ClearWater Market Commentary as of August 12th, 2022

Here is the ClearWater Market Commentary as of August 12th, 2022:

In this issue:
– Performance of Major Indices
– Market Commentary
– Last Week’s Key Economic  Events and Upcoming Events

Performance of Principle Indexes: 

S&P/TSX Composite Index  
5 Day2.60%
1 Month8.41%
1 Year-1.61%

As of 2022/08/12 – Source:

Index PerformancesLast 5 DaysYTD
Russell 2000 3.70%-10.34%
S&P 500 3.38%-10.20%
WTI Crude (oil) 3.20% 22.20%
Nasdaq 3.19%-16.60%
Dow Jones Industrial 2.83%-7.09%
S&P/TSX Composite 2.60%-4.91%
Nikkei 225 2.20% 0.28%
Shanghai Composite 1.21%-9.99%
DAX 0.41%-13.47%
CAC 40 0.20%-8.61%
Hang Seng Index-0.02%-14.35%
FTSE 100-0.24% 1.08%

As of 2022/08/12 – Source:

Last week’s and next week’s key economic events:

US economy (S&P 500 3.38%):

  • Stocks rallied after data showed signs that inflation, while still elevated on an annualized basis, had started to slow, supporting the view that the rise in consumer prices may have peaked. 
  • Federal Reserve officials reiterated that the central bank still had work to do in taming inflation, but the market still appeared to lower its expectations for a 75-basis-point (0.75 of a percentage point) rate hike in September. 
  • The narrative that inflation may have peaked appeared to fuel a risk-on rally in investment-grade corporate bonds.  
  • All eyes were on the July inflation print, given its possible implications for monetary policy, the economy, and markets. Headline consumer price inflation came in flat month over month, down from the 1.3% sequential uptick recorded in June and below the consensus estimate. 
  • On an annualized basis, headline inflation was 8.5%. Food prices increased 1.1% sequentially, an acceleration of 0.1 percentage point. However, energy prices dropped 4.6% sequentially, while gasoline prices declined 7.7%. 
  • Core inflation, which excludes volatile food and energy costs, was also below estimates and unchanged from the prior month. Meanwhile, the year-over-year increase in the producer price index fell 50 basis points sequentially to 9.8% in July, registering the first pullback in the headline number since April 2020.
  • Comments from Fed officials reiterated that the central bank would continue to seek to tame inflation by raising interest rates. For example, Mary Daly, president of the Federal Reserve Bank of San Francisco, told Bloomberg Television that the latest inflation data, while an improvement, are still high and should not be construed as “victory.” Daly again called for a 50-basis-point rate increase in September but indicated that incoming data should guide the Fed’s decision-making.

Canadian markets (S&P/TSX 2.60%):

  • Canada’s main stock index posted another day of triple-digit gains and U.S. markets were mixed Thursday against the backdrop of mounting evidence that inflation may be beginning to ease.
  • Though the areas affected by a power outage in downtown Toronto Thursday did include Bay Street, Toronto’s main stock exchange remained open for trading. TMX Group spokeswoman Catherine Kee said its trading systems were not impacted by the outage because its power systems are backed up.
  • Markets were coming off a strong rally on Wednesday caused by the release of a cooler-than-expected reading on U.S. inflation at the consumer level.
  • Thursday morning’s release of another U.S. report — this one on inflation at the wholesale level, which also came in cooler than economists had expected — spurred markets to rise early in the day, though they then gave up most of those gains later in the afternoon.
  • Inflation has been the story of the day on the markets for months, and both Wednesday’s and Thursday’s U.S. reports raised hope among investors that the peak has already been reached and that central banks will be less aggressive about raising interest rates than feared.
  • While July’s inflation numbers south of the border did come in better-than-expected, other areas that central bankers watch closely — such as housing and labour — still show signs of overheating. And even though the pace of inflation may have eased, the overall rate is still far higher than the two per cent central banks are targeting.
  • The price for both crude oil and natural gas rose again on Thursday, apparent proof that — while energy prices have backed off somewhat from their spring highs — they aren’t in for a drastic decline anytime soon.
  • While concerns about overall economic growth may have pushed the price of oil down slightly, the war in Ukraine continues to put pressure on global supply.
  • Second quarter earnings reports from companies in both the U.S. and Canada continued to trickle in on Thursday. While in general, markets have received a boost from the quarter’s better-than-expected performance.
  • Investors will continue to watch for any hint from the Bank of Canada or the U.S. Federal Reserve about what they plan to do about interest rates going forward. What equity markets are most concerned about is that central banks move too aggressively to curb inflation, and inadvertently tip the North American economy into a full-blown recession.
  • The Canadian dollar traded for 78.41 cents US compared with 78.19 cents US on Wednesday.
  • The September crude contract was up US$2.41 at US$94.34 per barrel and the September natural gas contract was up 67 cents at US$8.87.

Performance 2022: S&P 500/400/600 Sectors

Forward P/E Ratios: S&P 400/500/600 Sectors

European and Asian economies:

  • European shares rose as fears of more aggressive interest rate hikes eased.  
  • Several major European countries announced that they would provide more emergency funds to bolster slowing economies and to help citizens tackle the cost-of-living crisis.  
  • The UK economy contracted less than forecast in June, when public holidays for Queen Elizabeth II’s platinum jubilee celebrations weighed on output. Gross domestic product (GDP) shrank 0.6% compared with the previous month. The Bank of England (BoE) expects a recession to begin at the end of the year.
  • Bank of England Deputy Governor Dave Ramsden said in an interview with Reuters that interest rates will probably have to rise again to contain spreading inflation. Meanwhile, Chief Economist Huw Pill said at an online event that Britain will only feel the full impact of higher interest rates in late 2023 and that there is unlikely to be any return of quantitative easing for at least a few years.
  • Months of drought in Europe are severely affecting energy production, agriculture, and river transport. France, Spain, Italy, the Netherlands, and Germany are among the countries facing critical water shortages. Germany’s Rhine River, its main transport artery, may soon become unnavigable, threatening to interrupt the movement of 200 million metric tons of cargo, including coal, and depressing economic activity.
  • Japan’s stock markets rose over the week, with the Nikkei 225 Index and the broader TOPIX Index both gaining as investors risk appetite was supported by weaker-than-anticipated U.S. inflation data. 
  • Prime Minister Fumio Kishida signaled policy continuity by retaining top figures in key posts. Some of the top economy-related posts were given to LDP lawmakers who had close ties to former Prime Minister Shinzo Abe, who was assassinated on July 8 while campaigning for the election, suggesting that the basic tenets of his signature economic policy, “Abenomics”—built on the three pillars of monetary easing, fiscal stimulus, and structural reforms—are likely to be retained.
  • Inflation is a top priority for the Cabinet, and Kishida said that the government will take new measures to cushion the impact of rising energy and food prices. 
  • With electricity supply forecast to tighten, the government will explore all necessary options, including nuclear power after safety was assured, to secure stable energy supplies. Prime Minister Kishida has called for the restarting of as many as nine nuclear reactors. Most of Japan’s nuclear power plants have remained offline after the 2011 Fukushima nuclear disaster.  
  • China’s stock markets ended the week on a mixed note as a flare-up in coronavirus cases offset news of a record trade surplus last month and a central bank report signaling support for growth. 
  • The spike in coronavirus infections coupled with a continued housing market slowdown are considered among the largest risks to China’s economy in the near term. Coronavirus cases in China climbed to a three-month high, roughly half of them recorded in the southern coastal island of Hainan, which was widely locked down last week.
  • China reported a record trade surplus of USD 101.26 billion in July, surpassing the USD 90 billion consensus forecast. Exports rose a stronger-than-expected 18% from a year ago, while imports grew a less-than-forecast 2.3%. 
  • The consumer price index rose 2.7% in July from a year earlier, while the producer price index gained 4.2%. Both inflation readings came in below economists’ expectations. 

What to watch this week:

  • Canada housing, inflation and retail sales data
  • US FOMC Minutes from July 26-27 meeting
  • US housing, industrial production, and retail sales data
  • China retail sales, industrial production, and fixed asset investment data
  • Eurozone GDP, trade, and inflation data
  • UK employment, retail sales, inflation and consumer confidence data
  • New Zealand monetary policy announcement
  • 19 S&P 500 and 4 S&P/TSX companies report earnings

Sources:,, Barron’, and

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