A Comment -- General Comments From an Expert

A Commentary

Market. He sees a risk that oil goes below $50. There is the inventory build in the US, the battle with China over trade and sanctions with Iran. But the EIA report was favourable this time and the news with Iran and the drone today. The G20 will involve Trump and the Chinese leader having an extended discussion. He thinks the G20 will not come to the solution that everyone thinks. Trump won't want to solve it until Q1 of 2020 because of the election. The US may already be in recession. People are throwing out the number that maybe the Fed will cut by 50 basis points. This is the longest economic recovery in history and we are beginning to see signs that there may be some problems. If the trade issue does not get resolved in July we may see the price of oil back off.

Market Outlook Earnings are always what drives the market. Q1 earnings dropped over the year and only 38% of companies reporting beat estimates. The sectors of growth are limited making growth slow going forward. Companies will get through it, but the short to mid-term outlook will face head winds. Real estate may plod along, but will not likely be a growth sector. Tech is the most promising, but it is so thin with opportunities in Canada.

Cannabis He is starting to get a better feel for what the industry is going to look like. Companies are recording big misses on earnings and revenues, so it is hard to justify the multiples. It is a tough space still. They would like to see more care for the share count. He feels they are issuing shares like crazy since they are highly valued.

The US Fed held rates today but laid the groundwork for a July cut. The Fed is right on top of things, neither ahead nor behind the curve. They even steepened the yield curve at 2.03% for the 10-year. This and the ECB moves have placated investor angst. Inflation remains low, subpar with concerns over de-flation. To deal with this, there remain stocks with healthy--growing--dividends with little risk (they're mostly defensive). Then, there's big tech, which has come down a lot but boast higher-than-average growth rates. We could have both a US-China agreement and low interest rates, but not for the long-term, just short-lived.

The state of the energy market He's been out of this sector since fall 2014. It's been a classic bear market since with some extreme bear rallies. Two things: the global oil market is already hard, compounded by domestic pipeline issues. It's just too hard. To own this sector, you must firmly believe that global oil will stay at $60-65 and not plummet, and that pipelines will happen soon. He has no confidence in either, especially the latter. True, there's excellent value in Suncor, Vermillion and Whitecap, but these catalysts need to happen.

Growth stocks as a TFSA strategy Put all your growthier winners in your TFSAs? Yeah, I guess you could, but.... aim for singles like dividend growth. It's safer.

Protection strategies if the market plunges 20% The average bear market has a 42% drawdown. If you're not prepared for this, then have an asset allocation. First thing is, how much of a drawdown can you stomach? Next, diversify into bonds and stocks. Also, have covered call strategies. Point is, be ready, and have a strong hand when others are weak. Buy when others struggle.

Should I let dividend stocks ride the ups and downs of a market, or use a stop order? It depends on you. Storm clouds are gathering now. We will hit a recession at some point, though he expects the current rally to continue for a while. A downtown could amount to 20-30%, but remember that those stocks will rise back up the following year or so. If you maintain good positions and they pay good dividends (i.e. AQN-T), then there's nothing wrong with that. He prefers to hold, most of the time. But some may want to sell a bit off.

If a stock keeps falling, at what point do you stop averaging down? Depends. Some stocks are very whippy. Long-term, he likes NVDA-Q which has sold off half, but it doesn't mean there's anything wrong with the stock long term. Others though, there is indeed something wrong.

For a senior looking for safety and dividends, what sector or ETF to buy? Buy U.S. tech. Valuations are still cheap, like Apple and Google. Amazon is growing rapidly. They boast strong cash flow. Will they be broken up? Will the earnings streams be broken? The latter answer is probably not; they won't kill the golden goose. Yes, he likes ETFs.

Market Outlook He suggests putting money into the "risk-on" assets. The market was weakening back in April and had cautioned clients pause. Now they believe an intermediate low has been established and are recommending capital be redeployed back into the market. Today's price action is likely a signal we are about to move to new all time highs. This includes getting back into the crude oil space -- especially the integrated companies.

Gold prices Gold prices are testing key resistance again at $1350 /oz. He thinks a pullback may be coming back towards $1300 soon and reaccelerate later in the summer to potentially test $1400 or higher. Trading in the mining space seems to suggest the smart money is heading for the exit right now. If you are patient you may be rewarded handsomely.

Which oscillator do you recommend? The MACD is the most commonly used. It measures the differences between a slow and faster moving average. Technicals are driven by herd behavior, so if you follow the more broadly used indicator you will better understand the moves in the market.

Oil Prices They recommended to buy back into oil back in February. By the end of April they recommended that oil was due to retrace and they moved their clients toward gold. Now he thinks it is time to get back into the black gold.

Today's Trans Mountain green light gives him some confidence in the pipeline. He expects more court challenges. he doesn't think the Transmountain will cause a huge amount of environmental harm and is likely safer than transferring oil by train. Also, oil pipelines won't be around one day as we transition to cleaner energy...Markets are up today Trump threatened China with more tariffs--this is theatre of the absurd, a crazy way of running things.... The US Fed: he wouldn't be surprised if they said they saw some negative numbers (i.e. unemployment). "We may see some negative indications, but we're not ready to cut....yet."