Colin Stewart's Top Picks: October 26, 2021
BNN Bloomberg
Top picks from Colin Stewart, CEO and portfolio manager, JC Clark Limited
MARKET OUTLOOK:
Economic activity, while uneven by region, is exhibiting a strong recovery from the depths of the lockdown in 2020. With rapid vaccine deployment and a fast re-opening, the U.S. is the poster child for what Canada and other countries should see in the months ahead.
U.S. economic activity has been very strong in recent months and consumers are out in full force spending excess savings and stimulus cheques. Restaurants are busy, live sporting events are sold out, and the power of pent-up demand is on full display. We are optimistic that Canada is not far behind. With recent improvements in vaccination rates, excess savings, and a consumer eager to get out and spend, it is only a matter of time until the hospitality and retail sectors here see a similar rebound.
One potential fly in the ointment is inflation. Massive government spending, zero interest rate policy (i.e. free money), and supply chain bottlenecks are inevitably creating inflationary pressures.
While central banks and many economists continue to stick with their stance that inflation is merely “transitory”, one only needs to think about day-to-day living expenses to realize that pricing pressure is everywhere.
Housing prices, rent, food, lumber, shipping costs, the cost of a backyard renovation, or buying a boat – wherever we look, things are becoming more expensive. With such a deeply embedded view by many market participants that inflation will remain benign, this must be considered one of the key investment risks in the months and quarters ahead.
