Outlook for December 2019

Things are chugging along as the year wraps up and what a year it has been for the equities market. Some of the largest companies have seen record gains for the year and outlook is just as great.

On the central bank front, it appears that the US Fed is on hold for now after multiple rate cuts in 2019. The lower rates coupled with increased liquidity has given an extra boost to the stocks. On this side of the border, the Bank of Canada held steady hinting at rate cuts coming early next year. I just might hold onto my Canadian bond funds longer since the Canadian rates are going nowhere but down from here.

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Outlook for November 2019

Earnings season is in full swing and it makes for interesting times. Well run companies are posting near-record top line growth, while the mediocre ones continue the “miss-by-a-penny or beat-by-a-penny” earnings game.

Interesting moves on the central banks front as well in the past few days. The US Fed cut interest rates again and hinted that this will be the end of the rate cut cycle — but the bond market is calling their bluff sending yields further down post announcement. I will be keeping my eye on the bond market for further developments there.

The Bank of Canada held steady hinting at rate cuts coming early next year if not earlier. I just might hold onto my Canadian bond funds longer since the Canadian rates are going nowhere but down from here.

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Outlook for October 2019

Fireworks in the high-growth sector is seeing investors turn towards value stocks after a long pause. The drawdown and divergence was something to behold during the month of September as the selloff provided some good opportunities in the growth space — although valuation in general still seems pretty high.

The US Fed continued its easing policy with another rate cut and September also saw liquidity issues in the overnight repo rate — resulting in the NY Fed stepping in. Most central banks around the world have started easing as the US$ continues getting stronger, so the currency wars are far from over.

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Outlook for September 2019

August turned into a disaster for a lot of investors as the markets are roiling in trade war updates, resurgence in negative yielding debt, and other political issues. The flight to safety seems to be name of the game, as bond interest rates fall further and investors load up on gold.

The rate cuts are abound from central bankers around the world. The one central bank that is outlier, Bank of Canada, is also expected to turn dovish in coming days.

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Outlook for August 2019

Summer doldrums are here, but no loss of excitement in the markets. The Fed has followed through in its most telegraphed move ever to cut interest rate. A cut of 25bps was almost a certainty as the Jul 31st decision date came close.

However, it seems like Chairman Powell may have shown his hand a bit more than expected. Trump has been calling for further cuts and announced more tariffs on Chinese goods. This increased the bond market’s pricing odds of another cut in Aug/Sep. While the stock market is cheering on, history has shown that rate cuts are seldom bullish for the economy and markets. It remains to be seen how things play out in the coming weeks/months.

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