Andrew Pyle, senior wealth advisor and portfolio manager at Scotia Wealth Management
Focus: North American stocks

MARKET OUTLOOK

Even though risks of recession have increased over the past 12 months, equity market sentiment is definitely more positive today than a year ago. With the S&P hitting a new record this morning, concerns of a triple top in the index have diminished somewhat. However, there are some major “ifs” underlying sentiment: If the U.S. and China actually reach an agreement on trade in Chile, if the Fed continues to cut rates in December, if earnings growth re-accelerates into 2020. The concern is that market participants are once again looking past bad earnings this past season while pounding their chests on beats. As the bar gets raised, there is an increased likelihood of being disappointed should one or more of the “ifs” above fail to materialize, especially on Fed policy. 

Our own strategy is to use the advance in September-October to trim back exposure in equities ahead of year-end. This is not so much market timing, but realistic probability assessment. Investors with a balanced portfolio that may be up 7 to 9 per cent this year (not bad) need to look at the probability of stretching that to 10 per cent by New Year's Eve, being fully invested, versus seeing it turn to zero or worse. This assessment applies to bonds as well as equities and argues in favour of raising cash positions.

Canadian bonds do look cheap relative to the U.S., with the 2-year spread hitting positive territory for the first time since 2017. This has helped lift the loonie to above 76.50 cents, but a stingier Fed and increased chance that recent meteoric Canadian employment numbers will fade suggest we will get a pullback in the currency. For those heading south for the winter, this might be a good time to lock in.

TOP PICKS

Andrew Pyle's Top Picks

Andrew Pyle of Scotia Wealth shares his top picks: Rogers, Nutrien and Suncor.

ROGERS COMMUNICATIONS (RCI/B:CT)

NUTRIEN (NTR:CT)

SUNCOR ENERGY (SU:CT)

 

DISCLOSURE PERSONAL FAMILY PORTFOLIO/FUND
RCI/B N N Y
NTR N N Y
SU N N Y

 

PAST PICKS: NOV. 15, 2018

Andrew Pyle's Past Picks

Andrew Pyle of Scotia Wealth reviews his past picks: Mullen Group, BCE and Stars Group. BNN Bloomberg is a division of Bell Media, which is owned by BCE.

MULLEN GROUP (MTL:CT)

  • Then: $13.23
  • Now: $8.30
  • Return: -37%
  • Total return: -37%

BCE (BCE:CT)

  • Then: $55.08
  • Now: $62.74
  • Return: 14%
  • Total return: 20%

THE STARS GROUP (TSGI:CT)

  • Then: $22.43
  • Now: $27.14
  • Return: 21%
  • Total return: 21%

Total return average: 1%

 

DISCLOSURE PERSONAL FAMILY PORTFOLIO/FUND
MTL N N Y
BCE N N Y
TSGI N N Y

 

TWITTER: @andrewpyle_PWM
WEBSITE: pylegroup.ca

BNN Bloomberg is a division of Bell Media, which is owned by BCE.