During the first half of 2017, a divergence between growth and stock market performance has developed in Canada. Canadian economic growth is leading G7 countries while the TSX is one of the worst performing indices YTD. The latest Bank of Canada business outlook survey (summer 2017) points to increased confidence among CEOs and shows that positive business prospects are increasingly widespread across regions and sectors. The upbeat report provided the evidence Mr. Poloz required to conclude that the stimulus provided via two rate cuts during the energy downturn have “done their job” and should be taken away...
Inside this month’s commentary:
1. Is 2017 shaping up to be a repeat of 2015 for Canadian equities (recall the TSX delivered negative returns in 2015)? See inside for our view.
2. Interest rates and inflation: BNN Weekly interview with Robert Kaplan, President of the Dallas Federal Reserve
3. Canadian bank stocks – the bedrock of retail investor portfolios: Who is left to buy?
4. Annualized returns when investors buy the index at peaks vs troughs
Are you confused yet? Lots of investors are. After 100 days in office Trump is certainly more confusing than ever before. Reflation or no reflation? Policy change or no policy change? Markets certainly assume and hope something will get done on healthcare and, more importantly, taxes, but that’s a roll of the dice. Nevertheless, animal spirits rule as record amounts of money flows into passive index ETFs.
The Forge First portfolios are not positioned to “bet” one way or another on Trump getting something done or not. For us, “Trump” is another unknown in a roster of global uncertainties which could roil already highly valued equity markets.
During the month of April, the Forge First funds experienced only minor losses. Please continue reading for a macro overview and discussion of the funds’ current positioning and performance.
Inside this month’s commentary:
1. Q1 2017 Market Wrap: http://www.bnn.ca/weekly-with-andrew-mccreath/andrew-mccreath-s-market-wrap~1091187
2. Factors that will drive portfolio positioning
3. Portfolio changes and attribution