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 catch up on the past four weeks’ Weekly Update in the link to my Blog.

Read my latest Smart Investor newsletter on my website. The Q1 2024 edition covers Market Review for 2023, a Turning Point on interest rates, and advantages of Bonds. Plus my Book List for 2023.

 

Markets

Market scorecard as of close on Friday March 1, 2023.

Country	Equity Indices	Level	1 week	YTD
Canada	S&P/TSX Composite	21,552	0.7%	2.8%
U.S.	S&P 500	5,137	0.9%	7.7%
U.S.	NASDAQ	16,275	1.7%	8.4%
Europe/Asia	MSCI EAFE	2,304	1.1%	3.0%

Source: FactSet

• Canadian equities finished higher Friday, just off best levels. Most sectors higher. TSX logged a 0.7% weekly gain after capping off February with a 1.6% monthly rise on Thursday, though still lagged S&P 500 and Nasdaq.

• US equities ended higher Friday after capping off a fourth straight month of gains on Thursday. S&P up in 16 of last 18 weeks (first time in over 50 years).

 

Economy

Canada

• Canadian GDP edged up an annualized 1.0% in Q4 after an upwardly revised (but still negative) 0.5% decline in Q3.With population growth continuing to surge higher, the Q4 increase will mark a 6th consecutive drop on a per-capita basis.

• Housing activity has been picking up steam as home resales within Canada increased for the second month in a row in January with a 3.7% rise from December 2023. We note that this activity increase is coming off of historically low levels, leaving RBC Economics still describing this market as slow.

U.S.

• The Federal Reserve’s preferred inflation gauge, the Personal Consumption Expenditures (PCE) Index, delivered no major surprises in January. Core PCE grew 2.8% year over year, its lowest level since March 2021 and in line with Bloomberg consensus expectations.

Further Afield

• The European Central Bank (ECB) wage tracker suggested negotiated pay will again be up around 4.5% in 2024. With inflation rapidly declining, this means real wages are growing. Stronger real wages and a tight labour market should support consumption which, in turn, would be the main factor to underpin a modest economic recovery in the second half of the year.

• Hong Kong plans to remove all property cooling measures with hopes of an immediate effect according to the latest budget on Wednesday. Hong Kong’s government is hoping that the removal will help to boost its very weak residential market. Analysts, however, believe Hong Kong’s real estate sector still faces an uphill battle due to weak sentiment, high interest rates, and slow economic growth

 

Notes About Companies in Model Portfolio

• Apple (AAPL): The European Commission has fined Apple over €1.8B for abusing its dominant position on the market for the distribution of music streaming apps to iPhone and iPad users through its App Store. In particular, the Commission found that Apple applied restrictions on app developers preventing them from informing iOS users about alternative and cheaper music subscription services available outside of the app.

• Canadian Natural Resources (CNQ) reported Thursday adjusted earnings per share (EPS) of $2.34 vs. FactSet estimate of $2.15. Increases quarterly dividend by 5.0% to C$1.05 from C$1.00. The board approved a resolution to subdivide the company's common shares on a two for one basis.

• Royal Bank of Canada (RY) reported Tuesday net income of $3.6 billion for the quarter ended January 31, 2024, up $449 million or 14% from the prior year, which included the $1,050 million impact of the Canada Recovery Dividend (CRD) and other tax related adjustments. Diluted EPS was $2.50, up 12% over the same period. Compared to last quarter, net income was down 9%, partly reflecting a higher effective tax rate.

• TD Bank Group (TD) announced Thursday its financial results for the first quarter ended January 31, 2024. Reported earnings were $2.8 billion, up 79% compared with the first quarter last year, and adjusted earnings were $3.6 billion, down 12%.

 

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