The Richter Economic Timeline: What was known or knowable and what did the market say?

Sources: Available upon request

Richter’s economic timeline plots local and world events together with a depiction of the volatility of the stock market (S&P 500) and credit markets (the spread of publicly traded BBB corporate bonds over U.S. treasury notes).

Stock markets soared in Q4 2024. The U.S. economy surpassed expectations, reaching a new high, with robust consumer spending and AI-driven expansion. Rate cuts occurred; however stubborn inflation tampered some investor expectations. Asset classes including large cap equities, gold, growth stocks and bitcoin had the strongest returns.

During the fourth quarter of 2024, policymakers achieved a soft landing. However, there is still fear of recession with the looming U.S. and Canadian trade war. This occurs contemporaneously with the following:

• The Bank of Canada and U.S. Federal Reserve have cut rates, signalling confidence as inflation remains under control. Although, this confidence could be disrupted by trade tariffs.
• Unemployment rates in Canada have slightly increased, while the U.S. labor market shows stability.
• Driven by the AI boom, innovative tech stocks (MATANA*) have continued their growth in the market. However, geopolitical conflicts, looming trade tariffs and renewed tech bubble sentiments have led to heightened market volatility and occasional corrections.
• Despite a temporary ceasefire, the October 7th Israel-Hamas War has expanded into a wider regional conflict which poses a greater threat to prices and currency exchange rates. Contemporaneously, there are continued concerns and uncertainties over the sustained military invasion of Ukraine by Russia as well as tensed China-Taiwan relations.
• Disruptions geopolitically and environmentally, together with Canadian freight and postal strikes have impacted global maritime trade, severely elongating the time necessary to ship cargo by sea.
• The new U.S. administration, under a Republican-controlled Senate, emphasizes lower taxes, deregulation, and domestic energy production. However, risks such as trade tariffs, rising fiscal deficits, and geopolitical tensions could slow growth and drive inflation, prompting Canadian companies to reassess their international relationships.
• The housing market shows signs of stabilization after a period of correction, with demand gradually recovering in urban areas. However, affordability remains a significant concern, particularly for first-time buyers.

*MATANA describes the market’s technology leaders – Microsoft, Apple, Tesla, Alphabet, Nvidia and Amazon.

This timeline was compiled by Richter Inc.’s Business Valuation and Dispute. A similar version was published in the CBV Institute’s Journal Advisory Group.

Link: https://cbvinstitute.com/wp-content/uploads/2020/11/CBV-Institute_Journal2020_Final.pdf

Contact Person: Alana Geller, CPA, CBV, CFF, FEA