Despite this week’s rally, May has been mostly negative for international markets. Globally, Canada continues to lead the way, almost treading water on the month and trading a few points under even on the year. You know it’s a bad year when being slightly negative makes you a global leader. 
At the other end of the spectrum, the U.S continued its underperformance, falling another 3% in May (though it was 8% lower on the month just two days ago) to a 16% decline on the year. Much of this underperformance can be attributed to their outsized tech sector, which has plummeted 25% in 2022. Emerging market (EM) stocks also rallied this week, but still fell 2% month-to-date, resting 13% lower on the year. China, with its severe lockdowns, continues to be the EMs’ major source of weakness.
Once again, the exception has been the energy sector. Canadian energy producers climbed another 10% since the end of April. To date, they have risen an incredible 63% in 2022, 113% over the last 12 months, and an outstanding 330%+ since their pandemic bottom in March 2020. And lest you think they're historically expensive, they would need to rise another 30% before reaching the highs of 2008. There is no guarantee this will happen, but given the state of the world, it’s within the realm of possibility.
Looking forward, there are no easy answers. The world is in a place we haven’t seen in some time - maybe ever. Inflation is high across the board and interest rates are being hiked in hopes of taming them. But it’s a delicate dance. If they rise too slowly, prices could increase further or become entrenched. If they rise too quickly, it could drive the economy into a recession and potentially drive North American (especially Canada’s) home prices over a cliff. April’s 0.50% increase has already turned the GTA’s housing market on its head! And this isn’t even factoring in the pandemic or geopolitical environment, although they are closely entwined. 
Having said all of this, I have never felt more confident that we are taking the right approach. The trends of capital moving from growth to value, or at least value outperforming, remains intact. And being well diversified has rarely been more effective. Owning a few low correlated and outperforming positions (energy, gold, bonds, and value) has significantly insulated our portfolios. But, perhaps more importantly, these positions may pay significant dividends in the future, as we remain committed to religiously rebalancing, regardless of the environment or outlook.

As always, feel free to reach out if you have any questions, and if you’re looking for more timely information on the markets, you can find them on the research section of my website, or on my Twitter, Facebook, and LinkedIn feeds.

Some of you may have noticed that this newsletter isn't nearly as unwieldly as my usual letters. The last few weeks have had me hitting a different set of books: course materials and textbooks, as I have been studying for a major exam that will ultimately help me better serve clients. I'm happy to report that the exam was earlier this week and I passed.

So, for better or for worse, you can expect my typical fulsome newsletter come June!
The Last Lion: Winston Spencer Churchill: Visions of Glory, 1874-1932 by William Manchester: Book 1 of The Last Lion series (three books in total) begins with a fascinating illustration of the world and station Churchill was born into. (I was shocked at the prevalence of marital dalliances among the aristocracy). The next 800 pages give a detailed, but wonderful account of Churchill’s first 42 years.

If you’re looking for a good biography on Churchill, or frankly, just a good biography, I can’t recommend this highly enough! It’s wonderfully written, extensively researched, and transports you back in time to partake in his many highs and lows. 

Let There be More Biographies About Failures by Henry Oliver: I’m a firm believer in studying the lives of successful people. As the saying goes, “Success leaves clues.” However, I’m also enthusiastic about learning from failure. Learning what not to do, or how things go wrong, is often even more valuable. With that in mind, I thought this article was worth a read.

Are housing prices worse than ever in history? by Nikita Sokolsky: This article on the U.S. housing market is worth a read, but I thought the chart close to the bottom on the Canadian market was more important. As you might expect, it’s downright scary. 
The Weirdest Coaching Staff in Baseball by Jared Diamond: Score one run for the unconventional.
Trying Too Hard by Morgan Housel: Sometimes less is more - even, perhaps especially, in medicine.

Ten Commandments For Living From Philosopher Bertrand Russell by Farnam Street: Ten short, but poignant thoughts on how to live and think.
The Coddling of the American Mind by Jonathan Haidt & Greg Lukianoff: A fascinating look into how the education system and how we treat young people has changed…and mostly for the worse.
The Lost Jews of Nigeria by Samanth Subramanian: Fascinating read on a small, but determined group in Nigeria who have whole-heartedly embraced the Jewish faith.
A Clash of Two Systems by Nassim Taleb: A breakdown of how Ukrainian and Russian cultures differ.
Stars: It’s mind-bending to consider how big the universe really is. Take the tour and see for yourself.

“A great way to understand yourself is to seriously reflect on everything you find irritating in others.”
- Kevin Kelly
“He who knows only his own side of the case, knows little of that.”   
- John Stuart Mill
“The greatest threat to results are boredom and impatience…The difference between good and great results is often found in consistently doing the boring things you know you should do exactly when you feel like doing them the least.”   
- Shane Parrish
Matthew Lekushoff
This provides links to other Internet sites for the convenience of users. Raymond James Ltd. is not responsible for the availability or content of these external sites, nor does Raymond James Ltd endorse, warrant or guarantee the products, services or information described or offered at these other Internet sites. Users cannot assume that the external sites will abide by the same Privacy Policy which Raymond James Ltd adheres to. The views of the author do not necessarily reflect those of Raymond James. This article is for information only. Raymond James Ltd. Member-Canadian Investor Protection Fund. Unless otherwise mentioned, all market returns are sourced from Thompson One.