Monthly Newsletter: Portfolio Advisor - April 2023

April 11, 2023 | de Mello Wealth Management


Views on the global financial markets and insights on managing your wealth.

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Global Insight Monthly - April 2023

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:

A crisis for a few banks is not a banking crisis

It’s understandable that investors remain scarred by memories of 2008–09 and that any word of bank failures brings fears. But several factors distinguish the current turmoil from the banking system crisis of 2008–09. We discuss the drivers of U.S. policymakers’ current approach to today’s stress, and the risks for investors in U.S. banks.

China pursues a balance of economic pragmatism, reforms

The annual gathering of China’s political leadership saw policymakers formalize their economic goals, and introduce new measures aimed at reforming financial institutions and boosting the tech sector.

Global equity: Markets, recessions, and telltale signs

We expect a U.S. recession to arrive later this year, but understanding the timing differences between the economic cycle and the ebbing and flowing of stock prices can be useful to know.

U.S. recession scorecard: A U.S. recession moves ever closer

We think the indicators that have flipped to recessionary status point toward a recession getting underway by late Q2 or early Q3 2023.

Read Full Report Here >

First Home Savings Account (FHSA)

Work towards your goal of buying your first home with a First Home Savings Account (FHSA). Available at RBC in spring 2023, FHSA is a new registered plan that can help you save for your first home tax-free. If you’re at least 18 (and no less than the age of majority in your province), have a Social Insurance Number (SIN) and have not owned a home where you lived this year or at any time in the preceding four calendar years, you may be eligible to open an FHSA.

  • Use it to save up to $40,000 for your first home
  • Contribute tax-free for up to 15 years
  • Carry forward any unused contribution room from the prior years for as long as you have the account
  • Potentially reduce your tax bull and carry forward undeducted contributions indefinitely 
  • Pay no taxed on any investment earnings
  • Complements the Home Buyers' Plan (HBP)

Learn more Here >

Federal Budget 2023

We analyze the latest proposed federal budget measures, and the effect they may have on you.

No changes to personal or corporate income tax rates, capital gain inclusion rates or other measures coveted by Canadians, such as the principal residence exemption, are proposed.

However, the budget revises the Alternative Minimum Tax (AMT) regime to further focus on wealthy taxpayers. The government estimates that under the AMT reforms, more than 99 percent of the AMT paid by individual Canadians would be paid by those who earn more than $300,000 per year, and about 80 percent of the AMT paid would be by those who earn more than $1 million per year.

Read More Here >

What are the next risk for the Market, and can they be contained?

After the recent banking woes, attention has turned to other potential pressures. We take stock of some vulnerabilities and the investment implications.

Following the recent U.S. banking turmoil, U.S. commercial real estate (CRE) has become a hot topic among market participants. CRE relies heavily on small and midsize banks for financing, which just so happen to be the most stressed financial institutions. Overall, the commercial property industry in the U.S. owes $1.9 trillion to these banks, or twice what it owes to large banks ($0.9 trillion), according to the Mortgage Brokers Association. Small and midsize banks are heavily exposed to CRE, which accounts for as much as 43 percent of their outstanding loans.

We see strong reasons to believe that the risks facing U.S. CRE and European and Japanese banking systems can be contained. But the ongoing tightening in lending standards in both the U.S. and Europe may be accentuated should these pressure points flare up. We continue to recommend investors focus on quality in portfolios, and we prefer companies with business models that are not sensitive to the business cycle.

Read More >

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.