We see the current bear market as being in its late stages with the markets showing resiliency to unfavourable news lately such as the banking issues in the US and Europe as well as interest rate increases by central banks.  We see the economy continuing to slow in the coming months as interest hikes take greater effect on economic activity.  Remember the stock market is a leading indicator and it will turn higher 8-12 months before the economy begins to recover.

There are some in the market that see interest rate decreases this year.  We do not see that transpiring barring an unforeseen economic crisis or a late year interest rate cut.  Our view is if the market and the economy can move along without major disruptions past October this year, things will improve thereafter with a new bull market forming from now until then.  Interest sensitive sectors of the economy such as housing, financials, consumer staples, and construction will continue to be impacted by changes in interest rates.

Banks recently took a hit when news of banking issues in the US and Europe surfaced recently.  We see this as a buying opportunity with regards to Canadian banking stocks.  For example, Bank of Nova Scotia is yielding over 6% and is near its lows over the past two years.  When a Canadian bank stock is yielding in excess of 6% it has proven to be a good time for accumulation. There are issues both macro, such as the west shift away from China, and micro but the resulting changes will provide for a new era of growth over the next 10 years and beyond for North America.  The technology sector is strong and long-term trends will continue to benefit this space.

In summary, we are constructive on the market and believe the worst is behind us, barring an unforeseen economic crisis.

A Summary of equity index performance YTD to end of March is outlined as follows:

Dow Jones Industrial Average               + 0.38%

S&P 500                                                 + 7.03%

Nasdaq                                                  +16.77%

S&P/TSX                                                +  0.00%

The current prime interest rate in Canada is 6.7% and 7.50% in the US.  We expect further interest rate increases in the US and Canada in 2023 but we are close to the end of the tightening cycle.