The focus of global markets is now shifting from liquidity and financing concerns to deteriorating macro
fundamentals, which will worsen in the coming twelve months largely due to massive fiscal belt tightening in
over 60% of the world economy. If history is any guide, the next few months should see global stock markets
dance to the tune of a slowing global economy, and Canadian equities will see increased correlation with
softening world markets. In this environment of reduced diversification opportunities, sector selection within
the equity market and proper allocation across a range of asset classes will become increasingly important as
investors search for cover in a world in which returns are increasingly connected.
