After a down week to end January, stocks kicked off February with a week-long rally as investors parsed through a flurry of quarterly corporate results amid signs that renewed social lockdowns were disrupting the jobs recovery.
The Canadian S&P/TSX Composite Index was up broadly, with energy, financials, and technology all gaining and the TSX is in sight of its all-time high set in early January. Banks, industrials, and tech shares led the U.S. large-cap S&P 500 toward a record high while the small-cap Russell 2000 Index was also up for the week.
Meanwhile, video-game rental company GameStop Corp. plunged over the course of the week as day traders flocked to other stocks like silver producers and drug developers.
In economic news, Canadian consumer confidence held up in January at pre-pandemic levels despite new stay-at-home-orders and enhanced restrictions that took effect to curb virus cases. The Bloomberg Nanos Canadian Confidence Index, a composite measure of household sentiment based on telephone polling, averaged 56.5 last month. That’s the highest monthly average since January 2020 and reflects a remarkable rebound in consumer sentiment from record lows earlier last year.
Statistics Canada said the Canadian economy lost 213,000 jobs in January as employment fell to the lowest level since August last year, wiping out the gains made in the fall. The unemployment rate rose to 9.4%, the highest rate since August. The recovery in the U.S. labour market disappointed for a second month in January with only modest job growth that highlights persistently difficult prospects for millions of unemployed.
In the coming months, as more people get inoculated and virus cases fall, economic activity is expected to increase and job growth may resume. Selected high-frequency data, such as weekly consumer-confidence readings and restaurant bookings, point to some strengthening.
The virus news seems to be getting incrementally better while corporate earnings season and economic data similarly seem to be showing some improvement. Markets are actually focusing on what they’re supposed to be focused on – corporate fundamentals – and less concerned about the political machinations of getting fiscal policy out or what’s going on in Reddit chat-rooms.
• Short-Term View: Markets have trended higher based on Covid-19 vaccine progress and expectations of more broad-based economic recovery.
• Longer-Term Thinking: Continued market recovery is in alignment with long-term historical trends. Sticking to your long-term plan through periods of volatility is central to investment success.
• Logic Over Emotion: Perspective is key. Focus on long-term goals and timeframes. Contact your advisor to discuss any questions and concerns you may have.
Our Experts Say…
“We don’t believe that the isolated actions (by retail investors) in a few small-cap companies
will lead to a widespread, sustained downturn in the markets."
Chief Investment Officer
Counsel Portfolio Services / IPC Private Wealth
Source: Morningstar Direct. Growth of $10,000 shown. Total returns from January 1, 2010, to February 4, 2021, in local currency.
A look at our Portfolio Families
Investors that simply want a lower-cost investment that gives them exposure to key markets around the world should look at the IPC Essentials Portfolios. We’ve combined several ETFs into a cost-efficient package to ensure broad market participation.
For investors looking for a concentrated set of active managers, the IPC Focus Portfolios combine three of our top equity managers with our leading Canadian fixed income manager to give you unfettered access to their security selection expertise.
If your investment savings will be the sole source of income in retirement, or you want enhanced downside protection, look to the Counsel Retirement Portfolios for their strategies aiming to lower risk in periods of extended market drawdowns. These strategies seek to reduce the sequence of returns risk in the timeframe leading up to and entering retirement.
The Counsel Strategic Portfolios provide effectively diversified global exposure in a comprehensive approach that combine value, growth, and factor investing strategies into all-in-one solutions geared to investor risk profiles.
If you're looking for access to concentrated, high-conviction strategies and a transparent, understandable investment approach, the IPC Private Wealth Visio Pools are a sophisticated, yet simplified portfolio solution that combine a concentrated selection of equity and fixed income securities with globally diversified ETFs.
IPC Private Wealth Fundamentals provide access to directly held stocks and diversification through global equity and fixed income ETFs, giving investors access to a lower-cost discretionary managed account solution.
Higher net worth investors should consider IPC Private Wealth, a personalized discretionary management solution that includes access to directly-held securities, personalized tax management, sophisticated strategies including alternative investments, enhanced capital preservation, and the ability to combine family assets for a comprehensive investment approach.
Our Experts Say…
We're not changing the kind of companies we're looking for – we continue to find
those good companies that can keep growing through the uncertainty.
Portfolio Manager, Mawer Investment Management
International Growth Investment Specialist