Cidel - Q4 | Quarterly Report


Looking Back
In our opinion, these were the most important stories in Q1…
Equity markets began the year very strongly, with volatility falling near all-time lows, while bond yields increased quite dramatically in most developed markets. In early February, fears of rising interest rates and inflation led to an unwind in the short volatility trade, leading to a significant sell-off. While equity markets recovered quickly from their lows, there has been a marked increase in intra-day volatility. The rise has not spilled over into other asset classes, as has been the case in earlier ‘risk-off’ environments.
The theme of synchronized global growth continued over the first quarter. There was however some loss of momentum. Europe in particular which had been very strong saw a reversion in the speed of growth, which was inevitable given how strong it had been. It’s important to remember this reflects a slowdown in the pace of growth not a slowdown in the economy itself.
Risks increased over the quarter on the trade front, as the Trump administration announced tariffs on steel and aluminum, followed by tariffs on up to $50 billion in imports from China. China’s response has been more muted, but concerns remain about the effects of escalation and a potential trade war.
The US Fed raised rates in March as expected. Expectations remain for three hikes in 2018, although the markets are pricing in the possibility of a fourth. The Fed is also projecting a slight inflation overshoot next year. This has led to a tougher environment for fixed income performance.  


Looking Forward
As we enter Q2, the points below have our investment Team's attention...
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The output gap has closed – A decade after the financial crisis, the closing of the output gap should cause inflation to creep higher, further challenging the environment for traditional fixed income portfolios.
Equity valuations have declined – Somewhat lost in the equity market gyrations of Q1 was the solid earnings growth, which pushed equity valuations more in line with historical averages. We continue to feel comfortable with a modest overweight to equities in client portfolios.
The US tax bill is clouding the future – Larger deficits in the US will have a significant impact on the economy, with the US likely adopting a more pro-cyclical stance, creating potential headwinds for the US dollar. Increasing non-US investments makes sense to us.

Socially Responsible Investing Series

Philip Young with Part Two in our continuing series: Why Investors should care about Corporate Governance

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Spotlight on Cidel

A fresh update of our corporate overview

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Away From the Desk

Cidel in the News

Let's Talk

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This material is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The information contained in this document has been compiled by Cidel Asset Management Inc. from sources believed to be reliable, but no representations or warranty, express or implied, are made by Cidel Asset Management Inc. as to its accuracy, completeness or correctness. The opinions expressed are as of the date of this publication and may change without notice and are provided in good faith, but without legal responsibility. Cidel Asset Management Inc., carrying on business as Cidel, Cidel Financial Group, Toron Asset Management International, (“Cidel”) is registered as a portfolio manager, investment fund manager and exempt market dealer in Ontario. Cidel is also registered as a portfolio manager and exempt market dealer in the provinces of Alberta, British Columbia, Manitoba, New Brunswick, Newfoundland and Labrador, Nova Scotia, Prince Edward Island, Quebec and Saskatchewan. This document may not be reproduced, distributed or published by any recipient hereof for any purpose.