Today, Larry Berman CFA, CMT, CTA and Josef Schachter commented about whether PONY-T, SU-T, IMO-T, TVE-T, VET-T, TCW-T, TDG-T, PEY-T, CPG-T, BTE-T, SPE-T, CNQ-T, BIR-T, BNP-T, BXE-T, SDX-LN, IPO-T, PGF-T, HHL-T, ZWU-T, ABX-T, BAC-N, CNQ-T are stocks to buy or sell.
India ETFs. There are two he really likes. They trade in US$ so you have the currency risks. SCIF-N is a small ca play on India. This in where a lot of growth will be. INDA-N is another one he likes. Because of the time zone, there are liquidity problems resulting in wide spreads. He is looking to add on pull backs.
It is not his favourite but he has no issue with it. He is more of an ETF buyer. It is extremely overbought. The yield curve is flattening dramatically so the net interest margin is not going to be there for the banks. Toward the end of next year there is more market risk potential also. There is too much risk to step in at this level.
Gold stocks. It has been selling off recently. He backed up the truck in exposure to gold in the last dip. He can’t see it getting out of the trading range we have been in over the last couple of years: $1200-$1380. ZGD-T is the one he was buying. ZJG-T is junior golds. He has been buying on the weakness.
In a covered call strategy there are two factors for the distribution: Distribution of equities the ETF holds and premiums from the covered calls. There were no cuts in the stocks’ dividends but volatility shrunk so much this year that the premium from the covered call overlay is coming down and that is what brought the ETF’s distribution down. Don’t worry about it. We will see volatility pick up in the future.
Educational Segment. Forecasts for 2018. Looking back on 2017, he was looking for a disappointment, but the market has not been. He has been running portfolios very defensively. His global dividend strategy is almost 9%, which is not bad. He focuses on better risk adjusted returns. Should we step on the gas now with the US tax bill. No, 8 years into a bull market he will remain defensive. In the last couple of months we saw a dramatic downturn in the western Canadian select oil compared to WTI. Pipelines are not getting enough oil down to the US, so all of a sudden we can’t get enough our landlocked oil to Asia, due to a lack of east/west pipelines. Canada should underperform next year. The housing market and rising interest rates will start to cool, which was the biggest contributor to GDP. He does not think we get a recession next year. 2775 is his target for the S&P, a 4 to 6% return, and less for Canada. You should focus on dividend strategies for next year. He expects a 5-10% pull back next year. We are in for some bumpier markets in the next couple of years.
Market. He just turned more bullish on Natural gas. He has always said to buy on weakness. He finally went bullish. Tax loss selling ends this Friday. He thinks there will be more downside until then. When he was on Nov 9th, he cited specific companies that were down 30% on average. Natural gas is down 9% on Nynex on the year. On the year many gas stocks are down more than 50%. Everyone is taking a pessimistic approach to what natural gas is doing, but it has good draws this year. We are below inventory levels of last year, and below the 5 year average in terms of 5 year average. Inventories are now lower. You can’t give up on winter now. There is going to be more demand based just on LNG processing – it is about a 10% increase in demand in the last couple of years. He sees a 25% demand for our export of Natural Gas. Cold weather always helps and we benefit from it.
Market. They slipped some things into the US tax reform package at the last minute. Capping salt (state and local property tax and mortgage deductions) will impact markets like California. Most of the tax cost of the package is going to benefit corporations and the top 20% of earners. Over 10 years he understands they will pay more tax under $75k of income. It looks terrific now if you look at the numbers, however. Corporations won’t build more plant and equipment if they don’t see demand going up. He thinks people won’t get paid more.