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

European central banks easing again. Easier for banks to lend money over there. The US economy is a better place to be than in Europe. European growth is much more sluggish than US. Though US growth is slowing, it is still growing. Plus, the US consumer is healthier.

TSX flirted with a new high. Sentiment is more positive on trade. The US index is also within spitting distance of a new high. The market reacts positively or negatively, depending on trade news. Expect more volatility until things get resolved. Try to ignore all the noise. The US economy is not as strong as earlier, but the good thing for the US and Canada is that we're seeing consumer spending kick in.

Bond market's wild ride. It has whipsawed, but it has come back from last year. Conveys slower growth. Cash flow is coming into the US from elsewhere, because of negative interest rates abroad, and this drives down US bond yields.

BOC saying we can go it alone on interest rates. Not sure we can do this, as Canada's economy is very tied to the US. BOC is aware of trade tensions. We've seen stronger than expected GDP number in Canada. Employment here is still pretty good.

Sell US banks and move into credit cards, or is there more runway? The banks have had a good rally. May want to lighten up a bit if you have really high exposure. Yield curve steepening is good for banks. If Fed cuts, impacts the front of the curve and so the curve looks better. Keep JP Morgan, which she owns. Whether to double down on Mastercard if you already own Visa, depends how much exposure you want. Also consider diversifying into something totally different.

After recent volatility, can investors now be complacent? No. Whether it's political or trade related. Be aware, but don't get caught up in the noise. Consider how events impact the underlying economy and corporate profits.

Market Outlook If you look at the index levels, things look like they are improving. Under the surface, however, there has been an extreme "rotation" -- a five standard deviation move between momentum into value stocks. Unloved stocks are getting bought up, while strong steady performers are being sold. Monday was the highlight, but it may become a trend going forward. He thinks hedge funds are reducing exposures, so this means covering short hedges. Share buybacks are happening in the market as well. There are three weeks of really solid buying he thinks. Then the markets will return to being influenced by trade talks and politics.

High income ETFs? If you are looking for income, be careful. There are a lot of components in the basket that you might not want to own. You are better to look at the sectors and themes you like and look for high yields there. XLRE-N is a high yield ETF in the real estate sector (3.5% yield), for example. The quality of the holding is more important as you want to preserve your capital.

August bruising, calmer in September? Yes, tough in August. Now 1% away from hitting all-time highs on the S&P. Under the surface, rotation away from growth into value. Not sure if it will hold or not. He's in the camp of since interest rates are low, growth is the place to be over value.

Central banks holding steady. Yes, and this bodes well for growth. Interest rates hit a bit of a bottom earlier this week, and the trade moved away from momentum. This is short-lived. Too soon to push the button on the value trade at this point.

Trump calling on the Fed to lower rates. Consensus growth is not too far from the zero line. If US-China trade gets resolved soon, the economy will grind along. It'll push the economy from a 123-month expansion to even longer.

Asset allocation right now. Overweight US equities compared to Canada. US is a bigger sandbox to play in, and the economy is on a firmer footing. No exposure to Europe. Little exposure to Asia-Pacific, but now neutral on that, awaiting outcome of trade discussions. With passive investing, there is some risk if you're too exposed, as eventually you'll want to turn away from those growthier companies at the top.

Is energy having such a tough time because prices are driven internationally? Yes, but there are also pipeline issues in Canada. XLE in the US has started to move up a bit, but he doesn't think it's sustainable.

Seeking value without questioning the P/E. Important to also look at the macro-economic cycle. Recently, banks and US energy have started to move higher. But he asks where we are in the cycle. Those aren't your usual names to move higher at this point. You really want to look at sector and where we are in the cycle.

Canadian ETF that holds only big US tech companies? No, not one in Canadian dollars. There are NASDAQ 100 ETFs that hold tech as well as consumer services and biotech. BMO has ZNQ and ZQQ. Horizons has HXQ. And iShares has XQQ.