To my clients:
This week's update comes early owing to a personal commitment.
It has so far been an up week for North American stock markets with the Canadian TSX so far up 2.9%; the U.S. Dow Jones Index up 1.6%; and the U.S. S&P 500 up 2.1%.
Given my quarterly letter sent to discretionary clients earlier this week, there is no material update today. I’ll merely reiterate the following key points from that letter:
- Economic activity is slowing
- A mild recession is now, perhaps, a 50/50 possibility
- Given sharply declining commodity prices, inflation is almost certain to have peaked and is set to decline from here
- Given the continued strength of many parts of the economy (particularly employment), as well as the health of the consumer and corporations, it’s difficult to envision anything worse than a short and shallow recession
- Arguably, markets may already have priced in such an outcome, and may now be looking through to the other side of the slowdown or recession… hence the market strength the past few weeks
That’s it for this week. 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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