Over the first quarter of 2017, it seemed as if three things were in the news and influencing markets more than any other: Trump, Trump and Trump. From picks to fill cabinet posts, to a nominee to the Supreme Court, to Oval Office infighting to Russia, China, North Korea, and Syria. North American markets rose in the 3% to 5% range over the quarter, with our model portfolios performing in a similar fashion over that period.
Looking at the months ahead, obviously what the White House will do or not do will continue to have an influence on market direction. It would seem at this point, and based on what has transpired since the inauguration, that nobody really is confident in making any predictions. I have said many times in the past that the one thing that the market absolutely hates is uncertainly, and we have a great deal of that right now. As a result, the VIX (volatility index) has rapidly climbed almost 50% recently, after being relatively dormant since late fall last year. This will likely continue until investors feel a greater sense of certainly about the intermediate term.
In my last message I stated that I very much doubted that, for the most part, Trump’s pipe dream initiatives would ever see the light of day and that seems to be coming to pass. His number one campaign promise, to repeal the Affordable Care Act, was rejected by members of his own party. When a president’s party controls both the House and Senate, and he cannot push a major piece of legislation through, one would have to believe that that president is in for some tough times in turning his campaign promises into legislation.
Of course, the other major issue in the coming months is monetary policy both in Canada and the United States. Many are looking for two or even three more rate hikes by the Fed in 2017. With some on-going growth in the Canadian economy, it looks as if the Bank of Canada may be more inclined to initiate a rate hike at some point this year.
In terms of the Canada dollar, we continue to look for a range of 73 to 76 cents over the next several months.
President, HG Partners Limited
Director, Private Client Group &
Senior Financial Advisor,
HollisWealth Advisory Services Inc.
This article was prepared solely by Howard Goodman who is a registered representative of HollisWealth Advisory Services Inc. (a member of the Mutual Fund Dealers Association of Canada and the MFDA Investor Protection Corporation). The views and opinions, including any recommendations, expressed in this article are those of Howard Goodman alone and they are not those of HollisWealth Advisory Services Inc.
HollisWealth is a trade name of HollisWealth Advisory Services Inc. ™Trademark of The Bank of Nova Scotia, used under license.
HG Partners Limited is an independent company. Scotiabank companies have no liability for activities outside of HollisWealth.