Below is a summary of some of the relevant news items from the Capital Markets and the Economy from the past week extracted from RBC Global Insights and FactSet Research.

 

Markets

Market scorecard as of close on Friday September 24, 2021.

Equity Indices	Level	1 week	YTD	52-week
S&P/TSX Composite	20,490	-0.7%	17.5%	26.1%
S&P 500	4,433	-0.6%	18.0%	32.1%
NASDAQ	15,044	-0.5%	16.7%	37.9%
Euro Stoxx 50	4,131	-0.9%	16.3%	24.6%
Hang Seng	24,921	-4.9%	-8.5%	2.4%

Source: Bloomberg, RBC Wealth Management

• TSX closed lower in Friday afternoon trading near worst levels. Energy and staples the laggards with health care the leader. US equities were lower in Friday trading, finishing near worst levels with the S&P and Nasdaq indices lower on the week. Gold ended down 0.3%, off more than 2% on the week. WTI crude finished down 0.9%, though still up over 3% for the week. Canadian dollar lower vs USD.

• For the month, the S&P 500 is down 1.6% so far. In our view, this should not come as a surprise to investors because September is the only month in which the S&P 500 has delivered losses, on average, since 2010. No other month has been worse than a 0.1% gain, on average, over the same timeframe. However, the silver lining is that September weakness typically has come ahead of the most attractive window of returns: October through February.

 

Economy

Canada

• Canada’s labor market continued to recover in August. Employment rose by 90,000, bringing the labor market just 156,000 jobs shy of its pre-pandemic level in February 2020. The majority of gains came from the services sector as provinces lifted pandemic restrictions, allowing businesses to reopen and increase capacity. The unemployment rate ticked lower to 7.1%, down significantly from the pandemic peak of 13.7% in May 2020

• Canada’s Consumer Price Index jumped 4.1% in August from one year earlier. This marks the fifth straight month of inflationary conditions above the Bank of Canada’s (BoC) target range of 1%–3% and the highest level since 2003.

• Given well-anchored inflation expectations and considerable slack in the economy, BoC Governor Tiff Macklem maintains the view that the recent trend of above-target inflation is likely transitory.

U.S.

• Economically speaking, inflation data was the highlight of the week. Core CPI climbed 0.1% in August and was 4.0% above 2020 levels. These are both 0.2% lower than consensus expectations, raising the question of whether softer-than-expected data would be enough to delay the Fed’s tapering plans

Further Afield 

• After an important shift in polls, German Finance Minister Olaf Scholz has emerged as the most likely successor to long-serving Chancellor Angela Merkel. The elections held on Sept. 26 will also determine whether a centre-right coalition will continue to lead the world’s fourth-largest economy, as it has since 2005. The outcome will shape the future of Europe.

• The recovery in UK labour market data continues. In the three months to July, the unemployment rate fell to 4.6%, down from 4.7%, while the number of payrolled employees is back to pre-pandemic levels, according to HMRC payroll data for August, despite GDP still running considerably below the levels prior to the COVID-19 outbreak.

• Beijing is moving to tighten its grip on the world’s biggest gambling hub, Macau. According to a document up for public consultation, the government is looking at appointing representatives to “supervise” the casino operators as well as boosting local shareholdings and tightening controls on the distribution of dividends. 

 

 

Notes About Companies in Model Portfolio

• Apple (AAPL) Apple product announcements were largely in line with expectations heading into the event in relation to features. While the limited surprises in terms of features has always led to a post-event share price weakness, there are more crucial medium-term positives for investors, including:

  • iPhone 13 lineup focuses on continued enhancement of the camera, better battery performance, as well as 5G capabilities (support for more bands) to drive consumer interest in upgrade to the latest generation of devices and addresses investor concerns in relation to supply constraints, with shipping dates in line with typical historical pattern (last week of September).

  • The Apple Watch continues to enhance the positioning in fitness and will now feature improved charging, and integration of SharePlay and support for up to 32 group participants in Fitness+.

  • Major upgrade to the iPad mini, including 5G support, is likely to drive a stand-alone market of its own, on account of the small form factor, relative to the milder upgrades to the “traditional” iPad.

• CN Rail (CNR) Mgmt announced last week the details of its new strategic plan. we see many of the elements proposed as achievable (pricing, capex cut, share repurchase and asset sale); while others (volume and O/R) as a key “TBD.” RBC Capital Markets continue to rate CNR as Outperform on potential upside from efficiency drive.

 

Feel free to contact me with any questions and/or to discuss investment ideas.

I appreciate the opportunity to serve you and look forward to continuing to help you accomplish your long-term financial goals.

 

Regards,

Shiuman