Investment Commentary Fall 2024
The last quarter has produced very good market returns on both sides of the border due to interest rate easing from both central banks and the expectation that there will be, at worst, a soft landing. The focus now is shifting to economic growth, employment, and the U.S. election. The U.S. appears to be in a better economic position than Canada, with a more robust economy and lower levels of unemployment. However, the unemployment rate ticked downwards in Canada recently, which is an indicator of a positively functioning economy. Inflation has subsided in both countries, and it appears that the recent interest rate cuts are effecting the appropriate changes. The Canadian and U.S. markets are up respectively by approx. 17% and 21% as of October 15th, 2024.
With the U.S. election fast approaching, we thought it would be appropriate to focus some comments on what typically has occurred during elections.
An uptick in volatility ahead of the election is normal. The 2024 U.S. presidential election is currently a tossup. With uncertainty comes volatility, which would be expected to persist right up to election day and perhaps beyond if there is a drawn-out conclusion, such as with the Florida recount in 2000, or if we have challenges with certain results. A recent study shows that in the run-up to the last six U.S. presidential elections, the S&P 500 dropped 100% of the time with an average pullback of 6% during each time period. Once the outcome is determined, volatility typically declines. Strong post-election performance for S&P 500 and S&P/TSX Composite, regardless of who wins the election, typically results, and markets perform above their long-term averages in the following 12 months. There is no clear indication that having a Republican or Democrat win the presidential election has any immediate impact on the markets; however, what is more important are specific economic or trade policies. These can be adjusted considerably from original campaign promises to post election, and any analysis of these in advance would prove to be futile. Once the candidate has been chosen, we will investigate key policies like tariffs and fiscal measures to determine if there may be any prolonged impact on market performance and if investments need to be adjusted accordingly.
In summary, we expect some volatility, but markets should recover soon after the election, which should result in a positive performance at year-end. Our portfolio, which was shifted to a barbell approach of including growth securities as well as securities that benefit from declining interest rates, has experienced a very positive performance over the last 12 months and year to date.
Our investment strategist, along with Raymond James’ U.S. chief economist and Managing Director of Washington Policy, will be presenting their thoughts on the U.S. election and its impacts on October 23rd. While we have sent out the invitation already, we can certainly send it out again, should you wish to register. Please let us know.
As always, please do not hesitate to contact us if you have any concerns, want to review your positions, or even to say hi. We always welcome your calls for any reason, and we will always make ourselves available for you.
Linda Shick
Senior Portfolio Manager & Senior Wealth Advisor
T: 416-777-7109
linda.shick@raymondjames.ca
David J. Angas, CEA
Senior Financial Advisor, Certified Executor Advisor
T: 416-777-7110
david.angas@raymondjames.ca
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Information in this article is from sources believed to be reliable; however, we cannot represent that it is accurate or complete. It is provided as a general source of information and should not be considered personal investment advice or solicitation to buy or sell securities. The views are those of the author, Family Wealth Counsel Advisory Group, and not necessarily those of Raymond James Ltd. Investors considering any investment should consult with their Investment Advisor to ensure that it is suitable for the investor’s circumstances and risk tolerance before making any investment decision. Raymond James Ltd. is a Member Canadian Investor Protection Fund.
