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WELCOME,
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.
Is it safe to come out now? That is what our Research Department answers in their latest quartely outlook. To read the full research report, click here
Enjoy your reading!
Team Beauregard Farina Tourangeau
1250 René-Lévesque Blvd. West
Suite 1500
Montréal, QC
H3B 4W8
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Market Returns
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Value as of
May 31st 2016*
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2016
Year to date
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2015
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S&P / TSX
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14,066
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8.1 %
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-11,1 %
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S&P 500
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2,097
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2.6 %
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-0,7 %
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Euro Stoxx 50
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3,063
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-6.2 %
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3,8 %
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MCSI emerging markets
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807
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1.7 %
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-17,0 %
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Oil ($US/Barrel)
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$ 49.10
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18.8 %
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-38,8 %
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Gold ($US/oz)
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$ 1,218
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14.6 %
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-10,8 %
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$CAD / $USD
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$ 0.77
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6.3 %
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-16,5 %
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Source : Bloomberg, Richardson GMP Limited
*Values are in local currency
For an updated performance table, please contact us.
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Investment Strategies
Canadian Banks
First the oil and gas sector was at the forefront. It was only a matter of time before banks started to accelerate provisions taken for bad loans in this sector due to the decline in underlying energy prices since mid-2014. More importantly, the action taken by the banks was expected and therefore did not come as a surprise.
In fact, based on the share price responses to the earnings, one could conclude that the increased provisions/impaired loans were in line or even better than expected in some cases. That is not to say that the banks are in the clear when it comes to their resource related loan portfolios, but it does signal that risk is manageable at this point in time.
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Tax & Estate Planning Strategies
How to spend the $750 billion Canadians are about to pass to the next generation
It will be the largest transfer of wealth in our history, but what will Canadians do with the $750 billion that's about to fall into their laps over the next decade? It's a 50 per cent jump from the $500 billion passed on during the previous decade, even after being adjusted for inflation.
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In the news
This dynamic is wildly bullish
Many investors and strategists see the market as potentially overextended and set to suffer from a possible rate hike, but it is the very prevalence of such views that have other strategists licking their chops. There may be sense to going against the crowd in investing. The theory goes something like this: At times when many are bullish, there is little money left to be added to the equity market, and bullish news will be expected while bearish news will shock; at times when many are bearish, the opposite is true. There is a lot of dry powder on the sidelines right now that is eventually going to step up and get into this market.
Of course, this doesn't mean the bears don't have salient points. The growing likelihood of an imminent Fed rate increase and more elevated U.S. valuations warrant short-term caution.
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When buy-and-hold portoflios aren't enough
Most investors remained calm during recent sell-offs in global equity markets. Waiting to get a better read on opportunities can be a smart move. After all, over the last 50 years, the average rate of return for buying, holding and reinvesting the dividends of the S&P/TSX Composite Index was 9.7%. But when markets dipped and peaked over that period, there were opportunities to adjust portfolios.
Many experts think buying and holding never makes sense in the midst of volatility.
But, when an investor leaves the market, the question becomes whether he can get back in when markets gap higher. There are ways to mitigate risk in the short term. This includes sitting on a bit of cash or choosing to get out of one sector completely to more heavily weight another.
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How should investors look at the U.S. presidential election?
Trump adds uncertainty to the markets because you don't know exactly what he is going to do. From a trade perspective, all the talk about Mexico and China is going to cause problems for multinationals. So I think you'll see money flowing out of the U.S. if Trump wins, which means a potential decline in the U.S. dollar. If Hillary Clinton wins, markets might like that better because they know her a bit more. She probably won't do anything outrageous, but then again, from a corporate perspective, she wants to increase minimum wages, which is not good for profits.
But at the end of the day, you really don't have a lot of power to change the direction of U.S. policy as president. There is a lot of talk and headlines, but in order to execute on what Trump is talking about, is going to be really hard.
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Eddy Farina, Fin. Pl., CIM
®
Senior Vice President, Investment Advisor 514.981.5727
" Perfection is not attainable, but if we chase perfection
we can catch excellence "
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514.981.5727 |
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Richardson GMP embraces fiduciary excellence. Read more
DISCLAIMER
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 the author's 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. The comments contained herein are general in nature and are not intended to be, nor should be construed to be, legal or tax advice to any particular individual. Accordingly, individuals should consult their own legal or tax advisors for advice with respect to the tax consequences to them, having regard to their own particular circumstances. Insurance services are offered through Richardson GMP Insurance Services Limited in BC, AB, SK, MB, NWT, ON, QC,NB,NS,PEI and NL. Additional administrative support and policy management are provided by PPI Partners. Richardson GMP Limited is a member of Canadian Investor Protection Fund. Richardson is a trade-mark of James Richardson & Sons Limited. GMP is a registered trade-mark of GMP Securities L.P. Both used under license by Richardson GMP Limited.
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