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Earnings season has been good. No surprise, because they were beaten so down in recent months. But 8-10% earnings growth going forward? Really? The Fed says it won't raise rates, basically saying that the economy is pretty fragile. The quality of this market isn't great. The percentage of stocks making new 52-week highs is only 10% of the index, not 30-40% and not broad. It's common to see this low percentage late in the cycle. He thinks we're making a big top here, but markets could be grinding here because of liquidity. The FAANGs: MSFT blew the doors off their earnings report last week due to their strong cloud service. Intel has also made a new high, but fell 10% due to a miss in the topline and bottom line in their earnings report. So, it's been a mixed picture in tech and the US market. In the U.S. consumer sales are anemic and there's a massive build in inventories in Q1. We could see a zero quarter coming if sales don't pick up.

Is buying three low-vol ETFs--XMU, XMI and XMW with a long-term treasury bond--in a recession a good strategy? He likes that. We're late in the cycle perhaps facing contraction in the near future. A good stategy is low-vol, because these stocks are less sensitive to the economic cycle. It doesn't mean that these low-vol ETFs will go up, but they will be relatively stable. So, in a recession, consumer staples are a good buy, because--for example--people will stay in and cook rather than dine out.

20-30 years in the future he foresees no paper or coin, so cybersecurity will be big in the future (and today). But right now these stocks are volatile. We're late cycle, so you don't want to chase this as it makes new highs. Buying dips, sure.

This writes puts on these stocks a little below and market and generates a yield. It's very defensive, but risky, but better than holding cash. It's exposed to the US dollar. ZPW will give you decent yield.

He doesn't like the US banks this late in the cycle as the yield curve inverts. Banks are making less money and will face increasing challenges.

Bank stocks vs. utilities in terms of PE As people get older, they want a safer dividend, so more utility products are coming out in the market to meet that demand. Utilities are defensive. The PE on utilities have been pushed up much more than they otherwise would. They're expensive and therefore risky. Bank PE's are lower, because their income variability fluctuates more. Banks could lose billions in a down cycle. Risk-wise, he slightly prefers the dividend from utilities in this phase of the cycle.

Utilities aren't cheap, but this also includes telcos and pipelines. You get diversification across Canada and the U.S. This is pricey now and he wouldn't add here. Pays a 6.5% yield, so there's some safety. It's a defensive play and he really likes this.

Educational Segment. The trouble with U.S. monetary policy--too big and failing. Each week, he hears the question about not liking GICs or bonds, so can you recommend an ETF to give me a better yield. Bond yield have been pushed really low by central banks--and Trump wants them even lower. The average yield-to-maturity is 2.5%. The real return is zero worldwide. So, if you buy bonds, you will get nothing--inflation erodes your purchasing power. What will central banks do during the next downturn? How can they lower interest rates further? This makes it hard for the savers. Also, there's $265 trillion of debt across the world. What if interest rates rise 1%? So, there's been an astronomical transfer from the savers (retirees) to the corporations and governments through lower rates. This won't work going forward. What happens to the savings of retirees--and the world is rapidly aging?

We're at the end of a credit cycle as in 2000 and 2007: people have borrowed too much, some sectors overheated then the market corrects. 17 countries have yield-curve inversions, so supply and demand for credit are peaking. Equity markets are at all-time highs, but that attracts only more bullishness. A key indicator is margin debt. In 2000 and 2007, there were all-time highs in margin debt. We saw a similar pattern in margin debt in the late-2018 sell-off. Also similar to 2007, the US housing market was falling apart in the summer and equity markets made all-time highs in October. He fears the eventual outcome will be quite nasty. There's excess money-printing by central banks globally. Central banks, though, are being a little pro-active this cycle by raising rates last year, which is good. He thinks central banks will stabilize any correction. By doing this, maybe we'll see a 30% correction instead of 50%+ during 2008. Still painful, but we saw a 20% move in the past 6 months.

We had a short on it last fall. At the time, he thought the valuation was rich. They missed two straight quarters last year, but they are better shape now. He doesn't see much growth here in this sector. Also, there's lots of competition; they lost some bus contracts.

They buy mom and pop funeral homes and rolling this up. This just made their biggest acquisition and did an equity raise. He likes this, but he's cautious of any acqusition story at the end of a cycle. This is decent long-term.

He's shorting this. They missed a few quarters. Long-term this is interesting. As 5G builds up, they will benefit, because they supply the semi-conductor companies.

Energy has been such a slog with a hard regulatory environment. A change in our federal government would trigger a flood of foreign money into Canadian energy. Energy prices have been in the tank. He hasn't been buying energy.

He likes this long-term. It benefits from the secular shift from store retail to e-commerce. They have a good contract with Canada Post. It isn't cheap now, though. E-commerce is a tailwind.

Utilities are a good place to be in the late cycle. But Fortis is expensive here.