Canada’s economic boom in 2017 surprised economists and supported strong labour numbers. Yet, inflation also remained dormant, “which created this Goldilocks environment and, therefore, very strong financial market returns for the year,” says Luc de la Durantaye, the head of asset allocation and currency management at CIBC Asset Management Inc.
That won’t be the case this year, at least when it comes to inflation. Instead, says de la Durantaye, “Our forecast is [for] inflation that starts below central banks’ targets but rises toward [them].” He’s also calling for 3.6 per cent global growth, which he characterizes as “fairly optimistic.”
He’s not alone in his view, with both big banks and investment firms also calling for continued growth and inflationary pressure. In a January 2018 outlook report, the World Bank Group said global growth “reached three per cent in 2017, its strongest rate since 2011, in a broad-based upturn.” The group predicts that will “edge up to 3.1 per cent in 2018” due to the recovery of emerging and developing countries.
So what are the potential inflection points for 2018? De la Durantaye says it’s key to consider whether the following events could “derail this rosy environment.”
One such event is another increase in the Bank of Canada’s interest rate, which was raised to 1.25 per cent today. “Particularly in Canada, the labour numbers have been surprisingly strong. Certainly from a [Bank of Canada] perspective, which is data-dependent, that turns the pressure on for them to review their policy sooner [rather] than later,” says de la Durantaye.
But in making its decisions, the central bank is weighing multiple headwinds. “It’s a difficult balancing act for Canada, given NAFTA uncertainty in terms of the negotiation. [There’s] also the high debt levels that we have in the household sector and the housing market,” he says.
The U.S. Federal Reserve, the Bank of Canada and the Bank of England all raised interest rates in 2017. This year, “you may have other central banks that are going to get on the bandwagon,” says de la Durantaye, adding that the European Central Bank is likely to end its quantitative easing. Plus, there’s speculation about the Bank of Japan changing its policy stance, and the central banks in Sweden and Norway are expected to make moves.
One reason inflation could rise is “tightening labour markets in Canada, the U.S. and even in Germany. There are certainly secular reason[s] why inflation has remained subdued,” says de la Durantaye, but the probability of “an inflation surprise in 2018” is higher than the market expects.
Another issue to consider is real estate markets remaining overpriced, “not just in Canada but also in Sweden, Australia and Norway,” says de la Durantaye. As interest rates rise, that ongoing issue “could raise financial stability concerns in 2018.”
In 2017, equities outperformed fixed income. “That has most likely created a drift in [portfolios] away from basic policy — [they’re] probably now overexposed to equity relative to fixed income,” says de la Durantaye. As such, it’s “time to think about rebalancing.”
Ahead of potential interest rate and inflation increases, de la Durantaye is looking at portfolio duration. “In a rising rate environment, you may want to consider having a lower portfolio duration,” he says.
As well, says de la Durantaye, “Equity portfolio would probably want to be geared toward more cyclical markets, given the strength of the economic outlook, and less geared toward rate-sensitive sectors.”
Finally, the U.S. equity market rose “to a historically high valuation [in 2017], relative to emerging markets and some European markets.” De la Durantaye recommends trimming U.S. exposure and making room for emerging markets.
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Seriously, what the hell is my problem when it comes to finishing series? I have so many series that I need to finish. There are a multitude of reasons why I haven’t finished them yet. Is it that I want to binge read the entire series so I buy them all and wait until it’s over to read it? Or have I read the first couple of books and get to the last one and I’m just afraid for it to be over? Or is it that I read the first couple of books and then the last book somebody spoils for me and that’s not what I wanted to happen, so it’s hard for me to even open the book?
Honestly? It’s all of these reasons and maybe even some more. And the worst part of it is? I love series! I don’t know what is wrong with me lately, but I have SO many series that I need to read/finish/catch up on.
I loved the first two books! I read them in like a couple of days. And then I bought the third book. Started reading it, got to page 40, and then I stopped. I just stopped. Why? I don’t want it to be over! I am in love with these characters and I know that once I finish the third book, I’m only going to want more! But I NEED TO KNOW WHAT HAPPENS!!
I read the first two and then my boyfriend spoils it by saying something and of course I have to look it up online to make sure he was wrong. And he wasn’t. And I know that Allegiant is going to make me cry and I’m going to want to throw it across the room. But again, I need to finish it.
I read and loved the first book. Back in high school. I bought all the books. One of my best friends borrowed the books and read them in like a week. She loved the series. I just need to sit down and binge read this series from the beginning because book 1, I fell in love with Marcus Flutie. And for me to remember the main characters names in this series without even picking up the books since my sophomore year in high school (which was A DECADE AGO) it just means that this series is just a MUST FINISH PRONTO!
I read the first book and loved it. I own all the other books including the new spin-off series. Again, I just need to sit down and binge read.
Read and loved the first one! Read it over a year ago and I am only now reviewing it (next month, I have it scheduled for). I recently bought the second one and plan on buying the third one soon.
I LOVED the first one. So much that I almost immediately bought Crown of Midnight, Heir of Fire, and The Assassin’s Blade. I just got them in the mail and they look SO pretty! I’m hoping to dive into the rest of this series this summer and catch up. Since book 4 (Queen of Shadows comes out in September!!!)
I’m currently half way through These Broken Stars and I’m loving it. And I have an eARC of This Shattered World and I just know that I’m going to have to dive into it soon!
I bought the first book and it looks like the blogosphere is obsessed with this series and I’m dying to find out why.
My brother bought this book for me for Christmas a few years ago. I know this is going to be one of those books of why didn’t I read this sooner?
I have Alice in Zombieland. Again, my brother gave it to me for Christmas a few years ago. I’ve heard awesome things about it. And I was super excited when I first got it. But still it sits on my shelves.
I know I am most likely missing a lot of series. This is just everything I can think of that I have the books for. And that’s not even counting the series that are STARTING this year! Oh lord. I have SO much reading to catch up on, it’s crazy.
Do you have the same problem as I do when it comes to finishing series? What series haven’t you finished? What series do you want to start?
I have a similar problem, although I am getting better at this, I think. When it's an exceptionally awesome series (like Splintered) I delay reading the final books because then it's over…my heart still hasn't gotten over the HP series ending yet!
Series that I need to finish include: Splintered, Something Strange and Deadly, Iron Fey Series…Ones that I need to catch up on are: Bloodlines, Lynburn Legacy..
I definitely have this problem! I don't know why I do it either. A few of the series I know I don't want to end, but I really do want to read the ending. I just haven't. If I had to make a list of unfinished series, it would be LONG. At least I know I'm not the only one with this problem.
I'm going to try and get even better at this during the summer! Glad to know I'm not the only one with this problem.
Oh, I know what you mean! I keep thinking of even more series that I either haven't started yet or need to catch up, etc. It just keeps on going!