Hello everyone,
May has certainly delivered no shortage of headlines. The Vatican has elected a new head of the Catholic Church. Mark Carney officially took office, and following a brief royal visit, Parliament is set to resume after several months of suspension. We’ve also begun to see early cuts in public services as efforts to contain the growing fiscal deficit take shape.
Warren Buffett announced his decision to step down from Berkshire Hathaway. Meanwhile, Moody’s downgraded the U.S. credit rating, following last year’s similar move by S&P, amid mounting government debt, a widening deficit, and rising interest payments.
In brighter news, Lady Gaga delivered a spectacular performance in Copacabana, drawing an estimated crowd of over 2 million—setting a new world record for a female artist.
The FDA has approved the first blood test to diagnose Alzheimer’s disease in individuals aged 55 and over with memory concerns. Previously, diagnosis relied solely on PET scans.
On a personal note, our family had a milestone of its own: my son Nicolas took his first steps this past weekend. We are very happy!
Have a good rest of the day,
- Mauricio
Economic and Market Update
Markets around the world are still reacting to ongoing uncertainty over U.S. trade policies. Tariffs have created real challenges for businesses and economies, and while the U.S. government has hinted that some new trade deals may be coming, nothing is finalized yet. Until there’s more clarity—especially with major partners like the EU, China, Canada, and Mexico—investors will likely remain cautious.
In the U.S., the economic picture is showing signs of strain. Growth is slowing, and inflation is picking up. RBC Economics expects the U.S. economy to grow by only 1% this year, compared to an average of 2.7% over the past three years. At the same time, core inflation (which excludes food and energy) could rise to 4.3% by the third quarter. This combination of slow growth and rising prices—known as “stagflation”—is challenging for both consumers and investors.
After a sharp drop earlier in the year, markets bounced back in April, recovering much of the ground lost. But we’re now at a turning point. If no solid trade agreements are reached soon, businesses and consumers may pull back on spending, which could increase the risk of a recession. However, a downturn is not a done deal. With so many trade talks underway, there’s still potential for positive surprises—and for markets to respond well if progress is made.
The key to the U.S. economy is the consumer, who makes up about 70% of GDP. While confidence has dipped, consumer spending held up in the first quarter—possibly helped by early purchases ahead of expected price increases. For a recession to take hold, we would likely need to see job losses or weaker employment data, which hasn’t happened yet but remains a risk if tariffs begin to bite.
Meanwhile, global bond markets remain volatile. Uncertainty and shifting expectations have driven yields lower, as worries about slower growth outweigh concerns about inflation.
Given all this, we’re keeping our investment approach steady for now: cautious, selective, but fully invested. We continue to focus on high-quality, resilient companies that are better positioned to navigate uncertainty and hold up well even if the economy slows further.
Joan Miró
I was recently in an RBC building in Toronto and, to my surprise, one of Miró's paintings called L'étrangle, that I suspect now belongs to or has been lent to the RBC collection, was exhibited. I particularly love the bright colors and sublime lines of his work. If you want to see other select paintings and sculptures on the RBC collection, visit their website.
Wealth Planning Insights
It can take around 18 months, with as many as 70 different tasks, to settle even a simple estate. As a liquidator, you’ll have to protect and distribute assets, potentially go to probate, pay outstanding debts and taxes, and prepare a final accounting for the beneficiaries of the estate.
The team at RBC Royal Trust created tools to help you understand the complexity of the estate you’re settling and guide you through the tasks involved.
Access the Estate complexity calculator to determine how difficult it might be to settle your own Estate or that of a loved one.
Golden Pavilion in Kyoto
One of our readers shared this beautiful photo of Kinkaku-ji (the Golden Pavilion) in Kyoto, Japan. A Zen Buddhist temple declared World Heritage by Unesco in 1994, this structure surrounded by beautiful bushes and covered with gold leaf is one of the most important destinations in the city. Definitely in my bucket list now.
