Consumer delinquencies climb

You may have noticed the stock market going up lately. But the S&P 500 index has only been driven up by a handful of concentrated companies in the technology sector. The AI hype is real. Most stocks, however, are actually trading below their 50 day moving averages.

The financial sector has been one that’s been underperforming. My largest holding, TD bank stock is down about 15% now compared to just the previous quarter. Why? Because there are signs of cracks in the backbone of the economy.

According to Reuters, more consumers are falling behind on their debt payments. Worsening economic conditions would lead to “credit deterioration throughout 2023 and 2024 with losses eventually surpassing pre-pandemic levels given an oncoming recession,” predicted UBS analysts led by Erika Najarian. Still, loan defaults are forecast to stay “below the peaks experienced in prior downturns,” they said.

We’ll have to see how this all plays out, but I expect further volatility in financial stocks going forward at least for now. TD stock’s dividend yield is almost at 5% now which is looking pretty attractive. But I am waiting for signs of a turnaround before putting more money into the market. There will be a time to buy these stocks again I’m sure. 🙂

Canada literally saw 0% GDP growth in the latest data so I don’t expect the BoC to increase interest rates in June. But the Fed will probably bump the rate up by 0.25% in the U.S. as inflation down there is still stubbornly higher than what they want to see.

In any case, I’m back from vacation so I’ll be back to updating the blog regularly now. 😀

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Random Useless Fact:

The sun is one of the best sources of vitamin D for the human body.