Although it's a gloomy start to the week, spring is in the air. With only a few weeks left of the school year, it always signals that summer is around the corner. For those of us who have kids in school, recitals and programs wrapping up are always fun to look forward to. 

As mentioned in last month's blog, Sarah Kilpatrick went on maternity leave. As of this morning, no baby yet. Below is Sarah enjoying her in office baby shower. 

 

 

We have a new team member to introduce. Zach Dalton joined our investment team in April. Zach's role is supporting Natalia with portfolio management through investment research, due diligence and risk management. In his time outside of work, he enjoys golf and gardening, specifically growing vegetables. He is currently growing tomatoes, lettuce, kale, beans, peas, cucumber, peppers, spinach, arugula, and onions! We are looking forward to him bringing in some fresh produce! Please join us in welcoming Zach. 

 

 

Market Update

Volatility has been a key theme in the markets so far in 2022. In recent weeks, global markets have experienced a modest recovery, which has been met with a collective sigh of relief by investors. It is hard to point to a particular catalyst, but a growing view that inflation, while still very elevated, may be close to peaking could be partly responsible. The easing of virus-related restrictions in China also fueled some optimism that the worst of some of the global supply chain disruptions may be behind us. The S&P500 was able to turn positive after 7 consecutive weeks of declines. It is during these times that we have to remember that pullbacks are expected and a normal part of market cycles, but we understand that they never feel good when they are happening. Historically investors who have stayed the course and remained invested through volatile and uncertain times have seen their wealth increase the most over the long run. We rely on our recession indicators to guide us in the right direction and until they start to flash "red" for recession we should give equities the benefit of the doubt. Janet Engels, Head of the US Portfolio Advisory Group shares what’s on investors’ minds, provides perspective around bear markets, and discusses our current market outlook with Tylar Lunke, Senior Manager of the Portfolio Advisory Group’s Managed Portfolio Strategies team in this market update.

Last week, the Bank of Canada issued a second consecutive 50 basis point hike to lift the overnight to 1.5% which was largely expected. Their Hawkish statements reinforces our call for another 50 basis point hike in July and a 2.5% interest rate by October. Policy makers indicated they will act “more forcefully” if needed and that rates need to go higher than they initially thought, and this could involve either rate hikes of greater magnitudes than what we have witnessed thus far, or a longer tightening cycle in duration. They acknowledged that while they will try to do “what is best for Canadians” with respect to economic growth, the Bank’s inflation mandate will take precedence. In other words, slower growth is a cost they are willing to incur if it can ultimately bring inflation back down towards its longer-term target.

In order to monitor the effects of inflation on consumer spending, we follow RBC's Consumer spending tracker. Total Card spending is now 32% above pre-pandemic levels in May. Spending on goods has now plateaued and spending on services continues to soar. The chart below shows just how quickly spending on travel has recovered and surpassed pre-pandemic levels. 

 

Market Update Call with Jim Allworth

We invite you to join us for a Market Update call with Jim Allworth on Tuesday June 14th at 7pm EST.

 

Hosted by Kieron, Jim Allworth is one of the world's top Investment Strategists. With over 50 years in the investment business as both a research analyst and portfolio strategist, he is in a unique position to share his outlook and experience as we navigate our economy. Please register here for this virtual event. If you have any questions, please reach out to Lauren. If you are unable to attend, we will record the event and share at a later date. 
 

Wishing everyone a great week ahead, 
Hayes Vickers Private Wealth