If we could focus on a forecast without tariffs, it would probably be pretty good; declining inflation and interest rates, with corporate earnings broadening beyond the “Magnificent Seven” tech names that drove half the S&P growth number for the last two years. However, the new U.S. administration is already making clear it is committed to tariffs as a key trade policy tool.
Lots has happened over the past several months, most noticeably the US election. I can’t recall an election period that has brought so much hysteria from multiple perspectives teetering on the outcome. Going back over the past couple of years there have been other events that have brought heightened sensitivities – a pandemic, societal lockdowns, the war in Ukraine, the war in the Middle East to name a few.
We had the pleasure of attending both the Economic Forum early January and a full day economic update with one of our fund company partners at the end of January. The forum featured the chief economists of the big 6 Canadian Banks, it is always well attended and attracts the top investment professionals in the country. Our fund company day featured both their global macro economic strategist, their Canadian chief economic strategist, some former Bank of Canada analysts, along with a few of the top portfolio management teams in Canada.
As always, the year has gone by far too quickly. With November here we are looking at majority of the year in the rearview mirror. If economic performance for the year could be summarized in one word, it would be “flat”. Overall, both the stock and bond indexes are at around the same spot where they started the year. There were areas that did provide growth but overall the general market was flat.
No intended spin on Shakespeare’s Hamlet Soliloquy, “To Be or Not To Be” but it works since Central Banks find themselves in a uncertain decision inflection point – do we pause on rate raises or continue?
Today in the middle of May as I write, the S&P500 sits just north of 4,100. It has been used as a good gauge of market value and direction, it is basically a measure of the performance of 500 of the most successful American public companies. For perspective on where the market sits today, at the end of 2019 the S&P traded around 3,200. That was 3 months prior to the Covid crash in March of 2020.
The Economic Club of Canada’s annual panel of economist forecasts event was once again held this January. They highlighted the continued economic risks North America must navigate, namely, inflation, interest rates, recession, commodity prices, geo-political tensions, and housing.
Happy Spring. Headline news is as sensational as it has ever been these days. So much has changed just since the fall of last year; a war in Eastern Europe and raging inflation has gripped everyone’s attention. Q1 2022 was not a good quarter for investors, both equity markets and bond markets were down, some with more conservative portfolios actually fared worse than those with predominantly equity portfolios. In times like these it is more important than ever to take a step back, keep things in perspective and think through fundamentals. Not just fundamentals on investment policy, but revisiting your own cashflow analysis, needs for the future, projected net worth – the work that we’ve always done to gain perspective on how we are trending in order to help us make better decisions today.
Sustainable Investing is an approach that incorporates environmental, social and governance (ESG) factors in the investment process. This in today’s investing community has become front and centre. Never before has there been such a push towards such important drivers of change in the world.
2020 will go down as one for the history books. The first reports of a mysterious virus quickly turned into a pandemic, global shutdown, and the worst economic crisis since the Great Depression. And yet, by the end of the year, markets had recovered beyond expectations.