We are very pleased to send you our monthly financial newsletter to keep you abreast of financial markets and world economy. We hope that you will enjoy reading these articles. As always, we welcome your comments and questions.


Our Internal Research Team just released their new Quarterly Market Outlook. To read the report, click here




Team Beauregard Farina Tourangeau

1250 boul. René-Lévesque West

Suite 1500

Montréal, QC

H3B 4W8

Markets Returns

Value as of

May 30 2015*


Year to date




4.0 %

7.4 %

S&P 500


1.3 %

11.4 %

Euro Stoxx 50 


14.9 %

1.2 %

MCSI emerging markets


9.6 %

-4.6 %

Oil ($US/Barrel)

$ 59.63

7.2 %

-41.6 %

Gold ($US/oz)

$ 1,182

-0.3 %

-1.9 %


$ 0.83

-3.4 %

-8.5 %

Source : Bloomberg, Richardson GMP Limited

*Values are in local currency

Investment Strategies  

Why on earth investors would want to own bond?

There are areas of the market that seem to have better potential than the plain vanilla government bond market - an asset class that in the past offered risk-free rewards and today simply provides reward-free risk. If you're buying bonds at today's puny yield levels, you are speculating on capital appreciation from even more microscopic rates to generate your total return.

This is not the bond market of past years or decades when it was the coupon that was alluring. Today it is the capital gain, which was responsible for almost 90% of the total return at the long end of the government bond curve last year. Flipped on its head, this tells you that the income component is becoming less of the core in the bond market's total return and more so in the stock market


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Tax & Estate Planning Strategies 
Take advantage of the new TFSA contribution limit of $10,000

The recently introduced Federal Budget for 2015 includes an increase to the Tax-Free Savings Account (TFSA) contribution limit from $5,500 to $10,000 per year. The Canada Revenue Agency is allowing this new change to be effective immediately


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In the news                                     

Upturn in global growth?

The global economy, in aggregate, has been a bit of a disappointment during the past few years. After the big recession (2008/09), we experienced strong global growth but this slowed during 2012-2014 averaging a paltry 2.1%. All were to blame to varying degrees and time periods from the U.S., Europe, Japan and developing economies. But we may be on the verge of an uptick in global GDP growth and that has some big implications.


If the global economy is improving, that certainly has some positive implications for the TSX. While certainly diversified, our market still has a very healthy (or sometimes unhealthy) resource weighting.



Europe is the market to watch

In the U.S., the market overall is definitely richly priced with a 17x forward price-to-earnings multiple, but there are better valuations in many markets abroad and the difference between those regions and the U.S. - beyond lower price-earnings multiples - is that they are still receiving doses of monetary stimulus and benefiting from the tailwind of much more competitive currencies.


Earnings revisions are on the rise in the euro area, and the eurozone market trades at just a 15x P/E multiple with a near-4% dividend yield at a time when bond yields are close to zero or, in some cases, even negative out to the mid parts of the curve. And we still have the quantitative-easing program starting in the euro area in March. The history of QE in terms of its impact on the economy can be debated, but there is no debate about the impact it has on portfolio rebalancing and on investor behaviour.


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Investment trends to watch

Monetary policy divergence is driving market volatility. The mass injection of liquidity into the market since the financial crisis has pushed equity valuations to expensive levels. Typically, countries adjust to lower-growth environments by combining fiscal stimulus and monetary easing. This time, however, global demand slowdowns have put an outsized burden on monetary policy, as well as driven countries to fight for export share through lower currencies. Investors may also want to reconsider currency exposure, hedging foreign exposure back to the U.S. dollar. 


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Eddy Farina, Fin. Pl., CIM
Senior Vice President, Investment Advisor

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The opinions expressed in this report are the opinions of the author and readers should not assume they reflect the opinions or recommendations of Richardson GMP Limited or its affiliates. Assumptions, opinions and estimates constitute our judgment as of the date of this material and are subject to change without notice. We do not warrant the completeness or accuracy of this material, and it should not be relied upon as such. Before acting on any recommendation, you should consider whether it is suitable for your particular circumstances and, if necessary, seek professional advice. Past performance is not indicative of future results.   

Richardson GMP Limited, Member CIPF

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