It’s hard to believe that we are only a few weeks away from the end of 2018. This means we need to start looking ahead to the upcoming year. Earlier this week, RBC Wealth Management released their outlook for 2019, explaining their projections on markets and the impact that it may have on you.

The consensus from the report is that economic indicators show we are in the later stages of the economic cycle. Although we are in the later stages, recession risks remain low and there is still room for growth in 2019. Canada is expected to grow at, or slightly above, its’ potential over the next 12 months. The Bank of Canada has signaled that they will continue to hike interest rates in 2019 to keep pace with core inflation. The pending resolution of USMCA has reduced uncertainty surrounding some of Canada’s trade worries. Canada continues to face a number of challenges including the impact of higher interest rates on businesses and consumers, oil pipeline constraints and high levels of household debt.

The U.S is relying on economic and earnings growth over the next year to continue to contribute to their solid foundation. The forward-looking indicators point towards expansion for the next 12 months and beyond. A key risk factor is the ongoing trade tension between the U.S and China, as imposing tariffs will impact both major economies, if the dispute continues to escalate.

At this time, we don’t see the need for a dramatic portfolio change, instead we believe it is time to focus on your relative exposure to risk. It is important to review your equity levels, reducing if necessary and consider short/intermediate term fixed income strategies. As Mikhial Pasic writes, “You can’t predict, but you can prepare” as we start to get ready for the year ahead.

 

Please read the full Global Insight 2019 Outlook here.

 

If you have any questions, please reach out us at your convenience.