The important S&P 500 made a new 52-week high this week which is very encouraging. But don't be fooled. It was 530 days ago, on January 3rd, 2022, that the index was at its all-time high of 4796. As of writing this note, the S&P 500 is still down 7.7% from that level. The Dow Jones is still off 6.5% and the much-celebrated Nasdaq is still down 14%. In Canada, the S&P/TSX is still 9% below water.

Here are the S&P 500 index’s 11 sectors are relative to their own best levels over the last 52 weeks:

Technology: New high this week

Communication Services: New high week

Industrials: New high this week

Consumer Discretionary: 4% below (high on August 16th, 2022)

Consumer Staples: 5% below (May 1st, 2023)

Materials: 5% below (February 1st, 2023)

Health Care: 6% below (December 14th, 2022)

Financials: 10% below (February 7th, 2023)

Energy: 14% below (November 15th, 2022)

Utilities: 15% below (September 12th, 2022)

Real Estate: 18% below (August 15th, 2022)

So although things are looking up, most investors have not recouped prior high levels. Drawdowns are a necessary evil in the world of investing. Patience is required.

Should you have any questions or concerns, please feel free to reach out.

Portfolio Notes

(+) indicates a positive development, (-) indicates negative, and (~) indicates neutral

(~) BCE Inc (BCE-T) announced it would be selling off nine radio stations and eliminating approximately 1300 jobs (or 3% of the workforce) due to underperformance in its media division. For context, the CEO noted that the company’s news operations are incurring annual operating losses of $40MM and the profitability of its radio business has been slashed in half since the start of the pandemic. From our vantage point, we can’t say that we’re surprised given the evolution of how media is being consumed. It’s also important to note that the media segment accounts for 6.5% of BCE’s EBITDA and therefore is less material in the grand scheme of things in our view. The true focus lies within the increased wireless competition post RCI’s acquisition of SJR. We’ve seen some aggressive plans out of Freedom Mobile and Fido has followed suit to a certain degree. If this trend becomes structural in nature (i.e., a pricing war), it will ultimately weigh on wireless margins within the industry. The stock has pulled back since late April but is still up 5% YTD, modestly outperforming the S&P/TSX Composite. Despite the pullback, BCE continues to trade at a modest premium to its 5-year average of 8.4x EV/EBITDA. In other words, not timely for growth but fine to own for dividend-oriented investors. Owned in Core and Cash Flow Portfolio.

(+) Constellation Brands (STZ-US) Anheuser Busch InBev's (BUD) Bud Light is no longer the top selling beer in the U.S. after being dethroned by Constellation Brands' (STZ) Modelo Especial, the Wall Street Journal reported. This follows a boycott of the Bud Light brand since April over a controversial ad campaign featuring social media influencer and trans activist Dylan Mulvaney. Modelo accounted for 8.4% of beer sales by U.S. retailers in the four weeks ended June 3, compared with Bud Light's 7.3%. Bud Light sales slid 24% Y/Y in the week ended June 3. Sales of other AB InBev (BUD) brands have also been hit, the report said, including Budweiser and low-calorie beer Michelob Ultra. Owned in Core Portfolio.

(-) UnitedHealth (UNH-US) dropped this week after Chief Financial Officer John Franklin Rex said more seniors are getting medical procedures they delayed during the Covid-19 pandemic, according to a FactSet transcript of a presentation made Tuesday at the Goldman Sachs Annual Global Healthcare Conference. It’s a trend that means rising costs for the health insurance company. While the news is disappointing, we ultimately believe such pressures to be transitory, and continue to like UNH as a core long-term holding for dividend-growth and total-return oriented investors. Owned in US Portfolio.

Weekend Reading

Canada’s housing market recovery gains more traction A solid 6.8% m/m increase in new listings in May set the stage for a 5.1% jump in home resales nationwide. RBC

Behavioral Scientist’s Summer Book List 2023 Wander off the beaten path with books on neuroaesthetics and psychedelics. And dance between disciplines with titles covering curiosity, creativity, and connection. BEHAVIORAL SCIENTIST

Apple Vision Pro’s Spatial Computing Is a Big Deal Yes, it's very expense and, yes, the selection of apps will be limited early on — but those barriers will disappear over time. DEEPWATER

How is an FHSA taxed at death? It’s not too early to consider the estate implications if someone dies while holding an FHSA INVESTMENT EXECUTIVE

The $400 Million Investment Fund That Gives Athletes Cash in Exchange For Future Earnings HUDDLE UP

Mission critical: Securing supply of critical minerals Critical minerals are the building blocks of most modern technologies. We explore the drive for resilient supply chains and weigh the portfolio implications. RBC