Tuesday, July 9, 2019

Q3 Outlook

 Markets seem to be waiting for something and in the mean time keep slowly rising, no fireworks just a step up and then down. What are investors waiting for? There are many uncertainties at this time; is China US trade to have a real impact on the economy, will Europe recover from its funk, is there growth in earnings to be significant, to just name a few.

There is an underlying positive bias so the bears must receive real bad news like a recession or a blow off inflation for them to win the day. Yes, that is confusing, even a blow off in inflation which is an indicator of better growth can topple the market. But for now, more of the same.

The S&P/TSX Total Return Index was up 2.6% this quarter and so far this year it has gained 16.2%. In Can$ the US market S&P 500 is up by 13.2%. On a year-to-date basis every sector has made gains except Health Care, Energy and Telecom Services declined.

Canadian economy seems to be getting back on track after two quarters of decline. Driven by increasing exports including a rebound in oil shipments after curtailment, business sentiment continues to improve and the housing market is stabilizing as mortgage rates have declined.

Income to your portfolio continues to increase. Bank of Montreal, Pembina Pipelines and Telus
has all increased dividends this quarter providing increased cash flow to protect against inflation and provide strength for future capital growth.