Canada Outperforms U.S.

The Canadian market outperformed the U.S. market for the first time in many years in 2022, says Greg Taylor, chief investment officer at Purpose Investments. This has a chance to continue as the S&P/TSX remains underexposed to technology and is overweight on cyclicals. The largest risk to the Canadian market would be in the financials should a prolonged recession emerge. Similar to the Canadian story, international equities look strong in comparison to the U.S. markets. Their valuation discount remains at historic levels and any change in sentiment towards these regions should cause impressive gains as many investors have ignored this area for years. With so many cross currents underneath the surface, one prediction that should seem a safe one to make, he says, is that volatility will remain elevated. “Putting it all together, 2023 looks to be another challenging year for investors. A recession seems difficult to avoid at this point, but the good news is that fact should surprise no one and be fully priced into valuations.”