Monthly Archives: November 2017

Frank Mueller

Weekly Update – November 24, 2017

“This would be a much better world if more married couples were as deeply in love as they are in debt” – Earl Wilson

TSX Posts Modest Increase on the Week

The Toronto Stock Exchange’s S&P/TSX composite index, helped by broad gains, finished up on Friday by 33.79 points (0.21 per cent) to finish the week at 16,108.09. For the week, it was up 0.7 per cent (87.93 points) over last Friday’s finish at 16,039.26.

The energy and financial sectors gained on Friday.

Gold prices jumped this week overall, although it fell on Friday by $4.90 USD per ounce to $1,287.30. The $11.70 USD per ounce was good for a 0.92 per cent week-over-week increase.

U.S. light crude oil closed at a two-year high mark of $58.95 USD per barrel, while Brent crude oil gained 31 cents USD to finish at $63.86 USD per barrel. OPEC countries have once again been dancing around a potential supply cut, but nothing has been set in stone.

The Loonie gained 2 basis points on Friday, and stood at 78.68 cents USD as of Friday at 3:03pm PST. On the week, the Loonie dropped 25 basis points from last Friday’s finish of 78.93 cents to the Greenback, a drop of 0.32 per cent.

U.S. Markets See Dow Jones, S&P 500 Break Mini-Losing Streaks; NASDAQ Jumps

Black Friday, the famous shopping day that immediately follows the U.S. Thanksgiving – and for all intents and purposes, signals the green light for holiday shopping – meant a half-session on Wall Street. All of the Dow Jones Industrial Average (DJIA), S&P 500 and NASDAQ posted gains on Black Friday.

U.S. Thanksgiving Thursday saw three things: football, turkey and online shopping. According to Adobe Analytics, U.S. shoppers spent nearly $3 Billion online on Thursday.

Some heavyweight online retailers saw boosts on Friday, as optimism over the holiday shopping season is expected to bode well for 4th Quarter Earnings. Bricks & mortar stores with strong online presences fared quite well on Friday.

The Dow Jones rose 31.81 points (0.14 per cent) to finish at 23,557.99; the S&P 500 rose a modest 5.34 points (0.21 per cent) to finish at 2,602.42; the NASDAQ jumped 21.80 points (0.32 per cent) to settle at 6,889.16.

Lastly, the CBOE Volatility Index (VIX), dropped to a 3-week low of 9.67.

Canadian Household Debt Levels Highest Amount 35 Developed & Developing Countries

According to the Organization for Economic Cooperation and Development (OECD), Canada’s household debt ranks as the highest among 35 developed & developing countries that are monitored by the OECD. Read our blog post on the subject here.

Sources: Globe Advisor, Yahoo! Finance, Adobe Analytics,

Frank Mueller

OECD: Canadian Household Debt Levels Highest Among 35 Developed/Developing Nations

According to a recent report by the Organization of Economic Cooperation and Development, aka the OECD, Canada now has the highest household debt level per GDP in the world.

Canadian household debt is now greater than the national GDP, at 101% of GDP. As a brief refresher, GDP, or Gross Domestic Product, is the total of all goods and services – essentially everything – that is produced by a country; that is, everything produced within a nation’s borders.

The gap between Canada and the next-highest country on the list (South Korea), is roughly 8 per cent, as South Korea’s Debt-to-GDP mark of 93 per cent.

Economic powerhouses United Kingdom and United States post Debt-to-GDP levels of 88 per cent and 80 per cent, respectively; meanwhile, Germany’s Debt-to-GDP is below 60 per cent.

Why does this matter, you might ask? After all, this means that Canadians are spending money and driving the economy! This is only partly true. Yes, spending is good (to an extent); however, spending at this level can be risky.

Think about it like this: when stock markets like the TSX, S&P 500, NASDAQ, etc are increasing (recovery and expansion periods of the economic cycle), carrying debt is helpful. Debt allows companies the liquidity needed to purchase inventory, make capital investments (new bricks & mortar locations) and hire employees. But when the market starts declining and recessions hit, the companies that have over-extended themselves generally are hit the hardest.

Increasing interest rates heavily affect companies that are carrying debt, as all debt has a set interest rate. Revolving credit, such as lines of credit and credit cards, generally has an interest rate set as “prime + some additional amount”. So, when revenues start to decrease, during contractionary periods, while debt payment requirements begin to increase, companies carrying heavy debt loads can find themselves with a cash crunch.

The average family, in many ways, is synonymous with an average company, in that they have revenue (net income), they have debts (mortgage, car loan, line of credit, etc) and they must ensure they have liquidity to make it all work. The risk to families is camouflaged when things are going well, everyone is employed, and rates are low; however, the risk presents itself when rates increase (as they have twice since July), the economy slows down, and perhaps one – or both – of the family breadwinners suddenly find themselves out of work.

With all of this said, it is no surprise that the OECD has pointed out that such high indebtedness levels across the country is a risk to the economy. It is also no surprise that the soaring Debt-to-GDP has been linked to the red hot real estate markets across the nation.

The OECD stated in their report: “research points to a number of links between high indebtedness and the risks of severe recessions.” We are only about a decade removed from the U.S. housing crisis and resulting “Great Recession.”

Former British Prime Minister Sir Winston Churchill famously said: “Those who fail to learn from history are doomed to repeat it.” So, how can we learn from the past?

One of the most important things a family can do is create a budget. The budget must be feasible, it must be achievable, and it must allow for some fun.

A good budget should include some liquid savings account for emergency funds, travel funds, and the like. This way, when that emergency strikes, and you need cash in a pinch, there is a pool of money ready to deploy. Many people who do not have an emergency savings fund have to resort to drawing upon a line of credit. This will add to your debt load in a hurry.

If you do not have a budget in place, we can work with you to create one that is customized to your unique situation. If you have an interest in getting a budget on paper, please don’t hesitate to let us know!


Frank Mueller

Weekly Update – November 17, 2017

“Having a baby is one of the most wonderful things in your life, as well as the hardest thing in your life” – Nuno Bettencourt

A New Addition to the You First Family

Earlier this week, Mitra and Anthony welcomed their second child! Sophie Chandler Sabti was born at 4am on November 14th at St. Paul’s, weighing in at 8 pounds, 15 ounces. Mother and baby are happy and healthy, and resting up at home.

Anthony is home for the next couple of weeks, returning full-time on Monday, December 4th.

Despite Friday Gains, TSX Winning Streak Snapped

The Toronto Stock Exchange’s S&P/TSX composite index gained 63.20 points (0.40 per cent) on Friday to finish at 15,998.57. Energy and gold prices helped to push the TSX upward.

For the week, the TSX was down by 40.69 points (0.25 per cent).

The week-over-week decrease halted the TSX’s nine-week winning streak, its longest such streak since 1996.

Oil rose by $1.54 USD per barrel to finish at $56.68, a rise of 2.79 per cent on the day. For the week, oil was down 0.39% from last Friday’s $56.90 USD close. The rise was spurred by a possible OPEC production cut.

Gold popped up by $16.20 (1.27 per cent) on Friday to settle at $1,294.40 USD per ounce. This represents a gain of 1.47 per cent over last week’s finish at $1,275.60 USD per ounce.

The Loonie dropped by 0.00079 of a penny to finish at 78.302 cents to the Greenback as of Friday 3:19pm PST. For the week, the CAD was down about half a penny.

U.S. Markets Down Friday, Trump’s Proposed Tax Overhaul Continues to Weigh on Wall Street

Continued uncertainty in the U.S. about tax reform, and the Republicans’ ability to get it passed, led Wall Street lower on Friday. However, Congressional Republicans approved a broad tax cut plan. The U.S. Senate, also Republican-controlled, now must review the proposal.

Investors continue to look on with great interest, as a large corporate tax cut would lead to stronger bottom lines across the board, further propelling the hot markets south of the 49th parallel. A small Reuters poll of 60 economists found nearly 2/3rd of the 60 to be pessimistic that the Trump-led GOP will pass the tax reform legislation.

The Dow Jones Industrial Average (DJIA) dropped by 100.12 points (0.43 per cent) on Friday. On the week, the Dow Jones was down 72.77 points (0.31 per cent).

The S&P 500 fell by 6.79 points (0.26 per cent) on Friday and settled at 2,578.85, down 0.13 per cent on the week.

NASDAQ also dropped on Friday, with a pullback of 10.50 points (0.15 per cent). On the week, the NASDAQ was up 32.58 points (0.52 per cent).

Sources: Globe Advisor, Reuters, Yahoo! Finance

Frank Mueller

Weekly Update – November 10, 2017

“Inflation is when you pay fifteen dollars for the ten dollar haircut you used to get for five dollars when you had hair” – Sam Ewing

TSX Gains for Ninth Straight Week, Its Longest Winning Streak Since 1996

The Toronto Stock Exchange’s S&P/TSX composite index dropped 42.83 points (0.27 per cent) to finish at 16,039.26. The TSX was up 30.10 points (0.19 per cent) over last week’s finish at 16,020.16. The TSX is now on a nine-week winning streak, its longest such string of weekly gains since 1996.

Five of the TSX’s 10 main sectors were up on Friday, and six of the 10 main sectors were up on the week.

During this nine-week run of gains, the TSX – a performance laggard for much of 2017 – has jumped by over seven per cent. In the same timeframe, U.S. Crude Oil has jumped from $48.54 (USD) per barrel to $56.90 (USD) per barrel, a 17 per cent jump.

After reaching as high as $1,288 (USD) per ounce earlier in the week, Gold dropped $11.90 (0.92%) on Friday to finish $1,275.60. Even with Friday’s pullback, the precious metal was up $5.40 USD per ounce (0.43%) over last Friday’s finish of $1,270.20 USD.

The Loonie sat at 78.93 cents to the Greenback as of Friday 3:31pm PST, a rise of 11 basis points for the day, and 56 basis points (0.71 per cent) for the week.

U.S. Markets Flat Friday, Trump’s Tax Plan Concerns Weigh on Wall Street

Senate Republicans released their tax plan on Thursday. The plan significantly differs from the version that House Republicans tabled earlier; notably, the Senate’s plan called for corporate tax cuts… next year. A key pillar of Trump’s campaign included tax reform and corporate tax cuts. The expectation of corporate tax cuts helped propel the U.S. markets to unprecedented heights.

It is unlikely that Wall Street would look kindly upon a corporate tax cut delay of a year, with a market pullback a probable result.

The S&P 500 dropped 2.32 points (0.09 per cent) on Friday to settle at 2,582.30, a small decline of 5.54 points, or 0.21 per cent for the week.

The Dow Jones Industrial Average (DJIA) also pulled back Friday and for the week, with a Friday decrease of 39.73 points (0.17 per cent) and of 116.98 points (0.50 per cent) for the week.

NASDAQ bucked the Wall Street trend on Friday, with a modest 0.89 point, 0.01 per cent increase on Friday; however, the NASDAQ followed its counterparts downward for the week, with a 13.50 point, 0.20 per cent drop.

Sources: Globe Advisor, Yahoo! Finance

Frank Mueller

Weekly Update – November 3, 2017

“A budget is telling your money where to go instead of wondering where it went” – Dave Ramsey

TSX Gains for Eighth Straight Week

The Toronto Stock Exchange’s S&P/TSX composite index rose 5.17 points (0.03 per cent) to finish at 16,020.16. The TSX was up 66.85 points (0.42 per cent) over last week’s finish at 15,953.51. This is the eighth straight week of gains for the Canada’s main trading index, and the first time the TSX has broken the 16,000 watermark.

Five of the TSX’s 10 main sectors were up on Friday.

Financials, Materials and Industrials were notable sectors to experience drops on Friday, while the Energy sector ticked higher.

The October jobs report painted a rosy picture for Canada, with a greater-than-expected jobs boost and the largest wage increase in 18 months.

International trade data for September was less encouraging; both imports and exports decreased for the fourth consecutive month.

Gold dipped by almost eight dollars per ounce to finish Friday at $1,270.20 USD per ounce.

The Loonie rose on Friday to 78.37 cents to the Greenback, an increase of 33 basis-points for the day and 42 basis-points (0.54 per cent) on the week.

U.S. Job Growth Increases in October, Rate Hike Likely

As the southern states work to recover from a succession of battering hurricanes, the U.S. job market has picked up again; however, less encouraging numbers point to a slowdown in annual wage increases. Also, there has been an increase in people dropping out of the workforce altogether.

Investors rate the chance of a rate hike by U.S. Federal Reserve Chair Janet Yellen at over 90 per cent. If a rate hike does occur, one might expect the CAD to depreciate in relation to the Greenback.

Over 72 per cent of the 406 S&P 500 companies to report their Q3 earnings exceeded their expected earnings expectations. The S&P 500 increased by 7.99 points (0.31 per cent) on Friday to settle at 2,587.84.

The Dow Jones Industrial Average (DJIA) continued its ascent with a 22.93 (0.10 per cent) increase on Friday, to settle at 23,539.19. On the week, the DJIA rose by 106.41 points (0.45 per cent) over last week’s 23,432.78 finish.

NASDAQ continues to be propelled by the so-called FAANG (Facebook, Amazon, Apple, Netflix, Google), and rose 49.49 points (0.74 per cent) on Friday, settling at 6,764.44.

The Volatility S&P 500 (VIX), a market volatility index, dropped by 7.96 per cent on Friday to finish at 9.14, its lowest close in over 5 years.


North America
The DOW closed at 23,539, up 106 points or 0.45% over the past week. YTD the DOW is up 19.11%.
The S&P closed at 2,588, up 7 points or 0.27% over the past week. YTD the S&P is up 15.59%.
The NASDAQ closed at 6,764, up 64 points or 0.96% over the past week. YTD the NASDAQ is up 25.67%.
Gold closed at 1,270, down -7.00 points or -0.39% over the past week. YTD gold is up 11.60%.
Oil closed at 55.66, up 1.47 points or 2.71% over the past week. YTD oil is up 6.59%.
The USD/CAD closed at 0.78, changed 0.0000 points or 0.00% over the past week. YTD the USD/CAD is up 5.14%.

The MSCI closed at 2,043, up 17 points or 0.84% over the past week. YTD the MSCI is up 16.54%.
The Euro Stoxx 50 closed at 3,690, up 38 points or 1.04% over the past week. YTD the Euro Stoxx 50 is up 12.12%.
The FTSE closed at 7,560, up 55 points or 0.73% over the past week. YTD the FTSE is up 5.84%.
The CAC closed at 5,518, up 24 points or 0.44% over the past week. YTD the CAC is up 13.49%.
DAX closed at 13,479, up 261.00 points or 1.97% over the past week. YTD DAX is up 17.40%.
Nikkei closed at 22,539, up 530.00 points or 2.41% over the past week. YTD Nikkei is up 17.92%.
The Shanghai closed at 3,372, down -45.0000 points or -1.32% over the past week. YTD the Shanghai is up 8.63%.

Fixed Income
The 10-Yr Bond closed at 2.34, down -0.0900 points or -3.70% over the past week. YTD the 10-Yr Bond is down 4.49%.

Sources: Globe Advisor, Yahoo! Finance