To my clients:
It was a down week for North American stock markets with the Canadian TSX finishing down 1.3%; the U.S. Dow Jones Index down 1.2%; and the U.S. S&P 500 down 1.3%.
It will be a short update this week because I feel the past several updates have been on the heavy side. Since the messaging hasn’t changed, I don’t want that message to be lost in a multitude of details and economic minutiae. Here’s the message: We (I and RBC) do not anticipate recession in 2019. We anticipate a slowdown that will still see GDP growth and corporate earnings growth come in better than the post 2008 average for both. Absent a realistic expectation for recession, corrective events such as that in the current episode, and the February to April time frame earlier this year, are best to ride out.
So now, just a couple of quick observations:
Overall, it was a volatile week with significant daily moves both up and down. But, the point-to-point decline from the open on Monday to the close today, was on the fringes of what I would describe as a typically “normal” range for the markets at times other than correction. But I acknowledge it is still unsettling.
The other point is that the markets themselves remain within the range established by the current correction as well as the February correction earlier this year. Our technical analyst suggests that, absent a definitive break below this range, that markets are due for a potential rally into year-end. We shall see if this is the case.
That’s it for this week. All the best,
Nick Scholte, CIM, FCSI
Vice-President & Portfolio Manager
RBC Dominion Securities Inc. │ Tel: 604.257.7569 │ Fax: 604.235.9950
3200-1055 West Georgia │ Vancouver, BC │ V6E 3P3
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