Canadian investor sentiment like 'Eyeore from Winnie the Pooh,' says strategist
With the Canadian market still uncertain about future interest rate cuts, one market expert says Canadian investors are “a great contrarian indicator.”
Brian Belski, chief investment strategist at BMO Capital Markets, said in an interview with BNN Bloomberg on Monday that Canadian investors are the “moral equivalent to the mythical creature Eeyore from Winnie the Pooh.”
“It’s sunny today in Toronto, but tomorrow it’s going to snow, always focusing on the negative,” he said. “What’s really interesting, if you go back to look at relationships between currencies and the markets moving, whenever the big three — financials, energy, materials -- (are) all performing.”
“Last year, all three underperformed the S&P 500. The year before, people forget, 2022, the TSX actually outperformed the S&P 500.”
Belski mentioned that the cyclical nature of Canada’s markets could benefit investors, adding that sentiment towards rate cuts should not sour investing optimism.
“We are confounded, quite frankly, why so many people believed the feds are going to cut in March,” he told BNN Bloomberg.
“When we wrote our piece for the year ahead, meaning the 2024 forecast, we published it in November of 2023 and we said: ‘Listen there’s a really good chance the feds are not going to cut rates.’”
Belski also mentioned that history has shown that the Bank of Canada often moves faster than the U.S. Federal Reserve.
“If you look at history, the Bank of Canada’s actions always happen first. They cut first, they pause first, they raise first,” he said.
“Right now, our great economics department at BMO says it’s a June cut in Canada, a July cut in the United States — maybe. Now I think those could be diminishing, especially with the fact of how good employment is.”
Belski said that interest rates are not so important when the “economy is doing quite well.”
“Our theme remains resolute that as America goes, so goes Canada,” he said.
“I think North America is going to continue to pace equity performance.”
To watch the rest of Belski’s interview with BNN Bloomberg, watch the interview above.
