Exchange Newsletter
A quarterly newsletter that delivers strategic investment insight and helpful financial planning perspective.

Portfolio Advisory Group
ScotiaMcLeod's Portfolio Advisory Group assists the firm's Investment Advisors by providing market strategy, portfolio reviews, and equity and fixed income research designed specifically for individual investors.

Analyst Recommendations
A daily snapshot of the Portfolio Advisory Group's top three Canadian stocks making news in the market. Find out the story, the recommendation and performance expectations.

CIBC Wood Gundy's Canadian Portfolio Strategy Outlook

Executive Summary

Jeff Rubin, Economics and Strategy, CIBC World Markets

September 6, 2007 - Contagion effects have rippled through credit markets, but the subprime mortgage meltdown in the US is a temporary and nonlethal shock to the bull market in Canadian stocks. Federal Reserve Board intervention, in the form of two 25-basis point cuts to the federal funds rate, will reverse the effective tightening that has occurred in bank funding rates, boosting both market liquidity and confidence. With the Canadian economy outperforming central bank expectations over the first half of the year, the Bank of Canada is unlikely to parallel Fed cuts, a stance that will help boost the Canadian dollar toward parity with the greenback by year-end. Nevertheless, the
sudden loss ofliquidity in Canadian financial markets has brought the Bank of Canada’s tightening program to an abrupt end.

While the TSX is still 1,300 points shy of our year-end target, we expect to see a 15,000 Composite level within the next six months. Furthermore, another 13% rise in operating earnings, following this year’s expected 15% gain, should drive the TSX to 16,200 by the end of next year. Those targets warrant a continued heavy overweighting of equities at the expense of cash and bonds...Complete Story

CIBC Wood Gundy's Monthly World Market Report

Amidst The Credit Crunch, It May Be Time To Nibble

SUNIL BHARDWAJ, MBA, CFA
Canadian Equities Specialist, Private Client Investing

September 6, 2007 - When investors forget about a little thing called “risk,” it usually comes back to haunt them. The most recent example of this is the disappearance of risk premiums that befell parts of the bond market in recent years. Some fixed income investors, desperate for higher yields, took on risk that they perhaps did not fully understand. And now they are running for shelter.

The misunderstood risk lay in collateralized debt obligations (CDOs). The CDOs causing the most consternation are pools of loans made to people with weak credit histories (i.e., subprime mortgages). Now that default rates on these mortgages are starting to rise, some of these CDOs are quickly losing their value. Hedge funds and other institutional investors holding these products have been rushing for the exits, but like a rich-man’s game of hot potato, the music has stopped and those left holding the devalued CDO are getting burned. Many injured investors are now wary of bonds with even a moderate level of risk...Complete Story

FTSE Research Affliates FundamentaI Index Series