Below is a summary of some of the relevant news items from the Capital Markets and the Economy from the past week extracted from RBC Global Insights and FactSet Research.

You can catch up on the past four weeks’ Weekly Update in the link to my Blog.

Read my latest Smart Investor newsletter on my website. The Q3 2024 edition covers Market Review for first half of 2024, and a list of questions for those thinking about their retirement. Shiuman’s Corner is about my favourite podcasts.

 

Markets

Market scorecard as of close on Friday August 30, 2024.

Country	Equity Indices	Level	1 week	YTD
Canada	S&P/TSX Composite	23,346	0.3%	11.4%
U.S.	S&P 500	5,648	0.2%	18.4%
U.S.	NASDAQ	17,714	-0.9%	18.0%
Europe/Asia	MSCI EAFE	2,448	0.3%	9.5%

Source: FactSet

• TSX ended higher in Friday afternoon trading, climbing to near best levels just before the close. Most sectors higher. Information technology, consumer discretionary and financial the best performers

• US equities higher Friday, finishing near best levels. Ended mixed for the week and mostly higher for the month of August.

 

Economy

Canada

• Q2 2024 GDP growth was reported at 2.1%, following a slight upward revision to the Q1 figure of 1.8% (previously 1.7%). This result is above both our expectation and the consensus before the data release. Although slightly above expectations, the details behind the Q2 GDP increase are softer than the headline growth rate and per-person output continues to decline.

• RBC Economics expects another 25-bps cut to the overnight rate (to 4.25%) from the BoC meeting this week to build on cuts already delivered in each of the prior two meetings in June and July. Comments from Governor Macklem will likely again err on the dovish side, continuing to emphasize a softening economic backdrop that makes it more likely that inflation will keep trending lower.

U.S.

• Fed Chair Jerome Powell last week gave strong indications that the U.S. central bank will begin cutting interest rates at its September policy meeting. In his keynote address to the Fed’s annual Jackson Hole monetary policy symposium, Powell expressed confidence that inflation will return to the central bank’s 2% target and that cutting rates would allow the Fed to achieve a so-called “soft landing,” or a non-recessionary growth slowdown.

Further Afield

• Bank of England (BoE) Governor Andrew Bailey stated in his speech at the U.S. Federal Reserve’s annual Jackson Hole monetary policy symposium that despite increasing comfort in receding inflationary pressures, it is “too early to declare victory.” The BoE forecasts inflation to accelerate to 2.8% by the end of 2024 due to higher energy bills, which will increase by 10% in October, according to Ofgem, the UK energy regulator.

• The latest earnings season suggests Chinese consumers continue to tighten their wallets and remain selective on spending, even on lower-cost items. Corporate guidance does not suggest any bottoming soon.

 

Notes About Companies in Model Portfolio

• BMO Financial Group (BMO) reported Q3 2024 results on Tuesday. Net income was $1,865 million or $2.48 per share on a reported basis, and net income of $1,981 million or $2.64 per share on an adjusted basis ($2.94 same period last year). Total provision for credit losses was $906 million, compared with a provision of $492 million in the prior year.

• Royal Bank of Canada (RY) reported Q3 2024 results on Wednesday. Net income of $4.5 billion for the quarter ended July 31, 2024, up $626 million or 16% from the prior year. Diluted EPS was $3.09, up 13% over the same period. The inclusion of HSBC Bank Canada results increased net income by $239 million.

 

Feel free to contact me with any questions and/or to discuss investment ideas.

I appreciate the opportunity to serve you and look forward to continuing to help you accomplish your long-term financial goals.

 

Regards,

Shiuman