(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?

• Equity indices continued to power ahead again last week, with the exception of the Dow. 

  After maintaining value for the first four days of the week, twenty of the thirty Dow firms lost value on Friday. 

  • The one-day performance of only twenty firms, albeit large companies like Amex, IBM, Coca-Cola and 3M, caused the Dow index to finish in negative territory for the week. (Source)

  • For perspective, the Dow has still returned more than 15% in 2021.  The other major North American equity indices have delivered 20% so far this year. 

  • Forecasts for corporate growth and profitability continue to rise while Gross Domestic Product (GDP) growth forecasts are beginning to flatten.  Since GDP is a fair proxy for aggregate of corporate performance the forecasts are starting to contradict each another.  The typical response to this contradiction has been increased volatility.

What’s ahead for this week?

• In Canada, after closing for the observance of Labour Day on Monday the major domestic, economic news will be the Bank of Canada’s policy announcement on Wednesday.  On Friday the employment report for August will be released.

• In the U.S., markets will be closed on Monday before the release of July jobs report, producer price index, wholesale trade and the most recent weekly jobless claims later in the week.

• Globally, China is scheduled to announce consumer and producer inflation, trade surplus and foreign reserves.  Eurozone factory orders, Q2 Gross Domestic Product, and Germany’s industrial production and trade surplus will be released.  The European Central Bank will hold a monetary policy meeting on Thursday.

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