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What's new this month? Equity markets were lower across the board this month. The new COVID variant named Omicron is causing some concerns for the market, along with the persistently high inflation. During Fed Chair Jerome Powell's congressional testimony, he said that it is time to retire the term transitory when it comes to inflation. He acknowledges that factors putting upward pressure on inflation will linger well into next year.

In terms of the near-term policy path, Powell said that it may be appropriate for the Fed to consider wrapping up its taper a few months sooner than initially envisioned. Furthermore, health care professionals are still trying to assess whether the new strain is more transmittable or lethal compared to its predecessors. It is also unclear how effective the current vaccines are against the variant. What we do know is that Omicron symptoms may be more mild than other variants, and the US does not expect a further lockdown or travel restrictions this winter.

What happens when the Fed starts to taper? Historically, when the Fed started to taper, the market is usually followed by a period of weakness, but eventually, recovers 6 to 12 month out. This is true for both the TSX Composite and the S&P 500, as we can see from the chart. The speed and volatility of the tapering may cause further volatility in the market for the next six month. We continue to believe that in the near term, we will see emergence of new variants, though broadening base of immunity, globalizing, and increasing availability of antivirals should dampen the virus impact to our economy and people's lives in general.

We expect that the global economy to continue to expand, perhaps at a slower pace next year. Inflation will remain firm over the short to medium term, prompting central banks to begin dialing back monetary accommodation. We expect bond yields to continue rising in this environment, acting as headwind for fixed income returns, which we forecast to be low or even slightly negative over the years ahead. As a result, we remain underweight fixed income in our asset mix.

Stocks, although elevated, offers superior upside potential relative to fixed income. While we recognize that valuations are demanding and there is little room for error, we're also consider that the potential for strong nominal GDP could continue to support decent gains in corporate profits, which should support the bull market. We hope you have enjoyed our market update. Until next month, stay safe, and have a wonderful holiday season.

What's new this month? What a month it has been. The major stock markets in North America rallied more than 6% from the end of September, making another all-time high in the S&P 500, Dow Jones, and the TSX Index . In my video last month, I mentioned that September was traditionally a weaker month for equity returns and that we should see a Santa Claus rally as we head towards the year-end. This was validated by strong corporate earnings with major heavyweights, such as Alphabet, Apple, Amazon, Microsoft, and Facebook, or also known as Meta, showing strength and resilience, despite supply shortages and ad revenue concerns.

From a technical perspective, we may see a consolidation or a minor correction in the markets following a month of strong gains. There are some concerns about stagflation. What is stagflation? Stagflation is a period similar to the 1970s with sky-high prices of goods, stalling economic growth, high unemployment, and a weak stock and bond market. The Federal Reserve chairman, Jerome Powell, has communicated that strong inflation is transitory.

But the investors worry, what if it's not? With energy prices along with other input costs rising sharply, there are certainly some similarities. How can we protect our portfolio from rising inflation? Commodities tend to be some of the best performing assets in a higher inflationary environment.

Stock returns would be modest. And we would favor a mix of growth and cyclical sectors in the portfolio. The key is to pick good companies with low debt-to-equity ratios, the ability to generate secular growth, and decent margins, and, most importantly, the ability to pass the rising input costs to consumers. Appropriately priced real estate in some markets are also decent hard assets for inflation protection.

What are some risks still and your view for the next 6 to 12 months? Supply chain issues, rising labor costs, and interest rates are holding the markets back from further upside. Still, given the strong earnings so far, we still favor a modest overweight to equities and underweight to fixed income.

Within equities, we recommend a modest overweight to Canada and international-developed markets. We are neutral to US equities, given the recent run-up. We continue to favor equities over fixed income on a 12-month horizon due to the more attractive return profile on supportive economic profit trends, still accommodative monetary policy, and minimal risk of a US recession.

We do anticipate gains in equity markets to moderate considerably as profit growth slows and potential contraction in valuation multiples. I hope you have enjoyed this [? month's ?] update. Please feel free to reach out to our team if you have any questions or concerns.

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What's new this month? We finally saw a pullback of 5% in the US stock market this month. As mentioned during my last monthly update, this is to be expected as historically September has been weaker in terms of equity returns, while October, November, and December being some of the best month for equities.

This period is sometimes known as the Santa Claus rally. Although we expect volatility to continue in the market, we do believe the current pullback offers investors an opportunity to add to high quality companies, and take advantage of some of the sector rotations that is happening.

What caused the market drop? Investors are concerned about the global growth and inflationary pressures of higher energy prices, supply chain bottlenecks, regulatory risks, as well as the Evergrande's crisis from China. There are also no shortage of bad news. But the key focus this month was the rising US treasury yield and the Evergrande's debt crisis from China.

The US Federal Reserve signaled that it will begin to taper their quantitative easing program as soon as November. This notice was paired with the announcement of a possible interest rate hike as early as spring 2022.

This spooked the market. And investors once again, seek to rotate away from high growth areas, such as technology into cyclical sectors, such as financials, real estate, consumer discretionary, and energy.

The US dollar also strengthened this month as a risk-off move favors the currency. Evergrande's debt crisis in China also caused some volatility throughout the global markets. The property giant barely made the deadline on its loan payments this month, and was on the line for some $300 billion of potential bad debt.

Concerns of its potential default and its impact on the Chinese and global economy is still being felt today. To sum up, investors had a lot to digest this month. But we still believe a year-end rally is possible. Here's why.

From a technical standpoint, the S&P 500 is sitting at its 100 day moving average, which historically has been a fairly reliable support for the short term. While we expect further volatility in the markets to take place, we're reasonably constructive on our outlook for equities.

We think stocks over the next 12 months will deliver worthwhile returns, but perhaps at a more subdued pace than the last year and a half. Large market declines and recessions rarely happen when everyone's expecting it.

And on that note, the market sentiment is very weak at the moment. And historically, this is a contrarian indicator. In addition, keep in mind that normally a rising interest rate environment is good, because our government believes that our economy is healthy enough to warrant an increase in rates.

Rising commodities-- particularly, oil prices-- seem to support this view. Inflation is still an ongoing concern, but should normalize in the next few years as supply shock catches up with demand. Bottom line, we believe for investors with higher risk tolerance and longer term investment time horizon, an opportunity has presented itself this month to put the cash to work.

We continue to favor equities over bond's, value over growth stocks as we head towards year end. I hope you have enjoyed this video. Thank you so much for watching. And we wish you a very happy Thanksgiving with your family and friends.

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What's new this month?

All major North American markets hit an all-time high again on dovish comments from the Fed. The key event this month was the meeting at Jackson Hole where investors were quick to highlight the dovish stance of the Fed chairman Jerome Powell, who said he was in no rush to raise interest rates and would be guided by data and risks posed by the Delta variant. That effectively shut out noise from several Fed speakers, who had previously made some hawkish comments.

Powell also continue to make the case that inflationary pressures were transitionary and that there had been clear progress towards maximum employment. While the Fed may start paring back its bond purchases in the next few months, Powell didn't give a specific timeline for scaling back stimulus. And even if it did come this year, it won't necessarily start the shot clock on hiking interest rates.

It's clear that the Fed will follow the same playbook from 2013 and 2014-- that is, to give plenty of time in announcing, starting, and proceeding with rate hikes in order to avoid repeating the taper tantrum of 2013.

In other news, some Canadian Banks also hit all-time highs this month, including Royal Bank stocks. I mentioned previously in my video that Canada's big banks are stronger than ever, and we would not be surprised with dividend increases in the near future. Banks benefit with rising interest rates and as such should continue to perform well.

What happened in the past when the Fed started to taper?

Volatility tends to occur within equity markets, but any declines were short-lived. We can see from the chart that in most instances, the stock market on an average initially declines within the first six months and turning positively shortly after. There's a saying that you cannot time the market. Therefore, it is important that your portfolio is properly structured from an asset allocation standpoint in preparation of potential rate hikes.

We do believe the timeline for such hikes has been pushed back to the start of 2023 at the earliest and not in 2022 as previously projected.

How are you positioning the portfolio for your clients?

We are overweight in equities since the start of this year and have been scaling back slightly in favor of short-term bonds in more aggressive portfolios. Active rebalancing is key in this environment. The market is in a buy-the-dip mode and has not had a correction of 5% or more for some time. With DIC and bond rates at 1% or 2% and Canada's annual inflation rate surging over 3.7%, real return on safe haven assets are negative, which is driving investors to seek yield in other areas or alternatives.

However, we must be cognizant of the risks that we're currently seeing, such as interest rate risk, inflation risk, equity valuation risk, political risk, and of course, COVID variant risk. As we head into September, it has historically also been one of the weak performing months from a seasonality standpoint. There's a lot of moving parts, and one must tread carefully in order to ensure your investments and the portfolio is properly structured.

If you find this information helpful, we welcome you to share this video with colleagues, friends, and family. We're always willing to start a conversation. Thank you so much for watching this video, and until next month, stay safe.

What's new this month? Two steps forward, one step back. And get used to some additional volatility. These are the messages we think the US equity market is sending. The market is seemingly on edge and has prompted some unease about this phase of the bull market in economic cycle. We think a mix of interrelated issues caused the markets to be nervous. For one thing, the increase in covid-19 infections, particularly the Delta variant. We also have concerns about the degree to which the virus related restrictions would be resumed and their potential economic impact.

There is also the swift decline in the 10 year treasury yield in the bond market, which raises the uncertainty about what, if anything, the bond market may be signaling about the future economic growth potentials. At the very least, this is a reminder that volatility and equity investing go hand in hand. There is often a wall of worry, and news about outside forces or concerns about the stock fundamentals or monetary and fiscal policies.

These worries can often knock down the market from time to time. Still, we remain modestly overweight equities as we don't think these recent developments put the bull market and economic cycle at risk. Here's why. According to FactSet, approximately one third of all S&P 500 companies reported their Q2 earnings this month. With 88% of the companies beating their earnings.

With earning numbers coming in hot, investors are basically just buying the dip. Due to the ease financial conditions, central bank liquidity tailwind, excessive savings from fiscal stimulus, and pent up demand. Companies flush with cash are also buying back their shares at a record pace.

Concerns about the impact of the spread of the Delta variant on the economic recovery might also be overdone, as we do not believe countries would deploy another round of lock-downs despite areas of low vaccine rate. However, we must be cognizant of the risks, too. The S&P 500 has not suffered a 5% pullback since October 2020. And we believe it is reasonable to assume a correction sometime in the near future.

Furthermore, the bond market is signaling we are at a really, really negative real yield after we factored in inflation. What this means is that an investor who bought a 10, 20, or even 30 year real return bond today, would be guaranteed a net loss after factoring in purchasing power over the life of the bond. These factors in turn drive up other asset prices as investors seek to grow their money elsewhere.

The current conditions make for a very difficult reinvestment landscape. While there is no escaping of the effect of real yields, we do think there are an important barometer to watch in terms of economic health, as they are currently signaling that return expectations should be tamed going forward.

What are your thoughts on China's crackdown? We have more regulatory tightening from China this month on its online education sector. Beijing already moved to rein in its financial and technology companies earlier this year. This is a reminder to investors that investing in companies in the world's second biggest economy does come with significant political risk. And although the dip might present an opportunity, it could still go a lot lower.

It is worth noting, however, that emerging market indices as a whole are trading at a significant discount to our North American markets. For long term investors, we view this as a buying opportunity. And there you have it. My name is Peter and this is your July Market Minute.

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What's new this month? The US stock index hit all-time highs this month as the dust settled in the aftermath of the US Fed's meeting. Equity investors had initially been spooked by the Fed's commentary regarding the prospect of the first rate hike, and that is perhaps sooner rather than later. But this was quickly soothed by Chairman Jerome Powell and the Fed's officials, and stock market bounced back sharply towards the end of the month.

In an address to members of Congress, he acknowledged that the recent price increases had been largely than expected, but he has suggested that they are largely a function of reopening dynamics and that inflation should fall back to the Fed's long-term goal. The commodities market seems to support this view as lumber futures were down 57% from May. This suggests to us that even though consumer balance sheets are strong, we are unlikely to see runaway inflation of the kind seen in the 1970s. The potential for sustained inflationary pressure is still a risk until more evidence emerges that clarifies whether pricing pressures are simply due to supply chain bottlenecks versus demand, or factors that are more durable in nature.

How does the stock market perform after the first rate hike historically? Stocks generally have performed well historically after the first rate hike, as long as these hikes don't trigger recessions. RBC Global Asset Management studied the last 17 US rate hike cycles since 1954 and found the broad stock market posted a median gain of 13% 24 months after the first rate hike of the cycle, with even stronger gains during non-recessionary cycles.

The US economic backdrop should remain relatively strong through the course of the rest of the year, driven in particular by the services sector. While the world's largest economy may see its economic momentum fade at the margin through the second half, it should remain above average. And that this is supportive for global equities, which have historically done well in the absence of a US recession.

What's your thoughts going forward? Many developed global equity markets have done quite well year-to-date and are sitting near all-time highs. And while valuations are above-average for many, the backdrop of robust growth, double-digit earnings gains, and favorable financial conditions remain supportive for stock markets. We are also encouraged by the depth of the global markets gains this year. More specifically, the strength has not just been tied to one or two groups of stocks, but rather a relatively wide range of sectors and areas, which is a sign of a reasonably healthy market advance.

As mentioned previously, we prefer clients to own an equal combination of cyclical, dividend-paying, dividend-growing companies, along with companies that have high return on equities and the potential for higher growth. This is known as a barbell approach to investing and has served well for our investors this year. We continue to prefer equities over bonds, all else being equal. As always, we will monitor developments closely and provide thoughts on anything noteworthy. We wish you a healthy, safe, and enjoyable summer.

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What's new this month? Inflation, inflation, and inflation. The number printed this month was quite a surprise. In the US, there was 0.9% monthly jump in core consumer price index, which excludes energy and food. And this was the biggest increase since 1982.

If the rate of inflation observed thus far in 2021 continues for the remainder of the year, this would mean core CPI would exceed 4% by year end, a level unseen in decades. It is worth noting, however, that this was just one month and that soaring used car prices accounted for nearly a third of the month-over-month increase. This is likely a transitionary item due to lack of supply and ongoing semiconductor shortage.

And the US Federal Reserve has been consistent in its dovish messaging, dismissing inflation concerns and emphasizing that this is all likely temporary. We believe inflation will run hot for the next few months. The risk level for higher inflation also means we will have higher volatility in the markets, as investors will likely put the Fed's transitionary argument and commitment to a zero-rate policy to the test.

What are your thoughts on European equities? The European economy is reviving faster than most expected, so much so that it sparked a debate about when the European Central Bank should take its foot off the gas. Yet, we think monetary policy will stay loose for some time.

Furthermore, European equities typically out-perform when bond yields rise, as they have comparatively high exposure to groups and sectors that are beneficiaries of rising yields, such as financials, industrials, consumer discretionary, and materials. Conversely, they have relatively lower exposure to technology and communication service sectors that tend to complemented by US equities. Valuations for European equities are also more favorable as the Euro STOXX index currently trades at a 20% discount to the S&P 500.

What's your favorite sector right now? I like banks, particularly Canadian banks. Collectively, they have performed really well with share prices rising by roughly 25% already this year, in addition to a 3% annual dividend. The group is now well above where it traded before the pandemic began. Earnings this month have been very strong as well. And this should sustain the sector's momentum well into year end.

How is the US dollar doing? The US dollar is approaching a multi-year low against the basket of developed-market currencies. It is down approximately 5% against the Canadian dollar as of the end of May. We continue to see weakness in the US dollar, and this tends to drive up commodity and import prices, potentially adding to near-term inflation. Well, there you have it. My name is Peter and this is your Market Minute.

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What's new this month? Global equity markets are near all-time highs with most of the S&P 500 companies reporting better than expected earnings. The US central bank also provided an update on its outlook. Its messaging around inflation and approach to monetary policy was largely consistent with what it has been telegraphing for some time.

This stood in contrast to the Bank of Canada, which indicated that it would begin to incrementally withdrawal some stimulus by reducing its purchase of government bonds. As a result of the divergence between the two central banks, the Canadian dollar has been notably strong of late, reaching a three-year high. So far, the Canadian dollar has appreciated against the US dollar by approximately 3.7%.

My portfolio is fairly conservative and balanced, and it's done well last year, but why is it muted this year? While equity markets are near all-time highs, it is important to realize that the bond market are down 3% to 5% globally due to higher long-term yields. As mentioned previously, bond prices move in the opposite direction with interest rates.

Since central banks lowered rates last year due to the pandemic, both bonds and equity prices rallied in 2020. This year, the bonds have performed poorly, and thus, we recommend overweighting equities, all else being equal. In addition, the Canadian dollar has strengthened, which dampened the returns from foreign investments, both US and globally.

What are your thoughts on earnings? The earnings this month highlighted by very strong revenue growth in some of the well-known mega cap names such as Amazon, Google, Microsoft, Facebook, and the like helped to remind investors that fundamentals remain solid, and future prospects are bright. In many cases, businesses tied to cloud computing, e-commerce, advertising, cybersecurity, and wireless connectivity, among other themes, are benefiting from secular tailwinds that have existed for some time. The results released over the past week suggest the tailwinds remain strong today. Moreover, management teams of many businesses struck an optimistic tone about the prospects for stronger near-term demand, fueling by a reopening of global economy.

Where do you see some risks? It is important to recognize the expectations of future growth are already high and reflected in the current valuations of the names mentioned. The companies will have to deliver growth that exceeds current estimates in order for their stock price to move meaningfully higher in the future. The strong results from the technology sector should be supportive for markets near term, but at some point, bond yields may resume their march higher as investors shift their attention back to potential for building inflationary pressures. We believe it is important to manage for this risk by ensuring our client's portfolio are well-diversified with exposure across all asset classes.

Emerging markets have lagged developed markets. What happened? Developing nation's stocks have lagged the rest of the world since the middle of March, partly on concerns that vaccine shortages and delays will slow economic growth.

Not only do we have a much slower vaccination program across emerging markets, but worries over debt loads, external vulnerabilities, fiscal prudence, inflation, and currency stability will hamper a much stronger recovery post-pandemic. This is weighing on market sentiment in the near-term and will require a bit more patience from investors until the COVID situation comes under control. Emerging market companies are still trading at a steep discount when compared to the rest of the world and remain attractive in our clients' portfolios.

The 2021 federal budget was released this month. Can you summarize the changes? The federal government unveiled its 2021 federal budget this month, its first in two years because of the pandemic.

There were two broad takeaways. First, the budget was two-pronged in nature. On the one end, there were extensions to existing pandemic-related programs and new ones to help businesses and households deal with ongoing pandemic-driven disruptions.

On the other side, there was spending to foster more sustainable growth. This includes an ambitious national Early Learning and Childcare Program, aimed at bolstering women's labor force participation over time, though it will depend on cooperation from the provinces. There were also wide-ranging measures announced, covering everything from employment insurance eligibility to old age security, infrastructure and transit, affordable housing, and climate mitigation.

Ultimately, the budget was very much focused on spending roughly $100 billion over the next three years. For a detailed summary of the proposed budget, please reach out to our team. And there you have it. This is Peter, and this is your Market Minute.

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What's new this month? All major indexes were positive this month, with value outperforming growth-oriented investments. We are continuing to see a rotation towards more cyclical industries as long term interest rates are heading higher. In the US, the White House proposed of more than $2 trillion infrastructure spending over an eight-year period.

Part of those funds will come from 15 years of higher taxes, including increasing corporate tax rate to 28% from existing 21%. An increase in the global minimum tax from 13% to 21% and other measures. The idea is that all these government stimulus will be funded by increasing corporate taxes, and the effect of rising corporate earnings should be able to offset these debt levels in the long run.

Where do you think the market is headed from here? I think in terms of the economy, we're in recovery, and really has been since last summer. I think there's more of that to come, now that the new Biden administration has revealed their plans for an infrastructure program. But keep in mind that these types of programs usually take years to unroll, and we probably won't see money on that spend until next year.

But what it suggests is that there is going to be a lot of government support beyond this year in terms of the economy. As the economy starts to reopen around the world, that's the biggest driver for further growth. As long as the markets are supported by solid corporate earnings.

What are some of the risks you see in the markets right now? Well for one, corporate earnings thus far has supported equity levels and are generally above consensus estimates. Any downward deviation in corporate earnings may spook the market causing further declines. Furthermore, given the sharp economic acceleration, the concern is near-term supply shortages across nearly all key inputs to the economy, such as commodities, microchips, and labor, will drive price inflation considerably higher.

The other side of the argument is that inflation may be short-lived due to global forces such as, the digital revolution, continued expansion of the global economy to emerging markets, the biotech revolution, automation, and so on are deflationary by nature and will help to bring inflation under control naturally.

The 10-year Treasury yield is the discount rate on risk assets. So, the higher this goes, the lower the stock price of growth oriented assets. Most of these are high-growth stocks, which are last year's darlings. The debate now, however, is around where this yield adjustment process ends. We believe eventually the yield will hit 2% by year-end, and possibly overshoot to 2.25% and above. Beyond that level, the natural forces of international buyers, and yield curve arbitrage kicks in, and we think this probably holds the 10-year around 2% for now.

Also keep in mind that the US Federal Reserve always have the ability to intervene and make further adjustments to rates. Recently, several large hedge funds in the US have seen substantial losses that put investors on the edge. We believe these events are singular and are company-specific. We do not view this as a contagion effect.

Finally, further hikes for both personal and corporate taxes could be a blow to the economic recovery. Taxes would be going up for much of the middle-class, for all job-producing corporations, and for most small businesses. Stock investors would not be spared either with taxes on capital gains and dividends likely to slow investment and capital formation at the very point where they might be needed the most. Therefore, we must be cognizant of potential tax changes and how that might impact on investors' portfolios.

And there you have it. My name is Peter and this is your Market Minute.

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Hi, my name is Peter. And this is your Market Minute, where I answer some of your questions. Question number 1, what is happening in the equity markets this month? Equity markets were slightly higher this month with cyclical and value-based companies outperforming growth or momentum focused investments. From a sector standpoint, energy, financials, and industrials were the beneficiaries of the procyclical rotation.

Cyclical stocks are companies that make or sell discretionary items and services that are in demand when the economy is doing well. They include restaurants, hotel chains, airlines, furnitures, high-end clothing retailers, and automobile manufacturers. What we're seeing this month is money shifting away from last year's winners, such as technology companies towards more cyclical names as the economy continues to recover.

Question number 2, is there an inflation concern and what does it mean when bond yields rise? Bonds are debt instruments whereby borrowers pay a recurring amount of interest before ultimately repaying an investor at a future date. Many investors buy and hold bonds or invest in fixed income products, like mutual funds or ETFs as part of a well diversified portfolio. As with stocks, investors can both buy and sell bonds that they no longer want to hold. When more investors want to sell rather than buy bonds, the prices decline.

A bond yield represents the interest income relative to the price of a bond. As the price of a bond falls, its yield rises and vise versa. In recent months, bond prices have been under pressure. It's suggesting that there are more sellers than buyers. That in itself is not surprising given the current backdrop. A durable economic recovery will fuel earnings growth for stocks. And this has contributed for investors shifting some of their exposure away from defensive investments such as bonds into riskier investments such as equities.

But the move in bond yields has been noticeably sharper in recent weeks. This may suggest that some investors are nervous about future inflation. More specifically, some may be questioning whether the combination of an eventual opening of economies, massive fiscal, and monetary support from governments and central banks and pent up demand from consumers and households could lead to sustained inflationary pressures going forward.

Question number 3, what does inflation has to do with the equity market? Inflation is a key risk for bonds and fixed income assets in general as they can roll the bond price and principal, but it presents a risk for stocks too. Such a scenario may force central banks to shift their stance and raise interest rates earlier than expected.

Stock prices can be very sensitive to the level of interest rates, particularly when valuation levels are elevated as they are today. The potential for an earlier than expected increase in interest rates would be a new and meaningful headwind for stocks. As a result, any large and sustained move higher in inflation could present a risk to both stocks and bonds.

Question number 4, how are you positioning the client's portfolio given this backdrop? We understand inflation is problematic, but are less concerned at this juncture. Inflation will undoubtedly rise this year as a function of a recovering economy. Moreover, supply chain bottlenecks will intensify the upswing. But the US Federal Reserve has repeatedly indicated it is very willing to tolerate a rate of inflation above its long-term target, at least for a little while. We expect other central banks to remain similarly accommodative.

Furthermore, we have been rotating away from high growth momentum investments towards more value based cyclical names within the portfolio since the start of this year. Our overall narrative stays the same. We favor equities over bonds, international companies over North American companies, and value-based investments over growth investments. And there you have it. My name is Peter Wayne. And this is your Market Minute.

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Hi, I'm Peter Wang and this is your Market Minute where I answer some of your questions. Question one. How do you view the market right now? Despite a weak economy we have had a fantastic year in equities in 2020. Our outlook remains positive for equities through 2021, we're expecting and beginning to see evidence of a tactical pause or pullback developing by mid first quarter.

However, any declines would present an opportunity for investors to add to equities as positive earnings growth, supportive fiscal and monetary policies continue to provide a tailwind for the markets this year. Question two. Is there a bubble forming in the market? Certain areas of the market could be considered in bubble territory. The reason you surrounding an online group of retail investors pushing stocks that were heavily shorted by hedge funds, and the dramatic run of areas in cryptocurrency, thematic baskets such as electric vehicles, renewable energy, and others are examples.

We believe that the excess liquidity that is currently in the market is unlikely to disappear. The global balance sheet of key central banks has been growing far in excess of nominal GDP. Still we believe that central banks are sufficiently worried about a deflationary environment, that they might end up letting financial markets run hot until the economy itself starts overshooting. The overall equity market generally has a price to earnings ratio, 2:8 points higher than any historical averages. With US equities on the higher end, and emerging markets on the lower end or better value.

Stocks are likely to stay supported as long as the economic up cycles is enforced. And the withdrawal of excess liquidity does not start in earnest. Question number three. How is the market different than the economy? The stock market is always forward looking.

It focuses on corporate earnings, instead of media headlines. The guidance from Central bankers on monetary policies and interest rates have much more impact than daily headlines and the current economic conditions as a whole. Currently the economy is grappling with an assortment of challenges that may push back the eventual recovery from the crisis. The virus is proving more difficult to control than we had expected. New variants are being discovered and restrictions have tightened in many regions to combat rising infection numbers.

On the vaccine front, delays are a common occurrence. And prior hopes of a near perfect rollout of the vaccine are being met with the harsh reality, that the pace of delivery is not living up to expectations. In addition, inflation concerns are perking up, as money supply has ballooned and prices are starting to rise in some areas of the economy. All things considered, we continue to look for a solid rebound in economic growth in 2021. But the rebound in the economy is likely to be delayed.

Question number four. How are you positioning your portfolio for your clients? We maintain the view that stocks will continue to outperform bonds this year. The economy faces a variety of challenges in the near term, but if we look beyond the immediate difficulties posed by the pandemic, we see an improving economy, still low interest rates and rising corporate profits. This constructive medium to longer term view is reinforced by a steepening yield curve, and an equity rally that is broadening out to small cap and international equities.

In this environment, we continue to favor stocks over bonds, as even a small increase in interest rates from the current low levels will result in capital losses that would more than offset income from bonds. Should the economy reaccelerate and corporate profits rebound as expected, stocks hold the potential for much more return than bonds. Especially in more attractively valued markets outside North America.

Furthermore, even though stocks have had a good run, they represented by the blue line in this graph continue to offer historically attractive risk premium relative to fixed income, which is represented by the yellow line. As a result, we maintain an overweight in stocks and underweight in bonds for our clients' portfolio. Well there you have it. My name is Peter Wang, and this is your Market Minute Update.

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It's that time of year again where Canadians have to file taxes and decide on whether to top up their RRSPs or TFSAs. My name is Peter and I'm a Wealth and Investment Advisor and Financial Planner with RBC Dominion Securities. With this short video, I hope to address some of the most commonly asked questions regarding the two types of accounts, and when you should be contributing to each. The allowable TFSA contribution room for year 2021 is $6,000 per person. If you have never contributed to a TFSA and have been eligible since its introduction in 2009, your cumulative contribution room will be 75,500 in year 2021.

Your allowable RRSP contribution room is the lower of 18% of your earned income from the previous year or $27,230. It is important to know that the amount may increase annually. Be careful if your employer has a registered pension plan or deferred profit-sharing plan. Those contributions reduce the amount you can contribute to an RRSP. There is no deadline for the TFSA contributions.

Each year new contribution room is available starting January 1st. You have until 1st of March 2021 to contribute to your RRSP. And lower your taxes for the year 2020. After this period you must deduct your contributions on the following year's tax return. If you have TFSA contribution room, we would encourage you to first maximize contributions to your TFSA.

This allows you to withdraw these funds at a later time without a tax penalty and any gains or income earned in the account are tax free. This is especially true when you're younger or earlier in your career. While you accumulate RRSP room whenever you have earned income, it's better to take advantage of this room when you're in your higher earning years. Which allows you to have greater tax deductions. However, there are at least two exceptions to this suggestion.

The first exception is that you have an above average income, or you're confident your future income will be lower than your current income. In this case, you may want to contribute to your RRSP now and then withdraw your funds when you're in a lower income tax bracket such as in retirement. You can hold a wide range of investments in a TFSA. Like Cash, GICs, Bonds, Stocks, and Mutual Funds. It's important to think of these as investment accounts, rather than just simply saving accounts.

If you're earning approximately $50,000 or more, it could pay to know what tax bracket you're in. Since an RRSP contribution lowers your taxable income. It could place you into a lower tax bracket and result in a higher tax refund. By paying attention to your tax bracket and putting aside a modest amount of money, you may be surprised how much cash can end up back in your pocket.

We're happy to conduct an income tax analysis to determine the optimal RRSP contribution for you and your family. I hope you find this video helpful and informative. For additional information or if you have additional questions, please feel free to contact us any time. Thank you.

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