Happy Friday from BMWM!
We are happy to announce that an agreement has been made for RBC to acquire HSBC Canada, a premier Canadian personal and commercial bank that is focused on globally connected clients. There is additional information in this week’s Current Account which is posted below.
North American equities were mostly lower by Thursday afternoon trading, paring back some of Wednesday's big gains. However, despite the pullback, we remain on track for a positive week in the equity markets. Markets have reacted to the somewhat softer tone of a speech given by US Federal Reserve Chairman Jerome Powell mid-week. Additionally, some more evidence surfaced this week of economic growth slowdown, with data showing that U.S. manufacturing exports are in contraction. This supports the recession narrative, alongside the inverted yield curve in the bond market. We may also see selling pressure permeate the markets over the next few weeks as investors strategically crystalize losses to reduce their tax burden; a strategy known as tax loss harvesting, which we have discussed with many of you already this year. In light of these developments, we remain defensive in our positioning of the portfolios. We believe high-quality stocks and bonds will result in better outcomes for our clients, versus pushing heavily into growth stocks or high yield and emerging market bonds in an attempt to time the ultimate recovery.
The Current Account (click here to read) covers the deal for RBC to buy HSBC mentioned above, U.S. lawmakers vowing to intervene to avert a nationwide rail strike, protests spreading to 22 cities over China’s stringent lockdowns, and the passing of Chinese communist leader Jiang Zemin. It also contains a warning to expect harsh weather in early Winter across much of Canada.
Other news for this week includes Rolls-Royce successfully using hydrogen to power a modern aircraft engine. The British firm converted a turboprop engine that powers military aircraft from conventional jet fuel to green hydrogen generated by wind and tidal power. While electricity and hydrogen-powered aircraft remain years away from carrying passenger planes over long distances, this is still considered an important milestone in an attempt to de-carbonize the flying industry.
Taylor’s word of the week is dichotomy, meaning “a division or contrast between two things that are or are represented as being opposed or entirely different”. For example, war and peace or love and hate.
Have a wonderful weekend,
Brenda, Matt P, Taylor, and Matty