To my clients:
Quick announcement: I will be away from the office on Monday, November 4th. I will have remote access and will be checking for client communications, but it is likely that my response time might be less prompt than usual.
It was a down week for North American stock markets with the Canadian TSX finishing down 0.9%; the U.S. Dow Jones Index down 0.2%; the U.S. S&P 500 down 1.4%.
Brief update this week, with the following point form observations:
- Several of the “Magnificent 7” technology stocks reported earnings results this week. Discretionary clients hold 4 of these names: Amazon, Apple, Alphabet (aka Google) and Microsoft. All four of these Magnificent 7 stocks held by clients exceeded both earnings and revenue expectations for the quarter. However, both Apple and Microsoft (more so Microsoft) provided somewhat subdued guidance. Consequently, Alphabet and Amazon had great weeks in regard to stock performance, and Apple and Microsoft were down. Importantly, our analyst coverage think the setbacks for Apple and Microsoft are short term in nature and do not change the long term prospects.
- The October U.S. Employment Report was released this morning and, at just 12,000 new jobs created, it was the worst employment report since December 2020. However, variability in this report was widely expected owing to hurricane disruptions and a strike by 44,000 Boeing workers. In other words, this may well be a one-off weak report. It will be important to watch next month’s report to see if a bounce-back in employment numbers occurs as expected.
- ISM Manufacturing, reported at just 46.5, continued the 2-year stretch of contraction in the manufacturing sector. While it would be nice to see improvement in this sector of the U.S. economy, it is important to remember it accounts for just ¼ of economic activity (it was a far more significant contributor to economic activity in generations past). Conversely, the much larger services sector has been consistently expanding and the ISM report on this non-manufacturing sector is set for release next Tuesday.
- The U.S. election is next Tuesday. I will be watching intently.
That’s it for this week. Back in the office next Tuesday. 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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