Investor enthusiasm in 2024 was fuelled by a combination of moderating inflation, falling interest rates and Trump’s election victory, which signals more U.S. growth, lower taxes and less regulation. Stocks climbed to record levels as a result. While valuation risk is mostly concentrated in U.S. large-cap growth stocks, many global equity markets still offer attractive return potential.
The economy has stabilized in recent months as inflation concerns moderate and headwinds created by higher borrowing costs fade amid interest-rate cuts. While uncertainty remains as to which of the new U.S. administration’s ideas will be implemented, we assume that their proposed tariff and immigration policies will be significantly tempered, allowing for the effects of tax cuts, deregulation and rising exuberance to dominate, moderately boosting the near-term U.S. growth outlook. Potential risks to our outlook include the possibility of a U.S. recession, geopolitical instability driven by events in Ukraine and the Middle East, and China’s economic challenges, mostly focused on the country’s housing issues.
2024 brought tremendous political change and even upheaval, with over half of the world’s population in more than 70 countries holding national elections in one form or another. In almost every one of those elections the incumbent lost power – or lost outright – leading to a change in government. Of note was the outcome of the U.S. general election, which saw a Republican sweep of Congress and the return to power of former President Trump.
What is clear is that people wanted change, and voted accordingly. In the wake of this upheaval is a global economy and geopolitical situation that has become far more complicated than a year ago. We are skilled at managing risk and preserving wealth, but we are also focused on the opportunities for growth that change often presents. Beyond portfolio management, your Investment Counsellor can also draw upon the right expertise to help identify and manage other risks – while leveraging opportunities – for you in areas such as tax, insurance, business and estate planning.
I hope the year ahead brings you and your family good health, happiness and success. We look forward to seeing you soon and hearing about what’s going on and important in your life.
Regards,
Vijay Parmar
President, RBC PH&N Investment Counsel
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