Will global markets continue to heat up through summer?

Summer is here, and the spring of 2009 will certainly be remembered
for a while. After the long, tough winter, the global thaw in equity
markets mirrored the warming weather. Will global markets continue to
heat up through the summer? It is possible, but I believe it is
prudent for most investors to revisit their portfolios in an
overheated market. Long term, equity markets will recover further,
but it is likely we will see a pause over the next few months. Be
prepared, and seek an advisor that will work with you.

Do you want to discuss your alternatives?
Have you outgrown your mutual funds?


For a review your portfolio, or a complimentary copy of my CD, visit,
www.beyondfunds.ca or call me, Jeff Wareham, at 519 660 3260. This
program is for information purposes only. Fees, management fees and
commissions may be associated with mutual fund investing. Investors
should consult their prospectus before investing. Views expressed are
those of the author, not Scotia Capital. ScotiaMcLeod is a division of
Scotia Capital, member CIPF

Market Watch

The big picture

Global economy stabilizing


Finance ministers from the G8 countries agreed over the weekend that the global economy was showing encouraging signs of stabilization. This week, the Bank of Japan held its interest rate at 0.1% and upgraded its economic assessment for the second straight month, on rising exports and output. The Reserve Bank of Australia also refrained from cutting interest rates, given signs of stabilization at home and abroad, noting in particular a strong recovery in Chinese industrial production.



In Washington, U.S. President Barack Obama unveiled a proposal for sweeping reforms to bank and market regulation. The plan urges stronger consumer and investor protection, and includes new policing powers for the Federal Reserve and government, and higher capital and liquidity requirements for financial firms. Consumer prices in the U.S. rose just 0.1% in May from April, quelling fears that inflation would threaten economic recovery. Meanwhile, the total number of Americans on the unemployment insurance rolls dropped for the first time since early January. In Canada, the outlook for the economy continued to improve, based on Statistics Canada’s leading indicator index, which slowed sharply in May to just 0.1%, marking the smallest of nine consecutive declines.



The markets

TSX gives up some gains as commodities pull back



Although the TSX is still up nearly 40% since March 9, falling commodity prices sent the resource-heavy index into a broad-based retreat early this week. Meanwhile, the Canadian dollar fell to a four-week low against the U.S. dollar as the price of oil and metals weakened, and global equities slid on doubts about the strength of an economic recovery. U.S. stocks sagged as some investors unwound trades betting on quick economic recovery.



Markets reacted to a disappointing earnings announcement by FedEx, as the company’s business levels are seen as a gauge of the economy’s strength. Research in Motion Ltd. (RIM) announced better-than-expected earnings on Thursday, but offered an outlook that fell short of some expectations, causing its shares to slide 5%. While RIM’s new BlackBerry Tour is slated to launch mid-July, Apple’s new iPhone 3G S launched today – sales could top 500,000 in the first weekend given consumers’ growing appetite for advanced smart phones.



Our recommendation
Favour shorter-maturity bonds as yields set to rise



· Equities. Stephen Uzielli, Portfolio Manager, Portfolio Advisory Group, believes that trading volume has declined recently suggesting the current rally is losing steam and at best may move sideways for a while in a period of consolidation, or indeed give back some of the recent gains. Investors may be motivated to take profits based on the conclusion that stocks have in fact moved too far too fast and have few pending catalysts to generate further gains until Q2 earnings season commences in late July.

· Fixed income. Chris Kennedy, Associate Director, Portfolio Advisory Group, highlights that with Scotia Economics recently changing their forecast, calling for rising yields across the entire maturity curve in 12 months time, active traders should remain in shorter-maturity bonds. Clients should consider taking profits on subordinate Canadian bank bonds such as Tier 1 Capital Securities, as many are up more than 20% in value since December. Corporate spreads have narrowed significantly since the beginning of the year, due to investor risk appetite returning. As such, we see better relative value in municipal bonds where spreads have not declined to the same degree.

· Portfolio strategy. With significant volatility still a factor in the markets, it’s important to review the impact on your portfolio allocations and ensure that your holdings remain appropriate for your goals and risk tolerance.

TM Trademarks used under authorization and control of The Bank of Nova Scotia.
ScotiaMcLeod is a division of Scotia Capital Inc., Member CIPF

This publication is intended only to convey information. It is not to be construed as an investment guide or as an offer or solicitation of an offer to buy or sell any of the securities mentioned in it. The author is an employee of ScotiaMcLeod, a division of Scotia Capital Inc. ("SCI"), but the data selection, analysis and views expressed herein are solely those of the author and not those of SCI. The author has taken all usual and reasonable precautions to determine that the information contained in this publication has been obtained from sources believed to be reliable and that the procedures used to summarize and analyze such information are based on approved practices and principles in the investment industry. However, the market forces underlying investment value are subject to sudden and dramatic changes and data availability varies from one moment to the next. Consequently, neither the author nor SCI can make any warranty as to the accuracy or completeness of information, analysis or views contained in this publication or their usefulness or suitability in any particular circumstance. You should not undertake any investment or portfolio assessment or other transaction on the basis of this publication, but should first consult your investment advisor, who can assess all relevant particulars of any proposed investment or transaction. SCI and the author accept no liability of whatsoever kind for any damages or losses incurred by you as a result of reliance upon or use of this publication in contravention of this notice. All performance data represents past performance and is not indicative of future performance. Scotia Capital Inc. and its affiliates collectively beneficially own in excess of 1% of one or more classes of the issued and outstanding equity securities of Royal Bank. Within the last 12 months, Scotia Capital Inc. and/or its affiliates have undertaken an underwriting liability with respect to equity or debt securities of, or have provided advice for a fee with respect to Royal Bank. TM Trademark used under authorization and control of The Bank of Nova Scotia. ScotiaMcLeod is a division of Scotia Capital Inc., Member CIPF.

The Start of a Summer Surge?

Over the last 5 days, we have seen the TSX pull back about 5 1/2%.
Keeping it in perspective, this pullback is in the context of a 40%
rally from the market bottom in March. Is this the start of a
correction, or just a pause? Regardless, summer frequently features a
lower than average volume, and sliding stock prices. Is this the
start of a summer surge, or swoon? Regardless, this current market is
full of opportunity. Tune in tomorrow at 8:30. as I discuss
constructing a portfolio that will hold up well, either in a swoon or
a surge.

For a review your portfolio, or a complimentary copy of my CD, visit,
www.beyondfunds.ca or call me, Jeff Wareham, at 519 660 3260. This
program is for information purposes only. Fees, management fees and
commissions may be associated with mutual fund investing. Investors
should consult their prospectus before investing. Views expressed are
those of the author, not Scotia Capital. ScotiaMcLeod is a division of
Scotia Capital, member CIPF

Ensure You Are Prepared

On Monday, I discussed preparing for a market pullback, and the last
couple of days we have seen significant weakness in global markets.
History tells us that major rallies, after a bear market, may be
volatile, and often involve significant sell offs before the market
ultimately recovers. If we do see this kind of pullback, it makes
sense to ensure you are prepared to respond. If you have a long term
view, a pullback gives you the chance to buy quality stocks, and hold
them until the market recovers. By working with an advisor, you may
ensure you are prepared if opportunity knocks.

Do you want to discuss your alternatives?
Have you outgrown your mutual funds?


For a review your portfolio, or a complimentary copy of my CD, visit,
www.beyondfunds.ca or call me, Jeff Wareham, at 519 660 3260. This
program is for information purposes only. Fees, management fees and
commissions may be associated with mutual fund investing. Investors
should consult their prospectus before investing. Views expressed are
those of the author, not Scotia Capital. ScotiaMcLeod is a division of
Scotia Capital, member CIPF

Surging Market or Pull Back in the future

I spent some time on the weekend reading forecasts of a couple months ago, for the end of this year. Few saw the market ending 2009 anywhere near the level we are at currently. In fact, most analysts see little extra growth in the next few months. Many are predicting as insignificant pull back from the levels we have reached. It is quite possible that the analysts are wrong, but it is likely a good time to revisit your portfolio, and rebalance your assets, so you are properly prepared for either a surging market, or a pull back. Do you want to discuss your alternatives? Have you outgrown your mutual funds? For a review your portfolio, or a complimentary copy of my CD, visit,www.beyondfunds.ca or call me, Jeff Wareham, at 519 660 3260.
This program is for information purposes only. Fees, management fees and commissions may be associated with mutual fund investing. Investors should consult their prospectus before investing. Views expressed arethose of the author, not Scotia Capital. ScotiaMcLeod is a division ofScotia Capital, member CIPF

Market Watch: The big picture

10 U.S. banks to repay bailout funds

In the U.S., 10 of the largest financial institutions are ready to repay $68 billion of government-bailout money. More good news came from a U.S. Federal Reserve survey suggesting the worst of the recession may be over as the "downward trend is showing signs of moderating." Many analysts predict the U.S. economy to slow by 1-3% this quarter, versus sharp declines of 5.7% and 6.3% in preceding quarters. U.S. retail sales rose in May by 0.5%, the first advance in three months, and job losses slowed, with new applicants for jobless benefits at the lowest level since January.

Finance ministers from Group of Eight (G8) countries are expected to offer a brighter assessment of the global economy at a meeting this weekend in Lecce, Italy. Many countries have seen signs of improvement as a result of coordinated policy actions by governments worldwide. In Europe, European Central Bank (ECB) governing council member Christian Noyer expressed cautious optimism that the global economy could turn up in the first half of 2010. The strength of Canada's banking system has helped it navigate the crisis better than most, according to World Bank President Robert Zoellick. Zoellick offered the praise while speaking to the International Economic Forum of the Americas.

The markets Oil drives TSX higher

The S&P/TSX Composite Index has rallied 40% from its March lows, led by the Energy sector. Oil prices extended a three-day rally to hit above US$73 a barrel on Thursday, the highest price since Oct. 21, after the International Energy Agency revised its outlook higher for global oil demand. Oil imports into China rose 5.5% in May compared to the previous year, hitting the second-highest volume on record.

Fiat acquired a controlling stake in Chrysler on Wednesday after the U.S. Supreme Court lifted a temporary stay on the sale. Restructuring at General Motors (GM) continues with the Wall Street Journal reporting that GM is "very close" to cutting a preliminary deal to offload Sweden-based Saab. Meanwhile, the US$13.5 billion acquisition of Barclays PLC's investment unit, BGI, by BlackRock Inc. has created the world's largest asset management firm with a staggering US$2.7 trillion in assets under management

Our recommendation
Choose shorter maturity bonds as rates set to rise

* Equities. Stephen Uzielli, Portfolio Manager, Portfolio Advisory Group, believes the current strength in equities is overdone and that the market is vulnerable to a pullback, or at least a period of consolidation. We continue to advocate that investors take profits in long trading positions or overvalued cyclical positions that do not represent long-term core holdings. In the event of an inevitable pullback, return to selectively accumulating equities in anticipation of the next sustainable bull market for stocks.


* Fixed income. Chris Kennedy, Associate Director, Portfolio Advisory Group, highlights that with Scotia Economics recent change to their forecast, calling for rising yields across the entire maturity curve in 12 months time, active traders should remain in shorter maturity bonds. Clients should consider taking profits on subordinate Canadian bank bonds such as Tier 1 Capital securities as many are up more 20% in value since December. Corporate spreads have narrowed significantly since the beginning of the year as investor risk appetite returns. As such, we see better relative value in Municipal bonds where spreads have not declined to the same degree.


* Portfolio strategy. With significant volatility still a factor in the markets, it's important to review the impact on your portfolio allocations and ensure that your holdings remain appropriate for your goals and risk tolerance.

Cdns pay highest mutual fund mgmt fees in the world

A lot has changed over the last few months, but one thing remains consistent. Canadians continue to pay the highest mutual fund management fees in the world, even though most funds fail to beat the market index. Management expenses chew up abut one quarter of the historical return of equities. This gives you significantly less return for the risk you are taking. Whether you feel optimistic, or discouraged, by the market, you still need to recognize that long term, you should consider your options beyond mutual funds.

Do you want to discuss your alternatives?
Have you outgrown your mutual funds?


For a review your portfolio, or a complimentary copy of my CD, visit, www.beyondfunds.ca or call me, Jeff Wareham, at 519 660 3260. This program is for information purposes only. Fees, management fees and commissions may be associated with mutual fund investing. Investors should consult their prospectus before investing. Views expressed are those of the author, not Scotia Capital. ScotiaMcLeod is a division of Scotia Capital, member CIPF