Market Commentary

Making Cents of the Markets

Listen to this week’s Making Cents of the Markets on CKNW where we discussed what’s happening in the markets, sector rotation, and what to watch out for when investing in mutual funds. Check it out here.

Be in the Know

North American markets continued to new highs this week, up roughly 2% as positive sentiment continues to lift markets higher. Notable news events included a third company (Astrazeneca) announcing positive initial results from their vaccine, President Trump agreeing to transition power if the electoral votes are confirmed in favor of Biden, and Janet Yellen becoming the new Treasury Secretary. These were balanced by rising Covid case concerns though markets continue to focus on expectations for the global economy to recover quicker once vaccines are rolled out, despite near-term weakness that is starting to be seen in the data. We share these concerns as conditions have changed locally but remain disciplined and understand the motivations and dynamics driving markets.

Economically sensitive stocks continued to lead markets higher this past week and one reason behind this was Joe Biden selecting Janet Yellen to serve as his Treasury Secretary. The significance of this move is that Janet Yellen is a well-known labor economist with over three decades in policy making, including leading the Federal Reserve to bring the US economy back on track after the financial crisis in 2007. We are proud to see her as the first woman in her position and believe that her experience will be positive to assist Biden in creating fiscal policies (and additional stimulus) to support the US economy throughout the recovery.

Due to the latest increase in cases, we started to see economic data weaken in the US as personal income declined slightly in October and new unemployment claims rose for the second straight week. We are not too concerned with this near-term weakness as other data, including personal spending which drives 2/3rds of the US economy, continues to improve. Economic data in Canada was light this week as we will receive an update on third-quarter GDP growth and unemployment next week. The focus remains on the virus and rightfully so as many of us await more clarity on the potential rollout, timing, and safety around vaccines.

Our Strategy

This week we saw markets rise in a broad manner as technology and software played catch up and outperformed the general market. These sectors have consolidated sideways so we were pleased to see this leadership hold up as many of our existing and new positions had a strong week. Some of our new positions included Etsy (online retailer) and Paypal Inc (digital payments) that saw an acceleration of growth that we believe will continue. We remain balanced in our exposures and continue to be tactical in reallocating capital.

Our focus remains on quality as we do not want to chase certain retailers or cruise lines that have resorted to taking on much more debt in the near-term to survive. This approach has served us well as profits and growth leads to sustainable increases in stock prices over the long-term. We want to avoid any potential for negative surprises that can companies with high debt loads and uncertain paths to profitability. We look forward to the coming months and years as we expect the bull market to continue.

Chart of the Week

Today is Black Friday, which is the day after US Thanksgiving Day in the US, that became wider known in the 1980s to coin the traffic around the busiest shopping day of the year. Many retailers started offering special discounts and opening stores early to lure as many customers as possible. Clearly this strategy has been working as one can see the online interest increasing over the last 15 years below:

Worldwide search interest for the terms “Black Friday” & “Cyber Monday”

This year is no exception as the pandemic has led to an additional surge in online business, which is why we continue to focus on those companies with the strongest online presence that have benefited as they grew their market share against competitors that did not have this edge.

Beyond the Markets

We wanted to share a recent North Shore News article about Lori’s father, Rudi Pinkowski and his hard work to create beautiful landscapes in our city. We are so proud of his accomplishments and how passionate he is about creating a positive vibe for Vancouverites with palm trees swaying in the wind (and rain!).

Read the article 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.