2019 April Wrap-Up Danny Popescu 05/13/2019 700 Closed Global stock markets continued their rally in April: in North America, the S&P 500 finished up 4.72% (in CAD) while the TSX Composite rose 3.22%. Market volatility was subdued as there was no negative news on the US / China trade negotiations during the month, central banks were largely out of the news and the Bank of Canada held steady on interest rates. As markets had continued to reach new highs in April, we could conclude that investors have come to “expect” continued economic growth and a relaxed monetary policy vis-a-vis low interest rates with low inflation. At the same time, investors are willing to brush off mixed US corporate earnings while remaining optimistic about trade policy despite the increased likelihood of more global trade barriers, as Europe now seems to also be in Trump’s crosshairs. Perhaps what investors may be forgetting is that the good in the news about economic growth, inflation and monetary policy may already be reflected in equity prices. S&P500 top-line revenues peaked in Q3 of 2018 and have been drifting lower. Economic data is mixed (blue line in the chart below), yet the S&P500 had continued its increase in April. 3. Semi-conductor sales have a big impact on global GDP and are a leading indicator, as computer chips are a component of almost every household item (TV, microwaves, clocks, radios, washer/dryer, dishwasher) and in autos, computers, phones, tablets, smart watches, etc. Semi-conductor sales have been declining for the past year, yet the Philadelphia Semi-conductor Index is up approximately 35% YTD: Month to month semi-conductor sales fell 10% in February and 2% in March. Year over year sales fell 13% to end March 2019. The 3-month rolling average of sales for Q1 fell 15.5%. 4. Closer to home in Canada, April’s Manufacturing PMI came in at 49.7 (below 50 is recessionary, while above 50 means the economy is expanding). Having said this, April’s job reports were released today, and Canada posted its biggest job gains on record with 106,500 vs the 12,000 economists predicted. This was a broad-based increase (many industries) and wages also grew, both suggesting the Canadian economy is likely to improve. The current market environment is a reminder that equity markets are unpredictable, and a disciplined strategy is paramount. Avoiding equities altogether leaves us vulnerable if markets continue to rally while overexposure can lead to anxiety during periods of market contraction. Our approach has not changed: We continue to hold quality names with strong balance sheets while maintaining a meaningful allocation to asset classes that are not correlated to public markets. Should we see an equity market selloff, not only will this approach soften the landing, but it would present solid opportunities to pick up quality names at attractive valuations. Daniel Popescu CFP, CIM, FMA, FCSI President & CEO “I have prepared this commentary to give you my thoughts on various investment alternatives and considerations which may be relevant to your portfolio. This commentary reflects my opinions alone and may not reflect the views of Harbourfront Wealth Management. In expressing these opinions, I bring my best judgment and professional experience from the perspective of someone who surveys a broad range of investments. Therefore, this report should be viewed as a reflection of my informed opinions rather than analyses produced by Harbourfront Wealth Management Inc.” Disclaimer – This information transmitted is intended to provide general guidance on matters of interest for the personal use of the reader who accepts full responsibility for its use and is not to be considered a definitive analysis of the law and factual situation of any particular individual or entity. As such, it should not be used as a substitute for consultation with a professional accounting, tax, legal or other professional advisor. Laws and regulations are continually changing, and their application and impact can vary widely based on the specific facts involved and will vary based on the particular situation of an individual or entity. Prior to making any decision or taking any action, you should consult with a professional advisor. The information is provided with the understanding that Harbourfront Wealth Management is not herein engaged in rendering legal, accounting, tax or other professional advice. While we have made every attempt to ensure the information contained in this document is reliable, Harbourfront Wealth Management is not responsible for any errors or omissions, or for the results obtained from the use of this information. All information is provided “as is,” with no guarantee of completeness, accuracy, timeliness or as to the outcome to be obtained from the use of this information, and is without warranty of any kind, express or implied. The opinions expressed herein do not necessarily reflect those of Harbourfront Wealth Management Inc. The particulars contained herein were obtained from sources we believe to be reliable but are not guaranteed by us and may be incomplete. The opinions expressed are not to be construed as a solicitation or offer to buy or sell any securities mentioned herein. Harbourfront or any of its connected or related parties may act as financial advisor or fiscal agent for certain companies mentioned herein and may receive remuneration for its services. The comments and information pertaining to any investment products (The Portfolios) sponsored by Willoughby Asset Management are not to be construed as a public offering of securities in any jurisdiction of Canada. The offering of units of The Portfolios is made pursuant to the Offering Memorandum or Simplified Prospectus and only to investors in Canadian jurisdictions. Important information about The Portfolios is contained in the Offering Memorandum or Simplified Prospectus available through Willoughby Asset Management. Commissions, trailing commissions, management fees, performance fees and expenses all may be associated with investments in The Portfolios. Investments in The Portfolios are not guaranteed, their values change frequently, and past performance may not be repeated. Historical annual compounded total returns including changes in unit value and reinvestment of all distributions do not take into account sales, distribution or optional charges or income taxes payable by any security holder that would have reduced returns. Unit values and investment returns will fluctuate and there is no assurance that The Portfolios can maintain a specific net asset value. Harbourfront Wealth Management Inc. (“Harbourfront”) has relationships with related and /or connected issuers, which may include the securities or funds discussed in this commentary and are disclosed in our Statement of Policies Regarding Related and Connected Issuers. This policy is included in your new client package, on our website, or can be obtained from your investment advisor.