Market Commentary

Making Cents of the Markets

New episode of Ready.Set.Retire! Lori and Jon are discussing market uncertainty and how to manage investor emotions. Lori gives an update on how we are using our active management strategy to navigate through markets given the recent news about the Omicron variant so that you can feel confident your investments are being well looked after during these times!

Listen here.

 

Listen now to the most recent Making Cents of the Markets on CKNW, where we discussed the latest news impacting markets and how we are adjusting our strategy based on facts and not rumours. We also talked about the latest GDP update in Canada, and how to navigate your emotions as an investor when faced with market uncertainty.

Click to listen here.

 

Beyond the Markets

Bringing brightness and joy to West Vancouver, the annual Dundarave Festival of Lights is back for the month of December! The Forest of Miracles showcases over 130 festive tree displays sponsored and decorated by families, community groups, and local businesses. This year, you can check out the Pinkowski Wealth Management tree in Millennium Park at the bottom of 15th Street!

All support for the festival goes towards Lookout Housing + Health Society’s North Shore Shelter.

Be in the Know

Global markets continued to pullback for the second week in a row as investors continue to digest the potential impact of the Omicron variant as well and a policy shift from the US Federal Reserve which may end its bond buying program earlier than expected. North American markets were down 1% to 2% as a result of that news, however we were encouraged that markets held key support levels and expect to see some reprieve next week. Pullbacks never feel good in the moment but often happen during periods of uncertainty when fear and panic take control of investors which we believe is happening today.

We have been staying on top of the new variant as leading pharmaceutical companies continue to test the efficacy of their vaccines which will take another week. Early indications show that this variant may be more transmissible than previous variants though the symptoms have been reported as relatively mild, especially for those who are vaccinated. We understand the concern and shifted defensively a week ago and more importantly have plans to de-risk further if market conditions worsen. We need to remember that the world has come a long way from March of 2020 to today in terms of protecting, treating, and creating vaccines against Covid which is why we remain optimistic moving forward. We believe there will great opportunities to enter some companies that have been hit during this pullback, but only once we have more concrete information on the efficacy of the current vaccine as well as the severity of the illness.

Economically speaking, the highlight was in the jobs reports out of both the US and Canada that showed continued improvement. The Canadian economy added 154k net new jobs, coming well ahead of the 35k estimate, as the unemployment rate fell to 6.0% from 6.7%. Most of the jobs created came from service sectors such as healthcare and retail as the labour market is now 1% above pre-pandemic levels. The US economy only added 210k jobs, missing estimates of 550k, though their unemployment rate fell to 4.2% from 4.6% as more unemployed individuals re-entered the labour force. Next week our focus remains on variant related news though we will also hear from the Bank of Canada and receive inflation estimates out of the US.

Our Strategy

We continue to remain disciplined as our Legacy portfolios are relatively defensive today with an average cash balance of 12% that has insulated us from some of the volatility this week. Given the lack of information around the new variant, we do not want to panic and raise a lot more cash until we can make more fact based decisions. It is common for some investors to adopt a “sell now & ask questions later” approach which often results in them selling at the worst times. It is important to recognize that some of the best days in the market occur immediately after some of the worst days.

Markets continue to hold up at important support levels though we continue to follow our sell discipline and have plans in place to become more defensive quickly, but only if necessary. We also have our list together of names we want to add to the portfolio should markets continue their march higher towards the end of 2021. Many sentiment indicators such as the Volatility Index and the Fear & Greed Index have reached extremes that typically coincide with a near-term low in markets. Many economically sensitive areas did better to end the week which was encouraging. As always, we remain diligent in managing risk and are always here to answer any questions you have!

 

Visual of the Week

We sympathize with those who were affected by the recent flooding in our beautiful province. If you wish to donate and support affected communities or find other ways to help during this time, follow the link here.

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