Ottawa Investment Advisor John Bruce

Letter to Clients April 2012

April 17, 2012

Dear Client,

Global equity markets had a promising start to 2012, as the uncertainty of last year was replaced by a more optimistic outlook.

U.S. stocks were particularly buoyant in the first quarter, with the S&P 500 Index making broad-based gains of 12.6% (10.6% in Canadian dollars). The U.S. financial sector rose more than 22%, as several banks passed stress tests and raised dividends. The information technology sector was also strongly positive, with robust results reported by several large technology firms and cash-rich Apple Inc. announcing its first dividend since 1995.

Other global equity markets also performed well over the three-month period. Japan’s Nikkei Index soared 19.3%, Hong Kong’s Hang Seng Index was up 11.5%, Germany’s DAX Index added 17.3%, and the MSCI World Index rose 10.6% (all in local currency terms). Moves on the Canadian market were muted somewhat by evidence of slower economic activity in China, the world’s largest buyer of raw materials. Nonetheless, the S&P/TSX Composite Index finished the period with an increase of 4.4%, based on strong results in the financial and consumer discretionary sectors.

The global economic recovery continued in the first quarter, and investors were especially encouraged by indications that the U.S. economy is strengthening, with improvements seen in employment, retail sales, manufacturing and even housing. At the same time, the ongoing sovereign debt crisis in Europe abated somewhat, though investors have recently begun to focus on problems in Spain. In the first quarter, Greece reorganized a large part of its debt and the European Central Bank extended long-term credit to stabilize the region’s banking system.

The result was much calmer market activity than in previous quarters, as much of the investor anxiety that accompanied these concerns subsided. The VIX index, a measure of equity volatility, reached a five-year low during the period. In addition, U.S. and Canadian government bond yields rose and prices fell during the quarter, a reversal of the “flight to safety” that occurred last year. Overall, the bond market registered a slight decline during the quarter.

Looking ahead, there continues to be many economic and structural challenges that concern investors. However, there are also many positive factors that are supporting the markets, including low interest rates, low inflation, economic growth and high levels of corporate profitability.

The past four months show how share prices can make quick, strong gains, even as the headlines remain negative. That’s why it makes sense to remain invested in a diversified portfolio that’s tailored to your individual investment objectives.

If you have questions about the current market environment or your portfolio, please do not hesitate to give me a call. Thank you for your business.

Sincerely,

John S. Bruce
Ottawa Investment Advisor
Also licensed in ON, BC, AB, QC, NS
Mackie Research Capital
Direct Line- 613-425-3732
Toll Free- 866-860-4190

The information in this letter is derived from various sources, including CI Investments, Signature Global Advisors, Harbour Advisors, Globe and Mail, National Post, Financial Times, Bank of Montreal Economics, MSCI, and TD Newcrest. This material is provided for general information and is subject to change without notice. Every effort has been made to compile this material from reliable sources; however, no warranty can be made as to its accuracy or completeness.

The opinions, estimates and projections contained herein are those of the author as of the date hereof and are subject to change without notice and may not reflect those of Mackie Research Capital Corporation (”MRCC”). The information and opinions contained herein have been compiled and derived from sources believed to be reliable, but no representation or warranty, expressed or implied, is made as to their accuracy or completeness. Neither the author nor MRCC accepts liability whatsoever for any loss arising from any use of this report or its contents. Information may be available to MRCC which is not reflected herein. This report is not to be construed as an offer to sell or a solicitation for an offer to buy any securities. Member-Canadian Investor Protection Fund / member-fonds canadien de protection des épargnants.

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