Dear valued client,
Markets rose steadily again this week, especially in Canada where the TSX posted gains every single day. Markets’ encouraging results were undergirded by a number of factors; earnings reports, third-quarter GDP figures, Bank of Canada’s interest rate hike, among others.
A sigh of relief was warranted this week as Canada’s Central Bank Governor Tiff Macklem raised interest rates by only a half percentage point, as opposed to the 0.75% increase the majority of economists were predicting. “This tightening phase will draw to a close. We are getting closer, but we are not there yet,” Macklem said at a press conference. He is in a tug of war between bringing inflation back to his 2% target while maintaining as healthy an economy as possible. The 0.5% increase on Wednesday was the 6th straight rate hike over the course of several months. Higher interest rates are being felt the strongest in a key sector of growth – housing. Since March, house prices in Canada have declined by roughly 10%. All the while, Canadians are paying higher monthly mortgage installments, as well as facing elevated prices at the grocery store and gas pump.
On the U.S. side of things, higher-than-expected GDP figures and several earnings reports helped fuel stock gains. Third quarter GDP came in at 2.6% (a big jump compared to -0.6% in Q2 and -1.6% in Q1 of 2022) bolstered by increased global trade and strong consumer spending. While the market as a whole made progress this week with strong earnings from companies like McDonald’s and Visa, the tech sector suffered some blows with poor reports from Google, Meta, Amazon, Apple, and Microsoft (worst earnings in 2 years).
The appointment of a new Prime Minister is helping stabilize volatile British markets. Rishi Sunak is the UK’s third Prime Minister in 7 weeks, and the youngest individual (age 42) to hold the position since 1812. Sunak has a background in finance, having worked in investment banking for Goldman Sachs as well as other hedge funds on Wall Street. He and his wife are incredibly wealthy, having a combined net worth of approximately $830 million. The British citizenry will be looking to their new leader to steady the waters, to provide some reassurance and predictability in the midst of a chaotic economic situation.
“Never let the future disturb you. You will meet it, if you have to, with the same weapons of reason which today arm you against the present.” – Marcus Aurelius
Have a terrific weekend,
PW
PS. Elon Musk bought Twitter today.
