What is a Recession?

With the reduction in global economic activity due to the Corona virus (COVID-19), the reality of a recession is a common hot topic. The depth and breadth of a recession is dependent upon a number of factors. Our partners at National Bank Financial Economics offers a historical perspective.

“Will the ongoing coronavirus-related economic downturn also qualify as recession? We’ll have to wait some time to have an answer
from the CDHI. But if the March handoff is as bad as feared, we may get consecutive GDP contractions as early as Q1/Q2. Employment is likely to take a dive as well as businesses attempt to cut costs amid sinking revenues after operational shutdowns.”

National Bank Financial Economics, March 17th, 2020

Please contact your Hampton Securities Investment Advisor if you have any questions or concerns.

Does The Jobs Report Signal A Slowdown?

The Jobs Report for December was in-line with expectations.  “This is the worst performance in three years but it’s a pace we should get used to in the context of a tight labour market and a slowing economy,” indicates our partners at NBF Economics. Hiring plans continued to be widespread according to the Bank of Canada’s Business Outlook Survey published late in December. Canadian economic conditions have weakened. The jobless rate remained unchanged at a record low of 5.6% as the participation rate remained unchanged at 65.4%.

What does this mean for your investment portfolios?

This could translate into some cautiousness among employers early in 2019.  Does the more normalized growth and interest rates mean a decline in expected equity returns? December’s 2018 NBF report on business sentiment displays a divergence in expectations. The major decision is your belief about recent economic news. Do you view December’s volatility 2018 as the beginning of a slow period? If so markets may be fairly valued. If you believe with the lowered P/Es (price earnings ratio) equities are a buy within the extended late Bull market, then you will look to buy quality and have specific price targets. Regardless, it is a time in our economic and market cycles where active management and advice is required. Contact our seasoned Investment Advisors for a fulsome discussion on next steps for your portfolio.

https://www.nbc.ca/content/dam/bnc/en/rates-and-analysis/economic-analysis/economic-news-jobs.pdf