November 15, 2024 | portfolio managers' brief

Portfolio Managers’ Brief: November 2024

BY: Jason Ayres
A brief review of market conditions and how they are impacting the management decisions of our Investment Review Committee (IRC).

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Key Takeaways

New President-Elect and Market Reactions

  • Donald Trump has been elected as the 47th President of the United States, driving significant market optimism.
  • Key sectors such as financials, industrials, energy, and technology saw strong gains, reflecting expectations of deregulation, tax cuts, and infrastructure spending.

U.S. Equities and Interest Rates

  • U.S. equities have surged since the election: NDX is up 27%, SPX 26%, and Dow Jones 17% year-to-date.
  • The Federal Reserve remains cautious but may adopt a hawkish stance if inflationary pressures from fiscal expansion emerge.

Currency Movements: USD/CAD

  • The U.S. dollar has strengthened due to rising bond yields and expectations of inflation, while the Canadian dollar has weakened amid trade uncertainties and lower commodity prices.
  • Canadian investors holding U.S. stocks benefit from currency gains alongside stock appreciation.

Canadian Market Performance

  • The TSX is up 18% year-to-date, driven by gains in materials (especially gold), consumer staples, and healthcare.
  • Canadian bond prices have been stable despite a 0.5% rate cut by the Bank of Canada to 3.75%, spurred by declining inflation.

Potential Impacts of Trump Presidency on Canada

  • Trade & Tariffs: Potential U.S. tariffs could strain trade relations and impact Canadian exports.
  • Energy: Increased U.S. oil production may lower prices, benefiting consumers but hurting Canadian producers.
  • Sector Effects:
    • Financials: Canadian banks with U.S. operations could benefit from deregulation.
    • Manufacturing: Tariffs might disrupt supply chains, especially in auto and steel sectors.
    • Technology & Agriculture: Mixed impacts from deregulation and potential tariff issues.

Global Perspective

  • The MSCI All Country World Index is up 20% year-to-date, with U.S. markets contributing significantly to global gains.

Investment Strategy

  • Maintain diversification and focus on companies with strong fundamentals.
  • Actively manage portfolios to lock in gains and capitalize on market pullbacks.
  • Monitor U.S. fiscal policies, global trade dynamics, and energy price fluctuations for potential market impacts.

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