PLENTY OF GOOD REASONS FOR CANADIAN INVESTORS TO BUY MORE U.S. STOCKS

The U.S. Federal Reserve’s accommodative monetary policy is one reason to consider increasing exposure to U.S. equities, but it’s not the only catalyst making the trade attractive, says Charles Marleau, portfolio manager at Palos Management Inc. in Montreal.

“While we recognize that recent stock market performance has a lot to do with the application of easy money in terms of cost and availability, it remains that the U.S. economy is doing fairly well when compared to other developed economies,” Mr. Marleau said in his latest weekly commentary.

“Corporate profits are beating expectations, confidence about the future has improved and the housing sector is on a significant uptick.”

Mr. Marleau said there is also a positive trend in U.S. companies repatriating their manufacturing, noting a re- cent survey by Boston Consulting Group that showed 44% of U.S.-based manufacturing companies are planning or considering bringing back production to the U.S.

He said the U.S. is gaining comparative advantage due to low interest rates and the backing of the Fed, both of which lead to business confidence.

North American energy input costs are lower than anywhere else in the world, he added, while five years of corporate and personal deleveraging has led to a strong financial foundation.

“Moreover, given that it appears that the Fed will likely make changes to monetary policy before Canada, more exposure to U.S.-denominated securities may prove to be a good move in that U.S. dollar could make gains against the Canadian dollar,” he wrote.

GREGORY BULL / THE ASSOCIATED PRESS Miguel Fonseca carries lumber to a new home in Chula Vista, Calif. Improvement in the U.S. housing market may mean an end to the 30-year downturn in bond yields.