December 2019 - Monthly Commentary

This is the last Weekly Insight of the year that we will be sharing with you. This edition provides some expectations for investments in 2020. For those that are interested, we would recommend reading the first two pages of the publication.

A high level summary though indicates that equities should advance next year because of the monetary easing put in place by central banks.

Best wishes for 2020!

November 2019 - Monthly Commentary

We continue to monitor the strength of the domestic economy in North America given the weakness in business investment caused by trade tensions. October is often a period of seasonal equity weakness, but this year, October was more constructive than usual thanks to decent Q3 corporate earnings, trade tensions softening a little, and the yield curve steepening after another Federal Reserve rate cut. The graph on page 1 does a good job of comparing the inverted yield curve in July to the now upward sloping yield curve in October. As we mentioned in previous commentary, we were watching closely for 3 rate cuts from the Fed before year-end and we are there now. As a result, in certain client portfolios we used cash to add equities as we found some attractive entry points on a couple of stocks.

Please let us know if you would like to review any changes that took place in your portfolio.

October 2019 - Monthly Commentary

This month's Insight comments focus on the strength of the equity market and the impact of the impeachment process in the US. RBC is assigning very little weight to the impeachment process being a factor for investment decision making. However, the global economy continues to show signs of weakening. The biggest risk in our view remains with international trade as the employment picture remains strong in North America. As we said last month we will remain cautious at the margin until progress can be made on the trade front.

Please let us know if you would like to discuss further.

September 2019 - Monthly Commentary

Equity risk last year was focused on rising interest rates but this year the focus is on trade tensions between the US and China. Paragraph 5 on page 1 discusses a likely result to these tensions which seem quite probable. With an election in the US next year some sort of truce or light deal will likely be made that will satisfy things for now but a comprehensive deal would be too time-consuming and difficult to achieve. This would probably be enough to avoid serious economic problems and give companies more confidence to invest back into their businesses. In the meantime, both China and the US are trying to stimulate their economies to try and avoid too much disruption. Until tensions back off, there will likely be a headwind to equities which is causing us to be more conservative in our portfolio positioning at the margin.

Please let us know if you would like to discuss further.

August 2019 - Monthly Commentary

The Federal Reserve (Fed) lowered interest rates in July despite a very strong employment picture and rising wages. This seems curious at first but business is much more reserved right now due to concerns around the trade war with China and BREXIT. In addition, the 4th paragraph on page 2 discusses how the US Purchasing Managers’ Index continues to deteriorate and that this is correlated with economic growth. A similar global manufacturing index is indicating a contraction of economic activity. So in this light, you can see why the Fed felt compelled to reduce interest rates. Given that current irritants to trade don’t seem to be going away soon, the writer of this article believes the Fed could move interest rates down another 50 basis points this year (page 2, last paragraph).

We have not changed our asset allocation approach for clients. However, if the Fed doesn’t move aggressively enough this Fall, we would reconsider any non-North American positions we have remaining.

As always, please reach out if you would like to discuss further.

July 2019 - Monthly Commentary

Of note to us in this month's commentary is the analysis on page 3 under “United States” which discusses the attractiveness of small-sized companies. We have liked the relative valuations and more domestic revenue stream of these stocks for some time. This analysis supports why we continue to have a small/mid-cap position allocated in client portfolios.

As always, please reach out if you would like to discuss further.

June 2019 - Monthly Commentary

This month’s article features an update on the Brexit saga. With Theresa May stepping down and the recent EU election results, a way out of this Brexit predicament is not at all certain. On page 2 under “Probability Set” the article states: “Given our equal probabilities for these three scenarios, the visibility going forward is clearly murky”. As a result, our team remains underweight in European exposure.

We would welcome any calls with you to discuss further.

May 2019 - Brokerage Report Card

RBC Dominion Securities has once again been ranked the highest (9.4/10) among Canadian bank-owned wealth management firms in Investment Executive’s 2019 Brokerage Report Card. This is the 13th year in a row that the firm has earned the top ranking amongst competitors.

This year, we led in 32 out of the 34 categories, including: Firm's stability (9.8), Freedom to make objective product choices (9.8), Firm's reputation with clients and/or prospective clients (9.7), Firm's ethics (9.7), Products & support for high net-worth clients (9.6), Quality of product offering (9.6), and Firm's strategic focus (9.6). Check out the 2019 Brokerage Report Card: Summary chart for detailed results.

May 2019 - Monthly Commentary

This month's issue discusses the results of the US corporate earnings season. So far the news has been positive and better than analysts had expected. Also at the top of page 3 it is noted that US GDP recently came in above 3%, showing more confirmation about the strength of the US economy. This information continues to support our view that US equities are an important component for client portfolios.

April 2019 - Monthly Commentary

The latest RBC Global Insight Weekly discusses the strong growth for risk assets so far in 2019. While this is encouraging, we expect increased volatility to come back into play for equity markets. Page 1 (“Driving in neutral after a strong rally”) discusses the expected slowdown in global economic growth. In our view, this will support more price volatility than we saw in Q1.

We continue to operate with a balance of achieving returns at an acceptable level of risk and have increased the quality of things such as our fixed income holdings. As always, we welcome an opportunity to discuss more about this with you at your convenience.

March 2019 - Monthly Commentary

Two important negotiations are going on around the globe currently and both could have significant impacts on capital markets. This month’s Global Insight Weekly provides an analysis of the US/China trade discussions on the cover page and possible Brexit outcomes on page 4. In terms of a highlight, the US/China deal is expected to come to some sort of an initial agreement and the support of delaying the latest deadline on negotiations helps support this premise. In our view the Brexit vote seems more complicated but ultimately they believe a modified deal will be supported as it is better than a “no-deal” Brexit. For those interested in more details on the risks and options for either negotiation, it is worth reading this publication.

In any event we expect both items to be much clearer in a month’s time!

February 2019 - Monthly Commentary

Here are some comments from our fundamental and technical analysts this month. Bob Dickey is our RBC Capital Markets, LLC Technical Strategist and speaks in the last bullet point under the United States updates on Page 3. From a technical perspective, he warns that the equity market should still have some volatility after a strong month in January. Looking to 2019 year end, Lori Calvasina, LLC Chief US Equity Strategist of RBC Capital Markets, expects the S&P 500 to reach another 7% from these current levels.

We are pleased to talk more on this if you would like to discuss.

January 2019 - Monthly Commentary

Welcome to our first monthly commentary of the year. The enclosed Insight piece is a good recap of last year and it also provides some expectations for 2019. While we always summarize what we believe to be the most salient items, this issue is worth a full read for those who are interested.

While volatility is definitely back and there are lots of developments to analyze, the most crucial is that of the Fed’s policy strategy. Significantly they have struck a more dovish tone, meaning interest rates won’t be going up as fast (see page 2 paragraph 6). So long as this is the case, 2019 could be a constructive year for equities.

As always please contact us with any questions or items you wish to discuss.

Best wishes for 2019.

December 2018 - Monthly Commentary

The Global Insight Weekly we are sharing this month raises three areas of concern for investors despite generally supportive fundamentals. These concerns are worth paying attention to and so we have initiated the steps in our process of incrementally getting more defensive in portfolios.

A link to our investment process including the steps we take to protect portfolios (point #9) can be found here.

Please let us know if you would like to discuss our current thinking in more detail.

November 2018 - Interview with the Globe and Mail

It’s hard to believe that maternity leave for Investment Advisors is still newsworthy in 2018, yet this continues to be an issue for many women within our industry. The good news is that progress is being made and companies like RBC are finding new ways to better support women through the process.

Danielle was recently interviewed about her experience on maternity leave by the Globe and Mail. Please read it here.

October 2018 - Monthly Commentary

Given the weakness in equity markets this month, we felt this commentary was timely. The key for us is that the underlying economy is strong (the U.S. released good GDP numbers this week) and the bond market is not signaling big warning signs. Page 4 of the commentary states that the “…lack of fear in bond markets supports our view that patience with U.S. equities is the appropriate response to the recent selloff…”.

Please call us if you wish to discuss further.

September 2018 - Monthly Commentary

Instead of the Global Insight Weekly, this month we have decided to provide a quick summary of the new USMCA (NAFTA 2.0) given its recent announcement. We generally view this agreement as positive for equities as it reduces the uncertainty related to trade tensions between Canada and the US. Please click here to read the article.

August 2018 - Monthly Commentary

With 2nd quarter earnings season wrapping up, this featured Global Insight Weekly discusses the state of US companies and what to expect going forward. The document strikes a positive tone and here are some notable quotes from the first page:

- “…leading indicators signaling continued economic growth…”
- “Business capital spending has gained momentum. It surged at a 10% annual rate…”
- “ Consumer spending holds the key to future expansion, as it represents roughly 70% of total domestic economic activity….Strong job growth, ultralow unemployment, higher wages, and tax cuts are the primary reasons spending should stay elevated…”

Despite the longevity of this market and the headlines around trade, we tend to agree with the paper’s constructive tone.

July 2018 - Monthly Commentary

This issue of the Global Insight Weekly discusses trade problems between US and China. This has had some negative impact on stock prices. The last paragraph on page 3 states “…equities will remain under pressure, although we suspect that much of the damage has already been done…”.

Meanwhile Q2 US corporate earnings have been strong: “…revenue growth expectations have surpassed 9.0% and current EPS growth estimates of 23.3% are well ahead…” (page 4, 2nd paragraph).

Despite the concern around trade, we continue to believe it is prudent to stay invested given the underlying economic strength.

June 2018 - Monthly Commentary

This month the featured commentary provides a Q&A on the increasing trade tensions. The investment markets are paying attention to this now as these tensions have persisted and even escalated. There is likely no quick resolution and we will need to live with this uncertainty for a while, although we take some comfort in the following comment on page 3:

“All sides of the trade disputes have economic incentives to resolve their differences, and we think this will eventually occur”

As always, please reach out if you would like to discuss further.

May 2018 - Monthly Commentary

Two interesting graphs are presented in the June 7th Global Insight Weekly. The graph on page 1 indicates that the US has the flattest yield curve since 2007 (difference between the 10-year and 2-year Treasury Bond yields). We look at this as a way to gauge the state of the economy. Traditionally once the yield curve becomes inverted a recession is likely on the horizon. However, page 3 has a graph showing that there are more job openings in the US than there are people looking for work! This suggests that wage pressures could lead to more inflation, and is a sign of a robust economy.

We continue to watch signposts like this for clues on the future direction of the economy. For now we remain invested.

As always, please let us know if you would like to discuss further.

May 2018 - Brokerage Report Card

RBC Dominion Securities is ranked #1 again by Investment Executive magazine in their annual Brokerage Report Card. This is a survey-based ranking that covers a number of areas including firm ethics, stability and objectivity. Please click here to see the report card on page 4.

April 2018 - Monthly Commentary

We have said that US earnings growth would provide support for the equity market. This was the case in April as equity markets were widely positive and reported earnings were very strong (see graph on page 1). What was particularly impressive was that revenue growth was also strong. At times over the last 10 years revenue growth has been more muted. Last week there were some impressive earnings releases from big technology companies but the market didn't react as favourably as we had expected. We think this is for two reasons:

  1. Some of this earnings growth was priced in already

  2. Interest rates have generally been rising which can limit stock gains as people worry about higher borrowing costs for companies and valuations (see comments on Page 3)

We believe this “tug of war” between rising interest rates and rising earnings will continue throughout 2018. Please click here to see the full report.

As always, please let us know if you would like to discuss further.

March 2018 - Monthly Commentary

Most equity indices around the world were negative in the past couple of months (see graph on page 1). The good news, however, is that US corporate earnings are still expected to grow at a strong double digit rate (see graph on page 3), which should ultimately provide support for equity prices. Please click here to see the full report.

Please contact us should you have any questions or wish to discuss further.

January 7, 2018 - 42 km of Disney

​Anita ran her first marathon and race on January 7th at Walt Disney World. Her motivation, much to the confusion of many, was the 25th anniversary Mickey Mouse medal. ​The experience made her appreciate the mental discipline runners have​, and yes, the medal was worth the pain!

December 2017 - Brent achieves Top Tier Director's Council

As 2017 draws to an end, we are celebrating Brent’s successful qualification for the Top Tier Director’s Council this year. Qualifying advisors are ranked in the top 650 out of over 1700 across Canada. These advisors have a positive regulatory and compliance record and consistently deliver an unmatched experience to clients. This is the 4th year in a row that Brent has been included among RBC’s esteemed council recipients. A big thank you to all of our clients who made this possible!

August 2017 - Anita passed Level III of her CFA exams

After three years of studying, Anita has passed her CFA exams. Conquering all three levels is a rigorous test and takes a significant commitment on the part of the candidates. Congratulations Anita!! For more information on the CFA Institute, please visit: www.cfainstitute.org.

July 18, 2017 - Federal Government Targets Tax Planning Using Private Corporations

Federal Minister of Finance, Bill Morneau, announced the release of a consultation paper and draft legislation to address the following issues:

- Income splitting
- Multiplication of the capital gains exemption
- Holding a passive investment portfolio inside a private corporation
- Converting a private corporation’s regular income into capital gains

For more information on the above topics, please click here to read the full article.

June 13, 2017 - Golf for Good

Danielle participated as a fundraiser, player, and part-organizer in the Golf for Good Tournament on June 13th, 2017. The Golf for Good Tournament was started in 2006 and has raised over $1,500,000 for various community charities. Danielle would like to thank the various sponsors and donors who contributed to her raising over $16,000 this year!! Specifically to RBC Dominion Securities, RBC Private Banking, Mackenzie Investments, RBC Foundation, RBC Global Asset Management, and Fidelity Investments. The beneficiary charities included:

- Association Of Women In Finance
- Atira Women's Resource Society
- Vancouver Japanese Language School
- Covenant House Vancouver
- Big Sisters of BC Lower Mainland

May 19-22, 2017 - Ducks Unlimited Volunteer Convention

We are proud to have been sponsors of the Ducks Unlimited Volunteer Convention in Osoyoos this year.

April 2017 - 1% For the Planet

We are Founding Individual Members of 1% for the Planet! This is a commitment on our part to donate 1% of our annual revenue to environmental charities. For more information on 1% for the Planet, please visit: www.onepercentfortheplanet.org.