Equity markets continued to show strength in the face of negative factors such as recession fears, slowing earnings growth, trade tensions, Brexit and political concerns. A sharp selloff early in the month, the third selling squall this year, was easily overcome and markets are near the highs again.
We are positioned nicely for a transition from a corrective phase to a new leg up and our Canadian portfolio values have reached all-time highs.
Volatility returned to the equity markets with U.S.-China trade tensions coming back to the forefront. Recession worries amid plunging bond yields also caused equities to sell off during August. While the selling squalls were large and dramatic, the market showed signs of resiliency with its ability to rebound.
Equity markets continued to generally drift higher during the quiet months of summer trading. The imminent rate cut by the Federal Reserve is the main supporting factor counteracting expected slowdowns in corporate earnings growth and the economy, while the resumption of U.S.-China trade negotiations have also provided some market stability.
Equity indices are near or at highs again after Trump and Xi’s meeting at the G20 provided reassurances trade tensions would not be escalating in the near future. Whether this results in a convincing leg up in the secular bull trend remains to be seen.
The sudden breakdown trade negotiations between the U.S. and China triggered the start of a correction in the equity markets. While there is some volatility, the selloff thus far has been relatively orderly and much different from the one in December last year.
Equity markets continued to rise in April as fears of a global recession waned and central banks continued to reassure they are not looking to raise interest rates anytime soon. Trade talks between China and the U.S. seem to be progressing nicely with hopes of a final resolution coming by the end of May as well.
Equities are holding steady despite a sharp selloff on recession fears brought on by an inversion of the yield curve. Since 1962, all recessions have been preceded by a yield curve inversion. However, it is also important to note that not all inversions lead to recessions.
Equity markets continued to rally in February on a steady flow of reports that U.S.-China trade negotiations were progressing well. Sentiment is good, but we are cautious because the markets are very overbought and any adverse news could cause a sharp decline.
The strong rebound in January strengthens our view that the extremely sharp downward moves of the last quarter were part of a correction phase within a secular bull market rather than the start of a bear market.
