BMO Nesbitt Burns
1 First Canadian Place
38th floor, P.O. Box 150
June 2021 - Monthly Update
Trust this note finds you well as we launch into summer.
Your portfolio made gains in June. You remain with positive performance over the last twelve months.
As we move into the summer, the recovery is unfolding as planned and hoped.
This is great progress and the positive trends in place are set to continue.
Canada and the United States (U.S.) are now more than 50% fully vaccinated.
The economy on both sides of the border has reopened.
Jobs are being created and people are going back to work.
The conversation is shifting from one of recovery and reopening, to one of growth and expansion.
The long stated plan is unchanged: keep the stimulus in place to achieve an enduring period of full employment and lasting economic expansion.
All of the above continues to occur and people are feeling more confident about their own futures.
While there will be some bumps along the way, the economic foundation we are building off of is strong and even more resilient thanks to our experiences of the last 18 months.
There are many reasons to be constructive on the future and where we are headed in the years ahead.
You remain in a strong position financially.
The view from Brian Belski, BMO’s Chief Investment Strategist:
“The S&P 500 rose… in June, the fifth straight monthly gain for the index... The central theme during the month seemed to be this notion of “peak” as it relates to inflation, growth, and policy support. The expectation that peak inflation may be in the rear view mirror with growth soon to follow, along with a more hawkish -than -expected Fed, took the wind out of the reopening trade and helped spur the outperformance of growth over value. This peak rhetoric also led to some investors contemplating whether current price levels may be “as good as it gets” for stocks in 2021. However, we believe there is more room to run, especially as companies continue to build on the earnings recovery displayed in recent quarters. With that said, we think investors should be prepared for a 2H that will bring weaker gains than those seen in 1H, along with more frequent bouts of volatility and price choppiness as the recovery matures and investors digest the market implications of an EPS -driven environment… Canadian equities continued to march higher in June... Although this sharp recovery is unlikely to be matched in the second half of 2021, we continue to believe Canadian equities provide attractive value opportunities and room to beat still relatively modest expectations…Overall, our continued bullish outlook for the TSX is driven by several key pillars of strength that we believe remain supportive of earnings growth and the path back to normalcy. Firstly, the US will likely remain the key engine of global growth on epic stimulus measures and the gradual re-opening of the North American economy, which we believe is still in the early to mid -stages of recovery. Given the strong cross-border relationship, this will continue to be a tailwind for Canadian equities and earnings growth in the quarters ahead. We also believe analysts have been reluctant to factor in a more optimistic scenario and have been merely chasing a faster-than-expected recovery , leaving room for further positive surprises for earnings and the market in general. Furthermore, cautious corporations have continued to sit on cash and cash flow, and only recently have started to increase corporate actions like dividend growth, share buybacks , and M&A. As such, we believe the TSX is likely to continue to set new all -time highs in the second half of 2021 as confidence in the earnings recovery grows and the market slowly transitions back to normalcy.”
- Stocks in your portfolio that made a new 52 week high this past month: Accenture*, Fortis*, JPMorgan*, Microsoft*, Royal Bank*, S&P 500 Index, Telus*
- Stocks in your portfolio that made a new 52 week low this past month: None
- The Loonie declined by two and a half cents versus the US dollar to $0.805
We wish you and your family all our best for an excellent summer.
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.