Quarterly highlights (for the quarter ending June 30, 2009)

Improving short term economic data has encouraged more investors to take on risks and has led to strong performance across most asset classes during the quarter.

Several central banks continue to lower overnight rates, which is a continuation of a trend. More importantly, central bank leaders intend to keep rates low over the foreseeable future ensuring the price of credit will remain cheap.

Rising unemployment is emerging as the biggest challenge to resumption in growth, which governments around the world are trying to stoke with record low interest rates and by pumping trillions in cash into their economies.

Housing numbers in the U.S. were better than expected mostly on the sales side. The Standard & Poor’s/Case-Shiller Index of 20 major cities showed the smallest monthly decline since June 2008.

Commodities prices, which suffered their greatest two-month decline since records began, have been rebounding. Large scale Chinese purchases of oil, soybeans, and metals have been major contributors to this rebound.

Canadian Equities

Buoyed by improving commodity prices, the S&P/TSX Composite demonstrated renewed strength over the quarter. The broad based index returned 19% with commodity and financial stocks leading the way.

Among equities, Research in Motion (TSX:RIM) had the third largest contribution to overall index performance with a cumulative return of 52% over the quarter, behind only Royal Bank and TD. RIM’s better- than-expected earnings in the first quarter drove returns. In turn, profit rose by 26% compared to a year ago and revenue soared by 59%, despite quarterly revenue being slightly down quarter over quarter. In addition, Blackberry added approximately 3.8 million new subscriber accounts, taking its total subscriber base to nearly 28.5 million. Long term consensus remains decidedly bullish as RIM continues to grow share in the burgeoning market for web enabled smartphones at the expense of mobile phone operators such as Nokia and Motorola. According to the Economist, worldwide cell phone sales fell, while smartphone sales continued to grow.


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July 31, 2009