To my clients:
It was an up week for North American stock markets with the Canadian TSX finishing up 1.3%; the U.S. Dow Jones Index finishing up 1.2%; and the U.S. S&P 500 finishing up 1.1%.
Recognizing that last week’s update was “meatier” than usual, and heading into the Canadian Thanksgiving long weekend, it will be an exceedingly short update this week with only four quick comments:
1) This week’s batch of U.S. inflation readings (Consumer and Producer prices) proved modestly stubborn. Overall, the trend toward the 2% Fed target remains in place, although perhaps at a decelerated pace.
2) Likewise, market expectations for a campaign of Fed interest rate cuts also remain in place but possibly at a decelerated pace also.
3) Meanwhile, owing to the divergent economic conditions here at home in Canada, expectations for the Bank of Canada (BoC) to perhaps accelerate its own rate cut path have ratcheted up. A 0.25% cut at the next BoC meeting is a near certainty, while a 0.50% cut is now sitting at slightly better than 50/50 odds.
4) As I’ve been writing of late, more important for market expectations through year end will be corporate earnings results. Q3 U.S. earnings season began this week, and the limited results so far suggest that corporate earnings are indeed doing their part to justify current market valuations. As more companies report results over the next two weeks, market returns are likely to be shaped by the relative health of these results.
That’s it for this week. Happy Thanksgiving and all the best,
Nick
Nick Scholte, CIM, FCSI
Senior Portfolio Manager
Scholte Wealth Management
RBC Dominion Securities Inc. │ Tel: 604.257.7569 │ Fax: 604.235.9950
3200-1055 West Georgia │ Vancouver, BC │ V6E 3P3
Toll Free: 1.844.665.9900 │Email: nick.scholte@rbc.com
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