February 2023 Pricing Commentary (Audio version now available – use the controls above.) Despite the early month optimism, North American equity indices slid into negative territory by the end of February. This decline was mostly due to lingering concerns about elevated inflation, U.S. 10 year treasury bond yields creeping towards 4%, and ongoing restrictive central bank monetary policies. Surprisingly robust North American economic activity and employment data also contributed to the decline. Notably, with growing investment interest in large language models and generative artificial intelligence (AI), our three ABC Funds outperformed their respective benchmarks in February. This was due to the exceptional performance of two key investment holdings: NVIDIA and Meta, held in all three ABC Funds. During NVIDIA’s earnings call on February 22nd, CEO and company founder, Jensen Huang made a significant statement regarding the current state of artificial intelligence: “AI is at an inflection point, setting up for broad adoption reaching into every industry. From startups to major enterprises, we are seeing accelerated interest in the versatility and capabilities of generative AI.” While our portfolios are well-diversified, they are positioned to capitalize on AI’s tremendous growth potential, anchored by industry leaders leveraging the power of AI to drive transformative innovation, increase productivity, and boost corporate profits. Looking ahead, our outlook remains optimistic regarding the North American economic and investment prospects for 2023. As a result, we expect common share prices to saw-tooth their way to higher levels. Irwin A. Michael, PresidentI.A. Michael Investment Counsel Ltd.
