Those of us who work in offices have our own kind of occupational hazards – not the least of which is the paper cut. While hardly dangerous, a paper cut can range from harmless but annoying to mildly painful. The good news is that we rarely get more than one paper cut at once. But what if we experienced a hundred or more paper cuts around the same time? While they may not be deadly, they could certainly cause some serious suffering.
After an extended period of weakness, emerging market equities have rebounded nicely year-to-date – outperforming developed market stocks by a sizeable margin, as measured by the MSCI Emerging Markets Index and MSCI EAFE Index.1 In my view, this strong performance has been driven by better macroeconomic conditions, strong earnings growth and discounted valuations relative to developed market equities.1
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Global stocks moved higher last week, driven by a U.S. stock market that continued to advance despite a plethora of negative headlines and a growing likelihood that U.S. President Donald Trump’s legislative agenda will not come to fruition in 2017. In addition, U.S. stock-market volatility, as measured by the VIX Index, remains very low. It’s almost as if U.S. stocks have a Teflon-like coating around them, shielding them from the brunt of negative news. But why?
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As a dividend investor, it is important to differentiate between companies that have high, but possibly volatile yields and those with attractive, but defensible yields.
One of the key themes I’ve identified for 2017 and beyond is global disruption. Disruption can take many forms and be either a positive or negative force. The economist Joseph Schumpeter argued that disruption could be a positive force for economies – hence the term, “creative destruction.” Disruption – both positive and negative, both geopolitical and monetary – is abundant across the globe right now.
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Following recent upbeat comments, the Bank of Canada (BoC) announced today that it would hike the overnight target rate to 0.75% from 0.50%. This is the first rate hike since 2010, as the BoC has become confident that the current “above potential growth” will continue, leading it to take back one of two emergency rate cuts enacted in 2015.
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