I just wanted to provide a brief update on the financial markets.
After a tough Q4 2018 where most North American indices dropped 12% to 20%, we came into 2019 with some reservations.
Well January 2019 is in the books, and it was the best January in 30 years as the S&P 500 was up 7.9% while the TSX in Canada added about 9%. However, before we get too excited, the set up was very similar after January 2018, yet markets sold off in the back half of the year.
I think there is a big difference between last year and this year. A lot of items lay ahead from 2018 that created questions marks:
- The US mid-term elections
- The Fed was in tightening mode
- Brexit
- China/US trade talks and tariffs
- Worries over global economic slowdown
While all are valid concerns the main ones were the Fed and the China/US trade. As of January 4th, the Fed seems to have been taken off the table for at least six months or so, and we will find out in less than 30 days about China/USA trade… In my opinion, there will be some structure of a deal, and markets will rally.
I would guess that rally will signal a short-term top and we will then grind along. Overall, I still believe this secular bull market has time to run, and would guess at this point a US recession will not occur until after the US Presidential election in November 2020.
Stay tuned,
Vito Finucci, B.COMM, CIM, FCSI
Vice President and Director, Portfolio Manager
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