April 2021 - Monthly Update
Trust this note finds you well.
Your portfolio declined in April. You remain with positive performance over the last twelve months.
Here is what we know about the US economy (as measured by gross domestic product GDP).
It is now 1% below its all-time (pre-pandemic) high following another solid quarter of GDP growth to the end of March 2021.
What is the most likely path forward? This recovery cycle was completed in April 2021 and a new cycle of GDP expansion is now underway. We expect that the US economy will exit 2021 bigger than ever.
A strong, growing, stable US economy is good for Americans (their economy is domestically driven unlike Canada’s which is export). It is also good for Canada and the rest of the world.
The plan in the US is to continue to invest (which means spending and stimulating) to generate a structurally higher and enduring trajectory for growth.
A typical cycle of expansion lasts four years on average.
We believe the cycle that is just beginning can last longer than average given all of the foundational pieces that are in place.
There is reason to be constructive on the medium term while acknowledging there will be bumps along the way – we know growth is seldom linear. In fact, given the recent continuation of strong investment market gains it would not surprise us to see markets take a pause to digest these gains while the economy continues to grow.
Looking ahead, the world will operate more local and domestic while a little less international. This shift in demand creates positive trends while accelerating the trends that were already in place before the pandemic (on-shoring supply chains and working from home to name two).
Industries that lead the recovery (technology, health care, transportation, etc.) will continue to lead in the new cycle as they participate in the positive trends that are unchanged.
Our investment strategy is sound and remains unchanged.
You continue to be in strong position financially.
The view from Brian Belski, BMO’s Chief Investment Strategist:
“US stocks logged their best monthly gain since November… and once again climbing to new all-time highs. The path of least resistance remained to the upside despite a host of bearish concerns coming to the surface in the form of seasonality, higher taxes, extreme investor sentiment, and inflationary pressure… And while we acknowledge that these
concerns may eventually lead to short-term weakness and price choppiness at some point in the coming months… we do not see the longer-term outlook for US stocks being altered anytime soon, which continues to be underpinned by solid fundamentals and improving economic growth. As such, we advise investors to stay invested in US stocks rather than trying to time the market at every turn, and use bouts of weakness and volatility as opportunities to add to positions... Canadian equities maintained their strong momentum in April... While surging Energy and Financial stocks have been key in propelling the TSX to new all-time highs, performance also broadened out significantly with the percent of stocks outperforming the S&P/TSX over the last 12 months at the highest level since 2010. Overall, we continue to believe the cyclical areas are well positioned to outperform in the near term and the TSX will likely maintain slower but positive momentum through the remainder of 2021.”
- Stocks in your portfolio that made a new 52 week high this past month: Accenture*, CN Rail*, Fortis*, HomeDepot*, Kraft Heinz*, MasterCard*, Medtronic*, Microsoft*, Royal Bank*, S&P 500 Index, TD Bank*, Waste Management*, United Health*
- Stocks in your portfolio that made a new 52 week low this past month: None
- The Loonie gained another two cents versus the US dollar to $0.815 (a three year high)
We wish you all our best,
Ian, Gab & Kaitlyn
* This specific security is covered under the research of BMO Capital Markets. For a full list of company specific disclosures keys please visit https://research-ca.bmocapitalmarkets.com/Public/Company_Disclosure_Public.aspx
or ask your BMO Nesbitt Burns Investment Advisor for a copy.