Weekly Market Commentary - November 11th, 2020

The Markets

It’s said markets hate uncertainty, but that wasn’t the case last week.

Despite tremendous uncertainty about the outcome of the United States election, major stock indices moved higher and the Cboe Volatility Index, better known as Wall Street’s fear gauge, moved 35 percent lower. Ben Levisohn of Barron’s reported:

“By all accounts, it should have been a terrible week for the stock market. At the close of trading on Friday, we still didn’t know whether Joe Biden or Donald Trump had won or which party would control the Senate. There was also set to be at least two recounts – one in Georgia, and one in Michigan – with likely more to come. It’s the kind of uncertainty that the market is supposed to hate.”

Yet, there was little fear to be found in financial markets. Investors’ confidence may have been grounded in a wave of positive economic news:

• 15 of 18 manufacturing industries grew in October. The ISM Manufacturing Purchasing Manager’s Index rose 3.9 percent in October. The Index finished at 59.3 percent, an indication manufacturing is improving and the economy is growing.
  
  
• Rates remained low. The Bank of Canada, along with other central banks, has kept the overnight rate near zero, supporting economic growth. The BoC announced in October that it is their intention to maintain the current rate until its inflation objective is achieved.
  
  
• People are going back to work. Canada’s unemployment rate fell slightly in October to 8.9 percent, with most of the increase in employment being full-time work.  

While that’s all good news, the number of coronavirus globally are on the rise, which could lead to a reversal of fortunes in the economy if governments decide to return to lockdown measures.

If you have any questions or concerns about your investment portfolio or recent market conditions, please don’t hesitate to give us a call.

Source: Refinitiv

A salute to our veterans

This week we observe Remembrance Day. Usually, we would have parades followed by somber ceremonies to remember those that gave their lives to preserve the freedoms we enjoy as Canadians.

This is no usual year, however. With the coronavirus pandemic, many ceremonies are being cancelled or moved to a digital platform, such as Zoom.

In order to adapt to social distancing norms, the Royal Canadian Legion’s National Poppy Campaign has partnered HSBC Bank Canada to offer touchless donation boxes. Locations can be found at https://www.legion.ca, and they also accept donations online for those that aren’t comfortable leaving their homes but still wish to show their support.

Weekly Focus – Think About It

“The stock market is a device for transferring money from the impatient to the patient.”

--Warren Buffet, American Investor

Best regards,