Recent economic data for the first quarter of 2018 suggests the global economy cooled off from its red-hot pace of the second half of last year. However, economic activity remains well above its trend (or potential) growth rate, resulting in diminished excess capacity across most economies. This is reflected in declining unemployment rates and rising capacity utilization rates. As a result, inflation readings have ticked higher as tighter labor and goods markets result in stronger wage gains and quicker price increases. In response, central bankers, including those in Canada and the United States, have become more confident in tightening monetary policy. Strong growth, diminished excess capacity, and rising inflation and interest rates are all consistent with an economy in the later stages of its business cycle. Officially, this is the second-longest U.S. recovery in the post-war period at 8 years and 10 months so far. However, most reliable recession risk indicators (such as yield curve slope, real interest rates, output gap, unemployment rate, credit spreads, etc.) continue to suggest the odds of a recession materializing in the next twelve months remain modest. Thus, notwithstanding a typical increase in market volatility at this point in the cycle, we remain constructive on equities relative to fixed income with a bias toward economically-sensitive segments across asset classes.