August 2019 Portfolio Management Team Update

Elvis Picardo

August 8, 2019

Market & Economic Environment: Equities took a breather in July after an exceptional performance in the first half of 2019 that saw North American and U.S. stocks post their best performance in two decades. The TSX Composite was little changed with a gain of 0.15% in the month despite gains in eight of its 11 sectors – led by gold and silver producers – due to declines in the Energy and Health Care groups, as cannabis producers plunged. U.S. indices reached new highs in July, with the S&P 500 up 1.3% and the Dow Jones Industrial Average gaining 1%. (Data Source: FactSet)

Our Strategy: Stocks ended the month of July on a weak note despite the Federal Reserve cutting its benchmark interest rate by 25 basis points in a widely anticipated move for the first time since the 2008 financial crisis, as comments from Fed chairman Powell cast doubts on future rate cuts. Market weakness has spilled over into the current month as trade tensions between the U.S. and China spiked after the U.S. imposed a new 10% tariff on $300 billion of Chinese products and China’s yuan slipped below the key level of 7 to the USD. As a result, U.S. stocks endured their biggest decline of the year on August 5, erasing $700 billion in market capitalization as the S&P 500 fell 3%. In anticipation of renewed market volatility in the summer months, the Portfolio Management Team (PMT) completed a significant rebalance of all portfolios in July, taking profits in some long-standing positions and initiating positions in less volatile securities. The PMT expects the significant proportion of fixed-income and alternative securities in its client portfolios to cushion part of the downside if markets decline further, and continues to adopt a defensive stance with regard to portfolio positioning.

Please contact any member of the PMT if you have any questions or concerns regarding your accounts.