Insights | Lee, Turner & Associates Inc. | Investment Management Since 1991

Our Latest Thinking.

You can find our thoughts on world events, trends and happenings and its pertinent impact on the economy and financial markets here.

We will share our perspective on the past, opinions on the future, and any potential plans to action against our insights.

Investment Quarterly – July 2024

On June 5, the Bank of Canada jumped to the front of the line of developed countries’ central banks and cut its interest rate. The cut was a modest 0.25% and the immediate signal taken by market participants was positive, but that enthusiasm quickly faded as the market trailed down over the remainder of the month.

Admittedly, this cut came slightly earlier than our expectations, but our reasoning was sound because the inflation number, Canadian CPI at 2.9%, that was reported just three weeks later was ahead of expectations and stubbornly far higher than the “2% target.”

Investment Quarterly – April 2024

Central bankers, economists and politicians continued to tell investors that the overall health of the economy was not too hot, not too cold, but just right. After digesting their porridge of economic data, monetary policymakers decided that interest rates were also just right, keeping them status quo for the quarter.

And while they reiterated that the economy was healthy, with a primary focus on inflation trending as intended, they also continued to tease investors with the idea that multiple interest rate cuts may come this year. As a result, investors priced in very high expectations for these decreases to materialize, driving a strong performance in equities to start the year based on the belief that growth and profitability will follow.

Investment Quarterly – Jan 2024

Looking back at 2023, the predominant theme is unquestionably ongoing volatility. This trend, reminiscent of inflation, has not abated but has, in fact, intensified in investor expectations for the future. After decades of relatively low volatility attributed to “peace dividends” and central bank dominance, investors are still grappling with adapting to new market regimes. As an analogy, most of us have grown accustomed to air travel, experiencing it as akin to boarding a high-security bus, where the primary concerns revolve around lost luggage or delays (certainly not a window blowing out). Like the pilots on your flight, we intend for wealth management to be a smooth, largely uneventful trip from working to retirement to inheritance.

Investment Quarterly – Oct 2023

North American Central Bankers endured a cruel summer, but they should just shake it off, we repeat, shake it off. Tasked with a difficult and thankless job, balancing inflation with economic growth, the Banks’ performance over the summer was at once deemed ineffective by the financial markets and yet condemned as overly aggressive by populists. Hounded by a strong current of inflationary forces washing over North American economies, both the US and the Canadian Central Banks raised interest rates another 25 basis points (a total of 4.75% since 2022) in hopes of stemming those tides.

Investment Quarterly – July 2023

Two years after it was initially diagnosed as “transitory”, inflation remains, despite interest rates rising, quickly, to meet it. Meanwhile, we find ourselves with the almost Herculean task of trying to find a new metaphor to describe the dynamic. Global economies remain stuck trying to negotiate dangerous waters, caught between the threat of untamed inflation and the costly medicine of higher interest rates. Canadian inflation rate was 4.4% and 3.4% in April and May respectively while the Bank of Canada raised rates a further 0.25% to 4.75%, after a four-month pause in June. A year ago, the rate was 1.5%. More importantly, we are, officially, in a new regime as we have topped the pre-Financial Crisis high of 4.5% recorded in July 2007.

Investment Quarterly – April 2023

2023 kicked off in a similar fashion to how 2022 ended. January and February were going as market participants had largely expected, that is, until March Madness tipped off.

In early March, Silicon Valley Bank, a regional bank in the US experienced some substantial financial issues when they needed to sell assets at a significant loss to cover a ‘bank run’ – elevated cash withdrawals from its clients. The subsequent knock-on effects tore through the headlines and several other US regional banks saw similar internecine behaviour from clients in the coming days. To date, this crisis has seen the second and third largest bank failures in US history, and the takeover of one of Europe’s largest financial institutions (Credit Suisse).

Investment Quarterly – Jan 2023

If 2020 was the year of “uncertainty” rearing its ugly head in the form of an unforeseen pandemic, 2022 was the year of “risk”. High growth tech stocks and cryptocurrencies plummeted after years of high prices, inflation ran at decadal highs after record stimulus, interest rates rose at record speeds to address the inflation, and that is not to mention the world outside of financial markets where war, court rulings, and elections, all bucked expectations. In short, proverbial chickens came home to roost …

Investment Quarterly – Oct 2022

Is this the real life? Is this just fantasy? Caught in a landslide …

The opening lyrics to Bohemian Rhapsody, as serenaded to the world by Canada’s Prime Minister in September, turned out to be a poignant snapshot of the markets over the past few months. The first half of the quarter saw the S&P/TSX climb 7.5%, and the S&P500 jump13.7%, only to have it caught in a landslide and erased by the end of the quarter. Easy come, easy go, little high, little low.

Investment Quarterly – July 2022

“Unprecedented” is a word that has been used frequently in financial commentary over the last couple years and unfortunately there was plenty of material to reference during the quarter. High inflation, recessionary fears, and rising interest rates (the US Federal Reserve raised its rates by a further 0.75% and the Bank of Canada upped its rate by 0.50%), all combined to make a difficult 2022 even more choppy. Added to this came the ongoing uncertainty from the war in Ukraine causing difficulties across the European political and economic landscape. In response, both bonds and stocks sold off in, well, unprecedented fashion.

Investment Quarterly – April 2022

We’ve come to know the tale of David & Goliath as a situation where an underdog, David, takes on an opponent that is perceived to be in a much more advantageous position, Goliath. In the first quarter this year, the world saw this narrative unfold across several areas of life. Economically, we saw consumers battle Goliath increases in prices for goods and services.

Inflation, as we had anticipated, is not so transitory. It will drive consistent interest rate hikes for the remainder of the year. But with interest rates going up, do we foresee this tightening of monetary policy to tighten economic growth?

Investment Quarterly – Jan 2022

Roughly two years since the initial rumours about a new contagious disease began popping up in our newsfeeds, markets remain susceptible to the whims of a virus. On the COVID roundabout, we’ve approached the familiar turnoffs for restrictions, lockdowns, vaccinations, and most regretably, illness. However, while we’re reminded of Bill Murray’s exhaustion after reliving the same scenario again and again in the film Groundhog Day, there have been substantive changes in the markets and economy this go-around.

Investment Quarterly – Oct 2021

The world largely seems to be moving towards accepting life with COVID, understanding that full eradication of the virus seems unlikely in the near future. The vast majority have come to understand both the risks of the virus(es) and the benefits of vaccinations. In addition, people have adapted to the ongoing measures intended to curb rates of infection, which is likely to be the norm going forward.

How does this tie into the markets, and James Bond?

Insights – August 2021 – What to make of “ESG” Investing?

The big “new” thing in investing in the last few years and which shot to prominence during COVID—is “sustainable” or “ESG” investing (environmental, social, and governance investing). The premise is straightforward: companies have avoided shouldering the costs of their negative impacts on society, on the environment, and on various stakeholders and now the bill is coming due. In many ways, the trend is not new at all … So, what does all of this mean for us and you?

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