Lulled to sleep by consecutive record closing highs at the beginning of July, investors were abruptly awakened by the end of month haircut to risky assets. While the S&P 500 suffered its first monthly decline since January, Canada’s TSX eked out a 1.42% total return, thanks to the 4.5% advance in bank stocks which contributed a 1.46% total return to the index. Given better than expected fiscal Q3 results and growing discomfort with dividend growth at the telecom stocks and the valuations of utility and mid-stream companies, the reallocation of investor dollars to Canada’s most heavily weighted sector propelled our market to its positive performance in July. In contrast, high yield bonds sold off hard, as did the small cap bellwether Russell 2000 index, down 6.1%...

While May 2014 saw stocks climb to record highs, equity markets went into high gear during June 2014 with beta sectors, including internet and biotech stocks, leading the charge...

May 2014 was truly one for the record books. U.S. large cap markets posted multiple new intra-day and closing highs (6 for the S&P 500 after 45 during 2013) while yields on 10-year U.S. T-bonds fell below their 2.5% post-Bernanke ‘taper tantrum’ of May 22, 2013. On the surface, it seems unimaginable to enter the 6th year of an economic recovery and have stocks reach record highs while yields hit 52-week lows, serving to flatten the yield curve…

Despite April’s continuing trend of mostly weaker U.S. economic data – which may or may not still be attributed to the weather – positive fund flows have kept most global equity indices in the green, not due to investor conviction but as a result of seeing few alternatives to stocks. Investor sentiment readings have become more neutral as investors ponder what pace of economic growth will be required to justify current stock valuations. Clearly the jury is still out…