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

Canadian Dollar. Where does he see it bottoming out? He doesn't have any idea. The chart has been falling and it is in a downtrend and as long as it is a downtrend the trend continues. The only way the trend is going to change is, if it changes. You have to wait until it finally finds a support. The Canadian dollar is weak and it will continue for a while.

Price of Oil? We had a major, major down trend line. We have a potential for a double bottom. It is looking better than before.

Markets. China’s devaluing of their currency caught everyone by surprise. China is maybe not growing as strongly as the government’s target. Trade data coming out showed exports were down. Commodities now become more expensive for them to buy as they are priced in US dollars. For the markets it could mean weaker demand from China. The US is not as affected in terms of trade flow as they are more of a consumer driven economy. She is constructive on markets. She believes the US economy continues to grow and the Canadian economy starts to pick up. It will be actual fundamentals that will drive these markets.

Markets. The markets are extended and driven too high on the zero interest rate trend. He does not think we are headed for a recession, however. People don’t realize how much ‘air’ there can be in the markets after all this time. 6 stocks are responsible for more than 100% of the gains in the market – the breadth of the market is narrow. The risk/reward in stocks is much higher than sitting on the sidelines right now. You could see this market down 10-15% on a heartbeat. We are more than due for a correction of 10-15% as we haven’t had one since 2011.

You never go broke taking a profit. You could scale back your equity exposure to 50% right now. Cash is not always the worst alternative. He would not hide out in gold stocks right here.

Markets. The Canadian dollar moved lower in the last two weeks than in ‘08/’09. The technical traders should pile onto it. He thinks it will go from $0.76 to 0.80 before it goes anywhere else. It is oversold. The strength of the US dollar is a problem for China. We should get more volatility and uncertainty over China. We should watch this during September and October. Earnings growth in the US has been zero in the last year or so. If you back out Energy it is about 4%. He thinks the markets will get stressed with the expectation being 11-12%.

US Investments. The world is 55% US stocks, Canada makes up 4%. The Canadian dollar will stay around $0.80 for the next year or two. Then it could go up and that is the currency risk. ZWA-T, for example, is the Dow with a covered call overlay to enhance yield and hedge currency risk. He recommends hedged versions of ETFs without a doubt.

Copper. COPX-N is all the big copper producers. Over 5 years there is nothing remotely bullish. Demand will cause copper to increase and that will require global growth. He is not bullish on copper.

Falling Knives. If he really likes a sector, he sets a maximum position. He buys part of it and then if it goes lower he buys the rest of the position, otherwise he just makes money on a half position.

Oil. He thinks the Iran deal will happen and next year there will be more supply.

Educational Segment. Health of US Economy. It is not nearly as healthy as the bulls would have it. A Chart of Debt to GDP was displayed. Since ’09 it has increased dramatically to 105%. The US public debt was $9.2 Trillion in ’08 and is $18.2 today. It is starting to become a big problem. He thinks interest rates will stay low for 25 years because of the US public debt. He does not think the US economy is actually in good shape.

Markets. He is expecting a gradual cyclical rise in US interest rates because he thinks the US is moving through a faster growth clip, still muddling through, but getting better. The employment is getting stronger and getting closer to full employment levels. Starting to kick in a little inflation. It has been slow and drawn out. Feds will likely raise rates in Sept. and also in Dec.

Fixed Equities and Bonds: He feels that this is a big transition period because the rates of return available on the fixed income market have been very poor. People will be switching out of bonds to stocks as time goes on. His focus is on preservation of capital and not reaching for yield.

US Growth. He thinks we are heading for 3% plus territory here. Starting to see wage increases, We have strong employment, strong housing market and consumer confidence is strong.

Cdn Bond Markets. Preferred share holders have been suffering. Prefers are not his favourite investments. He likes the bond and equity camp . Bonds are ranked senior to prefers, which means bond interest gets paid before prefers dividends do and prefer shares don't grow with the growth of the company. No earnings upside for growth. Too late to sell though and feels that there could be some opportunities. Feels that the preferred share holders should hang on here.