To my clients:

It was a down week for North American stock markets with the Canadian TSX finishing down 0.7%; the U.S. S&P 500 finishing down 0.2%; and the U.S. S&P 500 finishing down 1.1%.

Short update…

… last week’s huge U.S. Employment Report continues to reverberate through markets. As a reminder, 517,000 jobs were reported to have been created for the month of January and the unemployment rate reached the lowest level since 1969. While seasonal adjustments (think holiday hiring ahead of Christmas and associated layoffs after Christmas) likely played a role and somewhat distorted the figures, this report must still be viewed as nothing short of exceptional. Counterintuitively, the implications of this strength have led to modest weakness in the markets (as seen in the down numbers reported in my customary opening sentence). Why? Because the report likely gives the U.S. Federal Reserve cover to raise rates another 0.25% or more. Such a prospect is not yet set in stone as there are two more inflation reports, as well as one more employment report, before the next Fed policy announcement in mid-March, and these reports may again change expectations for Fed policy. We will certainly have a better handle come next Tuesday when the first of these inflation reports is released.

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

Visit Our Website: www.nickscholte.ca

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