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November Market Perspectives

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November 13, 2023

Global equity markets fell over October as geopolitical tensions, relatively weak economic data and the possibility of higher-for-longer interest rates weighed on investor sentiment. Inflation continued to show signs of easing in October, which prompted central banks such as the Bank of Canada (“BoC”) and European Central Bank (“ECB”) to hold steady. Manufacturing activity contracted in major economies, suggesting global demand was relatively muted.

An advanced estimate in October showed the U.S. economy grew by 4.9%, annualized, in the third quarter of 2023, while the European economy shrank by 0.1%. China’s economy expanded by 4.9% year-over-year in the third quarter, showing some signs of stabilization. The S&P/TSX Composite Index declined over the month, hurt by weakness in the Health Care and Real Estate sectors. South of the border, U.S. equities also fell. Yields on 10-year government bonds in Canada ticked lower, while those in the U.S. finished higher. The price of gold moved higher amid geopolitical tensions and economic uncertainty, while the price of oil slipped.

While October marked the third consecutive month of declines, it is important investors keep in mind these months are historically the weakest period for investment markets couple with the fact they had a very robust start to the year. The S&P 500 market peak, July 31st, to trough, October 27th, has experienced a 10% tumble. While frustrating, it’s important to remember that an intra-year correction of this magnitude is actually quite common occurring in 59% of calendar years since 1970. The good news is we are still well positive on the index year to date (+10.7% as of October 31st) and entering a seasonally strong period. Furthermore, is it too early to start celebrating that central banks may have it the pause on their rate hiking cycle? Time will tell, but the market it signaling it is at that point if not ‘very’ close. History shows that the proverbial pause is quite rewarding for investors.

See attached the full monthly breakdown as we explore and uncover a buffet of topics including;

·      October Markets in Review

·      Central Bankers – Have They Perhaps Paused?

·      What Happens to Bonds when Yield Fall…

·      Finding Income – At this point are GIC’s your friend or foe…

·      The Magnificent 7- great for indexes but problematic for active managers

·      Finding value outside of the Mega-Caps

·      With geopolitical conflicts, why isn’t Gas spiking?

·      Your monthly visual. Spoiler Alert; an old one, not that I’ve shared it before but a good one nonetheless!

Finally, there is a reason why your car windshield is bigger than the rear-view mirror. In our closing remarks we look forward as I believe despite the recent pullback investment markets will end 2023 on a good note.

I sincerely appreciate you taking time out of your busy day to stay informed and please understand I am here for you every step along the way in your investment journey. Should you have any questions regarding your portfolio or any aspect of your planning, please do not hesitate to contact my office as creating well educated and informed investors continues to be the hallmark of my practice.

-Aaron Pedlar

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