Current Market Review

Current Market Review

Well it has certainly been a very unusual and eventful past six months! Given the virus, our in person meetings have been more limited over the past year.

Health Canada approved the Oxford University Astra Zeneca vaccine for use in the fight against COVID-19. Millions of Canadians are expecting to be inoculated in the coming months. In the U.S., the House of Representatives passed Biden’s US $1.9 trillion ‘relief ‘ bill. They estimate that about 9% of this will go to the American people (the rest to special interests, payoffs etc.) It now heads to the Senate for final approval.  Nevertheless, some should trickle into the economy.

We have experienced some volatility over the last month in the markets but there were some slight gains. In the U.S., the S&P 500 Index ended February slightly higher than where it started. In Canada, the S&P TSX Index started the month of February strong and ended slightly up from its starting point. The MSCI World Index, which reflects returns for developed equity markets around the globe, ended flat on the month.

Our market indicators remain up (see Market Trend chart) in this the ‘good season’ and so we should remain invested in a broadly-diversified portfolio based on our risk tolerance. In uncertain times, it is important to stay focused on our long-term goals and stay invested.

As always, should you have any questions regarding your portfolio, please do not hesitate to contact my office.

 

Current Market Review

The TSX was down 8.9% on the week ended Feb 28. The S&P500 was down 11.5% on the week.

This crash is now the fastest in one week following a new high in stocks!

Is the coronavirus a “black swan event?” i.e. ” Something that comes out of left field and is in this case different enough from past such pandemics; not as predictable, and we don’t have proven vaccines, and it may take too long to get them developed and approved as it currently stands?

The odds could favor a V-shaped rebound if there are no serious signs of the virus continuing to mushroom.” As of today this looks doubtful as it is certain to affect specific sectors. Time will tell.

We are still in the “good season” for money flows and treasury yields are at record lows which is very bullish for the market. Our three arrows remain up despite what has happened so far. We will keep our fingers crossed!

Current Market Review

As of August 23, 2019 the TSX Composite was up 12% YTD and the S&P500 is up 11% YTD in Cdn dollars. The market is down a bit from our last post but the summer as usual is more volatile and rarely up which is also the case this year.

Bond yield curves in Canada and the US have turned negative or flat. (i.e 2 yr treasury / 10 yr treasury : Can 1.37 % / 1.17% and US 1.53% / 1.54%) So given this change in yields, and given that it’s inversion often signals a recession down the road, the markets have pulled back somewhat recently.

Oil closed at $54.17 on Friday, down from our last post in May but still up 19.3% for the year so far. The embargo on Iran initially caused prices to rise in the spring but prices have fallen as inventories continue to grow thanks to other nations and the US continuing to pump out large amounts.

Global equity markets endured another volatile week last week as the U.S.-China trade dispute escalated, with China announcing retaliatory tariffs, as it had promised and President Trump following suit by imposing more tariffs on China in response. Trump also ordered US companies to curtail business with China!

Our 2 trend arrows remain but our seasonal arrow turned down mid summer and so will remain down until the later half of October at least. Stay tuned!

Current Market Review

As of April 26, 2019 the TSX Composite is up 16% YTD and the S&P500 is up 15.7% YTD in Cdn dollars. Stocks are simply normalizing the abnormal performance in Q4 2018. Stocks today are where they were at the end of last September!

As of April 26, 2019, the bond yield curves in Canada and the US remain positive. (i.e 2yr treasury / 10 yr treasury : Can 1.55/1.69% and US 2.29 / 2.5%) So as a recession watch this is good.

Oil closed at $63.30 on Friday up 39.4% for the year so far. The embargo on Iran has caused prices to rise this year. But President Trump told reporters on Friday he ‘called up OPEC to bring prices down’. And sure enough prices fell sharply on Friday erasing all last weeks gains.

In the US the Fed’s favourite inflation indicator, rose at only a 0.6% annual pace in Q1 2019, which is incredibly bullish for continued low interest rates. Overall, it implies a “Goldilocks” environment of stable interest rates, low inflation and 3% GDP growth. We will see if it lasts but many feel we will see no recession danger in 2019.

Our 3 arrows are up as we head into the seasonally volatile summer period. Stay tuned!

Current Market Review

The TSX Composite was down 12% for the year ended Dec 31, 2018 and the S&P500 was down 6.2% for 2018 in Cdn dollars.

The yield curves in Canada and the US remained positive
at year end. (i.e 2yr treasury / 10 yr treasury Can 1.86/1.96% and US 2.56 / 2.69%)

Oil closed the year at $54 a barrel for 2018 (Slumping demand from China)

The sell-off on the Canadian and US markets started Oct 4th and ended Dec 26, 2018 after the S&P had lost roughly 20% of its value. In a span of only 17 trading days this year though it rallied to close last Friday at 2,670 – a stunning 13.8% rebound!

Will it continue? Let’s hope it does during our usually strong winter season!

Our 3 arrows are down but the seasonal arrow is about to turn up. Staty tuned!

Current Market Review

The TSX Composite index was down 4.6% year-to-date as of Oct 19, 2018, and the S&P500 was up 7.9% in Cdn dollars for the same period.

The “recession watch indicator” i.e. the spread between the 2-yr and 10-yr Treasury notes of Canada and the US continues to be positive. (i.e based on current yields of 1.6% / 2.5% Cda and 2.25% / 3.193% US). But 10 year bond yields have risen over 15% in the just the last month!

Oil sits at $69 a barrel. Our TSX and our seasonality arrows have now turned down as we enter the “good season”!

Rising bond yields, a down market in China overnight as well as international tensions with Saudi Arabia have had their effect on the markets so far. This time of the year usually signals an upbeat market with the World Series starting tonight, the holidays approaching and earnings being reported. We shall see if it works this time.

Current Market Review

The TSX Composite index was down 1.2% year-to-date as of Sep 14, 2018, but the S&P500 is up 13.1% in Cdn dollars for the same period.

The “recession watch indicator” i.e. the spread between the 2-yr and 10-yr Treasury notes of Canada and the US stood at 25 basis points Cda and 38 points US. (i.e based on current yields 1.75% / 2.0% Cda and 2.38% / 2.75% US). Both are positive, so for now all ok. (When the yield curve inverts a recession usually results a short time later.)

Oil now sits at $69 a barrel. Our TSX and S&P arrows are up. Our third arrow based on seasonality could have turned down Apr 20 but remains up.

In the US, Trump has instructed aides to proceed with tariffs on about $200 billion more in Chinese products despite his Treasury secretary’s attempt to restart talks with Beijing to resolve the trade war. Trump has also apparently decided that NAFTA will be renamed USMC – for U.S., Mexico and Canada – and is threatening to drop the C if Ottawa doesn’t offer significant concessions.

Current Market Review

The TSX Composite index is up only 0.7% year-to-date as of Aug 10, 2018, but the S&P500 is up 10.5% in Cdn dollars for the same period. The 10-yr government bond yields in Canada and the US are currently 2.3% and 2.6% respectively. Oil now sits at $68 a barrel (down from the previous blog but you wouldn’t know it at Montreal gas pumps!). Our TSX and S&P arrows are up. Our third arrow based on seasonality could have turned down Apr 20 but remains up.

Looking at the US market, sector leadership still remains in growth oriented areas like Information Technology, Consumer Discretionary, and Health Care. Trump’s increased tariffs on Turkey have roiled the global markets this week. But in the US, they have low corporate tax rates, near-record low interest rates, a strong U.S. dollar, record buy-backs, record sales and earnings and a near-record high stock market. So no worries? Growth stocks look good. Will it continue? We will see.

Current Market Review

The TSX Composite index is up 2.2% year-to-date as of July 13, 2018, and the S&P500 is up 9.7% in Cdn dollars for the same period. The 10-yr government bond yields in Canada and the US are currently 2.1% and 2.8% respectively. Oil now sits at $71 a barrel (no change from the previous blog). Our TSX and S&P arrows are up. Our third arrow based on seasonality could have turned down Apr 20 but remains up!

Looking at the US market, sector leadership remains in growth oriented areas like Information Technology, Consumer Discretionary, and Health Care. Many of the leaders in these sectors are smaller companies that rely mostly on US domestic revenue. ie with Trump’s trade war antics, global markets are not performing well given the uncertainty. And with his huge corporate tax reduction US small caps that don’t sell as much internationally are benefiting big time from the tax reduction. So small / mid cap US funds are looking good right now.

Current Market Review

The TSX Composite index was down 0.3% year-to-date as of May 18, 2018, and the S&P500 was up 4% in Cdn dollars for the same period. The 10-yr government bond yields in Canada and the US are currently 2.5% and 3.06% respectively. Oil keeps climbing and now sits at $71 a barrel. Our TSX and S&P arrows are up. Our third arrow based on seasonality could have turned down Apr 20 but remains up!

As mentioned in the last post, as oil prices rise so does the Canadian market and with the prospect of future increases the TSX should gain more support. (especially if pipeline issues can ever be resolved!)

In the US, there are many questions as to how the new trifecta of economic concerns: a rising dollar, spiking oil prices, and rising interest rates will affect the markets this summer. But despite this and the roller-coaster news of the up-and-down status of North Korean disarmament talks, China trade talks, Iranian treaty issues, probes into Russian meddling, and all the soap operas surrounding their controversial President, the US market runs on corporate earnings and global economic growth, both of which are growing well enough to justify a rising market.

Market Trend

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Ultimate Funds

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