The fourth quarter of 2016 was a very positive one in terms of general market performance especially (and for many observers, surprisingly) after the U.S. elections in November. While we expected a Clinton win, we thought that a Trump victory was not out of the question. The big surprise for us was that we thought that result would have a short- term Brexit-like effect on markets, but that they would quickly recover and stabilize. The short term drop was basically limited to overnight futures markets on November 9th, with very strong gains thereafter. With the election of Mr. Trump we are certainly in uncharted waters in so many respects, and whether the post-election honeymoon we have seen continues is really anybody’s guess.
Here at home, our market has been very strong. Our dollar has settled into a 73 to 76 cent range versus the U.S. dollar. While oil prices have improved, where the dollar goes over the coming year really is dependent on interest rates more than anything else. We think it likely that Governor Poloz will not tamper with rates this year, regardless of what course the Fed choses to take. The consensus with respect to U.S. rates seems to be, well, no consensus at all. Some observers see perhaps one hike (or maybe none at all), while others see as many as four during 2017. Any U.S. rate hike (without any action by the Bank of Canada) would likely result in a cent or so loss for the Loonie.
The U.S. market seems to be priced based on the assumption that all of Mr. Trump’s promises will come to pass. As anyone who has even a modicum of understanding of U.S. politics knows, that is not even remotely possible. This is going to be a very interesting year. Market volatility has diminished tremendously over the last quarter, but will almost certainly increase with growing concerns about trade policy, China, North Korea, etc.
Our managers will certainly have their work cut out for them during the coming year. We continue to have every confidence in them to navigate well no matter what they face. They have done it many times before.
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. ® Registered 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.