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 November 18, 2022.

Equity Indices	Level	1 week	YTD
S&P/TSX Composite	19,981	-0.6%	-5.9%
S&P 500	3,965	-0.7%	-16.8%
NASDAQ	11,146	-1.6%	-28.8%
Euro Stoxx 50	3,925	1.5%	-8.7%
Hang Seng	17,993	3.8%	-23.1%

Source: Bloomberg, RBC Wealth Management

• TSX ended higher Friday, near best levels. Most sectors higher, communication services, consumer discretionary and industrials the leaders, with materials and utilities also ahead. Health care the big downside standout with tech, energy and staples the other laggards. Canadian equities logged a 0.7% weekly loss, though comes after a four-week stretch that saw the TSX gain nearly 10%.

• US equities mostly higher Friday, with a modest 0.7% decline for the week. Value outperformed growth. Sector leadership is evident in defensive areas such as Health Care and Consumer Staples while weakness can be seen in the more cyclical sectors such as Real Estate, Consumer Discretionary, and Energy.

• Nothing specific behind the Friday price action, though some focus on big options expiry Friday and a fairly well received batch of earnings. Bullish talking points continue to revolve around cooler-than-expected October inflation prints and Fed officials' implicit blessing of a slowdown in the pace of tightening. Bearish talking points include Fed focus on upside risk to terminal rate, expectations for outsized negative earnings revisions, and lagged China reopening and lingering geopolitical tensions.

• Asia Pacific equity markets have traded higher during the week, led by Hong Kong, with the Hang Seng Index up more than 20% from the late October low.

 

Economy

Canada

• October headline CPI inflation in Canada came in at 6.9% y/y, roughly in line with expectations and unchanged from the prior month. Although inflation appears to be peaking, levels remain uncomfortably high relative to BoC targets, doing little to derail market expectations for a 25 basis point hike in December.

• The Bank of Canada may be closer to the end of its tightening cycle than the market expects, according to a recent report by RBC Economics.

U.S.

• The Producer Price Index (PPI) climbed 6.7% y/y in October, notably slower than the consensus expectation of 7.1%. While initial unemployment claims of 222,000 for the week ending Nov. 11 shifted the four-week moving average higher to 221,000, claims are still well below the pre-pandemic average.

• Retail sales in October were higher than the consensus expectation as consumers increased their purchases 8.3% y/y, with an increase in underlying units purchased as well—meaning the overall rise in sales was not solely due to inflation.

Further Afield

• The UK seems to be the first of the major advanced economies to enter recession. It is not doing so in a position of strength, as it is the only G7 economy still languishing below its pre-pandemic output levels. More challenges are in store, as the government has announced sweeping spending cuts and tax increases, even as the Bank of England tightens monetary policy.

• President Xi Jinping spoke for more than three hours with President Joe Biden in a bilateral meeting ahead of the G20 summit. The two leaders set a more positive tone for relations, in our view, which had fallen to a low point after U.S. House Speaker Nancy Pelosi made a controversial visit to Taiwan.

 

Notes About Companies in Model Portfolio

• The Walt Disney Company (DIS) announced Sunday that Robert A. Iger is returning to lead Disney as Chief Executive Officer, effective immediately. Mr. Iger, who spent more than four decades at the Company, including 15 years as its CEO, has agreed to serve as Disney’s CEO for two years, with a mandate from the Board to set the strategic direction for renewed growth and to work closely with the Board in developing a successor to lead the Company at the completion of his term. Mr. Iger succeeds Bob Chapek, who has stepped down from his position.

• Visa (V) announced Thursday the appointment of Ryan McInerney as CEO, effective February 1, 2023. McInerney currently serves as President of Visa, a role he has held since 2013. He will take over as CEO from Alfred F. Kelly, Jr., who has served as the company’s CEO since 2016 and Chairman since 2019. Following McInerney’s appointment, Kelly will assume the role of Executive Chairman of the Board.

 

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Regards,

Shiuman