April 2024
Stéphane Rochon, CFA, Equity Strategist; Richard Belley, CFA, Fixed Income Analyst; Russ Visch, CMT, Technical Analyst; Eric Yoo, Associate; Ernad Sijercic, Associate
Lest you think you missed some major local news, the rate cuts to which we refer are not from the Bank of Canada (“BoC”) or U.S. Federal Reserve (“Fed”). At least not quite yet. Rather, it was the Swiss National Bank (“SNB”; which punches above the country’s demographic weight in financial circles) and the Bank of Mexico which eased very recently. Why does this matter for investors? Simply put, rate cuts boost future economic growth (primarily through better consumption and housing strength), and equity markets anticipate this well in advance of official economic data. It is therefore no surprise that stocks have performed admirably during “easing cycles”. While we have been consistently bullish on stocks since the end of 2022, we do concede that markets feel a little stretched at this point, especially among high flying AI-related stocks. In our view, a minor 4-5% pullback would present an attractive opportunity in lagging sectors. We hasten to add that the numerous models and indicators we track show a very low likelihood of a more painful 10-15%+ correction at this point. Our technical analyst believes one area that looks very promising for new money are commodity stocks (Energy, Base and Precious Metals) where we’ve seen several breakouts in underlying commodities.
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Do not hesitate to give either of us a call at 416 359-7565 or 416-359-7564 or email Sharon Kubicek or Alisa Carli if you have any questions respecting your portfolio and the prevailing investment, economic and political issues at play today.