As we finish the final week of October, we hope that everyone has enjoyed the beginning of fall. Although it has been rather rainy, we hope you've had time to enjoy the fresh fall air. If you haven’t yet had a chance to enjoy any of the hikes our area has to offer, you can find some great options here 15 Best Trails.
Unlike last year for Thanksgiving, this year we were allowed to get together with family and friends. Although COVID is still a part of our daily lives, with proper protocols, we are now able to be back together in small groups at least. Everyone on the team enjoyed celebrating Thanksgiving with family. This year Natalia cooked a full feast for her family who traveled from Ottawa to stay with her and her husband for the weekend.
With Halloween this weekend, Ontario released guidance and rules for people looking to participate in Halloween this year. Taryn and Lauren's kids will be taking part in the Halloween festivities. Taryn's youngest Nora is going out as an owl and her eldest Ben is dressing up as a ninja for a second year in a row. Lauren’s son and daughter will be dressed as a construction workers and a princess witch. If you are looking for other ways to celebrate Halloween this year, here are 11 Fun things to do if you are not Trick or Treating.
Climate Change
Addressing climate change is one of the most pressing issues of our time and a top priority for RBC. Tackling climate change presents a big challenge and an even greater opportunity for countries around the world, one that will impact all of our lives, and the lives of generations to come. Making the transition to a lower-carbon world will require us to work closely across industry sectors and with governments to help build a more socially inclusive sustainable future. RBC Economics and Thought Leadership set out on a year-long research project to map out some of the necessary pathways for Canada to get to Net Zero and sets out six pathways to get there. Research shows that we need to get to that state by 2050 or sooner to avoid the irreversible consequences of climate change. A Canadian survey by EY found we still value price over sustainability, and equate environmentalism with recycling (91%), reusable shopping bags (88%), composting (58%) and organic foods (49%). Our actions, in other words, are necessary but insufficient. Even in Europe, only 8% of consumers cite sustainability as a key factor in purchase decisions, placing it well below safety.
This fall, the RBC podcast Disruptors, launched a multi part series exploring some of the potential solutions to a warming planet, as well as some of the challenges fulfilling them. Together John Stackhouse and Trinh Theresa Do speak with a variety of innovators and market disruptors who are working to get Canada on a path to Net Zero. The first instalment of our new podcast series, The Climate Conversations, features Katherine Hayhoe and Mark Carney. You can link to the podcast from this article The Journey to Net Zero Must Be Global or you can download the episode and subscribe to the entire series here.
Market Update
Volatility has returned after having been absent from the investing landscape over the past few months. As a result, many global markets have experienced some pressure in recent weeks, although the bouts of weakness have been orderly in nature. We highlight a few things making headlines over the past few weeks:
Supply Chain
Supply chain bottlenecks are top of mind these days, the problems have been present and well known for many months but they are exacerbating inflationary pressures that were already creating unease amongst investors. This article How are supply chain issues impacting equity markets? examines root causes and discusses the impact on the market.
Global Energy
You may have noticed the recent jump in prices at the gas pump. Crude oil prices have more than doubled over the past year, rising from below $40 per barrel to more than $80. Not surprisingly, there has been a recovery in demand as the world’s economies have been reopening to varying degrees and levels of mobility and activity are returning closer to normal. A stronger demand backdrop is partly responsible for some of the oil price gains but, the bigger driver has been supply. There has been notable under-investment over the past decade. One could argue that oil is simply following a typical path of a commodity cycle: high prices encourage growth in exploration, development, and production. This eventually leads to oversupply, weaker prices, and cutbacks to capital expenditures. Years later, the underinvestment leads to a lack of supply that eventually drives prices higher yet again, and so on. This classic cycle may indeed be playing itself out yet again. The prevailing oil prices will inevitably lure more supply into the market as is typical in an upcycle. But, the rate of supply growth may fall short of prior episodes given some of the focus on climate and sustainability. That suggests the supply and demand dynamics have the potential to remain supportive of more elevated prices than what we’ve been accustomed to over the past decade. And we believe the global economy should have the capacity to handle higher oil prices, up to a certain extent, given the elevated savings of consumers and further economic reopening that still lies ahead.
China and Evergrande
China’s second largest property developer, Evergrande, has been under stress this year, with its bonds and share price selling off significantly, suggesting high risk of bankruptcy. An excessive use of leverage, and forays into businesses outside of its core real estate operations are to blame. The company recently missed a deadline to pay interest payments on a few of its bonds, and has now entered a thirty-day grace period, with default being a real possibility if that deadline passes with no payment.
There are a few reasons this is important for global investors: 1) the risk of financial contagion given the sheer size of the property developer and the interconnectedness of global credit markets; and 2) the risk to the Chinese economy, which is the world’s second largest. Encouragingly, global credit markets, where bonds of companies from around the world are bought and sold by investors, are behaving relatively well in the face of the Evergrande debacle. This suggests the risk of contagion outside of Chinese financial markets may be low. The bigger risk may be the Chinese economy which has already seen its momentum wane this year. The Chinese government has a delicate situation on its hands as it aims to ensure stability and affordability of housing, while attempting to rein in corporate mismanagement, monopolistic behaviour, and excess leverage.
Housing Market
Speaking of the housing market, let's take a closer look at what's been going on in Canada’s housing market. Despite the distraction of the federal election, Canada’s housing market has continued on a high note this fall. Demand-supply conditions continue to heavily favour sellers, forcing buyers to stretch their purchasing budget further to win (highly competitive) bidding wars. According to CIBC, parents gifted $10B to adult children this past year to buy homes. The report found that roughly 30 percent of first-time homebuyers and nearly nine percent of existing homeowners received financial help from family to purchase a house. First time homebuyers received an average gift of $82,000 while “mover-uppers” were gifted an average of $128,000 in September 2021.
Your Financial Health
The Wealthy Barber David Chilton, has created a three part series where he hosts Sarah and Bryan Baeumler of HGTV Canada and offers advice on how to find the right executor in large or complicated family situations, what to do if you're named as an executor of a Will, and three surprising Will and estate planning facts . You can find all three short videos here How family, real estate and business can complicate finding the right executor - RBC Wealth Management
Cyber security continues to be a risk as the world has shifted online. When you own and operate your own business it's often an issue that can shift your focus away from other important day-to-day tasks. Seven cyber safety tips to protect your business offers some helpful advice and understanding on how to protect your business from threats.
Happening near Ancaster this weekend
If you are looking for something to do this weekend, the Hamilton Fall Garden & Mum Show is in its final weekend. The event offers over 200 varieties of Chrysanthemums spread over 20,000 sq ft.
Have a great weekend!
Hayes Vickers Private Wealth