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 Q4 2023 edition covers Market Review, the Type of Recession we may have, and how to build Resilience in portfolios.

 

Markets

Market scorecard as of close on Friday November 10, 2023.

Country	Equity Indices	Level	1 week	YTD
Canada	S&P/TSX Composite	19,654	-0.9%	1.4%
U.S.	S&P 500	4,415	1.3%	15.0%
U.S.	NASDAQ	13,798	2.4%	31.8%
Europe/Asia	MSCI EAFE	2,036	0.2%	4.7%

Source: FactSet

• TSX closed higher in Friday trading after being stuck in a tight range for most of the session. Most sectors higher. TSX finished with a 0.9% weekly decline. Canadian dollar lower against USD with loonie down over 1% on the week.

• US equities ended higher Friday, reversing Thursday's declines. S&P 500 and Nasdaq both finished the week higher, extending the previous week's gains that saw best performance for stocks in a year.

• Stocks firming at the end of an uneventful week, but one that saw some risk-off later in Thursday's session driven by a very weak 30Y bond auction (largest tail since at least 2016) and hawkish-leaning Powell comments (said Fed not yet confident policy is sufficiently restrictive and reiterated it will not hesitate to hike if necessary).

• Credit for the stock market rally goes to the bond market and the Fed. As the 10-year Treasury yield declined from the nearly 5.0 percent nosebleed level in October to 4.5 percent recently on dovish Fed comments, the S&P 500 regained its footing and bounced.

 

Economy

Canada

• Canada’s trade surplus more than doubled in September as higher crude oil prices helped boost energy exports. According to Statistics Canada, the country’s trade surplus amounted to CA$2.0 billion compared to a revised surplus of CA$949 million for August. Total exports rose for a third consecutive month in September, with gains observed in seven out of the 11 product sections.

• While inflation remains above the Bank of Canada’s long-term target of 2%, it’s clear to us that higher interest rates have weighed on domestic economic growth. On one side of the ledger, we believe interest rates are likely to remain in a “higher-for-longer” range relative to the low interest rate environment that persisted following the global financial crisis.

U.S.

• The slowing in CPI growth to 3.2% year-over-year in October from 3.7% in each of August and September was largely thanks to slower food and energy price growth, but alongside further signs that broader inflation pressures are easing. Fed policymakers are wary of a reacceleration in price growth, but evidence is building that economic momentum is fading.

• RBC Global Asset Management Inc. Chief Economist Eric Lascelles remains skeptical about the U.S. economy’s potential. He thinks high interest rates will ultimately take their toll. Over the next 12 months, Lascelles now sees a 70 percent likelihood of the U.S. entering a recession, up from his previous estimate of 65 percent.

Further Afield

• China slid into deflation again in October, according to the latest data from the National Bureau of Statistics. China’s Consumer Price Index fell 0.2% y/y in October after being flat the previous two months; the latest reading was below the median consensus forecast for a 0.1% drop.

 

Notes About Companies in Model Portfolio

• Intact Financial Corporation (IFC) reported Q3-2023 results on Tuesday. Undiscounted combined ratio of 98.3% included 8 points of catastrophe losses in excess of expectations. [The combined ratio is calculated by taking the sum of incurred losses and expenses and then dividing them by the earned premium. A ratio below 100 percent indicates that the company is making an underwriting profit.] Net operating income attributable to common shareholders of $370 million was 24% lower than Q3-2022, as a $373 million increase in catastrophe losses offset the impact of improving underwriting fundamentals, and higher earned premiums and investment income.

• TC Energy Corporation (TRP) released its third quarter results on Wednesday. Delivered approximately seven per cent comparable EBITDA1 growth of $2.6 billion in third quarter 2023 compared to $2.5 billion in third quarter 2022. Coastal GasLink has achieved mechanical completion, ahead of its year-end target and the project remains on track with the cost estimate of approximately $14.5 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