ClearWater Market Commentary as of November 12th, 2021

Here is the ClearWater Market Commentary as of November 12th, 2021:

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	0.82%
1 Month	3.56%
YTD	24.66%
1 Year	28.68%

^{As of 2021/11/12 – Source: www.marketwatch.com}

Index Performances	Last 5 Days	YTD
Hang Seng Index	2.39%	-6.86%
CAC 40	0.88%	27.96%
S&P/TSX Composite	0.82%	24.66%
Shanghai Composite	0.81%	1.65%
FTSE 100	0.65%	13.75%
Nikkei 225	0.54%	7.96%
DAX	0.30%	17.36%
S&P 500	-0.30%	24.70%
Dow Jones Industrial	-0.60%	17.90%
WTI Crude (oil)	-0.60%	66.50%
Nasdaq	-0.83%	22.76%
Russell 2000	-1.29%	21.01%

^{As of 2021/11/12 – Source: www.marketwatch.com}

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

US economy (S&P 500 -0.30%):

• Stocks retreated from record highs, as investors confronted data showing the highest inflation in three decades. On Tuesday, the S&P 500 Index registered its first decline in nine sessions, ending its longest winning streak since 2017.
• The major indexes fell sharply on Wednesday morning following news that the consumer price index (CPI) jumped 0.9% in October, well above consensus expectations of around 0.6%. The increase brought the year-over-year CPI increase to 6.2%, the highest since December 1990.
• A surge in energy prices deserved much of the blame, but core inflation, which excludes the volatile energy and food segments, rose 0.6%, also more than expected. T. Rowe Price traders noted that a poorly received auction of long-maturity Treasury bonds may have further soured the mood for equity investors.
• The small materials sector performed best, seemingly helped by the recent passage of the Biden administration’s USD 1.2 trillion infrastructure bill in the House of Representatives.
• The week was also notable for the initial public offering of electric vehicle maker Rivian—the largest for a U.S. company since Facebook’s in 2012.
• Most observers attributed the surge in inflation to ongoing supply chain pressures and higher consumer demand as the coronavirus ebbs and more people re-enter the workforce. Positive news on the latter fronts may have helped cushion the week’s losses. Pfizer’s announcement that it was seeking emergency approval for a highly effective treatment for COVID-19 and strong weekly jobless claims numbers cushioned the blow.

Canadian markets (S&P/TSX 1.02%):

• Canada’s main stock index continued its record-setting ways, ending a volatile week higher on a broad-based rally led by cannabis stocks and a large gain by the country’s most valuable company, Shopify Inc.
• The Biden administration’s plans to legalize recreational pot seems to have won support from Republicans who recently said they are ready to support such a move, which helped the rally in this sector.
• The health care sector rose 4.8 per cent as investors latched on to hopes of legislation coming soon in the U.S. to legalize cannabis. Canopy Growth Corp. surged 12.8 per cent while Aurora Cannabis Inc. was up 12.5 per cent.
• The S&P/TSX composite index was up 186.55 points another record close of 21,768.53.
• Despite Wednesday’s losses prompted by U.S. inflation reaching its highest level in more than 30 years in October, the Toronto market was up for the week, 3.5 per cent in November and 24.9 per cent year-to-date.
• In New York, the Dow Jones industrial average rpse 179.08 points at 36,100.31. The S&P 500 index was up 33.58 points at 4,682.85, while the Nasdaq composite was up 156.68 points at 15,860.96.
• The technology sector increased four per cent Friday led by an 11.6 per cent rise in shares of Ottawa-based Shopify.
• The gain stems from positive headlines from the singles day sales in China, that showed there’s a lot of momentum for online shopping. Taylor said.
• Taylor added that a U.S. buy-now, pay-later firm said there’s a lot of demand on Shopify’s network.
• Materials was helped by the continuing rise in gold prices as investors sought to hedge against inflation. Canadian consumer price index numbers will be released next week.
• The Canadian dollar traded for 79.59 cents US compared with 79.46 cents US on
  Thursday.
• Energy was the biggest laggard on the week, losing ground on lower crude oil
  and natural gas prices.

Performance 2021: S&P 500/400/600 Sectors

European and Asian economies:

• Shares in Europe rose as continuing ultra-loose monetary policy and optimism about economic growth helped allay inflation concerns.
• European nations began adopting or considering restrictions to curb a wave of coronavirus infections on the continent. The Dutch government is considering a short, partial lockdown to combat surging infections. The country reintroduced mask rules, while Denmark reinstated proof-of-vaccination requirements to access certain indoor spaces. Italy, which already had these safeguards in place and has not been hit so hard by the new wave of the pandemic, offered booster vaccines to anyone over 40 years old.
• Eurozone industrial production fell in September, although the magnitude of the decline was less than expected due to increased output of nondurable consumer goods.
• In its fall report, the European Commission (EC) raised its 2021 economic growth forecast for the eurozone to 5.0% from 4.8%. However, it said that the economy now faced “mounting headwinds,” including supply chain disruption, rising energy costs, and an acceleration in the number of coronavirus cases.
• The EC estimated that the eurozone economy would grow 4.3% in 2022 and 2.4% in 2023, with inflation projected to come in at 2.4% in 2021, before slowing to 2.2% in 2022 and 1.4% in 2023.
• In Japan, new details about the government’s upcoming fiscal stimulus package and perceptions that valuations were lagging behind U.S. peers provided some tailwinds for Japan’s stock markets during the week. The corporate earnings season mostly confirmed positive effects from yen weakness.
• The Liberal Democratic Party’s (LDP’s) Fumio Kishida was reappointed Japan’s prime minister after his party’s convincing win in the October 31 general election, where it retained a majority of seats in the powerful lower house of parliament.
• The LDP’s convincing election win leaves Kishida well placed to push ahead with fiscal stimulus to boost Japan’s pandemic-hit economy. He is compiling an economic stimulus package of about JPY 30 trillion (around USD 265 billion).
• The central bank has reiterated its commitment to ultra-loose monetary policy until it reaches its 2% inflation target, a stance that diverges from other developed market central banks, which are signaling a shift toward monetary tightening.
• Chinese stock markets advanced amid speculation that Beijing would announce easing measures to help indebted property companies as the specter of defaults continued to loom over the sector.
• The previous week, cash-strapped developer China Evergrande Group averted a last-minute default for the third time in the past month. Meanwhile, Kaisa Group, which has the most offshore bonds of any Chinese developer after Evergrande, approached default as the company reportedly informed creditors that it “may not be able to pay the coupons” on its bonds because of legal and cross-default issues domestically and offshore. Kaisa was the first Chinese builder to default on its dollar bonds in 2015, a landmark event at that time.
• Property is a key pillar of China’s economy, and worries have grown that the sector’s financial woes could spill into other sectors.
• In economic readings, China’s producer price index (PPI) accelerated to a greater-than-forecast 13.5% in October over a year ago, a 26-year high, from September’s 10.7% rise. However, stagflation fears remain muted as analysts point to China’s ability to export inflation amid strong external demand.

What to watch this week:

• Canadian and US housing data
• Chinese fixed asset investment data
• Japanese and Eurozone GDP and trade
• UK employment and consumer confidence data
• Global inflation data
• Global industrial production
• Global retail sales data
• 15 S&P 500 and 9 S&P/TSX companies report earnings

• 

Sources: Bloomberg.com,Yardeni.com, Barron’s.com, Factset.com and Newyorkfed.org

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