US markets have reached all time highs this week with the TSX not far behind. The charts for US markets show similar levels about 18 months back and much longer for the TSX so despite the hype, markets haven’t made much progress during this time. A couple of years ago I wrote that given high valuations on North American exchanges, sector and security specific plays will outperform index hugging. With the Trump election we believe this trend will continue for some time and we’ll be buying the beneficiaries of his pro growth initiatives and staying away from sectors that may suffer in the event of unfavourable trade tariffs and currency related hurdles.
Events which can rattle markets in the short term include the outcome of OPEC’s meeting next week, the Italian Referendum and the US Fed comments in mid December. While it’s almost a given that a 25 basis point hike will come this December, investors could push the sell button if they get hints of 3 to 4 additional hikes next year rather than just a couple.
If markets perceive the outcomes of any of the above events to be negative, any sell-off will likely be emotionally based or an excuse to take profits from the recent rally. Should we see any market pullbacks due to any of these events, we will not hesitate to add to our favoured existing positions and pick up other watch-list names.
Enjoy your weekend!
Daniel Popescu CFP, CIM, FMA, FCSI
President & CEO
MNP Tower, 3100-1021 West Hastings St.
Vancouver, BC V6E 0C3
T: 604-558-6830/1(877) 588-6822
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