BMO Nesbitt Burns
1 First Canadian Place
38th floor, P.O. Box 150
Toronto, ON
M5X 1H3

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The Month In Our Words

Trust this note finds you and your family well as we move through the summer.
Your investment portfolio declined in August. It shows a small retraction in performance over the past 12 months.
The strong rally in stock markets from their mid-June lows reversed course mid-August, leading to declines on the month for all the major stock indices.
Domestic economic activity in the US remains strong. The most recent data show gains in the service sectors and a softening of additional inflationary pressures. While overall inflation remains high (+8%), signs of disinflation continue to emerge (for example the price of oil and gasoline continues to move lower). This reinforces our comments that inflation is not getting worse, which is a pre-condition to it getting better.
The United States (U.S.) dollar is the strongest it has been in 20 years versus global currencies like the British Pound, Euro and Japanese Yen.
A subtle consequence, the U.S. is effectively exporting inflationary pressures to those countries. As a result, their cost of imported goods are higher with a lower value of currency. The opposite is true for the U.S. (imports are less expensive).
The impact for Canada has been neutral as the Canadian dollar has predominantly been within a five cent range of eighty cents per U.S. dollar for the last seven years.
Further progress has been made around building a consensus in markets over the path of over night interest rates. On September 7th, the Bank of Canada started the conversation around the economic conditions to bring about rate cuts. Consensus building on this front will continue September 20th with the next rate hike from the US Federal Reserve.
This is not to imply we expect rates to come down immanently. Rather it is to illustrate that none of these patterns remain linear. They move in cycles. In the case of overnight interest rates; higher, sideways and then lower. We are just as interested in the trends of where we are today as we are of anticipating when those trends will shift in the future to position our investments accordingly.
When the time comes, we expect Canada to cut interest rates ahead of the U.S. Our bias is for a weaker Canadian dollar in both the short and medium term.
Our investment strategy of the past decade remains unchanged: A diversified collection of high quality, profitable businesses focused on the domestic U.S. economy with exceptional leadership. These businesses we own continue to grow, innovate and thrive while navigating periods of uncertainty to emerge bigger and better.
Your investment portfolio remains in a strong position.
The view from Brian Belski, BMO’s Chief Investment Strategist:
“The rebound in US stocks off the mid-June lows faded during the back half of August sending the S&P 500 index tumbling… for the month, marking the weakest August
performance since 2015… [T]he path of least resistance clearly turned to the downside as shifting Fed expectations to a higher for longer interest rate path, ramp-up in quantitative tightening, and persistent inflation fears once again raised the anxiety quotient in the market, pushing stocks substantially lower. Despite the price pullback, we remain bullish on US stocks for the remainder of 2022 and do not view a recession as an inevitability given the continued labor market strength and earnings resilience. While we do expect equities to stage a strong rally into yearend, there will likely be volatility along the way, especially considering that stocks are approaching the most seasonally volatile period of the calendar year, but with that volatility will come opportunities for investors who are focused on stock-picking…. The S&P/TSX declined… in August, well ahead of the… decline in the S&P 500. Indeed, the strong income and valuation position of Canadian equities was on full display in the month as Canada managed to outperform most global markets in August, despite soft energy and gold prices… Overall, while not immune to market volatility, we continue to believe Canadian equities offer an area of stability as global equity markets struggle with stubbornly elevated inflation and recessionary risks.” Portfolio Strategy – September 2022. BMO Capital Markets.


-     Stocks in your portfolio that made a new 52 week high this past month: United Health*, Waste Management*


-     Stocks in your portfolio that made a new 52 week low this past month: None


-     The Loonie declined two cents versus the U.S. dollar to $0.76

Thank you and 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 or ask your BMO Nesbitt Burns Investment Advisor for a copy.


Click below to see our previous monthly updates:

July 2022
June 2022
May 2022
April 2022
March 2022
February 2022
January 2022
December 2021
November 2021
October 2021
September 2021
August 2021
July 2021
June 2021
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December 2020
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