Novel Recession

Lots in this month’s investor strategy.

Executive summary:

  • Market recap – The bounce continues: Market recovery continued in May while boring bonds were very narrowly rangebound. An encouraging note: equity market leadership has been broadening beyond just tech and health care.
  • Investment strategy: This novel services-oriented recession continues, but we are starting to see some early improvements in market cycle indicators. No changes to our asset allocation at this time, but we have trimmed our short-term positive view on the CAD. Plus, a recap of bank earnings and recent investor FOMO.
  • Pay cuts and sticky wages: With aggregate payrolls plummeting, one big risk to the recovery is the near-term path for consumer spending.
  • Revisiting residential real estate: Canadian real estate prices are declining, unemployment is up big, consumer leverage is high – could this be the end of the Canadian real estate run?
  • Portfolio construction – A chef’s approach: A successful portfolio is not just about trying to find good managers / investments, it is how these investments are combined that often matters more than their individual attributes.
  • Managed Portfolios – A closer look at factor exposures: A walk through the managed portfolio process of incorporating factors when combining managers and ETFs.

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