2014

Push to bespoke target-date funds
FierceCFO, December 15, 2014

“Don Stone, director of DC strategy and product development at Plan Sponsor Advisors, a division of Pavilion Advisory, said companies might want to customize their target-date funds if the glide paths offered by the funds on the market don’t fit their employees. For example, almost all off-the-shelf products assume workers will retire around age 65, he said, and that’s not a good fit for certain fields, such as firemen, police officers, and workers in mining and heavy machinery industries.”


Canadian bank stocks hit too hard: Rosenberg
Financial Post, December 11, 2014

“We are negative on the Canadian dollar and on Canadian banks,” said Pierre Lapointe, head of global strategy and research at Pavilion Global Markets in Montreal, in a note to clients Thursday.

“While the structural reasons why Canadian banks tend to be liked remain in place, cyclical positives are disappearing and turning into negatives … from a macro standpoint, we see many risks for the sector, and few unrecognized opportunities for growth.”


BlackRock : Retirement target-date funds make hedge fund style bets
4-Traders, December 10, 2014

“Employers with 401(k) plans and the advisers who serve them worry that these additions mean more complexity. “How are we supposed to evaluate and monitor these investments? said Don Stone, director of defined contribution strategy and product development for Pavilion Advisory Group, which advises 401(k) plans. “The fact is it is hard and there has to be a certain level of trust in the managers.”


Falling oil threatens Canada’s bulletproof banking system
Morningstar, December 12, 2014

“The Pavilion note underscores the complex dynamic that oil’s decline presents. Average folks likely will reap the benefits from cheaper fuel, but in the long run, the negative impact on the overall economy could outweigh this upside. Particularly in places like oil-dependent Western Canada — but also in shale-producing regions of the U.S.

Of the Canadian banking system, Pavilion concludes that “from a macro standpoint, we see many risks for the sector, and few unrecognized opportunities for [earnings] growth.”


INSIGHT-Retirees’ target date funds making hedge fund style bets
Reuters, December 8, 2014

“A fast-growing segment of U.S. retirement plans is using hedge-fund type strategies to bet a small but increasing slice of their assets. …”How are we supposed to evaluate and monitor these investments?” said Don Stone, director of defined contribution strategy and product development for Pavilion Advisory Group, which advises 401(k) plans. “The fact is it is hard and there has to be a certain level of trust in the managers.”


If Abenomics can’t save Japan’s economy, what options are really left?
Financial Post, November 17, 2014

“The problem is, if Abenomics doesn’t work, Japan does not have many options left. “If this doesn’t work, it won’t be because they didn’t try hard enough,” said Pierre Lapointe, head of global strategy and research at Pavilion”


Deflation Ogre Proves More Fairy Tale Than Fact in World Economy
Bloomberg, November 17, 2014

“Back in 2003 when deflation chatter was being driven by weakening inflation in the U.S., the IMF created a vulnerability indicator to see how each major economy was prone to it. The Washington-based lender set 11 criteria for deflation and asked how many of them each economy satisfied. So inflation less than 0.5 percent, an output gap larger than minus 2 percent for four straight quarters and a 4 percent gain in the exchange rate were all among those listed as deflationary indicators. Eleven years on and Pierre Lapointe and Alex Bellefleur of Pavilion Global Markets, a Montreal-based brokerage, have updated the study to discover how big the danger is now of deflation in the world economy.”


New stimulus efforts will lead to far more volatile markets
Financial Post, November 13, 2014

Pierre Lapointe, head of global strategy and research at Pavilion Global Markets Ltd. in Montreal, said central bank assets in the U.S., United Kingdom, European Union, Japan, Brazil, India and China now represent 21.6% of world GDP, up from just 10% in 2007.

He said the Fed’s balance sheet is 5.8% of global GDP, while Japan and Europe each account for 3.3%, but most of the additional liquidity has come from emerging markets, particularly China.


Dow Industrials Jumps 200 Points Thanks to Visa’s Supercharged Gain
Barron’s, October 29, 2014

“Of course, the strong GDP reading only reinforces the Fed’s optimistic take on the U.S. economy yesterday, which accompanied the end of quantitative easing. Pavilion’s Pierre Lapointe and Alex Bellefleur note that that the market seems to be handling the end of quantitative easing much better this time than it has in the past.”


Bond Swings Following VIX Lead Defies History: Chart of the Day
Bloomberg, October 16, 2014

Surging U.S. stock volatility has carried into the bond market — a sequence that’s at odds with history, according to Pierre Lapointe, Pavilion Global Markets Ltd.’s head of global strategy and research.

The CHART OF THE DAY tracks three indicators that Lapointe and a colleague, Alex Bellefleur, used to draw their conclusion in a report yesterday. Their gauge of stock-market swings was the Chicago Board Options Exchange Volatility Index, derived from prices paid for Standard & Poor’s 500 Index options.


Battered emerging markets close in on correction territory as investors run from risk
Financial Post, September 30, 2014

“Pierre Lapointe of Pavilion Corp. said the real impact will likely show up in the earnings of EM companies this year, which he expects will continue to deteriorate. “To attract foreign capital, EM companies will now have to boost profit margins and generate more sales from their assets,” he said. “To do so, companies will need access to capital to improve productivity and efficiency. The problem is now circular.”


Which multinational stocks will get hurt by a rising U.S. dollar?
National Post, September 15, 2014

“Historically, U.S. equities have been correlated negatively with the greenback,” said Pierre Lapointe, head of global strategy and research at Pavilion Capital Markets in Montreal. “However, this time around, the currency move has not been accompanied by a weakness in stocks.”


Auto-Loan Boom in U.S. Bringing More Bad Debt: Chart of the Day
Bloomberg, September 11, 2014

“Auto loans are in the midst of a U.S. boom that is coming to “the end of the road,” according to Pierre Lapointe, head of global strategy and research at Pavilion Global Markets.”


U.S. Economy Enjoys Draghi Dividend as QE Talk Lifts Treasuries
Bloomberg, September 9, 2014

“By nudging the euro area closer toward all-out quantitative easing, Draghi is pushing European investors into U.S. Treasuries, reducing the yields on the securities which help dictate borrowing costs for American mortgages and other loans, according to Pierre Lapointe and Alex Bellefleur of Montreal-based brokerage Pavilion Global Markets.”


‘Don’t fight the ECB’: Investors seeking QE clues in Europe
Financial Post, September 3, 2014

“He has solidified our view that QE is coming this Fall, confirming our negative euro and our positive European equity views,” Pavillion Global Markets strategists Pierre Lapointe and Alex Bellefleur said in an Aug. 26 research note, referring to Draghi’s Jackson Hole talk.”


Something’s Out of Whack With Bonds, Stocks: Bianco Sees Losses
Bloomberg, August 26, 2014

“Can stocks and bonds continue to advance or will one asset class run out of steam?” Pavilion Global Markets strategists Pierre Lapointe and Alex Bellefleur wrote in an Aug. 25 report. “This is indeed an unusual pattern.”

Stocks have historically outperformed bonds in the year after simultaneous gains for both asset classes, the Pavilion strategists point out.”


Never mind Iraq and Ukraine, China is still the biggest risk to investors
Financial Post, August 20, 2014

“The Chinese consumer is also growing in importance to investors in American, Japanese and European equities, notes Pierre Lapointe, head of global rate strategy and research at Pavilion Corp. He points out that multinational companies in these countries have had an increasing share of their profits come from China.”


Internet, Biotech Fails to Justify Fed Concern: Chart of the Day
Bloomberg, August 22, 2014

“Internet and biotechnology stocks are cheap enough to counter the Federal Reserve’s concern that they may be too costly, according to Pierre Lapointe, Pavilion Global Markets Ltd.’s head of global strategy and research.”


Why fears of a high-yield debt collapse were overdone
Financial Post, August 18, 2014

“Overall, analysts said the recent pullback could prove to be healthy for the market as the U.S. Federal Reserve prepares to end its quantitative easing program later this year. Pierre Lapointe, head of global strategy and research, noted that investors have cooled on corporate debt at an understandable time, given the rally has left little room for returns with the U.S. Federal Reserve set to begin to raise interest rates next year.”


Why analysts are warming up to emerging market stocks
Financial Post, August 14, 2014

“Pavilion Global Markets, a Montreal-based research firm, is skeptical that prerecession readings of the labour market are useful benchmarks. Pavilion’s economists think structural changes, such as faster rates of retirement, imply a less dynamic labour force in the years ahead.”


GAO criticizes 401(k) managed accounts
FierceCFO, August 13, 2014

“Fees are all over the board,” said Don Stone, director of defined-contribution strategy and product development at Plan Sponsor Advisors, a unit of Pavilion Advisory Group. Given the lack of disclosure about performance, it’s hard for participants to assess the value of what they’re getting for those managed-account fees, he said.


Two numbers that are holding back a Fed rate hike
The Globe and Mail, August 13, 2014

“Pavilion Global Markets, a Montreal-based research firm, is skeptical that prerecession readings of the labour market are useful benchmarks. Pavilion’s economists think structural changes, such as faster rates of retirement, imply a less dynamic labour force in the years ahead.”


Small caps lose lustre as investors embrace stability
The Globe and Mail, July 27, 2014

“The average trailing price-to-earnings ratio for S&P small-cap stocks is now about 1.4 times the P/E of the large-cap benchmark, which is at the high end of a range that has held for the last 40 years, said Pierre Lapointe, head of global strategy and research at Pavilion Global Capital Markets.”


The hunt for value: How to pinpoint the best stock bargains
Financial Post, July 25, 2014

“Pierre Lapointe, head of global strategy and research at Pavilion Corp., points out that going back to the year 2000, strategies like price-to-book and return on equity have given investors better returns than price-to-earnings. “However, the … strategies that yielded the best returns over the past 25 years overweighted [S&P 500] companies with high ROEs or low P/B ratios,” he said. “A $100 investment in 1991 in those alternative benchmarks would now be worth $1,142 and $1,290, respectively.”


Runts MIA at Stock-Market Party as Corks Pop for S&P 500 Record
The Washington Post with Bloomberg, July 24, 2014

“Small caps actually have performed pretty well following the first Federal Reserve rate increase in past cycles, with an average gain of 7.7 percent in the following 12 months, according to research from Pavilion Global Markets. Yet this tightening cycle will be unique because it is not beginning until five years after the end of a recession and at a time when small-cap valuations are very expensive compared with larger stocks, according to Pavilion’s July 18 note that predicts further underperformance.”


Euro Area Down But Not Out as Japanese Lost Decade Looms
Bloomberg, June 25, 2014

The 18 euro nations are in the seventh year of a lost economic decade with no end in sight.

It still won’t get as bad as in Japan, which continues to struggle to escape a 15-year bout of deflation and recession, say analysts at ING Groep NV (INGA) and brokerage Pavilion Global Markets Ltd.

“We doubt that the euro zone, its currency and its equities will mimic the post-1990 Japanese experience,” Alex Bellefleur, Pavilion’s Montreal-based global macro strategist, said in a June 17 report.


China debt default still biggest risk to investors
Star Phoenix, June 19, 2014

The Chinese consumer is also growing in importance to investors in American, Japanese and European equities, notes Pierre Lapointe, head of global rate strategy and research at Pavilion Corp.

He points out that multinational companies in these countries have had an increasing share of their profits come from China.

“Over the past decade, more and more revenues [from S&P 500 companies] have come from Europe and Asia,” he said. “However, Asia has registered the highest growth for revenues of S&P 500 companies.”


Never mind Iraq and Ukraine, China is still the biggest risk to investors
Financial Post, June 18, 2014

The Chinese consumer is also growing in importance to investors in American, Japanese and European equities, notes Pierre Lapointe, head of global rate strategy and research at Pavilion Corp. He points out that multinational companies in these countries have had an increasing share of their profits come from China.

“Over the past decade, more and more revenues [from S&P 500 companies] have come from Europe and Asia,” he said. “However, Asia has registered the highest growth for revenues of S&P 500 companies.”


Trend: Transition Management Changes Highlight Evolving Investment Marketplace
Non Profit News, June 12, 2014

“Transition management has suffered a little bit and, as a result, the whole industry has been looked at in a negative way,” said Shauna Lambright, director of transition management in the U.S. for Pavilion Global Markets, which is separate from the firm’s investment consulting business. “The services continue to be vital… people are getting the impression that if large firms can’t succeed, how will smaller ones.”


When to use debt to invest
Financial Post, June 4, 2014

“Pierre Lapointe, head of global strategy and research at Pavilion Corp., notes that margin debt on U.S. trading accounts is now much higher than it was during the I.T. bubble or before the financial crisis. IIROC data shows the situation in Canada is similar.

But highly leveraged traders are not necessarily a reason to stay out of the stock market or to avoid going down that route.

“Margin debt seems to be purely a coincident indicator,” Mr. Lapointe said. “If the rally continues, margin debt will go even higher.”


Junk Drought Favoring Acquirers Seeking Financing: Canada Credit
Bloomberg, May 23, 2014

“Junk yields are very, very low, so it doesn’t cost much for companies to go on the market and do a bond offering,” Pierre Lapointe, head of global strategy and research at Pavilion Global Markets Ltd., said by telephone yesterday from Montreal. “It makes sense for them to do that and acquire a company.”


A Mixed Up Market: Dow, S&P 500 Gain, Nasdaq Tumbles
Barron’s, May 7, 2014

“Pavilion’s Pierre Lapointe and team suspect the market thinks the Fed will make a mistake: Since the Fed announced its intention to taper its QE program back in December, short-term yields moved higher while long-term yields declined. To us, this indicates two things: 1) the move to a confusing qualitative guidance from the Fed and 2) the perceived risk of a monetary policy error. Short-term rates are rising as investors understand that the Fed plans to raise rates sooner rather than later. However, longer maturity yields are falling because the market fears that rate hikes will come too soon and will kill the recovery.”


Today’s market conditions a prelude to ‘strong gains’
The Globe and Mail, April 24, 2014

“Investors have chosen to take profits and invest in laggards,” said strategists at Pavilion Global Markets, in a note. “Our historical analysis shows that these de-risk/re-risk periods are usually followed by strong gains in equities.”


U.S. forecast: a few good years, then watch for a bubble
The Globe and Mail, April 14, 2014

The U.S. economy is just past the midpoint of its boom cycle and will grant at least an additional two years of a bull market. But investors should watch for frothiness to avoid a bubble bursting at cycle’s end, according to recent research from Montreal’s Pavilion Financial Corp.


Japan’s stumbling market to rebound – but don’t bet on a big rally
Financial Post, March 5, 2014

Japanese equities are expected to rebound after a rough ride so far this year, but don’t expect another massive rally like in 2013, say analysts — not even close. “In our view, there are several potential catalysts that could move markets, though we believe they have limited potential,” said Pierre Lapointe, head of global strategy at Pavilion Global Markets in Montreal, in a note to clients. “Most importantly, our view is that more [Bank of Japan] stimulus is heavily expected but cannot be solely depended on to provide a sustained market rally.”


Emerging market stocks:  why you should ‘hold your nose and buy’ now
Financial Post, Feb 10, 2014

Pierre Lapointe, head of global strategy and research at Pavilion Global Markets, said it may be too early for tactical investors to jump back into EM stocks, considering these ongoing concerns, but longer-term investors should view equities in the developing world as attractively valued.  “For long-term value investors, the prospect of mean reversion over the next few years makes EM equities appealing,” he said in a note to clients. “Emerging market valuation has not been this cheap since the past two recessions and the 1998 Russian financial crisis.”


Emerging markets valuations still not cheap enough for bargain investors
Financial Post, February 5, 2014

The MSCI Emerging Markets Index is down more than 6% in the past month and Pierre Lapointe, head of global strategy and research at Pavilion Corp., points out the index has now fallen to the low end of its range during the past two years.  That may suggest emerging market stocks have become cheap, but that’s not necessarily the case, Mr. Lapointe says.


Is Small Better When It Comes to Investment Management?
Canadian Investment Review, February 4, 2014

The study was used to compare the performance of those managers with ‘entrepreneurial’ qualities of high employee ownership and smaller size with managers that are owned by an institution and larger in size. The analysis was a self-described ‘Moneyball’ type approach to manager selection. Data came from the Brockhouse & Cooper (now Pavilion Advisory Group) database and covered Canadian, U.S. and EAFE managers.


S&P 500 still has room to run despite lofty valuation
Financial Post, January 13, 2014

“Valuation cannot be considered cheap anymore,” said Pierre Lapointe, head of global strategy and research at Pavilion Capital Markets, in a note to clients. “However, we would not conclude that equities are expensive yet.”


The six biggest business stories to watch in 2014:  Politics will guide U.S. recovery
The Globe and Mail, January 3, 2014

U.S. politics will grip international investors in 2014 because the relative optimism about the global economy’s prospects is geared almost entirely to the U.S. outlook. Pavilion Global Markets finds that when American equities rise, global stocks follow. The lack of panic at the Bank of Canada about Canada’s lacklustre growth is rooted in confidence that the U.S. is on the verge of buying a lot more exports. America is once again the world’s undisputed economic leader.


Central Banks Split on Stimulus in 2014 as Fed Tapers
Bloomberg, January 5, 2014

Signs that the world’s largest economy is strengthening may be enough to rally equities in the U.S. and abroad, said Pierre LaPointe, head of global strategy and research at Pavilion Global Markets Ltd. in Montreal. His research shows that shifts in U.S. equities explained about 40 percent of the moves in German and U.K. stocks since 2000.