Market Commentary

Making Cents of the Markets

Listen to our newest Ready.Set.Retire!  As November is Make a Will Month, this week’s episode is your reminder to get started on a Will if you haven’t made one yet!

Lori and Jon explain the importance of having a Will, discuss how to talk about estate planning with your loved ones, and what happens if you don’t have a Will in place?

Listen here or subscribe on Spotify, Apple podcasts, and Acast.

Listen now to the most recent Making Cents of the Markets on CKNW. The markets took a breather from last week’s strong rally! We talked about the Canadian inflation rate remaining unchanged and positive retail sales in the US confirming consumers remain strong!

We also discussed how to adjust your portfolio for a mild or deep recession, what sectors to add to, and what sectors to avoid going into 2023.

Click here to listen.

Beyond the Markets

Lumière Festival

Lumière Vancouver returns to downtown and West End neighborhoods this weekend! The city will be dazzling with glowing installations, pop-up performances, workshops, and demonstrations. This year’s “Dream the Future” theme hopes to redefine winter as a month of inspiration.

The festival will run from November 17th-27th. Click here to find out more!

 

Be in the Know

“Bull markets are born on pessimism, grown on skepticism, mature on optimism, and die on euphoria.” – Sir John Templeton

Dear Santa: More cooperation, less crazy. 

Last week’s market excitement stoked by cooling inflation data waned a little, despite the Federal Reserve Vice Chair Lael Brainard who said: “it will probably be appropriate soon to move to a slower pace of increases,” adding that “we’ve done a lot, but we have additional work to do.” So, the expectation of the Fed slowing down to a 50-basis point hike in December seems likely. But that still means more hikes to come.

Thankfully, the Polish missile incident appears not to have been fired by Russia after all. Sparking WWIII is not what the world needs right now. Ever.

For our neighbours south of the border, Republicans secured a majority in the House, which will likely give Republicans more veto power over bills that might make it to Biden’s desk for signing. But their majority is narrow, which means any Republican priorities will have to be moderate enough to secure support within their own ranks and satisfy the Democrat-controlled Senate.

At the same time, it will be extremely difficult for Democrats to advance their agenda by blocking votes from even taking place in the House. Unlike the previous two years, don’t expect many new bills to be signed into law.

Buffett understands technology. But don’t expect him to tweet about it.

Warren Buffett has never met a bear market he didn’t welcome and take advantage of. “Whether we’re talking about socks or stocks, I like buying quality merchandise when it is marked down.”

His Berkshire Hathaway disclosed a $5 billion investment into Taiwan Semiconductor Manufacturing Co (or TSMC). It’s the world’s largest supplier of semiconductor chips and the exclusive supplier of silicon chips to Apple.

Buffett, who has famously stayed away from tech because he “didn’t understand it”, has realized that tech’s role in the future is not to be ignored.

It’s also no surprise that he is gravitating to a once-loved but now hated semiconductor sector. We too have some exposure to the sector that has now seen a solid bounce of about 28% off the lows. It stands as a reminder that having some skin in the game is important at times like these.

Our Strategy

“You will never reach your destination if you stop and throw stones at every dog that barks” -Winston Churchill

It’s been a fairly quiet week in markets, accompanied by speeches from several Federal Reserve officials who spoke their minds on the current state of the US economy. Despite all the noise, the bounce off the lows remains intact as markets were only down fractionally for the week and our portfolios did even better as they held steadier than indices.

We continue to remain focused and not lose sight of the ultimate thesis in markets as of late:
1. Markets received confirmation that inflation has started to trend lower, bringing us closer to a Fed pivot.
2. As we approach the holidays, seasonality has historically proven to be a tailwind for stocks.
3. A clearer picture post-midterm elections should provide further positive sentiment for investors.

Earnings season has also provided some sturdy results for our portfolios as we are very close to Q3 earnings season wrapping up. Just shy of 90% of our Legacy companies have now reported their previous quarter’s earnings and we are pleased that 80% of them reported better-than-expected results. To put this into perspective, 95% of the companies within the S&P 500 index have now reported their quarterly earnings results and 70% of them beat expectations.

The latest to join the list of winners this week was the discount retailer Ross Stores. They reported earnings and revenues that beat their respective analysts’ estimates and raised their business outlook ahead of the holiday shopping season. Our roster continues to prove that it holds the strongest of the bunch as we target companies that have proven their leadership time and time again.

Visual of the Week

Wholesale prices (PPI) show another sign of cooling inflation:

 

 

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. Investing in equities is not guaranteed, values change frequently, and past performance is not necessarily an indicator of future performance. Investors cannot invest directly in an index. Index returns do not reflect any fees, expenses, or sales charges. 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