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 17, 2023.

Country	Equity Indices	Level	1 week	YTD
Canada	S&P/TSX Composite	20,176	2.7%	4.1%
U.S.	S&P 500	4,514	2.2%	17.6%
U.S.	NASDAQ	14,125	2.4%	35.0%
Europe/Asia	MSCI EAFE	2,080	2.1%	7.0%

Source: FactSet

• TSX finished higher in Friday afternoon trading, near best levels. Most sectors higher. Canadian equities recorded a 2.6% weekly gain and are now 4.1% ahead Year-to-Date.

• The S&P/TSX Composite has performed well month to date, clawing back some of the losses it suffered in September and October. Recent gains have been driven by 10 of 11 sectors within the index.

• US equities ended mostly higher in an extremely quiet Friday session. U.S. equities are higher on the week as investors increasingly believe the Federal Reserve’s rate hiking cycle is over. All major indexes are higher.

 

Economy

Canada

• The Bank of Canada’s (BoC) rate hike campaign has cooled housing market activity meaningfully since the midpoint of 2023. This slowdown in home resales, which have dropped nearly 12% over the past four months, has reversed much of the increase in activity seen in the first half of 2023.

• The effects of higher interest rates have far outweighed any meaningful decrease in housing prices, with mortgage rates now at levels not seen in over a decade. While financial markets are pricing in cuts to the BoC’s overnight rate, RBC Economics does not foresee a significant improvement in affordability measures in the near term.

U.S.

• Inflation slowed more than expected in October. On a year-over-year basis, both headline (3.2%) and core (4.0%) inflation came in below Bloomberg consensus expectations of 3.3% and 4.1%, respectively. Headline inflation benefited from lower energy prices, a continued decline in food inflation, and moderating core goods prices.

• This cooler-than-expected inflation report has led many investors to conclude that the Federal Reserve is done raising rates. we continue to believe the key question moving forward is whether the trend lower in inflation will align with a slowdown in economic growth, or if the Fed will be successful in manufacturing its widely discussed “soft landing.”

Further Afield

• UK CPI inflation, at 4.6% y/y in October, came in softer than both consensus and Bank of England (BoE) expectations, at 4.7% y/y and 4.8% y/y, respectively. We think the bar remains high for further UK rate hikes and that the current 5.25% Bank Rate will be the peak for UK interest rates.

• At the Asia-Pacific Economic Cooperation (APEC) summit in San Francisco Chinese President Xi Jinping and U.S. President Joe Biden held a two-hour meeting, then both sides issued positive statements highlighting “progress” being made. At a subsequent dinner with business leaders alongside the APEC summit, Xi remarked that China wants to be friends with the U.S. and that China would not fight a war with anyone.

 

Notes About Companies in Model Portfolio

• Berkshire Hathaway (BRK.A, BRK.B) reported a relatively busy third quarter for its equity investment portfolio, with net sales (exclusive of purchases) coming in at an estimated $5.7 billion based on the insurer's recent 13F filing. The biggest reductions or elimination from the portfolio were: Chevron, Activision Blizzard, General Motors, Celanese, Johnson & Johnson, Procter & Gamble, Mondelez and UPS. Some of these positions have been in the portfolio for close to two decades.

• Microsoft (MSFT) “And we're extremely excited to share the news that Sam Altman and Greg Brockman, together with colleagues, will be joining Microsoft to lead a new advanced AI research team. We look forward to moving quickly to provide them with the resources needed for their success." (Tweet from Microsoft President & CEO @satyanadella on Monday November 20, 2023). The Board of Open AI had let Sam Altman go on November 17.

• Waste Connections (WCN) and Vision RNG, a full-service developer of projects designed to convert landfill gas to valuable renewable natural gas, announced that they are partnering on a project to convert LFG to RNG, at Waste Connections' Southern Plains landfill in Grady County, Oklahoma. The agreement also includes an option to build two additional RNG facilities at Waste Connections' Red Carpet and Osage Landfills, also located in Oklahoma.

 

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