We are pleased to present the latest editions of the Economic Monitor and the Market Monitor from Dynamic Funds Economics, prepared by Chief Economist Dr. Martin Murenbeeld and Senior Economist William Tharp; a division which provides independent analysis and research to retail and institutional interests from across the globe.
Dynamic Funds Economic Monitor
Financial Markets Overview
Markets continue to speculate about when and whether the Fed will begin to nudge interest rates higher. Continuing soft US data (other than labour market statistics) are pushing the Fed to postpone a rate hike. But the picture has become more muddied because bad weather in the northeast has temporarily trimmed economic activity, and a western port strike has also made very recent data harder to interpret. US inflation has not fallen as low as we initially feared, thanks to a variety of temporary oil refinery problems pushing up gasoline prices in February.
Globally, European growth is picking up somewhat, helped by a weak euro that is also allowing inflation to stop falling/edge up. The gains come at the expense of the US economy however as the soaring US dollar is curbing exports and related manufacturing, while helping push down domestic inflation. Meanwhile theChinese economy continues to exhibit weakening growth and slowing inflation, with the net result that global growth is probably still slowing somewhat.
Dynamic Funds Economic Monitor - March 2015
Monthly Market Snapshot
Don't Sweat The Foreign Currency Exposure
The issue of currency exposure within client portfolios is one that we seem to hear a lot about following big swings in the loonie. Currently, investors are lapping up U.S. stock funds, as the performance of these offerings have been propelled by robust returns for these markets, but also by the strength of the greenback. In 2007 and 2011, as the loonie moved above par versus the U.S. dollar, advisors were calling for the heads of those money managers who had not hedged their foreign currency exposure.
Former Fed Chairman Alan Greenspan said the following in July 2002: “There may be more forecasting of exchange rates, with less success, than almost any other economic variable.”
Based on that wisdom, we are not going to add our name to the list of failed currency forecasters. Instead, we are going to focus on the idea that for Canadian investors with a long term time horizon, maintaining foreign currency exposure within the equity portion of a portfolio can help reduce portfolio volatility. Additionally, when working with fixed income products, limiting foreign currency exposure is often the wisest course of action.
Monthly Market Snapshot - April 2015
The particulars contained herein were obtained from sources which we believe are reliable, but are not guaranteed by us and may be incomplete. The opinions expressed have not been approved by and are not those of HollisWealth. This website is not deemed to be used as a solicitation in a jurisdiction where this HollisWealth representative is not registered.
Scotiabank's Global Forecast Update
Scotia Economics provides clients with in-depth commentary regarding the factors shaping the outlook for Canada and the global economy, including macroeconomic developments, currency and capital market trends, commodity and industry performance, as well as monetary and public policy issues.
More Of The Same
Many countries and regions around the world are continuing to generate mixed economic performances. Longstanding structural issues are still counteracting cyclical forces of recovery, keeping global activity in the slow lane of growth. Recurring geopolitical stress points are compounding the problem, adding to the volatility in financial markets and undermining confidence. The recent weakness in equity prices highlights the growing uncertainty about longer-term prospects and earnings capabilities in a world challenged by too little demand and too much supply.
Scotiabank Global Forecast - March 31, 2015