| Left to Right: Corinne, Sarah, Mark, Peter and Nathalie Gallivan Wealth Management Report: July 2024 A few topics our newsletter touches on this month:
Our Thoughts: Dockside Reflections (mid-year checkpoint) We are halfway through an eventful 2024, with plenty of notable events to come (i.e. U.S. elections this fall). Scroll down to the image at the bottom of the newsletter to see our inspiration for the title this month (photo of Peter’s son Xavier at the lake). This is a good moment to take stock of “How did we get here?” and we have lots of information to help you digest that as well as understand our economic and market outlook. We also want to highlight the Global Insight Mid-Year Outlook, published by some of the thought leaders across our firm. Global equities have been somewhat directionless over the past few weeks. One notable development was the Canadian inflation report for May, which was higher than expected for the first time this year. This has moderately reduced expectations for a July rate cut, though markets still anticipate another one to two cuts from the Bank of Canada through the remainder of the year. There has been encouraging progress on inflation this year, albeit with different regions seeing different rates of decline. Yet, services inflation has remained sticky throughout most of the developed world due to wage growth, resilient demand, and shelter-related costs. Even so, fading pressures have allowed a few central banks to begin cutting rates, while others, like the U.S. Federal Reserve, suggest cuts remain a possibility later this year. On the growth front, things have been arguably better than anticipated, given many investors were expecting a recession to have already begun in various jurisdictions. The manufacturing sector has been generally weak, offset to a large degree by the services side of the economy. The consensus view is that a soft landing, where the economy slows but avoids a material deterioration in employment, is now more likely for many economies, particularly the U.S. It is frequently said that markets climb a wall of worry, and it is against this backdrop that global equity markets have driven higher this year, with the U.S. leading the way. But, as has been the case for some time, U.S. gains have been heavily influenced by large-cap technology, and more specifically, anything related to artificial intelligence. In part due to this rally, the U.S. market has become more expensive over the past year. While valuations are more reasonable if one excludes the large “tech” stocks, they still sit above historical averages. Our confidence in the sustainability of a bull market is usually highest when gains are driven by a broad range of stocks and sectors. Outside the U.S., and “tech” in particular, equity markets sit at valuation levels that are more balanced, reflecting some of the economic headwinds that exist in parts of the world. On the fixed income front, yields remain attractive in our view, and higher quality bond exposure can act as a stabilizer in portfolios in the event equity market volatility returns. Overall, our approach to managing portfolios remains a bit more cautious at this time given the range of potential outcomes. We remain committed to regular rebalancing to mitigate the risk of overexposure to any one market or sector’s idiosyncrasies. By the numbers (June): The TSX was down 1.4% and the S&P 500 was up 3.6% in U.S. dollars (4% in $CAD). The Europe, Australia & Far East index (EAFE) was down 1.4%, while the Emerging Markets index was up 3.9%. The Canadian bond market was up 1.1%.
New “additions” to the GWM team In the office – we are pleased to welcome new Associate Jackson Routledge to the group (picture & bio will be up on the website shortly). Jackson will be providing trading and client service support. His skillset will be an excellent addition to the team to help us improve our service to all of you. Outside of the office - we are very pleased to announce that Peter and his wife Breanne welcomed their second child, daughter Margot, to the world in June. We wish you and your loved ones a safe and happy summer! Regards, Mark, Peter, Sarah, Corinne, Nathalie & Jackson 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. © 2024 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. © 2024 RBC Dominion Securities Inc. All rights reserved. |
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