I was having a conversation with a friend in the industry recently, and we were both remarking how this summer is starting off rather nicely. After years of COVID induced work-life imbalance, it seems like this summer is a little calmer and less frenetic.
Market conditions have certainly helped set a more relaxing tone: inflation has fallen back to normal levels, interest rates have broken from their peak in most places, and stock markets are riding new highs. As always, Raymond Kezérho has written a detailed mid-year market update to complement the publication of client performance reports later in July.
This summer also comes on the heels of a very busy spring, particularly considering the new capital gains tax regime in Canada. While we created innumerable analyses to understand its impacts, there were ultimately only a handful of situations where action was warranted prior to the June 25th implementation date. If we haven’t talked to you already about how this impacts your planning, you can be sure we will in our next meeting.
There has also been plenty of concern about the state of global democracy, as many countries are going through elections this year. Of note, Taiwan, the U.K., France, the European Parliament and India have all held votes. Generally, results have been a bit more moderate than initially expected. Of course, the most closely watched is still to come south of the border, sadly with significant concerns about both candidates.
Political concerns are typically short lived in the context of long-term investment returns though. While they may buffet markets in the short run, it is the more fundamental elements that drive long-term investment outcomes, like inflation, interest rates and expectations of their future evolution.
On that front, the news is generally good in that economies and markets have responded well to the new interest rate regime. Bond markets are demanding a decent return above inflation to lend money to governments like the US and Canada, a phenomenon we haven’t seen since before the financial crisis of 2008/9. Companies are adjusting well to higher interest rates and while rising from its historical lows, unemployment isn’t causing significant concerns. It remains to be seen whether the long hoped for ‘soft landing’ will be fully achieved, but so far so good.
As we always do in our meetings, we’ll be talking about your specific asset mix, to ensure that you have sufficient cushion in your portfolio to weather the next downturn or crash, knowing that we can never predict when the next one will happen.
The team is in great shape this year as Daniele continues his progression, adding the Investment Advisor designation to his financial planning credentials. Many of you have already met him in our regular meetings and I look forward to introducing him to more of you as the year progresses. We also added Pranav Jawa to our portfolio administration team. With a Master of Management in Finance from McGill and his CFA level I, and internships with two of the big four accounting firms in India, he is a welcome addition to the team, replacing Simona while she’s on maternity leave.
With that, the whole team and I wish you a wonderful summer with lots of sun, relaxation and family time in your favorite places.
Best regards,
Peter and the Team
