A few topics our newsletter touches on this month:

• 2022 Thoughts: Expecting Above Trend Growth…
• Annual RRSP & TFSA Contribution Reminder
• Interesting Links: Disruptor’s eps, Global Insight Outlook 2022 & Housing Market commentary from RBC Thought Leadership

2022 Thoughts: Expecting above trend growth…albeit at a less robust pace

2021 marks an end to very strong year in equity markets. The main catalyst being economic recovery, which we expect to still be a factor in 2022. It is notable that emergency stimulus of central banks is ending so we might experience some near-term volatility as market conditions shift. Our outlook for 2022 forecasts worthwhile global equity returns and moderate earnings growth, supported by above average GDP growth and strong consumer and business capital spending.

As we mentioned last month after the banks reported, 2021 was a year filled with earnings surprises to the upside and we anticipated dividend increases would follow. In our discreitonary stock portfolios, our Canadian stock list saw average dividend growth of 10.7% while our USstock list saw average dividend growth of 8.2%. BMO Capital Markets Chief Investment Strategist Brian Belski echoed our belief regarding dividend increases in 2022: ‘[Earnings growth] is likely to generate an impressive, if not ambitious dividend growth cycle that could see overall dividend growth surge well above historical averages over the next 12-24 months. “. This is especially true of the Canadian equity universe

On the fixed income front - in response to above average inflation, the Bank of Canada (BoC) has been steadily dialing back monetary stimulus support, formally ending its QE program last October and paving the way for possible rate hikes this year, possibly as early as April. BoC rate hike expectations remain unchanged despite Omicron-induced restrictions. We will have more thoughts to share on this front as things evolve.

By the numbers (December): The TSX was up 3.1% while S&P 500 was up 3.3% (up 4.5% in US dollars). The tech heavy NASDAQ declined 0.4%.  The Europe, Australia & Far East index (EAFE) was up 3.9%, while the Emerging Markets index was up 0.5%. The Canadian bond universe was up 1.7%.

By the numbers (2021 calendar year): The TSX was up 25.1% while the S&P 500 was up 27.7% (up 28.7% in US dollars). The Europe, Australia & Far East index (EAFE) was up 8%, while the Emerging Markets index was down 5.3% largely due to China’s market performance. The Canadian bond universe was also down 2.5%.

Reminder: RRSP & TFSA Contribution Room

If you have not discussed this with us already, please let us know if you are planning on making a contribution and indicate whether it will come by cheque/online transfer or if you want us to move money between your DS accounts. Key figures and dates to know before making your contributions:

• Additional TFSA contribution room for 2021 is $6,000. Contributions by cheque should be made payable to RBC Dominion Securities. 
• Cumulative TFSA maximum contribution limit for an individual is $81,500.
• RRSP and TFSA contribution limit for 2021 can be found on your Notice of Assessment from the Canada Revenue Agency (or online through your MyCRA account).
• Maximum RRSP contribution limit for 2021 is 18% of earned income to a maximum of $27,830 less any pension adjustment. For the new year of 2022, the maximum will be $29,210.
• 2021 RRSP contributions must be made by Tuesday, March 1^st

Interesting Listening/Reading

• Disruptors – a dynamic ~30 min RBC podcast, “Climate Conversations” is a new mini-series focused on the threat of climate change.
  • The Climate Conversations: Indigenous Leader JP Gladu
  • The Climate Conversations: UN Special Envoy Mark Carney
• To check out our Global Insight Monthly for December find the link here
• Additionally, Global Insight: 2022 Outlook has been released. The focus includes investment implications of slower growth, the green shift, China concerns and the perspective on corporate bonds following the seismic shift of 2020/21.
• RBC Thought Leadership: The Great Affordability Squeeze: Homebuyers Confront Rising Ownership Costs

Please do not hesitate to reach out to any member of our team to discuss your portfolio or financial plan.

Mark, Peter, Sarah, Corinne & Nathalie

Gallivan Wealth Management Team