A Comment -- General Comments From an Expert (A Commentary)

None of the Canadian banks are inspiring. Headwinds -- higher costs, layoffs, not a lot of catalysts for growth. A bit early for the sector. Banks are nervous about the future environment. Long-term will do fine, but you need some patience right now.

Seems banks are trying to batten down the hatches on the cost side, rather than trying to aggressively grow the revenue side. This might impact the potential sale of Laurentian Bank.

Though some of the heat has come out, travel stocks have done incredibly well over the last year. It's only a matter of time before that demand starts to fall back to earth. It's already starting if you look at credit card spending, with cash and savings balances lower. 

This trend will flow into the travel industry eventually, and then you'll start to see some cracks on the growth side. Avoid right now. Sector is not cheap.

Economic news will continue to get softer/weaker, which is good news for the economy, as long we continue to glide down and flatten out. Yields are edging down. (Stocks are rallying this week.)

80% of reporting companies in this quarter beat. A year ago, it was 77%. The strength comes from companies selling to consumers, speaking to consumer strength. 88% of consumer discretionary companies are beating on EPS, and 62% beating on revenue. Only 51% of the S&P is beating n revenues. Same with healthcare.

Jay Powell's tone last Friday scared some people, but made other investos feel comfortable, including her. The PC number continues to decline. We haven't entered a recession, and 3.5% unemployment is unlikely to lead to that.

He wouldn't make too much out of seasonality in September, because on average the market declines 1%, though October sees more falls of 5% than any other month. However, October usually ends up. Also, this time, thgnis are different because of the number of rate hikes we've had. In 2004-6, we saw a similar rise in interest rates; the market traded up a year after the cycle started, and that's what's happening now. He can see a way to a positive market, but it's very, very dependent on data.

Defining Financial Market Sectors. The different financial sectors of the market can be categorized into 11 main sectors, each representing a distinct segment of the economy. Let's take a brief tour through one sector below. 

Communication Services: This sector brings together companies that facilitate communication and entertainment. It encompasses giants in the media and entertainment industry, as well as telecommunications and interactive media firms. From traditional broadcasters to streaming platforms, this sector captures the essence of modern connectivity and entertainment consumption.
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Much like last August, the market seemed to get a bit ahead of itself. The S&P 500 started this upward trend a month ago and hasn't broken that. Seasonally, August and September are two of the weakest months. We haven't seen a double-digit correction, but we have had mild volatility this year. We're just 4% off the peak, and no drop more than 8%, since the rally began last October.

The key question is whether this is just a temporary pullback and a rotation, or this is the beginning of a change in trend and a leading indicator of an upcoming recession? 

Inflation is trending lower, economy is still re-strengthening, interest rates and yields seem maxed out. A lot of moving parts right now.

We're at, or near, peak interest rates. Heading into the end of the year the economy's still stronger than expected, but with cooling inflation and resilient labour markets. For her, additional hikes from the Fed and BOC would be causing more inflation, rather than cooling it, at this point.

Most recessions don't come gradually, and things can change very quickly. Seeing those 2 consecutive quarters of GDP contraction, she still expects a mild recession heading into the end of 2023 and early 2024.

Time for investors to be cautious heading into the fall. Focus on defensive sectors, de-risking your portfolio. Look for quality, stable businesses that can weather a storm, even if it's just a mild one.

She's been taking profits in the tech space. Sees rotation from growth to value for the second half of the year. Be patient in adding tech. Still holding bigger names as able to weather a recession. Tech usually leads the recovery after a recession. Tech doesn't do as well when interest rates are rising. Will continue to see a bit of a cool off in that sector. Wait to add a position.

If you're a long-term investor, holding onto them is not a horrible thing. You can go through periods where they are underwater for 1-2 years. She's a more active manager, so she'll take profits when she sees them. Recently, she took profits on AMZN on valuation alone. At the end of the day, there's no harm in taking profits and waiting patiently for another entry point.

Potentially heading into a recession in Q4, she still really wants to be in quality companies with good, strong balance sheets. Stable, great businesses, not as volatile. Yes, you could squeeze some more juice out of other names, but she doesn't want the huge, rapid swings of volatility.

"Higher for longer" interest rates - theme from US Fed meeting last week in Jackson Hole. 
Question is how long interest rates will remain high.
J.Powell clear that "quarters" will measure decision time frames.
Believes J.Powell wants to be remembered as a solution to inflation. 
Not sure how markets are going to "soft land" - thinks its incorrect.
Does not think easy monetary policy will return until "pain" is felt on Wall Street & Main Street. 

Thoughts on Bank of Canada & Banking:
Planning for 1 more interest rate hike from Bank of Canada.
If US Fed raises interest rates, BOC will have no choice but to mirror.
Believes rally in Canadian bank stocks today not resilient.
Waiting for shares to fall with higher interest rates.
Bank of Nova Scotia offering value.