Coverage Universe - Weekly Price Change: Oct 11-18, 2019

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The reason for the stock rally this past year has been from from central banks acknowledging deflation is as big a risk as inflation, allowing interest rates to drop. The rally was despite having major headwinds from trade wars, presidential impeachment hearings, and Brexit all acting as a drag. This long awaited clarification of all three of these issues might support the next leg higher for markets although there are indications that some sectors have reached full valuation.

The US-China trade war is reportedly one step closer to a solution, a win by Boris Johnston's Conservatives of the British election and the lack of support for the Trump impeachment decreases uncertainty and improves visibility, which markets like. Just as all looks rosy, the Canadian REITs encountered some distinct headwinds, declining last week by 4.1% for the S&P TSX REIT Index and 3.1% for the IncomeResearch.ca group of REITs.

The drop in the REITs is has gone largely unnoticed, a similar decline in TSX or Dow of 4% in a week would be on the front page. Is this a harbinger, or just profit taking after a sizeable run up? Comments this week provide analysis of this interesting development.

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