North American Portfolio Strategist Martin Roberge notes momentum for Canadian equities may be waning despite a fourth consecutive month of positive inflows. While Martin has not seen a tangible shift in sentiment toward cyclical stocks in Canada, he believes investors should seek dividend income among cheaper resource (energy and material) and non-resource cyclical yielders (financials, industrials and cons. discretionary) as he still expect global growth to pick up in H2.
Martin remains bullish on gold. Martin expects a gradual Fed-hike cycle, further US Dollar correction/consolidation and catch-up in headline core inflation will provide a positive backdrop for gold(s) which should allow for a cyclical rally.
Martin believes the Fed's "gradual" or wait-and-see" approach means that real interest rates are likely to turn negative as headline inflation catches up to core CPI over the next six months. Martin's Chart of the Week shows US headline inflation would be near 2% in the spring next year if oil prices rebound to $70-75/bbl.
The Canaccord Genuity research included in the Legacy Wealth Weekly is solely for Canadian residents. To subscribe to our weekly newsletter,click here.