From our Portfolio Advisory Group

October 27, 2023 commentary.

Consistent with market expectations, the Bank of Canada (BoC) maintained its overnight policy rate at 5.0% following its October meeting. However, the BoC also acknowledged that “inflationary risks have increased” and therefore left the door open for future hikes, if deemed needed. On the flip side, the central bank noted there is growing evidence that past interest rate increases are making their way through the economy and are effectively dampening consumer and business activity. This has come in the form of lower demand for housing, durable goods, and services as access to credit has become more costly. Additionally, higher borrowing rates and a softer economic outlook have also weighed on business investments. Finally, rising immigration appears to be relieving some pressure in the labour markets. According to the BoC, job vacancies have eased, which could eventually alleviate elevated wage gains. Overall, we believe investors should prepare for an environment where rates stay higher for longer over the near-to medium term.

U.S. equities are on track for moderate losses on the week as quarterly earnings continue to come in. All major indexes are lower, with the Dow Jones Industrial Average being the best relative performer, with a -0.96% return. Meanwhile, the S&P 500, down 2.07%, has outperformed the Nasdaq Composite’s -3.15% return. Sector leadership is evident in Utilities, which has returned 2.90%, and Consumer Staples with a 0.67% return. Communication Services has lagged, falling 6.68%, as Alphabet Inc.’s disappointing earnings report has weighed on the sector. n Third-quarter earnings season is well underway with over 40% of the S&P 500 having already reported. Approximately 46% of companies have reported sales that exceeded analyst expectations, beating by an average of 1.0%. From an earnings perspective, 78% have beaten expectations by an average of 7.6%, the latter of which is slightly lower than the 8.5% five-year average beat rate. Communication Services and Financials companies have seen the strongest results, beating earnings expectations by 9.9% and 8.3%, respectively. As earnings reports continue to roll in over the next few weeks, we think the sectors to keep an eye on will be Utilities and Energy as only 13% and 27% of companies, respectively, have reported so far.

Wealth Management

We have released our year-end tax planning tips for 2023 and it is attached here.

Kim and I were talking about what we love about our jobs and we both said the client stories are so interesting and particularly the ones where we help people.

In 2017 I did a financial plan for a younger client and we talked about insurance as the plan showed it would be appropriate for him. He is young with young children and had a good paying job. He decided to proceed with purchasing a term policy and a disability policy. Recently I was speaking with him and he has been diagnosed with early onset Parkinson’s disease. He is grateful for having the Disability insurance as this will provide him with tax free income because he paid the premiums with after tax dollars. Although a health diagnosis is never welcome, knowing you won’t be financially stressed can ease the burden.

Client events

We hosted our Longevity, Planning for the Road Ahead event with guest Leanne Kaufman, President and CEO of Royal Trust and Audrey Miller, Founder and Managing Director of Elder Planning. They provided great insight into later life health and wealth planning. Here are some resources on this topic.

1. RBC Royal Trust: Estate and incapacity solutions
2. Matters Beyond Wealth podcast - "Aging at home, safely and securely” episode
3. RBC Wealth Management Aging Well Hub
4. The cost of caregiving
5. The Wellness Binder

In the Community

I will be volunteering again this year with Hearth Place Cancer Support Centre for their annual gala to be held in April 2024. We are in the early stages of planning and will definitely be looking for donations to our silent auction table.

As well, Hearth Place support families who are living with cancer at Christmas time. To date, they have already had 4 requests from families where more than one family member is living with cancer. If you are interested in helping a family, please contact Hearth Place Executive Director Janette Berthelot, at janette@hearthplace.org or 905-579-4833.

Team Notes

I am welcoming back my Associate Kim Balas from maternity leave. Mike Twohey’s last day in our office is October 31 and I want to thank him for helping for the past 17 months. Mike has accepted a role in our Peterborough branch and we wish him well there.

November 11 is a bank holiday and the bank branches are closed on Saturday November 11 and Monday November 13 (in lieu of the Saturday). The markets will be open on Monday November 13 and I will be working.

If you’re looking for some good listens or reads ….

I am reading Freezing Order by Bill Browder – A True Story of Russian Money Laundering, Murder and Surviving Vladimir Putin’s Wrath.

I listen to The Daily every weekday morning on my drive to work. It’s produced by the New York Times and the topics are current events.

Kim recently watched Beckham on Netflix after the kids went to bed. 

Happy Halloween!