The Panic of 2008 led to a sharp contraction in the US economy last winter. But by mid-year 2009, the US economy got back on the growth path. Real GDP growth spiked 5.7% in the final quarter of 2009, the fastest pace since 2003.

Despite this spike in growth, and a drop in the unemployment rate, pessimism is still prevalent. Many economists argue that fourth quarter growth was a function of inventory building, not real growth. This past weekend, former Federal Reserve Chairman Alan Greenspan said the recovery in 2010 will be “trudging.”-continued

Canadian and U.S. equities may be entering a period of consolidation in 2010. This view is, in part, based on historical trading patterns. Following the strong market gains exiting past recessions, the market consolidated, as seen in late 1975, 1984 (technically the most similar to today), 1994 and 2004.

The duration and potential downside risk through these periods will likely be a function of the rate of change in the economic recovery, the speed of the earnings recovery, and interest rate changes.-continued

Global equity markets came under selling pressure during the month of January as investors became pre-occupied with several factors that might contribute to slowing the pace of the economic recovery investors had priced into valuations during the latter part of 2009.

Included among those factors was evidence that Chinese banks have been encouraged by their regulators to restrict new loans in an effort to restrain credit after a large increase in lending early in January; recent reports suggest that bank lending dropped significantly as a result.-continued

The Raymond James Canadian Focus Picks Portfolio is a mutual fund that invests in securities that make up the Raymond James Canadian Focus Picks List.

Stock selection for the Fund is a bottom-up process anchored by recommendations from Raymond James Canadian Research Analysts.-continued

The Fund ended the month with 18 positions, comprised of 97.52% in equity holdings and 1.85% in cash on a net asset basis. Following the EnCana Corporation spin out, in order to lower our exposure to what we believe is a weak

natural gas market, we sold our EnCana Corporation stub and increased our stake in Cenovus Energy (CVE), which we view as having a more attractive growth profile and greater upside.-continued

S&P/LSTA All Loans Returns 3.20% in September up 10.53% for the Quarter The S&P/LSTA all loans index returned 3.20% in September, finishing a quarter that saw the loan market return 10.53%. While this was impressive and eclipsed both High-grade Corporate and 10 year Treasury indices for the quarter, the return did not exceed

those of the Equity and High Yield Bond markets, each of which returned approximately 15%. The Loan market continued to be led by beaten down cyclical sectors including Chemicals/Plastics and Building/Development. Despite the continued rally in these sectors, the average bid within these industries remains below the broader index of 85.08.-continued