2023 Recap and 2024 Outlook

Happy New Year and Welcome 2024.

The year 2023 was a difficult one for markets. At one point, it seemed that every time we got some relief and positive momentum, we would get a setback and the progress would reverse. It was a very frustrating market. Rising interest rates have historically made it difficult for markets to advance and it was no different this time.

In our email updates throughout the year as well as in calls and meetings with clients, we expressed the opinion that it would take some stability in interest rates before markets would be able to make a sustained recovery. Patience was required.

Fortunately, our strategy utilizes income as a core method of generating a return. This meant our clients’ portfolios continued to generate income while we waited for this volatility to pass.

After waiting for most of the year, we received the interest rate news we were waiting for, late in the year. The central banks of the U.S., Canada, and other developed nations signaled that they were most likely done hiking rates for this cycle and that cuts in rates could begin in 2024.

This, in turn, triggered a strong move higher in the markets in November and December. We feel especially confident that the pause in rates will be very positive for the area we favour, which is the dividend-paying sectors of the market.

Here is how we think 2024 is going to progress:

1. Inflation will continue to moderate.
   Recent data shows inflation continuing to decrease at substantial rates.
2. The economy will hold up well and avoid recession.
   More and more banks and forecasters are revising statements and no longer think we will get a recession.
3. Central banks will begin to cut interest rates sometime this year.
   The outlook is growing for interest rate cuts. Although the timing of cuts isn’t certain, there are growing predictions of multiple interest rate cuts this year.
4. Money will flow out cash and cash-like investments and transition to higher-paying investments.
   Especially the dividend-paying sectors of the market. When GICs were paying over five per cent, they offered competition to dividend shares. This trend should reverse as GIC rates continue to fall and dividends increase.
5. Occasional rough patches.
   Turning points in markets always have ups and downs. This is healthy and normal. Short-term corrections should be bought, and we will look to do so.

We look forward to our continued partnership in 2024 and, as always, are here to discuss any questions you may have about the market or your portfolio.

Best wishes,

Your T Wealth Team.

This communication has been prepared by Alan Tchabushnig and expresses the opinions of the authors and not necessarily those of Raymond James Ltd. (RJL). Statistics, factual data and other information are from sources RJL believes to be reliable but their accuracy cannot be guaranteed. It is for information purposes only and is not to be construed as an offer or solicitation for the sale or purchase of securities. It is intended for distribution only in those jurisdictions where RJL and the author are registered. Securities-related products and services are offered through Raymond James Ltd., member - Canadian Investor Protection Fund. Insurance products and services are offered through Raymond James Financial Planning Ltd., which is not a member - Canadian Investor Protection Fund.