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Monthly Archives: September 2015

Terry Broaders

Weekly Update September 29 2015

 

“I Never Said Most of the Things I Said” – Yogi Berra

 

TSX Ended The Week On a High Note
The Toronto Stock Exchange ended Friday’s session with gains as oil stayed strong and investors considered Thursday’s Fed chair’s speech and Friday’s US GDP data which exceeded expectations at 3.9 per cent.  Federal Reserve Board Chair Janet Yellen said Thursday that she and other Fed policymakers do not expect recent economic and financial market turmoil to significantly alter the central bank’s policy, easing concerns about the world’s economic health.  Wall Street was mixed as the session closed with the Dow outperforming both the S&P500 and the Nasdaq which both closed with losses. Europe shrugged off the ongoing drama of the Volkswagen emissions scandal to close higher. Asian markets closed broadly lower earlier in the day. The S&P/TSX Composite Index closed up 39.90 points and the Dow Jones closed up 113.4 points.  There is much to like about the U.S. economy in the second half of the year, despite “all the global malaise,” said Jacob Oubina, senior economist at RBC Capital Markets in New York.

 

Statistics Canada Says Retail Sales Up In July
Retail sales rose for a third consecutive month in July to $43.3 billion as Canadians opened their wallets for a new ride and new clothes. The 0.5% increase from June’s level was helped by rising sales of new motor vehicles as well as clothing and clothing accessories, Statistics Canada said Wednesday.  It said six of 11 retail subsectors posted gains. Excluding motor vehicle and parts dealers, retail sales were unchanged for the month. According to Thomson Reuters, economists had expected a gain of 0.5% for the month overall and 0.4% excluding autos.
The Canadian economy struggled through the first half of the year as it contracted in the first two quarters of 2015. However, most economists expect the economy to gain strength in the second half. To help offset the drag caused by the sharp drop in oil prices, the Bank of Canada has cut its key interest rate by a quarter of a percentage point twice this year and it now sits at 0.5%. The central bank expects the Canadian economy to grow at an annual pace of 1.5% in the third quarter before accelerating to an annual pace of 2.5% in the final three months of the year. Robert Kavcic, senior economist at BMO, says the “decent” retail sales report suggests the economy continued to rebound in July.

 

 

Market Update as of September 25 2015

North America
The TSX closed at 13379, down -88 points or -0.65% over the past week. YTD the TSX is down -9.32%.
The DOW closed at 16315, down -70 points or -0.43% over the past week. YTD the DOW is down -8.51%.
The S&P closed at 1931, down -27 points or -1.38% over the past week. YTD the S&P is down -6.17%.
The Nasdaq closed at 4687, down -140 points or -2.90% over the past week. YTD the Nasdaq is down -0.85%.
Gold closed at 1146, up 4.00 points or 0.35% over the past week. YTD gold is down -2.22%.
Oil closed at 45.56, up 0.88 points or 1.97% over the past week. YTD oil is down -13.53%.
The USD/CAD closed at 1.332648, up 0.0181 points or 1.37% over the past week. YTD the USD/CAD is up 13.56%.

Europe/Asia
The MSCI World closed at 1587, down 44.00 Points or -3.96% over the past week.  YTD the MSCI World is down -7.15%.
The Euro Stoxx 50 closed at 3113, down 44.00 points or -1.40% over the past week.  YTD the Euro Stoxx 50 is down 1.06%.
The FTSE closed at 6109, up 5.00 points or 0.08% over the past week.  YTD the FTSE is down -6.96%.
The CAC closed at 4481, down 55.00 points or -1.22% over the past week.  YTD the CAC is up 4.87%.
The DAX closed at 9689, down 227.00 points or -2.30% over the past week.  YTD the DAX is down -1.19%.
The Nikkei closed at 17881, down 189.00 points or -2.99% over the past week.  YTD the Nikkei is up 2.46%.
The Shanghai closed at 3092, down 6.00 points or -0.18% over the past week.  YTD the Shanghai is down -4.40%.

 

Sources: Bloomberg; Investment Executive;  advisor.ca

Terry Broaders
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Terry Broaders

Weekly Update September 8 2015

“The Hammer of the Gods Will Drive Our Ships To New Lands” – Plant/Page

 

TSX Falls Amid U.S. Rate Uncertainty
Canada’s main stock index fell on Friday, weighed down by financial and energy stocks and jobs data. The Toronto Stock Exchange’s S&P/TSX composite index closed down 118.10 points, or 0.87 per cent, at 13,478.31. It lost 2.7 per cent on the week. U.S. stock indexes ended down more than 1 per cent on Friday after a mixed August jobs report did little to quell investor uncertainty about whether the Federal Reserve will increase interest rates this month.
The Standard & Poor’s 500 Index lost 1.5 per cent to 1,921.22. York. The Dow Jones Industrial Average fell 272.38 points, or 1.7 per cent, to 16,102.38.  It’s “a glass-half-empty kind of day,” said Patrick Blais, a fund manager at Manulife Asset Management Ltd. in Toronto. He helps manage about $280-billion at the firm. “Right now there’s a lot of nervousness so it’s natural for the market to react aggressively.”
There were 12,000 more Canadians in the workforce in August, a 0.1 per cent increase from July. However the unemployment rate was 0.2 percentage points higher than it has been for six consecutive months, reaching 7.0 per cent. Data Friday showed U.S. employers added 173,000 workers in August and the jobless rate dropped to 5.1 per cent.

 

Kids Are Draining Parent’s’ Nest Eggs
Adult children are relying on their parents for money, and this is putting a drain on the nest eggs of two-thirds of parents, finds CIBC.  In fact, 25% of parents are spending more than $500 a month to help their adult children cover expenses, such as rent, groceries and cell phone bills. Further, 47% say helping their kids financially has hampered their ability to save for themselves, and 20% have delayed retirement.  Where the money goes The most common form of financial support that parents provide their adult kids is free room and board at home (71%), but many contribute towards other bills as well, including: groceries/other household expenses (47%); cell phone bills (35%); car payments or vehicle related expenses (23%); rent for their adult kids to live elsewhere (17%); debt repayments (12%).  “Living at home temporarily can be a smart way for young adults to save for the future or pay down student loans,” says Christina Kramer, executive vice-president of Retail and Business Banking at CIBC. ”[But] these extra costs can be a burden that delay or prevent parents from meeting financial goals, and that’s why both parents and kids need to be mindful of their budgets.”

 

Blog Links

What The Heck is a Technical Recession

 

Market Update as of September 4 2015

North America

The TSX closed at 13478, down -387 points or -2.79% over the past week. YTD the TSX is down -8.65%.
The DOW closed at 16102, down -541 points or -3.25% over the past week. YTD the DOW is down -9.71%.
The S&P closed at 1921, down -68 points or -3.42% over the past week. YTD the S&P is down -6.66%.
The Nasdaq closed at 4684, down -144 points or -2.98% over the past week. YTD the Nasdaq is down -0.91%.
Gold closed at 1123, down -12.00 points or -1.06% over the past week. YTD gold is down -4.18%.
Oil closed at 46.04, up 0.68 points or 1.50% over the past week. YTD oil is down -12.62%.
The USD/CAD closed at 1.326744, up 0.0063 points or 0.48% over the past week. YTD the USD/CAD is up 13.05%.

Europe/Asia
The MSCI World closed at 1623, down 28.00 Points or -1.67% over the past week.  YTD the MSCI World is up -5.07%.
The Euro Stoxx 50 closed at 3180, down 107.00 points or -3.24% over the past week.  YTD the Euro Stoxx 50 is up 1.07%.
The FTSE closed at 6043, down 205.00 points or -3.28% over the past week.  YTD the FTSE is down -7.97%.
The CAC closed at 4523, down 130.00 points or -3.25% over the past week.  YTD the CAC is up 5.86%.
The DAX closed at 10038, down 222.00 points or -2.53% over the past week.  YTD the DAX is up 2.37%.
The Nikkei closed at 17792, down 1009.00 points or -7.02% over the past week.  YTD the Nikkei is up 1.96%.

Sources: Bloomberg; Investment Executive;  advisor.ca

Odette Morin

Canada in a technical recession. What the heck is a technical recession and do we need to care?

recessions

Canada slipped in the “technical recession” territory in the first two months of the year as reported by Statistic Canada earlier this week. Economists say however that the contraction should be short-lived.

A “technical recession” just means that it has met the technical test of a recession which is two consecutive quarters of negative economic growth as measured by a country’s gross domestic product (GDP). So we are “technically” in a recession but other factors are required to establish recessions.

Recognizing how widespread the downturn was matters greatly. Did it affect a range of sectors in the economy, or was it confined to a few? Did the drop spread into other indicators, such as employment for example?

The main factor that dampened Canadian growth this year was the cyclical downturn in the price of oil.

Contrary to what is best reported in the media, there are plenty of signs that the trend of the economy was improving during the second quarter. Jobs grew steadily and the federal government ran a budgetary surplus in the second quarter. The declines in GDP so far this year were also microscopic.

The term “technical recession” has been widely use to demonstrate that this will unlikely be the beginning of a deep and long recession.

TD chief economist Beata Caranci says the benefit of the lower loonie to Canada’s export sector should boost growth in the third quarter. Caranci says that although exports were supposed to see a boost sooner, the sector’s sensitivity to the loonie has diminished over the past decade as the U.S. — Canada’s biggest trading partner — has been importing more from China and Mexico.

TD is forecasting economic growth in the 2% to 2.5% range in the third quarter, which Caranci says would make another rate cut from the Bank of Canada unlikely.

However, Capital Economics economist David Madani says he anticipates growth in the third quarter to be “unspectacular.”

Madani says business confidence indicators suggest the economy will continue to struggle in the second half of the year, even though it will return to positive growth.

So, we may be in a “technical recession” but modest growth is still expected.

Terry Broaders

Weekly Update September 1 2015

“A Public Opinion Poll Is No Substitute for Thought” -Warren Buffett

 

Energy Lifts TSX at End of Volatile Week

Energy stocks, buoyed by a jump in oil prices, led the TSX to close higher Friday, but U.S. stocks were mixed after a two-day rally following comments by a top Federal Reserve official that appeared to suggest that a September rate rise was still possible. The S&P/TSX composite index rose 98.40 to 13,865.07 points, after gaining 385 points on Thursday as the price of oil jumped 10 per cent. Oil rose again Friday, up 6.7 per cent or $2.87 to $45.43 (U.S.), far off its lows earlier the week near $38. The TSX energy sector jumped 5 per cent, followed by a 3 per cent rise in the materials sector. The Canadian dollar was down 0.08 of a U.S. cent to 75.66 cents (U.S.).
The Dow Jones industrial average wavered, dipping 11.76 points to 16,643.01. The S&P 500 index rose in the final minutes of trading to gain 1.21 points to 1,988.87. The Nasdaq composite added 15.62 points to 4,828.33. U.S. Fed vice-chairman Stanley Fischer said the United States was heading in the direction of higher rates and that recent economic data had been impressive. Data released on Friday showed U.S. consumer spending picked up a bit in July as households bought more automobiles, offering further evidence of strength in the economy.

 

Canadian Families Spend More On Taxes Than Necessities

The average Canadian family spends more on taxes than on food, clothing and shelter combined, finds a study by the Fraser Institute. “Over the past five decades, the tax bill for the average Canadian family has ballooned. The amount of money going to taxes is greater than what’s spent on life’s basic necessities,” says Charles Lammam, director of fiscal studies at the Fraser Institute. In 2014, the average Canadian family earned $79,010 and paid $33,272 in total taxes — compared to $28,887 on food, clothing and shelter combined.  In other words, 42.1% of income went to taxes while 36.6% went to basic necessities.
This represents a marked shift since 1961, when the average family spent 33.5% on taxes and 56.5% on food, clothing and shelter. The total tax bill reflects both visible and hidden taxes that families pay to the federal, provincial and local governments, including income taxes, payroll taxes, sales taxes, property taxes, health taxes, fuel taxes, alcohol taxes, and more.  Since 1961, the average Canadian family’s total tax bill increased by 1,886%, dwarfing increases in annual food costs (561%), clothing (819%) and shelter (1,366%). Even after accounting for inflation over the 53-year period, the tax bill shot up 149.2%.   “While taxes help fund important government services, the issue is the amount of taxes that governments take compared to what we get in return. With 42% of income going to taxes, Canadians might wonder whether they’re getting the best value for their tax dollars,” he adds.

 

Blog Links

Stocks End Painful Day With Biggest Drop In 4 Years. Should You Be Worried?

 

Sources: Bloomberg; Investment Executive;  advisor.ca