2016 is off to a turbulent start due in part to the Chinese stock market and the slowing chinese economy. Although we do believe we are seeing a longer term trend of lower, more sustainable growth in China, we do not think the progress the Chinese have made over the last two decades will be erased. Commodity based economies like Canada, will need to adjust to the reduced demand for much of what we produce, and this will take time.
The good news is that the U.S. economic outlook for 2016 remains reasonable at 2.1 per cent and employment growth, which will hopefully provide a big boost to retail spending, remains steadily impressive.
It has been a difficult start to the year but we anticipate that things will begin to normalize over the coming weeks as the data continues to support decent growth in the US. We are in good shape with our focus on well diversified portfolios of high quality businesses and look forward to the opportunities that this correction may present.
Here are a few good tips on how to think about the market when it corrects from a recent article in the New York Times.