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.

Read my latest Smart Investor newsletter on my website. The Q3 2023 edition covers Market Review, Concentration of Returns in U.S. equities and Estate Planning Basics.

 

Markets

Market scorecard as of close on Friday August 4, 2023.

Country	Equity Indices	Level	1 week	YTD
Canada	S&P/TSX Composite	20,236	-1.4%	4.4%
U.S.	S&P 500	4,478	-2.3%	16.6%
U.S.	NASDAQ	13,909	-2.8%	32.9%
Europe/Asia	MSCI EAFE	2,143	-2.4%	10.3%

Source: FactSet

• Canadian equities finished higher Friday, though closed well off best levels as stocks faded in afternoon trading. TSX recovered from a three-day slide but still posted a 1.4% weekly decline.

• US equities finished lower in Friday trading, ending well off after the market sold off through the afternoon. Major indices logged a weekly pullback with S&P breaking three-straight weekly gains. Treasuries rallied with biggest gains in belly of the curve.

 

Economy

Canada

• Despite the Bank of Canada (BoC) having delivered on a highly anticipated rate hike in July, market pricing suggests bond investors are now nearly fully convinced that the incremental tightening phase of monetary policy is now complete.

• Headline inflation has made quite the U-turn since the summer of 2022, decelerating from an 8.1% peak in June 2022 towards a sub-3% level today. However, we believe these recent data alone are unlikely to lead the BoC to deviate from its hawkish posture, keeping the central bank away from rate cuts anytime soon.

U.S. 

• On Tuesday, Fitch Ratings downgraded the U.S.’s sovereign credit rating to AA+ from AAA. The move comes just two months after warning the AAA rating was under threat as lawmakers flirted with default before ultimately increasing the nation’s debt limit. Fitch justified the downgrade by proclaiming the country’s finances will likely deteriorate over the next three years amid tax cuts, new spending initiatives, and potential political gridlock.

• Job openings in the U.S. fell in June to the lowest level since April 2021, suggesting signs of softening demand for workers in the labor force.

Further Afield 

• After the July meeting of China’s Politburo, various ministries and local governments have followed up with a string of support measures or pointed to the potential for further stimulus. However, the stimulus hasn’t been strong enough to reverse the trajectory of the Chinese economy. We think investors will remain skeptical about the economic outlook for China until the data shows improvement.

 

Notes About Companies in Model Portfolio 

• Apple (AAPL) Thursday posted quarterly revenue of $81.8 billion, down 1 percent year over year, and quarterly earnings per diluted share of $1.26, up 5 percent year over year. In North America revenues declined -6% y/y as the smartphone market remains challenged, while growth was driven by Greater China where revenues expanded by +8% y/y, and other Emerging markets with robust performances off a low-base as Apple continues to expand its presence.

• Berkshire Hathaway Inc. (BRK.A and BRK.B) released financial results for the second quarter and first six months of 2023 and 2022. Net earnings attributable to shareholders were $35.91 billion compared with a loss of $43.6 billion same period in 2022. First six months net earnings was $71.4 billion compared with a loss of $38.0 billion same period a year ago.

• Intact Financial (IFC) Wednesday reported Q2-2023 results. Net operating income per share decreased 30% to $2.30, largely due to an increase in catastrophe losses to $421 million, partially offset by higher investment income. Operating net investment income of $326 million for the quarter increased 55% year-over-year, due to higher reinvestment yields, increased portfolio turnover, and a $25 million special dividend.

• Nutrien (NTR) Reported Wednesday Q2 2023 results. Generated net earnings of $1.0 billion and adjusted EBITDA of $3.9 billion in the first half of 2023, down significantly from the record levels achieved in the first half of 2022. This was primarily due to lower net realized fertilizer prices, offshore Potash sales volumes and Nutrien Ag Solutions (“Retail”) earnings.

• TELUS Corporation (T) Thursday released its unaudited results for the second quarter of 2023. Consolidated operating revenues increased by 13 per cent over the same period a year ago to $4.9 billion. Q2/23 results in line with forecast by RBC Capital Markets, with adjusted EBITDA slightly below consensus. Telus announced a $475MM restructuring program, specifically, the elimination of 6,000 employees.

• Waste Connections, Inc. (WCN) Wednesday announced its results for the second quarter of 2023. Revenue of $2.021 billion, above outlook and up 11.3% year over year. Net income of $209.2 million, and adjusted EBITDA of $628.9 million, above outlook. Adjusted net income for the six months ended June 30, 2023 was $492.7 million compared to $470.6 million in the year ago period.

 

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