Perception that global growth is slowing. There will be a recession, he just doesn't know when. Looks like global economy has peaked. Debt levels are at record highs. Feds have taken a breather and given markets a boost. Policy makers don't have a lot of arrows in the quiver now. He never tries to guess where the economy is going, there are too many permutations and combinations.

Yield curve inverting. He doesn't like to say because of A, then B will happen. Bond markets have already reacted by knocking rates down. Who knows if yield curve will stay inverted for a long time. Globally, investors aren't afraid to buy Spanish and Greek low-interest credits anymore. German yields are 0 or negative, so the idea is just to not take on any risk. We don't see deflation around the corner.

US high-yield bonds. For US high-yield bonds, he hedges the currency. No sense buying a US high-yield bond fund, if the CAD rises from the 75 cent level. There is a US high-yield bond ETF that hedges the currency so you don't get burned. Do not buy US bonds unless you're going to have a currency hedge.

He isn't spooked by the inverted yield curve, given his long experience. He remembers Paul Volker who induced the 1981/2 recession when the prime rate hit 22.5% and the 10-year bond yielded 14%--a much-higher yield curve than today. The inversion now at 2.3% is a lot different. The US Fed raised short rates too far, too fast in December and took its foot off the gas selling longer-dated securities. It had continued, that 10-year yield would be 50-100 points higher. So, the inverstion is caused by regulation: on the long end by stopping selling bonds; on the short end by forcing up the Fed's funds rate. Now, we've never seen a recession with interest rates this low for so long, though it could still happen....Canadian banks go up and down like any stock and shorting is an investor's right, but our banks are nothing like the ones in America during the Recession. Defaults from consumer debt are still low. The dividend rates on the banks put a floor on the stock prices, and it's unlikely any bank will cut their yield.