Market Insights

The U.S. Federal Reserve sets interest rate policy for the largest economy in the world. Whether the U.S. central bank is tightening financial conditions (increasing interest rates or reducing asset purchases) or easing financial conditions (lowering interest rates or increasing asset purchases), is therefore closely monitored by economists and investment managers around the world...

With the majority of second-quarter earnings reported in Canada, here’s a quick summary and highlights for the Matco Canadian Funds:
Matco Small Cap Fund and Matco Canadian Equity Income Fund.

What’s said at Jackson Hole matters to global stock and currency markets. Central bankers and financial heavyweights meet annually at this exclusive economic symposium to discuss challenges, implications and policy that can affect us all.

Sustainable investment assets (excluding fund of funds) hit CAD$26 billion in Canada. This represents a quarter-over-quarter growth rate of 22% and a year-over-year growth rate of 130%. In the U.S., 2020 saw sustainable investment funds grow by USD$51.1 billion. More and more money continues to flow into ESG investment vehicles and the money being invested is outperforming investment vehicles that have not incorporated some form of ESG investment factors.

There are many theories about how the terms bull market and bear market came to be, but the most popular explanation is how each animal attacks.  A bull attacks by lowering its head and using its horns to lift “up” its opponents, while a bear attacks by raising its front legs and using its paws to swipe “down” at its opponents.  Thus, when the market is trending “up,” it’s termed a bull market and when the market is trending “down,” it’s termed a bear market; a bear market is confirmed when a market declines by 20% or more.

Since late November, we have been positive on small cap stocks as an economic recovery play. Eight months later, this investment thesis has continued to pay off for long term investors. Year-to-date, small cap stocks globally have significantly outperformed their large cap peers.

The first quarter earnings session of 2021 is behind us and all three Matco equity funds have performed admirably to kick off the year. In the context of the broad market within Canadian equities, over the past few quarters, we have gradually seen companies start to ease the fears of those concerned with potential asset bubbles and lofty valuations by producing strong and growing earnings metrics.

Back in November of 2020, we published a Matco Insights piece titled “The Inflation Debate and What it Means for Your Portfolio”. Within that publication, we primarily focused on the relationship between inflation and the labor market, as well as inflation and government spending. The conclusion was ultimately that inflation is more likely to be a persistent concern when the following two conditions are met: government debt is at lower levels and unemployment rates are much lower.

Throughout the Covid 19 pandemic, household debt has continued to rise throughout Canada. Canada has been the poster child for a high household income to debt ratio for years, with many economists focusing on the long-term effect of low interest rates.

In the early stages of digesting Canada’s first Federal Budget in more than two years, we wanted to provide a flash update with the primary highlights. Canada’s 2021 Federal Budget outlines CAD$101 billion in new government spending over a three-year period to fuel the economic recovery while continuing to bridge the growth gap due to the COVID-19 pandemic.

The preferred share segment of the market has often attracted individual investors seeking yield. In recent years, this demand has been further reinforced by a low-interest rate environment, which has created challenges for investors looking to generate income within their portfolio.

The large stimulus packages announced by G7 governments to support the economy during COVID-19 have led to massive deficits and debts for all nations.

Knock, Knock.
Who’s there?
Justin.
Justin who?
Just in time to raise your taxes!

When it comes to making an investment, there are several factors that will influence whether the outcome is successful. One of those factors, which is built directly into our investment process at Matco, is value.

Working from home has become a regular occurrence through 2020 and the COVID-19 pandemic. Adoption of the home office has been a difficult transition for some companies and seamless for others.

Millions of Reddit-users under the subreddit known as r/wallstreetbets coordinated one of the most epic short squeezes of all time.

Over the last year we have seen more Black Swan events than I have witnessed for many years. With the American Capital under siege, a pickup in Covid-19 cases, more shutdowns and a new US President introducing a new agenda we are all asking, “Now What”?

Matco is here to help you navigate the registered investment world with details about your contribution limits and deadlines.

Since the 2015 Paris Climate Agreement, governments and large institutional shareholders have been putting a massive amount of pressure on Big Oil to do more to reduce greenhouse emissions. On the shareholder front, many of the largest pension, endowment, and sovereign wealth funds have decided to reduce or eliminate the energy sector from their portfolios since Big Oil was not moving fast enough.

With many global stock markets hitting all-time highs, investors feel optimistic despite the negative news of rising daily COVID-19 cases. To better understand what is happening, we need to look below the surface to see how professional investors position their portfolios.

Working from home has become a regular occurrence through 2020 and the COVID-19 pandemic.  Adoption of the home office has been a difficult transition for some companies and seamless for others. Working from home has reached a point for some companies with productivity at highs and more of a focus on work-life balance, that the prospect of moving back to a full-time office may never happen. 

The current U.S. election was one for the ages, with record voter turnout and an extended vote count period due to the increased number of mail-in ballots. Although it appears that Joe Biden will become the 46th President of the United States come January of 2021, some uncertainty remains.

In this webcast Matco's investment team shares their thoughts on the U.S. election results and their investment implications. The team is joined by special guest Doug Peta, who is the U.S. Investment Strategist at BCA Research Inc.

There has always been a lot of debate as to whether ballooning government deficits will lead to significant levels of inflation. This debate also leaves investors wondering if they should be protecting their portfolio from the possibility of inflation.

I have been fielding an increasing number of questions regarding becoming a Canadian Non-Resident. There are various reasons why Canadians consider moving to another country, including lower taxes, employment opportunities, retirement lifestyle, or maybe all of the above.

2020 has been an interesting year to say the least. A global pandemic, the fastest bear market in history, and increasing unemployment or salary cuts. If you are thinking about topping up your RRSP this year but do not have access to liquid funds other than your TFSA, there may be a strategy that can work in your favour.

In my last blog I showed that Mr. Trump is not the stock market president, in that the U.S. stock market has had better returns under various presidents during their term and that since 1948, the U.S. stock market has done better under a Democratic president than a Republican.

President Trump has often bragged about how well the stock market has performed since he was elected. With the U.S. stock market recovering all its losses since its March lows and recently hitting a new all-time high, it’s time to do some fact checking

Recently there have been media reports of a few companies that had purchased pandemic insurance. Two notable examples are the Wimbledon Championship Tennis Tournament and the Shaw Festival in Niagara-on-the-Lake.

Consuming cannabis is the new normal. In 2013, Uruguay was the first country to legalize recreational cannabis. In 2018, Canada was the first industrialized country to legalize recreational cannabis. Today, there are over fifty countries that have legalized medical and/or recreational cannabis.

The International Monetary Fund (IMF) recently posted a blog about corruption and COVID-19.

Take advantage of income splitting and pay less tax by using a spousal loan

In the current economic environment, buying GICs can feel like making a deal with the devil.  With interest rates at lows, with little to no projection to increase in the near term, what is the real price you pay to guarantee and lock in your return?

Pink Floyd’s classic song ‘Comfortably Numb’ sums up the current state of global markets and the economy. Central bankers (‘the doctors’) have successfully revived the global economy (‘the patient’) from the COVID crisis through massive injections of liquidity

The old investing adage “a bird in the hand is worth two in the bush” signifies the importance that dividends and return of capital play in a sound investment strategy.

Within our Matco investment process, there are two primary layers of investment management. The first layer is security or stock selection, which is similar to choosing the ingredients for a recipe.

During their working years, many people become accustomed to a consistent pay cheque being available in their personal bank accounts on a bi-weekly basis.

COVID-19 has certainly changed the way we work and live. One of the most positive outcomes is improved productivity. Evidence can be found all over social media as friends and family share posts of de-cluttered spaces, learn a new language and grow the ever-elusive sour dough yeast.

Have you ever hit the road heading to a place you have never been without a map? Or arrived at the airport with no idea of your destination? Setting goals and building strategies to reach them are elements of successful behavior.

Like the Netflix hit series ‘Stranger Things’, the global COVID crisis has turned the lives of billions of people upside down for the last three months.

The world of bonds, the boring capital market security that has failed over the years to provide the same dramatic appeal and excitement as the stock market.

Since March 22nd, global stock markets have had a powerful rally with Canadian and U.S. stock markets, up 36% and 34%, respectively as of April 29th.

Given the stalling of the global economy in order to stop the spread of COVID-19, central banks and governments are forced into a corner to do “whatever it takes” to dampen the impact of a recession.

Despite a severe market correction brought on by fears of a global pandemic around the coronavirus, or COVID-19, Anil Tahiliani, a portfolio manager and vice-president at Calgary-based Matco Financial Inc., is hanging in with his portfolio selections and has in fact added to some existing holdings on price weakness.

On the weekend, Saudi Arabia cut its official crude selling prices for April, effectively launching an oil price war against Russia. The price cut was a result of Russia and Saudi Arabia failing to agree on terms surrounding further production restrictions that were slated to begin April 1st.

Since February 21st, investors have been gripped by the fear of the Coronavirus spreading globally and causing the next recession. Unfortunately, given the digital age we live in, fear, bad news and fake news all spread faster than good news.

News that the Coronavirus (Covid-19) is spreading outside of China, has caused investors to hit the panic sell button. With Covid-19 not yet contained, the economic damage continues to spread from China and across multi-national companies in the airline, hotel, cruise, casino, entertainment and logistics sectors.

This morning one of the Fund’s top ten holdings (with a 3.7% portfolio weight) – Northview Apartment REIT announced a takeover proposal at a 12% premium to yesterday’s closing price. The all cash deal is expected to close in the third quarter.

As of Feb. 4th, Tesla’s stock year to date has gained 112% in less than 24 trading days. Is this parabolic move based on fundamentals or just irrational exuberance? We looked under the hood to check out the facts.

In this edition of Matco Insights, we take a closer look at the upcoming Saudi Aramco IPO while exploring some worthwhile market implications and considerations. More specifically, how could this potentially historic milestone within the energy sector impact the markets and your portfolio.