Good afternoon,
As we head in to Thanksgiving weekend we contemplate nine months of 2022 to-date that bore its share of gut punches. War, pestilence, political acrimony, and sour markets can add up.
Our senior analyst, Jim Allworth is usually worth a read during such moments, and if you read nothing else in this email, have a look at his piece.
A link to his article is here: Global Perspective
A Key Excerpt: “All that said, it is worth putting this market retreat of the last nine months into perspective. From the pandemic low in March 2020 to the market peak in early January of this year—a stretch of 21 months— half of the points gained in that advance. In the same 21 months of rising markets to January of this year the S&P 500 gained about 2,600 points or 118%. Over the past nine months it has given back not quite, Canada’s TSX rose by a more subdued 99% (if one can call it that) but has since given back just over a third of the points gained. Japanese, European, and UK markets all look to be variations on this theme.”
A quick summary: Equity markets have become so deeply oversold over the course of the last nine months that some near-term relief is probably not far off. However, more market turmoil could be expected next year if further Fed tightening were to push the U.S. economy into recession. We regard an equity exposure of Market Weight as appropriate for a global balanced portfolio.
As cited in the report, here’s our: US Recession Scorecard
And for those interested, the latest from RBC Economist Eric Lascelles is here: Markets, economies, and conflict
A sampling of Friday Charts here:
Used vehicle prices
are still elevated but
have been on a
downward trend. As
one of the
(many) data points
watched for inflationary
pressure, this is
a mild bit of good news,
showing
in the RBC Economics
chart to the left.
Recessions and Economic Life: (see table below from the St. Louis Fed): In the two quarters leading up to the average recession, data measures show positive growth. Meanwhile, immediately following the onset of the average recession, indicators declined, which persisted through the recession. The last column in the table shows the most recent quarter (2022:Q2) of each indicator. All except wholesale-retail sales were still experiencing positive growth following the first quarter of 2022.”
Baseball, Sweet Potatoes, and All the Fix’ns
On a lighter note, it’s been easily the most beautiful fall I’ve seen in Prince George during our 22 years here, making one of our favourite seasons a little sweeter. Forecasts look toward still a few more summer-like days, this weekend… and with any luck, better financial returns in the offing!
From our family to yours, we hope you’re able to enjoy time with those who make your life generous, and your belly full this weekend!
Happy Thanksgiving!
Go Blue Jays!!
Mark