March 2024-Monthly Update

 

Hope this note finds you and your family well as we change the clocks and round into spring.

 

Your portfolio posted gains again in February for the fifth consecutive month. It remains with positive performance over the past 12 months.

 

The economy in the United States (U.S.) grew at an annualized rate of over 3% in the fourth quarter. The U.S. commerce department reported upgrades to consumer spending, state and local government investment as well as residential and business outlay in the quarter. Growth in business investment was also revised higher last quarter driven by upgrades to spending on non-residential structures like factories.

 

Domestic demand was stronger than initially thought while inflation was fairly mild.

 

In the U.S. inflation is within the U.S. Federal Reserve (FED) target range. Economic growth continues to be consistent and widespread. Normalized levels of inflation and economic growth lead to overnight interest rates following a path towards normalization around the 3% level.

 

Financial markets expect the FED to start decreasing the overnight interest rate in June. This represents one element that continues to support the domestically driven cycle of economic expansion underway in the U.S.

 

As investors, the present conditions and trends of the future help to answer two important questions.

 

1. Should we be making any material changes to our current investment positioning?

No

2. Should we expect to add to the gains of 2023 and 2024 in the months ahead?

Yes

 

The U.S. economy is the biggest and best structured in the world. Our investment market preference remains aligned to exposure to the U.S. economy (which began almost 15 years ago). These long-term trends reinforce our existing investment strategy to prefer stocks in the U.S. and bonds and bond-like stocks in Canada.

 

You and your investments remain in a strong position.

The view from Brian Belski, BMO's Chief Investment Strategist:

“

The S&P 500 jumped sharply during February… on the heels of some extremely impressive earnings results from several high-profile names within the index and is now sitting roughly at our current 2024 year-end target of 5,100. Nonetheless, we remain comfortable with our current number and prefer patience unless incoming data suggest a change in our base case assumptions is warranted, which at this point it has not, in our view. In addition, we believe the almost unimpeded rally off the October 2023 low and elevated valuation levels necessitate some near-term caution, if history is any sort of guide. Fortunately, the somewhat unexpected strength and resilience in earnings is likely to sustain stock prices since this is a trend we expect to continue throughout the year... Therefore, we would advise investors to not be too concerned should the market encounter some weakness in the coming months, as we expect, and instead treat any such periods as an opportunity to increase exposure to favored positions within portfolios… Although the S&P/TSX posted another gain in February… the TSX continued to struggle against the US with the S&P 500... From our perspective there remains significant apathy towards Canadian equities from both domestic and foreign investors alike. In fact, foreign investors were record net sellers of Canadian equities in 2023 and domestic investors have been clearly increasing their cash position relative to domestic equities. As such, we believe as equity flows begin to stabilize, and the fundamental strength of Canadian equities becomes more apparent, these trends will become contrarian positives for Canadian equities.”

 

Stocks in your portfolio that made a new 52 week high this past month:

Accenture*, Canadian National Rail*, Home Depot*, Mastercard*, Microsoft*, S&P500 Index, Thomson Reuters*, Qualcomm*, Waste Management*

Stocks in your portfolio that made a new 52 week low this past month:

Bristol-Myers*

The Loonie declined one cent versus the U.S. dollar to $0.735

We wish you and your family all our best.

 

Thank you,

 

Ian, Gab, Kaitlyn & Nataliia