Market Commentary

Making Cents of the Markets

New episode of Ready.Set.Retire! Listen to Lori and Jon McComb discuss current market conditions and the top five reasons retirees worry! Check it out here!

Listen to our latest Making Cents of the Markets segment on CKNW. We discussed markets, Canada & US job reports for July and an update on the housing market in Canada and BC! Listen here.

Be in the Know

Most global markets were positive over the past week as they continue to follow the path of least resistance and edge higher, albeit at a slower pace as the S&P 500 was unable to break above its previous all-time high. The TSX finished the week relatively flat while US markets closed approximately 1% higher. Economically sensitive areas that have lagged the overall market like industrials, energy, & transports continue to outperform in recent weeks as economic data is still surprising to the upside as the recovery progresses in the right direction.

We received a number of economic data points out of the US that were stronger than expected that included increasing job openings, lower unemployment claims, and improving retail sales in July. All these indications support the latest action within equity markets as volatility and fear remains low. Markets have shrugged off concerns around stalled out discussions on the latest stimulus bill proposed over 2 weeks ago as many do not expect a deal to be reached until early September. Strong corporate earnings and vaccine optimism have definitely helped as most news events this week have been supportive of markets heading higher.

Economic data out of Canada was relatively light this week yet we noted that housing starts in Canada surged 16% in July, adding over 245,000 units which is near the monthly highs over the last 5-years. Pent-up demand and historically low borrowing rates are the main reasons for this increase as we are back to pre-pandemic levels. In BC we have seen a similar trend as we continue to see activity increase in terms of housing starts and home sales. Prices have improved month-over-month but have been relatively flat over the past 2 years and most are still down over the past 3 years which is why we would caution reading too much into recent housing data until the market returns to normal demand & supply levels.

Our Strategy

We continue to remain active in managing our equity exposures and have used the recent strength over the past month to reduce and to take profits in certain names that have moved quickly to the upside. While we do not believe in forecasts or predictions, we do believe in being tactical and raising cash when appropriate as momentum has slowed in the past week. We continue to high-grade our portfolios ahead of the US election as we are investing most of this cash raised into bonds and other defensive areas that can do well during periods of volatility.

One of those areas has been gold which pulled back this week as positive economic data led to hedges like precious metals cooling off after a very strong run in the past month. We remain bullish on gold and gold miners as we look to add on any further weakness as gold is also a hedge against inflation which has started to pick up as of late. Remaining well diversified has been one of the reasons for our success this year as we have been very pleased with our decision-making process that has led us to focus on the asset classes and sectors that have been working and more importantly to avoid those that have not.

Chart of the Week

This year we went through the fastest bear market of all time which was then followed by the fastest bull market recovery as global central banks launched significant stimulus programs and continue to commit to supporting economies to return to pre-pandemic levels. Given the recent strength, many investors may question how sustainable this price action is and if markets will correct again which is why we want to provide you with what has happened after the strongest rallies in history:

As one can see, markets have a high probability of being positive over the next 6 and 12 months as we expect gains to continue as the global recovery progresses. Not shown within these time periods are pullbacks of 5-10% which are normal in any given year or environment. This is why we remain bullish but tactical to take advantage of any future weakness which we believe will be short-lived in nature.

Beyond the Markets

This Saturday, head down to Fort Langley for this year’s Jazz & Arts Festival for some socially-distanced musical fun! The strolling parade begins at 10:00am at the Fort Langley Community Hall Information Booth where parade-goers will be led by the traditional jazz band, RazzMaJazz Ensemble. So dress up in your colourful Mardi Gras attire and take part in what is sure to be fun-packed day! Click here to learn more.

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.