Semi-Annual Update with Paul Holba, Senior Vice-President and CIO

Paul Holba, Senior Vice-President and CIO of Empire Life Investments Inc. discusses some of the key themes the investment team will monitor as we head into the second half of 2024.

Hello, I’m Paul Holba, Senior Vice-President and Chief Investment Officer at Empire Life Investments Inc. As we head into the second half of 2024, I would like to update you on some of the key themes and events that our investment team continue to monitor.

Theme #1: Inflation, unemployment and growth continue to drive monetary policy

Headline inflation has cooled, however core inflation remains stuck above the 2% target set by central banks in most developed economies. This has contributed to the ongoing uncertainty surrounding policy decisions. The good news is that there appears to be a global trend towards moderation. However, the pace has differed among different economies. This has caused a divergence in interest rate policies- with Canada and the Euro area cutting rates, while the U.S. held rates steady. We will continue to monitor this as well as the relative impact on growth and currency valuations in the second half of the year.

Theme #2: We continue to monitor global elections with particular interest in how they will impact local economies and markets

Half the world was scheduled to hold elections in 2024, and there are still a number of them taking place in the second half of the year. We have been closely monitoring the U.S. presidential election We do not expect the outcome of this election to have a considerable impact on U.S. – China relations, which continue to deteriorate. In May, the Biden administration announced that many existing tariffs on Chinese goods will increase, most notably for electric vehicles, which will jump from 25% to 100% this year. The EU announced weeks later that they will also be increasing tariffs on Chinese EV imports. This has raised concerns of a broader trade war and the impact this may have on EV adoption.

Elsewhere, the Labour Party swept to power in the U.K on July 4th, ending 14 years of Conservative rule, and the second round of elections took place in France on July 7th that saw a surprising victory for the New Popular Front, a left-wing alliance. French President Emmanuel Macron called a snap election following strong support for far-right parties in the European Parliamentary elections in early June.

Theme #3: Artificial Intelligence (AI) continues to drive innovation and market sentiment

There are no signs of the hype around AI slowing down in the second half of the year. Open AI announced that it has begun training the successor to GPT-4, as well as a partnership with Apple, that is expected to revolutionize the iPhone as we know it.

We continue to monitor the global transition to green energy, and our progress towards reaching net zero in 2050, with a particular interest in emerging technologies. The Empire Life Investments Inc. team has also researched alternative energy sources, such as nuclear power, which has gained momentum following the COP-28 summit in December of last year where 22 world leaders signed a declaration to make efforts to triple nuclear energy by 2050. You can read all about the benefits of nuclear power in our recently published thought leadership piece, “The Critical Role of Nuclear Power in the Global Energy Discussion”- now available on empire.ca.

As we head into the second half of the year, these are some of the key themes that we will continue to monitor for challenges and opportunities, as they may arise. We look forward to sharing our updated outlook with you in the new year. Thank you for your continued support.

This document includes forward-looking information based on the opinions and views of The Empire Life Insurance Company and Empire Life Investments Inc. as of July 20, 2024 and is subject to change without notice.

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