The Bank of Canada raised rates 50bps (0.50%) this week, compared to the expected 75 bps increase. That helped the narrative that was developing last week when investors had a week off to recover. Stocks had another good week, up 3% or more. U.S. stocks are up about 9% over the last month. There is hope that central banks will at least coast in the near future to assess the impact of rate hikes. The Fed in the U.S. is set to deliver another rate hike next week, and it will likely be 75 bps say most market watchers. The Bank of Canada goes easy, we’ll soon find out if the U.S. will follow the more polite path of Canadian central bankers.
On the topic, Mark at My Own Advisor wrote in the Weekend Reads – Ooops, they did it again.
And here’s a Tweet that shows the pace of rate hikes. I’m not sure about that house price carnage, but I’m watching 😉
Some Canadians might offer to the bank of Canada – “slow down eh”.
With housing and rate hikes, there’s little buffer room …
Canada limping along
That said, the Canadian economy is still eking out some modest growth, at an annualized rate of 1.6%.
And it was a rough week for tech …
Well, except for my Apple of course, ha.
It even made Jim cry …
What what scares FiPhysician in retirement? Have a read.
As always, we check in on the weekly wrap courtesy of Dividend Hawk. With earnings season in full swing (and miss?) it was a busy and fruitful week.
And Kyle was making sense of the markets at MoneySense.
On Tawcan, Bob is reconsidering status symbols and also offers some good reads for the week.
Is there really a need to show off your wealth and all the expensive things you may own? For me, I think there’s more value in practicing stealth wealth. There’s no need to show off your wealth for the sake of showing off.
Banker on Wheels suggest that while there are troubling signs and scary headlines (just in time for Halloween) things are – Much better than it feels. This is not the great financial crisis of 2008-2009 and beyond. While we do not know what economic environment is on the horizon, many economists are singing from the ‘soft recession’ song sheet.
Scary Halloween reading
That said, on the scary side of things, Lance Roberts offers that the treasury market might be the Fed’s next crisis. What if no one really wants to buy up U.S. debt? There are some troubling signs.
John Mauldin is turning bullish on oil.
It was just over two years ago that I suggested readers take a look at Canadian oil and gas stocks. The sector has been delivering incredible total returns and fabulous dividend growth. After taking some wonderful capital gains, I moved the profits to the energy dividend approach.
From that Mauldin post …
And using smaller and less expensive nuclear tech, which can be scaled and made modular, it can happen faster than you think. And it will happen because there is no alternative, at least until we figure out fusion.
Why do I say that? Because we are behind the renewables curve. The world must cut emissions 43% by 2030 to meet Paris goals. Instead, they’re set to rise 10.6%.
I’m happy to continue to invest in oil and gas, including the pipelines that you find in the Canadian Wide Moat portfolio. I also agree with Mr. Mauldin and others that nuclear will play a major role in future energy needs. I invest in Horizons HURA.
This week on Seeking Alpha I penned Dividend growth and your retirement portfolio.
Grocery gouging? Nada, says Dan.
And according to the numbers found by Dan at stocktrades.ca, there has been absolutely no price gouging from grocers in the recent bout of grocery inflation. Check out that thread.
On A Wealth of Common Sense, what looks better these days? Stocks or bonds?
In one of our U.S. dollar accounts I moved the cash to SHY – short term treasuries. A nice yield and some slight convexity (inverse relationship to stocks). From that post, and a reminder of what happens if we have a continuing rising rate environment …
If you own short-term bonds, they would not lose as much money in this scenario as long-term bonds. Remember, longer duration bonds perform relatively better if rates fall but shorter duration does better, relatively speaking, when rates rise.
If rates rise, the fund loads up on more higher yields over time. Nothing wrong with that, either.
I’ll be happy to rebalance to the U.S. growth stocks if/when we get a recession and a ‘real’ market decline. Don’t write off the balanced portfolio and rebalancing just yet. I had trimmed some of the U.S. growth stocks over the last year and more.
Right on cue, on Findependence Hub, Jonathan Chevreau asks if balanced funds are really dead, or ready to rise again?
There’s very good value to be had these days. Over one month ago I asked – what stocks and ETFs are you buying. I’ll keep asking.
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