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

Gold. The story is about real interest rates. As the nominal yields go down, it signifies slower economy. Then there is a real aspect, which is the inflation side. The real driving factor is negative real yield. In the last couple months, nominal yields have been rising and inflation expectations have not kept up. Real inflation has been rising and has been a knock against gold. With additional debt, governments need negative real yields. Bitcoin has also taken away money that would have gone to gold bullion.

Educational Segment. There is a lot of talk about interest rates going up. According to the congressional budget office, 86% of ever tax dollar goes towards mandatory costs in 2021. The deficits are getting worse. The percentage of interest cost as percentage of GDP is 1.38%. In 2031, it will be 2.43%. The central banks are buying the debt and monetizing. This will be a permanent feature. When inflation comes up, it will put stress on the system. Central banks cannot have higher interest rates.

Bond yields. You gotta think about levels and rate of change. Bond yields are moving up, and this is validation that the economy is showing broad based recovery. At these levels, bonds are not competing for capital compared to stocks.

Promising sectors. It is a target rich environment. Positioning for economic recovery and their Canadian portfolio is over-weight in basic materials, metals, financials, and consumer discretionary stocks. Success in 2021 will hinge on what stocks are chosen not to own.

Canadian banks. There is value in the Canadian banks. They are great businesses in a well-managed oligopoly. Specifically this year, they offer good value and wealth management will see tailwind. Their net interest margins are still under pressure, but they should get back by end of this year.

Gold. Bullish on gold. The cycle is still on. A weaker US dollar is usually a good thing for gold.

An unemployment number was just right--enough to inspire a rally in tech as well as reopening stocks. It's been confusing for bond traders/investors. If we're hearing toward a boom, why do we need stimulus aid? The Fed won't raise rates soon; this recovering is in the early innings and still vulnerable. It feels like late-2015 to early-2016 when Janet Yellen raised rates which crushed stocks. He fears that will happen again, though Powell assures he won't raise rates soon. We're not out of the woods. He projects that good economic news will trigger dumping of bonds and raising interest rates, but weak economic data will reverse that. If oil keeps rising, then rates will rise higher and hurt tech stocks. Be prepared for choppiness next week. Lighten up on SPACs so you have cash.

OPEC planning to keep oil production flat through April. The issue is the Saudis don't want to cause the price to collapse. They're doing the right thing by keeping oil stable at these levels. Have to be careful, because if price gets substantially above $70-75, shale will come back on production. It's a fine line. Need to reassess in April. Oil would have to get substantially above $100 to negatively impact the global recovery.

Energy strategy right now. He owns CNQ as best in breed. Has executed incredibly well in its history. Also owns ENB, as an infrastructure play. These stocks got so cheap last year with the drop in the oil price.

Dividend strategy. People get confused about the dividend. It's not having a high dividend that matters. That could be because the stock price has fallen, or it could signal the dividend will have to be cut because the company can't afford it. A growing dividend is what drives stock prices. Whether a company consistently grows its dividend is a better methodology for looking at dividend-paying stocks. Gives you a nice yield over time, as well as a price that appreciates in value.

In 5 years time, what will we say about this pandemic? No one saw what was coming. Governments have stepped up in a phenomenal way. Hopefully we'll have a vaccine shortly. We may look back and say it wasn't as bad as it seemed. But there has been a lot of human carnage. Not sure how history will judge.

How are you playing the market? We are in a cyclical rotation. Anything to do with the vaccine saw outrageous growth, and this wasn't sustainable. A recovery is on its way. Capital is flying to the undervalued areas such as telcos. As long as the vaccine recovery process continues, we'll see more of that.

Any undervalued regions? Asia. Investors fled the region as a result of Trump bashing it. But it's the fastest growing region in the world. It's recovered the best. UK and the US will see some upside as well, though probably not the tech stocks, but more of a broad recovery.