To my clients:
An announcement first: just a heads up that as 2024 winds down and the holidays approach, Brenda and I both intend to take some personal time to spend with family and will be spelling coverage for each other on an ad hoc basis. Also, this will be my last weekly update until the new year. Next scheduled update is on January 3, 2025.
If you prefer, read this week’s update on my website. Feel free to share the link with family, friends and colleagues:
It was a down week for North American stock markets with the Canadian TSX finishing down ; the U.S. Dow Jones Index down ; and the U.S. S&P 500 down .
Brief update this week, with the following top-level notes:
Proposed U.S. Tariffs on Canada: RBC’s perspective is that blanket 25% tariffs against Canada are unlikely to be a lasting policy if implemented. Canada’s vast natural resources and their importance to the U.S. economy (notably oil and uranium) offer substantial leverage to discourage broad or prolonged tariffs. Further, both the Federal and Provincial governments are already developing a coordinated policy response.
Canada interest rates and the economy: The Bank of Canada (BoC) cut interest rates another half percent this week. This is the fifth BoC cut in a row, and marks the fastest pace of rate cuts among OECD nations this cycle. In comparison to many other industrialized countries, particularly the U.S., Canada’s economy is proving much weaker and is necessitating the rapid cut in rates to provide support for this struggling economy.
U.S. interest rates and economy: the U.S economy is proving much more robust than here in Canada. While the Fed is widely expected to cut rates again next week (though it’s not a sure thing), the outlook is for the pace of U.S. cuts to slow notably in 2025 and for the level where rates ultimately settle to be higher than previously anticipated. All else equal, higher U.S. rates in comparison to Canada favors continued strengthening of the US dollar vs the Loonie.
Portfolio Positioning: economic momentum and currency outlooks continue to favor current client portfolio positioning overweight to the U.S.
That’s it for this week and this year. All the best and Happy Holidays!
Nick
Nick Scholte, CIM, FCSI
Senior Portfolio Manager
Scholte Wealth Management
RBC Dominion Securities Inc. │ Tel: 604.257.7569 │ Fax: 604.235.9950
3200-1055 West Georgia │ Vancouver, BC │ V6E 3P3
Toll Free: 1.844.665.9900 │Email: nick.scholte@rbc.com
Visit Our Website: www.nickscholte.ca
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