Market Commentary

Making Cents of the Markets

Check out our latest article in the North Shore News that you don’t want to miss! Learn how you can set yourself up to enjoy retirement post-pandemic. Read all about it here.

Listen to this week’s Making Cents of the Markets on CKNW where we discussed what to look for when choosing a financial advisor. Check it out here.

Beyond the Markets

Today we welcome the Year of the Ox for Lunar New Year! Celebrate at home with some delicious local eats. Whether you are dining in, taking home a spread, or just appreciating the presentation, here are a few of our favourite Lunar New Year’s restaurants!

  • The Heritage Asian Eatery has prepared a Dining For The Feast of Fortune menu, available until February 21. The different menu options showcase uniquely curated visions of the Lunar New Year celebration and offer a tasteful way to support the new St.Paul’s at the Jim Pattison Medical Centre.
  • Whether you want to dine-in or take out, Minami is offering a luxury seafood feast to cater to all taste buds. The stunning presentation is available from February 12-14th, and complete with an 8oz A5 Japanese Aburi Ribeye Steak and Aburi Lobster Tail.
  • And who can forget about dessert! Cà Phê Vietnamese Coffee House has a limited edition Lunar New Year Lucky Treat Box to sweeten things up.

Be in the Know

North American markets continued to edge higher this week as falling Covid cases, vaccine acceleration, and easing lockdowns provided further optimism supporting prices moving higher. Cyclical sectors such as energy, financials, and materials led the market this week with the economic recovery in focus. We are happy that the attention has shifted away from Gamestop and other stocks of that matter towards what truly matters, corporate earnings and the economy.

We believe that the main driving force behind markets has been a strong earnings season as more companies are beating analyst estimates than in the past with a realization that we will very likely see positive growth for the fourth quarter of 2020. This is very constructive given that initial expectations called for a decline in profits of around 6%. The growth has been mainly attributed to the technology, materials, and healthcare sectors. Expectations for the 2021 year are for double-digit growth which supports why we remain optimistic on markets moving forward as higher profits drive higher prices.

Economic data was relatively light this week with US January inflation coming in at 1.4%, below the 1.5% consensus. Despite this reading, we likely will see some acceleration over the next few months due to rising commodity prices and the fact that we are coming off the extreme lows of 2020. In BC, real estate continues to head higher as the average residential price rose by 16% over the last year largely due to lower interest rates and increased demand for more space due to more people working from home. Higher real estate prices are another reason why we believe that inflation will pick up in the coming months.

Our Strategy

Our portfolios continued to move higher as we made minor changes throughout the week to decrease our exposures to various consumer staples that served us well over the last year as “pandemic” related opportunities. We re-allocated exposures towards opportunities that focused more on economic recovery as these are the areas that we believe will drive strong performance for the coming year and possibly beyond.

Our portfolio companies continue to report strong earnings with highlights from companies like Manulife Financial and West Fraser Timber that reported better than expected results and hit new recent highs afterwards. These are a prime example of leading stocks within strong areas benefiting from the economic recovery so far. We remain close to our target equity allocations and continue to analyze how we can always be improving our portfolios by selling laggards and adding leaders. We are confident that our discipline and active management should lead to continued positive returns for the portfolios.

Visual of the Week

After a global pandemic in 2020, one would not expect that housing prices would be up double-digits a year later. The chart below highlights the main reasons behind this strength – low-interest rates and remote working leading to higher demand while supplies remain tight as new builds may have been delayed. For these reasons, we believe that price increases will begin to moderate after this pent-up demand normalizes and new supply begins to hit the market through these price increases have been welcomed by many.

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.