Christine Poole, chief executive officer and managing director, GlobeInvest Capital Management

MARKET OUTLOOK:

The strong start in equity markets so far in 2023 reflects an improvement in the global economic outlook and a slowdown in global inflation. The decline in energy prices, courtesy of a warm winter, will soften the downturn in the Eurozone and the U.K. The earlier-than-expected and rapid reopening of China’s economy is also providing life to global growth. In North America, rising interest rates have yet to put a dent in a tight employment market, delaying the onset of a much-anticipated recession.

Inflation and interest rates will continue to dictate the direction of financial markets. While inflation has been steadily receding since the peak last June, prices are still growing well above the U.S. Federal Reserve’s two per cent target. As well, a remarkably resilient U.S. labour market, as evidenced by a 53-year low unemployment rate of 3.4 per cent, is inconsistent with the target range. As such, interest rates in the U.S. will continue to move higher and likely remain restrictive for longer to ensure that high inflation will be quelled for good.

This current tightening cycle is one of the fastest on record and its impact has yet to be fully felt. The Bank of Canada stated at its latest meeting it would be appropriate to pause any additional tightening to allow economic developments to unfold, acknowledging the lagged effect of monetary policy. The FOMC, on the other hand, anticipates that ongoing federal fund rate increases will be appropriate. Nonetheless, both central banks have conveyed a more data-dependent process going forward.

The leading economic indicators signal a broadening economic slowdown, although the depth and duration remain to be seen. Volatility is an inherent characteristic of owning stocks and will create opportunities to invest in companies at attractive prices.

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TOP PICKS:

Linde PLC (LIN NYSE)

Recent purchase $331 range in February 2023

LIN is the largest industrial gas company worldwide, serving a diverse group of industries and geographies. Linde is positioned to benefit from its leading positions in attractive secular growth end markets including healthcare, electronics, and clean energy. Linde provides a dividend yield of 1.4 per cent.

Mondelez International (MDLZ NASD)

Recent purchase price $65 range in February 2023

Mondelez is a global snacking company with top-category market shares in biscuits, chocolate, and candy. Its portfolio of leading global brands includes Oreo, beVita, Ritz, Cadbury and Toblerone. With about 35 per cent of its revenues from emerging markets, Mondelez is well-positioned to benefit from the growing middle-class population in these regions. Mondelez provides investors with a dividend yield of 2.3 per cent.

Walt Disney (DIS NYSE)

Recent purchase price $108 range in February 2023

Disney is a media conglomerate and premier content provider, comprised of media networks, parks and resorts, studio entertainment, consumer products and direct to consumer. Its strong global brand portfolio includes Disney, ESPN, Pixar, Marvel, and Lucas Film. The successful November 2019 launch of Disney+, its direct-to-consumer streaming service provides optionality to its distribution capabilities.