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 19, 2023.

Country	Equity Indices	Level	1 week	YTD
Canada	S&P/TSX Composite	20,351	-0.3%	5.0%
U.S.	S&P 500	4,192	1.6%	9.2%
U.S.	NASDAQ	12,658	3.0%	20.9%
Europe/Asia	MSCI EAFE	2,132	0.3%	9.7%

Source: FactSet

• TSX ended higher in Friday afternoon trading, off best levels. Most sectors higher. Canadian equities finished 0.3% down on a weekly basis, the fourth straight weekly decline with materials the big drag for a second straight week.

• US equities closed lower in Friday trading, with the S&P pulling back a bit from Thursday's YTD high. Nevertheless, major indices posted solid weekly gains. FANMAGs were mostly lower though group was still up big for the week. Treasuries were weaker, adding to the week's big yield backup (2Y yield up ~30bp this week alone).

• The major U.S. stock indexes continue to trade within the narrow ranges in place since the start of April. The S&P 500 has not had a week in which it moved up or down 1% in the past seven, the longest stretch since 2019. Sentiment was balanced, with optimism over an eventual debt ceiling increase tempered by growing concerns over weakening consumer behavior.

 

Economy

Canada

• Canadian headline inflation picked up modestly in April, raising concerns that inflationary pressures could remain sticky in the Canadian economy. Headline CPI came in at 4.4% y/y in April, well above the 4.1% y/y consensus estimate and up from 4.3% y/y in March.

U.S. 

• The U.S. debt ceiling has been front and centre. While it hasn’t resulted in significant volatility beyond certain segments of the U.S. government bond market, it remains a near-term risk demanding swift resolution. The self-imposed U.S. debt ceiling, established in 1917, sets a legally defined limit on how much the U.S. government can borrow to pay its bills. This limit has been reached and raised over one hundred times.

• While it’s unlikely to have significant implications for portfolios over the next few years, it’s an issue we remain mindful of given the implications on the country’s credit rating, the role of the U.S. dollar, the competitiveness of the country, and its long-term economic trajectory.

• The slowing consumer narrative was reflected in U.S. retail sales for April, which were up 0.4% m/m, missing the consensus estimate of 0.8% m/m growth. Gains in e-commerce sales were offset by declines in furniture and clothing.

 

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