The Richter Economic Timeline: What was known or knowable and what did the market say?

Sources: S&P Capital IQ, Yahoo Finance, Duff & Phelps, James R. Hitchner’s Valuation Products and Services and CMAJ News.

Richter’s economic timeline plots local and world events together with a depiction of the volatility of the S&P 500 stock index as well as the spread of publicly traded BBB corporate bonds over US treasury notes since the outset of COVID-19. The rebound of the stock and credit markets following the low in March 2020 was largely bolstered by remarkable government stimulus, particularly in Canada and the US. The level of funding provided and the impact on the economic environment could not have been predicted at the outset of the pandemic. It is difficult to predict the level of government stimulus that might persist, as well as the duration of the current aggressive tightening cycle, and the related impact on corporations, industries, and the macro-economic climate

During the first quarter of 2023, we continued to witness a slight recovery of the S&P 500 stock index following steep losses in September 2022. This occurs contemporaneously with the following:

• Looming concerns of a recession in Canada, US, and other countries, as S&P 500 stock index closed out 2022 with a 19.4% loss, the worst since 2008.
• Failure of three banks focused on start-ups and crypto currencies led to a significant drop in worldwide bank share valuations, prompting regulatory intervention.
• Continued concerns and uncertainties over the military invasion of Ukraine by Russia.
• Inflationary pressures appear to be cooling with declining consumer demand and lessening supply chain disruption.
• Experts believe that the Bank of Canada prime rate has reached its peak and will slowly fall in 2023.
• Unemployment rate held steady at 5% in Canada and 3.5% in the US.
• Increased gold prices and reduction in oil prices, resulting from looming recessionary concerns, inflationary pressures and geopolitical concerns.

This timeline was compiled by Richter Inc.’s Business Valuation and Dispute. A similar version was published in the CBV Institute’s Journal Advisory Group.

Link: https://cbvinstitute.com/wp-content/uploads/2020/11/CBV-Institute_Journal2020_Final.pdf

Contact Persons: Alana Geller, CPA, CA, CBV, CFF, and Brett Miller, CPA, CA, CBV, MBA