Christine Poole, CEO and managing director at GlobeInvest Capital Management
Focus: North American large caps
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MARKET OUTLOOK

After slowing last year, global economic growth, while still far from robust, has strengthened this year.
Domestically, the Canadian economy continues to surprise on the upside with GDP growth expanding 4.5 per cent annualized in Q2/17.  The unemployment rate in August declined to 6.2 per cent, the lowest level since October 2006. 
U.S. economic growth in the second quarter was revised upwards to 3.0 per cent, the highest quarterly rate in two years, supported by stronger household spending and gains in business investment.  While growth expectations in the U.S. has moderated since the start of the year, real GDP should surpass last year’s 1.6 per cent. The job situation remains healthy, with the August unemployment rate at 4.4 per cent.   
Real GDP in the Eurozone has accelerated to 2.6 per cent, crossing the 2 per cent threshold for the first time since Q1/11. The unemployment rate at 9.1 per cent has reached an eight year low.
Stronger than expected first half GDP growth in China suggests the country is on track to meet its target growth rate of 6.5 per cent this year. 
Growth suggested in soft data is being supported by hard data.  With economic expansions firming and becoming more self-sustaining, many central banks will likely slowly remove policy accommodation over time.  Despite faster economic growth, inflation has moved lower in many countries.  The combination of sub-par growth and tame inflation suggests central bankers will tread cautiously in their respective policy decisions. 

TOP PICKS

UNITED TECHNOLOGIES (UTX.N)
United Technologies provides products and services to building systems and aerospace industries around the world.  Its four business segments are (per cent of revenues): Climate, Controls & Security (29 per cent), Pratt & Whitney (26 per cent), Aerospace Systems (25per cent) and Otis (20per cent).  By geography, the U.S. represents 38 per cent of sales, Europe 28per cent, Asia 20 per cent and Rest of World 14 per cent.  Aftermarket revenues represent 46per cent of its total and provides a relatively less cyclical cash flow stream than original equipment orders.  The recently announced purchase of Rockwell Collins would expand its aerospace product portfolio to include avionics and interiors.  A steady dividend grower, the stock provides a dividend yield of 2.6per cent. Recent purchase price US$110.60 range in September 2017.

BROOKFIELD ASSET MANAGEMENT (BAMa.TO)
Brookfield Asset Management is a global alternative asset manager with approximately $250 billion in assets under management.  The company owns and operates assets on behalf of shareholders and clients with a focus on property, renewables, infrastructure and private equity.  BAM seeks to invest in long-life, physical assets that typically benefit from some form of barrier to entry, regulatory regime or competitive advantages that provide for relatively stable cash flow streams. The stock offers a modest dividend yield of 1.4 per cent. Recent purchase price $49.10 range in August 2017.

TD BANK (TD.TO)
TD is a leading North American bank, deriving 59 per cent of its net income from Canadian retail operations, 27 per cent from U.S. retail, 10 per cent from wholesale/capital markets and 4 per cent from TD Ameritrade.  TD is well-positioned to benefit from improving economic growth domestically and in the U.S.  A strong balance sheet and capital position, a track record of consistent dividend growth (10 per cent annualized over the last 20 years) combined with attractive valuation metrics makes TD a timely investment for both income and growth oriented investors. Its dividend payout ratio is about 43 per cent, the lower end of its 40 per cent to 50 per cent target. TD’s current dividend yield is 3.6 per cent. Recent purchase $64.30 range in August 2017.

PAST PICKS: SEPTEMBER 13, 2016

CGI GROUP (GIBa.TO)

• Then: $60.70
• Now: $63.23
• Return: 4.16%
• Total Return: 4.16%

CHARTWELL RETIREMENT RESIDENCES (CSH_U.TO)

• Then: $14.86
• Now: $14.59
• Return: -1.81%
• Total Return: 1.92%

JOHNSON & JOHNSON (JNJ.N)

• Then: $117.61
• Now: $132.62
• Return:12.76%
• Total Return: 15.77%

TOTAL AVERAGE RETURN: 7.28%

Twitter:  @christine_globe
Website: globe-invest.com