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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.


Enjoy your reading!

 

Team Beauregard Farina Tourangeau

1250 René-Lévesque Blvd. West

Suite 1500

Montréal, QC

H3B 4W8

Market Returns
              

Value as of

June 30 2016*

2016

Year to date

2015

S&P / TSX

14,065

8.1 %

-11,1 %

S&P 500

2,099

2.7 %

-0,7 %

Euro Stoxx 50 

2,865

-12.3 %

3,8 %

MCSI emerging markets

834

2.4 %

-17,0 %

Oil ($US/Barrel)

$ 48.33

15.4 %

-38,8 %

Gold ($US/oz)

$ 1,321

24.3 %

-10,8 %

$CAD / $USD

$ 0.77

7.2 %

-16,5 %

Source : Bloomberg, Richardson GMP Limited

*Values are in local currency

 

For an updated performance table, please contact us.

Investment Strategies  

It's not me, it's you
The referendum in the UK narrowly went the way of Brexit, setting in motion what will be a multi-year ordeal that will likely end with the UK no longer a member of the European Union. As this was a big surprise, we have a dramatic risk-off trading environment at the moment. So what does it mean now or in the future? To be honest, it is way too early and there are likely many different scenarios that could play out.

There is going to be a long lag between this vote and the actual Brexit. Operationally, leaving the EU is a relatively easy process for the UK and would take about two years based on how the structure works. We have been writing about a hot June for a month now given all the potentially market moving events. Brexit certainly turned out to be the big one impacting the market today. Brexit itself was never the big fear, it is the knock-on effects.
 
  
Tax & Estate Planning Strategies 
 
Cash damming
Cash damming is a technique that lets you deduct the interest on a mortgage loan from your taxable income. This technique is for self-employed workers, unincorporated workers, rental building owners and members of a general partnership. When these individuals borrow for business purposes and the money they borrow generates either business income or rental income, the interest on the loan is tax deductible.

Simply structuring your loans appropriately will make the interest tax deductible, including interest on a personal residential mortgage.
 
In the news                                     

It was a great media ride, but Brexit is no market killer
That was fast. The Financial Times 100 index of major British companies jumped 3.5 per cent Wednesday before closing above its level before the Brexit vote. As Winston Churchill might say, "Some crash, some crisis." All these movements over the past few days must be seen against a larger five-year economic and statistical context. The EuroStoxx 600, for example, has been in the doldrums since last July. At one point the index had fallen 25 per cent to the 300 level. At 356 Wednesday, the index is nicely above its one-year low - despite Brexit.

The real future of the markets and global economic trends is in the hands of politicians. The Brexit vote itself did not produce the anticipated financial carnage, mainly because the crisis is a political one and not an economic one.
  
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Housing crash? No problem for Canada's banks
If home prices across Canada dropped 25%, and if hot markets in Ontario and British Columbia saw an additional 10% dip, total direct losses for the banking system would reach almost $18 billion, says Moody's in a new report. But the banks would be able to generate internal capital to cover those losses within several quarters, the ratings agency adds. As such, Canadian banks could weather the effects of a severe housing crisis despite soaring home prices and household debt levels.

But the banks would be able to generate internal capital to cover those losses within several quarters, the ratings agency adds. As such, Canadian banks could weather the effects of a severe housing crisis despite soaring home prices and household debt levels. Moody's says the negative impacts of a housing downturn in Canada would be reduced due to a number of factors that differentiate Canada from U.S. mortgage markets.

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Don't let Fed meetings rattler long-term focus
The Federal Reserve made no move on rates today, in line with market expectations. The Federal Open Market Committee cited diminished employment gains and soft business investment numbers as key factors in its decision. We came into the year with the Fed telling us four hikes; and then it changed to two hikes, and now it looks like we might not even get one hike at all this year.

Investors shouldn't let the "roller coaster ride" of rate hike expectations rattle their focus on medium- to longer-term signals. These short-term changes in expectations really speak to the need for a disciplined and consistent process. It's very difficult to get shorter-term signals correct.

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Eddy Farina, Fin. Pl., CIM
®
Senior Vice President, Investment Advisor
514.981.5727
 

" The stock market is the story of cycles and of the human behaviour that is responsible for overractions in both directions. "
 
- Seth Klarman

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514.981.5727
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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.