Well, good morning.

It was a busy week both in the markets and on the weather front, a solid reminder that life, like the climate, can be both volatile and unpredictable.

I was fortunate enough to spend the first part of last week travelling. I found myself in NYC for a few days, then touched down in Calgary, amidst some of the most fridged temperatures we have experienced as far back as I can remember. I also made my way to the Fraser Valley area of BC, and it seemed the winter weather followed me west….we were pulverized with snow!!

I shifted over from Calgary to the Chilliwack area, specifically beautiful Cultus Lake. Yes, I know, Chilliwack is also a great Canadian band led by Bill Henderson, no relation, but who doesn’t love the song Fly by Night.

I was in the Chilliwack area, visiting my uncle Jim Henderson. At the moment, Uncle Jim is battling an illness with both strength and courage. A renowned helicopter pilot, James Keith Henderson is a man of purpose, authenticity, inspiration, and adventure.

As it’s often the case, we can certainly find visits with family inspiring. An opportunity to step back and reflect on the wonderful impact those around us have had on our lives, understanding that our relationships are a significant part of our True Wealth.

No matter the stage in life, or where we reside, there are those individuals that have had a boundless impact on our life. You may not realize it at the time, the imprint they are making on your path, but if you take some time and look back at your life, you can recognize just how important your relationships have been in your trajectory, particularly when we need them the most.

Invincible Summer

The Albert Camus’ quote at the outset of this morning musing is one of my all favorite of all time. Yes, fitting for today’s reflections, not alone for the fact that we find ourselves in the winter season, but the truth in that we all understand the emotional cold hard days, times of stormy winter.

A French philosopher, author, dramatist, journalist, world federalist, and political activist, Camus was the recipient of the 1957 Nobel Prize in Literature at the age of 44 and his life was cut short at the young age of 46, and despite his age, his words give us valuable insight into the human experience. Camus believed that we all must understand that we are able to find hope and resilience in oneself, and through the support of others, even in the darkest and coldest times. There is a source of joy and strength that we within us that cannot be overpowered by what’s happening outside in the world around us. In the spirit of the Invincible Summer, I thought I’d share with you, some lessons I have learned from my illustrious Uncle “helicopter Jim”.

Lessons of Life from Uncle Jim

• When travelling, be sure to embrace culture, and don’t hesitate to bring its magic home with you.
• Motorcycles are magnificent.
• No matter where one travels, family bonds remain the foundation upon which we build.
• You can wear Hawaiian shirts all year round.
• Life is an adventure if you are aware enough to enjoy its wonderous beauty.
• Live with virtue and you will enjoy a full life.

It was Jack London that once proclaimed that “the proper function of a man is to live, not to exist. I shall not waste my days in trying to prolong them. I shall use my time” My Uncle James Henderson does not waste his time, he is the perfect example of how one lives with virtue. As it’s displayed on the Henderson Crest - Virtue Alone Ennobles

What better time than today, to look around and understand where we are spending our time, with whom, and analyzing the impact. I share a few take away thoughts to consider after some brief updates in the markets…….

And now, to the Markets….

Market action in the first few weeks has been relatively muted, contrasting with the strong gains witnessed towards the end of last year. This moderation can be attributed to a string of slightly stronger global economic data, prompting investors to reassess their expectations for interest rate cuts. We expect the timing and degree of rate cuts to be one of the biggest debates this year, so I think it worth sharing some insight this morning…..

The Federal Reserve, the central bank in the U.S., decided to hold interest rates steady at its most recent meeting in December. During its post-meeting press conference, Chairman Jerome Powell suggested that the Fed has been faced with three big questions over the past few years: how fast to raise rates, how high to raise them, and the timing and size of cuts. While the first two questions were its predominant focus until recently, the question of rate cuts is now coming into view. The Fed’s December meeting revealed that, on average, policy makers expect to cut interest rates by nearly 0.75% in 2024 and expect the pace of inflation to slow to 2.4% (from over 3.0% today) and the unemployment rate to rise modestly, to 4.1% (from 3.7%).

Unlike the Federal Reserve, the Bank of Canada does not provide explicit future rate projections. But investors expect Canada’s central bank to similarly pivot towards interest rate cuts. The market is pricing in close to 1.4% in rate cuts by both the Bank of Canada and the Federal Reserve this year, with the latter expected to cut as early as March and the former as early as April. Despite the market’s expectations, there are reasons to believe that the Bank of Canada may act sooner and more swiftly than its U.S. counterpart, given its earlier start to rate hikes and Canada’s heightened sensitivity to interest rates due to higher household debt and shorter mortgage terms. Moreover, the Canadian economy has shown early signs of strain from the impact of higher rates with more sluggish GDP growth, weaker consumer spending, and dwindling job gains.

The two factors that should ultimately determine the timing and degree of interest rate cuts are inflation and employment trends. Last year saw a steady decline in the pace of inflation in both Canada and the United States, but some pressures remain. One example is the cost of shelter, which makes up the largest weight within the Consumer Price Index in both countries. It includes categories such as rent and mortgage interest costs, both of which have shown few signs of abating, particularly in Canada. Furthermore, the downward trajectory of inflation has started to flatten after a relatively sharp decline through the first half of the past year. December’s U.S. inflation data, released this past week, even showed a modest uptick. We believe that policymakers at the Bank of Canada and the U.S. Federal Reserve will aim to get inflation sustainably under 3.0% before considering any rate cuts.

The Federal Reserve is also focused on employment as part of its dual mandate. While there has been a moderation in job growth, it is hard to argue that the employment backdrop in the U.S. requires any support from the central bank. In our view, a more meaningful deterioration in the U.S. job market may be required before the Fed considers any move to reduce rates.

Investors will remain hyper-focused on inflation and employment trends this year, as they try to gage when central banks may take action and cut interest rates. We foresee this fueling swings in the markets in both directions as investors recalibrate their expectations. Nevertheless, this year should mark a notable shift in the environment as central banks transition to a more accommodative policy. That has historically proven to be a more constructive backdrop for investors. Our game plan is to keep an eye on the data, but also maintain a keen awareness and attention to the earnings season and the escalating conflict in the Middle East over the weeks to come…..as always, we see lots of opportunity amid uncertainty and are actively positioning accordingly.

“There is no greater joy nor greater reward than to make a fundamental difference in someone's life.”

Sister Mary Rose McGeady, D.C.

Wealth in Relationships

Poet and author David Whyte recently noted that so much of our life has to do with keeping the world at bay, of learning how to live under siege; of coping and of trying to create a space in which to catch our breath. He mentions that it’s important to “look at ways of working from a deeper, a priori, rested core that already exists inside us”. I suggest that those with whom we spend our time, can not only enhance our ability to endure the winter, but enable us to thrive in a constant state of summer. Who you choose to spend time with likely has a greater long-term impact on your health, wealth, and happiness than almost any other decision you make.

As we head into the week, give some thought to this…..

• Who in your life has had a meaningful impression on your life?
• Do they understanding how impactful they have been on the course and direction of your path?
• Have you shared this with them?
• Who, in your life, do you have significant influence?
• Are you intentional with its importance?

Understanding our ability to learn from others, through others, and that our actions and have implications is enlightening, and there is nothing more powerful than realizing you can change this at any moment. Spend time with the people who matter most to you. At any moment you can stop and reflect on the impact they have had on your journey, and you on theirs.

“The human spirit is stronger than anything that can happen to it.”

C.C. Scott

Be well and enjoy the moments.

G. Derek Henderson