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bnn market call

Greg Newman is director and associate portfolio manager at Scotia Wealth Management. His focus is Canadian dividend stocks.

Top Picks:

Algonquin Power & Utilities (AQN.TO)

Algonquin Power can offer investors a relatively defensive play on power generation, transmission and distribution that pays a solid, well-protected and growing dividend. With most of its business in the U.S., investors can also benefit from a powerful foreign exchange tailwind.

Killam Properties (KMP_u.TO)

Killam can offer investors shelter from the macro storm with its eastern and central Canada-focused apartment portfolio. It offers an attractive dividend while, we believe, the company is growing at an attractive rate. Buy this stock while it trades below its five-year average multiple.

Brookfield Asset Management (BAMa.TO)

Brookfield can offer investors a high-quality way to play the growing themes of global infrastructure, renewable power, private equity and improving U.S. property prices. Buy this stock while it trades below its NAV.

Past Picks: November 26, 2014

Power Financial (PWF.TO)

Then: $35.18 Now: $30.25 -14.01% Total return: -9.31%

WSP Global (WSP.TO)

Then: $35.90 Now: $38.96 +8.52% Total return: +13.62%

Brookfield Asset Management (BAMa.TO)

*Stock Split* May 13, 2015 – 3 for 2

Then: $56.22 Now: $40.05 +6.86% Total return: +8.33%

Total Return Average: +4.21%

Market outlook:

Markets hate uncertainty. Until there is more clarity that the events out of China and lower oil will not bring about a global recession, the path of least resistance may well be down – absent more powerful catalysts. While there has been some evidence of global economic deceleration, the better view at this time still supports a somewhat constructive picture. If correct, this pullback is more likely a correction within a bull, which means better days are soon ahead.

Yet the viciousness and suddenness of this downdraft since January 1 looks far more indicative of a looming recession. Is this the market correctly signalling an economic downturn? Or was the carnage triggered in part by a lot of big money hedging at once – creating a combination of fear, uncertainty and margin calls exacerbated by the fact that broker / dealers cannot play the same smoothing role. The next few months of data will likely tell the tale.

And since we cannot be sure, holding a higher amount of cash than usual‎ is prudent at this time.While we are not aggressively buying at the moment, we are holding quality, mostly cash flow-paying positions that we believe are well positioned to benefit from the areas of strength.