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While 2013 will be remembered as a very good year for most global stock markets, Canadian stocks continued to be held back by losses in the resource sectors. U.S. stocks finally broke out of the 15-year trading range that had been accentuated by two brutal bear markets (2001-02 and 2008) sandwiched between the technology boom, the global expansion (2003-07) and the recovery from the financial crisis. The gains from the 2009 financial crisis have been driven by both an earnings recovery as well as the most favourable monetary conditions ever by the global central banks. Interest rates remain near all-time lows while central bankers continue to ensure investors that they will not be in a hurry to remove this stimulus and raise interest rates until economic conditions improve even further. They are also setting goals of higher levels of inflation as a sign of this strength, something that central bankers have never supported or endorsed. The bottom line is that monetary conditions will continue to be easy and this should be a ‘tailwind’ for the stock market.
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