2018 Genus Quarterly Q1

The headlines of the first Quarter of 2018 were dominated by strong earnings expectations, which have delivered. The US economy continues to grow in part due to tax cuts passed in the last year, which can be viewed as a normalization process from their higher than average corporate tax rates. On the Canadian front, the impact of high debt ratios is likely to limit the Bank of Canada’s ability to raise rates, affecting the bond markets and currency. Moreover, high consumer debt may provide headwinds for Canadian banks. Liquidity and inflation issues remain modest as many developed economies continue to print money globally. Overall, we still believe we are in the late cycle and favour the economic sensitive materials, energy, informational technology, and emerging markets.