. We are in the last leg of the uptrend in base metals.

Educational Segment. US$ exposure in your portfolio. There is a perfect storm brewing: What the BOC will do, NAFTA, oil prices. There is Canadian dollar risk. He is fully exposed to the US$ at $0.80. There is an 85% change they will raise rates in Canada on Wednesday. The NAFTA agreement will allow Trump to cause a lot of problems without ripping it up. He will use this against Mexico because he wants his wall. There is a housing risk in Canada with the new rules combining with higher interest rates. The Canadian dollar should be weaker rather than stronger. Oil prices are being driven by the weaker US$. He thinks they will pull back into the mid-$50s. Go unhedged in ETFs for the next 6 months.

Market. This is one of the great Bull Markets of our lifetime. The global economies are booming, the US has increased its GDP forecasts, Europe is actually stronger than North America for the 1st time in a long time, and emerging markets are doing very well. We are in a Goldilocks environment. Haven't been here since the 1990s, so just lie back and enjoy it. Warren Buffett explained that the tax cuts are giving every stockholder a 20% increase in the value of their shares. That is going to propel markets for another year. He is quite sure we are going to see earnings surprises continue through the 1st half of next year anyway.

Market. We are coming out of 10 years of financial repression and low interest rates. The two-year treasury actually went over 2% today, the first time since September 2008. Capitalism has been on its back literally for over 10 years. As interest rates move up, that is showing that capitalism is coming back. The market is recognizing that. The last time he was on the show, his fair value for the S&P 500 was around $3100. Now we are getting revisions and a jump up in earnings that we are going to start to see starting next week. Now his fair value for the S&P 500 is over $3200. We are on the verge of a parabolic move.

Energy? On the back of this global growth, there is definitely room for oil to head higher in 2018. The 2 key questions will be, what will the US supply growth do this year and will OPEC be able to hold their production cuts. At the end of next year, he expects we will be at almost 100 million barrels of oil a day in demand. The price Canadian companies are receiving for their oil is much lower than what the world oil price is. Oil by rail will be another huge story for 2018. He still thinks the bias is for oil to head higher. He is expecting a $70+ handle on oil before the end of the year.