Emerging Market Angst
The real angst in the global markets this January was focused on emerging markets, where equities, bonds, and currencies were under pressure. Currencies in countries like Russia, argentina, India, Brazil, Turkey and South Africa have been particularly hard hit. A combination of slowing growth, rising inflation, U.S. Federal Reserve tapering, current account deficits and political unrest are the causes to varying degrees and significance in each country.
In addition, the Canadian dollar has fallen sharply over the past few weeks back to sub-90 cent levels.
Continue reading…. GLC_Market_Matters_February_2014
Equity Markets Roared Ahead!
Equity markets roared ahead and the U.S. market led the way! Canadian Equity markets fared well but but lagged behind their developed market peers. Europe emerged from it’s longest recession in history and equities experienced strong gains across the region.
So what lies ahead?
Given improving global economic conditions against a backdrop of accommodative monetary policy, we anticipate that equity returns in 2014…
Continue reading…. GLC_Market_Matters_January_2014
Dashing through the snow
The American S&P500 hit the year’s 38th new closing high in November. While a short-term pull back in possible, a number of factors remain in favour of the expanded rally.
In contrast the Canadian S&P/TSX Composite has been one of the weakest performing equity markets among developed nations this year.
As we approach the new year, we highlight 3 game changers for 2014 that have the potential to significantly and positively change the playing field for investors in 2014.
Continue reading….. GLC_Market_Matters_December_2013
A BITE FROM THE HAND THAT FEEDS YOU
The U.S. economy is improving and central banks are nearing an inflection point in which the negatives of their aggressive policies (artificially low yields) begin to outweigh the positives (encouraging investment/spending), and in fact, hamper recovery.
It was a bumpy quarter marked by a sharp volatility in equities, commodities and bonds after U.S. Federal Reserve (the Fed) Chairman Bernanke indicated that the central bank could start winding down its bond-buying stimulus programs*, and end it altogether by mid-2014. Fed officials quickly sought to reassure investors that they had no intention of raising short-term interest rates from near- zero anytime soon, and decisions to pull-back stimulus would be ‘data dependent’. But the horse was out of the barn……
Continue reading ……GLC_Market_Matters_July_2013
This is good news, right?
As we approach mid-year, we can put aside many of the worries that we started the year with. The U.S. economy has shown resilience in its recovery in spite of tax increases and forced spending cuts. The American fiscal cliff has so far turned out to be a non-event, as private sector spending has proven to be stronger than expected and is providing an offset to the government cuts.
While couching his words, Chairman Bernanke expressed his view that if evidence unfolds of self-sustaining economic recovery, such as stronger labour markets, plans to ease off the bond buying program could begin as early as the fall. No matter how many ‘ifs’ and ‘whens’ he stated, his response created concern that a pull-back in stimulus could begin sooner than anticipated and equity and bond markets reacted quickly.
When considering the big picture……
Continue reading GLC_Market_Matters_June_2013
Hoping For “Miracle Grow” Results
For those of us taking to the yard this spring, we know there is a fine line between pruning to promote healthy growth, and cutting too deep. Global policy makers have faced a similar dilemma in recent years as harsh austerity measures cut spending, increased taxes and yielded few areas of new or renewed growth.
Recently, there has been a shift in thinking as soft global economic data, subdued inflation and frustrated citizens/voters encouraged global leaders and policy makers to re-think their fiscal restraint strategies in favour of more accommodative pro-growth policies…..
Continue Reading GLC_Market_Matters_May_2013
Gold, Material Sector, Decline Significantly
Once again, the Canadian S&P/TSX Composite lagged its global peers. The Materials sector suffered significant declines as mining and gold companies continue to lose favour with investors. Meanwhile, the Ameican S&P500 hit a record high level of 1569, at the end of the first quarter – marking a 131% rise since the March 9, 2009 bear-market low of 676.
We caution investors that rather than chase hot performance with pendulum shifts in and out of assets, focus on your long-term plan and base your asset mix decisions on your financial goals, risk tolerance and time horizons. If it doesn’t make sense from all three perspectives, it may not be the right move for you.
Continue Reading GLC_Market_Matters_April_2013
A growing Number of Bull-Ievers
Improving economic conditions, particularly out of the U.S. are trumping worries of impending budgetary cuts and political unease. Investors seem more willing than they’ve been in years to take on market risk and once again consider the benefits of being owners (equity shareholders) rather than loaners (bond investors).
In spite of this, the strong bull market in the U.S. continues to outrun our Canadian market as our material heavy TSX index lagged as market sentiment towards Gold Miners in particular has continued to turn sour. It appears the traditional attraction of bullion as a safe-haven trade during times of economic turmoil has lost its luster as investors gain confidence in the global economic recovery.
Global stock markets continued their dramatic improvement. The S&P 500 index posted its biggest monthly gain since October 2011 and best January performance since 1997, advancing 5 percent. Investors have grown hungrier for higher returns over the past two months, driving investment into equities and away from bonds in what many pundits are now calling “The Great Rotation”.
Canada’s bond market weakened in January, with all bond sectors posting negative returns…….
Continue Reading……. GLC_Market_Matters_February_2013
Positive Momentum For Global Economy
Overall the global economy is entering the new year with positive momentum, mainly in the U.S. and China, which should help corporate earnings and support risk appetite early in 2013. Companies are in good shape, with strong 2012 profits, record cash levels, and very manageable debt levels. The question for 2013 will be whether investors can continue to focus on corporate fundamentals to drive their investment decisions with less distraction from remaining macro and government fiscal challenges. Things to watch out for in the coming year include……
Continue Reading… GLC_Market_Matters_January_2013
“We’ re not going to permanently cripple ourselves because 535 people can‟t get along” -Warren Buffett
Like a day-time TV drama, the political negotiations feature a regular rotation of characters and new story threads spinning off daily. All of which build anticipation for a year-end finale which may involve any number of partial resolutions, new cliff-hangers (pun intended), and the near promise of more drama from old and new characters.
In spite of the lingering unease accompanying these issues, a number of major world markets have continued to show resilience. Companies are attracting investors back with healthy balance sheets, large cash holdings and strong earnings, all of which are available within relatively attractive price ranges.
Continue reading GLC_Market_Matters_December_2012
Bonds Close With A Moderate Slip
The higher yielding Corporate bond sector was the only fixed income sector to post a positive return as Canada’s bond market weakened moderately in October and investors’ shifted assets from “safe-haven” assets to riskier equity’s.
Meanwhile, it appears China is finally catching the wave of recovery as economic data is further expected to list to the upside as the government maintains its monetary easing policy through the period of leadership transition in November.
Continue reading… GLC_Market_Matters_November_2012
Risk On – Equities Continue to Gain Ground
Global equity markets sprang to life over the summer, reflecting the growing belief by investors that the efforts of global central bank authorities will help the world economies grow instead of contract. The American S&P500 has gained 14.6% YTD, while Gold, a beneficiary of QE3, posted an 11.1% YTD return.
Investors should remain cautiously optimistic as over the coming months there will be no shortage of political and economic events to capture media headlines, not the least of which will be political leadership changes in China, U.S., and Italy, and upcoming deadlines for fiscal cliffs, austerity targets, and debt ceilings. In the near term, we anticipate market…….
Continue Reading….. GLC_Market_Matters_October_2012
Whatever It Takes To Save the Euro
In Europe, ECB President Mario Draghi announced his Outright Monetary Transactions (OMTs). In short, Mr. Draghi made good on his summer-time commitment to ‘do whatever it takes to save the euro’. The new OMT program would allow for the purchase of unlimited amounts of bonds to provide a “fully effective backstop” to stricken European economies, such as the familiar headliners like Spain, Greece and Italy.
Meanwhile, the lagging Canadian S&P/TSX has only recently caught some traction as our resource heavy economy was given a boost by US Federal reserve chairman Ben Bernanke when he announced another round of quantitative easing or QE3……..
Continue reading… GLC_Market_Matters_September_2012
American Market Up – Canadian Market Down
The bull market remains intact with all markets gaining in the month and the S&P 500 index up a healthy 9.7 per cent year-to-date. Most other major global indices have also gained this year. Lagging its global peers due to a greater leverage to resource stocks, the Canadian S&P/TSX composite index has declined 2.4 per cent year-to-date. These recent showings help remind investors about the importance of diversification and overcoming home country bias.
Continue reading GLC_Market_Matters_August_2012
The Glare of a Volatile Quarter
Investor confidence that built up in the first quarter was eroded by the dire economic headlines of the second quarter. The macro-economic concerns fuelled a significant flight to safety and the quarter was marked by heightened volatility and a significant down trend in equity and commodity values. Of note, the most significant losses took place in May, overshadowing a much more positive month of June. The net result was…
Continue reading GLC_Market_Matters_July_2012
Europe’s ongoing Quagmire
With rocky stock markets and investors reacting to daily headlines, some active managers believe this situation is masking a lot of great companies that are building up tremendous shareholder value. Often when investor sentiment is extremely negative that is precisely the moment when some of the best investment opportunities arise………
Continue reading GLC_Market_Matters_June_2012
Macro Matters – Dealing with Uncertainty
Strong earnings results from American companies were overshadowed by broader global growth concerns as waning investor confidence in the economic outlook for global growth dampened equity market returns. Weak GOLD company results weighed down the material sector in Canada…..
Click here to read the MAY issue of GLC Market Matters May 2012
The Oddity of Commodities and other Notables
Both patience and resolve of investors have been sorely tested since 2008. However, 2012′s Q1 strong equity markets and weaker fixed-income markets results reflected the return of investors’ appetite for risk.
Click here to read the APRIL issue of GLC’s Market Matters Commentary