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December Market Perspectives

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December 13, 2022

We are in the thick of likely the last “important” week of the year as it pertains to economic data. U.S. Inflation data came in softer than expected this morning boasting well for stocks and reiterating that yes, inflation is cooling and the rate hikes that have dampened the spirits of financial markets in 2022 are having an impact.

Tomorrow we will hear from the Federal Reserve, and it will be interesting to see how they continue to respond as it relates to rate hikes with inflation showing signs of cooling. The market has fully priced in a 50-basis point increase. Anything less than that could spark another rally. After all, markets are looking for any positive reason to push higher.

Finally, on Thursday morning we have a jammed pack kickstart to the day as we get the month over month U.S. Retail Sales and Initial Jobless Claims.

The reason I bring this to your attention, although important to know, is lagging macro data but the market has consistently moved one way or another upon learning it. Up until October, it primarily didn’t do us any favours but the last couple of months have provided more favourable news setting up what has been a nice recovery off the lows.

As we reflect on the past year, we are reminded that stock markets have a way of humbling investors. Right when you think they are going to recover, they tend to falter, and vice-versa. We have been through an extremely challenging period in 2022, where not much seems to be going right for stocks or bonds. Interestingly though, financial pain can also bring opportunity. The correlation of returns with Presidential election cycles, coupled with the historical pattern of market action following a 25% market decline, and seasonality introduces compelling arguments for adding risk to your portfolio. While there will be bumps in the road and volatility may be heightened, the historical evidence supports an attractive outlook for stocks and other risk assets. See attached my latest “Market Perspectives.” Enjoy the read and please never hesitate to reach out if you would like to discuss further,

In closing, be sure to take time this holiday season to enjoy your friends, family, food, and get those batteries recharged for 2023. Thanks for your continued trust and support in helping you navigate today’s financial markets.


Aaron Pedlar, HBA, CHS, PFA

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