To my clients:
Very short – and early - update this week as we head into a holiday long weekend.
Two hours short of the market close, it has been an up week for North American stock markets with the Canadian TSX up 0.9%; the U.S. Dow Jones Index up 0.8%; and the U.S. S&P 500 up 0.3%.
Following my adjustment last week of discretionary client stock portfolios slightly in favour of U.S. vs Canadian equities, it is interesting to note that senior officials at the Bank of Canada (BoC) are now sounding the economic alarm also. Specifically, Senior Deputy Governor of the BoC, Carolyn Rogers, said in a speech Tuesday that Canada is experiencing a productivity “emergency” and that “the level of productivity in Canada’s business sector is more or less unchanged from where it was seven years ago. You’ve seen those signs that say, ‘In emergency, break glass.’ Well, it’s time to break the glass,” she told the crowd. This is consistent with my/RBC’s recent observations that per capita Canadian GDP has declined since 2019. Read here for more: https://www.bnnbloomberg.ca/need-to-improve-canadian-productivity-has-reached-emergency-level-boc-official-says-1.2051718
Obviously the above is concerning. I’ll continue to contemplate the implications for portfolio positioning, but would note – as I always have – that I and the vast majority of clients: live in Canada; have our expenses tied to the value of the Canadian dollar; and much of our livelihoods too are tied to the success and trajectory of the Canadian economy. As such, it makes sense to have a “meaningful” percentage of our investment assets tied to Canada also. However, the question as to what percentage of client portfolios constitutes a “meaningful” allocation will continue to be evaluated. Further adjustments may be forthcoming.
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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