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

Markets. We are at the early stages of a bull run, the likes of which we have not seen in a decade. Things are NOT looking toppy. Brexit yielded one certainty in that government interest rates are going to stay low for longer. The world is awash with money looking for a home. We are in the early stages of a big run in the markets. Pension funds need to figure out how to generate more income. The real estate market has a ways to go. It is not like less and less people are going to come to Canada. Now that there is a green belt around Toronto, we become like Manhattan. You can’t go out so you go up.

Gold in general: It has done very well since Brexit. It has rebounded. As a hedge against uncertainty, you are in an interesting spot where the US dollar AND gold could both continue to do well. This is not usual. Gold stocks should continue to well. Political uncertainty is likely to remain high while interest rates remain low.

Markets. To believe in this market, you have to believe in earnings. Earnings in this market look a little disappointing. Most forecasts are indicating a decline of about 5% this quarter. Thinks it is going to be hard to see this next leg over. There were some very good numbers from J.P. Morgan this morning, that helped a little bit on the US side. For continued growth though, he has to see earnings come on board. Looking at the back drop, globally it is pretty weak. We don’t know what BREXIT is going to be as we have a couple of years ahead of us at least, of negotiations. Expects they will get along and compromise on the way. There are some very unusual signals. The bond market was peaking at the same time stocks were peaking last Friday, which has never occurred before in the history of the markets. Which market do you believe? The bond market typically gets it right, but it is telling you that things are a little worrisome in the world, which is why prices are so high and yields are so low. Investors are thinking central banks will be coming to the rescue again. The market is obsessed with what the Fed is going to do, and to a lesser degree the Bank of Canada, Bank of England, etc. It is a total central bank falling market, and right now we live in a market where central banks have distorted everything. Thinks the current rally is going to be short lived.

Physical gold and silver? If you are looking at holding actual bullion, you would have to have insurance, storage costs, etc. If looking at an ETF, (GLD-N) would make a lot of sense, at least as a hedge. He has never done the physical metal as you are looking at a discount and are probably buying coins or maybe Troy ounces. You have to store them somewhere. Now is probably not the time to buy it.

Markets. Bruce Murray, with David Newman appearing alongside him. The Brang-over, the after affects of Brexit. They do not think it will be all that bad. There is a great relationship between Britain and Germany that they will want to keep going. It is risk on again so growth stocks are coming back into favour.

Buy into the market now? They are 100% invested. We just broke out on the S&P since 2000. Quality Global growth and US large cap growth stocks will lead the markets. He recommends staying fully invested.

Markets. Keith Richards was joined by Craig Aucoin, of the same company. A new high in the S&P is great news. It has done it on a few questionable things, however, such as sell in May and go away and the presidential election. Earnings for the quarter are just starting to ramp up now. That will be a tell-tale sign. Brexit caused a non-fundamental response. It is too early to say if buying opportunities will emerge. Banks face a lot of headwinds. Defensive plays are way overbought. This should not happen when the market is breaking out to new highs.

Gold Bullion. He likes gold. It was in a nasty downtrend for some time and broke out at the beginning of 2016. Gold can sell off a little into the end of July, and then there will be a possible entry point. Since 2011, companies have been waiting for this.

Smart Money vs. Dumb Money. A lot of retail money has moved into the market over the last few days and this is a bad thing. Institutional money has started to sell off. This is a danger signal.

Markets. The US market, being so high, gives him pause. A couple of times in the past, the Dow has traded at 22X. We are now at 17.5-18. The market is saying “forget about BREXIT, forget about second-quarter earnings. The quarter for the S&P is forecasted at -9.6, so we are going to ignore that it was a weak second-quarter and are going to just look forward.” If the market can contain that, we will probably go 3%-5% higher. Banks look like decent, not great, value here. Also, thinks you can make a case to have a difference between Canada and the US. US banks have done poorer in the past 6 months. Our banks are probably in the “okay” range, up 2%-3% in earnings, plus 4% dividend and you get a positive return.

Markets. The Dow and the S&P 500 have been hitting new all-time record highs. There was a knee-jerk reaction to BREXIT and that negativity was quickly reversed. Feels the market may be a little ahead of itself. Going into earnings season it is really important to focus on what the companies are saying, and how they are seeing the different geographies. It is really too early to know what the impact may have on the UK, the US and on the global economy. When looking at fundamentals, Europe is not getting worse, but is bumbling along and the US recovery is on track. We had that really strong halo number on Friday, but it is probably not sustainable. With all Central Banks indicating they are going to keep rates low, especially the US Fed, (the only central bank that was going to raise rates) the US economy is on track, so it seems rates will stay lower for longer, which she thinks may have been the catalyst for this rally across all markets. Inflation is one metric we have to really watch carefully, but so far she doesn’t see it rising sharply. As long as inflation stays benign, there is no urgency to raise rates. Thinks the markets are going to be sensitive to any economic releases that come out.

Canadian Banks? She likes the banks as a group, although they were more attractively valued a few months ago. While our economy lags that of the US, it is slowly going to start to improve. That will be beneficial for the banks. Most banks are yielding 3.5%-4%. Earnings growth is kind of mid-single digit range, and she thinks the dividend growth will track earnings growth. She would initiate a half a position, and not buy it all here. If we get the general market pullback, the banks will come back as well.

Markets. They are having a referendum in Italy in October. If Italy goes, the whole thing falls apart. If France goes, the whole thing falls apart also. Gas prices are pointing to weakness in crude oil. Usually refiners build up inventories for the summer, but the demand has not been there. We are 10-15% below averages and this is negative for West Texas oil. He thinks we will see a dip below $40 this fall in the price of oil. Energy stocks should fall off 10% and this would be your next buying opportunity.

MOO-N and COW-T play in the agri-space. Some are food processing and some are agriculture side (potash and so on). Some of these stocks will come down over the next year. You could nibble now.

Silver. He looks at gold and silver together. We should test the recent break out in the near term and that is where you could buy on a dip.