As we headed into March, buoyed by a strong rally, I held high expectations. Known historically as a favorable month for North American stock markets, and with a wealth of positive economic indicators on the horizon, it seemed the stage was set for significant market advancements. Analysts in both Canada and the USA were looking for data indicating robust economies, stable job markets, and decreasing inflation rates going into the month.
Indeed, the March reports did not disappoint. They painted a picture of strong economies and steady job markets across North America, alongside growing investor optimism and diminishing inflation. These developments have heightened investors’ expectations for interest rate cuts by the central banks of Canada and the US come June. Furthermore, with April historically being a strong month for the markets (though it is important to remember that past performance does not guarantee future results), the stage seems perfectly set for a bullish April.
Let us hope the bulls take the lead and run with it. 😊
However, before we get ahead of ourselves, let’s see what happened this past week….
Items that may only interest or educate me ….
Canadian Economic news, US Economic news, How to invest in the stock market, ….
Canadian Economic news
This past week’s key economic data that the Bank of Canada (BoC) considers when deciding whether to raise or lower the interest rate.
Gross Domestic product (GDP)
According to Statistics Canada, the Canadian economy started 2024 strong, exceeding expectations with 0.6% GDP growth in January. This comes after a flat December report. Analysts had predicted a 0.4% expansion. Impressively, 18 out of 20 industry sectors grew in January, highlighting the broad-based strength of the economy.
On a monthly basis, the goods producing industries were up 0.2%, led by a 3.2% gain in the ‘Utilities’ industry. The services producing industries were up 0.7%, led by a 6.0% increase in ‘Educational services.’ Annually, the goods producing industries were down 1.1%. An annual increase of 0.5% in the ‘Mining, quarrying, and oil and gas extraction’ industry was more than offset by a 3.5% decline in the ‘Construction’ industry. The services producing industries were up 1.6%, led by a 3.6% increase in the ‘Transportation and warehousing’ and a 30.5% decrease in the ‘Management of companies and enterprises.’
The advance estimate for February suggests GDP rose 0.4% thanks to increased output from the resources sector.
Canadian market volatility
Over the past week, Canada’s Volatility Index (VIXC), which tracks the TSX 60 VIX, continued to drift lower, ending the week at 10.72, down from 10.92 the previous week. Falling inflation, expectations of lower interest rates in Canada and the US are likely the primary reasons for the low volatility figure.
The VIXC, often referred to as Canada’s ‘fear gauge,’ provides insights into the expected volatility within the Canadian stock markets. Typically, readings above 20 signify high volatility, while those below 20 indicate low levels. The current reading of 10.72 places it well below the high volatility zone.
US Economic news
This past week’s key data points that the Federal Reserve (Fed) considers when deciding whether to raise or lower the interest rate.
Personal Consumption Expenditures (PCE)
The Commerce Department reported that February’s PCE price index rose 0.3%, down slightly from a 0.4% gain in January. On a year over year basis, the PCE index gained 2.5% annually, up slightly from 2.4% in January. Analysts had expected a monthly gain of 0.4% and a yearly gain of 2.5%.
Core PCE, which excludes the volatile energy and food components, rose 0.3% on a monthly basis, down from 0.5% in January. Annually, core PCE fell to 2.8% from 2.9% in January. Analysts had expected a monthly gain of 0.5% and an annual gain of 2.8%.
While both overall PCE, or headline PCE, and core PCE continue to rise month over month, their pace of growth is slowing. Headline PCE was up marginally on an annual basis, but in line with expectations. Core PCE, the Fed’s preferred measure of inflation, fell on an annual basis.
Overall, this seems like a good inflation report and should be enough to keep a June rate cut on the table. Fed Chair Jerome Powell sounded pleased and indicated the data was inline with what they were hoping for. While inflation remains above their 2% target, it is slowly falling to their 2% rate.
Goss Domestic product (GDP)
The Bureau of Economic Analysis’s final estimate for the fourth quarter GDP showed that the economy expanded at an annual rate of 3.4%, a decrease from the 4.9% growth recorded in the third quarter. Despite the deceleration, fourth quarter performance exceeded analysts’ expectations, which had forecasted a growth rate of 3.2%.
This slowdown came despite stronger consumer spending, higher government expenditure at all levels, and a rise in exports. Weaker private inventory investment and reduced federal government spending appear to be the primary contributors to the deceleration.
Overall, the report indicates a solid economic performance in the fourth quarter, despite the slowdown from the third quarter’s growth pace.
American market volatility
The CBOE Volatility Index (VIX), widely regarded as the market’s fear gauge, showed little change this week, closing marginally lower at 13.03 compared to last week’s 13.06. With the VIX standing well beneath the 20 mark — a threshold typically indicative of heightened market volatility — it signals that investor anxiety is relatively subdued. This calm is attributed largely to the ongoing decrease in inflation and the anticipation of reduced interest rates later in the year.
Consumer Confidence Index (CCI)
The Conference Board announced that the CCI for March stands at 104.7, essentially holding steady from February’s slightly downwardly revised figure of 104.8. This outcome fell short of analysts’ expectations, which had predicted a rise to 107. Looking closer, the CCI comprises two key components: the Present Situation Index, reflecting consumers’ assessment of current conditions, which rose from 147.6 to 151.0, and the Expectations Index, indicating short-term outlooks, which declined from 76.3 to 73.8.
This suggests a growing confidence among consumers regarding their immediate circumstances, contrasted with a more cautious outlook for the near future. The dip in expectations may be attributed to concerns over an economic slowdown and a tighter labour market. Interestingly, an Expectations Index falling below 80 has historically been a precursor to a recession within the following year. Let us hope that is not the case this time.
The CCI serves as a vital gauge for economic sentiment, influencing both the Fed’s policy decisions and market movements. Its components offer insights into the public’s perception of economic health, with the Present Situation Index highlighting current economic robustness and the Expectations Index serving as a forward-looking indicator. The divergence observed in March’s figures emphasizes the complexity of current economic dynamics, wherein immediate conditions appear stable, yet prospects are viewed with concern.
Consumer Sentiment Index (CSI)
The University of Michigan’s final Consumer Sentiment Index (CSI) for March registered at 79.4, an increase of over 3% from February’s reading of 76.5, and a significant jump of over 28% compared to March 2023. This positive shift in consumer sentiment is largely attributed to several key economic factors. Firstly, inflation continues its downward trend, offering relief to consumers. Secondly, there is a widespread expectation among consumers that interest rates may decrease later in the year, potentially easing credit conditions. Lastly, the economy and job market have remained stable. The combination of these factors most likely combined led to the more optimistic outlook among consumers about their financial prospects and the general economic situation.
How can I invest in the stock market?
Investing in the stock market can seem daunting at first, however, investing in the stock market is a powerful way to grow your wealth over time. While it may seem intimidating initially, understanding the different paths you can take simplifies the process. Let us explore the avenues for investing in companies: buying shares directly or opting for pooled investment vehicles like mutual funds, index funds, and Exchange-Traded Funds (ETFs).
Direct Stock Purchases: For those who prefer to dive deep into market waters, buying shares of individual companies offers the chance for substantial gains. This route requires a hands-on approach, with diligence in research and monitoring your investments closely.
The Case for Pooled Investments:
- Mutual Funds: Your investment is merged with others to acquire a diverse portfolio. Managed by professionals, these funds aim for lower volatility with the trade-off of higher annual fees known as the Management Expense Ratio (MER).
- ETFs: Offering the diversity of mutual funds but with the flexibility of stocks, ETFs are passively managed, meaning lower fees. They mirror the performance of indexes or sectors and are traded like stocks.
- Index Funds: These funds replicate the performance of a specific index (like the S&P 500). They are a hands-off, low-fee investment option that moves with the market.
Understanding fees is crucial. The MER represents the total cost of operating a fund as a percentage of its assets. Lower fees are often associated with passively managed funds, such as most ETFs and index funds, because they aim to mirror an index rather than outperform it. This means lower operational costs and, typically, a more straightforward investment strategy. When you purchase shares in a specific company directly you may have to pay a transaction fee, but many trading platforms do not charge for buying or selling shares. If there is a transaction fee, it is a one-time fee, usually less than $10.
The best time to start investing is when you are young, in your early 20s. This will maximize the amount of time you have to let your money work for you. Otherwise, the best time to start investing is now. Do not let the initial investment amount deter you. Many platforms offer options for starting small, whether through low-fee ETFs or no-minimum investment accounts.
Whatever you choose to invest in, your choice should align with your investment goals, risk tolerance, and how actively you want to manage your investments. Consulting a financial advisor can provide personalized advice tailored to your financial situation and objectives.
Investing is a journey of continuous learning. Explore books, online courses, and other resources to broaden your understanding. The more informed you are, the better investment decisions you will make.
Remember, investing is personal. Begin with clear objectives, stay within your comfort zone, and be prepared to adapt as you gain experience and knowledge.
Weekly Market Review
Monday: the start of a short final week of the quarter got off to a slow start as investors seem to be taking a breather after what has been a strong first quarter and last week’s mini rally. The price of oil rose on supply concerns after Ukraine and Russia attacked each other’s oil infrastructure.
In Canada, despite higher commodities prices, a last-minute plunge sent the Toronto Stock Exchange Composite Index (TSX) into red. In trading, Energy and Consumer Staples were the only Canadian sectors to end higher, while Healthcare and Industrials had the biggest drops.
In the US, the S&P 500 Index (S&P) and the Dow Jones Industrial Average (DJIA) were in the red all day, while the Nasdaq Composite Index (Nasdaq) was briefly in the green during the afternoon before dropping into the red at the end of the session. In trading, Energy and Utilities had the biggest gains of the American sectors, while Technology and Industrials had the biggest declines.
Tuesday: the indexes got off to a fast start but abruptly fell into the red at the end of the day as investors continued to take profits. Analysts and investors are waiting for the Fed’s favourite measure of inflation, the PCE, to come out at the end of the week. If the PCE comes in higher than expected it could push back the start of rate cuts in the US. Oil prices fell despite the loss of Russian oil inventories.
In Canada, the TSX ran its losing streak to three days as lower energy (oil and natural gas) prices weighed on the Canadian market. In trading, Healthcare, Consumer Cyclicals and Technology were the only sectors to end higher, while Energy and Utilities suffered the biggest declines.
In the USA, the three indexes continued their retreat from last week’s record highs as investors await Friday’s crucial inflation data. In trading, Healthcare, Consumer Staples, and Consumer Cyclicals were the only sectors to post a gain, with Utilities and Energy falling the most.
Wednesday: its not often this happens, but the indexes ended higher without the assistance of the big technology companies. The price of oil rebounded despite a build up in US oil stockpiles.
In Canada, the TSX set a record high as commodity prices continued to climb, fueling the resource heavy index. It was a good day in trading, led by the Healthcare and Basic Materials (miners and fertilizer manufacturers) sectors. Technology was the only sector to end the day lower.
In the US, the S&P set a record high as it snapped a three-day losing streak. In trading, it was a broad-based rally that saw all sectors end higher, led by Utilities and Basic Materials, with Technology and Energy trailing the pack.
Thursday: the last day of a short week ended with mixed results as only the Nasdaq failed to end the day higher. Oil prices rose on tighter supply concerns. Not only was this the last trading day of a shortened week, but it was the last trading session of March and the first quarter. It would have been fitting if a strong quarter had ended with all four indexes in the green. 😊
In Canada, the economy grew more than expected, combined with rising commodity prices to lift the TSX to a record closing high to close out the week, month, and first quarter. In trading, Basic Materials and Energy posted the largest gains, while Technology and Healthcare suffered the biggest losses.
In the USA, the latest GDP report showed the American economy expanded more than expected. In the markets, the S&P set another record high while the DJIA inched closer to breaking the 40,000 mark for the first time. In trading, it was another day of multi sector gains, led by Energy and Utilities. Technology was the only sector to lose ground.
Weekly Market and Portfolio Review
For the week, the TSX (SPTSX) rose 0.8%, the S&P 500 (SPX) increased 0.4%, the DJIA (INDU) gained 0.8% and the Nasdaq (CCMP) fell 0.3%.
| Index | Weekly Streak |
| TSX: | 7 – week winning streak |
| S&P: | 2 – week winning streak |
| DJIA: | 2 – week winning streak |
| Nasdaq: | 1 – week losing streak |
The momentum from the previous week’s news of the Fed’s rate cut plans struggled in the early days of this past week, as depicted in the accompanying chart above. Nevertheless, bolstered by positive GDP data that surpassed expectations and investor optimism in anticipation of the PCE inflation report on Friday (when the markets were clsed for the Easter holiday), three of the four major North American indexes managed to close the week in positive territroy.
In the US, the tech sector saw a pause as investment shifted into sectors with perceived more growth potential, including Basic Materials, Energy, and Financials. In Canada, rising commodity prices lifted the TSX, bringing it level with the DJIA for the best weekly performance. This year’s rally, though more subdued compared to previous surges, is noticeable for its breadth across multiple industries, signaling a healthier market environment.
Looking forward to a full trading week ahead, I’m hopeful that the news of slowing inflation from the latest PCE report— the Fed’s preferred inflation gauge—will kickstart a rally, potentially driving all four indexes into positive territory next week.
| Portfolio | Weekly Streak |
| Portfolio 1: | 1 – week losing streak |
| Portfolio 2: | 2 – week winning streak |
| Portfolio 3: | 2 – week losing streak |
Despite a decent week for the broader market indexes, my portfolios did not fare as well, as seen in the chart below.
Portfolio 1’s 12 week winning streak came to a crashing end this week, largely due to slight declines in many of its key holdings. However, a highlight was Nuvei Corp (TSE: NVEI), which surged 10% during the week. During my review of the portfolio, I noticed Nvidia’s (NASD: NVDA) had become the largest position within the portfolio, now constituting 40% due to its significant share price appreciation over the last 18 months. Despite Nvidia’s strong performance, its outsized presence makes the portfolio highly sensitive to its price fluctuations, prompting me to reconsider this position.
Portfolio 2 stood out as the week’s success story, marking its second consecutive weekly gain. Notably, it outperformed the four main indexes in percentage terms, driven by impressive gains in Hammond Power Solutions (TSE: HPS.A) up 22%, Guardant Health (NASD: GH) up 17%, and Mitek Systems (NASD: MITK) up 12%.
Portfolio 3, much like Portfolio 1, saw no significant movements but was predominantly characterized by minor decreases across most holdings. The combined weight of Shopify (TSE: SHOP), Microsoft (NASD: MSFT), and Royal Bank (TSE: RY)—which together comprise nearly half of the portfolio’s value— make it tough for the rest of the portfolio to overcome.
Hopefully next week I will see the return of all three portfolios into positive territory, and the start of a bull run in April. 😊
Monthly Market and Portfolio Review
For the month, the TSX (SPTSX) surged 3.8%, the S&P 500 (SPX) advanced 3.1%, the DJIA (INDU) rose 2.1% and the Nasdaq (CCMP) gained 1.8%.
With the strong rally leading into March, expectations were high. Traditionally a favorable month for the North American stock markets, the backdrop of robust economic indicators—solid GDP growth in Canada and the US, a steady job market, and cooling inflation—seemed poised to fuel significant market gains. Furthermore, with the Fed signaling three potential rate cuts within the year, investor confidence in managing inflation without triggering a recession was on the rise. This brew of positive news helped push consumer sentiment to its highest since 2021, fostering an environment ripe for market advances.
Each of the indexes recorded their fifth consecutive month of gains. While all three American indexes achieved record closing highs during the month, the rally broadened as investors rotated into other sectors creating a broader, more sustainable rally in the long run. However, the broadening came at the expense of the technology heavy Nasdaq, which trailed the other indexes in March.
In Canada, the TSX not only reached its highest point in two years but also extended its winning streak to twelve weeks before breaking that streak this week. A significant contributor to this performance was the Energy sector, propelled by rising prices, tightening supplies, and decreasing oil inventories. With OPEC+ potentially maintaining production cuts and ongoing geopolitical tensions impacting Russia’s energy infrastructure, the outlook for the TSX appears optimistic.
While the month’s advances didn’t meet my lofty expectations, March 2024 still marked a period of solid growth for the North American markets, underscoring the unpredictable nature of investing. 😊
March presented a mixed bag across my three investment portfolios, as shown in the chart below. Portfolio 1 benefited from the initial surge in technology stocks, but these same stocks detracted slightly from its performance by month’s end. Portfolio 2 experienced significant volatility, eventually reducing its monthly loss thanks to strong gains from Hammond Power Solutions. Finally, Portfolio 3 recorded a modest increase, driven by a positive month for Lithium Americas (TSE: LAC).
Overall, it was a decent month for the portfolios. However, with the positive economic news – solid growth and cooling inflation in both Canada and the USA – I was admittedly hoping for stronger performance. This illustrates how market performance can be influenced by a wide variety of factors and why I diversify my portfolio with a focus on long term growth. It also confirms my inability to predict the market. 😊 With earnings season on the horizon and the potential for continued economic growth, April presents a new chapter for the markets.
Companies on the Radar
Carnival Cruise Line (NYSE: CCL) sailed onto my radar this past week. I had not previously considered investing in cruise lines, but recent analysis suggests these companies are undervalued, with CCL positioned as a leading opportunity. The cruise industry was hit hard by the COVID-19 pandemic, but there has been a gradual increase in sales, albeit not yet to pre-pandemic levels. Reports of strong sales for the upcoming travel season hint at a demand rebound.
CCL, a prominent American cruise line company, which includes Carnival Cruise Lines, Holland America, and Princess Cruises among its brands. It is experiencing rising sales and improving cash flow, despite reporting net losses in recent years. However, these losses are diminishing. While I do not consider CCL a good fit for me long term, its current momentum presents a potentially profitable short-term opportunity. I plan to do further due diligence to assess whether the potential rewards justify the risks involved.
Carnival Cruise Line now joins the four companies currently on my radar list:
- Celestica Inc. (TSE: CLS), a medium sized Canadian company that manufactures electronic products and provides supply chain services to companies around the world.
- Equitable Bank (TSE: EQB), a mid sized Canadian bank, considered Canada’s 7th bank, that provides financial services to consumers and businesses.
- Lumine Group (TSE: LMN), a young Canadian mid sized company that acquires communications and media software companies and then strengthens and grows those companies.
- Evolution AB (OTCM: EVVTY), a Swedish company that provides live casino solutions for global gaming operators.
Please keep in mind that these are only companies that have piqued my interest. This is not a recommendation or financial advice. You should do your own research or contact a professional before making any investment decisions.
The Radar Check was last updated March 29, 2024.
NOTE: Morningstar and Thomson-Reuters analysis is unavailable for Evolution from my usual sources because the company’s home stock exchange is the Nasdaq Stockholm in Sweden. While it is possible to invest in Evolution through the Over the Counter Market, there is no analysis similar to the data available for companies traded on the major North American stock exchanges (Toronto Stock Exchange, New York Stock Exchange, and Nasdaq Stock market). The Analysts Rating and Price Target for Evolution are from Yahoo! Finance, under the Analysis tab once you have searched for the ticker.
Portfolio Update
Portfolio 1
Portfolio 1 for the week ended March 29, 2024: DOWN 
- Lightspeed Commerce (TSE: LSPD) is considering returning to private ownership. No formal review or discussions have begun.
- Amazon (NASD: AMZN) was fined US$ 7.8 million by Poland’s consumer regulator UOKiK for misleading Polish customers about product availability and delivery dates.
In other Amazon news, the company plans to spend US$ 150 billion building out their data centres and cloud computing capabilities over the next 15 years. - Visa (NYSE: V) and Mastercard (NYSE: MA) reached a settlement with US based merchants to cap the swipe fees they charge merchants. The deal limits swipe fees to 0.04% through 2030, and merchant groups can negotiate directly with the two credit card companies like large companies do, and small merchants will be able to set different swipe fees for all cards, not just by card network. All this is good news for merchants, but will the savings be passed along to us consumers. Doubtful. ☹
- Home Depot (NYSE: HD) announced they had made their largest ever acquisition when they bought building materials supplier SRS Distribution for US $18.25 billion. The deal is expected to boost their professional customer base.
Activity
Received interest on TD 1-year cashable GIC.
Dividends
Dividends Received this week for the following companies:
Companies followed by DRIP (Dividend Re-Investment Plan) indicate additional shares were purchased with the dividend. Any cash leftover was added to the cash balance.
Canadian $
Canadian National Railway Company (TSE: CNR)
US $
NVIDIA Corp (NASD: NVDA)
Quarterly Reports
Boston Omaha Corporation
Fourth quarter 2023 financial results on March 27, 2024
Portfolio 2
Portfolio 2 for the week ended March 29, 2024: UPÂ 
- Walt Disney (NYSE: DIS) reached an agreement with the state of Florida over the governance of the Disney World special tax district. This settlement allows Disney to proceed with its expansion plans for its Disney World parks and resorts.
Activity
No significant activity to report this week.
Dividends
Dividends Received this week for the following companies:
Companies followed by DRIP (Dividend Re-Investment Plan) indicate additional shares were purchased with the dividend. Any cash leftover was added to the cash balance.
No dividends this past week.
Canadian $
Hammond Power Solutions
Brookfield Infrastructure Partners LP (TSE: BIP.UN)
Brookfield Infrastructure Corp (TSE: BIPC)
US $
No US$ dividends this past week.
Quarterly Reports
No quarterly reports this past week.
Portfolio 3
Portfolio 3 for the week ended March 29, 2024: DOWN
- Nothing to report about the companies in this portfolio this past week
Activity
No significant activity to report this week.
Dividends
Dividends Received this week for the following companies:
Companies followed by DRIP (Dividend Re-Investment Plan) indicate additional shares were purchased with the dividend. Any cash leftover was added to the cash balance.
Canadian $
Brookfield Reinsurance Ltd (TSE: BNRE)
Brookfield Renewable Corp (TSE: BEPC)
US $
No US$ dividends this past week.
Quarterly Reports
No quarterly reports this past week.