In our blog post this week, we discuss the relatively resilient summer that it’s been for the markets in the face of a number of uncertainties and why investors may want to temper their expectations for investment returns going forward.

In addition to our economic update, we have included two interesting videos for you this week, The Wealthy Barber on how a corporate executor helps family harmony, and from the At home with RBC series, All that bubbles, a video for wine lovers.

Your RSVP link to the next event in the Elinesky Schuett Speaker Series, Thinking about what comes next, in conversation with Jim Allworth, is also below. You are welcome to share this link with friends and family who may also be interested in watching this live online event.

As always, we end our weekly blog post with a few good news stories from in and around our community. This week we’ve highlighted a recent community event that we had the privilege of being involved with, Patio for a Purpose, a fundraiser for the Children’s Foundation of Guelph and Wellington.

Please note that we will not be publishing our blog next Friday, but it will be back online on Friday, September 2.

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Your economic update

Global markets have been relatively resilient through a summer period that has had its fair share of uncertainties. More specifically, renewed political and geopolitical uncertainty, a fourth (and in some countries fifth) wave of COVID-19, moderating global economic growth, and a U.S. Federal Reserve that appears to be on the verge of fine tuning its ultra-accommodative approach to monetary policy. We offer some brief thoughts on the latter three issues that remain central to the investment outlook.

The economy amidst the next wave

The general economy continues to learn how to function amidst a pandemic that is nearly a year and a half old. That’s not to say things are back to normal, particularly for some pockets of the economy, but consumers, households, and many businesses have figured out how to make do, for the most part. Vaccinations have helped too. And while new cases are rising across many jurisdictions, the impact on hospitalizations and the economies of many countries have become less pronounced with each successive wave of the virus. As a result, markets aren’t as fussed as they once were and that trend may continue barring any meaningful change in transmissibility and morbidity.

Moderating global economic growth

Economic growth in recent months has begun to slow down. Undoubtedly, part of this is driven by new waves of the virus, but much of the slowing has to do with a reversion that was inevitable. The slowing explains the recent weakness of late in some pockets of the global markets such as commodities, cyclical sectors, and even currencies like the Canadian dollar.

Growth bounced back so strongly last year as a result of the reopening, pent up demand, excess savings, and government support, but the pace was always destined to fade to something more normal. The question is whether growth is simply levelling off to a more sustainable level or whether the slowing could turn into something more prominent. The former may be more likely based on recent economic data points and other factors. Furthermore, the global economy has yet to reach its full potential and could do so should the pandemic eventually turn into something milder, or even end completely over the next year. So, there is still room for improvement.

The US Federal Reserve

One of the primary supports that has been in place for the global economy and markets are the central banks. This is particularly true in the U.S. where the Federal Reserve has emphasized it would do whatever it could, within its means, to ensure a functioning credit market and sustainable economic recovery. This includes a program by which they purchase billions of dollars of bonds every month to keep bond yields, and the cost of financing, relatively low. The Federal Reserve is likely to modify this program in the not too distant future given the progress made since last year. Regardless of timing, a change is in order, and it will mark the beginning of a gradual unwind of its stimulus. While noteworthy, it does not suggest the conditions that have been so supportive to the recovery are set to deteriorate. Moreover, any interest rate hikes still remain well more than a year away. In other words, the transition from accommodative to more restrictive monetary policy is more likely to take a few years to unfold.

The aforementioned issues have all bubbled to the surface in recent months. Yet, they haven’t deterred global equity markets, with many still sitting near their highs. The outlook remains constructive given the diminishing impact from the virus, an economy that should continue to grow at a reasonable pace, and a monetary policy backdrop that remains very supportive. But, investors may want to temper their expectations with respect to investment returns. The sharp market rebound since last year combined with valuations that are generally above average suggest forward looking return potential, while still reasonable, may be more moderate.

 

The Wealthy Barber on how a corporate executor helps family harmony Instead of placing the stress on a loved one, experienced professionals can carry out your last wishes. Watch the video online: The Wealthy Barber on how a corporate executor helps family harmony

 

You’re invited! Join us for our next online event, September 8

We hope that you can join us for the next online event in the Elinesky Schuett Speaker Series: Thinking about what comes next, in conversation with Jim Allworth. Jim will speak on the outlook for the global and Canadian economies and financial markets.

Visit our website for more information and to RSVP: Thinking about what comes next, in conversation with Jim Allworth

 

At home with RBC We are excited to share a specially curated series featuring experts from arts and culture, food and wine, lifestyle and sports, and more, entertaining you from the comfort of your own home. Watch these blog posts each week for a new video in the At home with RBC series. All that bubbles Andrea Robinson, world-renowned master sommelier, former Dean of the French Culinary Institute and the winner of three James Beard Awards, shares her expertise on all that sparkles with wine. Watch the video online: All that bubbles

 

Community Corner

Each week, we like to end our blogs with a few good news stories from in and around the community. We hope that they brighten your day!

• Chalmer’s hosting free Freezie-fest to bring community together
• Bugs Bunny and LeBron James spotted on Grange Road during pandemic
• Google gives Guelph Humane Society gift of music for its animals
• Fergus Legion to host first motorcycle show and shine
• Guelph-based pandemic project reconnecting Ontarians one postcard at a time

Patio for a Purpose

This week in our community corner, we’d also like to take a few moment to recognize the work that the Children’s Foundation of Guelph and Wellington does for the youth in our community. Through their various programs, including Food & Friends, scholarships, and their recently launched mental health initiative as part of their Free to Grow program, they ensure that all children in our community are provided with the opportunity to thrive.

 

Over the past three nights, they have hosted a fundraising event, Patio for a Purpose, that replaced their annual gala. We are proud to be the presenting sponsor for this event, continuing our ongoing partnership with the Foundation. Members of our team and their guests attended each of the three nights, and we were thrilled to see so many wonderful people in our community in attendance.

On the final night on the “patio”, our team was there en masse to support this great event. Looking for more photos? We will be posting them on our Facebook page.

 

As always, we are available to connect with you personally. Please don’t hesitate to contact us at 519-822-2024 or elineskyschuett@rbc.com.