Overall, we are generally optimistic about the macroeconomic backdrop and see little sign of recession over the next 12 to 18 months.

Looking ahead to 2019, our key themes will focus around:


Slowing but positive global growth

Although we expect a deceleration, the long economic expansion should continue in 2019.


Continued central bank tightening

Central banks should continue to normalize interest rates this year, but we expect a slower pace of rate hikes going forward.


Interest rates and inflation drift higher

We expect to see some cost pressures emerge this year on the labour front, lifting overall inflation modestly, while we expect rates to retrace much of the drop experienced in Q4.


Moderate equity returns

Although earnings growth will slow from 2018's pace, equity prices are supported by more reasonable valuations and we expect earnings growth in the 5-10% range.


Persistent volatility

Later stages of the business cycle are usually accompanied by increased volatility and the current geopolitical landscape provides plenty of opportunity for surprise.

Expect slower growth, contained inflation and modestly higher rates
Take a more balanced approach

This mid-to-late cycle stage calls for a more balanced approach to portfolio positioning that allows for flexibility given the increased risks.

Diversify globally

We continue to favour global over Canadian equities as geographic diversification remains important.

Adopt a neutral stance in equities

Slowing growth, political risks and the promise of monetary tightening on the horizon has led us to recommend that our clients move to their target asset allocation in equities, adopting a neutral stance.

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