Market Watch – December 14, 2018

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Meanwhile, U.S. consumer prices were flat in November, suggesting that underlying inflationary pressures remain stable as the Fed prepares to raise interest rates later this month. However, economists at JPMorgan Chase have warned that rising inflation could be an issue by Q2 2019, due to the tight labour market and the ongoing effect of tariffs. 
 
Markets

Cleaning roadways

City of Red Deer to begin street sweeping on Sunday

17h ago

mixed bag

Unemployment rate both up and down for Red Deer in March 2026

18h ago

March 2026 Incident

Trial date set for Red Deer man charged in downtown assaults

19h ago

U.S. Markets Regain Some Ground, TSX Down Slightly

For the four days covered in this report, the Dow gained 208 points to close at 24,597, the S&P 500 added 18 points to settle at 2,651, while the tech-heavy Nasdaq rose 101 points to close at 7,070. In Canada, the TSX was down 45 points to end at 14,750. 

Equities/Strategy 
 
Strategy

Correction, not recession.  We continue to recommend modest overweight exposure to equities and underweight exposure to fixed income, relative to our long-term strategic asset allocation model.  A slight inversion at the front end of the U.S. Treasury yield curve occurred earlier this week, when the two-year yield exceeded the five-year yield.  Although yield curve inversion is typically viewed as a leading indicator of economic recession, Exhibit 1 shows that opportunities for equity market gains exist even after inversion occurs.  We recommend capturing such potential gains through thematic investment in issuers with sustainable competitive advantages, high free cash flow, and low balance sheet leverage.  We expect that bouts of financial market volatility will become increasingly frequent in the near and medium-term owing to the maturity of the business cycle and a waning global economic growth outlook.  We recommend managing these risks through diversification across asset classes and geographies.  Further, we recommend exposure to alternative assets, which typically exhibit low correlation to traditional asset classes (such as bonds and equities) and can help investors reduce portfolio volatility and enhance potential risk-adjusted returns. 

(Big Picture – Bill Curry)

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