Global Insight Monthly - December 2022
I am pleased to share the latest investment strategy report from RBC Wealth Management—Global Insight, which provides our latest thoughts on asset classes, the economy, and timely issues that impact investment strategy. This month’s topics include:
Global Insight 2023 Outlook
RBC Wealth Management has launched the Global Insight 2023 Outlook, which showcases unique perspectives on the catalysts and challenges that could impact investment portfolios in the year ahead.
You can enjoy the complete report in PDF format here: 2023 Outlook Or, you can read the feature article and regional focus commentaries by clicking on the mobile-friendly links below.
- We are the hedgehog - One big thing—the arrival of a U.S. recession in 2023—should shape the investment landscape over the next 12–18 months. We discuss the implications for equity markets and interest rates.
- Canada regional focus - The Canadian economy is likely to slip into recession in 2023, but domestic equity valuations are reflecting some of this uncertainty.
- U.S. regional focus - U.S. markets could change course more quickly, and in different ways, than investors might assume.
- Additional regional insights - Our on-the-ground analysts and strategists around the world examine the issues and opportunities facing markets and asset classes in 2023 in the UK, Europe, and Asia.
Interest Rates and Inflation
BoC’s hawkish(ish) 0.50% rate hike
The BoC lifted its overnight rate by 50 bps to 4.25%, a stronger increase than the 25 bps we expected. Consensus was almost evenly split between a 25 and 50 bp hike though market pricing was leaning toward the former, so yields have increased and the Canadian dollar is a touch stronger in the wake of the decision. The policy statement wasn’t as hawkish as the decision itself—in fact the BoC’s updated forward guidance features a softer tightening bias than we expected.
The Fall of FTX & the Impact on Crypto
Audio – Podcast (29mins)
This episode, Karim Hamasni, Director, Crypto Asset Innovation, discusses the rise and sudden fall of Futures Exchange (FTX), once one of the largest crypto-trading companies in the world, and the potential implications facing the already-challenged cryptocurrency industry.
How Solar Can Brighten Investment Portfolios
A cheap and emissions-free technology, we shine a light on solar’s potential and how investors can look to tap into this growth opportunity.
Solar appears set to play an increasing role in our energy supply. Its many advantages, including being the lowest-cost technology and emissions-free, make it an attractive candidate, in our view, to help countries decarbonize. The energy crisis today makes this even more of an imperative. Generous incentives in Europe and now also in the U.S. should further underpin solar’s growth.
Market Volatility Hub
What to do when markets are volatile
Market volatility is an inevitable part of investing. Geopolitical events, like the invasion of Ukraine, inflationary pressures and changes in interest rates are some of the many reasons that cause markets to fluctuate, sometimes drastically.
When markets shift, particularly when they drop quickly, it can be hard not to react. But history shows you will more likely achieve your long-term investment goals if you have a plan and stick to it through all types of market conditions. This may sound easy, but investors have been put to the test in recent times. Veering off course from a carefully thought-out plan can have long-reaching consequences. It can turn a temporary loss of confidence into a realized loss on an investment portfolio.
Please visit the following link for strategies, historical context, and additional reference points on dealing with periods of market volatility.
Financial Literacy: Video Presentation
In Conversation with Noah Booth, youth author
Great interview facilitated by RBC Wealth Management with Noah Booth, the youth author of A Rich Future: Essential Financial Concepts for Youth.
Noah is a Canadian high-school student who, from the age of 10, took an interest in finances. His interest led him to realize there weren’t many resources out there for teenagers that zeroed in on a personal finance. Recognizing the benefits of building financial skills and awareness from an early age, Noah has spent years learning, researching and connecting with experts, the culmination of which is his newly released book.
Informed by advice and lessons from experts, Noah introduces readers to financial concepts in an approachable and relatable way – from the viewpoint of a teenager. Covering a wide range of topics, Noah’s mission is to empower younger individuals for a successful financial future.
Watch Here (29 mins)>
This information is not investment advice and should be used only in conjunction with a discussion with your RBC Dominion Securities Inc. Investment Advisor. This will ensure that your own circumstances have been considered properly and that action is taken on the latest available information. The information contained herein has been obtained from sources believed to be reliable at the time obtained but neither RBC Dominion Securities Inc. nor its employees, agents, or information suppliers can guarantee its accuracy or completeness. This report is not and under no circumstances is to be construed as an offer to sell or the solicitation of an offer to buy any securities. This report is furnished on the basis and understanding that neither RBC Dominion Securities Inc. nor its employees, agents, or information suppliers is to be under any responsibility or liability whatsoever in respect thereof. The inventories of RBC Dominion Securities Inc. may from time to time include securities mentioned herein. RBC Dominion Securities Inc.* and Royal Bank of Canada are separate corporate entities which are affiliated. *Member-Canadian Investor Protection Fund. RBC Dominion Securities Inc. is a member company of RBC Wealth Management, a business segment of Royal Bank of Canada. ®Registered trademarks of Royal Bank of Canada. Used under licence. © 2022 RBC Dominion Securities Inc. All rights reserved.