A Comment -- General Comments From an Expert

A Commentary

Markets plunged today in manufacturing numbers from the US--the lowest in a decade. He isn't worried because he's both long and short the markets and in fact, his stocks rose 0.5% today. For tech stocks going forward expect the same volatility we've seen the past 18 months. One area where tech and digitization will make big gains is real estate. Tech hasn't touched real estate much so far. One day, we can buy a mortgage online, for example.

Show Did Not Air. [Larry was off today and instead of a substitute guest, they simply started the 11:30 show a half hour earlier and made it a full hour in length. There was no Berman's Call today].

Market. ISM is a measure of how manufacturing is doing on an international basis. We were a hair below the threshold for contraction at the end of August but turning upward. History has show that the S&P usually goes up 17% within 12 months after this point on the charts. He thinks this is what is coming. US leading economic indicators are still rising so there is no recession imminent. US 10 year bonds have hit the bottom and will likely turn up. This bull market has a long way to go in terms of time and distance.

There are lots of noise these days with markets rangebound around the world. This may continues given that the trade war won't go away anytime soon, though he expects a resolution eventually. Re: Trump, this folly after four years is coming to an end. If the Republicans are smart, they'll get rid of him and Trump will be a footnote. As for the Democrats, Elizabeth Warren's ability to execute her agenda will have to go through the political process and won't be swift. After all, income inequality needs to be addressed in America--Trump himself tapped into that discontent. The biggest risk is staying out of the market. Despite volatility, stocks are where it's at.

Market Outlook You have to remain invested. We are capped on the upside with trade uncertainty, while the central banks are providing support. You need to consider a bar bell approach. You want to hold companies that will continue to benefit from secular themes, balanced against defensive holdings. He likes real assets like real estate and infrastructure. Worries of the US restricting flows into the Chinese markets is likely posturing. Negative interests are an abnormal environment and it is making defensive sectors like utilities more interesting.

Japan? Japan is the King of negative rates. It has been tough for banks there. You probably want to stay away from regions with negative interest rates in general. If you want global exposure, you may want to hold US banks who have expanded globally.

White House has discussed de-listing Chinese companies We all want this situation to get better. Let's hope they do not de-list companies and worsen things.

Impact of negative interest rates? A lack of alternatives is driving investors right now. Equities are still the place to be. We need to see earnings growth again to bring focus to the market. CEOs are getting concerned about changes in business decisions -- delays in capital expenditures, for example. US Consumers are still in a good spot and so is labour. As long as the US consumer is doing well, remain in equities.

Global investing? He is a big fan of investing outside of North America -- especially into EU infrastructure. On the trade front, the Chinese-US tensions will be resolved. He expects the US to resume its dominance eventually. China is doing a good job on R&D, but it will never be the world financial centre.

Negative Rates. ECB Chief economist has said there's plenty more rooms for them to buy more bonds. However, who else who buy bonds with a negative yield? Along with Japan, one third of developed world bonds have negative yield.

He thinks bond interest rate in the U.S. could go lower. If the economy is badly effected by Tump's impeachment or trade war, you could see rates cut. He doesn't think they will go to 0% but could see it quite low.

It's not a big surprise that there is further escalation of trade war talks seeing as it's gone on for so long. China's economy is slowing because they're export oriented, so it would be in their own interest to strike a deal. However, they have to do it without losing face. It's a question of striking a balance.

If there is a shut down of the US government, you could see the USMCA could get lost in the transition. However, there are plans to push it through regardless.

Market. This year has been a very strange year. Typically when you have a year when stock markets are up, investors chase those returns. Investors have raced into bonds of all stripes. Memories of more mature investors move back to 2008 with a kind of investor PTSD. The outlook is one of stabilizing growth – easing monetary policies and a very different set of circumstance. This is the first time that lowering of interest rates has come without any strong evidence of an economic recession. They are being pre-emptive with rate cuts.