November in Review

Volatility remained muted in November, as Canadian, U.S. and global equity markets all posted positive returns for the month: 1.06%, 4.15% and 3.53% respectively. Meanwhile, crude oil prices fell to $66.15/barrel on news that OPEC planned to leave output unchanged.

Bank of Canada (BofC) to continue stimulus, despite growing risks.

Despite growing risks of rising household debt, housing prices and inflation, the BofC Governor Stephen Poloz reiterated the need for continued monetary policy stimulus last month. “Certainly financial stability risks, especially those related to household imbalances, remain a concern to us here in Canada. But our economy faces significant headwinds and continued monetary policy stimulus is needed to offset them.”

S&P 500 bull market underpinned by record high stock prices.

One hundred and sixteen stocks (or 23%) in the S&P 500 Index hit 52-week highs last month, as the bull run continues. The index is up 22.66% this year, despite the volatility exhibited in September and October. Some of the many factors pushing the S&P 500 Index to new highs include improved sales and corporate earnings, nine straight months of 200,000-plus job gains, a flurry of other positive economic reports and historically low interest rates.

ECB prepared to “do what we must” to raise inflation.

With disappointing manufacturing numbers coming out of Europe in November, the European Central Bank (ECB) went on the offensive. ECB president, Mario Draghi, strongly signaled that they were preparing a new round of powerful monetary stimulus to spark the stagnating eurozone economy. European markets reacted positively to the ECB’s language, gaining 3.89% in November despite disappointing economic indicators.

Japanese economy says one thing; the market does another.

The Japanese economy unexpectedly slipped into a recession in the third quarter, contracting 1.6%. Japanese Prime Minister, Shinzo Abe, called an early election on the news in hopes of delaying a sales tax increase (that was weighing on the economy) and salvaging his extensive stimulus program (coined abenomics). Japanese markets brushed off the news retreating briefly, only to bounce back and end the month in a positive note.