October 2024 - Monthly Update
Nataliia Riabenko - Oct 01, 2024
Hope this note finds you and your family well.
Your investment portfolio posted steady gains in September. It remains with positive performance (+15% or $68.000)over the past twelve months.
In the United States (U.S.), the medium-term trends of a strong job market, normalizing inflation, and an expanding economy continue to endure. This is reflected by the stable and constructive behaviour of North America investment markets.
In the short term, we have identified a few emerging trends that reinforce the trajectory of an expanding U.S. economy as the most likely path going forward to bolster the medium-term trends and our constructive outlook for investment markets.
The technology sector (which had been the driver of gains during the start of this cycle of growth in 2023) has been lagging investment markets over the last four months. We view this as a normal pause after a strong period of leadership. We expect to maintain a healthy exposure to this sector into the future.
At the same time, there was a broadening of participation to other sectors during the summer. A greater number of investments contributing to the cycle of growth is a healthy sign and builds on our confidence in the path for the future.
Innovation, creativity, and prosperity originate from the private sector not the public sector. This has always been the case and will continue to be true into the future.
Let’s remember we have great leadership here in North America. It is found in the private sector.
These incredibly well-run, massive businesses that we own are profitable and central to the economy. They already have a plan for every scenario and possible future outcome that will allow them to navigate it undistracted, thrive and be bigger and more valuable as time goes on.
Economic conditions in Canada continue to favor bonds and bond like stocks. The cycle of interest rate cuts will progress into 2025 / 2026. It follows that the income streams from these investments become more valuable, leaving us to expect to add to the price gains that we have already enjoyed so far in this cycle.
A new round of corporate earnings begins at the end of this week lead by U.S. banking sector. We expect earnings to come in ahead of consensus expectations and guidance to continue to move higher.
You and your wealth remain in a strong position.
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The view from Brian Belski, BMO's Chief Investment Strategist:
“Through the first eight trading days of the month, it appeared that September was well on its way to living up to its worst month of the year moniker ... Those losses proved to be short-lived as the index staged an impressive rally into month-end, particularly following the somewhat surprising 50-bps rate cut by the Fed and finished the month up … to mark its fifth consecutive month of gains … Given continued market strength we decided to increase our 2024 year-end S&P 500 price target … since our work suggests that a stronger-than-normal 4Q is likely in store for the market when this sort of YTD gain is put into a similar historical performance pattern context … and especially since the Fed has shifted to easing mode. Nonetheless, we do not expect the path to be a smooth one, as investors continue to debate the size and scope of the Fed’s easing campaign, as well as all the uncertainty surrounding the upcoming election. That being said, we continue to be staunch advocates of a “buy the dip” strategy since we believe US stocks remain firmly within a bull market that has at least a few more years of life to it if history is any sort of guide... The S&P/TSX gained … in September closing the month at a new all-time high and just 2% off our 2024 year-end price target. Furthermore, the TSX gained … in the third quarter, outpacing the S&P 500 … marking the strongest Outperformance for Canada since the first quarter of 2022. Indeed, all sectors posted positive returns during the quarter and half the sectors in Canada posted double digit gains, led by the more interest rate sensitive areas like Real Estate, Financials and Utilities. While there has certainly been a yield focus to the recent rally, which does benefit Canada, this rally has been a generalized “Buy Canada” trade that is exhibiting improvement in overall equity market flows; a trend we expect to persist well into 2025. Overall, this positive broad-based, low dispersion rally among TSX sectors is a positive sign that the market is beginning to see improving breadth and confidence in the fundamental backdrop of Canadian equities. As such, as valuations normalize faster than expected, we believe the market will likely pass our … year-end price target sooner, rather than later.”
Stocks in your portfolio that made a new 52 week high this past month:
Fortis*, Home Depot, Johnson & Johnson, MasterCard*, Royal Bank*, S&P 500 Index, TD Bank *, United Health*
Stocks in your portfolio that made a new 52 week low this past month: None
The Loonie eased half a cent versus the U.S. dollar to $0.74
We wish you and your family all our best.
Thank you,
Ian, Gab, Kaitlyn & Nataliia