A Good First Quarter 

Markets were positive during this period, as your portfolio statement will attest.Canada’s S&P/TSX Index increased by 3.74% while to the south of us the S&P 500 increased by 12.0%. The MSCI World Index rose by 10.4%, demonstrating that the market surge was broadly based. At home, foreign returns were somewhat muted by the strengthening Canadian dollar that increased in value by 2.4% during this time.

 The Quarter was notable for things that did not become full-blown issues: 

• European leaders engineered an “orderly default” forGreeceto help it through its present troubles.Greece’s sovereign debt issues are still a problem, as are those of other fragile countries such asSpainandPortugal. However, there is a stronger sense now that the European Union will be sustained during the difficult “reset” years ahead.
   
• Europedid not slip into a severe recession, which could affect other parts of the world in a serious way. However, it is experiencing a major slowdown and it will be some time before growth accelerates again.
   
• China, the world’s second largest economy, avoided a hard landing so far. We can only wait and see if its government leaders have the where-with-all to successfully micro-manage this huge economy and deliver an optimal level of economic momentum during the years ahead.
   
• TheU.S.economy continued to expand, as well as gradually improving its jobs picture.    

Outlook

There is still an excessive level of consumer and government debt in the developed world, which will slow GDP growth during the next several years. Even so, corporations are doing well in this environment, and world stock markets are expected to reflect this. There is growing optimism that better times are ahead for investors.

2012 Federal Budget Proposal