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Hi,
 
Trust this note finds you well as we look back on the Labour Day long weekend.
 
Your portfolio posted gains again in August. You have experienced positive performance in 2020 and over the last twelve months.
 
August’s rise in North American markets represent a fifth straight monthly advance.
 
For the United States (U.S.), the fastest stock market correction in history (February to March) has now been followed by its fastest recovery (April to August).  It took 175 days for the U.S. stock market to go from trough back to peak. This historically takes an average of four years. The rebound has also been felt in the Canadian stock market index but at a slower pace.
 
Gains have been concentrated in a handful of Technology companies to the point where the five largest companies in the S&P 500 account for more than a quarter of its value. This reflects the uneven nature of the recovery – some businesses have seen demand for their services growth while others have dropped. The trends around working remotely and closed borders continue to reinforce this local, home bound focus and domestic economic activity.   
 
Another trend supporting the economy are the historically low levels of interest rates. In Canada, mortgages are being offered with interest rates of below 2% for the first time ever. As homeowners’ mortgages come due, they are able to renew at materially lower rates which effectively acts as a tax cut (expenses going down). The same is true for businesses, which leaves more capital to invest or retain as profits. In our view, low interest rates will be here for much longer than expected.
 
Our investment strategy remains sound and continues to evolve to align with the positive trends and avoid the negative ones.
 
You have been and are in a strong position financially.
 
The view from Brian Belski, BMO’s Chief Investment Strategist:
 
“The S&P 500 recorded its best August performance since 1986 … climbing to a new all-time high for the first time since February. [This] marks the strongest five-month gain for US stocks since 1938. This epic price recovery has been fueled by continued monetary stimulus and most recently boosted by the Fed’s confirmation of the lower for longer interest rate environment, but a stellar Q2 earnings period, improving economic data, and vaccine progress have also been key tailwinds, helping investors to make the important pivot from chaos to coexist as it relates to COVID-19. And while we do expect the myriad of uncertainties that investors face to bring bouts of elevated volatility in the coming months, we believe that US stocks still have some upside ahead…. While Canadian stocks have certainly exhibited an epic price recovery from the March lows, the challenges of the two largest sectors (Energy and Financials) have seen the TSX decouple from the US. In fact, while the US is already above pre-COVID levels and hitting new all-time highs, the TSX remains almost 8% below the previous peak. However, with the strong momentum and wherewithal exhibited by stocks, companies and investors since the market lows, we believe these more challenged sectors, particularly Financials, are likely to gain momentum and add fuel to the TSX price performance over the next 12 months. Indeed, we expect Financials to eventually participate in the recovery with much higher conviction than is currently priced in, and when it does, the TSX is likely to see strong outperformance and hit new all-time highs... No doubt the uncertainty and chaos that COVID-19 impressed upon the
world has shifted investor preferences, but as the market continues to pivot from the chaos to coexist, we believe Canadian stocks will ultimately participate.” Portfolio Strategy – September 2020. BMO Capital Markets.
 
-          Stocks in your portfolio that made a new 52 week high this past month: Accenture*, CN Rail*, Home Depot, Kraft Heinz*, MasterCard*, Microsoft*, Qualcomm, S&P 500 Index, United Health*
 
 
  • Stocks in your portfolio that made a new 52 week high this past month: Accenture*, CN Rail*, Home Depot, Kraft Heinz*, MasterCard*, Microsoft*, Qualcomm, S&P 500 Index, United Health*
     
  • Stocks in your portfolio that made a new 52 week low this past month: None
     
  • The Loonie gained two cent versus the US dollar to $0.77
 
Thank you.


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.