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

Market. With the end of September and into October, the pullback in the NASDAQ became a real correction. The ingredients are not there for a full-fledged bear plunge. He still sees the making for new highs yet be made – but it may take a while. The big trends in technology are 5G deployment and creating “Digital Twins”, data analytics towards AI, and electrification and digitization of technology (like auto-drive technology).

Market. The German chancellor resigned. He has been saying Europe has been fragile for years. The real story is that even when we went through the Greek crisis 6-8 years ago, we are now going through the Italian version and he thinks it will be ugly. It is a question of who is going to write a question the next time it is necessary. This is the beginning of the unwinding of the strength of the European block. Interestingly the markets are up today. This is going to get worse before it gets better. He sees 2020 as the biggest recessionary risk. This is a trade at best. As we get close to mid-term US elections, uncertainty reduces and the markets like that. He thinks the market highs might be in and we might be building a top over the next year.

ETF to short the market. Horizons have the ones in Canada that go inverse, but don’t use leveraged if you want to hold for some time. Shorting S&P vs. shorting specific stocks has not done much better.

Educational Segment. The funding market – The Euro market call. Euro dollars are financial markets linked to the libor market. All the banks in the world participate in it. The Euro dollar still goes out 10 years. Each contract is a three month interest rate. It is a series of three month interest rates that equate to the year. The curve graphs a year, a month and a day ago tell us that the yield curve is starting to change. 2020-2021, rates are expected to be slightly lower in Europe. This is where we have to worry – when we get the inverted yield curve a year out. In history the average correction in recessions is 29%. We are starting to see late cycle behavior.