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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.
Our Research Team released last month their last quarterly outlook. To read the full 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
Aug. 31 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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14,598
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12.2 %
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-11,1 %
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S&P 500
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2,171
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6.2 %
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-0,7 %
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Euro Stoxx 50
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3,023
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-7.5 %
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3,8 %
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MCSI emerging markets
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894
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12.5 %
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-17,0 %
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Oil ($US/Barrel)
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$ 44.70
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5.4 %
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-38,8 %
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Gold ($US/oz)
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$ 1,311
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23.2 %
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-10,8 %
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$CAD / $USD
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$ 0.77
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7.6 %
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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
Careful how much you pay
The two best performing sectors of the S&P 500 so far this year are Telecom and Utilities. In Canada, these sectors have done very well too, only trailing the recovery in Materials and Energy. Of course this flight to high-yielding stocks, such as those found in the Telecom and Utilities sectors, is primarily in response to bond yields dropping to all-time lows. A 1% yield on a 10-year Canada government bond certainly makes dividend paying equities more valuable as more investors reach for yield in the equity markets. However, the rise in prices of 'bond proxies' has come largely from multiple expansion as earnings growth has been tepid. And this comes with risks.
The chart on the right (click here) breaks down the year-to-date returns of U.S. Utilities and Telcos as well as Canadian Utilities, Telcos and REITs. All these sectors are up about 20% so far this year and almost all of these gains have come from multiple expansion.
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Tax & Estate Planning Strategies
Best way to pass on the family cottage
Several factors can influence the transfer of the family cottage. Before deciding to transfer ownership to the children, we must consider how inheriting the cottage will affect them.
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In the news
Global bond rally starting to buckle
Japan's sovereign debt is suffering its worst rout in 13 years, handing investors biggest losses over the past two months than any other government bonds amid speculation the Bank of Japan plans to change its asset-purchase strategy. The impact of the BOJ's stimulus is that the bond markets worldwide are becoming one market. This is a big, big moment. Interest rates have bottomed. They may not rise in the near term as we've talked about for years but it's the beginning of something and you're supposed to be defensive.
All this comes after the BOJ's decision to introduce a negative deposit rate in January accelerated a plunge in yields. That spurred a rush among Japanese investors to seek income in bonds abroad - flows that have now started to dry up. Money flows across borders. It's all linked.
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September could be huge for markets all around the world
The first debate of the U.S. presidential campaign. A Group of 20 (G20) central bank interest rate announcement nearly every other trading day. And a key meeting among commodity nations around the world. With a jam-packed calendar in September, no asset class is immune from potential event risk. That's not to mention that the month has typically been the worst one for stocks - the only one in which the median return for the S&P 500 has been negative going back to 1928.
Now, Wall Street strategists are warning of an end to the unusual calm that's characterized markets in August, advising clients to go long volatility, citing, in part, the prospect of rising cross-asset correlations. Of course, there's no guarantee this volatility will ever materialize: strategists were also warning of a swoon in U.S. stocks and uptick in volatility right before they proceeded to march to all-time highs.
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Value stocks beating growth stocks
So far this year, value stocks are outperforming growth stocks. This is unexpected for the following two reasons. It's the reverse of what occurred in 2015, when growth stocks were in the lead. When market returns are reasonably good, and when interest rates are falling or low, more stable sectors will usually lag more aggressive sectors. But, "that just hasn't been the case here in the current environment.
Markets returns in the U.S. have been reasonably good since January. However, the tables are turning. The earnings growth picture in the U.S. is somewhat muted, in that S&P earnings have been slightly negative. Going into 2016, the market was looking forward to a rising-rate environment. But now, interest rates are likely to remain suppressed. On that front, the train never really left the station.
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Eddy Farina, Fin. Pl., CIM
®
Senior Vice President, Investment Advisor 514.981.5727
" If you're offered a seat on a rocket ship, don't ask what seat!
Just get on. "
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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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