The market developments

Dear friend,

I hope all is well. Below you will find a summary of this week’s market developments and subsequent thoughts.

Market developments

  • North American equity markets proved volatile this week, reacting to increasing numbers of COVID-19 infections in 27 states and fears of new lockdowns and decreased economic activity. In particular, cases continued to soar in Florida, Texas, Arizona and California.
  • The International Monetary Fund (IMF) now expects global economic output to contract 4.9% in 2020, with U.S. output contracting 8.0% and Canadian output 8.4%.
  • Ratings agency Fitch Ratings downgraded Canada’s credit rating to ‘AA+’ from ‘AAA’ to reflect the deterioration of public finances due to COVID-19.
  • New Bank of Canada Governor Tiff Macklem said that Canada’s economy will take a long time to fully recover from lockdowns, requiring the central bank to continue purchasing government bonds to keep interest rates low indefinitely.
  • President Donald Trump said that a second stimulus bill was coming and would likely be announced in the next few weeks. Weekly jobless claims in the U.S. were 1.48 million, and real gross domestic product (GDP) contracted at an annual rate of 5.0% in the first quarter of 2020.

How does this affect my investments?

A resurgence of COVID-19 cases across the United States has caused investors to consider the implications of a second series of lockdowns, something many hoped would be unnecessary moving forward. As economic forecasts continue to show the damage caused by the pandemic, it is understandable that sentiment may turn bearish in the short term.

With that said, our decision to stick with our long-term plan even when markets hit their lows in March ultimately proved prudent, and my advice is to continue to do so, even when sentiment appears to change. The chart below serves to illustrate this point, demonstrating that often times when investors turn increasingly bearish, markets may be poised to move the other way.

I am always happy to discuss your investment plans. Please do not hesitate to contact me at (450) 951-8787.

Sincerely,

Michel Prévost

     

The market developments

Dear friend,

I hope you and your family are well. Below you will find a summary of this week’s market developments and related thoughts.

Market developments

  • After pulling back last week, North American equity markets advanced, with optimistic economic announcements and a potential COVID-19 treatment outweighing “second wave” fears.
  • Ten U.S. states saw coronavirus numbers surge more than 50% in the past week, and a new outbreak in Beijing stoked fears of a second wave in China. Scientists at the University of Oxford said that a commonly available steroid, dexamethasone, reduced deaths in patients with severe cases of COVID-19.
  • In the U.S., the Census Bureau announced that retail and food services sales were up 17.7% in May, the biggest monthly jump ever recorded. Weekly jobless claims in the U.S. were 1.5 million.
  • The U.S. government was said to be considering a $1 trillion infrastructure package to boost the economy, and U.S Federal Reserve (Fed) Chairman Jerome Powell announced that the Fed will begin to purchase individual corporate bonds.
  • Prime Minister Justin Trudeau announced that the federal government is working to extend the Canada Emergency Response Benefit (CERB) for workers who can’t yet return to their jobs, and that the government would provide a “fiscal snapshot” on July 8.
  • Statistics Canada reported that manufacturing sales fell by a record 28.5% in April and 37.1% year-over-year. Consumer prices rose 0.1% in May, but were down 0.4% year-over-year.
  • Geopolitical tensions heightened as North and South Korea, as well as India and China, engaged in separate confrontations. North Korea blew up an inter-Korean liaison office and rejected an offer by South Korea to send special envoys, while Chinese and Indian soldiers engaged in a deadly border clash.

How does this affect my investments?

Clearly, markets have taken an optimistic view of economic and pandemic-related developments over the last few months, focusing on positive data while brushing aside most concerns. Much of that may be related to the continued willingness of governments and central banks to step in with significant support at any signs of possible distress. We saw this once again this week with the Fed’s announcement regarding bond purchases, the Canadian government’s attempt to extend CERB payments, and the prospect of the Trump administration’s $1 trillion infrastructure package.

While this short-term reaction does not mean things will play out similarly in the future, it is worthwhile to note that amid a global pandemic and recession, with no certainty on an ultimate solution for COVID-19, markets have proven resilient. The plan we have built together is designed to benefit from that type of resilience over the longer term.

I’m happy to discuss your investment plans if you feel it would be beneficial. Please do not hesitate to contact me at 450-951-8787.

Sincerely,

Michel Prévost

The market developments

Dear friends,

I trust that all is well. Below you will find a summary of this week’s market developments and related thoughts.

  • Following the best 50-day period in the history of the S&P 500 Index (which measures the stock performance of 500 large companies listed on stock exchanges in the U.S.) and the Nasdaq (a stock exchange that includes the world’s primary technology and biotech giants) hitting new all-time highs, North American equity markets fluctuated throughout the week.
  • Anthony Fauci, Director, National Institute of Allergy and Infectious Diseases, stated that the coronavirus outbreak “isn’t over yet” as hospitalizations in at least nine states have risen since Memorial Day (May 25).
  • Opposition parties refused to give unanimous consent to Canada’s Liberal government to speedily pass new emergency COVID-19 legislation, which is focused on expansion of the wage subsidy program and penalties for fraudulently claiming the Canada Emergency Response Benefit.
  • The U.S Federal Reserve said it expects interest rates to remain near zero through 2022, and while U.S. GDP is forecast to shrink by 6.5% in 2020, it is expected to bounce back to 5% growth in 2021.
  • Weekly jobless claims in the U.S. were 1.54 million.

How does this affect my investments?

The fact that the S&P 500 gained 40% in just 50 days – even as the economy falls into a severe recession – should give most investors pause when they consider trying to “time” the market. You may have heard the saying, “It’s time in the market, not timing the market,” and the last few months have lent credence to that statement.

When the coronavirus first emerged and the lockdowns began, it was difficult to foresee the sheer extent of stimulus that governments and central banks would provide to keep economies and markets functioning. Those who remained invested benefited from those measures.

That said, there are no guarantees on how markets will react in the future. What we can be sure of is that missing such sudden moves to the upside can greatly hurt a portfolio. That’s why I believe in being patient and staying committed to your investment plan.

I am always happy to discuss your investment plans if you feel it would be helpful. Please do not hesitate to contact me at 450-951-8787.

Sincerely,

Michel Prévost

The market developments

 

Dear friends,

I hope you and your family are well. Below you will find a summary of this week’s market developments and some related thoughts.

Market developments

  • Despite civil unrest across the United States, escalating American tensions with China and an ongoing battle with COVID-19, North American markets once again moved higher.
  • White House health advisor Dr. Anthony Fauci expressed optimism that one of the many coronavirus vaccine trials would prove effective and stated that the U.S. should have 100 million doses of vaccine by the end of year.
  • The Canadian government announced it will offer cities $2.2 billion in infrastructure money to help cover COVID-19-related budget shortfalls.
  • The Bank of Canada held interest rates steady and indicated that it expects the economy to resume growth in the third quarter.
  • Weekly jobless claims in the U.S. were 1.87 million, reaching 42.6 million in the last 11 weeks.
  • The U.S. announced plans to block Chinese airlines from flying into or out of the country after China had effectively already done the same for the U.S. China also asked its state-owned firms to stop buying U.S. soybeans and pork amidst continued tensions between the two nations.

How does this affect my investments?

Global capital markets continue to brush aside a number of conflicting developments as they stage a strong recovery from the March lows.

While many investors may claim this recent rise is remarkable, it is for exactly this reason that my advice to you has been to stick with the long-term plan we built. Months ago, had we imagined a global pandemic, a gradual re-opening of economies after an extended shutdown and protests throughout America all taking place as we head into June, you would have been hard pressed to find someone predicting that markets would continue to move higher right through it. Yet here we are.

By adhering to the plan we mapped out together, we have the luxury of being able to observe surprises in either direction in the context of a longer-term strategy; and regardless of where markets go from here, such a perspective is valuable – particularly the next time we are faced with strong volatility.

As always, I am happy to discuss your investment plans. Please do not hesitate to contact me at 450-951-8787.

Sincerely,

Michel Prévost

Sources: CI Investments Inc., newyorktimes.com, cnbc.com, abcnews.com, ctvnews.com

IMPORTANT DISCLAIMERS ASSANTE

This material is provided for general information and is subject to change without notice. Every effort has been made to compile this material from reliable sources however no warranty can be made as to its accuracy or completeness. Before acting on any of the above, please make sure to see a professional advisor for individual financial advice based on your personal circumstances.

 

The market developments

Dear friend,

I trust that all is well with you and your family this week. Below you will find a summary of this week’s market developments and some further thoughts.

Market developments
• North American markets again moved higher on continued optimism over re-openings; all 50 U.S. states have now at least partially re-opened their economies.
• White House health advisor Dr. Anthony Fauci stated that a second wave of coronavirus is “not inevitable” if states re-open correctly, and said there’s a “good chance” a vaccine could be deployed by year’s end. As of May 27, new cases in the U.S. rose at a rate of 1.2%, down from 1.4% in the week prior.
• The European Union is said to be preparing a fiscal package worth more than $800 billion, and Japan is planning new economic stimulus valued in excess of $1 trillion.
• Weekly jobless claims in the U.S. were 2.1 million, passing 40 million in 10 weeks. Real gross domestic product (GDP) contracted at 5% in the first quarter.
• Tensions between the U.S. and China escalated as the House of Representatives passed legislation calling for sanctions against Chinese officials.
How does this affect my investments?
In previous letters, we have discussed the importance of sticking to your long-term plan, despite current market conditions. The incredible recovery we have seen since the recent market lows have included some very large gains on certain days, which have caught investors by surprise. By sticking to our plan, we look to avoid the risk of missing out on such days. Conversely, the chart below demonstrates what can happen to those who do try to time market moves.

This is not to say that this recent run will continue, nor that anyone is sure how North America’s return to normal will progress. It means that we are taking the approach that we believe will ultimately best align with your long-term goals.

Source: thesimpledollar.com. For illustrative purposes only.

Sources: CI Investments Inc., Bloomberg Canada, cnbc.com.

IMPORTANT ASSANTE DISCLAIMERS

This material is provided for general information and is subject to change without notice. Every effort has been made to compile this material from reliable sources however no warranty can be made as to its accuracy or completeness. Before acting on any of the above, please make sure to see a professional advisor for individual financial advice based on your personal circumstances.

 

Everything you need to know!

Dear friends,

I hope this letter finds you and your family well. As part of my commitment to keeping you informed in the current environment, this letter includes a recap of what took place in the markets this week.

What were the key developments this week?

Canadian and U.S. equity markets continued to fluctuate as investors weighed the possibilities of slowly easing lockdown restrictions and a quick economic recovery against the fallout of plummeting oil prices.

  • On April 20, U.S oil prices fell below zero for the first time in history, ending the day at -$37.63. With so much of the economy paused, the absence of demand has left a lack of storage facilities for soon-to-be-delivered oil. As expected, last week’s OPEC production cut was not enough to rectify this.
  • Canada’s annual inflation rate fell to a near five-year low in March as gasoline prices plunged.
  • The U.S. announced weekly jobless claims of 4.427 million, bringing total job losses to over 26 million in the last five weeks, wiping out all gains since the Great Recession.
  • The U.S. House of Representatives approved a $484 billion coronavirus relief bill to fund small businesses and hospitals; this brought the country’s total crisis response funds to almost $3 trillion.
  • The number of confirmed COVID-19 cases worldwide surpassed 2.6 million. Europe continued to slowly loosen restrictions in certain regions, as did some southern U.S. states.

Should any of this change my views on my investments?

The market’s recent turbulence has been difficult emotionally for many investors, and we should be proud that we have followed our long-term plan. Going forward, we will continue to see numbers like those above; some may be positive for the economy and others negative, but it is important to see them as data that are constantly changing, rather than as indicators to overhaul your portfolio.

To emphasize the benefits of staying invested in both good times and bad, I thought I would share the chart below. Regardless of what the market does in the days, weeks, months and years ahead, history has shown that staying the course has reaped benefits over the long run. My advice is to continue to do so as developments such as this week’s drop in oil prices play out.

Sources: CI Investments Inc., Johns Hopkins University (JHU), Thomson Reuters Corporation, oilprice.com, cnbc.com, bbc.com and The Wall Street Journal

IMPORTANT DISCLAIMERS ASSANTE

This material is provided for general information and is subject to change without notice. Every effort has been made to compile this material from reliable sources however no warranty can be made as to its accuracy or completeness. Before acting on any of the above, please make sure to see a professional advisor for individual financial advice based on your personal circumstances.