Geopolitical disruption caused an increase in oil price which helped support the TSX as it outperformed its US counterpart which saw a small loss this week. (fourth straight week).
The market is focused on the Chinese US trade discussion (note: I didn’t say war). We are not initiating any major trades we are taking advantage of the volatility by adding to our current positions on pull backs.
This week we made a small addition to our Oil exposure.
In the Enhanced Yield portfolio we decided to get out of Bombardier. After a poor quarter plus the World Bank accusing the company of corruption we no longer believe that the company is turning the corner upward. We used the proceeds to buy a one year preferred share which is paying close to 5%. We also added to our Encana position.
It is different for Everyone.
The positive trend created by last weeks strong economic numbers was quickly reversed when President Trump tweeted on Sunday that the trade tariff would be increased as of 12 midnight this morning. As no trade deal was agreed upon the tariffs were implemented. Will there eventually be a deal, we think so but the market does not like the uncertainty. We have been promoting that equity exposure should be increased on pull backs. Pull backs are created by this type of event so we see this as an opportunity. For those with equity exposure, do not sell into this.
In the Enhanced Yield Portfolio we added to our Precision Drilling and the US Bank Covered Call ETF positions on weakness. We also sold the following covered calls: