The Message Remains the Same - "Late Cycle" Does Not Mean "End of Cycle", and Recession Does Not Seem Imminent

Jan 18, 2019 | Nick Scholte


Further, given that the economic expansion that began in 2009 has been shallower than past expansions, it may well continue running for longer than past expansions. I've always felt this "slower for longer" argument had merit.

To my clients:

It was an up week for North American stock markets with the Canadian TSX rising 2.4%; the U.S. Dow Jones Index rising 3.0%; and the U.S. S&P 500 rising 2.9%.

It’s a short update again this week as the messaging is still the same. Specifically, although the economy is in the “late cycle”, it is not yet “end of cycle” and recession does not seem imminent and is not anticipated by RBC for 2019 (I sat in a boardroom conference with our chief strategists this week where this perspective was reinforced with a large volume of supporting data which I will not bore readers with here). Further, given that the market expansion that began in 2009 has been shallower than past expansions, it is expected that this will allow it to continue running for longer than those same past expansions. Perhaps multiple years longer. This is known as the “slower for longer” argument in financial circles. I’ve always felt the argument has merit.

The only development I’d like to specifically comment on is the Wall Street Journal report on Thursday that the U.S. is considering reducing, or perhaps entirely suspending, existing tariffs on China as a sign of good faith in the negotiation process. While this report remains unverified, markets responded as if there may, in fact, be some substance to it. Regardless, markets which were already up for the week prior to the report, accelerated their gains into week end on the basis of the report.

That’s it for this week. All the best,


Nick Scholte, CIM, FCSI

Vice-President & Portfolio Manager
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