“In Nature Nothing Exists Alone” – Rachel Carson
U.S. Markets Hit Records In Spite of Weaker Than Expected Jobs Datat
U.S. stock markets shrugged off weaker than expected jobs data and hit all-time highs, while lower oil prices weighed on the Toronto stock market. The Toronto Stock Exchange’s S&P/TSX composite index retreated 27.16 points to 15,442.75, while the loonie lost 0.02 of a cent to US74.05¢. South of the border, all three of the main stock indexes hit new records, with the Dow Jones industrial average gaining 62.11 points to 21,206.29. The S&P 500 index added 9.01 points to 2,439.07 while the Nasdaq composite index rose 58.97 points to 6,305.80.
Canadian exports climbed to a record in April and first-quarter labour productivity approached a three-year high, further evidence that the economy is recovering after a long slump caused by low oil prices. In commodities news, the July oil contract was down US70¢ to US$47.66 per barrel.
IMF Warns About Housing and Household Debt
The International Monetary Fund is warning about the risks to the Canadian economy due to a possible correction in the housing market and urged governments to do more to protect against them. In the preliminary findings of its annual review of the Canadian economy, the IMF said Wednesday that a further tightening of macroprudential and tax-based measures to mitigate speculative and investment activity should be considered. It also called for greater co-ordination between federal and provincial regulators as well as government efforts to collect more comprehensive data on real estate transactions.
Ottawa has moved several times in recent years to tighten mortgage lending rules, including expanded stress tests on mortgages. A foreign buyer tax of 15% was implemented in the Vancouver region last summer, while Ontario recently announced plans for a similar levy for the Greater Toronto Area. Cheng Hoon Lim, the IMF’s mission chief for Canada, said there are a few policies that could help deter speculation in the housing market and alleviate concerns about rising debt burdens. “Among these measures, a cap on household debt to income or more stringent qualification criteria for household debt above a certain threshold will go directly to addressing household indebtedness,” she said. The IMF also encouraged B.C. and Ontario to replace their foreign buyer taxes. “This could include a combination of prudential and tax-based measures that discourage speculative activity without discriminating between residents and non-residents,” it said.
Sources: Bloomberg; Investment Executive; advisor.ca