December 2024 Strategy Notes

As 2024 draws to a close, we note it’s been an eventful year. Markets have been volatile but have now reached all-time highs, geopolitical risk is either on-going or increasing but never abiding, Donald Trump is preparing a return to the White House amidst a quickly changing political environment in the U.S., and Taylor Swift concluded her wildly successful Eras Tour in Vancouver on Sunday.

The topic du jour remains, however, interest rates and inflation.

On Wednesday, the Bank of Canada cut rates by 50 basis points for the second consecutive time to 3.25 percent, but the bigger story was the prospect of a slower pace of future interest rate cuts. A weak Canadian dollar that could continue to weaken, threats of president-elect Trump’s tariffs and expected cuts to immigration are on-going headwinds for the sputtering Canadian economy. Canada’s economic growth was weaker than expected in the third quarter, and the fourth quarter promises to be similarly weak.

We do not wade into politics because our portfolios are designed to be agnostic, but in light of Canada’s current economic situation, we can’t help but raise our eyebrows at ‘Trudeaubucks,’ a $250 rebate for Canadians who earned less than $150,000, and the two-month GST/HST holiday that will begin Saturday. Not only will the $250 cheque be unlikely to reach you before January, but among the people it excludes are children and seniors on disabilities – Canadians who may need this rebate the most.

And for a country that has massive problems in productivity, among the GST/HST breaks is alcohol and video games, because surely we don’t need more reasons to get off our couch. Prepared foods (but not our ever-expensive groceries!), sports jerseys (but not leisure equipment such as skates?) and books (but not notebooks that help us stay organized?!) are also among the curiously inconsistent and senseless logic behind the GST/HST break.

Face, meet palm.

Regardless, our portfolios have kept pace with the market growth and continue to adjust our portfolios relative to our clients’ appetite for risk. In a tougher economic environment we will continue to earn interest and dividend income to help you reach your financial and retirement goals. As we previously said, our portfolios are designed to be agnostic.

We will continue to stay in touch and reach out to you in the new year. The TFSA contribution limit for 2025 will be $7,000, and the deadline for RRSP contributions for 2024 will be March 3, 2025. We will be sending reminders as we get close to those key dates. If you have any questions, we always welcome your call.

Further Reading:

No homework this month.

We wish all of you a happy holiday season with your friends and family.

Cheers!