Weekly Newsletter – January 5, 2024 – HIGHER FOR LONGER

Happy New Year! At the end of 2023, I wrote about the effects that a Presidential election year and the timing of the last interest rate (US) have on the outlook for the S&P 500 – all positive! Now that we are in 2024, I believe that there is greater evidence that the North American equity markets, in general, will experience strong overall performance. Our Technical Analyst has published his outlook for 2024, highlighting the 5 Phases of a market cycle. It is his opinion that we are currently in the second phase and that this will last through 2025 until the first half of 2026.

Phase 2 leading industries are generally industrials, technology, and basic materials. Canada has an abundance of basic material companies which should allow for the TSX to improve extremely well throughout the year. The basic commodities that are most favored are copper and lumber. Copper usage is for electric vehicles, housing, and infrastructure – all growth sectors in Canada and around the globe. Lumber, also used in housing, should see rising demand once the new housing market starts to expand as rates back off. Once interest rates recede in Canada, pipelines, financials, REITs, and other dividend-paying companies will perform better as investors (GIC refugees) look to replace income earned from fixed income investments.

Finally, after 4 years of Covid, the biotechnology sector should see a boom with the quest for immortality rising. Drug manufacturers, along with new medical technologies and devices, are allowing us all to live longer, but we also need medications and devices that allow us to live better, not just longer. There will be a boom in the coming years for medications that reduce pain that are non-addictive, orthopedic replacement surgery, private healthcare, and oncology drugs, along with a host of many new medical devices that make our quality of life better.