November Econ Update

Economic Update: November 2019

by Blake Whiteley Last updated on December 06, 2019 Tags: Market & News Updates

Equity markets have continued to break records during November advancing quietly due to less trade news relative to the rest of the year. The S&P TSX Composite (YTD gain 18.5%) is on track to finish the year at its highest calendar year return in a decade, and the S&P 500 (YTD gain 24.2%) is on track to record its highest calendar year return since 2013. No discussion of market performance would be complete without a discussion of risk, which we’ll get into as we continue.

index performance nov 2019

*Equity Indices - FTSE Global Indices in CAD, Bonds - Barclays Global Aggregate Canadian Float Adjusted Bond Index based on end-of-day data for the Total Return Index as at market close November 29 2019


The rally in US markets continued this month fueled primarily by the thesis that the US and China are getting closer to inking a trade deal. The month was quiet in terms of significant announcements. Which translated to a CBOE Volatility Index (VIX) that was at its lowest level in years.

Although November was calm, President Trump started the month of December by back tracking on earlier comments that they’re close to a phase one deal by noting that he’s willing to wait until after next year’s presidential election to strike a deal with China in order to secure the best deal possible.

These flip-flops have been common during the Trump presidency and should not be the basis for a new narrative to shape the expectations of investors. This announcement has certainly reintroduced additional volatility to the markets but for all we know this could simply be a negotiating tactic; from the view of a long-term investor these events are just noise and shouldn’t be given too much weight. Policy makers know that trade is good for economies and with the passage of time these situations should improve. The growth of the US economy has relied heavily on the US consumer; macroeconomic conditions in the US are still supportive of the consumer as the economy is at full employment and the Federal Reserve has been accommodative.


The Canadian economy remains in a healthy spot. Unemployment is low, Q3 year over year growth is at 1.65%, and the Bank of Canada has shifted from being hawkish to more data dependant which, based on recent data, means it’s been more supportive and has kept interest rates very low. Canada’s trade relationship with China has been damaged throughout the year and household debt levels in Canada are among the highest for developed countries. We believe these risks are concerning but that they’re minimized with a globally diversified portfolio.


Geopolitical tensions did not subside in November. The political situation in Hong Kong has worsened as protests have become more violent. The US showed its support of Hong Kong by signing legislation to protect the protestors. These actions have the potential of weakening relations between China and the US, making a deal more difficult to reach in the near-term.

Other events that have been taking shape in the markets are weakening data in the UK as the newly extended deadline approaches, weakening factory data in China, and climate related events in places like Italy, Australia, and China.

Although risks are present in emerging and developed global economies, we believe that the diversification benefits of having exposure to these markets outweigh the risks, and in the long-term will be further bolstered by increased trade activity.

Final Thoughts

Around this time last year there was a lot of fear in the marketplace and few pundits would have predicted that we would have had this great of a year in terms of equity market performance. There is a saying in investing that stocks tend to climb walls of worry and 2019 is certainly a great example of this. If investors made any gut decisions to sell during Q4 of 2018, they would have had to decide on the best time to re-enter the market, and would have missed out on some of the upside during this time lag. That’s why we’re big proponents of goal-based investing; decisions on when to sell under this model of investing are done to either rebalance back to a strategic asset mix or because the investor has reached their goal.

Based on current conditions we believe that there’s still room for economic growth which should translate to continued growth in stock markets, but we do see continued volatility accompanying the environment of political uncertainty. We’re currently in the 10th year of a bull market and this also makes market participants feel jittery. While the trend may change, there are no significant fundamentals that indicate major long-term mispricing.  The key to navigating that uncertainty is having a portfolio that’s appropriately positioned based on your attitude towards volatility and your investment time frame, and keeping emotions out of the equation.

As always, we believe that a winning strategy is one that involves a clearly defined goal, tracking of your progress towards that goal, frequent contributions, and tuning out the daily noise. At Invisor, tools such as pre-authorized contributions and InvisorGPS and relationships with the portfolio management team can go a long way in helping investors achieve their goals.

Happy Holidays!


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