Market View

Quarter 4, 2023

2023 Market Summary – what a difference a year makes!

Stock Market Returns 2023:             CANADA:  TSX +8%      USA:  S&P500  +26%

Stock Market Returns 2022:             CANADA:  TSX  -9%     USA:  S&P500  -19%

Inflation “worries” lessening

The focus of the financial markets this year was on inflation and whether higher interest rates would slow the economy into a recession.  At the beginning of the year, one could not look at the market through a single lens because of the many factors that “could” affect the market.  Our Commentary noted that the markets were “murky”.  This past year traditional economic models that looked back did not work as the economy did not cycle in the same way.   

Central Bank Interest Rates rose in 2023 – expected cuts in 2024 cause year-end rally

Labor shortages traditionally have been inflationary.  Higher wages were necessary to attract employees to fill job openings.  The traditional response of central banks was to raise interest rates to slow the economy, which would lower the demand for employees and their wages.  The Bank of Canada rate was 4.25% on January 1, 2023 and was raised by 0.25% three times in 2023 to 5.00%.  The Canadian unemployment rate has stayed steady at 5.8%. 

At the end of 2023, the US Fed Funds Rate was 5.50% whereas a year ago it was 4.50%.  The United States still has a high level of job openings despite higher interest rates which were supposed to put the brakes on the economy.  The US Federal Reserve recently indicated that they may be able to lower the Fed Funds rate later in 2024.  This produced a year-end stock market rally on the hopes that interest rates will be lowered in 2024.

Canada’s High Immigration Levels a cause of the Housing Shortage

The price of homes had a huge jump during the first year of COVID for a variety of reasons.  The high immigration levels in 2022-23 have increased demand for housing – and supply has not increased to meet this demand.  This is inflationary, especially in the bigger cities.  Some economists are saying that Canada is in a “per capita” recession. 

Excess Savings from Government Cash Transfers during COVID?

Data is not available as to what Canadians have done with their CERB cheques.  Are they saving or have they spent it?  According to Statistics Canada, consumer spending reached an all-time high in the third quarter of 2023 – which could be the answer to the question!  In the US, Americans’ credit card debt swelled to a record US$1.08Trillion in Q3, according to the Federal Reserve Bank of New York, notching the largest increase since it began tracking in 1999.

Oil and Gas prices have not spiked

The price of gas in Ontario has come down from 170.6 cents per litre in August to 143.7 cents per litre at the end of December.  The price of oil (WTI) per barrel ranged from a low of USD$67.50 per barrel to a high of USD$93.00 per barrel – USD$72.79 at year end.  The predicted spike in oil due to the conflicts in the Ukraine did not happen.  Oil was not inflationary.

International Conflicts and Politics have not caused shortages

The Ukraine conflict continues into its second year.  There has not been any resolution and the Ukraine is relying on Europe and the United States for military support.  The barriers to trade that were to pressure Russia into pulling back have not worked.  Conflicts in the Middle East bear watching.  The US and China seem to be breaking their “cold” war.  International trade is very important to both parties.  China has been visited by politicians from Europe, Brazil, and Russia.

2024 is being called the biggest election year in history with half the world participating in regional, legislative, and presidential elections. All represent potential risks to the world economy.

AI and Chat GPT

The markets have not decided whether this is a good or bad invention.  It should not be inflationary.  Something to watch from regulatory and productivity points of view.  Tech stocks were the “hot ticket” this past year.  Time will tell if their earnings match the hype.

Crypto Currency is not a hedge against inflation

Crypto currency stocks have rallied since they took a significant hit after the collapse of exchange FTX at the end of 2022.  On June 2, 2023, Dan Raju, CEO of Tradier, a brokerage platform, said; “The last year has busted the convenient myth that cryptocurrencies are a hedge against recession… The truth is the crypto prices have proven to be impacted by the same directional sentiment that impacts retail stock investors.” 

PMC continues to look Long Term

This past year has shown that new variables can muddy the waters and make short term prognostications unreliable.  Many thought that 2023 would be a down year.  At the end of October, the TSX was down -2.6%.  The Fed’s indication that the Fed Funds rate may be lowered 3 times next year promoted “irrational exuberance” in the markets at year end.  We continue to take a long-term view which supports our investment philosophy of investing for the long term in quality companies. 

2024 is PMC’s 60th Anniversary!  We are proud of our long service to our clients.  In 1964, a young man named Richard Hurlburt turned his dream into a reality – he incorporated Portfolio Management Corporation as an investment management firm.  His vision was to offer personal service to clients.  As a result of this, we are privileged to be investing on behalf of third generation clients. 

Looking ahead - in 2024 PMC will offer Funds

PMC will offer an equity fund and a fixed income fund later in 2024.  These will be beneficial for smaller portfolios.  With one purchase you will be able to own a basket of securities with a lower risk profile than that offered by just a few securities.


Nine Canadian fund managers offer their top picks and portfolio advice for 2024 - The Globe and Mail 2023 12 18 (Need to be a Globe subscriber to access this link).

How to manage innovation risk in your portfolio amid emerging technologies - Video - BNN ( to manage innovation risk in your portfolio amid emerging technologies; Anish Chopra, managing director of Portfolio Management Corporation, joins BNN Bloomberg and discusses the generative Ai boom and how to manage the disruption as companies grapple with the changes. BNN, 2023 10 25.

Maximum contributions:  for RRSP for 2023 is $30,780;  for TSFA in 2024 is $7,000

February 29, 2024, is the 2023 RRSP Contribution deadline.