A Comment -- General Comments From an Expert (A Commentary)

Weak employment numbers today, but the market reacted tepidly She wasn't surprised by today's non-reaction by markets, given the inflationary environment. Megacap stocks benefit on days like this. Employment remains weak for African-Americans.

Japan is rallying to a 30-year high after their PM resigns He feels this is the most important story in markets now. For 30 years there's been a trade where you borrow Japanese yen and use it to get US dollars and buy US stocks. This is why the USD-Yen is strongly correlated to the S&P 500. Every bank and company in Japan is taking money from Japan and investing in the U.S. because they can't get a return in Japan. BUT with the PM resigning and the potential for more stimulus in Japan that'll put money into people's pockets, the Japanese stock market should take off now after basing for the last 30 years. This is huge, because all of those flows over the past 30 years COULD reverse and it will hit every asset class. Remember, Japan is one of the biggest buyers of U.S. treasuries. So everything in the last decade could be upended. Any party will likely issue stimulus during an election.

Disappointing employment numbers today and the tepid market response He was surprised by today's reaction to disappointing employment numbers, but it places Jay Powell in a shining light who is holding rates until employment rises. He supports Powell in holding these rates.

Markets shrugged off today's disappointing jobs numbers The market is digesting today's numbers without getting shocked. Bad economic news is good news for the marketplace. It's healthy today that the market was not shocked. Maybe we're still in a sweet spot, but he's less optimistic and feels September will see a 5-7% pullback. Overall, stay the course in the market. Investors are getting complacent. Weaker job numbers increases the odds of more government stimulus. Also, bond yields rose today, which makes stocks a tiny bit less attractive. He's a little skeptical about fall seasonality.

Markets this time of year. Lots of cross currents. "Sell in May, go away" didn't happen. September and October can be dramatic. Lots of analogies to 1929 are flying around. He's seeing markets continue to hit all-time highs, especially with the large caps. Tech in the US and large caps have done well in last 4-5 months, moving the TSX and broader indices to all-time highs. Now seeing a rotation, where small and mid-caps had been consolidating, but more of them now starting to perform. Many are just on the cusp of starting to take leadership positions away from the large caps.

M&A in cannabis space. There has been lots of recent activity. Interesting, given that price performance this year hasn't been strong. The sector still looks more exciting than it ever has.

Markets on a sugar high? You could claim that almost every asset is in a bubble. The system is awash with cash. Economy needs a lot of momentum before the Fed and BoC start withdrawing liquidity. A 0% interest rate distorts asset prices and everything is going up aggressively.

Any stable place in the market? He tends to be more value based and looks for a consistent dividend. The energy patch is hated, but it has a yield, and profits and free cashflow are fantastic. The sector is ripe for a re-rating. Manufacturing and production costs were cut, and they now have a good profit margin with the cost of oil.

Bonds. Bond market is almost uninvestible, but you should allocate a portion of your portfolio to it. Focus on short corporate credit, under 3 years. No long credit securities. He also has a position in real return bonds. See his Top Picks today.

Sell banks to capture capital gain? The bigger question is what is your view on the banking sector. You always have to own some of the banks, as they're such a large part of the economy and the index. You need to compare tailwinds and headwinds. Bank earnings were, for the most part, just phenomenal. Tailwinds include Liberals' proposed tax and low interest rates. Cooling in the housing market would affect income from mortgages. As a sector, he thinks they've gone a long way so he's not that excited about them. He'd be cautious on financials.

Preferred shares. Hit hard last year. Doesn't love them, as there's a risk rates will go down. Problem is we're expecting rates to go up, with rate resets, but rates keep going down, with a chance they could go negative in the next couple of years. Indebtedness will slow the economy down, and there's a risk of recession. They are tax advantaged, but don't think of them as fixed income, as the fixed income part of your portfolio should not go down 30-40%. Better to look at perpetual preferreds instead.

USD outlook It is THE most important chart, especially when the Fed is in play. June 2014 into mid 2015 saw a 25% move in the USD and it destroyed some asset classes, though okay for equities. What will the USD when the Fed offers more direction? The USD is correlated with volatility.