| A few topics our newsletter touches on this month:
Our Thoughts: Outlook 2024 Progress against inflation ignited both bonds and stocks at the end of 2023, as the need for additional tightening of monetary policy is removed. While the threat of recession in early 2024 remains due to the lagging impact of prior rate hikes, the next cycle, after the inflation battle is over, is coming into view. Still, 2024 challenges include: the excess savings built up during COVID are working down/spent; corporate financing is now more expensive reducing profit margins and the consumer has to deal with higher interest costs affecting their discretionary consumption. For the stock market there is also a new kid on the block competing for funds from conservative investors – bonds are finally back to paying a half decent yield. The artificially low interest rates that were a tax on retirees in order to support the economy is now over. Of course central banks are aware of all this and they are expected to start pivoting soon and cutting rates as inflation ebbs; this combined with earnings advances and a soft landing scenario argue for continued market strength. Regardless, we take the view that a focus on quality businesses with strong balance sheets, and a business model with pricing power along with sustainable dividends offer attractive long term returns from current valuations. The end of the year is also a great time to take stock of where you are relative to your goals and expecations. We are happy to answer any questions you may have. By the numbers (December): The TSX was up 3.9% and the S&P 500 was up 4.5% in U.S. dollars (2.1% in $CAD). The Europe, Australia & Far East index (EAFE) was up 2.8%, while the Emerging Markets index was up 1.3%. The Canadian bond universe was up 3.2%. By the numbers (2023 calendar year): The TSX was up 11.8% while the S&P 500 was up 26.3% in U.S. dollars (23.5% in $CAD). The U.S. market return was heavily skewed by gigantic moves in large cap A.I. themed tech stocks ( knicknamed the Maginficant 7). Weighting each of the returns on all of the S&P 500 companies equally, the S&P 500 returned 11.5% in 2024. The Europe, Australia & Far East index (EAFE) was up 12.5% while the Emerging Markets index was up 4.6%. The Canadian bond universe was up 6.4%. Reminder: RRSP & TFSA Contribution Room 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. For discretionary clients, we will action this if we have received prior instruction. Key figures and dates to know before making your contributions:
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. |