September 2023 Pricing Commentary (Audio version now available – use the controls above.) Historically, September has never been an easy month for financial markets. It was no different for the month of September 2023. Market headwinds included the growing investor recognition of “higher for longer” interest rates, as well as the recent Federal Reserve comments interpreted as alarmingly hawkish. Additionally, the impending threat of a U.S. government shutdown, with its huge risks and repercussions, kept investor sentiment on edge. While decelerating, inflation remains stubbornly above the Federal Reserve’s 2% target. This has encouraged the central bank to continue with its tightening efforts. Consequently, bond yields have climbed to levels not seen since 2007, contributing to the steepest drop in bond prices in nearly four decades. Despite the pervasive negativity overhanging financial markets, we remain optimistic with regard to our diversified, large-capitalization portfolios. Common stocks appear technically oversold, which we believe sets the stage for a significant snapback rally, buoyed by solid corporate earnings and transformative innovations in technology including generative AI and digital transformation. Additionally, as we enter October, seasonal market trends are encouraging. In fact, the October to April period has a track record of delivering superior returns relative to the rest of the year. In summary, although the challenges of August and September have priced significant negativity into the financial marketplace, we believe our portfolios are resilient and strategically positioned to capitalize on an eventual market rebound into year-end. Irwin A. Michael, President I.A. Michael Investment Counsel Ltd.
