2018 started with a great deal of investor optimism. Global economies were growing, US tax cuts were predicted to be a boost to earnings, interest rates were still at low levels and expectations were that international trade tensions would be reasonably resolved. What a difference a year makes!
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Investors have been extremely skittish as indicated by the bipolar market reactions day to day. These reactions to current stimuli are typical of late cycle behaviour. After nine years of recovery since the financial crisis, the market is being challenged by some underlying inequities that have been building over this extended period. [+] Read More
After nine and a half years of expansion since the financial crisis of 2008, expectations of continuing synchronized expansion have begun to diminish. While the developed economies continue to exhibit progress, those in the emerging markets have begun to falter. Countries with high debt levels are being negatively impacted as central banks tighten monetary conditions through higher interest rates. Given the availability of low rate debt, consumers and governments in the more developed countries will also begin to feel the pinch of higher rates.
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As the third quarter drew to a close, Canada had yet to come to terms with the US and Mexico on a renewed trade agreement. Investors woke up on Monday, October 1, 2018 to news that a deal had in fact been cobbled together at the last minute and that all was well in the world. [+] Read More
Market participants are becoming more cognizant of the possible negative economic outcomes surrounding many of the political and geopolitical issues facing the world today. [+] Read More
Trade tensions intensified in the second quarter of 2018. The US aggressively enacted more encompassing tariffs that were soon countered by their disgruntled trading partners. [+] Read More
Until recently, markets shrugged off political and geopolitical developments. However, investors were shaken in the latter part of the second quarter as tensions intensified regarding global trade in reaction to a series of tariffs and counter tariffs that were enacted. Global stock market volatility increased as investors exited positions in June and markets lost some of the gains that had been achieved earlier. It is becoming increasingly apparent that the US is no longer going to accept what it views as asymmetrical trade and military alliances as the status quo. This state of affairs has enormous implications for the US and its trading partners. Corporate profits would be severely impacted by a prolonged trade war.
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We have been of the opinion that valuations have been stretched following ten years of market advances. In this environment, value rather than momentum will become more important in stock selection as investors seek to minimize risk on the downside. Investors should continue to seek well financed, well managed companies that are selling at attractive price levels. [+] Read More
