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I’m sure you’re all feeling as frustrated with the markets as we are, but decades of excessive spending by governments and individuals alike have come at a cost and we’re now having to pay for it one way or another. What’s worse is the inability for governments to agree on meaningful solutions, which do more than provide short-term solutions.

We’re all looking for answers to the global economic woes, but there do not appear to be any, certainly no solutions that instill confidence and this suggests that the volatility and debates will continue.

The ‘Occupy Wall Street’ and ‘My fat Greek default’ rumblings are a symptom of the enduring market drubbings and may well grow in the years to come as an icon of multi-year global excess and greed.

We Canadians are under the belief that we’re ok and have miraculously avoided the brunt of global issues. I certainly hope so, but will point out that our debt to disposable income ratio is now at a record 147% and our housing market has not corrected, but rather advanced further from the bubble peaks of 2008. The Economist magazine estimated in June 2011 that Canadian real estate is currently a whopping 23% overvalued.

Click here for an excellent article that critically reviews our (Canadian) housing and consumer debt in the global context and highlights very valid reasons for concern.

Europe needs to reach an agreement to protect its banks, put Greece to rest, and become unified. They seem to be heading that way, but there have been no decisions yet so the risks are still high.

“…there is no question that Greece is going to default….” Dr. Martin Feldstein, Harvard University economics professor.

Click here to listen to his short yet insightful interview on CNBC.

The United States Government needs to get on the same page and devise meaningful solutions to unemployment and ongoing housing concerns as well.

It is against this backdrop of dysfunctional markets that the TriDelta Investment Committee continue to focus on delivering meaningful and proactive investment strategies to grow your assets. Our first priority remains capital protection followed by appropriate growth based on individual situations.

At TriDelta Financial we’ve always been proactive in managing risk, which we have done by:

• – Avoiding the US and Euro markets for over 6 years now and remain 95% invested in Canada.
• – Hedging portfolio risk a number of times over the past few years.
• – Benefiting over the years from significant gold and silver investments.
• – Successfully raising cash on numerous occasions, but particularly through mid 2011 as global economies continue to deteriorate.

The ongoing deterioration of global economies and growth is being reflected in lower and more realistic company valuations (stock price). As this unfolds we will maintain our defensive portfolios to preserve your capital and wait patiently for the dust to settle as we scour the market for opportunities that present themselves in times of turmoil.

There is also simply no compelling evidence that the serious risks that we face have abated.

Written by Anton Tucker, Vice President

Global equity markets remain under extreme pressure amidst a perfect storm of collapsing global economic indicators. The news is pretty grim and will likely be for awhile, but remember that “it’s darkest before dawn”, which suggests things will improve in time. We agree, particularly given the coordinated efforts of governments, business leaders and consumers.

A deceleration in western economic growth to a mere 0.2% in the second quarter and fears of debt crisis contagion across the Eurozone has rattled confidence. The Head of the International Monetary Fund (IMF) also warned on the risks posed by an inadequately capitalised European banking sector. This added to the prevailing gloom. The European Central Bank (ECB) decided to support Italian and Spanish government bond markets, but only in return for an acceleration in local austerity programmes.

In the US, Mr. Bernanke delivered a speech Sept 8th stating; “The Federal Reserve will do all it can to help restore high rates of growth and employment in a context of price stability”. He went on to warn that overzealous belt-tightening by the U.S. government in the near term could also slow down the “erratic” recovery, but dashed any hopes of immediate assistance to boost the flagging US economy.

We see the ‘de-risking’ process playing out as stock and bond prices adjust to a very low and slowing http://premier-pharmacy.com global growth scenario in the developed world, if not a recession.

Currency volatility also reflects the changing environment as countries jostle for a competitive edge. The euro dropped like a stone after the ECB left its benchmark rate unchanged at 1.5% and lowered its 2011 Eurozone Growth Domestic Product (GDP) forecast.

Looking ahead through September and October all eyes will be on the economic data announcements as investors seek further confirmation of continued deceleration or stability. Ultimately an enduring and credible resolution to the European and US debt crisis is necessary if we are to see the markets move higher and this will unfortunately take time.

There are however a number of good news indicators that include:

• Stocks are relatively cheap. The S&P 500 is trading at only 11.2 times 2012 earnings.
• Falling oil prices are their own “stimulus package” to global consumers.
• The dividend yield of the market is above long term interest rates — which is also a bullish sign for stocks.
• U.S. corporate profits are very strong. Almost 75% of companies beat analysts’ second-quarter estimates.

Recall the words of Sir John Templeton: “Bull markets are born in pessimism, grow on scepticism, mature on optimism and die on euphoria.” If anything, we’re at the ‘pessimism’ phase of this cycle and not ‘euphoria’.

The recent increased volatility, which shook commodity prices this week has slowed Canadian stock market growth to the point that we’re now slightly negative on the year. Our outlook however remains positive and we continue to expect low double digit returns by year end.

JP Morgan also maintain a positive outlook on the US market and see the S&P 500 reaching 1475 by year end, a 10% increase.

April had a 730pt swing on the TSX during the month but only finished down 170pts. It was an interesting month but pales with the first week of May:

May 1st – Obama gets Osama. Economists are split on whether this is a negative or a positive. The negative position worries about the backlash of terror attacks adding an aspect of risk to the economy. They further point out that this event does not impact earnings, unemployment or economic expansion. The positive position believes that the death of Osama bin Laden is a devastating blow to Al-Qaeda especially as it appears he was still playing a major leadership role, increased Arab democracy, a “Post Al-Qaeda era” and lower oil prices as a result of increased long-term Middle Eastern stability.

May 2nd – the Canadian markets were quiet post the Osama news and prior to the election. We witnessed a ‘Conservative Majority Government’ with the NDP as the official opposition. Regardless of how you voted, a majority government is viewed as stable to international observers. It is also the most market-friendly result with a government focused on controlling the deficit and able to enact measures without the inevitable compromises associated with a minority status. Read More