Global Insight Monthly - May 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:
The rocky road for debt ceiling negotiations
As the U.S. runs out of ways to pay its bills, raising the debt ceiling is a necessary, but difficult, task. We look at why negotiations will likely be contentious and delve into some possible scenarios for the weeks ahead.
U.S. recession scorecard: Sliding toward an economic downturn
Two of our leading indicators have recently shifted from expansionary green to a cautionary yellow, continuing the Scorecard’s months-long transition toward a more negative overall reading. We discuss the implications of recent data releases, as well as the nuances that could affect our view of the economy going forward.
Global equity: Approach with caution
Against an increasingly challenging macro backdrop, recent market advances have left many investors pondering how far this leg up has to run. We think the failure of small-cap stocks to join the party could be telling.
Global fixed income: Is this the end?
The global banking stress of March eased through April and cleared the way for further central bank rate hikes in May. But after seemingly endless head fakes, are central banks ready to put rate hikes on pause?
Artificial Intelligence
Advances in AI reshape every industry and every individual
Today, an increasing portion of our digital experience is powered by AI that gets smarter with more usage and with more data. Over time, technology will evolve from AI-enabled applications to true general purpose AI, which we view as the fifth industrial revolution.
But even at today’s levels, AI throws up challenges as well as opportunities. Data privacy, automation and job loss, fairness, equity, and security are all topics for debate in this arena. While general purpose AI is some way off, we need to wrestle now with ethical questions about what may happen when AI systems can communicate with each other and potentially exceed human intelligence.
Business Owners - Insurance
Protect your human capital with key person insurance
As a business owner, it’s not uncommon to rely on a few key people for the successful operation of your company. In fact, many businesses are built around the strengths and skills of a handful of individuals whose capital, energy, knowledge or experience makes them valuable assets to the organization. But, while most business owners understand the need to protect against unforeseeable risks such as fire and theft related to their capital assets, risks related to human capital within their organization are often overlooked.
How would your business be impacted if one of the partners or key employees — a manager, top sales person or technical specialist, for instance — passed away or became unable to work? Would you have sufficient cash on hand to deal with the temporary business emergency? In many cases, the answer to these and other questions about risk is “no.
Read the full article here to discover strategies available to minimize these risks, and please free to contact us directly for additional information.
First Home Savings Account (FHSA)
Work towards your goal of buying your first home with a First Home Savings Account (FHSA). The 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 bill and carry forward undeducted contributions indefinitely
- Pay no taxes on any investment earnings
- Complements the Home Buyers’ Plan (HBP)
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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.