The “Magnificent 7” refers to a group of leading tech companies — including Apple, Microsoft, Amazon, Alphabet (Google), Meta (Facebook), Tesla, and Nvidia — that have shown exceptional growth and market performance. While there may have been doubts that the run would continue after the massive returns over the last decade, here are several reasons why we believe these companies will continue to perform strongly into the next decade.
Fiscal stimulus remains an upside risk to growth in both Canada and the U.S.. Government bonds remain attractive heading into the second half of the year. Corporate bond holders are not being compensated as much for taking on corporate credit risk, with spreads at near 20-year lows, although all-in yields look attractive.
The Bank of Canada has expressed confidence that inflation will continue to move towards the 2% target. Canadian consumers will require further rate cuts and more time to alleviate pressure from their large debt-loads. The Trans Mountain Pipeline and LNG Canada project will create a positive backdrop for Canadian oil and natural gas.
Europe has benefited from falling inflation and positive GDP revisions. Wage increases and improved corporate governance standards are among some of the reasons we maintain a positive view of Japan heading into the second half of the year. Chinese equities maintain attractive valuations.
Market sentiment now indicates that rate cuts will not occur until the third quarter of 2024. Despite signs of strength, the direction of the economy and the likelihood of a recession remain uncertain. Relations between the U.S. and China are expected to remain strained regardless of the U.S. election outcome.
Dean is a single Canadian in his twenties looking forward to buying his first home. He’s planning to increase his home savings as his income grows over time. Dean’s advisor recommends a First Home Savings Account (FHSA) because it will give Dean up to 15 years to save, which suits his budget and time frame.
Monetary policy, global growth, politics and innovation have dominated headlines in 2024, and we expect these broad themes to continue to have an impact on markets as we head into the second half of the year.
Paul Holba, Senior Vice-President and CIO of Empire Life Investments Inc. discusses some of the key themes the investment team will monitor as we head into the second half of 2024.
Amina and Sanjay are a young Canadian couple looking forward to buying their first home. They both have satisfying jobs and are financially savvy. Through Amina’s grandfather they were introduced to an advisor who told them about the First Home Savings Account (FHSA), and they think it’s a good way to save for a home.
