- Equity markets were mixed this week, patiently waiting for the results of next week’s FOMC meeting.
- The S&P 500 rose 0.7%, while the TSX added 1.4%. The Q2 earnings season is underway, and it comes amid a still-tricky environment for profit growth and market expectations.
- This week highlighted as much, with a number of banks topping estimates and suggesting higher rates are helping net interest margins; some big names like Tesla and Netflix reported good results but were sold by investors; some disappointing numbers in the chip sector weighed on tech; and for every consumer business touting sturdy demand, there was seemingly one (e.g., Best Buy) eying ‘recessionary behaviours.
Bottom Line: Cooling inflation is good news for investors concerned about rates rising further, though fears of rates staying higher for longer may continue.
Bottom Line: Between now and the end of the year, markets are likely to move higher, but it could be a bumpy ride.
Bottom Line: The Hollywood strikes will have an impact on streaming companies, but the temporary lack of new content is not likely to change people’s long-term behaviours.
With a strong possibility that markets could move even higher, it’s not the time for us to take our foot off the pedal. Down the road, signs of a recession may emerge more forcefully, but for now, we don’t see a compelling reason to shift to an overly defensive position.
For a detailed breakdown of our portfolio positioning, check out the latest BMO GAM House View Report, titled Staying the Course Through Choppy Waters.
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