March 2023 - Monthly Update
Ian Peebles - Mar 01, 2023
Hope this note finds you well as we approach spring and get set to turn our clocks forward.
Stocks and bonds declined in February following January’s strong start to the year.
As we've shared in our conversations of the last six months, our expectation is that the economy will find its inflection point later this year and a new cycle of economic growth will begin. Every passing day reinforces that the cycle of recovery is now underway for investment markets. The domestic economy in the United States (U.S.) will lead this next cycle of growth in North America and Canada’s economy will follow. In the medium term, the Canadian dollar will weaken against U.S. dollar. Canada will begin a cycle of lowering interest rates before U.S.
Being a successful investor over the long term includes identifying and understanding the important trends.
Often these trends are quantifiable (employment, income, economic activity, growth, etc.). Taken together, they reflect present conditions which we use to extrapolate into the future. As we have mentioned repeatedly, the present conditions for the North American economy are sound. Businesses are in a great shape financially as evidenced by the most recent quarter of earnings. They are incredibly profitable. With dividend payments going up, the outlook for their individual businesses is also bright. Hundreds of thousands of people are starting new jobs every month which also bodes well for their individual futures. These two pillars form a solid foundation to build from economically as well as a safety net to smooth out the inevitable economic bumps along the way.
Other trends are harder to quantify in an empirical sense yet remain important components to the overall trajectory for an economy and the big picture. Confidence is one such trend.
On that note, pessimism peaked last fall. For confirmation look no further than the headlines.
Last year the question was how much worse can things get economically as we head into the winter. The conversation anticipated an economic collapse that was to be severe (hard landing for the economy in financial jargon) accompanied by significant job losses. In hindsight, that did not occur and the discussion transitioned to an economic slowdown and small contraction (soft landing). Fast forward to today and we know the economy did not contract or collapse. Rather, it continues to grow at a slow pace. Now, we are introduced to the possibility that the economy will not contract at all (no landing). As investors, our expectation should be to complete the short recovery from last years temporary declines and shift back into an environment of absolute growth over the next year. In the meantime, the income from our individual investments has risen and with every day that goes by we are being paid more while we wait for the return of higher investment values.
Your investment portfolio remains in a strong and stable position.
The view from Brian Belski, BMO's Chief Investment Strategist:
Stocks in your portfolio that made a new 52 week high this past month:
Stocks in your portfolio that made a new 52 week low this past month:
Johnson & Johnson
The Loonie was unchanged versus the U.S. dollar at:
Ian, Gab, Kaitlyn & Nataliia