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.

You can view the past four weeks’ Weekly Update in the link to my Blog.

To read my latest 2023 Q1 Smart Investor newsletter (What 2023 Holds, How to Invest, my list of books from last year), and catch up on back issues, go to my website.

 

Markets

Market scorecard as of close on Friday May 12, 2023.

Country	Equity Indices	Level	1 week	YTD
Canada	S&P/TSX Composite	20,420	-0.6%	5.3%
U.S.	S&P 500	4,124	-0.3%	7.4%
U.S.	NASDAQ	12,285	0.4%	17.4%
Europe/Asia	MSCI EAFE	2,126	-0.9%	9.4%

Source: FactSet

• TSX finished little changed Friday, recovering from some afternoon weakness that followed strength at the open. Sectors were mixed with tech the outsized decliner. Financial, real estate, and communication services other laggards, though downside limited. Canadian equities logged a 0.6% weekly decline, with resource sectors a drag, as the TSX ended lower for a third straight week.

• US equities were mostly lower in Friday trading, though ended off worst levels, as earnings season begins to wind down. However, the S&P was still modestly lower for the week, while Nasdaq finished a bit higher. Softer Michigan consumer sentiment reading and accompanying uptick in long-run expectations drove reversal from modest gains to start the session. Treasuries mostly weaker with curve flattening.

 

Economy

Canada

• As the impressive run in Canadian housing prices over the past couple of years started to fade, households began to question if an end is near. RBC Economics notes that activity has ramped up significantly in many local housing markets from the depressed levels observed in March, and prices have begun to tick higher again.

• The Canadian labour market surprised to the upside once again in April. Canada added 41,400 jobs, with full-time employment down 6,200 and part-time employment up 47,600. Over the last seven months, employment has increased by 412,000, which is three times the trend rate from 2010 to 2019. April’s unemployment rate held steady for a fifth straight month at 5.0%.

U.S.

• Bank lending standards continued to tighten during Q1. According to the Federal Reserve’s Senior Loan Officer Opinion Survey (SLOOS), the net percentage of U.S. banks tightening commercial and industrial loan standards for large and mid-sized businesses increased to 46.0% in the first three months of the year, up slightly from 44.8% in Q4 2022.

• Banks cited deterioration in credit quality, reduced collateral values, increased funding costs, and deposit outflows during the quarter as reasons for the tightening.

• Inflation moved lower for a tenth straight month in April. Last week’s Consumer Price Index (CPI) report showed that headline inflation climbed 4.9% in April compared to a year ago, slightly below the 5.0% consensus expectation and down from 5.0% in March. 

Further Afield 

• The Bank of England (BoE) delivered a 25 basis point (bps) interest rate increase to reach a Bank Rate of 4.5% at the meeting on Thursday. The widely expected move marks the twelfth consecutive rate hike and the highest Bank Rate since 2008.

• China’s recent economic data show an uneven economic recovery. Consumption during the country’s Labor Day holiday was encouraging. The number of tourists was 20% above the 2019 level, and total travel revenue surpassed the pre-pandemic level for the first time.

 

Notes About Companies in Model Portfolio

• Intact Financial Corporation (IFC) reports Q1-2023 results. Net operating income per share up 4% to $3.06 on premium growth, higher investment yields and increased distribution income.

• Nutrien (NTR) Reports First Quarter 2023 results with net earnings of $0.6 billion ($1.14 diluted net earnings per share). First quarter 2023 adjusted net earnings per share was $1.11 and adjusted EBITDA1 was $1.4 billion.

 

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