2017 was a most interesting year in so many ways. In fact, I think it was the most bizarre year that I can remember in terms of geopolitics and investment markets. Pretty much whatever most people thought would happen, didn’t. With enormous uncertainty on so many levels, volatility dropped to new lows and many markets rose to new highs. There was a disconnect that I, in truth, had never before seen.
Who would ever have guessed that in the United States, with a Republican president, Congress and Senate, virtually nothing would be accomplished in 2017. During the campaign in 2016, Mr. Trump constantly referred to the legislative branch as the “swamp.” Now he owns it.
While the situation vis-à-vis North Korea may seem like the next Marvel comic book inspired movie, it is not. It is real. And it may be more likely that China will end up in North Korea`s corner rather than stand with the U.S.
As mentioned, markets ignored much uncertainty and pushed on to new highs in many cases. Each and every one of our Model Portfolios surpassed their benchmark returns. So, as far as markets were concerned, 2017 was a good year.
Market performance is based, more than anything else, on earnings growth. As well, unemployment in the U.S. reached a 17 year low and Canada recorded 11 straight months of job gains. All of this powered the Conference Board Consumer Confidence Index to it`s highest point since 2000.
I think that central bankers were also caught a bit off guard by the robust growth and unemployment numbers last year. There has been a return to “normalcy” in terms of interest rate management, with rates beginning to rise for the first time since the financial crisis of a decade ago.
During 2018, we expect markets to be a bit more muted than they were last year, but they should still provide good returns. Interest rates will probably rise a bit, but the level of increase will continue to depend on central banks’ perception of growth and employment rates. Gold continues to be a good hedge against geopolitical uncertainty (and there is still a lot of that). We expect that the Canadian Dollar will decline to some extent over the course of 2018.
All of that said, we wish you all the very best for a happy and healthy 2018!
President, HG Partners Limited
Director, Private Client Group &
Senior Financial Advisor,
This article was prepared solely by Howard Goodman who is a registered representative of HollisWealth® a trade name of Investia Financial Services Inc. (a member of the Mutual Fund Dealers Association of Canada and the MFDA Investor Protection Corporation). The views and opinions, including any recommendations, expressed in this article are those of Howard Goodman alone and they are not those of HollisWealth®
HG Partners Limited is an independent company. iA Financial Group and Industrial Alliance companies have no liability for activities outside of HollisWealth®