Market Commentary

Making Cents of the Markets

Listen to this week’s Making Cents of the Markets on CKNW where we discussed the impacts of being invested in low interest bearing accounts. Check it out here.

RRSP Contribution Deadline Approaching

The deadline for making your 2020 RRSP contributions is Monday, March 1, 2021. The maximum RRSP contribution limit for 2020 is $27,230 + any carry-forward room or 18% of your previous year’s earned income. Please review your latest notice of assessment for your specific available contribution amount.

There are three ways to make a RRSP contribution:

  1. Contribute from one of your accounts here at Canaccord Genuity
  2. Send funds electronically by adding Canaccord as a payee through online banking and let us know you are sending money
  3. Send a cheque made payable to “Canaccord Genuity Corp.” with your RRSP account number in the memo (must be received by March 1, 2021)

Give us a call if you have any questions!

Beyond the Markets

With last week’s snow on the BC coast, we were reminded of some of our favourite indoor winter activities to do together. Here are a few of our favourite things to try at home that give old traditions a new twist.

Sugarcoat things with a baking class 

Test your skills in the kitchen and learn to make a new recipe from a professional baking school! From French Macaron to Portuguese Custard tarts, Shiela’s Cooking School offers weekly baking workshops that will make trying these new desserts a piece of cake.

Stimulate your creativity with painting lessons

Paint along virtually with step-by-step instructions from the comfort of your own home with an online art class! Choose from different mediums and subjects to showcase your artistry.

Be in the Know

Markets pulled back slightly this week as weaker than expected employment and housing data in the US overshadowed strong earnings announcements as earnings season for the fourth quarter is coming to an end. The number of Americans filing for unemployment benefits rose to 860k (compared to expectations of 765k) as this leading economic indicator has failed to improve over the last 6 months. This prompted US Treasury Secretary, Janet Yellen, to push for a large stimulus package to be passed for the economy to get back to full strength.

Democrats have been working on this package over the last few weeks and are expected to present a final bill in the coming week. We believe that the risk of it not passing is low as Biden has been working with his party to smooth out any differences as Democrats have to be fully aligned for it to pass. The result of additional government spending is an increase in inflation though we have not seen this take place yet. This fear of rising inflation has weighed on growth stocks this week as areas like technology and retail were amongst the weakest while cyclical areas such as materials and financials benefited.

In Canada, we saw inflation increase in January to 1.0% (from 0.7%) as it remains below the Bank of Canada’s target. Meanwhile, lockdowns impacted retail sales in December as we saw a decline of 3% which was below expectations. Near-term economic weakness has not affected markets much as investors have fixated on corporate earnings which are now expected to grow more than 3% in the fourth quarter of 2020. This has been very impressive and has easily beat initial expectations for negative growth which bodes well for the market.

Our Strategy

Our portfolios moved in line with markets though we had several positive earnings announcements within the materials sector as our copper miners continue to beat expectations. Copper has eclipsed the $4 price and has hit multi-year highs this week as Chinese demand remains strong while supply is limited. While inflation has benefited the materials sector, it has not resulted in higher gold prices which has proven frustrating as gold has historically been a hedge for inflation which led to us decreasing our gold exposure in the short term. Some sectors are showing much more strength right now so we prefer to increase those weightings.

We continue to rotate out of areas that benefited us in 2020 such as gold and consumer staples and move into sectors focused on economic recovery. We remain focused on targeting opportunities within Canada as dividend-paying stocks are starting to outperform the overall market which makes sense with interest rates so low today. Low-interest rates bode well for dividend-paying stocks as the income from stocks is greater than bonds in today’s environment which has driven more flows towards stocks.

 

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.

CANACCORD GENUITY WEALTH MANAGEMENT IS A DIVISION OF CANACCORD GENUITY CORP., MEMBER-CANADIAN INVESTOR PROTECTION FUND AND THE INVESTMENT INDUSTRY REGULATORY ORGANIZATION OF CANADA