Big Stories of 2023

by Scott Ronalds

There are four days left in 2023 and the scramble is on. You need to figure out New Year’s Eve plans, work off that extra helping of turkey, and get Mariah Carey’s Christmas lyrics out of your head. The pundits, on the other hand, are feverishly putting together market predictions for the year ahead.

But be careful what you read. As Tom pointed out in his last Globe and Mail article, there’s no accountability around these forecasts, no intellectual honesty, and for every prediction that’s right, there are 10 that are way off.

Rather than trying to forecast an unpredictable future, it can be helpful to reflect back on some of the year’s biggest stories and events when thinking about the outlook for your portfolio.

Below are some of the key happenings in 2023. We’ll be talking more about the impacts they had on the capital markets and your portfolio in our Q4 Report and year-end video, which we’ll be releasing the weeks of January 8 and 15, respectively.

Interest rates

Following seven interest rate increases in 2022, the Bank of Canada raised its key lending rate three more times this year, by a total of 0.75%. It currently sits at 5.0%, a level not seen in over 20 years. The U.S. Federal Reserve upped its benchmark rate four times, to its current range of 5.25% - 5.5%.

The higher rates have had the intended impact of slowing the economy and bringing down inflation. They’ve also put consumers in a tighter spot, as mortgages, car loans and lines of credit have higher payments attached to them.

Both central banks signaled in their latest announcements that the hiking cycle is likely over. Investors embraced this sentiment, pushing stock and bond markets meaningfully higher in the fourth quarter in anticipation of lower interest rates ahead. While this may be the case, it is by no means a given. The timing of any cuts is uncertain, and things can change quickly. As bond investors have come to know, interest rates are fickle.


Ukraine continues to put up a valiant fight against Russia, but Putin has vowed to carry on his destructive campaign until Russia’s “goals are achieved”, i.e., Ukraine surrenders. As the war nears its two-year mark, tens of thousands of lives have been lost and countless households destroyed. The economic consequences endure, with the flow of energy disrupted, prices of commodities impacted, trading relations and routes redrawn, sanctions stepped up, and the geopolitical divide between West and East growing.

The world was dealt another blow in October when Hamas attacked Israel and the latter retaliated against Gaza. Both conflicts (Russia-Ukraine and Israel-Gaza) are testing the West’s resolve and financial support. I heard a sobering stat at a Remembrance Day ceremony this year: over 3,500 years of recorded history, there have only been 230 years with no war(s). Peace should be on everyone’s wish list this season.

Artificial Intelligence

The rise of artificial intelligence was arguably the biggest business story of the year. Its use is being implemented across all industries, and investors rushed to companies positioned to benefit from its growing adoption. Some big questions are also emerging. What guardrails and/or regulations are necessary? What impact will it have on jobs? To what extent will it improve productivity? Are any risks being overlooked? We’re likely to start seeing some answers next year.

The Magnificent Seven

Tech stocks took a beating in 2022. Their rebound this year has been profound. Seven of the biggest U.S. companies, coined the ‘Magnificent Seven’, drove much of the American market’s gain this year (accounting for roughly three-quarters of the S&P 500 Index’s rise).

Apple, Microsoft, Nvidia, Meta, Amazon, Alphabet, and Tesla saw their share prices soar, due in part to the excitement around artificial intelligence and the opportunities it presents for their respective businesses. With the renewed enthusiasm around the tech sector, investors are well advised to remember the virtues of diversification.

Medical breakthroughs

Ozempik became a household name this year. Sales of the drug, which was developed to treat diabetes but has also proven effective at helping weight loss, are projected to surpass $US13 billion this year. Other similar drugs designed specifically for weight loss (known as GLP-1 drugs) have skyrocketed in popularity. Novo Nordisk, the Danish maker of Ozempic and its sister drug Wegovy, is now the most valuable company in Europe based on market capitalization.

If the world indeed gets leaner, the impacts on global health and the economy at large could be far reaching, from a reduction in heart attacks and obesity-related diseases, to lower fast food sales (some investors are already expressing concern about the sector), to fuel savings (one Wall Street analyst has suggested that United Airlines would save $80 million a year if the average passenger weight falls by 10 pounds).

A lesser talked about breakthrough came this month when the FDA approved the first gene-editing therapy for the treatment of sickle cell disease using CRISPR technology. Like the mRNA vaccines developed in 2020 to combat the coronavirus, these latest drugs and therapies serve as a reminder of progress and innovation.

Final thoughts

2023 turned out to be a good year for investors, which probably comes as a surprise to many. Balanced portfolios are up 8-10% in the face of decades-high interest rates, a regional banking crisis, an ongoing war in eastern Europe, a new conflict in the Middle East, a slowing global economy, and worries around next year’s U.S. election.

It was a year that underscored the importance of a steady hand on your portfolio and proved once again that stocks are highly unpredictable in the near term, the correlation between the market and the economy is sloppy at best, and forecasting is a mug’s game.

Nonetheless, if I had to make a prediction for 2024, here goes: Taylor Swift and Travis Kelce will part ways. You heard it here first.

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