Russell Investments released its third quarter outlook report on July 23. Because of improving profit margins and firm commodity prices, the firm has increased its year-end forecast for the S&P/TSX Composite Index from 13,800 to 15,300.
Shailesh Kshatriya, associate director of client investment strategies at Russell, suggests increased activity in the United States will also help to improve conditions in Canada and predicts that economic growth south of the border will finish the year somewhere between 2% to 2.3%. As for the Canadian dollar, Kshatriya says that the days of near parity to the U.S. dollar are over. He believes the exchange rate range is now 0.89 to 0.94 USD per CAD.
"We're calling current market conditions the 'great re-moderation' as they appear similar to the low-volatility, high-return markets we saw prior to the 2008 global financial crisis," adds Andrew Pease, Russell's global head of investment strategy. "This time though, we think recession risks are low and a major market reversal seems unlikely. However, volatility could easily spike, creating a temporary shake-out, which we'd see as a 'buy-the dips' opportunity."