September 3, 2019
8:45 am EDT
At SIA Wealth Management everything we do is based on Relative Strength Analysis. We evaluate the Relative Strength between asset classes giving us insight into money flows on a large scale, and from this select top ranked investments.
Market Commentary By:
Colin Cieszynski, CFA, CMT
Chief Market Strategist
+1 (647) 282-4428
North American investors returning to work from the holiday weekend have been greeted with a selloff sparked by the US and Chinaâ€™s threats of new tariffs against each other becoming reality. While thereâ€™s still talk of the two sides getting together sometime this month, details remain sketchy, making investors nervous. Dow futures are down 230 points or 0.8%. Meanwhile, over in Europe, the Dax is down 0.35% and the FTSE is down 0.25% with UK PM Johnson threatening to call a snap election for October 14th (two weeks ahead of the October 31st Brexit deadline) should MPs or the courts stymie his plans for a No-Deal Brexit.
WTI crude oil is getting really hammered falling another 2.2% while gasoline is down 3.3%. It appears at this point that investors are more concerned that Hurricane Dorian could reduce short-term demand more than short-term supply, depressing energy prices.
As is usual at the beginning of the month, Manufacturing PMI reports have been rolling out, an early indicator of economic health. Chinaâ€™s reports were mixed with the governmentâ€™s manufacturing PMI sitting just below 50 in contraction territory at 49.5, but the private Caixin manufacturing PMI popping back into expansion territory at 50.4 and beating the 49.8 street estimate. Reports for the UK (47.4) and Germany (43.5) both came in below 50 and below street expectations
Later this morning, manufacturing PMI reports are due for the US and Canada. In the US, the street is expecting 51.0 for the national reading but investors should note that on Friday, the regional Chicago PMI beat the street handily (52.4 vs street 47.5), so a positive surprise appears possible. US construction spending is also due at 10:00 am EDT today with the street expecting a 0.3% rebound following last monthâ€™s 1.3% plunge.
Canadian manufacturing PMI is also due this morning and represents the last data point before tomorrowâ€™s Bank of Canada meetings. Fridayâ€™s data which included Q2 GDP growth of 3.7% which beat the 3.0% street estimate, and weaker than expected producer price inflation suggests that there isnâ€™t much pressure on the Bank of Canada to do anything on interest rates at tomorrowâ€™s meeting. Overnight in fact, the Reserve Bank of Australia (who has a similar economy to Canadaâ€™s) held rates steady, although they have already cut rates twice this year as China slowed.
Disclaimer:Â SIA Wealth Management Inc. (SIAWM) specifically represents that it does not give investment advice or advocate the purchase or sale of any security or investment whatsoever. This information has been prepared without regard to any particular investor’s investment objectives, financial situation, and needs. None of the information contained in this document constitutes an offer to sell or the solicitation of an offer to buy any security or other investment or an offer to provide investment services of any kind. As such, advisors and their clients should not act on any recommendation (express or implied) or information in this report without obtaining specific advice in relation to their accounts and should not rely on information herein as the primary basis for their investment decisions. Information contained herein is based on data obtained from recognized statistical services, issuer reports or communications, or other sources, believed to be reliable.Â SIAWM nor its third party content providers make any representations or warranties or take any responsibility as to the accuracy or completeness of any recommendation or information contained herein and shall not be liable for any errors, inaccuracies or delays in content, or for any actions taken in reliance thereon. Any statements nonfactual in nature constitute only current opinions, which are subject to change without notice.