From the Desk of Irwin Michael – August 21, 2015 Global equity markets have declined precipitously this past week amid seasonally light volume. Interestingly, at this time of the year summertime seasonality can be quite influential on both common stock trading activity and prices due to North American and European investor summer vacations. For the record, I am writing this commentary while on vacation. This seasonality combined with U.S. Federal Reserve uncertainty, Chinese economic deceleration and stock market volatility, currency fluctuations, commodity, oil + gas and metal price weakness have largely accounted for this week’s steep market decline. Nonetheless, looking beyond these concerning issues, we continue to believe that the all-important U.S. economy is slowly, but surely moving forward at a 2-3% growth rate. Interest rates remain low, inflation is non-threatening and quarterly corporate profits are respectable. Despite this week’s disappointing stock market activity, we remain optimistic with our ABC portfolio’s re-positioning: 50% American common stock weighting primarily in selective retailers/consumer discretionary, healthcare, technology, and special situation sectors. Our significant underexposure in the Canadian resource sector particularly in oil + gas and mining. Our optimism was further bolstered today with the very positive quarterly results of two of our favoured U.S. stock holdings: Foot Locker Inc. reported Q2/2015 earnings of $0.84 versus $0.63 last year and $0.69 average consensus. Q2 store sales were $1.7 billion versus $1.64 billion last year and $1.66 billion consensus. Q2 same-store sales were up 9.6% versus 5.9% consensus. Mentor Graphics Corporation reported earnings per share of $0.36 versus a mean forecast of $0.14. In summation, we offer the following observations: 1. We believe that presently oversold markets will recover shortly to continue their upward price trajectory. 2. Interest rates will remain low with the present global market weakness and financial uncertainty possibly postponing a U.S. Federal Reserve interest rate increase. 3. The declining oil + gas/gasoline prices are providing a boost to consumers’ disposable income so as to increase their discretionary goods and services purchases. 4. We are very comfortable with our ABC Funds’ present 50% U.S. stock exposure within the consumer, health, technology and banking sectors. Combined with our 80% $USD/$CAD currency hedge, we believe that our ABC Funds are well positioned for a market recovery and a stronger 2015 investment performance. Irwin A. Michael, President I.A. Michael Investment Counsel Ltd.