| A few topics our newsletter touches on this month:
We hope you and your loved ones enjoyed a Happy Canada Day; July 1st always marks a celebratory kick-off to the heart (& heat) of summer. Our Thoughts: Man! It Feels Like Summer It’s hard to believe, but the first half of the year has come to a close. This month’s title is a nod to this year’s RBC Ottawa Bluesfest Headliner Shania Twain who coined so many famous lyrics; it also reflects the heat-waves Ottawa and in general North America overall have been experiencing recently. While the year in markets has been eventful, one could argue it has been relatively dull compared to the first half of 2022. Interest rates are still rising, but less aggressively than last year. The rate of inflation is decelerating, rather than accelerating. And, economies have proved resilient, still largely growing despite what many had predicted at this time last year. Below, we share some takeaways on the year’s performance thus far and our thoughts going forward. We also provide a summary of our firm’s “Mid-Year Outlook”, which is hot off the press. Global stocks and bonds are higher year-to-date, despite the near universal concerns around the interest rate backdrop. In some cases, the returns have been modest with global bonds and Canadian equities up a few percentage points. In other cases, like international equities, the gains are larger. The U.S. equity market has looked strong, yet beneath the surface, its gains have been less compelling as the technology sector has had an outsized impact. In particular, a handful of the largest tech names (in fact 7 stocks) represent the majority of the total return on the S&P 500 year-to-date. This in part reflects a bounce back as these stocks were responsible for driving much of the U.S. stock market decline last year, but it also reflects the feeling that the worst of interest rate increase is over. Regardless, it has undoubtedly been a more pleasant investing experience for investors thus far in 2023. Our firm’s global investments team regularly produces thoughtful content to help us think about the future and assess the positioning of our clients’ portfolios. It recently produced its mid-year outlook, in which it discussed the rally in asset prices since last year’s lows. It acknowledged these trends may continue in the short-term, but also highlighted the increasing number of economic indicators that are pointing to more challenging times ahead. It remains of the view that investors should be prudent and ensure the companies they are invested in are positioned to navigate through a more difficult backdrop in the future. We largely share this view as we believe the substantial amount of rate hikes of the past year will eventually wear on consumers and businesses. We have taken action in portfolios for our clients over the past year that leave us feeling comfortable with their ability to handle whatever the future has in store. Refinements made include re-evaluating the quality of our portfolio holdings, their dividend yields, growth prospects and sector exposure. As well, fixed income has re-emerged as a more useful tool in helping our clients and their portfolios. The level of income that can be generated from bonds today is substantially more attractive than it has been in years, with yields that are hundreds of basis points, or a few percent, higher. Moreover, while inflation remains a risk, we believe bonds can offer renewed diversification and protection for our portfolios in the event the economic backdrop worsens. Should you have any questions, please feel free to reach out. By the numbers (June): The TSX was up 3.4% and the S&P 500 was up 4% in Canadian dollars. The Europe, Australia & Far East index (EAFE) was up 1.8%, while the Emerging Markets index was up 0.7%. The tech-heavy NASDAQ was up 4% as well in Canadian dollars. The Canadian bond universe was flat. Midyear Outlook – Global Insight In this year’s issue…
Other Interesting Listening/Reading
Regards, Mark, Peter, Sarah, Corinne and Nathalie Gallivan Wealth Management RBC Dominion Securities Inc.* and Royal Bank of Canada are separate corporate entities which are affiliated. *Member-Canadian Investor Protection Fund. RBC Dominion Securities Inc. is a member company of RBC Wealth Management, a business segment of Royal Bank of Canada. ® / ™ Trademark(s) of Royal Bank of Canada. Used under licence. © 2023 RBC Dominion Securities Inc. All rights reserved. This information is not investment advice and should be used only in conjunction with a discussion with your RBC Dominion Securities Inc. Investment Advisor. This will ensure that your own circumstances have been considered properly and that action is taken on the latest available information. The strategies and advice in this report are provided for general guidance. Readers should consult their own Investment Advisor when planning to implement a strategy. Interest rates, market conditions, special offers, tax rulings, and other investment factors are subject to change. The information contained herein has been obtained from sources believed to be reliable at the time obtained but neither RBC Dominion Securities Inc. nor its employees, agents, or information suppliers can guarantee its accuracy or completeness. This report is not and under no circumstances is to be construed as an offer to sell or the solicitation of an offer to buy any securities. This report is furnished on the basis and understanding that neither RBC Dominion Securities Inc. nor its employees, agents, or information suppliers is to be under any responsibility or liability whatsoever in respect thereof. The inventories of RBC Dominion Securities Inc. may from time to time include securities mentioned herein. RBC Dominion Securities Inc.* and Royal Bank of Canada are separate corporate entities which are affiliated. *Member-Canadian Investor Protection Fund. RBC Dominion Securities Inc. is a member company of RBC Wealth Management, a business segment of Royal Bank of Canada. ® / ™ Trademark(s) of Royal Bank of Canada. Used under licence. © 2023 RBC Dominion Securities Inc. All rights reserved. |