Commentary

Markets remain supported by Trump Administration tax cut which will increase corporate cash flows and economic growth
Still concern over extended global market valuation and inflation rising more quickly than expected
Geopolitical concerns remain over Brexit negotiations, NAFTA trade discussions and unstable situation in North Korea
Less liquidity available as Federal Reserve gradually unwinding quantitative easing & European Central Bank reducing monthly bond purchases
U.S. corporate profit growth expected at 10% in 2018
Lower taxes and strong corporate balance sheets in the U.S. will support acquisitions/dividend increases/stock repurchases
Oil US$60-70; C$0.77-0.80 range vs US$ in Q1
Focusing on Canadian dividend paying equities, U.S. growth equities, International (EAFE) equities and Canadian corporate bonds

U.S. GDP expected to grow almost 3% with low unemployment, better wage growth and strong consumer confidence
Canada’s growth expected to be only 1.5-2.0% as consumer spending and housing market low
European Union economic growth at 2.0% with continued monetary stimulus
China maintaining growth near 6.5% while moving to a consumer-based economy
Economic recovery in Japan continuing in 2018 with stronger exports and accommodative monetary policy

Favoured equity markets (in order): North America, Japan, Europe, Emerging Markets
Continue to favour equities over fixed income as earnings worldwide still growing while interest rates are only expected to rise slowly

U.S. and Canadian short term rates at 1.25-1.50% and 1.25%, respectively
U.S. short term rates expected to increase by 0.75% this year
Canadian short term rates increased 0.25% in January; growing 0.25-0.5% more in 2018
Longer term rates will rise slightly with continuing U.S. economic expansion
Lower than 2.0% inflation still expected in North America and Europe