We had an excellent guest speaker event last week with Anthony Scaramucci, a member of the US National Financial Advisory Committee and a key participant on the President-Elect’s transition team. He provided us and our guests with more detailed insight on how Mr. Trump is planning on accelerating US growth. The event was a success with tasty refreshments and a wide array of new and old luxurious exotic cars to experience.
Other than his most commonly known plans of cutting taxes and re-negotiating trade agreements, there was an emphasis on regulations and how to balance safe guarding the economy and not stifling growth at the same time. An example that was given would be the extremely loose restrictions used by the Bush administration that caused the 2008 recession and the extremely tight restrictions put on by the Obama administration coming out of the recession. Both of these were prime examples of extreme right wing and left wing politics, while the new administration’s goal is to find a happy medium in between these two extremes. This is amongst the many details that were discussed, but we can say that we are less concerned about Mr. Trump then we were before this event.
Oil prices got a lift on the very last day of November as OPEC finally agreed to oil production cuts with Saudi Arabia making the biggest concession.
In India, the government made a huge stand to eliminate tax evasion and other illegal activity when they removed from circulation large bills. Citizens have only 30 days to deposit bills in the denominations discontinued before they expire worthless. A huge move, which we see China possibly following suit in order to reduce its underground economy and increase its tax payer base.
Let’s see how the markets have done.
This month Canada got a lift from energy companies soaring. With OPEC’s deal paving the way to higher oil prices that are necessary for Canada’s oil producers, along with Trump’s positive position on the construction of the Keystone XL pipeline. However, we are waiting to see what kind of effect the new President will have in the coming months as he has distaste for the current North American Free Trade Agreement (NAFTA).
Instead of the market going down predicated by Donald Trump being elected, it quickly rallied on the next day post-election, closing up 1.5% on that day. By the end of the week the markets had the best week for stocks in the past 5 years. All 3 of the major stock exchanges posted new highs for the year. Unlike the stock market, the bond market had a difficult month as rates have risen in the past few weeks and in the short term have hurt bond prices. It will be very difficult for the bond market as it is entering a new phase in the rate cycle.
With the election results in the US, it created some uncertainty around the world, especially in emerging markets. It is too soon to tell if there will be any impact to current trade agreements allowing these countries to produce products at a much cheaper price as per lower standards of living and devalued currency. However, the latest numbers show that the global economy stabilized somewhat in the 3rd quarter. At the time of writing this, we know that Italy’s referendum did not destabilize Europe even more, as 60% voted to stay part of the European Union.
We continue to believe that a globally balanced portfolio is the best approach. Equities favored over fixed income as bonds enter into a difficult long term environment. We favor the US over Canada unless there is an event to derail their growth, this could be the “Trump” factor but it is looking less likely that it will have a negative impact on the market.
Kind Regards,
Konrad, Justin and Merriel
Disclaimer: Echelon Wealth Partners Inc. is a member of IIROC and CIPF. This document has been prepared as a monthly market update and does not contain any recommendations for any particular investment. It is not an offer to buy or sell or a solicitation of an offer to buy or sell any security or instrument or to participate in any particular investing strategy. Any investment decision should be based on your own risk tolerance and investment objectives and reviewed with an investment advisor. Any opinions or recommendations expressed herein do not necessarily reflect those of Echelon Wealth Partners Inc. The data used in this document is from various sources and is believed but in no way warranted to be reliable, accurate, complete and appropriate.
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