June 2023 Pricing Commentary

North American equity markets extended their upward ascent during the month of June and ended the first half of 2023 well into positive territory. This appreciation occurred despite continued central bank interest rate hikes, economic uncertainty, persistent global inflation, and an opaque corporate earnings landscape.

Remarkably, equity markets have continued to climb the proverbial “wall of worry”, with the S&P 500 rising over 15% and the Nasdaq Composite increasing over 31% for the first half of 2023. This performance defied all bearish prognostications, demonstrating the strength and resilience of the markets. Most noteworthy, it appears that there is still significant investible cash sitting on the sidelines anxiously awaiting a wishful market selloff. This did not occur during the first six months of 2023.

Our three ABC Funds capitalized on the positive momentum in June, posting excellent returns and adding to our impressive year-to-date results. In particular, three sectors lifted our performance: information technology, communications, and consumer discretionary. Other positive factors included:

• Prioritizing U.S. equities versus Canadian equities
• Focusing on large capitalization securities
• Maintaining fully invested portfolios
• Our U.S./Canadian dollar hedge to mitigate currency risk

Particularly notable was that our top three ABC Funds holdings, Apple, Microsoft, and NVIDIA reached new all-time highs during the month of June. Additional contributors to our performance included: Adobe, Becton Dickinson, Broadcom, S&P Global, Meta, Honeywell, Amazon, Mastercard, Visa, and Waste Management.

Looking ahead to the second half of 2023, we remain very optimistic and expect North American equity markets to continue scaling the “wall of worry” to higher levels. Our ABC portfolios are well diversified, and we believe their composition positions them favourably to navigate an evolving market landscape.

Irwin A. Michael, President
I.A. Michael Investment Counsel Ltd.