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Over the past quarter, equity markets managed to rise, thanks in large part to strong earnings (primarily by a small group of mega-cap stocks). This performance came in the face of investor anxiety around stubborn inflation and reduced expectations that the Federal Reserve (Fed) will rate cuts soon. So, once again, the markets had to climb the infamous "Wall of Worry" and prevail. What exactly is the "Wall of Worry" you ask?
The Wall of Worry is a reference used to describe the market's ability to show resilience in the face of negative economic or corporate news that would otherwise cause a pullback in markets and instead they edge higher. The markets' ability to climb a Wall of Worry reflects investor confidence that these issues will be resolved at some point.
Ultimately however, when you really think about it, equity markets never seem to be a stress-free place. Even when the market is rising, many investors will invariably think "how long will this keep going for?" or "I think a correction is coming soon!" And as the market continues to climb the Wall of Worry, the decision to stay invested can become increasingly difficult.
TD Asset Management Inc. (TDAM) has a timely and easy to digest publication that helps investors get over the Wall of Worry. Every quarter, the TD Wealth Asset Allocation Committee (“WAAC”) publishes their thoughts on the markets and economy including a positioning overview in the Market Perspectives. In the recently published Q3 Market Perspectives the WAAC provides its latest views on asset classes, where investing opportunities may arise, and future scenarios for global economies and interest rates. Key Q3 highlights include:
- Global economic momentum gained a step relative to expectations but, even so, the Bank of Canada ("BoC") and European Central Bank ("ECB") began rate-cut cycles; the first G7 central banks to do so.
- In the U.S, economic growth this year is expected to nearly match 2023's pace, at 2.4%. However, this is partly due to a very strong 4% hand-off in the second half of 2023, which has boosted the 2024 average. By the end of this year, U.S. growth is expected to slow to 1.7% on a Q4 over Q4 basis, as the longevity of higher interest rates create more weight under the normalization of savings and job markets.
- Eurozone growth has surprised to the upside in early 2024, albeit from low expectations. Nonetheless, forecast revisions are now leaning toward upgrades, as the prospect of lower interest rates creates some optimism that a floor can be maintained under economic momentum. However, the risk of an uptick in inflation from geopolitical tensions or solid domestic labour markets remains ever-present.
- The Canadian economy should benefit from interest rate relief, but overall economic momentum is forecast to remain subdued as indebted consumers continue to adjust. Consumer spending is expected to cool even though the BoC has started to cut interest rates, as borrowing costs remain higher than the COVID-19 pandemic lows. Additionally, a softening labour market is expected to weigh on the pace of consumer spending.
- China exceeded forecasters' economic expectations in the quarter, leading to an upgrade to 2024 gross domestic product (GDP). With a 5% growth target almost assured, there is doubt that the government will provide more stimulus to the economy. Ultimately, China's aging demographics and restructuring of the economic drivers will maintain a slowing growth trajectory as the years progress.
Access to the insights
For access to TDAM's full update, please check out the latest Market Perspectives.
本文所含信息由道明资产管理有限公司提供，仅供参考。信息出自我们认为可靠的来源。本信息并未提供财务、法律、税务或投资建议。具体的投资、税款或交易策略应根据每位投资者的目标和风险承受能力加以评估。
本文档中的部分陈述可能包含预测性的前瞻性陈述（“FLS”），其中包含“预计”、“预期”、“打算”、“认为”、“估计”和类似的前瞻性表述或其否定形式。前瞻性陈述基于当前对未来普遍的经济、政治、相关市场因素（例如利率和汇率、股票和资本市场）以及普遍经营环境的预计和预测，并假定不发生税法或其他法律或政府管制方面的任何变动或灾难事件。对于未来事件的预计和预测本身受无法预见的风险和不确定性的影响。此等预计和预测可能在未来并不准确。前瞻性陈述并非对未来表现的保证。实际发生的事件可能与前瞻性陈述明示或暗示的事件存在实质差异。包括上文所述各项因素在内的多个重要因素均可能造成这种背离。您不应在任何程度上依赖于前瞻性陈述。
The TD Wealth Asset Allocation Committee ("WAAC") is comprised of a diverse group of TD investment professionals.WAAC的责任是发布季度市场展望，提供有关未来6至18个月市场行情的简明观点。WAAC的预测并非对未来结果的保证，实际市场事件可能与WAAC季度市场展望中明示或暗示的情况存在实质性差异。WAAC市场展望不可取代投资建议。
道明资产管理有限公司 (TD Asset Management Inc.) 是道明银行 (The Toronto-Dominion Bank) 的全资拥有附属机构。
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