Economic update, event invitation, and community news

March 18, 2022 | Elinesky Schuett Private Wealth Management


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In our economic update this week, we discuss recent market action, the situation in Ukraine, and the rate hiking campaign that the Fed has begun. We have also included the latest economic update video featuring RBC Global Asset Management’s Chief Economist, Eric Lascelles, An update on Russia-Ukraine, commodities and global growth, and an article published on our website, Economic stakes of the Russia-Ukraine conflict.

In our tax feature this week, we have included an event invitation to RBC Wealth Management’s upcoming seminar that focuses on potential tax implications south of the boarder, U.S. tax exposure: Broader than you can imagine. More information and your link to RSVP is below.

In addition to our economic updates and tax information, we have included two other features this week. The first is an article focusing on eldercare and the major personal finance consequences at the individual level, The cost of caregiving. The second is a link to a new podcast series to help grandparents stay healthy, connected and financially fit, Go-To Grandma Podcast.

As always, we end our weekly newsletter with a few good news stories from in and around our community.


Economic update

The volatility witnessed since Russia’s invasion nearly a month ago has subsided a bit in recent weeks. Global equities have also trended in the right direction and bond yields have reached new highs for the year. Oil prices have retreated somewhat, as have other commodities. That being said, the military conflict in Ukraine remains very active and unpredictable. The other notable recent development came from the U.S. Federal Reserve, which raised interest rates for the first time since 2018. We provide a brief update on both issues below.

Military conflict in Ukraine

The war in Ukraine is understandably top of mind for most people. Investors remain predominantly focused on whether this conflict will be limited, in both duration and scope, or has the potential to become more drawn out and broader, involving NATO (North Atlantic Treaty Organization) countries.

Recent comments from Ukrainian and Russian officials have led investors to believe that there may be a glimmer of hope that some level of compromise and ceasefire can be reached, but there is a long list of demands from both sides that need to be addressed. Moreover, some of the regional and geopolitical experts we follow have expressed skepticism regarding the potential for a truce at this point, suggesting that it ultimately depends on Russia’s President, Vladimir Putin, whose objectives remain unclear. Many of these analysts have speculated that, given the military and economic costs borne by Russia, Mr. Putin may only end this war once he can demonstrate some kind of triumph in front of the Russian public. It’s unclear what that would look like, but investors should be prepared for a wide range of outcomes.

U.S. Federal Reserve rate hiking campaign

The other notable development recently was with respect to the U.S. Federal Reserve. It began a much anticipated rate hiking campaign. Predictably, the central bank indicated the impact of Russia’s invasion of Ukraine will create additional inflationary headwinds while weighing on economic growth. It raised its estimate of core inflation over the next few years, while lowering its forecasts for U.S. economic growth. While this may seem troubling, Chairman Jerome Powell provided some reassurance by emphasizing that the U.S. economy is performing well and the probability of recession in the near future is low.

At this time, the Fed, like other central banks, seems more concerned about inflation than growth. Fed officials are suggesting they may raise interest rates six more times this year, and another three times next year, in a rather aggressive attempt to ensure inflation does not become entrenched. Moreover, the central bank indicated it may announce plans to reduce its holdings of bonds on its balance sheet in the next few months. This is another meaningful step towards tightening monetary conditions over time, with the goal of reducing inflationary pressures.

We also believe inflation is an important risk to the investment outlook over the intermediate term. The military conflict in Ukraine will only exacerbate current price pressures because of the potential disruptions to supply chains across a range of commodities. Fortunately, the economies in North America are starting from a position of reasonable strength and can handle some degree of higher costs.

An update on Russia-Ukraine, commodities and global growth

Eric LascellesIn this video, RBC Global Asset Management’s Chief Economist, Eric Lascelles, provides an updated outlook for the global economy as Russia and Ukraine negotiate resolutions. With commodity prices still high, he downgrades his growth forecast for Europe and other regions reliant on commodity exports. Finally, he shares reasons why growth remains more likely than recession, despite the increased risk the conflict presents.

Watch the video online: An update on Russia-Ukraine, commodities and global growth

 

Economic stakes of the Russia-Ukraine conflict

Harvester working on wheat fieldAfter dropping sharply a couple weeks ago, North American developed equity markets have attempted to stabilize of late, but volatility persists amid the crisis in Ukraine. Market participants continue to take note of the negotiations between Russia and Ukraine and multiple discussions between various leaders.

Read the article online: Economic stakes of the Russia-Ukraine conflict

U.S. tax exposure: Broader than you can imagine

Our tax feature this week is an event invitation!

Seniors couple in a boat on the waterDo you have an investment portfolio that contains U.S. stock? Do you own U.S. real estate, such as a vacation property or a rental property located in the U.S.? Do you have U.S. citizenship?

Find out how certain connections you have to the U.S. may expose you to the U.S. tax system. In this session, we look at the U.S. tax system, provide examples of connections that may create U.S. tax exposure, and highlight important tax and planning considerations.

U.S. tax exposure: Broader than you can imagine
Wednesday, March 23, 2022 | 1:00 p.m. – 1:20 p.m.
Hosted on BrightTALK

Use the link below to register.

I will attend!

In case you missed one of our recent tax articles, the list below includes the articles that we’ve shared recently.

If you have questions about 2021 tax reporting from Elinesky Schuett Private Wealth Management, please contact Brittany Beach at brittany.beach@rbc.com or 519-822-2024. Brittany will be your first point of contact for all 2021 tax package questions.

 

Eldercare: The cost of caregiving

Two women talking over a kitchen tableWithin the next decade, almost 25 percent of the Canadian population will be over the age of 65—increasing from 18.5 percent in 2022. There are a multitude of social, economic and health care system implications from this shift. Planning for the eventual need for caregiving is powerful, and so are conversations with your family about those plans.

Read the full article online: The cost of caregiving

Go-To Grandma Podcast: Family and Money Matters in Retirement with Kathy Buckworth

Kathy BuckworthGrandparenting has never been more enjoyable – and Kathy Buckworth, host of Go-To Grandma, dials up the fun with weekly guests who provide tips to help grandparents stay healthy, connected and financially fit. From heart healthy recipes to downsizing insights, family dynamics and cross-border lifestyle tips, Go-To Grandma covers all things grandparenting.

Use this link to listen online: Go-To Grandma with Kathy Buckworth

 

Guelph Chamber of Commerce Inspirational Women Series

Our very own Jennifer Goody-Brown (left) was at Cutten Fields this week to interview Debbie Stanley (right) as part of the Guelph Chamber of Commerce Inspirational Women Series. We are fortunate to have so many dynamic and inspirational women, like Debbie and Jennifer, in our community.

We are thrilled to be the presenting sponsor for this series and look forward the next event.

Jennifer Goody-Brown and Debbie Stanley at the Guelph Chamber of Commerce event

 

Community Corner

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

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.