Market Commentary

Making Cents of the Markets

Listen to this week’s Making Cents of the Markets on CKNW we discussed the latest Canadian jobs report, tax loss selling, and spending during the holiday season. Check it out here.

Beyond the Markets

With the holidays right around the corner, here are some gift ideas and gestures for your loved ones!

A meal from their favourite restaurant
Bring the socially distance equivalent with food delivery services such as DoorDash, Uber Eats and Skip The Dishes.

Virtual Reality Headset
Travel across the globe without leaving the comfort of your living room! Explore the caves of Zion, relax on a tropical beach or take a stroll through Greece through these goggles

Tile Mate Tracker
Find your keys or wallet with this cool tracker

Learn a new skill
There’s nothing more gratifying than mastering a new skill, and it’s an even better experience when you get to share it with someone you love.

For more ideas, check out 27 holiday gift ideas here and 52 meaningful gifts your spouse will love here

Be in the Know

After a strong run since vaccines were announced, global markets took a breather and were flat to slightly lower on the week. The main reason for weakness was the lack of progress around the US fiscal stimulus deal as Congressional debates remain at a standstill. The Senate was able to pass another one-week government funding extension to keep discussions going which is positive for the time being as about 12 million people will lose unemployment benefits if a deal is not reached. The market remains optimistic that a last-minute deal will be reached which has been typical for the US government over the past few years.

A positive development for the global economy was that the European Union was able to pass through a landmark 1.8 trillion euro budget and stimulus package that will help the region continue to recover from the pandemic. These recovery funds will help soften the blow for countries that are harder hit by the crisis because of their greater extent on tourism and support them as travel is expected to pick up again next year. The celebrations were short-lived as the UK and the EU are likely headed for a “no-deal Brexit”, leaving both without any trade or security agreements as negotiations are set to continue next week.

Within Canada, the Bank of Canada opened the possibility for another rate cut (from 0.25% to 0%) but remains skeptical on the effectiveness on negative rates so decided not to make any changes. The central bank also voiced its concerns around the latest strength of the Canadian dollar, as this would negatively impact exports as our goods have become more expensive to other countries. In the US, inflation remained unchanged in November at 1.2%, well below the Fed’s 2% target as the latest surge in cases has dampened economic activity. Next week our focus will be on the Federal Reserve meeting in the US as well as monitoring the latest inflation and retail data in Canada.

Our Strategy

Our portfolios were flat on the week as markets have started its latest consolidation phase. We were pleased to see several our portfolio companies report strong earnings as the final companies reported their third quarter results. These included the likes of Adobe, Costco, and Lululemon which continue to show double digit growth in both sales and profits. This is a testament to our positioning in strong companies that are leaders within their respective areas as many are coming out of the pandemic in a better position than before.

We continue to make changes to our portfolios as we prepare for 2021, where we believe the global economic recovery will continue as its supported by coordinated stimulus efforts and vaccine rollouts. One asset class of high interest is commodities including copper which we already have good exposure to, with the reason being that supply shortages caused by the pandemic and demand increases from infrastructure programs should lead to higher prices for the coming years. This is one of the themes that we have our eye on for sustainable gains moving forward vs. trends in financials and energy that may be more volatile and potentially short-lived.

Chart of the Week

With the latest decision to hold rates steady and the global economy on the mend, many may ask themselves when will interest rates start to increase again? While no one can predict the future, we can look at the past to get a better idea of how long we can see low rates staying in place:

In 2008 we faced a unique shock where rates remained near zero for just over a year before increasing when the economy and inflation was picking up steam. Now heading into 2021, we are in another unique scenario where policymakers expect it will take another 2 years before the 2% inflation rate is sustainably achieved which is when rates can increase. This remains our best guess as the economy will be strongly supported in the coming year before positive momentum allows the economy to grow without as much government support.

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.