Market Commentary

Making Cents of the Markets

New episode of Ready.Set.Retire! Listen to Lori and Jon discuss the pitfalls of mutual fund investing and the benefits of being managed by an active portfolio manager! Listen here.

Listen to this week’s Making Cents of the Markets on CKNW where we discussed Canadian GDP and fiscal stimulus as well as the importance of having a will and estate planning. Check it out here.

Beyond the Markets

We’re excited to announce that Cindy David, one of our external partners for financial planning, has been recognized as one of Canada’s Top 100 Most Powerful Women of 2020! The Women’s Executive Network released a list of outstanding women across Canada who advocate for workforce diversity and inspire tomorrow’s leaders. These individuals are trailblazers and ground breakers for future generations.

Cindy has been an asset to our clients over the past decade and has provided a lot of guidance and insightful financial advice to the family’s we work with on a regular basis. Her knowledge in the estate and tax planning fields is incredible and we appreciate the wisdom she shares which allows clients to sleep better at night through retirement!

Being recognized as one of Canada’s most powerful women is a big accomplishment and we are so proud of her – congratulations Cindy!

To read more about her impressive career, check it out here.

Be in the Know

Markets continue to follow the path of least resistance and advanced 1% on the week as US indices continue to hit new highs. This move was impressive in the face of concerns that lockdowns have begun to dent economic growth, little progress on the US Covid relief plan, and potential supply and delivery issues with vaccines. Investor sentiment is clearly bullish as vaccine optimism remains a strong tailwind with the UK approving Pfizer’s vaccine with the first shots being available next week. These vaccines could have not come at a better time with cases continuing to hit new highs in North America.

An unexpected positive this week was the jobs report in Canada with the economy adding 62k net new jobs in November (vs. expectations of 20k) as the unemployment dropped to 8.5% from 8.9%. Increases were mainly in Ontario, BC, and the Atlantic provinces with sector gains mainly in retail, construction, transportation, and finance categories. In BC, employment grew by 24k as the province is now at 99% of its pre-Covid February levels, ahead of the nation as it will likely take years to get back to full employment. Otherwise we saw Canadian GDP grow 9% in the 3rd quarter as we expect lower and more sustainable growth rates moving forward.

In the US, jobs growth missed expectations with the US economy only adding 245k jobs (vs. 470k expected), though the unemployment rate dropped to 6.7% from 6.9%. This report adds to the case for fiscal stimulus to bridge the economy to a time next year when vaccine distribution is expected to allow a return to normality. President-elect Joe Biden continues to put pressure on congress to pass a near-term stimulus bill as he stated he is working on the plan for his administration to move fast in January to control the pandemic, revive the economy, and build it back better than before.

Our Strategy

Our portfolios continue to head higher with markets but were partially weighed down by the weakening US dollar vs. the CAD as the Canadian dollar finished the week at $0.78, which is a new high not seen since 2018. Despite this near-term weakness, we remain bullish on US stocks over Canadian stocks and the US currency over the long-term due to a stronger and better-diversified economy. We expect this weakness to persist over the coming months as commodities like oil continue to recover but understand that holding US dollar-denominated investments are also a strong hedge when markets weaken.

We remain active in altering our exposures for the economic recovery with a focus on companies that we believe will provide sustainable growth in 2021 and beyond. This is why most of our additions over the past 2 months were within cyclical areas like Industrials and Materials vs. Financials and Energy due to stronger and more sustainable growth profiles. We continue to invest for the long-term and are confident in our approach and discipline to focus on leading sectors within the market.

Chart of the Week

Strong Novembers have historically been followed by positive Decembers as the month tends to be strong generally due to “the Santa Claus rally”. Seasonality is never a guarantee but the following table highlights the increased likelihood for positive returns after strong November performances:

Huge moves like we saw in November tend to be the start of a new bull move, not the end. Significant stimulus globally remains as the tailwind that should continue to propel markets higher, though we always are prepared if this is not the case!

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.