Wake Me Up When September Ends


With summer behind us and the arrival of cooler, rainy days, we trust you had a fantastic time creating cherished memories during the warmer months. Since our last update in mid-July, the financial markets have been anything but static. Indeed, the world of finance remains ever dynamic - never a dull moment. Since our mid-July update, the financial world has navigated a maze of challenges that have softened overall market dynamics. Notably, after a year of relative declines, inflationary pressures have resurfaced in both the US and Canada, predominantly driven by escalating costs in fuel and housing. The oil sector's resurgence in the latter part of the summer, while providing relief to some, has also reignited concerns about further inflationary headwinds and potential economic hiccups. Despite the gravity defying strength in employment, a noticeable drop in job openings this summer suggests weakening labor market conditions might be on the horizon. Compounding the summer's unrest, a sudden US credit downgrade in August sent shockwaves through international financial circles, deepening the prevailing sense of uncertainty. With summer drawing to a close the convergence of concerns over thinning pandemic savings and whispers of one last rate hike intensified financial anxieties - combining to create a volatile backdrop as summer waned. Yet so far, September has emerged as the standout, bearing the brunt of market volatility this year, primarily attributed to the pronounced rise in long-term market rates, a phenomenon known as a 'bear steepening.’

When discussing financial markets, terms like 'bear steepening' may sound complex, but they play a pivotal role in understanding market volatility. Simply put, bear steepening occurs when long-term market interest rates rise faster than short-term rates - reflecting investor expectations around future growth and inflation. These changes can greatly affect the economy and various sectors (pension funds, insurance companies, real estate, ect..), particularly when coupled with a weakening economic backdrop. Historically, a bear steepening has often served as a market warning sign. We have observed these patterns before downturns in 2000, 2007, and 2018. During these times, even as economic indicators suggested a softening, the market aggressively pushed long-term rates higher, testing the economy's overall resilience. The outcomes were not always favourable. Now, with elevated inflation, central banks have less wiggle room (ability to pivot), making our current bear steepening phase more complicated. While higher long-term rates usually signal a strong economy, the current mismatch with a slowing economy is noteworthy. History suggests that such dynamics can foretell market adjustments. As always, deciphering these market nuances remains crucial in our current positioning – which remains defensive in the face of continued headwinds. In the world of investing, there's always a new narrative to contend with. Today, it's the bear steepener; tomorrow, the possibility of a government shutdown might take center stage. And looming on the horizon—dare I mention it—the 2024 election? Yet, amid the challenges of September and the chorus of pessimistic voices, the equity markets of 2023 have shown impressive resilience, pushing forward. While this year's story is still unfolding, it serves as a reminder that market movements can be unpredictable, and deviating too far from one's strategic investment approach can be risky. As always, our role is to decipher meaningful signals amidst the noise, maintaining vigilant oversight of your portfolios to help keep you on track.

- Jack

Proposed Changes to the Alternative Minimum Tax: Implications for Philanthropy

The Alternative Minimum Tax (AMT) has been a quiet part of Canadian tax law since 1986. However, proposed changes in the 2023 federal budget could shake things up, especially for charitable donors. These changes might limit donation tax credits and count a portion of capital gains from donated securities as income, potentially increasing tax costs for donors. While charities could see a short-term boost from donors accelerating their contributions before 2024, the long-term implications might be less rosy. If philanthropy is close to your heart, it's essential to understand these shifts and plan accordingly. Dive deeper into the topic here.

Does Buying a Vacation Property Make Financial Sense?

After a summer of relaxation, the allure of owning a vacation property might be strong. But beyond the dreamy sunsets and serene mornings, have you considered the financial implications? From potential rental income and property appreciation to tax challenges and unexpected costs, there's a lot to ponder. Before making a decision, it's essential to weigh the pros and cons. Dive deeper into the financial intricacies of owning a vacation property and discover if it's the right investment for you. Learn more here. Additionally, for Canadian residents eyeing a property in the U.S., below you'll find an invaluable resource that delves into the tax and estate planning implications of such a purchase. It's a must-read for those considering a cross-border investment. Planning the purchase of a US Property.

Gifting in Life: A Thoughtful Approach to Legacy Planning


This month, we're shining a spotlight on an insightful article that explores the concept of a "living inheritance." Instead of waiting to pass on your legacy, have you ever considered gifting your wealth during your lifetime? The article, titled "Gifting in Life: What You Need to Know," highlights the joy of witnessing the impact of your generosity in the present. However, it's essential to acknowledge that this approach comes with complexities. From comprehending the financial implications to navigating potential family dynamics, the article provides a concise overview. It also illuminates the tax nuances associated with different types of gifts, ranging from cash to real estate. Before embarking on this path, it's crucial to be well-informed. Gain a deeper understanding by reading the full article here.

Bernabeu 2.0: Where Football Meets Futuristic Innovation This month, we spotlight the forthcoming jewel in the crown of the world's most impressive stadiums: Real Madrid's soon-to-be-completed Santiago Bernabeu. Set to officially open its doors later this year, the Bernabeu is not just poised to be a football sanctuary, but a multi-functional marvel. It's designed to host an array of events, from concerts and conferences to diverse sporting events like tennis and basketball. The pièce de résistance of this architectural wonder is its state-of-the-art retractable pitch. This real grass surface divides into six sections, each of which can be seamlessly stored beneath the stadium in a 30m high-tech chamber, ensuring the grass remains in pristine condition. For a sneak peek into this engineering marvel, we've included a video that showcases the retractable pitch's transition, a testament to the future of stadium innovation.