This month brought us some interesting news from Canada, as Prime Minister Justin Trudeau won the Federal election to return for a second term as the leader of Canada. There has also been some progress in the US/China trade talks and the US Federal Reserve has decided to cut rates once again. We also came closer than ever to a BREXIT deal that eventually was shut down, but it shows there is at least some progress being made. Many of the major headlines have either concluded, are in the process of being resolved or shine a positive light towards the markets. This should give investors more predictability going forward which should drive markets higher.
April was another strong month as the market continued its recovery from the lows of December. This continues to been driven by the topics we have covered in the previous market reviews of the year. This rise feels very similar to 2017 when the US equity markets faced very little opposition and continued to run higher and higher without a real pause or correction. While issues did present themselves, nothing materialized and then we had a bit of a move upwards to new highs. It is also worthy to point out the US Federal Reserve raised rates three times that year.
The big news this month is that BREXIT has been delayed! With proposal after proposal being shut down, Britain has decided to delay their infamous BREXIT, with approval from the EU as expected. We did predict this as the most likely scenario for the two sides as no progress was being made and a hard BREXIT is not a good scenario for anyone. This temporary solution is valid until the 14th of April and we would imagine this will get pushed back once again as there isn’t a viable deal currently out there. While this was once thought to be a big change in the economic landscape of Europe, companies have spent the last two years adjusting and preparing for a hard BREXIT, so a middle ground solution may actually be very positive for the market.
The market continued its recovery from the Christmas Eve lows as Jerome Powell has reinforced the fact that Federal Reserve will become more patient on raising rates. This along with the progression of US and China trade talks, the market has rallied to recoup some of the losses from the end of last year. In hindsight, that drop appears to be an emotional overreaction for issues that we’re still in the process of reaching a conclusion.