May

Market Update – Spring 2024

Market Update                                                                                                                    May 2024

Since my last update in March, markets have retracted a little bit after a strong run of performance in the U.S. market followed by somewhat weaker performance here in Canada.  In particular, we can see retraction the U.S. technology sector in the last 4-6 weeks.

YTD Market Performance…

TSX +3.3%          Canadian broad market

SPX 5.2%            U.S. broad market

Nasdaq 4.5%    U.S. technology focused index

A tale of two markets.

The American economy is doing quite well and I think that is being reflected in the broader SPX market performance.  Interest sensitive technology stocks have pulled back a bit recently as predictions for interest rate cuts are not as relevant today.  With a stronger economy than many thought six months ago, the central bank in the U.S. isn’t likely in any hurry to start cutting interest rates today, particularly as they have stated a desire to see inflation get down to 2%.  Globally, the U.S. market is providing growth in our portfolios. 

Here in Canada we have a much more challenging economy. 

Government spending is excessive in an economy where most job creation is in the public, not private sector.  Government debt has increased substantially as has taxation.  The Federal budget this week provided a new Federal wealth tax, increasing the taxable portion of capital gains to 66.7% from 50% if your gains are over $250,000 (individual).  This is a rude awakening for anyone with assets beyond their personal residence.  (I have included a summary of the Federal Budget separately).

We have sought to weight Canadian portfolios to the Financials (banks) over the last year or so which has worked out well.  However, I believe banks will be anchored to arguably almost zero GDP growth if you factor out immigration.  Productivity in Canada is currently ‘zero’.  While we have enjoyed constant dividend growth in this sector, that will likely get muted over the near future.  The banks with the best ROE right now appear to be National and RBC. 

Another sector we have favoured is Energy which has performed fairly well on the production side though infrastructure (pipes) remains weak.  I believe this will change as we have two pipelines to tidewater about to open here in Canada.  As confusing as it may sound, the Federal government owns the Trans Mountain pipeline on one hand, while seemingly being opposed to fossil fuels on the other. Oil and gas remain a very significant source of revenue for Canada while our carbon taxes are among the highest in the world.  Canada is responsible for 1.4% of global C02 emissions. The good news about energy to tidewater is that demand will allow us to finally realize world pricing for this commodity as opposed to selling it for what we can realize from our only current market, the U.S.  This is particularly relevant with the new LNG facility at Kitimat opening soon where ships can be directed to where the demand and money is for LNG.  

Summary.

I think that there is more likelihood of Canada reducing interest rates than the U.S. in the coming months.  I believe Canada is slipping toward recession and stimulus might come in rate cuts.  Inflation in March came in at 2.9%. 

 I often hear Canada compared to Australia because like Australia, we are arguably, the most resource rich countries on the earth.  When comparing Canada to other countries, I have often said, that ‘our wealth is beneath our feet’.  However, while both countries are resource rich, Australians are considered to be 20% wealthier than Canadians. 

I have prepared this commentary to give you my thoughts on various investment alternatives and considerations which may be relevant to your portfolio. This commentary reflects my opinions alone and may not reflect the views of National Bank Financial Group. In expressing these opinions, I bring my best judgment and professional experience from the perspective of someone who surveys a broad range of investments. Therefore, this report should be viewed as a reflection of my informed opinions rather than analyses produced by the Research Department of National Bank Financial.

Best,

National Bank Financial

Rob Hunter

Senior Wealth Advisor

Sources: National Bank Economics, Hamilton ETFS, BNN, Bloomberg

National Bank Financial – Wealth Management (NBFWM) is a division of National Bank Financial Inc. (NBF), as well as a trademark owned by National Bank of Canada (NBC) that is used under license by NBF. NBF is a member of the Canadian Investment Regulatory Organization (CIRO) and the Canadian Investor Protection Fund (CIPF), and is a wholly-owned subsidiary of NBC, a public company listed on the Toronto Stock Exchange (TSX: NA).

This information was prepared by Rob Hunter, a Senior Wealth Advisor with National Bank Financial. The particulars contained herein were obtained from sources that we believe reliable but are not guaranteed by us and may be incomplete.

The opinions expressed herein do not necessarily reflect those of National Bank Financial. The particulars contained herein were obtained from sources we believe to be reliable, but are not guaranteed by us and may be incomplete. The opinions expressed consider a number of factors including our analysis and interpretation of these particulars, such as historical data, and are not to be construed as a solicitation or offer to buy or sell the securities mentioned herein. Unit values and returns will fluctuate and past performance is not necessarily indicative of future performance. Important information regarding a fund may be found in the prospectus. The investor should read it before investing.

The opinions expressed herein do not necessarily reflect those of National Bank Financial. Several of the securities mentioned in this article may not be followed by National Bank Financials’ Research department.

The securities mentioned (inclusive of option strategies) in this article are not necessarily suitable to all types of investors.  Please consult your investment advisor to discuss investment risks. All prices and rates are subject to change without notice. Stocks typically fluctuate in value. Stock values can go to zero.

Selling calls against stock (Covered Writing): Shares may need to be sold at the strike price of the option at any time prior to expiration. If the calls are assigned, further opportunity for appreciation in the underlying security above the strike price is foregone.

Risk/Reward of the strategy = Strike price minus the purchase price of the underlying plus the premium received from the sale of the call. The maximum loss is the same as holding a long position less the premium received.

The investment advice given only applies to residents of the provinces of British Columbia, Alberta, Manitoba, Saskatchewan, Ontario, New Brunswick and Quebec.

National Bank Financial is a member of the Canadian Investor Protection Fund.

      

March 2024

Market Update – March 2024

Market Update                                                                                                                    March  2024

 

Market breadth has expanded since my last update.  More stocks are participating in this market rally.  In particular, the lagging Canadian market (TSX) in green above is starting to narrow the gap with the leading U.S. markets since mid-February. 

Here is market performance YTD:

Top spot goes to the broader S&P 500                +8.41%

Nasdaq (tech index)                                                       +7.8%

Canada’s TSX coming up in the rear                   +4.87%

81% of stocks in the S&P500 are now trading above their 200 day moving average.

68% of stocks in the TSX are now trading above their 200 day moving average.

In short, the market has continued to rally out of last year’s October lows, climbing the wall of worry from inflation, interest rates, trade, geopolitical tensions, election fears. 

Maureen Peters.

Most everyone is very familiar with our administrative lead, Maureen who has been with my team for seven years.  Maureen is retiring at the end of this month.  She has been an invaluable part of my team and will be missed as she prepares to greet another grandchild.  If you like hanging out on rock walls, you might bump into her at the climbing centre here in Victoria!  Best wishes for a great retirement Maureen!

 

 

Introducing Comet Tang.

Of course, our administrative team will continue with Stephanie Hunter and our newest team member, CometTang. Comet has a degree in Chemistry with a minor in Business, which has translated into great analytical skills.  He is tech savvy and we are enjoying his friendly nature and enthusiasm for our business.  Welcome Comet!

 

 

I have prepared this commentary to give you my thoughts on various investment alternatives and considerations which may be relevant to your portfolio. This commentary reflects my opinions alone and may not reflect the views of National Bank Financial Group. In expressing these opinions, I bring my best judgment and professional experience from the perspective of someone who surveys a broad range of investments. Therefore, this report should be viewed as a reflection of my informed opinions rather than analyses produced by the Research Department of National Bank Financial.

Best,

National Bank Financial

Rob Hunter

Senior Wealth Advisor

Sources:  Stockcharts.com, BNN, Bloomberg

National Bank Financial – Wealth Management (NBFWM) is a division of National Bank Financial Inc. (NBF), as well as a trademark owned by National Bank of Canada (NBC) that is used under license by NBF. NBF is a member of the Canadian Investment Regulatory Organization (CIRO) and the Canadian Investor Protection Fund (CIPF), and is a wholly-owned subsidiary of NBC, a public company listed on the Toronto Stock Exchange (TSX: NA).

This information was prepared by Rob Hunter, a Senior Wealth Advisor with National Bank Financial. The particulars contained herein were obtained from sources that we believe reliable but are not guaranteed by us and may be incomplete.

The opinions expressed herein do not necessarily reflect those of National Bank Financial. The particulars contained herein were obtained from sources we believe to be reliable, but are not guaranteed by us and may be incomplete. The opinions expressed consider a number of factors including our analysis and interpretation of these particulars, such as historical data, and are not to be construed as a solicitation or offer to buy or sell the securities mentioned herein. Unit values and returns will fluctuate and past performance is not necessarily indicative of future performance. Important information regarding a fund may be found in the prospectus. The investor should read it before investing.

The opinions expressed herein do not necessarily reflect those of National Bank Financial. Several of the securities mentioned in this article may not be followed by National Bank Financials’ Research department.

The securities mentioned (inclusive of option strategies) in this article are not necessarily suitable to all types of investors.  Please consult your investment advisor to discuss investment risks. All prices and rates are subject to change without notice. Stocks typically fluctuate in value. Stock values can go to zero.

Selling calls against stock (Covered Writing): Shares may need to be sold at the strike price of the option at any time prior to expiration. If the calls are assigned, further opportunity for appreciation in the underlying security above the strike price is foregone.

Risk/Reward of the strategy = Strike price minus the purchase price of the underlying plus the premium received from the sale of the call. The maximum loss is the same as holding a long position less the premium received.

The investment advice given only applies to residents of the provinces of British Columbia, Alberta, Manitoba, Saskatchewan, Ontario, New Brunswick and Quebec.

National Bank Financial is a member of the Canadian Investor Protection Fund.

      

November

Market Update – February 2024

Market Update                                                                                                                    February 2024

Seven tech stocks are driving the valuation gains for the U.S. market.  In fact, the so called Magnificent Seven (ALPHABET (Google), AAPLE, AMAZON, MICROSOFT, NVIDIA, TESLA, META (Facebook)) recently accounted for half the valuation of the Nasdaq index

Many are trading above rising analyst targets as momentum takes over.

My mind can’t help but think back to 2000 when Nortel alone represented 35% of the weight of the TSX here in Canada.  Back then, BCE owned part of Nortel so the combined weight of those two stocks was more than 55% of the TSX!  It didn’t last.

I fully believe that AI can be bigger than the internet.  However, at this juncture, one of two things will happen.  These companies will report incredible earnings this week – or miss expectations.  This happened with Tesla last week when it warned of weaker growth this year and the entire Nasdaq pulled back 5% on that news. 

Of course, while the hopes for change via technology are one thing, the other is direction interest rates. Technology stocks perform better with the hope of lower interest rates.  The Federal Reserve meets on Wednesday and while there has been plenty talk about lowering rates, that hasn’t happened – yet. 

The U.S. economy seems to be doing rather well despite public sentiment.  The measure by which the Federal Reserve measures core inflation is indicating that inflation has dropped significantly.  Unemployment in the U.S. is still quite low and the jobs report comes out Friday.  Maybe, the Fed might be less inclined to lower rates soon – if they don’t feel the need. 

In terms of the next few years, I don’t think it will matter much for technology stocks.  Near-term, I have less conviction.

TRYING TO BE RIGHT

Invest into smaller positions in this sector as earnings play out over the next few quarters to see if earnings are catching up with prices.  That way, you are not overweight if they pull back on an earnings miss.  On the other hand, if earnings are fantastic, you still have exposure.

TESLA    $190

< $38.30>  Recent premium available on the Tesla January 2025 $190 Call.

$38.30 represents 20% of the value of the stock.  If assigned, the profit would be 25.2%

The stock could drop $38.30 before it lost money.

*The volatility of this stock makes it good for illustrative purposes.  I am not recommending everyone owns TESLA.

I have prepared this commentary to give you my thoughts on various investment alternatives and considerations which may be relevant to your portfolio. This commentary reflects my opinions alone and may not reflect the views of National Bank Financial Group. In expressing these opinions, I bring my best judgment and professional experience from the perspective of someone who surveys a broad range of investments. Therefore, this report should be viewed as a reflection of my informed opinions rather than analyses produced by the Research Department of National Bank Financial.

 

Best regards,

National Bank Financial

Rob Hunter

Senior Wealth Advisor

 

Sources:  Stockcharts.com, BNN, Bloomberg, Globe & Mail, Yahoo Finance

National Bank Financial – Wealth Management (NBFWM) is a division of National Bank Financial Inc. (NBF), as well as a trademark owned by National Bank of Canada (NBC) that is used under license by NBF. NBF is a member of the Canadian Investment Regulatory Organization (CIRO) and the Canadian Investor Protection Fund (CIPF), and is a wholly-owned subsidiary of NBC, a public company listed on the Toronto Stock Exchange (TSX: NA).

This information was prepared by Rob Hunter, a Senior Wealth Advisor with National Bank Financial. The particulars contained herein were obtained from sources that we believe reliable but are not guaranteed by us and may be incomplete.

The opinions expressed are based on our analysis and interpretation of these particulars and are not to be construed as solicitation or offer to buy or sell the securities mentioned herein. National Bank Financial may act as financial advisor, fiscal agent or underwriter for certain of the companies mentioned herein and may receive remuneration for its services. Rob Hunter, National Bank Financial and/or its officers, directors, representatives, and associates may have a position in the securities mentioned herein and may make purchases and / or sales of these securities from time to time in the open market or otherwise.

The opinions expressed herein do not necessarily reflect those of National Bank Financial. Several of the securities mentioned in this article may not be followed by National Bank Financial’s Research department.

 

The securities mentioned (inclusive of option strategies) in this article are not necessarily suitable to all types of investors.  Please consult your investment advisor to discuss investment risks. All prices and rates are subject to change without notice. Stocks typically fluctuate in value. Stock values can go to zero.

 

Selling calls against stock (Covered Writing): Shares may need to be sold at the strike price of the option at any time prior to expiration. If the calls are assigned, further opportunity for appreciation in the underlying security above the strike price is foregone.

 

Risk/Reward of the strategy = Strike price minus the purchase price of the underlying plus the premium received from the sale of the call. The maximum loss is the same as holding a long position less the premium received.

 

The investment advice given only applies to residents of the provinces of British Columbia, Alberta, Manitoba, Saskatchewan, Ontario, New Brunswick and Quebec.

 

National Bank Financial is a member of the Canadian Investor Protection Fund.

 


 

April

Market Update – January 2024

Market Update                                                                                                                    January 2024

From July highs to October lows to a strong year end rally, this was the year in markets…

                                                                           2023

TSX (Canada)                                                   8.12%

SPX (US)                                                            24.23%

Nasdaq (US largely tech index)                   43.52%

The Best and Worst Performing Sectors in 2023 (visualcapitalist.com)

U.S. ten year treasury yields continue to recede and in sync, the U.S. dollar, as attention is focused on anticipated interest rate cuts.  I think for current market valuations to hold in the U.S. we will need to see those interest rate cuts become reality while earnings continue to grow. 

Here in Canada, markets managed to turn from a negative in October to a positive rally for year end.  However, the discount between the Canadian market and the U.S. remains the largest in decades.  Arguably, the weaker Canadian market may also be the best value proposition given attractive dividend yields and low valuations.

TFSA contribution room allowed this year moves to $7,000 in cash or equivalent value of securities.  Use your TFSA for growth stocks.  TFSAs are less conducive to monthly income needs as a result of the need to deregister each time you withdraw.    

It is not what you get – but what you keep.  Remember that dividends are taxed the least in taxable accounts, followed by capital gains (which are half taxable) followed by the worst taxation of any investment income – interest income.   Income from selling calls, is taxed as capital gains.

Graduated Federal tax rates:

  • 15% on the first $53,358 of taxable income
  • 20.5% on taxable income over $53,359 up to $106,717
  • 26% on taxable income over $106,717 up to $165,430
  • 29% on taxable income over $165,430 up to $235,675
  • 33% on any taxable income over $235,675

Graduated BC tax rates:

  • 5.06% on the first $45,654 of taxable income
  • 7.7% on taxable income over $45,654 up to $91,310
  • 10.5% on taxable income over $91,310 up to $104,835
  • 12.29% on taxable income over $104,835 up to $127,299
  • 14.77% on taxable income over $127,299 up to $172,602
  • 16.8% on taxable income over $172,602 up to $240,716
  • 20.5% on taxable income over $240,716

Alberta graduated tax rates:

  • 10% on the first $142,292 of taxable income
  • 12% on taxable income over $142,292 up to $170,751
  • 13% on taxable income over $170,751 up to $227,668
  • 14% on taxable income over $227,668 up to $341,502
  • 15% on taxable income over $341,502

I have prepared this commentary to give you my thoughts on various investment alternatives and considerations which may be relevant to your portfolio. This commentary reflects my opinions alone and may not reflect the views of National Bank Financial Group. In expressing these opinions, I bring my best judgment and professional experience from the perspective of someone who surveys a broad range of investments. Therefore, this report should be viewed as a reflection of my informed opinions rather than analyses produced by the Research Department of National Bank Financial.

 

Happy New Year!

Best regards,

National Bank Financial

Rob Hunter

Senior Wealth Advisor

 

Sources: Technical Speculator, Stockcharts.com, BNN, Bloomberg, Globe & Mail, Visual Capitalist 

National Bank Financial – Wealth Management (NBFWM) is a division of National Bank Financial Inc. (NBF), as well as a trademark owned by National Bank of Canada (NBC) that is used under license by NBF. NBF is a member of the Canadian Investment Regulatory Organization (CIRO) and the Canadian Investor Protection Fund (CIPF), and is a wholly-owned subsidiary of NBC, a public company listed on the Toronto Stock Exchange (TSX: NA).

This information was prepared by Rob Hunter, a Senior Wealth Advisor with National Bank Financial. The particulars contained herein were obtained from sources that we believe reliable but are not guaranteed by us and may be incomplete.

The opinions expressed are based on our analysis and interpretation of these particulars and are not to be construed as solicitation or offer to buy or sell the securities mentioned herein. National Bank Financial may act as financial advisor, fiscal agent or underwriter for certain of the companies mentioned herein and may receive remuneration for its services. Rob Hunter, National Bank Financial and/or its officers, directors, representatives, and associates may have a position in the securities mentioned herein and may make purchases and / or sales of these securities from time to time in the open market or otherwise.

The opinions expressed herein do not necessarily reflect those of National Bank Financial. Several of the securities mentioned in this article may not be followed by National Bank Financial’s Research department.

The securities mentioned (inclusive of option strategies) in this article are not necessarily suitable to all types of investors.  Please consult your investment advisor to discuss investment risks. All prices and rates are subject to change without notice. Stocks typically fluctuate in value. Stock values can go to zero.

Selling calls against stock (Covered Writing): Shares may need to be sold at the strike price of the option at any time prior to expiration. If the calls are assigned, further opportunity for appreciation in the underlying security above the strike price is foregone.

Risk/Reward of the strategy = Strike price minus the purchase price of the underlying plus the premium received from the sale of the call. The maximum loss is the same as holding a long position less the premium received.

The investment advice given only applies to residents of the provinces of British Columbia, Alberta, Manitoba, Saskatchewan, Ontario, New Brunswick and Quebec.

National Bank Financial is a member of the Canadian Investor Protection Fund.


 

December

Market Update – December 2023

Market Update                                                                                                                    December 2023

Both Canadian and U.S. markets have surged upward in November on anticipation that interest rate hikes may be over.  Earnings season has held some positive surprises including the consumer who is still spending.   Retail sales were stronger than expected in September and more so in October despite economists expecting – nothing. 

Canada’s market remains range bound but has rallied off the Oct 27th bottom in the TSX by 7.3%.  The TSX is +3.7% ytd.

The U.S. market has recovered from seasonal September and October pullback in markets.  The S&P 500 (SPX) has rallied off Oct 27th bottom by 10.7%.  The SPX is +18.75% ytd and within a few points of a new high. 

The Nasdaq (tech index) has recovered from seasonal September and October pullback as well.  The Nasdaq has rallied of Oct 27th bottom by 15%.  The Nasdaq is +36.15% ytd and the best performing market so far this year.

As quarterly earnings season draws toward a close, the Canadian banks start reporting next week.  Perhaps we see more dividend hikes.

TFSA contributions get a boost in 2024.

Individual contribution room jumps to $7,000 for 2024.

Leslie Vieites is Retiring Nov 30th!

I want to acknowledge Leslie’s contribution to my team since joining me over ten years ago, in May of  2013.  You may not know, but working with me was just the tip of the iceberg.  She has been working in the securities industry since December 1986 – for 37 years! Fortunately, she has spent most of her career with us at National Bank Financial – 21 years.  We are going to miss her but extend our very best wishes for a well-deserved retirement. 

I have prepared this commentary to give you my thoughts on various investment alternatives and considerations which may be relevant to your portfolio. This commentary reflects my opinions alone, and may not reflect the views of National Bank Financial Group. In expressing these opinions, I bring my best judgment and professional experience from the perspective of someone who surveys a broad range of investments. Therefore, this report should be viewed as a reflection of my informed opinions rather than analyses produced by the Research Department of National Bank Financial. 

 

Best regards,

National Bank Financial

Rob Hunter

Senior Wealth Advisor

Sources: Technical Speculator, Stockcharts.com, BNN, Bloomberg, Globe & Mail

National Bank Financial – Wealth Management (NBFWM) is a division of National Bank Financial Inc. (NBF), as well as a trademark owned by National Bank of Canada (NBC) that is used under license by NBF. NBF is a member of the Investment Industry Regulatory Organization of Canada (IIROC) and the Canadian Investor Protection Fund (CIPF), and is a wholly-owned subsidiary of NBC, a public company listed on the Toronto Stock Exchange (TSX: NA).

The information contained herein has been prepared by Rob Hunter, a Wealth Advisor at NBF. The opinions expressed do not necessarily reflect those of NBF.

The opinions expressed herein do not necessarily reflect those of National Bank Financial. The particulars contained herein were obtained from sources we believe to be reliable, but are not guaranteed by us and may be incomplete. The opinions expressed consider a number of factors including our analysis and interpretation of these particulars, such as historical data, and are not to be construed as a solicitation or offer to buy or sell the securities mentioned herein. Unit values and returns will fluctuate and past performance is not necessarily indicative of future performance. Important information regarding a fund may be found in the prospectus. The investor should read it before investing.

The particulars contained herein were obtained from sources we believe to be reliable, but are not guaranteed by us and may be incomplete. The opinions expressed are based upon our analysis and interpretation of these particulars and are not to be construed as a solicitation or offer to buy or sell the securities mentioned herein. The opinions expressed do not necessarily reflect those of NBF.

I have prepared this report to the best of my judgement and professional experience to give my thoughts on various financial aspects and considerations. The opinions expressed represent solely my informed opinions and may not reflect the views of NBF.

Several of the securities mentioned in this article may not be followed by National Bank Financial’s Research department. The investment advice given only applies to residents of the provinces of British Columbia, Alberta, Manitoba, Saskatchewan, Ontario, and Quebec. National Bank Financial is a member of the Canadian Investor Protection Fund.


rhunterwealth.ca