Financial Post
Published: Tuesday, July 07, 2009

OTTAWA - Consumer bankruptcies jumped more than 34% in May from a year earlier as household finances continued to take the brunt of the economic downturn.

There were 9,900 personal bankruptcies filed during the month, up 34.4% from 7,364 in May 2008, the federal Office of the Superintendent of Bankruptcy reported Tuesday.

On a monthly basis, consumer insolvencies were down 9.5% from 10,578 in April.

There were 464 business bankruptcies in May, down 16.2% from 554 a year earlier, and down 12.3% from 529 in April.

Total bankruptcies were up 30.9% to 10,364 in May from 7,918 a year earlier. On a monthly basis, however, insolvencies were down 9.6% from 11,465 in April.

There is currently a lot of conflicting opinions in regards to where global stock markets are headed over the next few months. On the one hand, we have the perpetual bears that strongly believe that the market is ripe for a sharp sell-off. David Rosenberg, the former Chief Economist art Merrill Lynch, for example, is adamant that the market will re-test their March lows. Others, however, believe that the worst is behind us and there is nothing but blue skies ahead. These conflicting views are causing retail investors a lot of confusion. My advice is to wait and be patient.

In my opinion, markets around the world have rallied far too quickly given where we are in the current economic cycle. History has shown that markets typically overshoot their fundamentals as news of an improved economy begins to emerge. I think this is what is happening now.

As the realities of the economic condition set in, stock markets will likely retreat in the coming summer months. It is during this period that investors should be diligent in patiently looking at the economic landscape and carefully picking their entry points into sectors that look most promising going forward. Patience often yields the best results when investing in stocks during uncertain times because it allows investors to make informed decisions with the help of their financial advisors rather than simply buying stocks because they have risen dramatically. I have always been a proponent of buying on weakness and selling into strength. If, for one reason or another, you missed buying on weakness then the best strategy t is to wait once again for the markets to weaken.

Mounir R. El-Ayari, CIM, FCSI, C.h. P. Strategic Wealth
Investment Advisor
Associate Portfolio Manager
e-mail: mounir.el-ayari@nbf.ca

The headline figure might exaggerate the underlying strength of the Canadian labour market in April. But there is a sign of hope in the fact that payroll headcounts decrease in the private sector was the slowest since the beginning of the recession. Over this seven-month period, Ontario, Alberta and BC were hit the hardest, but the latter two registered gains in April, especially BC. Also, Quebec had rather low casualties so far. Those still working enjoy wage gains which sustain consumption. This morning’s employment report is consistent with my view calling for a stabilization of the economy in Q2, followed by positive growth in the second half of 2009.

Mounir R. El-Ayari, CIM, FCSI, C.h. P. Strategic Wealth
Investment Advisor
Associate Portfolio Manager
e-mail: mounir.el-ayari@nbf.ca

During my conference call in mid-December I discussed the importance of monitoring the Baltic Dry Index. The Baltic Dry Index is a statistic in the shipping world. It serves as a leading indicator for the health of the global economy by acting as a barometer of global trade. The index surveys the price of transporting raw materials by sea.

In recent weeks the Baltic Dry Index has been peaking up some steam, albeit slowly. The index was up four days in a row and is well off its bottom.

A recent report has identified that shipping to and from countries including China, India and Pakistan has been improving as of late. Although this does not mean that global trade is bouncing back to its recent peak levels any time soon, it may signal that we are at or very near bottom in terms of the economy. This would obviously be welcomed news for individuals around the world.

Mounir R. El-Ayari, CIM, FCSI, C.h. P. Strategic Wealth
Investment Advisor
Associate Portfolio Manager
e-mail: mounir.el-ayari@nbf.ca