U.S. equity indices have delivered impressive gains in 2024. Year-to-date, the S&P 500 Index as well as the NASDAQ Composite have outperformed the S&P/TSX Composite Index by a wide margin.
When we look at the underlying economy and we look at what are risks to the underlying economy, we don’t see a lot actually. The consumer is resilient, they continue to spend. When you look at the U.S. economy and you look at the areas that are driving the new all-time highs, these are things that are tied to AI cloud computing, automation, these are long term trends with mega cap companies that have invested billions of dollars into it. And the market is valuing them on this future growth.
I think it’s important to note, 75 per cent of the time when we have an election in the U.S., markets are higher in an election year. It doesn’t matter if it’s the Republicans or Democrats that win, the markets tend to be higher because everybody’s talking about how they can grow their economy and add to the wealth of the consumer and therefore markets get excited by that.So, it does depend. But you still see momentum coming through. The key is the delivering on some of those promises.
We expect an additional 50 basis points of rate cuts for the remainder of this year and then to continue next year. But I don’t think it’s necessarily going to be every single meeting that they’re going to continue to decrease. I think that’s more likely to occur in Canada than it is in the U.S. How will the outcome of the U.S. election impact your asset mix, sector and portfolio recommendations?When we think about regions across the world, China is still going to be a bit of a headwind no matter if it’s Trump or Harris. We do know that Trump will add more tariffs than probably Harris will so that would be a little bit more negative on China.
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