As we enter the halfway point of September, we hope that everyone is adjusting back to their regular routines following a relaxing summer. The beginning of September often feels like a fresh start and a New Year for many of us. New goals and plans are frequently associated with the beginning of the month.
It is with sadness that we share the death of Queen Elizabeth II who passed on September 8th. Elizabeth surpassed the record of 63 years and 216 days on the throne set by Queen Victoria (her great-great-grandmother) to become the longest-reigning British monarch in history. In February 2022, Elizabeth celebrated her Platinum Jubilee—marking seven decades of her service to the Commonwealth. The Queen was known for taking a serious interest in government and political affairs, apart from her ceremonial duties, and was credited with modernizing many aspects of the monarchy. The Queen’s state funeral will take place on Monday September 19th at Westminster Abbey. Federal offices will be closed on Monday September 19th. RBC Dominion Securities will be open and will be taking a moment of silence to remember her.
Last month, Kieron took our team to Cameron’s Motorsports for Go Kart Racing. This was one of our first team outings since the pandemic. It was wonderful to be together outside of the office for a few hours. After the first few laps that evening, a few things became very evident. Kieron is a fast driver and zipped ahead the majority of the team. Although we were all fairly close at the beginning, we did have a tie between our slowest drivers, but we will keep their names a secret! Below is a photo of us before we hit the race track.
Market Update
While markets enjoyed a sense of calm for most of the season, the same cannot be said of the last few weeks. Below we discuss why volatility has resurfaced and what investors should do.
The initial catalyst for the recent softness was a speech delivered by U.S. Federal Reserve Chairman Jerome Powell. In it, he indicated that the U.S. Federal Reserve is drawing on lessons learned in the past as it tries to deal with the current inflationary period. A key take-away from the speech was that Central banks must maintain a restrictive policy until inflation returns convincingly to a low and stable state. Predictably, markets sold off in response to the appreciation that tighter financial conditions are here to stay for some time to come.
Earlier this week the US Consumer Price Index report for August was released. Headline CPI growth slowed to 8.3% which was higher than market expectations. An increase in costs for rent, food and healthcare was offset by a 10.6% decrease in gasoline prices. While the path downward for inflation may not be as linear or "smooth" as markets would like to see - we believe inflation has peaked and there are generally diminishing inflation pressures ahead based on the view that the four key drivers of high inflation have turned : Monetary stimulus, Fiscal stimulus, Supply chain problems significantly resolving, and the commodity shock being materially unwound.
During the upcoming months investors will have to be tolerant, patient, and prepared for a period where interest rates are higher and growth is weaker as demand from businesses and consumers wanes in the face of higher borrowing costs. These bouts of turbulence and broad market weakness often create opportunities to rebalance, reallocate, and unearth higher yielding and higher quality investments. The bottom line is we know a little — but not much — more as a result of Powell’s speech. Policy will ultimately depend on the broader economic backdrop. For the individual investor with a long-term view, the hype around the speech emphasizes the importance of looking first and foremost at asset allocation and long-term planning. Attempting to time the market (even in the guise of predicting monetary policy moves) is unlikely to be beneficial to investment returns. We have blogged about taking a step back and looking at the markets in perspective during turbulent times, for a more in-depth read see June's Blog Post.
On Tuesday September 20th at 1pmEST, we invite you to join virtually a Market Update event hosted by the Portfolio Advisory Committee of RBC Wealth Management. Richard Tan, Canadian Equities Portfolio Advisor and Stephen Chang, US Equities Portfolio Advisor will discuss key topics such as the economic outlook, market and sector thematics and their thoughts on market valuations, asset allocation and performance of stocks over the long-term. If you would like to register or if you would like us to send you the recorded session, please RSVP to Lauren.
Financial Wellness
September marks Alzheimer’s Awareness month, we wanted to share with you the importance of creating a care plan. According to the National Institute of Aging (NIA), the number of Canadians over the age of 85 is expected to reach 2.6 million by 2050, up from around 844,000 in 2021. As more Canadians enter their senior years it is increasingly important for them to have a care plan to help manage their lives and those of their loved ones. A care plan is similar to a financial plan but with a focus on ensuring a person's care needs are met, according to their wishes, should they become seriously ill. Your health and wealth go hand and hand. We encourage you to ask us about creating a care plan.
We wanted to share an article that addresses and emphasizes the importance of not making emotionally charged decisions. The piece shares three ways to avoid making emotionally charged financial decisions. During periods of heightened emotions, decisions tend to be based on short-term objectives, without much consideration for their long-term implications. It's important to remember that remaining calm during all market environments and staying focused on the long term is critical to reaching your financial goals. If you have any questions regarding your portfolio, please feel free to reach out to us.
Changes in your LIF/RIF
In September, RRIF/LIF payment information will be available on your RBC Wealth Management App instead of letters being mailed to our clients. Online access for our clients will allow up-to-date RRIF/LIF payment details at any time – particularly helpful for those who receive full payments prior to the annual information being available at the end of January. If you have any questions regarding this, please let us know.
Wishing everyone a happy weekend ahead!