| Left to Right: Corinne, Sarah, Mark, Peter and Nathalie Gallivan Wealth Management Report: August 2024 First and foremost, our thoughts go out to those that have been impacted by recent wildfires, especially in Jasper National Park A few topics our newsletter touches on this month:
Our Thoughts: An Olympic summer matched by Olympic-sized Moves in the Markets We, like many of you, are glued to the nightly recaps on CBC/CBC Gem as we watch Team Canada at the Paris Olympics. On the CBC Gem app you can watch the replay of any event. Also you can catch an inspiring performance in the opening ceremonies from our own Celine Dion, who has been fighting her own comeback battle. July certainly had big surge in the markets – during the month, the Bank of Canada cut interest rates for the second consecutive time. This helped fuel a very strong and broad rally in the TSX. Since the beginning of August, global equities have been weaker, driven first by a classic sector rotation out of growth stocks, and then a sharp unwinding of hedge fund carry trades. Hedge funds love trend investing with leverage, and recent softer economic & employment data combined with interest rate differentials tightening had those complicated trades going south and leading to a rush to the exits. This creates short term volatility even if it reflects little on the outlook for businesses that we invest in. We like to focus on earnings and guidance. So far, S&P 500 earnings have been relatively sturdy, although expectations for “tech” left little room for disappointment. Updates from a few high-profile tech companies were not well received by investors. The concern has not necessarily been the earnings reports themselves, but rather the significant sums being spent on artificial intelligence-related research and development, and growing scrutiny around the future returns on those investments. US Election: Financial markets have largely shrugged off the historic events that have unfolded in Washington over the past few weeks. However, the appointment of Vice President Kamala Harris as the Democratic nominee, set to be made official at the party’s national convention next month, has introduced new uncertainty with respect to the outcome of the November elections. Markets tend to focus on policy and priority differences among the parties, the likelihood of meaningful legislation being passed, and any potential impact on the country’s growth and fiscal position. While the potential President-elect understandably gets the lion’s share of media attention, congressional elections are also important. The U.S. Congress is deeply involved in making new legislation and changing existing ones, and the president must sign its bills in order for something to become law. Therefore, Congress shares authority over financial and budgetary policy and national defense, among other federal government functions. It also has extensive investigative powers over government agencies that the president controls and can initiate special inquiries involving the president and other officials. We will be paying close attention to the elections to get a better sense of any major policy shifts and their implications for future growth and government debts and deficits. Given the unpredictable nature of the election thus far, it is premature to make any real assessments at this juncture. We will follow up as we gain greater clarity. In the meantime, we continue to digest the earnings season that is taking place and expect to offer some takeaways in the near future. Should you have any questions, feel free to reach out. By the numbers (July): The TSX was up 5.9% and the S&P 500 was up 1.2% in U.S. dollars (2.2% in $CAD). The Europe, Australia & Far East index (EAFE) was up 3.9%, while the Emerging Markets index was up 0.8%. The Canadian bond market was up 2.4%. Interesting Listening/Reading
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. |