Market Insights: Market Commentary
Milestone Wealth Management Ltd. - May 15, 2020
Market developments North American markets pulled back as concerns of a second wave of COVID-19 infections began to grow. Many investors began to fear that even with lockdowns starting to lift around the world, the economy may not snap back as
- North American markets pulled back as concerns of a second wave of COVID-19 infections began to grow. Many investors began to fear that even with lockdowns starting to lift around the world, the economy may not snap back as quickly as hoped, after Federal Reserve Chairman Jerome Powell cautioned the same.
- The Canadian government announced it will spend another $2.5 billion to help seniors manage extra costs associated with the pandemic shutdown.
- The U.S. Bureau of Labor Statistics reported that the consumer price index decreased 0.8% in April. This is the largest monthly decline since December 2008.
- The U.S. announced weekly jobless claims of 2.981 million, bringing total job losses to 36.5 million in the last eight weeks.
- The price of U.S. oil rose again this week with WTI trading Friday around $29 with Saudi Arabia pledging to further cut production in June. The price of Canadian cruise (Western Canadian Select) rose to around $19.
We posted a new blog post this week regarding how travel insurance has been affected by the current situation:
Retiring Abroad: Travel Advisories and Travel Insurance Coverage
Other recent blog posts we’ve done related to the COVID-19 pandemic can be found here:
Wealth Strategies: Government Support for Business Owners During Covid-19
Wealth Strategies: Summary of the Government of Canada Covid-19 Economic Response Plan
Has any of this news changed the way I should view my investments?
Our consistent message to you has been that no one can predict how markets will move in the short term, regardless of the underlying news, and we are seeing this play out. Even as lockdown measures have continued to ease, sentiment has turned somewhat more cautious, with the potential consequences of opening too soon beginning to dominate the discussion. These are the same variables that were in place as markets moved up earlier in May, yet investors at that time appeared to be demonstrating a more optimistic view than they have over the last few days.
For us, this changes nothing. We are very process driven and continue to adhere to our Milestone investment management process. We stuck to our long-term process as markets began to recover from their March lows, and we continue to do so even on down weeks such as this one. Although the secular long-term trend remains positive, our Milestone Recession Risk™ Composite continues to keep us in a defensive position short-term, and we have used the recent strength over the last few weeks to increase our cash positions.