September 2023 - Monthly Update
Kaitlyn Richardson - Sep 01, 2023
Listen Here:
Your portfolio performance was break even to slightly down in August. It remains with positive performance over the last 12 months.
Stock markets unwound some of their prior month’s gains. This type of consolidation is normal following the positive first half of the year.
Bond markets were steady and positive. There is a growing consensus that overnight interest rates have peaked. The expanding stability in bond markets is building our confidence that we have effectively entered the plateau stage of this interest rate cycle. The next phase is interest rate cuts and an easing of financial conditions for the economy.
On the economic front, the United States (U.S.) Is widening its lead over Canada. The U.S. posted another positive quarter (Q2) for gross domestic product (GDP) while Canada's GDP contracted by 0.2%.
When the time comes for interest rate cuts the motivation by our respective central banks will reflect this difference.
Rate cuts in Canada will be intended to help cushion a slowing economy. In the U.S., rate cuts will provide fuel for economic expansion while their inflationary headwinds continue to fade.
Quarterly earnings were better than expected and "artificial intelligence (AI)” replaced the word "recession" as a keyword to accompany results in the U.S.. There, businesses are using AI software applications to reduce the waste (of time and resource) which increases what is left over as profits. AI is not replacing people for jobs. Everyone that wants a job has a job in North America.
As is often the case, the domestic U.S. economy will lead the cycle of expansion with Canada to follow.
We continue to be realistic and constructive on the longevity and duration of the current cycle of growth.
You and your investments are in a strong position.
The view from Brian Belski, BMO's Chief Investment Strategist:
“The S&P 500 snapped its five-month winning streak last month with the index [declining], although a strong rally in the final days of August mitigated some of the weakness. Nonetheless, the market remains up [year to date] and first eight-month performances of this magnitude have typically translated into further gains for the remaining four months historically. In addition, economic and earnings data remain resilient despite investor worries regarding the higher-for-longer interest rate narrative. Therefore, unless trends in these data take a significant turn for the worse, we continue to believe higher stocks prices are the path of least resistance through year-end. In fact, we believe a fabled soft-landing scenario has become increasingly more likely… The S&P/TSX declined… in August, slightly outperforming the S&P 500. There have been a few notable performance shifts over the last few months, both the Energy and Health Care sectors have started to rebound and are the only sectors up double digits over the last 3-months. Meanwhile, Consumer Discretionary was easily the worst performing sector in August and is now trading broadly inline with the TSX year-to-date. Interestingly, the TSX continued to see increasing breadth of performance, with nearly half of S&P/TSX stocks outperforming the index in August. Overall, despite continued challenges in the Financials and Materials sectors over the last several months, we continue to believe the TSX remains well positioned to outperform in the near term.”
Stocks in your portfolio that made a new 52 week high this past month:
Mastercard*
Stocks in your portfolio that made a new 52 week low this past month:
Bristol-Myers*, Telus*
The Loonie declined by two cents versus the U.S. dollar to:
$0.74
Thank you,
Ian, Gab, Kaitlyn & Nataliia