ClearWater Market Commentary as of August 18th, 2023

Here is the ClearWater Market Commentary as of August 18th, 2023:

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 Day-2.80%
1 Month-3.55%
1 Year-1.46%

As of 2023/08/18- Source:

Index PerformancesLast 5 DaysYTD
S&P 500-1.19%14.47%
Dow Jones Industrial-1.48%4.15%
Shanghai Composite-1.68%1.16%
CAC 40-2.32%12.45%
FTSE 100-2.45%2.75%
S&P/TSX Composite-2.80%2.36%
MSCI EAFE-2.80%6.40%
Russell 2000-3.12%5.62%
WTI Crude (Oil)-3.20%0.50%
Hang Seng Index-5.36%-9.51%

As of 2023/08/18- Source:

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

US economy (S&P 500 -1.19%):

  • Stocks were broadly lower as sentiment appeared to take a blow from a sharp increase in longer-term bond yields and fears of a sharp slowdown in China. The S&P 500 Index ended the week down 5.15% from its July 26 intraday peak. Growth shares should theoretically suffer the most as rising rates place a greater discount on future earnings, but the Russell 1000 Growth Index held up modestly better than its value counterpart. Small-cap stocks performed the worst. 
  • The notable economic release of the week appeared to be Tuesday’s report from the Commerce Department on July retail sales, which jumped 0.7% over the month, roughly double consensus estimates. Excluding the volatile auto segment, sales rose 1.0%, bringing their year-over-year gain to 3.2%. While retail sales were essentially flat over the past year given the equivalent rise in the consumer price index, sales in specific categories indicated a sharp rise in discretionary spending. Sales at restaurants and bars jumped 11.9%, for example, while online purchases surged 10.3%. Meanwhile, gas station sales plunged 20.8%.
  • Some of the week’s other data seemed to raise the prospect of a “no landing” scenario—the possibility that the economy would continue to expand without experiencing a “soft landing” slowdown or a “hard landing” recession.
  • Industrial production grew by 1.0% in July, roughly triple consensus estimates and its biggest gain since January, although part of the increase came from utilities boosting output to cope with July’s extremely high temperatures. A gauge of manufacturing activity in the mid-Atlantic region indicated expanding factory activity, orders, and shipments for the first time in 14 months. Nationwide housing starts also rose more than expected.
  • The Wednesday release of the minutes from the Federal Reserve’s July policy meeting seemed to raise worries about how policymakers would respond to continued growth signals. Investors appeared to interpret the tone of the minutes as generally hawkish, even as Fed officials expressed hopes that “a continued gradual slowing in real gross domestic product (GDP) growth would help reduce demand-supply imbalances in the economy.”
  • Whether the economy was slowing and by how much may arguably have become less clear since the Fed’s meeting, however. The Atlanta Fed’s GDPNow forecast for growth in the current quarter, which is continually revised based on incoming data, jumped to 5.8% as of Wednesday, well above the official second-quarter growth rate of 2.4%. While most expect the actual growth rate in the third quarter to come in substantially lower, the Atlanta Fed’s “Blue Chip” survey of economists indicated that most are also steadily revising higher their growth forecasts. 
  • Nevertheless, rate hike expectations remained roughly stable over the week, with futures markets pricing in the likelihood of rates staying at their current level through the end of the year.

Canadian markets (S&P/TSX -2.80%):

  • Canadian equities were higher at the close on Friday, as gains in the Clean Technology, Energy, and Healthcare propelled shares higher. However still finished the week off negative.
  • Canadian consumer price index (CPI) data was released this week, with inflation accelerating slightly to 3.3% on a year-over-year basis. Food — including groceries and take-out deliveries — made up 16% of the CPI calculation, with shelter making up 28% of it. These categories rose by 7.8% and 5.1% respectively, on a year-over-year basis.
  • Canadian existing home sales (July) fell -0.7%, after the prior month’s 1.5% gain. Sales are still up 8.7% y/y. Housing starts fell to 255k annualized units (versus 244k expected), down from 283.5k in the prior month.
  • Due to base effects from a year ago, along with higher mortgage interest costs, we expect Canadian inflation to remain within the range of 3% to 3.5% for the remainder of 2023, before decelerating again in 2024. The recent moderation of inflation should mean the Bank of Canada will pause making any further interest rate increases.
  • The Canadian dollar traded for 73.79 cents US compared with 73.94 cents US on Thursday.
  • The October crude contract was up 76 cents at US$80.66 per barrel and the September natural gas contract was down seven cents at US$2.55 per mmBTU.
  • The December gold contract was up US$1.30 at US$1,916.50 an ounce and the September copper contract was up a cent at US$3.71 a pound.

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

Performance 2023: S&P 500

European and Asian economies:

  • Major stock indexes also weakened on intensifying concerns about the outlook for China’s economy and the prospect of a prolonged period of higher European interest rates.
  • UK wage growth accelerated, increasing the pressure on the Bank of England (BoE) to raise interest rates further. Average weekly earnings (excluding bonuses) climbed 7.8% in the three months through June—up from 7.4% in the three months through May. Signs of cooling in the labor market also emerged. The unemployment rate rose more than expected to 4.2% sequentially from 3.9% in the previous three months.
  • Annual UK inflation slowed in July to 6.8% from 7.9% in June, driven lower by falling energy and food prices. But underlying price pressures remained strong, with the core rate, which excludes food, energy, alcohol and tobacco, staying at 6.9%. Services prices—seen by the BoE as the best predictor of underlying domestic inflation—quickened to 7.4%, the highest level since March 1992.
  • The Norwegian central bank raised its benchmark interest rate by a quarter percentage point to 4.0%, as expected. Norges Bank Governor Ida Wolden Bache signaled after the decision that there could be another increase in September.
  • Amid concerns about the broader impact of China’s macroeconomic weakness and its troubled property sector, Japan’s stock markets declined over the week.
  • Japan’s GDP grew by an annualized 6.0% quarter on quarter in the three months to the end of June 2023, far exceeding the 2.9% expansion forecast by economists. The growth surge was driven largely by external demand, with net export growth ahead of estimates. Historic yen weakness continued to boost exports, particularly of cars. This offset weakness in domestic demand, notably a drop in private consumption due in part to the impact of rising prices.
  • Japan’s consumer price inflation slowed from the previous month in July but remained elevated at 3.1% year on year (y/y), above the BoJ’s 2% target for the 16th straight month. Meanwhile, customs exports declined 0.3% y/y in July, the first drop in more than two years, due primarily to weak demand from Asia, while growth in Western markets was more robust. Imports fell 13.5% y/y amid easing commodity prices.
  • Chinese stocks lost ground amid pessimism about the country’s flagging economic recovery. In Hong Kong, the benchmark Hang Seng Index plummeted 5.89%, its biggest weekly drop in five months, according to Reuters.
  • Official data for July revealed that China’s economic activity continued to weaken. Industrial output and retail sales grew at a slower-than-expected pace in July from a year earlier. Fixed asset investment growth in the first seven months of 2023 also missed forecasts. Urban unemployment edged up to 5.3% from June’s 5.2%, according to China’s statistics bureau. The bureau did not release the youth unemployment rate, which rose every month in 2023 and hit a record 21.3% in June. The decision to suspend the closely watched indicator raised concerns that Beijing was suppressing information that it deemed politically sensitive.
  • More evidence of a property market downturn weighed on the outlook for a key sector of China’s economy. China’s property sector showed signs of stabilizing earlier this year, but recent developments have renewed concerns about the strength of the recovery.
  • Country Garden, one of China’s largest property developers, suspended trading on several onshore bonds after the company missed interest payments on two dollar-denominated bonds the prior week. Meanwhile, China Evergrande, another leading developer that defaulted in 2021, filed for bankruptcy protection in New York, a move that protects the company from U.S. creditors as it works on debt restructuring deals in Hong Kong and the Cayman Islands, Bloomberg reported.

What to watch this week:

  • Canadian retail sales data
  • Fed Chairman Powell to speak at Jackson Hole Symposium
  • US housing and durable goods orders data
  • Japanese inflation data
  • NVIDIA quarterly earnings results
  • Global PMIs
  • 12 S&P 500 and 2 S&P/TSX companies (RBC & TD) report earnings

Sources:,, Barron’, and

Thank you for checking out our ClearWater Market Commentary for August 18th, 2023. If you would like to receive the ClearWater Commentary at the start of every week, sign-up for our Newsletter.