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Market. Regarding China vs. the US on trade negotiations we have no resolution. The theft of intellectual property is at the core of this. The Chinese got an extension and everyone is celebrating. This is probably going to become a big issue again. This is going to be a hard issue to solve. He does not see a solution. He hopes they are smart about this. We will see how all this plays out three months from now. The Saudis and Russia have agreed to extend but not on size. Don't look for a big rally here, just stabilization. The bottom line is to fix the problem with pipelines and capacity for refining.
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When to get defensive. No one knows when we will get into recession. We are late in the cycle and the yield curve is flattening. Once it inverts, the market will peak in about 6 months or so of that inversion. There is not a perfect inversion.
DON'T BUY
Why was it hit so hard and will it recover to $50? A phenomenal growth story that probably still has years to go. When a huge growth stock becomes a mature company and there are questions about the growth, the multiple will contract. We are probably in that phase with this one. Don’t play it for much more than a bounce at the $40ish level.
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ETFs that achieve diversification – how to compliment it with other investments. If you put a Euro ETF and a US ETF together, you have geographic diversity but they go up and down together. You are not getting diversification of asset classes. You need bonds, REITs, utilities, commodities and so on. That's where you get your maximum diversification. See his road show.
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ETF providers have their version of monthly yields, focused on high dividends and so on. When the yield is higher than everything in the ETF, you are getting some of your capital back.
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Educational Segment. David Rosenberg is his favouite economist on the planet and was his guest today. He is a forensic economist. He focuses on the yield curve. We have seen that the yield curve did not invert in two countries recently and yet they have gone into recession. It is the general increase of interest rates in the most indebted countries in the world that could tip it into a recession. The recession odds are one in three right now. Catalysts around recession are around trade. Since Trump put tariffs on goods, the markets are really down. His guest feels it is all about the FED. A global recession will be caused by liquidity. We will have massive fiscal policy withdrawal next year. When interest rates rise, the impact is down the road. We are transitioning away from the long term bull market.
BUY
It is the pipeline sector in the US. The yield is north of 8%. He likes it. He accumulated a lot of it under $11. It is now very attractive down here. There is not huge growth here. It will just trade in a range. The yield is very sustainable.
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STPL and DISC are ETFs of global consumer stocks. Cyclicals do better when the economy is booming. Staples do better when the economic cycle turns down.
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Market. The WTI oil price increased. We will see if this lasts more than a few weeks or days. The correction was long overdue. The volatility we saw was caused to a large part by automated trading and panic selling in the retail market. We have tax loss selling season coming, in addition to current market weakness. He does not like E&P companies but likes mid-streamers. You want to be the toll collector in the commodity business.
DON'T BUY
It is too expensive for his style. He questions if the new business of advancing funds, if this money is not being used to pay fees to Shopify. You have to keep your eye on that. There is good growth but what are you paying for that growth. These kinds of companies can come off dramatically.
SELL
They do canola mainly. At these prices the stock is so cheap. He sold because he was not seeing enough capital being deployed in Canola streams.
STRONG BUY
It is one of Canada's leading meal kit companies. Last quarter they came in ahead of top line revenue growth. They improved gross margins, better than the grocery industry. There is no wastage of food. This morning's subscriber numbers blew him out of the water. He is really, really happy. Someone might make an offer for them.
BUY
It is a new position he put on this year. New orders took a lot longer to gather for this company. He thinks they have a winning bus that will meet the right-sizing of transit in the US. He thinks it will be much better next year. They are suffering from tax-loss selling.
STRONG BUY
His second biggest position. They made a few acquisitions that position them in all the sectors of wireless antennas. They will have huge potential over the next 20 years. Their sales are booming overseas as developing countries catch up. He expects double digit growth next year.
DON'T BUY
It is a tough call at this stage. They made a pretty bad acquisition in California that is really taking them down. There are better opportunities out there. He prefers KEY-T.