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 Q3 2024 edition covers Market Review for first half of 2024, and a list of questions for those thinking about their retirement. Shiuman’s Corner is about my favourite podcasts.

 

Markets

Market scorecard as of close on Friday August 23, 2024.

Country	Equity Indices	Level	1 week	YTD
Canada	S&P/TSX Composite	23,286	1.0%	11.1%
U.S.	S&P 500	5,635	1.4%	18.1%
U.S.	NASDAQ	17,878	1.4%	19.1%
Europe/Asia	MSCI EAFE	2,439	4.0%	9.1%

Source: FactSet

• TSX closed higher in Friday afternoon trading, near best levels at new all-time high. All sectors higher. The TSX recorded a 1.0% weekly gain.

• US equities were higher in Friday trading, ending near best levels. Friday's broad-based gains reversed Thursday's declines, when S&P suffered its biggest pullback in more than two weeks. S&P and Nasdaq capped off second-straight week of gains, with S&P less than 1% from record close.

 

Economy

Canada

• Headline inflation kept easing in Canada in July to 2.5% year-over-year that was the lowest reading since March 2021. The scope of price pressures also continued to normalize – the diffusion index says the breadth of inflation in Canada is looking similar to pre-pandemic norm in 2019.

• As the Sept. 4 Bank of Canada (BoC) monetary policy meeting approaches, markets have priced in another 25 basis point reduction in the benchmark rate. This would be the third consecutive rate cut as inflation continues to cool, with July headline inflation coming in at 2.5% y/y, the lowest reading since March 2021, and down from 3.4% at the end of 2023.

U.S.

• While it was a light week for economic data, most releases continued to indicate a slowing economy. July’s leading economic indicators declined for the 29th successive month, and the manufacturing Purchasing Managers Index fell from 49.6 in July to 48.0 in August (a reading below 50 indicates contractionary conditions).

• Big focus on Friday was Fed Chair Powell's remarks at Jackson Hole conference. He said that the Fed does not welcome further cooling in labor-market conditions and noted changes to the balance of risks. He argued "the time has come for policy to adjust," adding his confidence has grown that inflation is on a sustainable path to 2%. Market responded positively to perceived dovish tone to the speech with a bit of increase expectations for a 50bp September cut.

 

Further Afield

• The UK economy defied the most pessimistic expectations and grew at a healthy pace for the first half of the year. GDP grew by 0.6% q/q in Q2, following a 0.7% q/q increase in Q1. Such growth points to a healthy recovery from last year’s mild recession. This could be attributable to real wage growth as core inflation decreased over the period.

• Japan’s total exports in July were up 10.3% y/y vs. the 11.5% Bloomberg median estimate. Total imports increased 16.6%, stronger than the consensus forecast and the fourth consecutive month of growth.

 

Notes About Companies in Model Portfolio 

• Canadian National Railway (CN) has formally locked out employees represented by the TCRC as of 22-Aug at 00:01 ET, after the union did not respond to another offer by CN in a final attempt to avoid a labour disruption. Without an agreement or binding arbitration, CN had no choice but to finalize a safe and orderly shutdown and proceed with a lockout.

• • The independent Canadian federal labour board ordered Canadian National Railway and Canadian Pacific Kansas City and their employees to end their bitter dispute that had disrupted transport traffic across the continent. The union representing the 9,300 affected workers with both companies pledged to appeal the ruling in court, but said it will comply with the board decision. CPKC said it expects full recovery to take several weeks, noting a phased shutdown at both railways began around two weeks ago.

• Intact Financial (IFC) estimates total catastrophe losses are ~C$1.1B on a pre-tax basis and net of reinsurance. The company notes the catastrophe losses are well above expectations for a third quarter. The company will issue an update in early October if other significant catastrophe losses occur or if the amount of losses materially differs from this estimate.

 

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