Matthew Lekushoff |


With the first half of 2018 behind us, most international markets sit slightly higher than their 2017 close, while the emerging markets have not fared as well. After a strong start to the year, they have endured a correction since the end of January. China's Shanghai composite index, for example, currently trades 20% below its January high.

Knowing why markets move is always tricky, but it's not a stretch to say the strong U.S. dollar has negatively affected emerging markets. In addition, President Trump's aggressive trade position has been particularly hurtful for China's stock markets. Although both China and the U.S. know that an escalated trade war will be bad for each side, only time will tell whether posturing and saving face are as important as doing what is right for their economies. 

On the home front, the Bank of Canada raised its benchmark interest to 1.5%----the fourth interest rate hike since last summer. The rate remains historically low, but reflects a desired return to more "normal" levels, as well as an improving Canadian economy. Economic concerns remain, like high real estate prices and possible trade war with the U.S., but this should be taken as a positive sign.

You may also be surprised to learn the TSX has outperformed the S&P 500 since early March. The last time this happened for an extended period of time was 2016, when oil prices were in full recovery mode, gaining more than 100% in 12 months. 

If oil prices continue to strengthen, this should bode well for the Canadian market since 20% of its value is composed of energy companies. Should energy prices find their way into the $80+ range, it won't take long for profits in the sector to surge, cuing a move upward in the value of producing companies.

I'm still concerned about global equity valuations (especially in the U.S.), potential trade wars, and inflation. However, our portfolios remain conservatively positioned to take advantage of market fluctuations should something happen.


On Writing: A memoir of the Craft  by Stephen King: Part biography, part a how-to book on writing, On Writing is one of the better books I've read on the craft, written by one of its most prolific authors.
Why Winners Keep Winning  by Nick Maggiulli: Hard work, intelligence, and grit are important factors regarding success. But other factors, like luck and early advantages, are often just as important, perhaps even more so.
Nobody Planned This, Nobody Expected It  by Morgan Housel: A reminder of how random life can be and the importance of preparing for it.
5 Common Mental Errors That Sway You From Making Good Decisions  by James Clear: The ability to make good decisions is one of the most important skills you can have. A big part of making good decisions is reducing bad ones. In this article, five of the most common mental errors people make, when it comes to decisions, are highlighted.
Company Culture, Collaboration and Competition: A Discussion With Margaret Heffernan  by Farnam Street: An insightful conversation on how to improve the culture of an organization.
Pundits Predicting Panic in Emerging Markets by Research Affiliates: The emerging markets have corrected considerably this year. When taking a closer look, there remains good value in investing in them moving forward.
Human Population Growth Over All of History   by Visual Capitalist: A cool video marking the rise of empires and human population growth.


"The scariest moment is always just before you start. After that, things can only get better." 
 ----- Stephen King  
"A rule of thumb is that everything will eventually break. So if a bunch of things rely on one thing, and that thing breaks, you are counting the days to catastrophe."
----- Morgan Housel
"We're most likely to choose to be surrounded by people, who roughly speaking, share the same mental models and therefore will see the same things that we see, and not see the things that we don't see. They may sort of amplify our blindness."
----- Margaret Heffernan

  • In a harrowing mission, 12 boys and their football coach were saved after being trapped in a Thai cave complex for more than two weeks. The BBC breaks down how the escape happened.
  • On the World Cup front, the two semi-final games raised quite the excitement. After some beautiful plays, France and Croatia advance to the finals this Sunday! SB Nation breaks down the 2018 tournament by the numbers. 

Matthew Lekushoff

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