- Equity markets rose in April due to strong corporate earnings and reduced geopolitical tensions. The S&P 500 gained 2.8% while the Canadian S&P/TSX fell 1.2% partly due to declines in energy and financial stocks. - Commodity prices were mixed in April with oil, gold, and other commodities rising while others like copper and zinc fell. Central banks in Canada, US, and Europe kept interest rates unchanged. - A pullback in commodity prices like oil and silver in early May was expected and may provide relief from inflation, especially for food and fuel prices. The decline also gives investors time to reassess companies and markets.

1.
MAY 2011
Market Matters
APRIL HIGHLIGHTS
Table 1
 Equity markets were buoyed by stronger than expected Summary of major market developments
corporate earnings and diminished anxiety over the market Market Returns* April YTD
effects of geopolitical unrest. S&P/TSX Composite -1.2% 3.7%
o Approximately ¾ of U.S. companies who had S&P 500 2.8% 8.4%
reported earnings beat analysts’ expectations. - in C$ 0.6% 3.4%
 The Canadian S&P/TSX was an outlier during the month. MSCI EAFE 1.5% 1.8%
o Profit taking in the Energy and Financial sectors - in C$ 2.8% 2.6%
pulled results down, while Research in Motion’s MSCI Emerging Markets 0.5% 0.8%
stock continued to struggle.
 Commodity prices were mixed during the month. DEX Universe Bond Index** 0.9% 0.6%
o Oil, gold, silver, aluminum and corn prices rose BBB Corporate Index** 1.2% 1.2%
sharply. *local currency (unless specified); price only
o Conversely, zinc, copper, uranium, and cotton **total return, Canadian bonds
prices fell.
 Central banks in Canada, U.S. and the European Union all Table 2
remained on hold during the month. Other price levels/change
o Most notably, the U.S. Federal Reserve delivered a Price April YTD
message of caution and patience, reassuring USD per CAD $1.0547 2.3% 4.9%
investors that they were in no hurry to raise interest Oil (West Texas)* $112.85 5.7% 23.6%
rates. Bond markets responded favourably.
Gold* $1,536 6.9% 8.3%
 The U.S. dollar continued to slide.
o Concerns over U.S. deficit growth and inflation drew CRB Industrials* $704.00 -16.4% -2.7%
investor interest to other currencies and assets. *U.S. dollars
 Canada’s employment situation continues to show
improvement. In April, additional job creation marked the Table 3
recovery of full-time jobs to pre-recession levels. Sector level results for the Canadian market
 During the early days of May, a sharp pullback in many S&P/TSX sector returns* April YTD
commodity prices, such as oil and silver, unfolded. After a S&P/TSX -1.2% 3.7%
long and strong rally in commodity prices, the price pullback
may provide some welcomed inflation relief, particularly for Energy -2.0% 5.9%
food and fuel prices. Materials -0.4% -2.0%
Industrials 0.3% 8.5%
Consumer Discretionary 0.4% -2.1%
Consumer Staples 0.9% 3.2%
APRIL SPRINGS FORWARD Health Care 2.0% 54.1%
The general tone for capital markets was positive during Financials -1.5% 6.6%
the month of April. The upward trend (intact for several Information Technology -10.4% -9.6%
months now) was aided by positive global economic Telecommunication Services 0.9% 3.7%
growth, strong corporate earnings and supportive Utilities -0.6% -0.6%
investor confidence. *price only
Source: Bloomberg, MSCI Barra, NB Financial, PC Bond, RBC Capital Markets
GLC Asset Management Group 1 of 2 May 2011
www.glc-amgroup.com

2.
U.S. equity markets in particular had a very strong ROAD WORK AHEAD. EXPECT DELAYS.
month in April (see Table 1). Small and mid-cap One of the surest signs of spring is the resurgence of
companies hit all-time highs, fully recovering from their construction crews and road repair across the country.
financial crisis battering, while even the tech-heavy Delays and bumpy roads quickly become commonplace.
Nasdaq Composite index reached its highest closing Even though we know delays along our route are
value in over 10 years. inevitable from time to time, we still seem to be caught
off guard. It takes a while to find our patience and avoid
The Canadian S&P/TSX was the noted exception to the disappointment by building in extra time to reach our
positive equity markets (see Table 2). Perhaps as a destination. The commodity pullback in early May
foreshadowing glimpse of what was to come in early delivered the same lesson.
May, the Energy sector declined, despite oil prices rising
almost 6% during the month. Investors took profit on Canadians are more sensitive to significant moves in
assumptions that oil prices (up just shy of 25% year-to- commodity prices because the impact can affect our
date) would not persist. Instead investors factored in economy and markets in several ways. Not only are
more moderate expectations for oil prices and sold off many of our businesses and exports driven by our
Canadian energy companies. Similarly, after a strong fortunate supply of natural resources in Canada, but our
run, the stock price of Canadian financial companies currency and stock market results are positively
took a breather and declined modestly in the month. correlated with commodity prices as well. The slide in
The most significant sector decline came in the commodity prices will cause an initial shock to the
Information Technology sector. As is usually the case strength of the Canadian dollar and to our equity
with this sector in Canada, it was the stock-specific story markets, but there may also be some positive outcomes.
of Research in Motion (RIM) that defined the sector For example, a moderation in commodity prices will be a
performance. RIM’s market share has been declining welcome relief for those concerned about inflation and
over the past year due to increased competition from the rising cost of fuel and food around the world.
Apple's iPhone and various Android smartphones. This Likewise, market setbacks often give investors a
led RIM executives to warn that the company’s first breather - time to reassess their assumptions and
quarter earnings would be lower than initially anticipated. outlooks for companies – and effectively lay the ground
As well, a "less-than-favourable debut" of the company's work for the next leg of a market rally.
PlayBook tablet on April 19 sealed the negative
sentiment for the company. With commodity prices having risen sharply over the
past several months, a pullback and moderation of
CAREFULLY CONSIDERED prices (such as we’ve seen in early May) was not
Bond markets, which have been weaker overall this completely unexpected. However, when faced with the
year, managed a relatively strong result in April. Fixed headlines, anxiety and frustration rise. Consider the
income investors took comfort in Bank of Canada advice written in bold in advance of road construction:
Governor Carney’s comments that he remains cautious “expect delays”. Find your patience and avoid future
about the timing of further tightening monetary policy. disappointments by planning ahead for the inevitable
By doing so, he pushed back the timing expectations for setback from time to time. It might just help you reach
the next interest rate hike, previously anticipated for your investment destination safely and comfortably.
early summer. Similarly dovish comments made by U.S.
Federal Reserve Chairman Bernanke also contributed to
an improved near-term outlook for bond investors.
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without notice. This commentary is presented only as a general source of information and is not intended as a solicitation to buy or sell specific
investments, nor is it intended to provide tax or legal advice. Prospective investors should review the offering documents relating to any investment
carefully before making an investment decision and should ask their advisor for advice based on their specific circumstances.
GLC Asset Management Group 2 of 2 May 2011
www.glc-amgroup.com