December 2, 2020
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
The rally which kicked off December and saw US indices gain 0.6% to 1.3% yesterday appears to be quickly fading with US index futures giving back some of their gains already with declines of 0.3% to 0.4%. Several European indices are also in decline today with Frankfurt down 0.7% and Milan down 1.1%.
Some of the forces which had propelled stocks upward in recent weeks appear to be weakening which suggests developments have already been priced in. For example, on the news that the UK has approved Pfizerâ€™s vaccine with rollout expected to start next week, the FTSE is up only 0.2% today.
The political landscape has also started to shift. Crude oil had soared in November on speculation that OPEC+ may postpone or slow the production increases planned for January but has levelled off as members continue to argue over the proposal and postpone decision making meetings (OPEC+ is still scheduled for tomorrow).
Meanwhile in the US, the euphoria over the end of the election campaign and the start of the transition process has faded and concern over stimulus has started to creep back in. US lawmakers have until December 11th to agree on funding to avoid a government shutdown, so the impasse over spending and stimulus could take over the spotlight in the coming days. Also, the Electoral College is expected to vote on the election results on December 14th.
Economic data continues to come in mixed for the US. ADP payrolls out this morning showed that employment recovery momentum continues to weaken (307K vs street 410K and previous 365K). This disappointment adds to the cloudy picture that came out of yesterdayâ€™s numbers where headline ISM Manufacturing PMI dropped back under 50 into contraction territory (48.4 vs street 51.4 and previous 53.2), but ISM New Orders (65.1 vs street 53.4) and construction spending (1.3% vs street 0.8%) exceeded expectations.
Canadian bank earnings week continues today with mixed results as Royal Bank beat the street on EPS ($2.27 vs street $2.04) on strong results from its capital markets division. Royal cut its loan loss provision to $427M from $675M last quarter. National Bank reported adjusted EPS above expectations as well ($1.69 vs street $1.52) and cut its loan loss provision to $110M from $143M).
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.