Blog

Category Archives: Anthony & Frank’s Update

Frank Mueller

Weekly Update – February 16, 2018

“The Stock Market is a device for transferring money from the impatient to the patient” – Warren Buffett

North American Major Markets Recover

This week saw North America’s main stock indexes recover from last week’s nine per cent loss. The Dow Jones Industrial Average (DJIA) rose by 1,028 points this week to finish at 25,219. This 4.25 per cent gain erased roughly half of last week’s drop. The S&P 500 gained 4.27 per cent on a 112-point increase, finishing at 2,732. The NASDAQ gained 365 points this week – good for a 5.31 per cent jump – to finish at 7,240.

All three major American markets are again positive on the year.

Toronto’s S&P/TSX Composite Index did gain 418 points this week, good for a gain of 2.78 per cent; however, the TSX remains down on the year by 4.66 per cent. 2017 saw the TSX get outpaced by American and many global markets, and so far in 2018, that trend has continued – being overweight Canadian is not an ideal spot for portfolios. Contact us if you have any questions or concerns about your portfolio’s allocation.

2017 RRSP Contribution Deadline – March 1, 2018

We’d like to remind you again that this year’s RRSP deadline is now only 13 days away. The last day to contribute is March 1st.

Let us know if you would like to make a contribution.

Weekly Market Wrap-Up

North America

  • The TSX closed at 15453, up 418 points or 2.78% over the past week. YTD the TSX is down -4.66%.
  • The DOW closed at 25219, up 1028 points or 4.25% over the past week. YTD the DOW is up 2.02%.
  • The S&P closed at 2732, up 112 points or 4.27% over the past week. YTD the S&P is up 2.17%.
  • The Nasdaq closed at 7240, up 365 points or 5.31% over the past week. YTD the Nasdaq is up 4.88%.
  • Gold closed at 1348, up -19.00 points or 2.51% over the past week. YTD gold is up 2.90%.
  • Oil closed at 61.65, up 2.60 points or 4.40% over the past week. YTD oil is up 2.04%.
  • The USD/CAD closed at 0.79666, up 0.0014 points or 0.17% over the past week. YTD the USD/CAD is up 0.17%.

Europe/Asia
The MSCI closed at 2131, up 86 points or 4.21% over the past week. YTD the MSCI is up 1.33%.

  • The Euro Stoxx 50 closed at 3427, up 101 points or 3.04% over the past week. YTD the Euro Stoxx 50 is down -2.20%.
  • The FTSE closed at 7295, up 203 points or 2.86% over the past week. YTD the FTSE is down -5.11%.
  • The CAC closed at 5282, up 203 points or 4.00% over the past week. YTD the CAC is down -0.58%.
  • DAX closed at 12452, up 344.00 points or 2.84% over the past week. YTD DAX is down -3.61%.
  • Nikkei closed at 21720, up 337.00 points or 1.58% over the past week. YTD Nikkei is down -4.59%.
  • The Shanghai closed at 3199, up 69.0000 points or 2.20% over the past week. YTD the Shanghai is down -3.27%.

Fixed Income
The 10-Yr Bond Yield closed at 2.88, up 0.0500 points or 1.77% over the past week. YTD the 10-Yr Bond is up 20.00%.

 

Sources: Globe Advisor, Dynamic Funds

Anthony Sabti

Weekly Update – February 9, 2018

“Volatility is far from synonymous with risk” – Warren Buffett

Volatility Returns to the Markets

U.S. markets took a beating this week, as a rise in bond yields and inflation fears led to historic drops for the Dow Jones index on Monday and Thursday.

Since last Friday, the daily return of the DOW has been:

Friday: Minus 666 points
Monday: Minus 1,175 points
Tuesday: Plus 567 points
Wednesday: Flat
Thursday: Minus 1,033 points
Today: Plus 330 points

Current Index Value: 24,190

The DOW and S&P 500 are down about 10 per cent from their highs two weeks ago.

In absolute terms, the two 1,000+ point falls are the largest daily point losses in DOW history.  However, the index has increased so much that comparing today’s point losses to previous eras is not relevant.  The DOW has doubled in value in seven years and we must get used to seeing larger daily point movements.

In percentage terms the Dow’s 4.6 per cent loss on Monday was the worst since August 2011 and falls outside the top-20 of all-time losses. It was just the 25th worst loss since 1960.

The Dow’s largest one-day percentage loss was the 22.6 per cent Black Monday crash on Oct. 19, 1987. In point terms, that was “only” 508 points. In second place, the Dow crashed 12.8 per cent on Oct. 28, 1929. It retreated just 38 points that day.

The pullback has only reverted prices to where they were in December. The one-month chart looks scary….

….however, it barely registers on the three and five-year charts:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The volatility we’re experiencing this week is due to a technical, market structure event – not a fundamental one. Monday’s dramatic sell-off was a function of large U.S portfolios and pension funds rotating away from strong performing equity investments to strategically re-balance portfolios. The overwhelming nature of this move was exacerbated by robotic trading price sets and momentum technicals and then further compounded by retail trading.  This is not a repeat of 2008, where we witnessed a credit event and a housing-related issue (sub-prime mortgage market collapse).

Earnings season has been positive with Q4 earnings on the S&P 500 on track for the most beats this cycle. We still have an environment with coordinated global economic growth, and provided market volatility does not erode broader confidence, the underlying fundamental picture remains supportive. We are in an economic world that is positive and continuing to expand. With that said, we are in the later stages of the market cycle. Because of elevated valuations and central bank renormalization, we should expect more volatility in the next five years than the previous five years.

Conclusion

Pullbacks are normal. Five per cent corrections happen on average three times per year. In the last 30 years, there have been 30 months during which global equities have fallen by at least 6.3 per cent in six business days. Markets took on average four months to recoup the loss.

What Can You Do?

For investors in the accumulation phase, this is good news. You are now able to purchase units at lower entry prices. We feel much more comfortable deploying money into portfolios than we did a month ago. This pullback coincides very well with RRSP season and now is a great time to make a purchase. Do not worry about trying to time the bottom perfectly. History has shown time and time again that buying on dips such as this one will lead to favourable results in the future.

For retired or soon to be retired investors, please try to ignore the noise. This is the reason we select a more conservative investment to fund your monthly payments. Your short-term cash flow is not fully exposed to markets, and the balance of your portfolio has enough time to recover from dips.

Please feel free to contact us anytime with any questions or comments.

From the entire You First team, Happy Family Day weekend!

Weekly Market Update – By The Numbers

North America

  • The TSX closed at 15035, down -571 points or -3.66% over the past week. YTD the TSX is down -7.24%.
  • The DOW closed at 24191, down -1330 points or -5.21% over the past week. YTD the DOW is down -2.14%.
  • The S&P closed at 2620, down -142 points or -5.14% over the past week. YTD the S&P is down -2.02%.
  • The Nasdaq closed at 6875, down -366 points or -5.05% over the past week. YTD the Nasdaq is down -0.41%.
  • Gold closed at 1315, down -15.00 points or -1.42% over the past week. YTD gold is up 0.38%.
  • Oil closed at 59.05, down -6.04 points or -9.28% over the past week. YTD oil is down -2.27%.
  • The USD/CAD closed at 0.7953, down -0.0091 points or -1.13% over the past week. YTD the USD/CAD is unchanged 0.00%.

Europe/Asia

  • The MSCI closed at 2045, down -168 points or -7.59% over the past week. YTD the MSCI is down -2.76%.
  • The Euro Stoxx 50 closed at 3326, down -197 points or -5.59% over the past week. YTD the Euro Stoxx 50 is down -5.08%.
  • The FTSE closed at 7092, down -351 points or -4.72% over the past week. YTD the FTSE is down -7.75%.
  • The CAC closed at 5079, down -286 points or -5.33% over the past week. YTD the CAC is down -4.40%.
  • DAX closed at 12108, down -677.00 points or -5.30% over the past week. YTD DAX is down -6.27%.
  • Nikkei closed at 21383, down -1892.00 points or -8.13% over the past week. YTD Nikkei is down -6.07%.
  • The Shanghai closed at 3130, down -332.0000 points or -9.59% over the past week. YTD the Shanghai is down -5.35%.

Fixed Income

  • The 10-Yr Bond Yield closed at 2.83, down -0.0200 points or -0.70% over the past week. YTD the 10-Yr Bond is up 17.92%.

 

Sources: Dynamic Funds, Globe Investor, Yahoo! Finance

Frank Mueller

Weekly Update – January 5, 2018

“Every accomplishment starts with a decision to try” – Anonymous

New Year, Same Rally

The Toronto Stock Exchange’s S&P/TSX composite index dropped 63.50 points (0.39 per cent) on Friday to finish at 16,349.44. Resources weighed on the TSX on Friday, with oil, gold, copper and other metals pulling back on the day.

However, the TSX enjoyed a gain of 0.9 per cent on the week as the extended market rally continued into 2018.

Statistics Canada announced the December jobs numbers, with 79,000 new jobs being added. One caveat, however, is that most of them were seasonal, part-time positions. However, Canada’s unemployment rate of 5.9% in November was a full percentage point lower than in November 2016.

Retail sales data, housing starts, and consumer confidence levels were all higher year-over-year as well.

U.S. Crude Oil dropped by 42 cents USD per barrel to finish the week at $61.59 USD.

Gold dropped by $1.30 USD per ounce on Friday, and finished at $1,320.30 per ounce.

The Loonie rose by 56 basis points on Friday to finish at 80.61 cents to the Greenback, a rise of 0.6989 per cent.

U.S. Markets Hit More Record Highs

The S&P 500 rose 19.08 points (0.70 per cent) on Friday to close out the week at 2,743.07.

The Dow Jones Industrial Average (DJIA) rose above 25,000 for the first time ever on Thursday, and jumped by 220.74 points (0.88 per cent) on Friday to finish at 25,295.87.

NASDAQ also had a good day on Friday, with a gain of 58.64 points (0.83 per cent).

Some encouraging global economic data helped to propel markets upward. US unemployment figures for November – like Canadian unemployment – were lower than a year prior.

2017 Market Recap

It was, in some ways, a strange year for the Canadian investor. Early in the year, Canadian markets were relatively flat, while south of the border, U.S. markets were (and still are) very hot. Overseas markets advanced. However, as the Canadian dollar appreciated relative to the Greenback, U.S. and many overseas gains were mitigated.

As the year progressed, the Bank of Canada raised rates twice, and the Fed also raised rates. The BoC raising rates led to a dampening of fixed income returns. Luckily, the TSX rebounded late and was able to post a decent, if unremarkable, 6% increase on the year.

Most major international indexes posted double-digit returns; in fact, even factoring the appreciating Loonie, global markets outpaced Canadian markets.

So, what is the lesson here? In our opinion, this information reinforces the benefit of sound diversification, not only between equities and fixed income, but also regional diversification. Canadian investors have the reputation of being the most biased toward domestic markets, and, at least in 2017, the Canadian investor who invested heavily in Canada at the expense of other regions certainly missed out on some significant gains.

If you have questions about your asset allocation or would like to come in for a review of your portfolio, please let us know!

2017 Market Recap: By The Numbers

North America
The TSX finished at 16,209, up 6.0% for 2017
The DOW finished at 24,719, up 25.1% for 2017, or 17.0% in $CDN
The S&P 500 finished at 2,674, up 19.4% for 2017, or 11.7% in $CDN

The NASDAQ finished at 6,903, up 28.2% for 2017, or 19.9% in $CDN
Gold finished at $1,303 USD per ounce, up 13.1% for 2017
Oil finished at $60.42 USD per barrel, up 12.5% for 2017
The USD/CDN finished at 0.7955, up 6.9% for 2017
The CDN/EUR finished at 1.5089, up 6.8% for 2017

Europe/Asia
The MSCI World finished at 2,103, up 20.1% for 2017, or 12.3% in $CDN
The MSCI EAFE finished at 2,051, up 21.8% for 2017, or 13.9% in $CDN
The MSCI EM finished at 1,158, up 34.3% for 2017, or 25.7% in $CDN
The FTSE 100 finished at 7,688, up 7.6% for 2017, or 10.3% in $CDN
The DAX finished at 12,918, up 12.8% for 2017, or 20.4% in $CDN
The Nikkei finished at 22,765, up 18.9% for 2017, or 15.3% in $CDN

Sources: Globe Advisor, TD, Yahoo! Finance

Frank Mueller

Weekly Update – December 8, 2017

“We make a living by what we get, but we make a life by what we give” – Winston Churchill

TSX Rises on to End Week on a Positive

The Toronto Stock Exchange’s S&P/TSX composite index rose by 80.39 points Friday, a 0.50 per cent gain, to close at 16,096.07. On the week, the TSX managed a gain of 57.10 points (0.36 per cent). Nine of the 10 main groups rose on Friday.

Gold dropped $3.90 USD per ounce on Friday (0.31 per cent) to close the week at $1,245.90 per ounce. On the week, this represents a drop of $33.80 an ounce (2.64 per cent).

Increasing Chinese demand for oil, coupled with potential supply-side issues out of Africa, led oil up on Friday; however, oil was down for the week overall. West Texas Intermediate (WTI) closed at $57.33 USD per barrel, up 64 cents (1.13 per cent), but was down 96 cents for the week, a drop of 1.65 per cent.

The Loonie sat at 77.87 cents to the Greenback on Friday (as of 2:14pm), a gain of 12 basis-points (0.17 per cent). On the week, the Canadian Dollar was down 1.02 cents (1.29 per cent).

U.S. Markets All Gain on Friday

Friday saw increases across the board on Wall Street. The Dow Jones Industrial Average (DJIA) was up was up 117.68 points (0.49 per cent) to close the week at 24,329.16.

The S&P 500 gained 14.52 points (0.55 per cent) to finish at 2,651.50.

The NASDAQ rose by 27.24 points (0.40 per cent) and settled at 6,840.08.

November jobs numbers propelled markets upward to end the week, a further signal of a strong economy. Analysts already expected a rate hike next week, and the strong jobs figures propelled this expectation.

CRA Confirms 2018 Tax-Free Savings Account Room

This week, the Canada Revenue Agency (CRA) announced the new Tax-Free Savings Account (TFSA) room for 2018 will be unchanged at $5,500.

How does this announcement affect your investment portfolio? Well, this is $5,500 of new space to shelter your investments from capital gains tax. Remember that you contribute net income to your TFSA because unlike the RRSP, you don’t get a tax savings on your contributions to a TFSA. However, you get the tax savings when you make withdrawals from your TFSA – you pay no capital gains whatsoever – and you also enjoy tax-sheltered growth while your money is in the TFSA itself.

If you have questions about how best to invest your money, be it to an RRSP, TFSA or to a Non-Registered account, give us a call and we can discuss your specific needs!

Weekly Market Wrap-Up

North America
The TSX closed at 16,097, up 58 points or 0.36% over the past week. YTD the TSX is up 5.37%.
The DOW closed at 24,329, up 97 points or 0.40% over the past week. YTD the DOW is up 23.10%.
The S&P closed at 2,652, up 10 points or 0.38% over the past week. YTD the S&P is up 18.45%.
The Nasdaq closed at 6,838, down -10 points or -0.15% over the past week. YTD the Nasdaq is up 27.03%.
Gold closed at 1,246, down -8.00 points or -2.88% over the past week. YTD gold is up 9.49%.
Oil closed at 57.34, down -1.00 points or -1.71% over the past week. YTD oil is up 9.80%.
The USD/CAD closed at 0.77714, down -0.0108 points or -1.37% over the past week. YTD the USD/CAD is up 4.75%.

Europe/Asia
The MSCI closed at 2064, down -13 points or -0.63% over the past week. YTD the MSCI is up 17.74%.
The Euro Stoxx 50 closed at 3592, up 64 points or 1.81% over the past week. YTD the Euro Stoxx 50 is up 9.15%.
The FTSE closed at 7394, up 93 points or 1.27% over the past week. YTD the FTSE is up 3.51%.
The CAC closed at 5399, up 82 points or 1.54% over the past week. YTD the CAC is up 11.04%.
DAX closed at 13154, up 292.00 points or 2.27% over the past week. YTD DAX is up 14.57%.
Nikkei closed at 22811, down -8.00 points or -0.04% over the past week. YTD Nikkei is up 19.34%.
The Shanghai closed at 3290, down -28.0000 points or -0.84% over the past week. YTD the Shanghai is up 5.99%.

Fixed Income
The 10-Yr Bond closed at 2.38, up 0.0200 points or 0.85% over the past week.YTD the 10-Yr Bond is down -2.86%.

Sources: Globe Advisor, Yahoo! Finance, cbc.ca, Bank of Canada, Dynamic

Frank Mueller

Weekly Update – December 1, 2017

“If inflation continues to soar, you’re going to have to work like a dog just to live like one” – George Gobel

TSX Down Slightly for the Week

The Toronto Stock Exchange’s S&P/TSX composite index dropped 28.51 points on Friday, a 0.18 per cent drop, to close at 16,038.97. On the week, the TSX was down 69.12 points (0.43 per cent). Gold miners and materials led the drop, while the financials and energy sectors gained on the day.

Gold dropped this week to finish at $1,279.70 USD per ounce, although it was only $7.60 USD off last Friday’s $1,287.30 per ounce finish (0.59 per cent). However, the precious metal did mitigate the weekly loss on Friday with a gain of $6.50 (0.51 per cent).

U.S. light crude oil finished at $58.29 USD per barrel, down for the week versus last $58.95 USD per barrel close.

The Canadian dollar gained over a penny Friday versus the Greenback (1.36 cents USD, 1.7575 per cent) to finish at 78.89 cents USD.

U.S. Markets Unfazed by Continuing White House Turmoil, Michael Flynn News

The saga in and around the White House and beleaguered President Trump kept going full steam ahead this week. On Friday, former National Security Adviser Michael Flynn testified on his involvement in the 2016 Russia Election Scandal. While the details of his testimony haven’t been made public, Mr. Flynn did plead guilty to lying previously to the FBI on the subject. As part of his guilty plea, Flynn is apparently cooperating with Special Investigator Robert Mueller.

The Russian investigation could derail the Republicans’ planned tax legislation; failure to enact yet another core election promise could spell the end of the GOP majorities in the House of Representatives and/or the Senate. Further, such a failure could hurt markets and therefore investment portfolios, as the anticipated tax cuts would improve companies’ bottom lines, and thus their earnings.

If the tax cuts fall through, a market pullback is certainly possible, leading to reduced returns on portfolios’ US equities.

As far as this week was concerned, however, markets were unfazed. The Greenback and US Treasury yields dropped on the Flynn bombshell, but major US indexes S&P 500, the NASDAQ and the Dow Jones Industrial Average (DJIA) rebounded from sharp losses early to finish Friday with only minor setbacks.

The S&P 500 dropped 28.51 points (0.18 per cent) after being down as much as 1.26 per cent midday. The DJIA fell by 41.65 points, or 0.17 per cent, and finally the NASDAQ Composite dropped 26.39 points (0.38 per cent).

Canadian Inflation for October Eases Versus September Inflation

October inflation figures in Canada came in at 1.4 per cent in October, down from 1.6 per cent in October. Statistics Canada cited smaller-then-expected gasoline price increases. September saw a year-to-year gas price increase of 14.1 per cent, mainly on the heels of Hurricane Harvey. October came, supply rebounded, and the October year-to-year increase dropped to 6.5 per cent.

The tightrope that Central Banks like the Bank of Canada have is to keep inflation low, to ensure its currency retains value, while also allowing for some inflation to help the economy keep growing. The Bank of Canada’s stated aim is to keep inflation at the two per cent midpoint of the control range of one-to-three per cent.

How does inflation affect your investment portfolio? It is quite simple, really.

Inflation, in its basest form, is simply the depreciation of the purchasing power of currency. Stated another way, inflation is the increase in the cost of goods. However, inflation is also necessary in an economy to help it grow and expand, which helps increase job numbers and consumer spending (good for the companies and therefore, good for portfolio values). So, inflation numbers that are within the one-to-three per cent target range allows markets returns to grow, while helping your money retain its value.

Weekly Market Wrap-Up

North America
The TSX closed at 16039, down -69 points or -0.43% over the past week. YTD the TSX is up 4.99%.
The DOW closed at 24232, up 674 points or 2.86% over the past week. YTD the DOW is up 22.61%.
The S&P closed at 2642, up 40 points or 1.54% over the past week. YTD the S&P is up 18.00%.
The Nasdaq closed at 6848, down -41 points or -0.60% over the past week. YTD the Nasdaq is up 27.22%.
Gold closed at 1283, down -3.00 points or -0.62% over the past week. YTD gold is up 12.74%.
Oil closed at 58.34, down -0.61 points or -1.03% over the past week. YTD oil is up 11.72%.
The USD/CAD closed at 0.7879, up 0.0009 points or 0.11% over the past week. YTD the USD/CAD is up 6.20%.

Europe/Asia
The MSCI closed at 2077, up 17 points or 0.83% over the past week. YTD the MSCI is up 18.48%.
The Euro Stoxx 50 closed at 3528, down -53 points or -1.48% over the past week. YTD the Euro Stoxx 50 is up 7.20%.
The FTSE closed at 7301, down -109 points or -1.47% over the past week. YTD the FTSE is up 2.21%.
The CAC closed at 5317, down -74 points or -1.37% over the past week. YTD the CAC is up 9.36%.
DAX closed at 12862, down -198.00 points or -1.52% over the past week. YTD DAX is up 12.03%.
Nikkei closed at 22819, up 268.00 points or 1.19% over the past week. YTD Nikkei is up 19.38%.
The Shanghai closed at 3318, down -36.0000 points or -1.07% over the past week. YTD the Shanghai is up 6.89%.

Fixed Income
The 10-Yr Bond closed at 2.36, up 0.0200 points or 0.85% over the past week. YTD the 10-Yr Bond is down -3.67%.

Sources: Globe Advisor, Yahoo! Finance, cbc.ca, Bank of Canada, Dynamic

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