Christine Poole, CEO and managing director, GlobeInvest Capital Management

FOCUS: North American large-cap stocks 

 MARKET OUTLOOK:

Turmoil in the banking sector incited by the swift collapse of two U.S. regional banks was not necessarily an outcome of the rapid interest rate tightening cycle that started a year ago, but certainly laid the groundwork for potential accidents to unfold. Unlike the 2007/2008 Global Financial Crisis (GFS), the highly regulated, well-capitalized large banks will likely benefit from a flight-to-safety mindset.

Notwithstanding any actions regulatory authorities will take to stave off another GFS, financial conditions have tightened considerably over the past week and will have lasting economic consequences. Lingering uncertainty and elevated volatility will likely lead to widening credit spreads and tightening lending standards by banks. Regulatory oversight will increase across the financial sector including stricter capital standards, which will dampen lending activity as banks shore up their balance sheets.

The situation is very fluid at present, and it is difficult to gauge how widespread the economic fallout will be. Inflation continues to moderate albeit the employment situation remains healthy for now. The pullback in equity markets and plummeting bond yields signal slower growth ahead. The recent turbulence in financial markets and financial contagion are key considerations for U.S. Fed policy going forward.

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TOP PICKS:

Chubb (CB NYSE)

Recent purchase $186.50 range March 2023

Chubb is a leading global property and casualty (P&C) insurer, with a proven record of managing risk in both underwriting and investing. Its product depth and geographic reach are sources of future growth opportunities. Chubb provides a dividend yield of 1.7 per cent.

Enbridge (ENB TSX)

Recent purchase price $50.50 range in March 2023

Enbridge is a leading North American energy infrastructure company with core businesses in liquids pipelines, gas transmission and midstream, gas distribution and renewable power generation. Its relatively low risk, albeit mature commercial model is backed by contracted cash flows and investment grade customer base. Enbridge offers an attractive dividend yield of 7.1 per cent.

Loblaw Companies (L TSX)

Recent purchase price $116 range in March 2023

Loblaw is Canada’s largest grocery retailer, offering consumers multiple banners and through Shoppers Drug Mart, the leading national drugstore operator. Its scale, locations, extensive private label offering, and PC Optimum loyalty program are advantaged assets within a highly competitive industry.  Loblaw provides a current yield of 1.4 per cent.

PAST PICKS: March 15, 2022

Abbott Laboratories (ABT NYSE)

Then: $117.48
Now: $98.06
Return: -17%
Total Return: -15%

Fortis (FTS TSX)

Then: $60.19
Now: $56.81
Return: -6%
Total Return: -2%

WSP Global (WSP TSX)

Then: $166.04
Now: $173.82
Return: 5%
Total Return: 6%

Total Return Average: -4%