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May 2021 - Monthly Update


Hi,
 
Trust this note finds you well as we launch into summer.
 
Your portfolio was breakeven (no gain no loss) in May. You remain with positive performance over the last twelve months.
 
The United States (U.S.) economy has now completed its recovery from the pandemic shut-down, as measured by Gross Domestic Product (GDP). A new expansionary cycle is now underway in the U.S. In time, Canada’s economy will complete its recovery and follow the U.S. into growth.
 
Companies is the U.S. just reported their best quarter of earnings ever.
 
Stock markets in Canada and the U.S. sit at all-time highs.
 
All forms of economic stimulus remain in place to support the return to full employment and an enduring new cycle of growth.
 
The number of job openings in the U.S. now stands at over 8 million – an all-time record. Coincidently, this is roughly the same number of jobs that American policy makers feel they need to regain to complete a recovery in employment. We know it takes time to match these two sides of the same coin. Stimulus is to remain in place well after this is accomplished to ensure an enduring cycle of growth and the job gains stick…this is after all the plan to pay for all the spending.
 
A strong, stable, growing U.S. economy is good for (in this order):

1) Americans (because their economy is domestically orientated)
2) Canada
3) The World 

There is every reason to be constructive on the opportunities to participate in this new cycle of growth by investing in high quality U.S. and Canadian businesses.
 
The world will be more local and domestic than it was in 2019.
 
Industries such as technology, health care, transportation and the consumer sector will continue to benefit from the tailwinds and positive trends already in place.
 
While there will be periods of transition and bumps along the way – as there always are – we continue to expect a new leg higher to begin later this year.
 
You remain in a strong position financially.
 
Our strategy is sound and unchanged: Own a properly diversified portfolio of high quality U.S. & Canadian investments aligned with the positive and enduring trends.
 
The view from Brian Belski, BMO’s Chief Investment Strategist:
 
“US stocks rose… in May, the fourth straight monthly gain for the S&P 500, but a deceleration from the price returns exhibited during the February through April period. Inflation dominated market headlines in May with investor anxiety reaching a crescendo as April US CPI sharply surprised to the upside, leaving many investors contemplating the implications this could have on future Fed action as well as overall market performance… Q1 earnings season also wrapped up with S&P 500 companies blowing away expectations, posting record levels of EPS growth, surprises, and beat rates, and annual EPS estimates being revised higher at a blistering pace… As we look to the months ahead, we do see slightly weaker and more volatile price returns in 2H compared to 1H as an earnings-driven market unfolds, but this should also bring plenty of stock-picking opportunities for active investors… Canadian equities maintain solid price momentum in May… In fact, this momentum was propelled by another epic positive surprise cycle that saw a strong majority of S&P/TSX companies meaningfully beat upwardly revised estimates....Overall, we continue to believe that the TSX will trade at a discount to the more technology-heavy S&P 500.”
 
-          Stocks in your portfolio that made a new 52 week high this past month: Accenture*, Bristol Myers-Squibb, HomeDepot*, JPMorgan*, Kraft Heinz*, 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 one and a half cents versus the US dollar to $0.83, a four year high
 

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.