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MARQUEST WEEKLY COMMENTARY – FEBRUARY 2, 2015

 In Market Insights
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Liis Palmer, Cassels Investment Management Inc.

MONTHLY PAY FUND

Last week the TSX was down 0.7 percent. The Marquest Monthly Pay Fund A units closed at $4.44 after the $0.075 monthly distribution ($4.52 before distribution) down from $4.55 the previous week. Canada’s economy contracted 0.2% in November as manufacturing dropped the most since January 2009. Meanwhile, the U.S. economy slowed sharply in Q4, but consumer spending grew at the fastest pace since 2006.

Contributors to the Fund last week were West Fraser Timber (up 8.1 percent), Teck Resources (up 6.3 percent) and Potash Corp. (up 3.8 percent). This is the second week in a row that West Fraser has been the top contributor, reflecting the continuing tailwind of the weak C$ and the strength of the US housing sector.

Laggards were Royal Bank (down 4.8 percent), Bank of Nova Scotia (down 4.3 percent) and TD Bank (down 3.4 percent). Barclay’s downgraded Canadian banks. The analyst expects profit growth to be 3.1 percent in 2015, the slowest since 2009. The pace of year-over-year mortgage growth last year was about half what it was eight years ago, according to Bank of Canada data. The S&P /TSX Commercial Banks index has dropped 9.5% this month, the weakest start to the year since a 12% decline in January 1990, according to data compiled by Bloomberg.

GLOBAL BALANCED FUND

Last week, the MSCI World Index was down 1.8 percent. The C$ was down 2.4 percent versus the US$. The Marquest Global Balanced Fund A units closed at $18.14 ($18.23 before the $0.09 monthly distribution) down from $18.26 the previous week. Canada’s economy contracted 0.2% in November as manufacturing dropped the most since January 2009. Meanwhile, the U.S. economy slowed sharply in Q4, but consumer spending grew at the fastest pace since 2006.

Last week in the global equities portion of the portfolio, leading contributors were Magna International (up 2.4 percent), Novo Nordisk (up 3.5 percent) and Anheuser Busch (up 3.8 percent).

Laggards were United Health (down 3.3 percent), Keyera (down 4.8 percent) and Comcast (down 3.8 percent).