His clients, he says, are constantly asking him when the big market correction is going to happen, but Scotia Wealth Management portfolio manager Stan Wong says he doesn’t think a major pullback is likely to materialize, despite an environment he characterizes as one that will contain higher levels of volatility that investors have been used to in recent years.
On Thursday, Wong appeared on BNN’s “Market Call Tonight” and talked about his outlook for the rest of the year.
“Maybe we don’t have a major correction,” Wong told host Jameson Berkow. “We have had some minor pullback and I really think that’s as far as we go when it comes to the markets.”
Wong says investors have been basically ignoring news that might have sparked a downturn, perhaps revealing some underlying bullishness that many hadn’t detected.
“When you look at the headlines they have been negative when it comes to White House turmoil or geo political events happening around the world but I think the last few weeks investors have largely been ignoring some of the good things that are happening, which is really positive economic data happening all around the world and corporate earnings have been very strong,” Wong says. “If you look in the U.S., earnings are up 12 per cent year-over-year and we had a 77 per cent beat rate in the S&P 500. I think some of those things are being overshadowed by the negative headlines.”
Wong says the TSX has been a laggard when compared to the rest of the world due to weak energy prices, a softening housing market, and uncertainty around the future of NAFTA.
“When it comes to volatility,” says Wong, “I think we have had a pretty long period of fairly relaxed volatility and now we are getting back to more elevated levels of volatility, a little bit higher than our extreme lows. And I think those elevated levels will remain, but that presents buying opportunities along the way.”