(source: Bloomberg https://www.bloomberg.com/markets, MSCI https://www.msci.com/end-of-day-data-search and ARG Inc. analysis)

What happened last week?

• U.S. markets were closed on Monday for Memorial Day, but that did not stop equities from receiving a much-needed boost as May concluded and June began.  The surprising laggard among North American equity indexes was the NSADAQ that gained only 1% on Friday, while the others rose 1½ to 2%.  Both the TSX and the S&P 500 had been down for the week until Friday’s rally.  So far this year and over the past year the NASDAQ has delivered the highest returns of the major indexes.
• Avoiding a default on U.S. government debt was a leading reason for wide-spread growth in share values last week.  A deal had been agreed between House Leader McCarthy and President Biden prior to Monday’s Memorial Day.  Despite deep criticism from both Democrats and Republicans, it received bi-partisan approval in the House and the Senate and was then signed into law. A 2-year extension on the debt ceiling was achieved in exchange for spending and taxation reductions. 
• Secondly, on Friday morning, the latest U.S. jobs data was announced.  Employment grew by 339,000 in May, and the unemployment rate rose 0.3% to 3.7% as the number of unemployed persons grew by 440,000 to 6.1 million.
• The on-going growth in jobs in Canada and the U.S. has confounded the Bank of Canada and Federal Reserve.  Increasing interest rates to lower demand is less effective when job growth is robust.  Jobs growth makes a recession less likely but could lead to additional interest rate increases to slow inflation.

Source: Debt Ceiling Agreement, Employment Situation Summary

What’s ahead for this week?

• In Canada, the most significant news will likely arrive from the Bank of Canada when it announces its latest interest rates on Wednesday morning.  A pause in rate hikes has been in-place, and the mid-week release will demonstrate whether The Bank believes that it has struck the right balance between slowing demand-fueled inflation, but not slowing the economy into recession.  Friday’s employment numbers will also provide insight into the health of the Canadian economy.
• In the U.S., durable goods, factory orders, mortgage market index, wholesale sales and inventories will be released.  On June 14th the Federal Reserve is scheduled to release its next interest rate announcement, and it will be heavily anticipated and closely watched since its influence on markets could be very strong.
• Globally, the Eurozone will report its retail sales, imports, exports and trade balance and employment, unemployment, and wages.  China will report consumer inflation and employment data.

For more information contact: [email protected]

www.iaic.ca | Tel (519) 291-2817 | 135 Main Street, East | PO Box 68 | Listowel, ON N4W 3H2

This report is produced by Independent Accountants' Investment Counsel Inc (“IAIC”) in conjunction with ARG Inc.  All graph and chart statistical data contained in this report has been supplied by ARG Inc. The views and opinions expressed in this report are based on market statistics.  No guarantee of outcome is implied, and opinions may change without notice.  Investors should not base any of their investment decisions solely on this report nor should any opinions expressed within this report be construed as a solicitation or offer to buy or sell any securities mentioned herein.  Although the information contained in this report has been obtained from sources that IAIC believes to be reliable, we do not guarantee its accuracy, and as such, the information may be incomplete or condensed. All opinions, estimates and other information included in this report constitute our judgment as of the date hereof and are subject to change without notice.

Please contact your IAIC representative if you have any questions regarding this report. 

©Copyright 2023 Independent Accountants’ Investment Counsel Inc. All rights reserved.

(source: Bloomberg https://www.bloomberg.com/markets, MSCI https://www.msci.com/end-of-day-data-search and ARG Inc. analysis)

What happened last week?

• The TSX and major U.S. corporates (i.e., Dow Jones Industrial Average) lost ground last week.  The 2½% gained last week, and the 24% year-to-date, and 10½% over the past 12 months has placed the NASDAQ far into the lead compared to its North American rival indexes. 

• The deadline of early June, where the U.S. government will run out of cash and be unable to meet its debt obligations is quickly approaching.  It appears that a 2-year deal has been tentatively reached between President Biden and House Leader McCarthy.  Once the 150-page deal is finalized it will have to pass through the U.S. Senate and House of Representatives and receive Biden’s signature before it becomes law.  The reaction for equities is still uncertain since the U.S. Treasury will need to replenish is cash reserves, which could pull capital away from stocks and temporarily, at least, place downward pressure on share prices. 

• Additionally, the Federal Reserve released its meeting minutes from the most recent interest rate decision on May 3rd that showed officials were divided on whether further interest rate increases were required.  Their next opportunity to adjust rates to respond to inflation, employment and economic growth is scheduled for June 14th.  The Bank of Canada will announce its interest rate plans on June 7th. 

Source: CNN and Debt Ceiling, CNBC and Debt Ceiling, Federal Reserve Meeting Minutes

What’s ahead for this week?

• In Canada, first quarter Current Account, Gross Domestic Product for March, and year-to-date and manufacturing Purchasing Managers Indexes (PMI) will be released.

• In the U.S., Monday has American markets closed for Memorial Day.  Starting on Tuesday the Conference Board will release consumer confidence information, ADP will release its payroll report ahead of the U.S. Depart of Labor’s weekly unemployment claims and the Bureau of Labour Statistics monthly jobs report.

• Globally, Japan will release its jobs data, and its industrial production, consumer confidence and retail sales, while China will report several PMIs.  The Eurozone will announce business climate, consumer confidence, services and industrial sentiment and inflation expectations.  The European Central Bank will release its Financial Stability Review.

For more information contact: [email protected]

www.iaic.ca | Tel (519) 291-2817 | 135 Main Street, East | PO Box 68 | Listowel, ON N4W 3H2

This report is produced by Independent Accountants' Investment Counsel Inc (“IAIC”) in conjunction with ARG Inc.  All graph and chart statistical data contained in this report has been supplied by ARG Inc. The views and opinions expressed in this report are based on market statistics.  No guarantee of outcome is implied, and opinions may change without notice.  Investors should not base any of their investment decisions solely on this report nor should any opinions expressed within this report be construed as a solicitation or offer to buy or sell any securities mentioned herein.  Although the information contained in this report has been obtained from sources that IAIC believes to be reliable, we do not guarantee its accuracy, and as such, the information may be incomplete or condensed. All opinions, estimates and other information included in this report constitute our judgment as of the date hereof and are subject to change without notice.

Please contact your IAIC representative if you have any questions regarding this report. 

©Copyright 2023 Independent Accountants’ Investment Counsel Inc. All rights reserved.

(source: Bloomberg https://www.bloomberg.com/markets, MSCI https://www.msci.com/end-of-day-data-search and ARG Inc. analysis)

What happened last week?

• It was a strong session for investors in U.S. equities, and the TSX was the only index that lost value.  For the fourth consecutive week the NASDAQ bested the other major equity indexes.  The gain of more than 3% in one week for the NASDAQ was nearly double the performance of the S&P 500, and well beyond the respectable, yet small, increase of the Dow. 
• On Tuesday the latest consumer inflation data was released by StatsCan.  In April the Consumer Price Index (CPI) rose 4.4% on a year-over-year basis, just slightly above the same figure for March, which was 4.3%.  On a monthly basis prices increased by 0.7% in April, above March’s one-month inflation of 0.5%.  Gasoline, groceries, rent, and mortgage interest were the largest contributors. 
• The debt ceiling negotiations continue in the U.S. without resolution.  President Biden has warned, “I can’t guarantee that they (Republicans) will not force a default by doing something outrageous”.  Republicans would like significant reductions in government expenditures in exchange for an increase in the borrowing limit.  Growing sentiment is that neither side will be able to escape blame should a default occur.  The deadline to avoid a cash shortfall is approaching quickly, and President Biden and House Leader McCarthy had an in-person meeting scheduled for 5:30 pm on Monday.  Honouring its debts by avoiding a default is necessary for the American, North American, and global economies. 

Source: StatsCan CPI Release, Debt Ceiling Discussion, U.S. Debt Ceiling Standoff

What’s ahead for this week?

• In Canada, after Monday’s celebration of Victoria Day, when markets were closed, another light week for economic announcements will occur with wholesale and manufacturing sales, the federal government’s budget balance and the raw materials price index scheduled for release.
• In the U.S., building permits, pending home sales, new home sales, durable goods orders, Gross Domestic Product, and April’s Personal Consumption Expenditures (PCE) will be reported before Memorial Day is observed on May 29th.  Also, the meeting minutes from the Federal Reserve’s latest interest rate announcement on May 3rd will be published.
• Globally, Eurozone consumer confidence, manufacturing and services Purchasing Managers Indexes, and a European Central Bank (ECB) meeting are scheduled.  The Bank of Japan will release its inflation indicator and the Bank of China will announce its prime rate.

Source: Federal Reserve’s Meeting Minutes

For more information contact: [email protected]

www.iaic.ca | Tel (519) 291-2817 | 135 Main Street, East | PO Box 68 | Listowel, ON N4W 3H2

This report is produced by Independent Accountants' Investment Counsel Inc (“IAIC”) in conjunction with ARG Inc.  All graph and chart statistical data contained in this report has been supplied by ARG Inc. The views and opinions expressed in this report are based on market statistics.  No guarantee of outcome is implied, and opinions may change without notice.  Investors should not base any of their investment decisions solely on this report nor should any opinions expressed within this report be construed as a solicitation or offer to buy or sell any securities mentioned herein.  Although the information contained in this report has been obtained from sources that IAIC believes to be reliable, we do not guarantee its accuracy, and as such, the information may be incomplete or condensed. All opinions, estimates and other information included in this report constitute our judgment as of the date hereof and are subject to change without notice.

Please contact your IAIC representative if you have any questions regarding this report. 

©Copyright 2023 Independent Accountants’ Investment Counsel Inc. All rights reserved.

(source: Bloomberg https://www.bloomberg.com/markets, MSCI https://www.msci.com/end-of-day-data-search and ARG Inc. analysis)

What happened last week?

• On Wednesday the Bureau of Labor Statistics released the latest Consumer Price Index (CPI) data showing that household purchases rose by 4.9% on a year-over-year basis and by 0.4% in April after rising 0.1% in March.  The most recent monthly price increases were led by shelter, used vehicles and gasoline.  Overall, the energy index rose 0.6% for the month, and food prices in the aggregate were unchanged.

• The U.S. Producer Price Index (PPI) rose 0.2% in April after falling 0.4% in March and was unchanged in February.  On an annualized basis producer prices rose 2.3% for the twelve months ending in April.  Year-over-year producer prices have fallen each month over the past year from a high of 11.2% in April 2022.

• China’s consumer prices rose 0.1% in April, after rising 0.7% in March, and its year-over-year inflation rate is 1%.  China’s PPI fell 3.6% compared to April 2022.  China's inflation for consumers and producers are significantly lower than the United States, who has seen 10 consecutive interest rate increases and has brought U.S. CPI down to 4.9%.

Source: BLS CPI Release, BLS PPI Release, China’s inflation

What’s ahead for this week?

• In Canada, new housing price index, housing starts, manufacturing sales, wholesale sales, and retail sales will be reported. 

• In the U.S., a variety of indicators for April showing the health of the economy will be reported, including retail sales, capacity utilization, industrial and manufacturing production, business, and retail inventories, building permits, housing starts, and existing home sales.

• Globally, the Eurozone will announce its first quarter Gross Domestic Product (GDP) and trade balance and its consumer inflation for April and year-over-year.  China is scheduled to release its industrial production, retail sales and unemployment rate for April.  Capacity utilization and industrial production, imports, exports and trade balance, and CPI will be reported by Japan.

Source: Eurozone

For more information contact: [email protected]

www.iaic.ca | Tel (519) 291-2817 | 135 Main Street, East | PO Box 68 | Listowel, ON N4W 3H2

This report is produced by Independent Accountants' Investment Counsel Inc (“IAIC”) in conjunction with ARG Inc.  All graph and chart statistical data contained in this report has been supplied by ARG Inc. The views and opinions expressed in this report are based on market statistics.  No guarantee of outcome is implied, and opinions may change without notice.  Investors should not base any of their investment decisions solely on this report nor should any opinions expressed within this report be construed as a solicitation or offer to buy or sell any securities mentioned herein.  Although the information contained in this report has been obtained from sources that IAIC believes to be reliable, we do not guarantee its accuracy, and as such, the information may be incomplete or condensed. All opinions, estimates and other information included in this report constitute our judgment as of the date hereof and are subject to change without notice.

Please contact your IAIC representative if you have any questions regarding this report. 

©Copyright 2023 Independent Accountants’ Investment Counsel Inc. All rights reserved.

(source: Bloomberg https://www.bloomberg.com/markets, MSCI https://www.msci.com/end-of-day-data-search and ARG Inc. analysis)

What happened last week?

• North American equity indexes lost value from Monday to Thursday before rallying on Friday when the TSX rose 1½% and the NASDAQ jumped 2¼% with the S&P 500 and Dow both improving by about 1¾% final day of the week.  The losses had been about 2-3% prior to Friday’s rally.

• Friday also brought the latest Canadian employment data from StatsCan.  Employment rose by 41,000 in April, all in part-time work.  The unemployment rate has been unchanged since December 2022 and remains at 5.0%.  The slowing of full-time employment growth is a result of prior monetary actions undertaken by the Bank of Canada to temper demand.   

• Linked to employment and current rounds of interest rate increases, the U.S. is lagging behind Canada.  On Wednesday the U.S. Federal Reserve raised interest rates by ¼ percent (25 basis points) to a range of 5% to 5¼% for the federal funds rate.  In the press conference that followed the interest rate announcement, Fed Chair, Jerome Powell, indicated that the timing of a rate-cut was not known, and that the current conditions do not favour a reversal of the current path.

• On Thursday the European Central Bank (ECB) raised its benchmark interest rates by the same amount ¼ percent (25 basis points).  Price stability (controlling inflation) is the primary goal of the ECB’s interest rate policy, just as it is for the Bank of Canada and Federal Reserve.  All three institutions have a 2% target inflation rate as their goal.

• The next opportunity for the ECB, Bank of Canada, and Fed to adjust its monetary policy is scheduled for June 5th, June 7th, and June 14th, respectively.  Several weeks will elapse before the opportunity for monetary policy from these three bodies to further align arrives.

Source: StatsCan release, Fed release, CNBC and Fed decision, ECB release

What’s ahead for this week?

• In Canada, a very light week for economic announcements brings March’s building permits on Wednesday, and not much else of note.

• In the U.S., wholesale inventories and sales, and monthly and year-over-year Consumer Price Index (CPI), Producer Price Index (PPI), and Import and Export Price Indexes will describe the inflation situation for Americans and American firms.

• Globally, China will release its CPI and PPI, and imports, exports, and trade balance.  In Europe, France and Germany will reveal their consumer inflation. 

For more information contact: [email protected]

www.iaic.ca | Tel (519) 291-2817 | 135 Main Street, East | PO Box 68 | Listowel, ON N4W 3H2

This report is produced by Independent Accountants' Investment Counsel Inc (“IAIC”) in conjunction with ARG Inc.  All graph and chart statistical data contained in this report has been supplied by ARG Inc. The views and opinions expressed in this report are based on market statistics.  No guarantee of outcome is implied, and opinions may change without notice.  Investors should not base any of their investment decisions solely on this report nor should any opinions expressed within this report be construed as a solicitation or offer to buy or sell any securities mentioned herein.  Although the information contained in this report has been obtained from sources that IAIC believes to be reliable, we do not guarantee its accuracy, and as such, the information may be incomplete or condensed. All opinions, estimates and other information included in this report constitute our judgment as of the date hereof and are subject to change without notice.

Please contact your IAIC representative if you have any questions regarding this report. 

©Copyright 2023 Independent Accountants’ Investment Counsel Inc. All rights reserved.

(source: Bloomberg https://www.bloomberg.com/markets, MSCI https://www.msci.com/end-of-day-data-search and ARG Inc. analysis)

What happened last week?

• The rally for equities during the second half of last week erased early losses.  U.S. equities fared better than Canada’s TSX, which lost ¼ percent.

• The Bank of Canada released a Summary of Governing Council Deliberations leading to its monetary policy announcement of April 12th.  The major factors contributing to the decision to hold rates steady are the international economy, and domestic economic developments and the outlook for inflation.  The summary provides insight to both the process of the Bank’s analysis and the depth.  It also highlights that these decisions cannot be based solely on the situation in Canada, and the U.S. is a major influence. 

• Two key economic indicators were released last week in the U.S., Gross Domestic Product (GDP) and Personal Consumption Expenditures (PCE) price index.  Total economic output, GDP, grew at an annualized rate of 1.1% for the first quarter of 2023, which is below most estimates.  GDP grew at a rate of 2.6% in the final quarter of 2022, and the 2.1% for all of 2022. 

• PCE, which is the Federal Reserve’s preferred indicator for inflation rose 4.2% in March, down from February’s 5.1%.  The current period exceeded estimates of 3.7%.

Source: Governing Council Deliberations

What’s ahead for this week?

• In Canada, March’s imports, exports and trade balance, and a number of Purchasing Managers Indexes for April will be reported.  On Friday the jobs report for April will be released, which will show employment, unemployment, wages for the most recent period.

• In the U.S., construction spending, durable goods production, factory orders, trade balance, and an extensive array of Purchasing Managers Indexes are scheduled.  The most important announcement for the week will occur on Wednesday afternoon when the Federal Reserve releases its monetary policy announcement.

• Globally, many markets will be closed on Monday for Labour Day (also known as May Day).  Eurozone consumer inflation will be released on Tuesday, along with several individual nation’s inflation numbers.  Employment data for the Eurozone will also be announced, which will be followed by a European Central Bank interest rate announcement. 

For more information contact: [email protected]

www.iaic.ca | Tel (519) 291-2817 | 135 Main Street, East | PO Box 68 | Listowel, ON N4W 3H2

This report is produced by Independent Accountants' Investment Counsel Inc (“IAIC”) in conjunction with ARG Inc.  All graph and chart statistical data contained in this report has been supplied by ARG Inc. The views and opinions expressed in this report are based on market statistics.  No guarantee of outcome is implied, and opinions may change without notice.  Investors should not base any of their investment decisions solely on this report nor should any opinions expressed within this report be construed as a solicitation or offer to buy or sell any securities mentioned herein.  Although the information contained in this report has been obtained from sources that IAIC believes to be reliable, we do not guarantee its accuracy, and as such, the information may be incomplete or condensed. All opinions, estimates and other information included in this report constitute our judgment as of the date hereof and are subject to change without notice.

Please contact your IAIC representative if you have any questions regarding this report. 

©Copyright 2023 Independent Accountants’ Investment Counsel Inc. All rights reserved.

(source: Bloomberg https://www.bloomberg.com/markets, MSCI https://www.msci.com/end-of-day-data-search and ARG Inc. analysis)

What happened last week?

• Canada’s TSX was the only major North American index to gain ground last week.  Its rise of ½% may be modest compared to some week’s gains and losses, but it outpaced its continental rivals, and all other indicators in the grid, above.

• On Tuesday StatsCan released consumer inflation numbers that showed prices have risen 4.3% in the March-to-March timeframe.  One month earlier the year-over-year inflation rate was 5.2%.  Much of the decline in this March’s annualized inflation rate can be attributed to the steep monthly price increases experienced in March 2022, which were 1.4%.  In March 2023 consumer prices rose 0.5%.  Last month food prices rose 8.9%, shelter increased by 5.4%, health and personal care rose 6.5%, while gasoline fell by 13.8%.  

• On Thursday Tiff Macklem and Carolyn Rogers, Bank of Canada Governor, and Senior Deputy Governor, respectively, testified in Ottawa.  The central bankers indicated that rate cuts are not expected in 2023, and a slowdown, not a recession, is expected in Canada.  Some concern was expressed that further increases to government spending could contribute to inflation as the public service strike continues, and 150,000 federal workers seek higher wages.  The robust job market could continue to fuel inflation, which could also delay interest rate cuts or lead to rate increases. The Bank of Canada’s overall view is that inflation will come under control and the economy will experience a soft landing.  Several months will need to pass before we know whether this prediction has become reality. 

   

Source: StatsCan's CPI release, Inflation Soft Landing, CBC's take on BoC testimony

What’s ahead for this week?

• In Canada, February’s Gross Domestic Product data, and March’s new housing price index, wholesale sales, and manufacturing sales are scheduled for release.  Also, the Bank of Canada will release its summary of deliberations from the last interest rate decision.

• In the U.S., the house price index, new home sales, mortgage market index and pending home sales will provide insight to the housing market for March.  Consumer confidence, durable goods orders, along with Q1 Gross Domestic Product and Personal Consumption Expenditure (PCE) price index, the Federal Reserve’s preferred inflation measure, will also be reported.

• Globally, Japan will release a number of economic indicators including its Consumer Price Index, industrial production, retail sales and unemployment. In the Eurozone, German and French consumer confidence and spending, consumer inflation and Gross Domestic Product numbers will be released.

For more information contact: [email protected]

www.iaic.ca | Tel (519) 291-2817 | 135 Main Street, East | PO Box 68 | Listowel, ON N4W 3H2

This report is produced by Independent Accountants' Investment Counsel Inc (“IAIC”) in conjunction with ARG Inc.  All graph and chart statistical data contained in this report has been supplied by ARG Inc. The views and opinions expressed in this report are based on market statistics.  No guarantee of outcome is implied, and opinions may change without notice.  Investors should not base any of their investment decisions solely on this report nor should any opinions expressed within this report be construed as a solicitation or offer to buy or sell any securities mentioned herein.  Although the information contained in this report has been obtained from sources that IAIC believes to be reliable, we do not guarantee its accuracy, and as such, the information may be incomplete or condensed. All opinions, estimates and other information included in this report constitute our judgment as of the date hereof and are subject to change without notice.

Please contact your IAIC representative if you have any questions regarding this report. 

©Copyright 2023 Independent Accountants’ Investment Counsel Inc. All rights reserved.

(source: Bloomberg https://www.bloomberg.com/markets, MSCI https://www.msci.com/end-of-day-data-search and ARG Inc. analysis)

What happened last week?

• Markets moved higher last week, except for gold.  North American equity indexes all rose with the TSX leading with a nearly 2% increase.  The Canadian dollar also added another 1% in value, as oil and Canadian bond rates also improved. 

• The Bank of Canada released its interest rate decision on Wednesday morning and decided that no adjustments were needed at this time, holding the benchmark interest rate steady at 4½%.  The plan to pause interest rates had been announced and enacted at the last interest rate announcement back on March 8th.  The continuation of ‘the pause’ was predicated on demand slowing, inflation tempering, wage rises moderating, and Gross Domestic Product growth easing, which would demonstrate that domestic and international monetary action was affecting appropriate change. 

• Evidence that consumer inflation was slowing was delivered from the U.S. on Wednesday morning with news that the Consumer Price Index (CPI) had settled back to a year-over-year rate of 5.0% for March after a modest 0.1% increase during that month.  On Thursday the U.S. Producer Price Index (PPI) continued the trend by declining to 2.7% per year and by 0.5% in March. 

• Increasing results in the fight against inflation suggests that future interest rate increases from the Federal Reserve may be smaller. 

   

Source: March 8 announcement, CPI, PPI, CNN, US inflation and the Fed

What’s ahead for this week?

• In Canada, the Consumer Price Index report for March will be released on Tuesday, followed by the Industrial Producer and Raw Materials Price Indexes on Wednesday.  Retail sales and housing starts are two more important indicators on the calendar.

• In the U.S., a relatively light week for announcements includes building permits, housing starts, existing home sales, National Association of Home Builders housing market index, and manufacturing and services Purchasing Managers Indexes.

• Globally, inflation news continues as the Eurozone is scheduled to release its CPI (along with Italy and Germany’s PPI) and consumer confidence.  China will report its GDP and industrial production for the first quarter.

For more information contact: [email protected]

www.iaic.ca | Tel (519) 291-2817 | 135 Main Street, East | PO Box 68 | Listowel, ON N4W 3H2

This report is produced by Independent Accountants' Investment Counsel Inc (“IAIC”) in conjunction with ARG Inc.  All graph and chart statistical data contained in this report has been supplied by ARG Inc. The views and opinions expressed in this report are based on market statistics.  No guarantee of outcome is implied, and opinions may change without notice.  Investors should not base any of their investment decisions solely on this report nor should any opinions expressed within this report be construed as a solicitation or offer to buy or sell any securities mentioned herein.  Although the information contained in this report has been obtained from sources that IAIC believes to be reliable, we do not guarantee its accuracy, and as such, the information may be incomplete or condensed. All opinions, estimates and other information included in this report constitute our judgment as of the date hereof and are subject to change without notice.

Please contact your IAIC representative if you have any questions regarding this report. 

©Copyright 2023 Independent Accountants’ Investment Counsel Inc. All rights reserved.

(source: Bloomberg https://www.bloomberg.com/markets, MSCI https://www.msci.com/end-of-day-data-search and ARG Inc. analysis)
*TSX, S&P500, Dow and NASDAQ, Govt CAN bond closing figures as of April 6, 2023 due to exchange closures on Good Friday, April 7th

What happened last week?

• The week concluded with the closure of North American exchanges for Good Friday observances.  While markets were closed, the latest U.S. employment numbers were released by the Bureau of Labor Statistics.  The unemployment rate remained unchanged as 236,000 jobs were added, which is close to estimates, but well below the 326,000 jobs added in February.  It is also the lowest monthly gain in jobs since December 2020.  Leisure and hospitality, government and professional, business services and healthcare sectors contributed to the majority of the gains.

• Prior to the jobs announcement the major indexes delivered mixed results with the TSX and Dow advancing by ½%, the NASDAQ losing 1% and the S&P 500 essentially breaking even during four days of trading.  Since the beginning of 2023 these indexes are all in positive territory with NASDAQ leading the pack at nearly 17%, trailed by the S&P 500 at 7%, the TSX at 3½% and the Dow with a slight gain.  The technology-heavy NASDAQ also leads in 1-year losses at minus 14%, with the other indexes also needing to gain significantly to erase losses suffered over the past year after losing 8%, 9% and 4% for the TSX, S&P500 and Dow, respectively.

• The near-term prospects for equities will hinge on the inflation, associated interest rate and monetary policy action, and the fear of a recession from the slowing economic activity.

Source: Bureau of Labor Statistics, CNBC and Jobs

What’s ahead for this week?

• In Canada, an interest rate decision, monetary policy report and rate statement is scheduled for Wednesday morning from the Bank of Canada.  Tiff Macklem, Bank of Canada Governor, has previously indicated that the central bank plans to pause interest rate increases.

• In the U.S., wholesale inventories and trade sales, mortgage market indexes, and fuel inventories (heating oil, gasoline, crude oil) precede inflation reports.  On Wednesday the Consumer Price Index (CPI) will be released, Thursday brings the Producer Price Index and Friday includes the Import and Export Price Indexes. 

• Globally, the International Monetary Fund (IMF) will conduct a series of meetings.  Retail sales and industrial production will be released for the Eurozone.  China will report its consumer inflation and Japan will release its producer inflation next week, providing a glimpse of price increases and, perhaps, upcoming monetary policy in Asia.

Source: Tiff Macklem previous statement

For more information contact: [email protected]

www.iaic.ca | Tel (519) 291-2817 | 135 Main Street, East | PO Box 68 | Listowel, ON N4W 3H2

This report is produced by Independent Accountants' Investment Counsel Inc (“IAIC”) in conjunction with ARG Inc.  All graph and chart statistical data contained in this report has been supplied by ARG Inc. The views and opinions expressed in this report are based on market statistics.  No guarantee of outcome is implied, and opinions may change without notice.  Investors should not base any of their investment decisions solely on this report nor should any opinions expressed within this report be construed as a solicitation or offer to buy or sell any securities mentioned herein.  Although the information contained in this report has been obtained from sources that IAIC believes to be reliable, we do not guarantee its accuracy, and as such, the information may be incomplete or condensed. All opinions, estimates and other information included in this report constitute our judgment as of the date hereof and are subject to change without notice.

Please contact your IAIC representative if you have any questions regarding this report. 

©Copyright 2023 Independent Accountants’ Investment Counsel Inc. All rights reserved.

(source: Bloomberg https://www.bloomberg.com/markets, MSCI https://www.msci.com/end-of-day-data-search and ARG Inc. analysis)

What happened last week?

• The end of the week, March 31st, coincided with the end of the first quarter of 2023.  For equity investors, the final few days of trading reversed much of the recent losses that began with two bank failures in the United States.  Each of the North American indexes gained more than 3% last week, and they all sit in positive territory for 2023.  Unfortunately, each of them is below their levels of one year ago by four to fourteen percent.

• The NASDAQ has jumped nearly 17% this quarter and this year as technology firms are seeing their reductions in staffing and other cost cutting measures reflected positively in their share prices.  The broader indexes, like the TSX and S&P 500, have been weighed down by the Financials sector in each. 

• One of the contributors to last week’s increases for equities was the release of the February’s U.S. Personal Consumption Expenditures (PCE) price index on Friday.  Core PCE increased 4.6% on a year-over-year basis, a slight deceleration from the level in January.  In February the PCE rose 0.3% from its level in January.  Both increases were below expectations, which led to increases across equities. 

• Positive news for the Canadian economy arrived with the release of January’s Gross Domestic Product (GDP) numbers that saw a monthly growth of 0.5%.

Source: Fed Inflation Gauge, Personal Income and Outlays, Business Economy GDP

What’s ahead for this week?

• In Canada, the Bank of Canada’s Business Outlook Survey will be released.  Also, imports, exports and trade balance, and the latest jobs data, including employment change, unemployment rate, and labour participation rate are scheduled prior to the Good Friday holiday.

• In the U.S., several indicators will be reported: durable goods, factory orders, construction spending, imports, exports, trade balance, mortgage index and refinance rate, and energy stockpiles and inventories.  On Good Friday when markets are closed Nonfarm Payroll report will be issued.

• Globally, imports, exports and trade balances are expected from Germany, France and Italy, and Purchasing Managers Indexes for products and services for the Eurozone and U.K. 

   

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