New Bull? Performance overview to Dec 2, 2022

Will they do 50 bps next time around (Consensus Thursday), versus will they do 75 bps (earlier consensus) on account of latest NFP?

Will markets continue on the uptrend underway since mid October?

Weekly performance to Dec 2, 2022

Sectors

Noteworthy:

  • The notion that the FED is on the cusp of decreasing the magnitude of the rate hikes imposed at upcoming meetings is being well received (obviously). Interesting to see Canadian Tech this past week significantly outperform US Tech …
  • Materials also had a very strong week (related to improved outlook for Chinese reopening?), as did industrials – pointing to sensitivity to risk of recession being perhaps reduced by the FED deciding to be more “measured” aka look to let things play out before (hopefully) causing a big problem for markets (?)
  • Consumer discretionary – unlikely that closely following the notion that less financial hardship (rising rates) = more discretionary … but decent uptick here as well. Will it be sustained?

Thematics

  • Not every week that practically all themes find themselves on the positive side of the performance ledger …
  • Noteworthy that ARKK can conceivably be used as gauge as to the market’s take on where monetary policy is going – aka as a high BETA exposure, ARKK posts strong % gains when the challenges posed to disruption by disruptive rise in rates is seen abating …

Factors

  • Value, Fundamental, and Min Vol lagging last week =(market looking for more “risk on” exposures?) … not been the case generally, yet not changing the fact in my opinion, that these are outperforming on the YTD level, and likely to fare better than the aggregate market as well as other factors in 2023
  • Dividend combined with quality – in my view a factor combo that likely will fare relatively well in 2023 as the need for dividends won’t go away, respectively an emphasis on quality (stable earnings, good quality balance sheet etc) can’t hurt these days given the myriads challenges faced by the economy and companies heading into an uncertain 2023 …

Regions

  • What’s up China? While still the worst performing market YTD, China enjoyed a strong weekly performance this past week. Dead cat bounce? Or, optimism regarding reopening, and associated with that, better performing stocks after what has been absolutely dismal performance on any backward looking timeframe we can chose to look at …
  • Canada lagging this past week? Likely on account to lackluster response to bank results here, as well as uncertainty regarding the near term outlook for energy space in the context of price caps imposed on Russia, and what that will do to prices (also balance seems to suggest it may lead to higher crude prices as opposed to lower ones … which presumably explains why the sector is faring much better relative to crude than it did earlier in the year.

YTD performance to Dec 2, 2022:

Sectors

  • Still a market led by Energy, which explains most of the relative outperformance of Canada versus the World
  • Get Financials on the + side and TSX performance overall will look even better heading into 2023 …

Thematics

  • Clean Tech; Healthcare; Travel … two out of the 3 “relatively” more conservative in realm of Thematic, Travel – burst of relative performance based on pent-up demand at risk of then meeting the road of what the recession will look like? We’re likely to find out in 2023 …

Factors

  • The leading Factors ytd remain Value; Fundamental; and Min Vol, with Quality dividend not far behind
  • Despite “growth” higher beta (risk) – YTD performance not that far beyond broader benchmark … A sign that the worse of the bear market / correction is already behind us … Or simply a bear market rally?

Regions

  • All things considered, this year’s BEAR affair relatively “muted” imo, save for Thematic, and NASDAQ, which obviously have endured a much more painful repricing …