Home

(00:01):

Hello and welcome to this month's monthly debrief. My name is Leanne Mamchur, and this is all the information that I read that I listened to, that I watched throughout the month of April and compiled in a, hopefully a very succinct video for you. And so let's just jump in. Before we do jump into economics though, I just wanted to share a little bit of a personal mishap that I had this month. And actually I was traveling with my little children and so it was very scary, but everybody physically was really, really well, and so nobody got injured at all. Not that the car fared very well, unfortunately, but the, the silver lining was the very next day we learned a beautiful art form. and this is actually saran wrap art, if you can believe it. And so you can see some of the colors and the way in which it all mixes together.

(00:56):

But we sat there and we learned a new form of art the very next day. Got a lot of peace back. The car is written off, but but we definitely enjoyed the art the next day. Alright, so enough about that. The first thing I wanted to start off this video with was generic generative, sorry, I have trouble with that word. Generative artificial intelligence. Now, this has been in the news quite a bit, so I thought I would briefly touch on it. One of the things is artificial intelligence has been in the making for a very long time, and it's ex an exciting time. what generative artificial intelligence is, is that it is the artificial intelligence that creates new things. It might create new forms of art, it might create stories, if it reads enough things and that type of thing. It's, and it's all from its own learning, which is really truly fascinating.

(01:55):

And if you really think about how things are going to change over the next 10 years based on some of this technology that's coming online, it, it's, it's going to be very interesting. Now, having said that, there's still going to be care needed. There's still going to be that human oversight that we're going to have because it's only as good as the data that's inputted into it because it's learning just like anybody would be learning. So if you learn faulty data, unfortunately there's can be some mistakes. So care is going to be needed on the go forward. Now this is very interesting to me. So this is the, how long did artificial intelligence take to reach a hundred million users or 1 million users, sorry. And so you can see the various platforms and the various length of times that these various things took.

(02:47):

And so the artificial intelligence was very, very quick and a very quick uptick. Now take a look at this next chart. This is to get to a hundred million users. Now with the artificial intelligence, it actually only took two months to get to that level. So it was very, very quickly adopted. So it, that's why I think that it's going to be very interesting to watch what's going to happen over the next little bit. Now it's been ongoing for decades as I mentioned. Within the next 10 years we're going to see quite big moves and it's being quickly developed and perhaps it's really going to revolutionize lots of the industries that we're in. And for me the possibilities really seem endless if you can think about what could be as far as possibilities. So it's exciting times. So I just wanted to share a little bit of that before jumping into economics.

(03:41):

Alright, so into economics. Right now what we're experiencing is a lagging impact of those rate increases. So the rate increases went very, very quickly and now it's starting to slow and we're seeing a slowing of the economy. Now we are still anticipating a mild recession ahead and we do feel as though that it's likely most of the le leading indicators are and have been declining for over a year now. And also we're starting to see because some of the banking stress, we're starting to see that we're going to have a little bit of tighter in the way of lending standards and credit available. And so that's really going to impact our businesses, especially when you look at smaller businesses that are looking to the banks for financing. And the very unlikely but possible outcome is that we could escape without a recession. Now we don't put a big probability on this outcome, but I thought to just mention it, that it's not of the realm of possibility, but we just think that it's quite a low probability.

(04:48):

All right, so let's take a quick look at equities. Now this is the daily number and so you can see over the last little bit here, it's really been moving quite a bit, but you can see the increase from the bottom there all the way up to here. Now let's take a look at that on a month over month basis. And so how does that look? So you can see the peak right in here, this zone here and then the dip. And then you can see the nice little recovery that we've seen. But you can see it quite bobbing around. So it's still bobbing. But this month we did see a little bit of an uptick right at the end there or right, so a little uptick and then a little down. It, it's just been bobbing quite a bit over the last little bit.

(05:30):

And so, alright, so one thing I wanted to point out though is that sharp bear market rallies. So that means when a bear mar bear market means just the market is down. and the opposite would be bull markets. But in a fair market, when the market is quite down, you can see some false starts almost. So all of a sudden it looks like, ooh, we went up a little bit. And, and you can see that and the typical rebounds are in the range of 10 to 20%. So it does feel like, oh, maybe we're getting out of things, but then it happens probably three or four times before the ultimate bottom and they're usually fairly big swings. And so we're seeing that a little bit right now in the numbers and especially the six month numbers is looking quite positive. But we wouldn't say that a countertrend rally is likely sustainable.

(06:22):

Now countertrend means that we are anticipating still that the economy drop and so when the economy drops there's still probably some pain to be felt within the stock market. And so that's why we're thinking that it might be a rally that's just not quite sustainable yet until they are. And so then you never know quite when they are. And so then, but none of the singles signals are really indicating the end of the bur market in our opinion. And so we do not believe that we're there yet. So just as a word of cautionary, Taylor, what have you, we do feel as though that there might be more downswing before there is the upswing and the, and the bull market with the heading up okay onto equities as far as valuation, we feel as though that they're likely reasonable more so, especially in emerging markets, which we're probably underneath of value right now.

(07:16):

And we're finding that even with all of the stuff going on in the banking side, that the market has been quite resilient to it. But the valuation still might be a tad bit high in the US now with earnings because we're watching earnings quite a bit and some of the earnings results and some of the estimates and that type of thing are still quite positive. But when there is an even a mild recession, when there is a recession of any sort, we're going to see those earnings come off and we don't feel as though that necessarily analysts or people that are doing earnings estimates have really quite priced in all of that. And the market is not pricing all of that in. And so some of the earnings estimates are being revised lower, but we do feel as though that there's still more needed. Okay, let's turn to the next slide here onto interest rates.

(08:10):

The US Federal Reserve, very much anticipated move of increasing the rate by 0.25. Now it's sitting at 5.25. This move was widely expected. The market priced is, is currently pricing in an approximate rate of 4.25% and that's quite a drop. And the market is pricing it in as early as January of 2024, which means that there would be rate cuts in 2023 at the tail end. Now having said that, that is not our expectation. This is just what the market is pricing in. So what we're anticipating is that the rate cuts are probably not going to start until 2024. and it it's really hard to really judge, but now likely there is going to work. What we're going to see is a pause. Canada has been in a pause situation and now probably our, our our neighbors to the south are also going to be in a pause.

(09:06):

Inflation is starting now to show some results from that monetary policy. So we're seeing it decreasing, which will impact the decisions in that area. But they're going to be really cautious this time of changing anything because honestly they're in a true pickle. The pickle is a catch 22 situation because if they start easing too quickly and don't allow the economy to kind of do its natural course of going down into that recession, then it might not cleanse out some of the excesses and some of the inflation that we need cleansed out of the economy at this time. And so then they're not going to run to the rescue of the economy like we've seen in the past because they have other concerns. They have inflation on their minds as well. And so then it, it, it's going to be really, really hard. Usually during a downturn they have the very good ability to reduce rates and to try to stimulate the economy, but then they're, that's where the pickle lies because if they, they increase rates too quickly, then inflation might kind of crop back up, which is counterproductive.

(10:16):

That's not what they want. So it's going to be really, really tricky. So simply put more care will be needed in our policy decisions. So they're tricky right now for sure. I'm not sure whether they're going to end up with the perfect soft landing, but they're probably going to dip us into recession as our suspicion. Okay, so fixed income and credit markets valuations are still strong, albeit whereby we're bouncing a little bit. So we're still bouncing a little bit in our fixed income markets, rates are anticipated to drop and which will likely be quite positive for the fixed income area. And this will keep your portfolio afloat during downturns during a mild recession. This very, this asset class probably will be a very good diversifier for your portfolio. And I do sound like a broken record in this area now that I've said that for a couple of months now.

(11:07):

But I do honestly believe that will be the case. And so I would not discount fixed income and I would keep it definitely within your portfolios. Okay, so inflation, us inflation is now down to approximately 5% from over 9%. And in Canada we've also seen quite nice drop. So inflation is dropping off nicely and now the expectation for 2023 is overall around four and a 5%. And then we see the drop to around 2.4%. So just slightly above the ultimate target, but perhaps the target has been changing. Basically central banks will do whatever it takes to get inflation under control and now tides are turning. So now we're seeing a little bit of action. One of the things that is interesting is our labor market. So the labor market needs possibly some more softening and it's quite a bit like it's still sizzling quite a bit.

(12:08):

 in particular in the US some job numbers came out and that type of thing that look quite positive. Cause one of the things that's happening is that people that had left the labor force or went away during covid and so they weren't participating in labor, now all of a sudden are coming back. So the demand and the supply is kind of like balancing each other, but it's not softening as much as it could be. And so we're not seeing the labor pain that we would need to see to really bring that economy back into realm of normalcy. All right, so one of the things that I wanted to mention just at the tail end, I've included a piece this this month on the 2023 family office webinar series. I'm part of the C I B C family office and we're very happy to offer monthly topics.

(13:04):

And so I know that we're already in the fifth month and I'm just mentioning it now, but you can go backwards and you can listen to the recordings if there's a topic of interest for you. And then the dates are on the attached article. So if you if or it's not an article, it's just like kind of showing you the dates and then giving you a link. But if you click on it, then you'll be able to see all of the dates of the various topics and the various presentations. So just as a few of the topics that are this year and, and just three, I'm going to highlight what and where to consider when buying a Canadian vacation property. So just some considerations also succeeding as the rising generation. Now this is a tricky one because a lot of times people feel as though that if you are inheriting or if you have wealth to kind of start out with, then things might be a little bit easier, but that's not always the case.

(14:01):

And I read an excellent book in relation to this topic and it really pointed out some of the challenges and the struggles that the rising generation might encounter. So that one is a really good topic. And then also I think in December we have the can money buy happiness, which is always an interesting topic for sure. And so then we have expert speakers coming in as part of our family office. And so please join us if, if one of the topics interests you or go backwards and listen to the other topics. Also, there has been topics in 2022 and when you click on this site you'll see a lot more different areas or articles that you might want to listen to as well. So happy exploring and with that,

(14:50):

That it for my monthly debrief. So I tried to keep it quite small and quite concise because I'm dealing with a lot of insurance companies right now. But all as well when your health is good. And so I'll leave you with that. And here's our disclaimer.