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Monthly Archives: October 2016

Terry Broaders

Weekly Update October 25 2016

“Autumn Is A Second Spring When Every Leaf Is A Flower ” -Albert Camus

TSX Climbs;  Canadian Dollar Takes a Dive

The loonie took a dive Friday as disappointing economic data coupled with recent comments by Bank of Canada governor Stephen Poloz hinted that an interest rate cut may be on the horizon. The Canadian dollar finished the day at 75.04 cents US, down 0.59 of a cent after Statistics Canada released new economic data showing weaker-than-expected inflation and retail sales figures.  The federal agency said the consumer price index was up 1.3% in September compared with a year ago. Statistics Canada also reported that retail sales fell 0.1% to $44.0 billion in August. The decline was due to lower sales at motor vehicle and parts dealers as well as general merchandise stores. Earlier in the week, Poloz said the central bank’s governing council actively discussed the possibility of cutting its benchmark lending rate before deciding to leave it at 0.5%.
The Toronto Stock Exchange’s S&P/TSX composite index hit a 16-month high, gaining 91.12 points to close at 14,939.04. The market hasn’t closed above 14,900 since late June 2015. Most segments of the TSX closed higher, with energy stocks leading the way, up 0.94% on stronger crude prices. The sole exception was consumer staples stocks, which slipped 0.15% after Statistics Canada reported that food prices declined last month.  In New York, the Dow Jones industrial average lost 16.64 points to 18,145.71, the S&P 500 index lost 0.18 of a point to 2,141.16 and the Nasdaq composite rose 15.57 points to 5,257.40. In other commodity news, the December crude contract strengthened to US$50.85 per barrel, up 22 cents.

 

CRA Reports $240m In Real Estate Tax Fraud

The CRA crackdown on real estate tax fraud is producing some big numbers in audit recoveries. The CRA’s website shows that, for the last year and a half, audit recoveries in B.C. and Ontario total more than $240 million. In B.C., $30.3 million (from 2,366 case files) was recovered; in Ontario, that figure jumps to $210.4 million (from 13,403 case files). The CRA applied an additional $12.5 million in penalties. Taxes on real estate transactions in the Greater Toronto Area have been under greater scrutiny for some years. In 2015, the CRA doubled its efforts in B.C. That was the same year the tax agency started a review of 500 high-dollar real estate transactions in B.C. to uncover tax issues not already identified. On its website, the CRA lists its top areas of concerns for real estate tax compliance, including: questionable fund sources for buying property; property flipping; unreported GST/HST on the sale of new or renovated property;  and unreported capital gains.
Taxpayers identified as high-risk are audited. The CRA applies penalties equal to 50% of the additional tax payable if a taxpayer knowingly makes a false statement when filing.

 

WEEKLY MARKET WRAP-UP

North America

The TSX closed at 14939, up 354 points or 2.43% over the past week. YTD the TSX is up 15.02%.
The DOW closed at 18146, up 8 points or 0.04% over the past week. YTD the DOW is up 4.14%.
The S&P closed at 2141, up 8 points or 0.38% over the past week. YTD the S&P is up 4.75%.
The Nasdaq closed at 5257, up 43 points or 0.82% over the past week. YTD the Nasdaq is up 4.99%.
Gold closed at 1268, up -6.00 points or 1.28% over the past week. YTD gold is up 19.74%.
Oil closed at 50.31, down -0.01 points or -0.02% over the past week. YTD oil is up 35.79%.
The USD/CAD closed at 1.333616, up 0.0173 points or 1.32% over the past week. YTD the USD/CAD is down -3.62%.

Europe/Asia
The MSCI closed at 1704, up 10 points or 0.59% over the past week. YTD the MSCI is up 2.47%.
The Euro Stoxx 50 closed at 3078, up 53 points or 1.75% over the past week. YTD the Euro Stoxx 50 is down -5.81%.
The FTSE closed at 7021, up 7 points or 0.10% over the past week. YTD the FTSE is up 12.48%.
The CAC closed at 4536, up 65 points or 1.45% over the past week. YTD the CAC is down -2.18%.
DAX closed at 10711, up 131.00 points or 1.24% over the past week. YTD DAX is down -0.30%.
Nikkei closed at 17185, up 329.00 points or 1.95% over the past week. YTD Nikkei is down -9.71%.
The Shanghai closed at 3091, up 27.0000 points or 0.88% over the past week. YTD the Shanghai is down -12.66%.

Sources: Bloomberg; Investment Executive;  advisor.ca

Terry Broaders

Weekly Update October 18 2016

“What Kills A Skunk Is The Publicity It Gives Itself ” – Abraham Lincoln

Toronto’s S&P/TSX Dragged Down By The Gold Sector

Toronto’s main stock index fell Friday, dragged down by weakness in the gold sector. The S&P/TSX composite index dropped 58.72 points to 14,584.99, as gold stocks shed nearly 3%. The December gold contract fell $2.10 to US$1,255.50 an ounce.  The Canadian dollar was at 76.07 cents US, up 0.34 of a U.S. cent.  U.S. stocks ended little changed on Friday, losing ground late after Federal Reserve Chair Janet Yellen’s comments on the economy.  Financial shares finished up, giving the S&P 500 its biggest boost after stronger-than-expected bank results, but gave up most of their early gains. Healthcare shares led declines. Yellen, in a speech at a conference of policymakers and academics, laid out the deepening concern at the Fed that U.S. economic potential is slipping – and may need aggressive steps to rebuild it. In New York, the Dow Jones industrial average was up 39.44 points at 18,138.38, the S&P 500 gained 0.43 points at 2,132.98, and the Nasdaq composite rose 0.83 points at 5,214.16.

For the week, the TSX was up slightly by 0.12 per cent, the Dow was down 0.6 per cent, the S&P 500 was down 1 per cent and the Nasdaq fell 1.5 per cent.

 

Housing Starts Pick Up In Most Regions

The pace of Canadian housing construction starts picked up nationally in September despite a decline in Ontario. The Canada Mortgage and Housing Corp. says the seasonally adjusted annual rate of starts was 220,617 in September, up from 184,201 units in August. CMHC says construction of urban multiple-unit dwellings such as townhouses, condominiums and apartments were the main reason for the increase in most regions, such as in Quebec. Quebec saw the largest gain in housing starts last month, due to the development of new rental apartments for seniors.

There were also increases in British Columbia, the Prairies and Atlantic Canada. However, Toronto was an exception: its seasonally adjusted rate dropped to 30,232 units from 40,406 units in August, mainly as a result of fewer apartment starts. Plus, several smaller cities across the province also recorded declines from one month to the next. As a result, Ontario’s overall activity fell to 67,426 housing starts in September, from 70,262 units in August.

Sources: Bloomberg; Investment Executive;  advisor.ca, CMHC

Terry Broaders

Weekly Update October 4 2016

“The Stronger The Ignorance, The Greater The Opinion” -Ken Follett

 

TSX Slightly Lower As U.S. Markets Rally

On Friday, the S&P/TSX fluctuated and finished down 0.19 per cent, or 28.57 points, to 14,725.98 in Toronto, finishing September up 0.88%. The gauge is up 4.49% since the end of June, its best quarterly performance since 2014. The Canadian economy got off to a stronger-than-expected start in the third quarter, fueled by a rebound in oil and gas extraction that had been disrupted by wildfires in Alberta earlier this year. Gross domestic product grew 0.5 per cent in July, topping analysts’ forecasts for a gain of 0.3 per cent.

In New York, the Dow Jones industrial average was unofficially up 164.63 points, or 0.91 per cent, to 18,308.08, the S&P 500 rose 17.11 points, or 0.80 per cent, at 2,168.24 and the Nasdaq Composite was up 42.85 points, or 0.81 per cent, to 5,312.00.  December gold contracts were down $8.90 at US$1,317.10 per ounce, while the November crude contract rose 41 cents to US$48.24 a barrel.November natural gas contracts were down five cents to US$2.91 per mmBTU and December copper was up two cents to US$2.21 a pound.

 

Canada’s Economy Continues To Rebound

The Canadian economy beat expectations in July with fresh data showing it expanded 0.5% as the country continued moving away from a contraction earlier in the year. Statistics Canada data released Friday for real gross domestic product found the month’s growth was largely tied to resumption of oilsands production. It had been disrupted by massive wildfires that also forced the evacuation of Fort McMurray, Alta., in May. This marked the second month of growth, following a 0.6% gain in June. The increases followed contractions of 0.6% in May and 1.6% in the second quarter of 2016 — the worst quarterly performance since the Great Recession of 2009.

“The big bounce in July GDP has broken the narrative that the Canadian economy was sinking back into the mire, and will dampen down talk that the Bank (of Canada) would need to cut rates again soon — at least due to domestic factors., said Douglas Porter, chief economist with BMO Financial Group. The Bank of Canada has predicted a third-quarter GDP rebound of 3.5% thanks to oil production back online and reconstruction efforts in Alberta’s oilsands region. Statistics Canada said there was a 19% increase in non-conventional oil extraction, which includes oilsands. It was the driving force behind a 3.9% increase in the overall mining, oil and gas extraction sector.

The Statistics Canada report was stronger than a general estimate from economists, who had forecast growth of 0.3%, according to Thomson Reuters. The GDP figures indicate that Canada’s economy began the third quarter on solid footing after it experienced a significant contraction in the second quarter.

Sources: Bloomberg; Investment Executive;  advisor.ca,