April 15, 2002

North American stock markets generally marked time over the 7 weeks, with only the Canadian TSE catching up to the other major market indexes. The TSE 300 index at 7730 is up 4.1% over the last 7 weeks from the 7427 level at Feb 23/02 and up 16% from the 6669 level of Sept 28/01.It is now down 32% from its high of 11,402 in early September of 2000.Because of certain company components running significant losses, the index still doesnít have earnings, but nevertheless trades at a level to yield 1.60% on cash dividends.This compares with 22.8 times earnings and a yield of 1.28% at year-end 2000 when corporate earnings were higher. The Dow Jones Industrial Index at 10,191 is up 2.2% over the same 7-week time frame compared with the 9968 level of Feb 23/02.At its current level it has increased 17% over the 8681 level of Sept 28 and is now down only 13.3% from its all time high of 11,750 on January 14, 2000. At its current level it trades at 27.5 times trailing earnings of $370 to yield 1.77% on dividends of $180. This compares with 22 times and 2.07% on Sept 28 when trailing earnings and dividends were higher.†† The S&P 500 index continues to lag the DJ since at 1111 it is up 1.9% from the 1090 level of Feb 23/02 and up 9% from 1019 on Sept 28.It is now down 28.5 % from its high of 1553 on March 23, 2000.At the current level it trades at 44 times depressed earnings of $25 to yield 1.42% on cash dividends of $15.83. The NASDAQ at 1756 has marked time over the last 7 weeks, up 1.8% from the level of 1724 on Feb 23/02. However, it is up 20% over the 1461 at Sept 28/01.It is still down 66% from its March 9, 2000 high of 5,132.

Bonds over the last 7 weeks have fallen in price and are trading at yields higher than that on Feb 23/02. 10-year Canadas are currently trading at a 5.62% yield compared with the 5.27% yield on Feb 23/02 and compared to the 4.87% low of Nov 10/01.Over the last 7 weeks the rate varied between 5.27% and 5.81%.2-year Canada bonds are trading at a 4.22% yield compared with 3.26% on Feb 23/02 and the low of 2.69% on Nov 10/01.Over the last 7 weeks, they traded within a range of 3.26% and 4.65%.US 10-year bonds are currently trading at a yield of 5.16% compared with 4.83% yield on Feb 23/02 and with the low of 4.31% on Nov 10/01. Over the 7-week period under review, the rates varied from the low of 4.83% to a high yield of 5.43%.US 2-year treasury notes now trade at 3.36% yield compared with 2.92% on Feb 23/02 and with the low of 2.45% on Nov 10/01.During the period under review, the notes traded at prices between a high of 2.92% yield to a low of 3.73% yield.There is the likelihood that bond markets will continue to trade at these low levels, certainly until loan demand improves significantly, signs of inflation appear and the economy takes off.

The US Federal Reserve Board held pat on the overnight bank lending rate when they met on March 19/02., thus keeping the rate at the 40-year low of 1.75% after 11 cuts in 2001, the last in December.

The University of Michiganís Index of Consumer Sentiment for April slipped to 94.4 from 95.7 in March.This compares with 90.7 in Feb and 94.2 in January, thus continuing to stay encouragingly positive.

The Conference Boardís U.S. index of leading indicators stayed flat in February, compared with rises of 0.6% in January, 1.3% in December and 0.8% in November.The indicator is the Conference Boardís measure of the economy over the next 3 to 6 months. This may indicate that there is a pause-taking place in the economic recovery.

Institute for Supply Management Index ISM (purchasing) fell to 57.3 in March from 58.7 in February.

The US Trade Deficit for February continued at a relatively high level of $28.5 billion.Chances are that the March deficit will be higher due to increased prices for oil imports.

4Q GDP was revised to being up to a 1.7% annual increase compared with the 1.3% contraction in 3Q and the 1.2% annual increase for all of 2001.

US Nonfarm Payrolls for March grew by 58,000 compared with 66,000 in February.These payrolls amounted to 131.3 million down 1.4 million from the peak of 132.7 million a year ago. The unemployment rate in March increased to 5.7% from 5.5% in February.Average weekly income in March of $501.71, or $14.67/hr increased 0.3% or 4 cents/hour over Februaryís.

The US Consumer Price Index rose 0.2% in February month over month, core rose 0.3%, unchanged from January. During all of 2001, the CPI was up 1.6%. March results expected week of April 15 will show an increase due to higher energy prices.

The US Producer Price Index rose a surprisingly high 1% in March compared with the 0.2% rise in February influenced by a 5.5% jump in energy costs.

US Retail Sales rose 0.2% in March, less than expected, matching those of January.

Housing starts continue to be in an upward trend rising 2.8% in February to an annualized rate of 1.769 million, compared with 1.678 in January and 1.579 in December.This is a result of low mortgage rates and favorable weather.

The CRB index at 195 has been creeping up from the depressed lows of below 190 over the last 2 months, mainly on higher gold and coffee prices, but is still down 15% from 229 at 2000 year-end, reflecting the lack of inflationary forces in commodities.Light crude oil over the last 2 months increased dramatically to over $27 from $18, but has pulled back in recent days to $23.50, still down from $29 at 2000 year-end.Gold took off recently to the delight of gold bugs, attaining $308 in recent weeks and now pulling back to its current level of $203.Some major gold producers have either completely stopped selling gold forward or, at least, have reduced their selling programs.Supply and demand have continued to remain in balance so that there is now a strong likelihood that gold will hold at these higher levels.

In summary, corporate activity should improve over the year as inventory de-stocking ends, combined with a slight improvement in demand.Reported earnings in 1Q 2002 will, on balance, make for poor reading.It now appears that the economic recovery in North America will be gradual and tame, less volatile than those of the past.If so, this could contribute stability and confidence too investment markets.The US Federal reserve board may well decide to see how long it will take for the economy to recover and what amount of price inflation will take place, if any, during the gradual build up.If that proves to be the case, interest rates could very well continue at these current low levels into the beginning of next year.Hopefully, the Bank of Canada will not buckle to pressure from the cartel of Canadian charter banks to increase interest rates, just to improve their spreads.North American stock markets should continue to trade in a narrow range, possibly lower to reflect current reduced earnings.However, there should be good opportunities as well-managed companies get to be discovered by mainly individual investors.

The following section, LATEST PICKS, will review 15 companies, 3for the first time.

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