Recap & Macro Outlook: Sales have been strong
Canadian banks have just finished up their quarterly reporting period. This traditionally serves as a signal for the end of “earnings season” in Canada. During earnings season, we are always busy reviewing financial results, speaking with management and listening to conference calls. However, after the banks report, we always take a moment to look back and assess more broad-based results. Bloomberg has a great function that consolidates financial results and expectations by region, index and/or company type. The table to the right presents 2017 sales growth results by industry, for just under 90% of North American companies. We prefer to evaluate sales vs. earnings, as we feel there is less manipulation. As you can see, there has been very broad-based growth since last year. Corporate strength is another reason which supports the recent strength of the US and Canadian economies. On our last note, we wrote about North American GDP and promised that we would update you as fresh data became available. Canadian economic data came in strong but the real surprise was US and Canadian employment. Both reports showed robust employment strength but wage growth remains muted at this point (i.e. inflation is still lagging).
“This means that” we continue to see strong coincident economic data, with no obvious signs of weakening.
This is our last issue of the Pathfinder Investment Outlook for 2017. We will spend the remainder of December writing our annual reviews for each of the mandates. We have written this weekly newsletter in various forms for the past 12 years – thank-you for reading. We write regularly for two important reasons: First, to keep you aware of our thoughts. We think you should know “where your money is invested and why”. Second, the note serves as an important part of our investment process. We believe that summarizing our investment committee meetings and the debate surrounding them is a very helpful discipline. Please have a safe and happy holiday season from everyone at Pathfinder; we will resume our note in January. Yours truly, Mike.
National Instrument 31-103 requires registered firms to disclose information that a reasonable investor would expect to know, including any material conflicts with the firm or its representatives. Doug Johnson and/or Pathfinder Asset Management Limited are an insider of companies periodically mentioned in this report. Please visit www.paml.ca for full disclosures.
*All returns are time weighted and net of investment management fees. Returns from the Pathfinder Partners’ Fund and Partners’ Real Return Plus Fund are presented based on the masters series of each fund. The Pathfinder Core: Equity Portfolio and The Pathfinder Core: High Income Portfolio are live accounts. These are actual accounts owned by the Pathfinder CEO (Equity) and client (High Income) which contain no legacy positions, cash flows or other Pathfinder investment mandates or products. Monthly inception dates for each fund and portfolio are as follows: Pathfinder Core: Equity Portfolio (January 2011), Pathfinder Core: High Income Portfolio (October 2012) Partners’ Fund (April 2011), Partners’ Real Return Plus Fund (April, 2013), and Partners’ Core Plus Fund (November 2014).
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