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Dale Jackson

Personal Finance Columnist, Payback Time


It’s hard to remember a time when the outlook for financial markets was more mixed. The economy is facing sky-high inflation, aggressive rate hikes by central banks, and the spectre of a recession; while bulls and bears are battling it out on equity markets.

That leaves investors in a whirlwind of information (and speculation) as they try to navigate their portfolios to retirement. To help stay on course, here are four popular takes on where markets are headed:   


The notion that equity markets will continue their upward trajectory once the skies clear up seems to prevail. Why not? They always have.

BMO Capital Markets Chief Investment Strategist Brian Belski recently cut his year-end target for the S&P/TSX Composite Index to “a more realistic” 21,000 points, after a long stretch of sticking to a call for 24,000.

As of the close of trading Friday, the main Canadian stock index had plunged 17 per cent to 18,326 since hitting a high of 22,087 on March 29. It would need to rally about 15 per cent to hit that 21,000 target by Dec. 31.

Belski has pointed to low stock prices in relation to corporate earnings as a potential buying opportunity.

“Nobody knows where the bottom is until you pass from one,” he told BNN Bloomberg last week prior to paring his target.


The bear to Belski’s bull is David Rosenberg, the founder and president of Rosenberg Research. He says investors who jump into the market now will only watch their stocks dwindle in value until they hit bottom in 2024.

He told BNN Bloomberg last week that the stock market historically bottoms 16 months after the U.S. Federal Reserve pauses interest rate hikes. The Fed, along with other major central banks (including the Bank of Canada), has telegraphed that more rate hikes are coming because inflation is still a concern. 

“There is no evidence of the stock market ever bottoming as the central banks are still raising rates into an inverted yield curve,” he said.  


One of the most telling indicators of market sentiment is the Volatility Index (VIX), also known as the fear gauge, which touched a two-year high last week. 

The VIX was established in Chicago; the epicentre of the global options market. It seeks to measure volatility using call and put prices in S&P 500 options. The options market is complicated — calls and puts are basically bets on the future price of stocks. The VIX turns those bets into a forecast of how those expectations jive with reality. When they don’t jive, and reality hits, you get the sort of volatility we’ve been seeing lately.

A high reading on the fear gauge can be seen as bearish because fear tends to breed fear, or bullish because it’s a sign markets are near a bottom.   


Once you strip out all the short-term motives for stocks going up or down, current prices are a reflection of a company’s ability to maintain or grow earnings in the future.

Nadia Lovell from UBS told BNN Bloomberg last week that third-quarter earnings growth for the S&P 500 is expected to come in at three per cent compared with the same period last year. That’s a far cry from the 10 per cent earnings growth expected a few months ago, but it is still above water for now.

She said she expects strong results from sectors including consumer staples, health care and energy (which would bode well for the energy-heavy TSX). 

Lovell says earnings for consumer discretionary companies could take a hit, which suggests picking the right stocks could be most important in this market storm.