With the Bank of Canada set to make a rate cut announcement in the next coming days, we sit down with portfolio manager and Fidelity Canada’s Chief Investment Officer, Andrew Marchese, to get his latest insights on the market landscape and what a rate cut would mean for the broader economy. Andrew says in his opinion a cut of 25 or 50 basis points doesn’t matter – what concerns him is what a cut would signal to the market. Andrew says when you get into these rate cuts cycles, it's really about making sure that central bank reaction matches the economic backdrop. Most importantly, Andrew notes, the fate of the economy could probably be determined by one, macroeconomic metric and that's unemployment. That’s why you saw a dip in the market in August when the US reported higher unemployment numbers. For him, he’s concerned about the speed and the magnitude by which central banks cut. He also says we should be less concerned about a potential recession and be more mindful of possible leadership changes going into 2025 and what that means from a market perspective.

 

Recorded on September 3, 2024.