Lexicon Financial Group Weekly Update — December 18, 2024

Dec 18

“Good health is not something we can buy. However, it can be an extremely valuable savings account.”

— Anne Wilson Schaef, American clinical psychologist and author

From the desk of Craig Swistun, CIM, MFA-P, Portfolio Manager, Raymond James Investment Counsel, and Wayne Hendry, Client Relationship Manager, Raymond James Investment Counsel

Looking Around

If we asked you to name several stores of wealth, what would come to mind for you? Would it be gold, stocks (Nvidia, Apple, Tesla, etc.), paintings by Picasso or one of the European masters, or real estate holdings in one of the major capitals of the world? All of these are valuable assets, without doubt. Perhaps, more accurately, they have all become valuable assets in the current market, over time.

Sometimes, the value of something depends on our unique view of the world from where we stand. Take, for example, less tangible assets like good health or happiness? How valuable are these?

While none of these appear on your monthly statements or corporate balance sheets, there’s no denying their value. Although many have tried, these are things you can’t readily buy and sell. Roman poet Virgil said that “the greatest wealth is health.” That is as true today as it ever was. It is possible that our physical and mental well-being could arguably be one of our most valuable assets of all.

The phrase, “money can’t buy happiness” is used so often that it has become a cliché. Which is strange, because a 2010 Princeton study found that, while low incomes do indeed worsen emotional pain, having “more” does not correlate to being happier. It also found that emotional well-being increases as annual income rises to USD 75,000, at which point happiness stops going up. Earning more than this doesn’t seem to make people happier.

From a financial standpoint, maintaining good health is almost always good for your wallet. Adjusting your lifestyle for medical conditions and physical illnesses isn’t cheap. And let’s not overlook the importance of mental health. Having a mental illness has close links with financial difficulties, and debt can follow. According to the National Debtline, 50 per cent of adults with debt also have a mental health issue. (1)

Recently, a new study by Telus Health revealed that the mental health of Canadian workers has not been as bad as it is now, since the early days of the pandemic. Financial worries are driving the decline—the Telus mental health index plummeted to an historic low in October, as its financial risk score took its largest single-month dive ever. The share of workers at high mental health risk hit a new high of 37 per cent in October, which is almost four per cent higher than the index’s annual average in the last four years. Mental health scores have dropped to 61.3, which is nearly two points lower than the start of the pandemic in April 2020. The biggest decline was seen in the financial risk score, which dropped 6.8 points. Forty per cent of workers said they frequently felt anxious about their financial situation and 28 per cent identified personal finances as their primary source of stress. This anxiety is also affecting their work, with almost a quarter of those polled saying that their financial situation has negatively affected their productivity in the past quarter. In October, the work productivity score on the index plunged 5.4 points to the lowest since the launch of the index in April 2020. (2)

But studies and averages and data and reports and talking heads on TV can’t tell you about you, the individual. There are some simple ways that we can help. Let’s make it a priority for you and your family, in 2025, especially if you are feeling any anxiety around finances.

Create a financial plan, which may help clarify some of your goals and objectives.
Ensure that should your health suffer, there will not be a financial burden to your family. There are critical illness insurance policies that can help mitigate this risk to a certain extent, especially for business owners or the primary income earner in a household.
Pay attention to the small things. If you don’t think small things make a difference, try sleeping in a tent with a mosquito. Small changes to diet and exercise can go a long way in keeping you healthier, longer.

Financial and emotional well-being often stems from having the ability to do what you what, when you want, with the people you want.

We wish you a healthy, happy holiday season and a prosperous New Year!

Read and Watch

Want deeper insight into topics in your Weekly Update? Then, read and/or right click:

What’s Next for Bank of Canada Rate Cuts? Ask Trump

Video: 'Lack of leadership in the EU': 'Severe' situation for French-German economic 'engine'

Once again, China pushes for economic stimulus, hoping for a different result

Raymond James Markets & Investing: How the Fed’s dot plot may shift at the December FOMC meeting – CIO Larry Adam, December 13, 2024

Raymond James Economy & Policy: Our shadow dot plot for December: An attempt to read FOMC members minds? - Chief Economist Eugenio J. Alemán, December 13, 2024

Looking Back

At the end of last week, the S&P/TSX composite index (TSX) fell to a three-week low, as a drop in metal prices weighed on the materials sector and the market gave back some of the robust gains accumulated since the U.S. presidential election. After posting five straight weekly gains, the TSX was down 1.6 per cent for the week, last week. Nine of ten major sectors of the TSX posted declines, with the only exception being the technology sector. Moving into January 2025, it is possible that the TSX will remain range-bound until the inauguration in the United States (U.S.) on January 20 and we see what kind of U.S. tariff hazards Canada may be facing. (3)

Most U.S. major stock indexes ended the week lower, although the technology-laden Nasdaq Composite advanced modestly and cleared the 20,000 level for the first time. Sector performance was also largely negative, as only the communication services and consumer discretionary notched gains for the week.

Meanwhile in Europe, major stock markets ended mixed last week. The pan-European STOXX Europe 600 Index fell 0.77 per cent, as investors debated whether the European Central Bank (ECB) has been easing monetary policy fast enough to support the struggling economy. The ECB lowered its key deposit rate by a quarter of a percentage point to 3.0 per cent last week and has left the door open to ease monetary policy further.

Japan’s stock markets registered modest gains over the week, with the Nikkei 225 Index rising 0.97 per cent and the broader TOPIX Index up 0.71 per cent. Regional market sentiment was boosted by China’s announcement of more proactive fiscal measures and moderately looser monetary policy.

Chinese stock markets gave up ground last week, as recent policy announcements underwhelmed investors. China pledged to implement a more proactive fiscal policy and increase the budget deficit in 2025 at the annual Central Economic Work Conference - a high-level meeting in which top officials plan the economic agenda for the next year. Chinese officials stated that the central government will continue issuing ultra-long special Treasury bonds to fund major projects. However, the readout following the two-day conference provided little details, which dampened investor sentiment. Inflation data released earlier last week showed that China’s economy remains stuck in deflation. Core inflation in China, which strips out volatile food and energy costs, edged up to 0.3 per cent from October’s 0.2 per cent rise. The producer price index fell 2.5 per cent year on year, which is lower from the prior month’s 2.9 per cent drop but marks the 26th straight monthly decline, despite the Chinese government’s numerous efforts to boost domestic demand. (4)

The opinions expressed are those of Craig Swistun and not necessarily those of Raymond James Investment Counsel which is a subsidiary of Raymond James Ltd. Statistics and factual data and other information presented are from sources believed to be reliable, but their accuracy cannot be guaranteed. It is furnished on the basis and understanding that Raymond James is to be under no liability whatsoever in respect thereof. It is for information purposes only and is not to be construed as an offer or solicitation for the sale or purchase of securities. Raymond James advisors are not tax advisors, and we recommend that clients seek independent advice from a professional advisor on tax-related matters.