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

Markets. They were originally looking for 4 or 5 % increase in earnings quarter over quarter and now it is down to 2%. What we saw last week was the beginning of the 10% correction he was looking for. It will play out for the next month or two. This is a correction in a bull market. If the S&P falls 10, the NASDAQ could fall 20. Let’s look at this dip in the market as an opportunity to do some buying. Most people believe things are recovering.

The sell off that we are in now is specifically linked to the over valuation of the NASDAQ. The momentum money is coming out of the market.

Educational Segment. Why Earnings Estimates Are So Low. Warnings are a big game for the market. They put out guidance that they know they can beat just before releasing them. Telecoms and utilities are improving guidance slightly. We need to pay attention to materials and financials. He thinks the gains are going to be mitigated by slow earnings over the next couple of years. These corrections will be buying opportunities.

Markets. Iraq increased production in February. They still have more to bring online. We needed the extra capacity during those winter months, but now that we are in the shoulder season they need to cut back or there will be a glut. He is predicting a price decline. We have not yet seen a correction in the WTI yet. Nat Gas: now there is too little inventory. We should get through a normal winter with $5 gas, but if we have another cold winter, we could see spikes to $7-$8 in Nat Gas. Buy Nat Gas stocks in Q4 this year.

Nat. Gas Service Companies. There is going to be a better buying opportunity in the third quarter in this sector. In 2016/17 we will see the industry running at record rates.

Markets. Concentrates on the best picks on the long side and then pairs them on the companies that won’t grow as rapidly. He had a negative view on the Canadian dollar and shorted it and that worked out well. The high flying concept stocks were short and it worked out pretty well. The things he owns keep working out really, really well. It’s one of those perfect storms. He is not so much contrarian, but he wants to make sure he is thinking hard about why he is investing in things.

Markets. The reduction in the differential between oil prices has been one of the powerful positive trends in the Canadian oil and gas sector. LNG is a tremendous business opportunity and to exploit our Nat Gas reserves. But if they don’t go west they can go east or south. Technological changes are bringing down costs. It is exciting times.

Oil Price Spreads. It is all about transportation. We have difficulty shipping our oil to places that really need it. Rail cars started being used over the last couple of years and that made a huge difference to the spread.

Markets. Sees good upside for the markets going into 2015. Canada and emerging markets will improve 12 months out. Pure energy is 20% of the TSX and will do the heavy lifting.

Markets. We are set up for a balanced budget in 2015, which is ahead of most of the other countries in the G7. 2013 was wonderful with US up 30%. 2014 is still positive. Valuations are reasonable in the broad market with a few places where they are too high. There is volatility right now. The sell off today is a buying opportunity. He was carrying a little more cash coming out of 2013 than he usually would. He is considering Valiant as an addition.

Global Growth. Constructive on global growth. Sees signs, in the US in particular, that economic growth is going to be stable and improving. Looking for 4% or higher GDP growth in the US. Seeing signs of improvement in Europe, not just in Germany and some of the stronger regions, but in peripheral regions including Spain and Italy. That should lead to some coordinated growth. A question mark still remains in Asia, both in Japan and China. Japan has introduced a consumption tax increase, which may slow things down there creating all kinds of question marks. Because of the brutally cold winter, he is expecting a lot of pent-up demand in the US, which should drive GDP for a quarter or two.

Markets. Equity markets are looking fatigued. Stocks quite fully valued. Negative seasonal tendencies; Presidential cycle; But thinks at the end of the year we will be higher than we are today. Some growthier cyclical names are being bought. Prefers equities over bonds. Thinks economy will continue to move forward in the US. Industrials, tech, financials, consumer discretionary, cyclical areas, are good. Likes the US and Europe. 10 year bonds are now down to 6% in Greece.

Europe. Recovery is underway. Just like the rest of the world, growth is difficult, but it is at least on the bottom and seeing some positive momentum. Has been underpriced for a little while, which he likes. If things do decelerate a little bit, there is room to provide some quantitative easing. Banks are volatile, but he thinks they will do well. Also, the consumer space should do well as people get more disposable income. Automotive sector and industrials also do well.

China. This is always a difficult picture to properly paint for everyone, given the quality of the data. Things that can’t be hidden are institutions or companies that default on loans, or certain people going bankrupt. He is monitoring that situation to see how tight or how scary that area may be. There is a shadow banking system that is certainly going to impact the way business is done there. That might be unwinding as well. He is cautious because any type of easing, etc. that the government is trying to do; the growth rate is going to normalize and not accelerate. You are going to see slowing growth.

North America. Finds that US growth is tepid. Their financials have been struggling lately. He has been staying more towards the Canadian side. Energy, a late cyclical play, has been working. A lot of energy stocks, in Canada in particular, have been working extremely well. Likes the gas trade a little bit better than oil.