Your Portfolios in Brief
Corebridge Financial Inc. (CRBG), a major player in retirement solutions and insurance products, continues to impress investors with its strong financial performance and proactive capital management. Spun off from AIG in 2022, Corebridge has established itself as an independent and competitive entity, offering promising prospects in a high-interest-rate environment.
Key Highlights in 2024:
• Third-Quarter Financial Results:
Corebridge generated post-tax operating earnings of $810 million, or $1.38 per share, up 32% from the previous year, exceeding expectations by $0.22. Premiums and deposits increased to $9.6 billion, supported by strong demand for fixed and indexed annuities. Adjusted revenues rose 11.1% year-over-year to $4.5 billion, although slightly below market expectations.
• Key Segment Growth:
o Fixed annuity sales doubled to $2.8 billion.
o Assets under management (AUM) grew 17% to $163 billion.
o Fee income in the individual retirement segment increased by 11%, reaching $321 million.
o Life insurance premiums and deposits decreased by 21.1% to $856 million, but adjusted pre-tax income rose 15% to $156 million, supported by favourable mortality rates.
Why It’s a Stock to Watch:
Corebridge Financial demonstrates exemplary management of its investment portfolio, with 97% of its assets in fixed-income securities. Its limited exposure to riskier assets, combined with a solid roadmap for share buybacks and dividend payouts, positions Corebridge as an attractive investment. The company has also pivoted towards lower-risk annuities, which should reduce hedging complexity and provide more stable income.
Additionally, two strategic trends enhance its potential:
• Aging Population: The growing demographic of individuals nearing retirement age presents a significant opportunity for Corebridge Financial. By responding to the increasing demand for insurance and retirement planning products, the company can expand its customer base and develop tailored offerings to meet this market’s evolving needs.
• Technological Advancements: Adopting technologies like artificial intelligence, data analytics, and digital platforms enables Corebridge to enhance operational efficiency and customer service. Leveraging these tools allows the company to streamline processes, optimize decision-making, and offer personalized experiences, increasing satisfaction and customer retention.
Conclusion:
At Pratte Portfolio Management, we firmly believe that adding Corebridge Financial to our portfolio was a strategic and judicious decision. Its robust positioning in the retirement solutions sector, its ability to generate substantial capital returns, and its continued growth make it a key investment.
Corebridge is an attractive stock for dividend-focused and growth-oriented investors. The stock has risen by 5.40% over the past five sessions and an impressive 49% since the start of the year. Experts estimate the stock could reach a range of $38–$40 in the next 12 months, offering a significant total return opportunity. With promising prospects for 2025, Corebridge remains a must-watch stock for investors seeking long-term value and returns.
Markets in Brief:
Monday
• Dow Jones Industrial Average (DJIA): +0.99%, closing at 44,736.57 points, a new record.
• S&P 500: +0.3%, finishing at 5,987.37 points, another all-time high.
• NASDAQ: +0.27%, closing at 19,054.84 points.
The session saw a broad rally in U.S. markets, pushing the Dow Jones, S&P 500, and Russell 2000 to new highs. The nomination of Scott Bessent as the future Treasury Secretary by President-elect Donald Trump eased investor concerns about inflation and protectionist policies. His measured approach contributed to a drop in the 10-year U.S. Treasury yield to 4.27%, down from 4.40% on Friday, providing support for equities.
Most S&P 500 stocks gained, with strong interest in cyclical stocks such as Nike (+2.4%), Caterpillar (+2.05%), and Home Depot (+2.06%).
Some tech giants faced losses, including Nvidia (-4.18%) and Tesla (-3.96%), as investors shifted towards cyclical and undervalued names. In contrast, Amazon (+0.9%) and Alphabet (+0.6%) ended the session higher.
Key Highlights:
• Bath & Body Works (+16.51%): Posted better-than-expected quarterly results and revised its annual forecasts upwards.
• Nike (+2.4%): Benefited from renewed interest in cyclical stocks.
• Nvidia (-4.18%) and Tesla (-3.96%): Suffered profit taking after recent rallies.
• Macy’s (-2.21%): Declined after announcing a delay in its earnings report due to the discovery of accounting fraud.
• Toronto Stock Exchange (-0.13%): Closed down 33.93 points at 25,410.35, weighed down by energy stocks affected by falling oil prices.
• Canadian dollar: Traded at an average rate of 71.53 cents USD, slightly lower than 71.54 cents USD on Friday.
Tuesday
This session saw the major U.S. stock indexes hit new records, as investors digested President-elect Donald Trump’s tariff threats.
• Dow Jones Industrial Average (DJIA): +0.28%, closing at 44,860.31 points, after rebounding more than 300 points from intraday lows.
• S&P 500: +0.57%, finishing at 6,021.63 points, a new all-time high.
• NASDAQ: +0.63%, reaching 19,174.30 points at the close.
Despite Trump’s announcement of an additional 25% tariff on goods from Mexico and Canada, as well as a 10% increase for Chinese products, the markets seem to view these measures as negotiation tactics rather than imminent threats. Large-cap technology companies, nicknamed the “Magnificent Seven,” significantly contributed to the indexes’ gains:
• Amazon: +3.18%.
• Alphabet (Google): +0.70%.
• Apple: +0.94%.
• Nvidia: +0.66%.
Mixed Economic Data and Fed Minutes
Regarding indicators, U.S. consumer confidence reached a new high in November, fuelled by optimism about the labour market. However, new home sales plummeted in October, disappointing market expectations.
The release of the Federal Reserve’s minutes confirmed that further rate cuts will be implemented “gradually,” fostering some caution in the markets. On the bond market, the 10-year Treasury yield rose to 4.29%, up from 4.27% the previous day.
Stocks in Brief
• Amazon (+3.18%): The best performer among the “Magnificent Seven,” driven by renewed investor interest.
• General Motors (-9.03%): Hit hard by Trump’s tariff announcements.
• Ford (-2.6%): Also affected by tariff concerns.
• iShares MSCI Mexico ETF (-2.0%): Reflecting rising trade tensions between Mexico and the U.S.
• Bitcoin: Pulled back after a recent surge.
• S&P/TSX (-0.02%): Slight decline of 5.21 points, closing at 25,405.14.
• Dow Jones Industrial Average (DJIA): +0.28%, closing at 44,860.31 points, after rebounding more than 300 points from intraday lows.
• S&P 500: +0.57%, finishing at 6,021.63 points, a new all-time high.
• NASDAQ: +0.63%, reaching 19,174.30 points at the close.
Trump’s Tariff Threats Plunge the Auto Sector into Uncertainty
President-elect Donald Trump’s recent threat to impose 25% tariffs on all imports from Canada and Mexico has shaken the markets, particularly the already pressured automotive sector. James Demmert of Main Street Research advises investors to exercise great caution, highlighting that auto part manufacturers and automakers, deeply integrated into North American supply chains, are the most vulnerable.
On Tuesday, the S&P/TSX Composite Index initially dropped 0.5% but managed to close flat, demonstrating some resilience despite widespread concerns. However, individual company performance painted a gloomier picture:
• Bombardier Inc. (Quebec-based) dropped 9.3%, its steepest decline since February.
• Magna International Inc. and BRP Inc., key players in Canadian manufacturing, also saw declines.
• Linamar Corp. and Martinrea International Inc. faced downgrades from analysts, anticipating significant tariff-related impacts on their operations.
Analysts and investors agree that tariffs are a hindrance to the global economy. Colin Cieszynski, Chief Strategist at SIA Wealth Management, compared these measures to “sand in the gears,” explaining that markets react negatively to any threat likely to disrupt trade flows. Derek Holt, Vice President at Scotiabank, added that the energy and automotive sectors are likely candidates for exemptions, given their importance to supply chains and U.S. consumers.
On the currency front, the Canadian dollar briefly fell to 70.53 cents USD before slightly recovering to 71.01 cents USD by the end of the day. The prolonged depreciation of the loonie, exacerbated by the Bank of Canada’s interest rate cuts this year, reflects a combination of internal economic pressures and uncertainties surrounding trade relations with the U.S. Sadiq Adatia, CIO at BMO Global Asset Management, warned that the Canadian dollar falling below 70 cents USD could become a reality if trade tensions persist.
The impact of tariffs would not be limited to automakers. Transportation companies like Canadian National Railway Co. and Canadian Pacific Kansas City Ltd. also faced declines, illustrating the potential domino effect on the Canadian economy. Additionally, Karl Schamotta, Chief Market Strategist at Corpay, noted that investors remain skeptical about Trump’s proposed tariffs, suggesting they may simply be a negotiation tactic.
As Canada and Mexico assess their options for responding to this threat, the future of North American trade remains uncertain. If implemented, these tariffs could redefine long-standing trade relations, with major implications for manufacturing industries, cross-border commerce, and Canada’s global competitiveness. For investors, this situation requires a detailed analysis of the most exposed companies and careful risk management.
Wednesday
• Dow Jones Industrial Average (DJIA): -0.31%, closing at 44,722.06 points.
• S&P 500: -0.38%, finishing at 5,998.74 points.
• NASDAQ Composite: -0.6%, ending at 19,060.48 points.
Major U.S. indexes ended lower on November 27, 2024, marking a pause after several consecutive days of gains. Low activity ahead of the Thanksgiving holiday and profit-taking in large-cap tech stocks weighed on the markets.
Inflation and Economic Indicators in Focus
The release of the Personal Consumption Expenditures (PCE) index, a key inflation measure favoured by the Fed, showed:
• A 0.2% increase in October (2.3% year-over-year), in line with expectations.
• Core PCE (excluding food and energy) rose 0.3% month-over-month and 2.8% year-over-year.
These data points did not clarify the Fed’s intentions, but two thirds of analysts predict another rate cut during the next meeting in December, while the remainder anticipates rates to stay within their current range of 4.50%-4.75%. On the bond market, the 10-year Treasury yield fell to 4.24%, down from 4.31% the previous day.
Stocks in Brief
• Urban Outfitters (+18.31%): Surged after posting better-than-expected quarterly results.
• Dell (-12.25%): Hit by weak PC sales and disappointing forecasts.
• HP (-11.36%): Penalized for its poor quarterly outlook.
• Nordstrom (-8.12%): Fell despite better-than-expected revenue.
• Nvidia (-1.15%): Declined after an exceptional year (+173%).
• Meta Platforms (-0.8%): Saw profit taking after significant annual gains.
• Salesforce (-3.84%) and Adobe (-2.21%): Affected by a general trend of profit-taking in the tech sector.
Friday
• Dow: +0.46%, at 44,927.43 points (intraday record).
• S&P 500: +0.40%, at 6,016.72 points.
• NASDAQ Composite: +0.60%, at 19,135.48 points.
U.S. stock indexes were advancing this Friday in a shortened session, marking the end of an exceptional month for equities.
Stocks in Brief
• Nvidia (+2.75%): Benefiting from improved semiconductor outlook.
• Applied Materials (+3.0%) and Lam Research (+5.0%): Gaining from news regarding trade restrictions.
• Russell 2000 (+11.1% for the month): Strongly supported by optimism around tax policies favourable to small businesses.
Conclusion
With impressive monthly gains for major indexes, November 2024 marks a pivotal period of recovery for stock markets. Investors remain confident about economic and political prospects, while seasonality and expectations of rate cuts provide a favourable tailwind for equities. Don’t miss the next strategic moves to maximize your investments.
