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Market Commentary

Market Commentary
October 2021

Inflation remains a key part of the investment narrative and this will likely continue for the short term. The recent impact has been felt by consumers through prices at the pump, grocery store and car dealerships to name just a few examples. For manufacturers, retailers and transportation companies, critical supply chain issues continue to hurt production and increase total production costs.However, the extent of inflation on markets is more complicated since mild inflation can actually be a positive as it provides additional pricing power to well-positioned companies and confirms that the risk of a deflationary trap is behind us.

September 2021

Typically August kicks off a weaker 3-month period for markets as the August to October window is the weakest consecutive three-month period of the calendar. However, this month the S&P 500 saw the strongest August performance in the past 20 years, bucking this trend.Fed Chairman Jerome Powell made comments mid-month at the Jackson Hole Symposium, highlighting that although the economic recovery is making progress, there remains slack in the labour market leaving optimism that the central bank won’t be increasing rates any time soon.

August 2021

July saw markets add to gains made earlier this year as both Canadian and US equities ended inpositive territory. Helping drive this performance has been corporate earnings, which have been very strong for companies this quarter. In fact, this earnings season is one of the best on record, with (as of writing) more than 85% of the stocks in the S&P 500 reporting having surprised to the upside, a record over the last 30 years.

July 2021

Markets finished off the first half of the year on a strong note with equities in Canada and the US gaining over 2% in each local market. Bonds even joined in the fun as the Canadian bond universe was up almost 1% during the month. Elsewhere, after gaining close to 6% through May, the Canadian dollar gave back over 2.5% to its US counterpart during June.

June 2021
It was Canadian equities outperforming their counterparts south of the border for a change, driving equity performance for the month of May. During the month rising oil prices and strong numbers from the big banks led the S&P/TSX more than 3% higher. Meanwhile, in the US the S&P 500 was only marginally positive, but dipped into negative territory after accounting for a stronger Canadian dollar.
May 2021
North American equity markets in April posted strong performance on the back of increasing optimism about vaccine rollouts and the economic recovery. After a slow initial roll out, Canada’s vaccine distribution has picked up steam, while in the US many regions have opened up fully allowing larger gatherings and removing mask requirements.
April 2021
Steep and getting steeper. This is the best way to describe the shape of the yield curve right now. What does that mean for markets and why does it matter for investors? In a nutshell, the yield curve measures the difference between long term rates (e.g. 10 year+ interest rates) and short-term rates (3 months to 2 year interest rates). When long rates rise faster than short term rates – as they are currently doing – this has historically been a bullish sign for stocks, and particularly sectors such as financials and other cyclical stocks.
March 2021
The market narrative has shifted of late to the risk of higher inflation with an associated sharp rise in interest rates (although they remain very low by historical standards). This makes intuitive sense since vaccination is accelerating - more so in the U.S. where almost 20% of the population has received at least one shot - which should help unleash pent-up consumer demand in the second half of 2021.
February 2021
In recent weeks we have been receiving questions from clients inquiring about current market conditions. Markets have continued to rally this year, while COVID news continues to show challenges. January also saw retail investors take aim at hedge funds which have shorted names that were potentially headed toward bankruptcy.
January 2021
Happy New Year to all. This month’s update starts with a market review of 2020.  Last March, stock markets experienced one of their most dramatic downturns in history when COVID-19 forced economies to shut down. What followed was one of the fastest and steepest global recessions in decades. Then came a rapid recovery for both stocks and the global economy.
December 2020
Major indices have crossed into positive territory on a year-to-date basis, but that does not tell the market’s story this past year. A ‘roller coaster’ would be a fitting metaphor or, better still, a ‘bungie jump’. After a panic sell-off that pillaged equity markets in the first quarter, markets staged a brisk and almost unstoppable recovery for the balance of 2020.
November 2020
North American markets in October continued to slide as two main themes dominated the news cycle; increasing COVID-19 cases around the world and the US Presidential election. Since markets don’t typically like uncertainty, the absence of a viable vaccine and a close presidential race were both weighing heavily on investor’s minds.In the US, the S&P 500 was down 2.8% in Canadian dollars during the month, while at home the S&P/TSX was down 3.1%.
October 2020
Historically, September has been one of the weakest months of the year for equity performance and unfortunately 2020’s version of the month followed this pattern. Markets in both Canada and the US retreated during the month. While the uncertainty of an upcoming US election as well as being in the midst of a global pandemic can be cause for hesitation going forward, there still remains reason to be optimistic on the market. One of the most important variables for the market is the level and trajectory of interest rates, and the outlook remains very positive on that front.
September 2020
In August markets continued to recover and march higher. The Nasdaq, which initially posted a new all-time high in June reached further new highs during August as heavily weighted tech names Apple, Amazon and Google all reached new levels. Meanwhile, the S&P 500 also hit new highs during the month while in Canada the market remained slightly below levels reached before the pandemic-led correction in February. For the month, the S&P/TSX was up about 2.3%, while the S&P 500 was up just over 4.0% in Canadian dollar terms.
August 2020
Equity markets continued to recover in July posting strong gains in both Canada and the US. The month provided further evidence that economic activity has improved in each country as indivduals adjust to new procedures. Additionally, hopes for a vaccine were boosted by positive early-stage trials in a number of products.
July 2020
A significant collapse in equity markets in February and March (the quickest value destruction since 1931), followed by an equally sharp opposite reaction to the upside to the end of June, has left many investors asking whether we have recovered too far and too fast. We continue to have a high degree of conviction in the view that, among asset classes, equities hold better value than cash or bonds at this juncture.
June 2020
The V-Shaped recovery in the stock market since March lows has led many to question the sustainability of the advance. Given the unprecendented collapse in the market due to COVID-19, which was quickly followed by unprecendented fiscal and monetary stimulus, it is possible that the market will avoid retesting recent lows (which has historically been the pattern).
May 2020
After entering into the fastest bear market ever during March, markets snapped back strongly in April entering into another bull market (which by definition is a climb of 20% or more from its trough). While there remains much uncertainty with regards to how or when global economies will return to some sort of normalcy, there have been a number of encouraging signs which have lifted equity markets around the world.
April 8, 2020
What a difference a month can make. February saw markets in both Canada and US hit new all-time highs, while March saw the fastest official bear market ever (as measured by at least a 20% drop) take place. Of course the reason for this is the swift moving coronavirus – Covid-19.
April 1, 2020
Recency bias is the tendency to overweight recent experiences. It is the risk of extrapolating recent events, or short term returns in the market, and drawing conclusions from them. One week ago investors were concerned about the market going to zero, while this week investors may be afraid about missing out on a recovery.
March 24, 2020
The wild ride in the market continues, with futures limit up (as of writing at 5:15am this morning). The one thing we know for sure these days is that what is at this moment, is no indication for how things will look at the end of trading today. Markets remain focussed on the headlines, and intra-day volatility can be driven by the US Federal Reserve, Congress or the Senate, a White House press briefing, or just about anything else remotely relevant. We remain focussed on risk management and will continue to do so as we navigate this challenge.
March 17, 2020
Financial markets over the past four weeks have been on a wild ride. The fear and uncertainty surrounding COVID-19 and its impact on public health, industry and the economy have created extreme levels of volatility and days where historical correlations are irrelevant.
February 2020
Couples commonly hold property as Joint Tenants with Right of Survivorship (“JTWROS”). In certain circumstances, there are several benefits to this ownership structure. However, JTWROS ownership for couples may not always be appropriate if one of the spouses wishes to benefit children of a previous relationship, other family members, friends, charities or other beneficiaries. The attached article shows the pros and cons of owning property JTWROS.
January 2020
Like many Canadians, making the world a better place and creating a legacy aligned to your personal values, beliefs and convictions is an important wealth planning priority. Establishing a private foundation can help you achieve these priorities and give meaning and structure to your philanthropic goals. It can also help you to pass these values on to your children and grandchildren,by involving them and other family members in your giving strategy and family legacy.