The current expansion has become the longest economic expansion in history.  In the major global economies it appears as though we have further room to grow, however signs are indicating that we are in the later stage of the business cycle.  We know we must be diligent with the investment portfolios and continue to be market weight with asset allocations.  Domestic challenges are evident in Canada; most notably in elevated household leverage, strained affordability in key housing markets and insufficient pipeline capacity for oil and gas.  However, the biggest driver for a Canadian recession would be a slowdown in the U.S. economy. U.S. recessions have historically been associated with equity bear markets.  Hayes Vickers Private Wealth continues to monitor key leading indicators in the US that have historically been reliable in foreseeing recessions.  As of today, these indicators are still not pointing an imminent downturn.  This leads us to believe that a recession could still be a year or more away and that North American markets could continue to expand into 2020.  However, we know we have to continue to be diligent with investments.  We have been and will continue to prepare for increased volatility and a potential economic downturn.  We have become more defensive in both our equity and fixed income investments.  We expect more modest returns in 2020 but acknowledge the risks that come with the late cycle.  We expect lower yields to persist in fixed income but note that fixed income will also help buffer a downturn and is, now more than ever, something we cannot ignore in clients' portfolios.  We will continue to monitor the economy and position portfolios accordingly.

Political turbulence has been dominating December headlines.  RBC Wealth Management has written an interesting article on the potential implications to markets of impeachment.  To learn more about this topic please read Will political turbulence roil equities?

We look forward to meeting with you in 2020 and discussing these topics further.