Market Commentary

Making Cents of the Markets

Listen to the latest Making Cents of the Markets on CKNW! This week, we talked about investing to hedge yourself against rising inflation, and what to consider before taking out a loan to invest in the market. Listen now here.

 

Beyond the Markets

Two of our favourite Vancouver businesses have teamed up to give you the perfect summer treat! Granville Island Brewing and Lee’s Doughnuts have come together to launch a Peachy-Keen Pop-Up where you can taste the new Peach Sour Brew and complimenting Peach Crumble Doughnut. The COVID-safe 10 day event in Gastown runs May 14 through 24. Be sure to book online to reserve your spot!

Be in the Know

After hitting new highs last week, markets pulled back slightly as uncertainty about future inflation weighed on investor sentiment. The US reported that annual inflation for April rose 4.2%, which was greater than expected mainly because of high commodity prices, but also due to comparatively low inflation a year ago when the world was locked down. Regardless of expectations, prices of goods and services have been increasing, which affects us all as consumers and is why we continue to position portfolios proactively with this in mind.

Central Banks, like the Federal Reserve, have stated that they believe inflation will be temporary in nature, yet recent data may lead them to change their views sooner rather than later. While it is too early to tell if inflation will continue, investors believe that central banks will begin increasing interest rates earlier than expected in response to rising prices. This negatively impacts growth sectors such as technology and consumer discretionary but is generally positive for cyclical sectors that include financials, materials, energy, and real estate. Diversification is important to have at all times, though weighting portfolios towards these sectors can help hedge against these risks which has been our goal this year.

Earnings season is winding down with profits growing close to 50% from a year ago, which is double what analysts expected and highlights the strength of corporations today. Demand is expected to remain strong as the global economy continues to reopen and return to normal which should more than offset the eventual phasing out of government support. Economic data was relatively quiet in Canada this week as we look ahead to monitoring trends in inflation, housing prices, and retail sales next week.

 

Our Strategy

Our portfolios held up well as performance was enhanced from companies like WSP Global and Canadian Tire that hit new all-time highs after reporting strong first-quarter results, despite some volatility in markets this week. As another earnings season has come and gone, we are very confident in our portfolio companies as leaders within their respective industries.

With inflation expectations heading higher again, we remain active in rotating portfolio exposures towards sectors that benefit from rising inflation while maintaining diversification to remain flexible to changing conditions. We also have a small cash cushion with the goal of adding a few more market leaders when the time is right in the coming weeks. As always, we appreciate your trust and confidence as we navigate through the changing but dynamic economic recovery.

Please note that Canadian Pacific Railway (Ticker: CP) had a 5 to 1 stock split on Friday so you may see a temporary change within your accounts online as our back office looks to update this early next week. Don’t hesitate to contact us if you have any questions!

 

Visual of the Week

The comments and opinions expressed in this newsletter are solely the work of Pinkowski Wealth Management, not an official publication of Canaccord Genuity Corp., and may differ from the opinion of Canaccord Genuity Corp’s. Research Department. Accordingly, they should not be considered as representative of Canaccord Genuity Corp’s. beliefs, opinions or recommendations. All information is given as of the date appearing in this newsletter, is for general information only, does not constitute legal or tax advice, and the author Pinkowski Wealth Management does not assume any obligation to update it or to advise on further developments related. All information included herein has been compiled from sources believed to be reliable, but its accuracy and completeness is not guaranteed, nor in providing it do the author or Canaccord Genuity Corp. assume any liability.

CANACCORD GENUITY WEALTH MANAGEMENT IS A DIVISION OF CANACCORD GENUITY CORP., MEMBER-CANADIAN INVESTOR PROTECTION FUND AND THE INVESTMENT INDUSTRY REGULATORY ORGANIZATION OF CANADA