In this discussion, the speaker begins by recapping recent market performance. They note that the third quarter saw a 3% loss in most sectors, with energy being an exception due to rising oil prices. In the U.S., the S&P experienced a pullback in tech stocks but still had a double-digit percentage gain for the year. The guest, Kevin Hedland, expresses concerns about the Fed's actions and the potential for a recession in both the U.S. and Canada. He expects the Bank of Canada to act faster than the Federal Reserve to address economic weakness. Regarding investment strategy, he suggests preparing for near-term volatility in equities, embracing flexibility in fixed income, and seeking quality businesses with strong cash flow and revenue growth during economic cycles.
Sure! Here are the key facts extracted from the text:
1. The markets are entering a new month and quarter.
2. September had the second worst monthly performance of 2023.
3. Energy sector performed well with oil prices rising.
4. S&P had its worst month of the year with a notable pullback in tech stocks.
5. The quarterly decline was larger in the U.S compared to Canada.
6. The start of the year followed by weakness in August and September is a typical pattern.
7. The profit picture is expected to improve heading into the fourth quarter.
8. There's uncertainty regarding the Fed's actions and rate cuts.
9. The market is priced for perfection, expecting positive outcomes.
10. Recession is anticipated for both the U.S and Canada, with Canada potentially deeper and longer.
11. The Bank of Canada may move quicker to help the Canadian consumer.
12. Central banks' reactions to weaker economic data are uncertain.
13. The guest recommends preparing for near-term volatility in equities.
14. Flexibility in fixed income investment is emphasized.
15. Quality in stocks is determined by cash flow generation and beating top-line expectations.
16. Companies with experience in handling a slowing economy are preferred.