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Base Metals. A lot of eyes are on China right now, “are they growing”, “are they not going to be able to reach their targets”, so there were some sloppy trade numbers over the weekend. Imports for iron ore for China have been falling for the last couple of years. If you overlay that and the price of copper with the Chinese domestic market indexes, from 2010, all the indexes have rolled over. Copper has been in jeopardy of breaching the $3 support area for about 3 years now. If it does, that could accelerate some negativeness in the materials sector of base metal stocks. He thinks it is going to happen this time around.

Markets. Looking at the NASDAQ as it relates to the McClellan Oscillator of the NASDAQ, when we get a spike in the Oscillator to a high point and it starts to roll over, the markets may be making slight highs, but the number of stocks participating in the rally is starting to fade. That usually means we are going to go into a consolidation or have some kind of a correction. NASDAQ has been the leader for about 6 months now and it’s rolling over, so we have to watch. We used to watch Apple (AAPL-Q) but now we watch Google (GOOG-Q) and it hasn’t made a new high in March and is starting to roll over. If that plays out, then we are in for 3%, 4% or 5% correction in the next little while. He was a buyer in late January, early February for his clients when we had the last 5%-6% dip and he thinks another one is coming. This last week was the five-year anniversary from the bottom. We’ve had 29 months now of a rally in the S&P 500 without a 10% correction. That is the 2^nd longest in the history of the markets so we are due for a 10%-20% so we have to watch things carefully as these divergences play out.

He is widely bullish for the next decade or 2 on uranium. Simply put, it is the single most efficient source of high-powered global energy and we need it. Reactors are coming on stream. You have Russia decommissioning of the nukes ending, supplies/demand balance is starting to improve. Likes the sector. It is going to be volatile. Japan is starting to turn on their reactors again.

Gold and silver had a decent bounce off the lows last year. Doesn’t think that either gold or silver are going to take off in a big way. Maybe there is scope for gold to pop above $1400 if the markets come unglued over the next 6 months. However, he still thinks we are range bound and you want to take a profit and sell into that rally. If we get a pullback in gold in the next month or 2 of $1300 or less, you want to nibble at it.

The big picture story for the next 5 years or so, supply is going to dwarf demand in oil and gas in North America. However, when you look at a stock like this that has been beaten up because of some of those reasons of weaker production prices in Canada, and you look at a five-year picture, what you are seeing in this and a lot of these focused here in Canada, you’ve got these big bases coming. In order to get relief there and have some of these start to break out, you need that supply/demand thing to start to turn around. Pipelines east and west, pipelines north and south, LNG distribution should bring better prices to Canada but it is still a few years off. The stocks are starting to respond so this is important to watch.

Copper has a good chance of breaking down through $3 and if it does, all these copper stocks are going to break heavily. You should watch the Copper ETF (COPX-N) which has a lot of copper names and if it starts to break be wary. This is a fine company, and what they do, they do very well. They are in a sector right now that he is not remotely interested in and may not be for years. Doesn’t feel demand in China is going to be there for a number of years. He is biased against having a full position in this company at this time.

Tradable but we haven’t made a long-term investment bottom because there are problems coming. It could take up to 3 years and could be an interesting place to invest. Europe is coming back, but it is not fixed by any stretch of the imagination. He feels that within the scope of the next 5 years, Spain breaks off from the euro. 28% unemployment, almost 60% unemployment for youth under 25. You can’t fix that and have them stay in the euro to his way of thinking.

Building out the infrastructure, pipelines and all those things, is a wonderful place to invest. Not early on this one. We are starting to see quite a decay. Five-year chart shows the last year has been weak. The best case scenario is that we find some support in the mid to low $70’s and we go sideways from there for a number of years. He would have on his radar for something you want to build a position in.

Markets. TSX has lagged its US counterparts, mostly because of resources. In that 5 year period, the oil sector, gold sector, silver sector and base metals have all underperformed. They are such an important part of the TSX that, when they do lousy, the TSX does lousy. They far outweigh their peers in the American indices. Doesn’t see this changing. We are not seeing any kind of inflation or upward price pressure on the commodities with the sporadic exception of oil at around $100. There is no global shortage developing in the important metals. Statistics out of China today certainly indicate that if we are expecting China to drive the resource sector forward, it is a little disappointing. With this, it is difficult to see commodity companies making great strides forwards.

Financials. Canadian financial services is a terrific industry as a group. We have an oligopoly and when you have this, they do not compete as hard as they might and everybody makes lots of money. In the most recent quarter, all the capital ratios and profit margins are very strong. We now have the best IPO season that we’ve had for 10 years and all of them are going to make a lot of money on investment banking. He likes the technology sector in the US as it is so difficult to find these in Canada. He does own 2 US banks, J.P. Morgan (JPM-N) and Goldman Sachs (GS-N), both of which are going to benefit tremendously from this big IPO boom.

Technology. He owns technology companies in the US, simply because it is so difficult to invest in that sector in Canada. He owns companies like Qualcomm (QCOM-Q), Apple (AAPL-Q) and Microsoft (MSFT-Q). There are no equivalents in Canada.

If you are going to own only one large cap energy company in Canada, it should probably be this one. You’ve got the vertical integration working for you. Nobody is building refineries. They’ve got retail outlets and, of course, a lot of production. Have a very long lived resource in the oil sands. Their production and efficiency keeps improving. Still attractively priced. The cloud hanging over the company is of course transportation. We have all learned that rail transport is not a great solution and pipelines are vastly to be preferred. That oil will get to market one way or another. He feels the fair value is in the mid-$40s. If there was a solution on the Keystone pipeline, that would help.

The Brookfield “system” has a number of different arms to it, infrastructure, energy and property. With the property, you get a lot of apartment buildings, a lot of commercial space and top-notch realty at that and very well managed. If you want to do real estate, you are probably better off with some of the Canadian REITs, which are trading at very attractive prices with very high current yields. In particular, he likes H&R (HR.UN-T) for industrial, RioCan (REI.UN-T) for retail and True North Apartments (TN.UN-T) for residential.

REITs. What we saw last May when the “taper caper” started and everybody was panicking about interest rates, the REITs also fell off very sharply, mostly around 15%. While some of the utilities and pipelines and other interest sensitives came back, we haven’t seen the REITs come back. They are still at the discounted price from last summer. Buy them now and you get the great yield plus probably capital appreciation.

Canadian REITs are trading at very attractive prices with very high current yields. In particular, he likes H&R (HR.UN-T) for industrial, RioCan (REI.UN-T) for retail and True North Apartments (TN.UN-T) for residential.