October 2019 Portfolio Management Team Update

Elvis Picardo

October 3, 2019

Market & Economic Environment:  Canadian and U.S. stocks advanced in September to cap the third straight quarter of gains. Strong gains by the financials and energy sectors fueled the TSX Composite’s 1.3% rise last month, bringing its Q3 gain to 1.7%. Energy stocks rallied as crude oil recorded its biggest-ever gain on September 16 after a surprise weekend attack on Saudi Arabia’s oil facilities. The surging energy sector propelled the TSX to a record intra-day high of 16,947.23 and a record close of 16,899.69 on September 20. The S&P 500 gained 1.7% last month as it rebounded from a 1.8% decline in August, for a Q3 gain of 1.2%. While the Dow Jones Industrial Average also posted a similar Q3 gain of 1.2%, the Nasdaq was marginally lower in the quarter. (Data Source: FactSet)

Our Strategy:  As of September 30, 2019, the TSX Composite and S&P 500 had surged 16.3% and 18.7% respectively year-to-date. Such stellar gains may make equities vulnerable to profit-taking against a backdrop of slowing global growth and rising geopolitical uncertainty. The fourth quarter has commenced on a (typically) volatile note, with soft U.S. economic data triggering back-to-back declines in North American stocks in the first two days of October. Having completed a major rebalance of all portfolios in July, the Portfolio Management Team (PMT) intends to capitalize on buying opportunities that it expects will arise in Q4. The PMT will also continue to maintain a defensive tilt to portfolios, based on its expectation that 2020 will be a challenging year from an investment viewpoint.

Please contact any member of the PMT if you have any questions or concerns regarding your accounts.