Markets staged a remarkable November rally.
The 2nd strongest November in over 20 years
Even with November typically being the best month for equities historically, Christmas really came early for the stock market this year. The S&P 500 Index almost hit a new 2023 high, after seeing its strongest month this year and the second strongest November in over 20 years, only second to the rally in November 2020.
Cracks are showing on consumer spending
Canadian retail sales in September and preliminary data for October indicate a rebound after a weak third quarter, which is optimistic news for continued strength throughout the Christmas shopping season. However, inventory-to-sales ratios have risen to above trend, which typically is a negative indicator for future GDP growth if it indicates that companies may draw down on inventory rather than turning to production.
The case for moving off the sidelines
As fixed income and equity investments were being repriced due to rising interest rates in 2022 and 2023, cash and money market investments look relatively compelling. Investors seeking safe haven were rewarded with relatively higher yields. Money market inflow of assets reached record levels in 2023.
