2018 Q4 Newsletter December 31, 2018
The fourth quarter of 2018 has seen severe market volatility globally. Both the TSX and Dow Jones Industrial Average declined more than double digits from peak levels seen in August and October (down 13.0% and 15.2% respectively). The TSX was down 8.9% for the year, while the Dow Jones lost 3.5% in local currency. Exacerbating the significant volatility was a relentless tax loss selling season, as investors looked to offset gains accumulated over a multi-year up cycle. There is a material amount of investor angst over US-tariffs and political instability, which have rattled already vulnerable markets, but the real issue is a concern over interest rate hikes, quantitative tightening, decelerating earnings growth and expectation for an upcoming recession.
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