Ottawa Investment Advisor John Bruce

First Quarter Update

April 15, 2016

Capital markets were unsettled in the first quarter of 2016, with stocks exhibiting heightened volatility and selling off through January and February before recovering in March. While markets were initially affected by the familiar themes of slow global growth, low commodity prices and uncertainty over monetary policy, investors appeared to gain confidence as the quarter progressed.

Here at home, Canada’s S&P/TSX Composite Index offered a bright spot among global markets. The index gained 4.5% including dividends, as oil rallied strongly into the end of the quarter after dipping to multi-year lows in mid-February. The S&P 500 Index in the U.S. posted a modest gain of 1.4%, which translated to a loss of 5.0% in Canadian dollars as the loonie appreciated 6.7% in value relative to its U.S. counterpart.

The MSCI World Index finished the quarter nearly flat with a return of -0.2% in U.S. dollars (or -6.5% in Canadian dollars), with results for local markets varying widely. Stock markets in Europe, Japan and China, for example, were mostly down for the quarter despite central banks’ efforts to boost liquidity and keep borrowing rates low, while others including Taiwan and South Korea made small gains. Stock markets in Latin American countries such as Brazil, among the worst performers in 2015, rallied from their lows to post strong increases.

Bond markets, meanwhile, finished the first quarter with mainly positive results. In the U.S., economic data remained encouraging, with strong employment numbers, moderate inflation and a rebounding housing sector. But after announcing its first interest rate increase in nearly a decade in December, the U.S. Federal Reserve sounded a cautious note and left rates unchanged in the first quarter, citing risks including sluggish global growth. Overseas, several other central banks introduced measures to stimulate their economies during the quarter, including negative interest rates by the Bank of Japan, key rate cuts by the European Central Bank and policies to encourage lending in China. These actions, along with muted inflation, helped to drive yields for longer-maturity government bonds lower throughout the period.

The Bank of Canada also left rates unchanged in the first quarter as the Canadian economy defied expectations to post a broad-based 0.6% GDP increase in January, its best month since mid-2013. The FTSE TMX Canada Universe Bond Index, a measure of Canadian government and investment-grade corporate bonds, returned 1.4% for the three-month period.

Overall, global capital markets have exhibited a higher level of volatility over the past several quarters, and this may continue to be the case during 2016. Nevertheless, conditions that support the expansion of the global economy and individual businesses, including low inflation and low interest rates, persist. Although it may be tempting to try to limit losses by exiting the markets during more turbulent periods, history also tells us that keeping an eye on the long-term horizon and staying true to a sound, diversified financial plan is the best course of action.

In closing, I would like to remind you that my assistant Kim O’Leary, and I are here to help. Should you have any questions about your investments, I would be happy to discuss them with you.


John S. Bruce
Senior Investment Advisor

Assistant- Kimberley O’Leary
Direct Line- 416-860-7785
Fax- 416-860-7671
Toll Free- 877-860-7659

Mackie Research Capital is a national investment firm with offices in Vancouver, Calgary, Regina, Toronto and Montreal.

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. This newsletter is intended for distribution only in those jurisdictions where both the author and MRCC are registered to do business in securities. Any distribution or dissemination of this newsletter in any other jurisdiction is strictly prohibited. MRCC and its officers, directors, employees and their families may from time to time invest in the securities discussed in this newsletter. ©2016 Mackie Research Capital. Member-Canadian Investor Protection Fund / member-fonds canadien de protection des épargnants.

The information in this letter is derived from various sources, including CI Investments, Signature Global Asset Management, The Globe and Mail, National Post and Trading Economics. Index information was provided by TD Newcrest and PC Bond. 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. Before acting on any of the above, please contact me for individual financial advice based on your personal circumstances.

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