Big Rebounds in Q3

Most western economies are headed for big rebounds in Q3 as countries enter different stages of re-entry from the lockdowns of Q2. As an aside, the monthly GDP gains of 6.5% reported for June, and the estimated 5% in July, means that GDP would already be up a massive 41% annual rate versus the Q2 level. Another example of indicators pointing to a significant increase in Q3 is the flash estimate on July manufacturing sales for an 8.7% gain, representing a mammoth 159% annualized figure above Q2 levels. It’s also worth mentioning that for the first time in four months our Economics Team is revising their estimate on Canadian GDP growth for 2020. Meanwhile, our Chief Equity Strategist, Brian Belski is maintaining his forecasts for the major indices, calling for the S&P 500 to finish the 2020 calendar year at 3,650 and hit 3,850 over the next 12-Months and the S&P/TSX to finish the calendar year at 18,200 and hit 18,700 over the next 12 months. While we ascribe to this more upbeat tone for the overall economy and markets in general, we are also well aware of the potential for some mixed emotions and unwanted volatility centered on the U.S. election. We maintain our belief that while governments tend to enhance or detract from overall market performance, they do not change the overall direction of the market, and in our view the direction of the markets over the next 6 to 12 months is positive, regardless of the election outcome.

If you would like to discuss further, please email us or call 403-296-9086.