Mackenzie All-Equity Allocation ETF · TSX:MEQT
Mackenzie All-Equity Allocation ETF — Mackenzie Investments — Investor Presentation (March 2023)
23 slides from Mackenzie All-Equity Allocation ETF's investor presentation, Mar 1, 2023
Slide 1: Monthly macro and markets update
Monthly macro and markets update March 1, 2023 All data and charts as of March 1, 2023.
Slide 2: Contents
Contents Markets Economic trends Macro policy Asset valuations 1. Market developments in the past year 1. Consensus macro forecasts 1. Federal Reserve policy 1. Canadian dollar 2. Market developments in the past year 2. Economic leading indicators 2. Global fiscal positions 2. Canadian dollar, drive
Slide 3: Market developments in the past year
MARKETS Market developments in the past year Stocks lost momentum with hot economic data Rates rose across the curve in February Total return equity indices, change vs. one year ago U.S. Treasury yields by maturity 15% 5.5% 10% 5.0% 8.1% 4.5% 5% 3.9% 4.0% 0% 3.5% -2.7% -5% 3.0% -10% -10.2% 2.5% 2.0%
Slide 4: Market developments in the past year (cont'd)
MARKETS Market developments in the past year (cont’d) The US dollar rallied in February with rising rates Oil prices are trading in a range, with room to rise Currencies relative to USD, change vs. one year ago Commodity prices in US$ 5% 2100 130 2050 120 0% 2000 110 1950 -5% -4.9% 100 -6.6% 1900 90
Slide 5: Consensus macro forecasts
ECONOMIC TRENDS Consensus macro forecasts Developed economies expected to stagnate in 2023 Inflation is expected to moderate, but stay elevated Consensus GDP growth forecast Consensus CPI inflation forecast 10% 9% 8% 8% US 7% Canada 6% 5.2% Eurozone 6% Japan 4% 5.5% China ECB, BoC, Fed and BoJ 5% in
Slide 6: Economic leading indicators
ECONOMIC TRENDS Economic leading indicators PMIs have rebounded with China’s reopening Advanced countries’ momentum picking up Purchasing Managers’ Index, major economies Purchasing Manager’s Index, extended sample 70 70 US Canada Eurozone Japan 65 Emerging markets 65 Expansion Level (>50 = positive
Slide 7: Employment, U.S.
ECONOMIC TRENDS Employment, U.S. Sidelined Americans have begun to rejoin the labor force Employment rates are slightly below pre-pandemic U.S. labour market indicators levels U.S. labour market indicators 16% 68% 85% 14% 80% 80.2% 66% 12% 75% 64% 10% 70% 62.4% 8% 62% 65% 6% 60% 60% 60.2% 4% 3.4% Em
Slide 8: Employment, United States (cont'd)
ECONOMIC TRENDS Employment, United States (cont’d) Quits and openings have recently stopped easing Wage growth has probably peaked, but is still reflecting U.S. JOLTS indicators the market tightness U.S. wage indicators 8% 9% Average hourly earnings (yoy) 7% 8% 6.7% Atlanta Fed wage index (yoy) 7% 6
Slide 9: Employment, Canada
ECONOMIC TRENDS Employment, Canada After cooling in Q3, the labour market tightened recently Employment rate for 25-54s is above pre-pandemic levels Canada labour market indicators Canada labour market indicators 16% 70% 90% 14% 85% 85.3% 68% 12% 80% 66% 10% 65.7% 75% 8% 64% 70% 6% 65% 62% 62.5% 5.0
Slide 10: Housing
ECONOMIC TRENDS Housing House prices lagging stocks in the US and Canada Canadian home valuations have outpaced other countries House prices and equities, Jan. 2002 = 100 House price-to-rent indices, Jan. 2000 = 100 700 400 Canada US UK 350 600 Canada house prices 300 500 US house prices 250 TSX tot
Slide 11: Housing, Canada
ECONOMIC TRENDS Housing, Canada The effective cost of homeownership has more than Higher rates explain surging payments for new mortgages doubled in 20 years – Affordability measure Affordability measure 200 40% Proportion of household earnings required to cover 180 monthly mortgage payment (average
Slide 12: China
ECONOMIC TRENDS China China’s credit impulse should rise as the economy Growth will rebound in 2023 reopens – China economic indicator and credit impulse Debt and real GDP, China 30% 45% 350% 16% 300% 14% 25% 40% China economic indicator (Li Keqiang index, left) China credit impulse (right) 12% 250%
Slide 13: Inflation
ECONOMIC TRENDS Inflation U.S. inflation will stick above 2% Canadian inflation has peaked, but 2% is still quarters U.S. inflation measures away Canada inflation measures 10% 10% US CPI inflation (yoy) Canada CPI inflation (yoy) US core CPI inflation (yoy) Canada core CPI inflation (yoy) 8% 8% 6% 6
Slide 14: Inflation expectations
ECONOMIC TRENDS Inflation expectations Market inflation spike in February amid hot data Forecasters expectations dipped at the end of 2022 Future U.S. inflation as implied by bond markets U.S. inflation forecast, Survey of Professional Forecasters 4% 4% 5-year average CPI inflation forecast 5-year U
Slide 15: Federal Reserve policy
MACRO POLICY Federal Reserve policy Markets expect rates to peak above 5.5% in 2023 The Fed has begun to shrink its balance sheet Policy rate expectations Fed balance sheet assets 6% 9 Mid-point of federal funds rate (FFR) U.S. Treasuries (trillions US$) 8 Market-implied FFR 5% Mortgage-backed secur
Slide 16: Global fiscal positions
MACRO POLICY Global fiscal positions Deficits are expected to shrink in the next few years U.S. debt load will stabilize at new, higher level General government deficits as a % of GDP, IMF forecasts General government debt-to-GDP ratios, IMF forecasts 4% 300% 2019 (+0%) 2% 250% 0% 2020 -2% (118%) 20
Slide 17: Canadian dollar
ASSET VALUATIONS Canadian dollar The CA$ lost value in the second half of 2022 with lower The CA-US “carry” has turned negative for the CAD oil prices and inflation running below US inflation CA-US yield differentials, basis points Canadian dollar exchange rate to US dollar $0.85 $150 40 CA-US 5-yea
Slide 18: Canadian dollar, drivers
ASSET VALUATIONS Canadian dollar, drivers With lower commodity prices, the CA deficit has returned The price of Canada’s exports dropped in 2022H2 Current account balances as a % of GDP Measures of export prices, Canada 4% 1,000 35% Canada Canada export-weighted commodity index (left) 3% 900 US 30%
Slide 19: Yields and interest rates
ASSET VALUATIONS Yields and interest rates Real yields exceeding 1.5% for the first time since 2010 There had been an upward bias in yield forecasts before Decomposition of US yields last year Historical yield forecasts 5% 9% 10-year Treasuries yield 8% 4% 3.9% 10-year Treasuries yield Forecasts (Su
Slide 20: Corporate bonds
ASSET VALUATIONS Corporate bonds Spreads are narrow considering the risks Corporate debt ballooned during the pandemic U.S. corporate spreads, basis points U.S. corporate debt as a % of GDP 20% 60% 18% US corporate debt as a % of GDP 16% 55% Investment-grade option-adjusted yield spread 14% High-yie
Slide 21: Equities, earnings
ASSET VALUATIONS Equities, earnings Analysts generally expect below-average earnings Earnings have driven a large share of equity returns growth – Earnings per share growth consensus forecasts Contributions to annual index returns 14% Emerging 2001-2022 US Canada Europe Japan UK 12% markets Year 10%
Slide 22: Equities, valuations
ASSET VALUATIONS Equities, valuations Dividend yields are less attractive given the spike in real U.S. equities appear more expensive than other markets yields Cyclically-adjusted earnings yield Equity yields vs. bond yields 8% 12% S&P 500 dividend yield US (S&P 500) 7% Canada (TSX) S&P 500 dividend
Slide 23: Disclaimer
Disclaimer Commissions, trailing commissions, management fees, and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. The indicated rates of return are the historical annual compounded total returns as of March 1, 2023 including changes in unit
Mackenzie Investments — Investor Presentation (March 2023) on 6ix