To my clients:

Note: I’ll again be away next week for my last holiday stretch of the summer. I’ll return to the office Tuesday, August 22nd. While away, please reach out to Brenda for any pressing needs.

It was a mixed week for North American stock markets with the Canadian TSX finishing up 0.9%; the U.S. Dow Jones Index finishing up 0.6%; and the U.S. S&P 500 finishing down 0.3%. This follows a down markets last week while I was on holiday (though monitoring from afar).

Of note last week was the U.S. Employment Report which saw the U.S. create 187,000 new jobs for the month of July. This was lower than expectations and continues a modest softening trend in new jobs created since the beginning of 2022. Two thoughts here: 1) a stated goal of the U.S. Federal Reserve is to slow down job growth to help tame inflation, so this seems to be happening; and 2) though softening, job creation still remains remarkably robust in the face of the very sharp rise in interest rates the past 18 months.

And over these same 18 months, inflation remains front and center in the investment world. This week saw the U.S. Consumer Price Index tick up to a 3.2% annual rate from 3.0% the month before. As I noted in my weekly update at the time, I was anticipating this modest uptick given the way the CPI year-over-year rate is calculated, and this modest increase is of no concern to me. In fact, economists were expecting a larger tick up to 3.3%, so I was not alone in my outlook. I’d expect the year-over-year decline in inflation to resume in the months ahead, and I look forward to soon seeing the first reading with a “2” as the first digit.

I’d be remiss if I didn’t note that a mild correction in stock prices has been playing out so far in August. This too is not unexpected. As I’ve previously noted (in my quarterly letter to discretionary clients as well as many times in these weekly updates), after such a strong start to the year, a correction at some point would not only be normal, but healthy. It wouldn’t surprise me if this softness continues for a few more weeks, perhaps months. That said, I continue to expect markets, in aggregate, will climb the proverbial “wall of worry” through year-end and finish somewhat higher than the current levels. Of course, I’ll continue to monitor events for a change to this outlook.

That’s it for this week; next update on August 25th. 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
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