Q1 2024
Q1 2024 is finished and now many events, most of them notable, are coming to center stage.
2024 First 90 days and into the “thick of it”
US Politics is progressing so far as expected with the two front runners apparently already decided on for both major parties. Their respective conventions have yet to take place and, barring some major health issue, which is possible with octogenarians, other events such as court battles may sway things as well. There are also couple independents out there, who, if they run, could really shift some voters from either party. Although RFK is not Ross Perot, he could have a very similar effect, but to which other candidate does the advantage go? This will be interesting.
Yogi Berra-ism perfect for politics in 2024:
“I never said most of the things I said”
More on the Balanced Approach
Old faithful, aka the balanced mix, came back to earn its keep in 2023 and 2024 sees a more muted return on the fixed income side of the ledger.1 Albeit, if rates don’t fluctuate too much, the mid 4-5% range is attainable across the yield curve. We have been extending terms where possible and practicable. With oil and commodities where they currently trade, a favorable light may just shine on Canada’s equity markets. If the world wants resource participation, they come here. Recent action in other metals might be an early signal.1 One has to remember though, that Canada has less than 3% representation of the global stock markets. Hence, in most portfolios exposure is rarely at a maximum.
What’s coming?
From our last letter…
“Presidential years tend to skew positive in the second half of the year.”
All things being equal, we have had a good start to the year. So far, the wind has been at our backs. What could change this? Well to start, the insistence that interest rates are headed down with multiple cuts this year, and the “inflation is under control” mantra may both prove to be either early, flawed, or wrong. We could potentially be set up for a rug-pull. Do you remember when Charlie Brown was about to kick a field goal and just pre-impact Lucy yanked the ball? In a word, painful. If you have back problems you can relate.
At the start of the year there was much talk about the impending six or so rate cuts by the FED – so far none.2 Recent CPI numbers as posted by the Bureau of Labour Statistics show a 0.4% tally for March 2024.3 This is not what discerning eyes want to see… Powell in recent speeches is talking back the number of cuts, and the economy might be a tad too strong for any movement at this time.
Another rule, seemingly unwritten, is that the FED does not alter rates after June or July in election years to keep up with the perception that they are unbiased and apolitical. Given recent history, all bets are off here.
The Numbers
For the quarter ended March 31st, the S&P/TSX was up 5.8%. The S&P 500 advanced 10.3%. The NASDAQ continued up 9.8%. In general, the equity market continued their ramp off of the early November 2023 lows.1 Depending on the prognosticator you listen to, the markets have followed through off lows from 2022 or 2023. Inflation, while sticky, is in the mid 3% range and may (most likely) have something to do with the rise in the price of the barbaric metal: GOLD. It’s up 7.5% YTD.1 Gold is also finally up vs the US Dollar after making new highs versus practically every other world currency last year. It is now at 2,400 USD$ at time of writing.1 As noted last quarter many gold shares are noticeably underperforming the commodity. Queries are out as to why, but the trend and reason highlighted last quarter are still front and center.1 Among them, the cost of doing business such as labour, insurance, and nationalizations, are all definite reasons. We will see how they react in the next weeks and months. Oil ended the quarter at $83.00, up 16%.1 In the currency arena the Canadian dollar declined 2.50% versus the US dollar.1
We constantly and consistently advocate and remind that combining the discipline of a well thought out plan, and the asset allocation derived from it, will do its part in seeing us through the scenarios and challenges ahead. As always, if you have any question or concerns, please let us know.
We also would like to thank you for your continuing confidence and trust in our team. It truly is a privilege serve our clients!
Some notes for 2024
Tax time for most should be over by the time this reaches you. Don’t hesitate though to reach out if you need any further form/slips or other documents. As mentioned previously the annual TFSA contribution limit is now $7,000, and lifetime $95,000 if you have been eligible since the inception of the program. (Age 18 or over from 2009 onward). This is definitely a program to take advantage of if you aren’t already.
The First Home Savings Account (FHSA) plan also needs a serious look for any of you young adults out there. Combing tax-free growth and deductions, it should be front and center for our younger clients and the children and grandchildren of our more “mature” clients as well. With an $8,000 annual contribution and $40,000 lifetime limit, some serious downpayment money can be accumulated.
Wishing you and yours Health and Success for the next quarter!
1 Source for market data: Thomson Revinitiv, Bloomberg
2 Rechtshaffen, Ted. " Interest rate cuts will be the story of 2024 — what that means for mortgages and more." Financial Post, Dec 27, 2023
3 Bureau of Labor Statistics (BLS)
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Thomas Burnett, Thomas Okanski, and Andrew Dale are Investment Advisors with CIBC Wood Gundy in London. They and their clients may own securities mentioned in this column. The views of Thomas Burnett, Thomas Okanski and Andrew Dale do not necessarily reflect those of CIBC World Markets Inc.
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