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Category Archives: Financial Planning

Frank Mueller

Trade Settlement Shortened to Two Days

Effective September 5, 2017, the financial industry in Canada and the U.S. has reduced the trade settlement cycle for purchases and redemptions from three business days (“T+3”) to two business days (“T+2”) after the trade date (“T”).

This change stems from a global trend in shortening investment settlement dates. Markets in the European Union and Asia/Pacific have already moved to T+2 settlement.

For example, if we put through a redemption on Monday, the investment company will transfer the proceeds to your bank account on Wednesday. You should have the funds on Wednesday, but some banks have their own processing windows causing delays of 1-2 days.

Money-market fund transactions, which are subject to T+1 regulations, are not affected by this change. If you redeem from a money market fund on Monday, the trade will settle and the funds should be in our account on Tuesday.

Frank Mueller

Weekly Update – July 14, 2017

“Buying at regular intervals eliminates the risk of over-investing at a stock market peak” – Quentin Lumsden

TSX, Loonie Rise on Friday After Bank of Canada Rate Increase

The Toronto Stock Exchange’s S&P/TSX composite index closed at 15,174.81 on Friday, a rise of 39.81 points (0.76%) over Thursday’s close, on the back of utility and mining stocks. On the heels of the Bank of Canada Overnight Rate increase this week, the Canadian Dollar rose above 79 cents (USD), up from 76.81 cents at last Friday’s close. Interest rate-sensitive companies experienced losses during the last half of the week on the BoC news.

The BoC acknowledged stronger growth compared to expectations, and they forecast continued growth. In continued efforts to fight off expected inflation, the BoC is generally expected to raise the overnight rate one more time in 2017, and perhaps again in early-2018.
The BoC also hopes to temper the hot Canadian housing markets, particularly in Toronto and Vancouver, as home prices continue to detach themselves from income levels.
A more in-depth analysis of the BoC’s rate increase can be found here.

Dow Jones and S&P 500 Hit Record Highs

A second consecutive month of economic data in the U.S. has dropped expectations of additional rate hikes by the Federal Reserve. In particular, steady consumer prices and decreased retail sales numbers indicate lower-than-expected inflation.

As a result of this data, analysts dropped their expected chance of a December rate hike from 55% down to 48%. Fed Chair Janet Yellen said earlier this week that persistently low inflation could make future rate hikes more gradual.

This news helped buoy S&P 500 to record highs on Friday, and is now trading at 17.3 times forward earnings, above the long-term average of 15 times. The Dow Jones Industrial Average (DJIA) also touched a record high on Friday before dropping to end the day down 0.6%. As expected, U.S. banks experienced drags on their share prices. The NASDAQ rose 40.69 points to close at 6,315.12.

Some heavyweight companies – Bank of America, Goldman Sachs and Morgan Stanley – report their Q2 earnings results next week, and Michael Scanlon, Portfolio Manager at Manulife Asset Management, stated “The bar for earnings is higher this time around, especially after the phenomenal (profit) growth we saw in the first quarter. So companies that miss expectations or guide down will be overly punished”

Links

Bank of Canada Raises Overnight Rate

Sources: Globe Advisor, Fidelity Investments, Thomson Reuters Data

Anthony Sabti

Weekly Update – July 7, 2017

Look on every exit as being an entrance somewhere else.” – Tom Stoppard

The Next Chapter of You First Financial & Benefits Consultants

Today marks the end of my first week as owner of You First. Odette & Terry’s presence will be missed, but their values and principles will continue to guide the company’s future. We will continue to provide timely service and professional, sensible advice. We are here to help you meet your financial planning objectives. Most importantly, know that we ALWAYS have your best interests in mind when we consider any question or situation you may have.

I look forward to meeting with you in the weeks and months to come. In the meantime, enjoy your long-awaited summer!

Anticipation of Rate Hike, Oil Price Declines pull Toronto Stock Exchange to 7 ½ Month Low

The Toronto Stock Exchange’s S&P/TSX composite index dropped 50.84 points to finish the week at 15,027.16. However, during the Friday trading session, the TSX dropped for a time as low as 14,916.94, its lowest point since November.

Expectations of Bank of Canada rate hike, as well as encouraging June jobs numbers, pushed the Loonie up to 77.6 cents (U.S.). Rate hike anticipation has also led a few of the larger banks – Royal Bank of Canada among them – to increase their mortgage rate offering.

Oil prices dropped by 2.5% drop in oil prices today alone, on news of OPEC exports reaching their highest levels in 2017. The constant “will they or won’t they” questions surrounding potential OPEC production cuts again veered to the “they won’t” camp, as analysts raised doubts about OPEC’s efforts on the matter. Brent futures dropped by $1.36 (U.S.) to close the week at $46.28 per barrel, while West Texas Intermediate dropped by $1.28 (U.S.) per barrel to finish at $43.78.

In the United States, Wall Street reacted positively to strong U.S. jobs data, as the S&P 500, the Dow Jones Industrial Average (DJIA) and the NASDAQ all posted strong increases. Analysts project a 51.5% chance of a December rate hike by the U.S. Federal Reserve; however, policymakers have differing opinions on inflation, which dropped further below the Fed’s 2% target. This differing opinion has cast doubts on future rate hikes.

Sources: Globe Advisor

Terry Broaders

Weekly Update June 30 2017

“May You Live Long And Prosper ” – Mr. Spock

 

Farewell To You All

I remember that Odette and I started the Weekly Update many years ago in the early 90’s. Back then before the internet we would watch the business news on TV and scramble as fast as we could to write down and formulate the details. We would then fax it out to you individually from our old thermal paper fax machine.

That’s a long time ago and it is hard for Odette and I to believe that it has now come to this; our last day of work before retirement!
We have truly enjoyed being of service to you and we will sincerely miss you. Be assured that whatever we did, whatever decisions we made we always did with your best interests at heart. We truly and always put You First.  We are confident that we leave you now in strong competent hands with Anthony and his team.

Enjoy your lives and be good and kind to all those around you. It’s a quick trip and it goes fast.

Thank you all from the bottom of our hearts.

Peace And Love To You All FOREVER!

Terry Broaders

Weekly Update June 23 2017

“Well Begun Is Half Done” – Aristotle

 

TSX Rallies On Resource Stocks

Canada’s main stock index rallied on the strength of resource stocks, but shares in BlackBerry plunged after its first-quarter sales failed to meet expectations. The S&P/TSX composite index advanced 99.66 points to 15,319.56, with the base metals and gold sectors leading the way. Blackberry shares dropped more than 12% after the company announced a profit of US$671 million in its latest quarter, despite revenue falling to US$235 million compared with US$400 million a year ago. In New York, the Dow Jones industrial average shed 2.53 points to 21,394.76. The S&P 500 edged up 3.80 points to 2,438.30, while the Nasdaq composite gained 28.56 points at 6,265.25. The Canadian dollar was trading 0.15 of a U.S. cent lower to an average price of US75.37¢. The August crude contract was up US27¢ at US$43.01 per barrel and the July natural gas contract advanced US4¢ at US$2.93 per mmBTU. The August gold contract gained US$7 at US$1,256.40 an ounce and the July copper contract added US3¢ at US$2.62 a pound.

 

Canada’s Most ‘Emotional’ Investors Revealed 

Do you ever wonder why some people seem more prone to making rash or emotional investment decisions? Well, a new survey reveals which groups are most likely to buy stocks based on headlines and hype. Conducted by Hennick Wealth Management, the survey of Canadian investors found that higher income earners ($75K – $150K+) were more likely to make an investment decision based on a ‘hunch’ or a tip from a friend. 11.8% of high income earners said they would buy a stock solely on a friend’s recommendation compared with just 5.3% of low-to-mid income earners ($0K-74K.)

Men (13.7%) were twice as likely to make emotional investments and buy stocks based on a hunch than women (7.5%). Men (34.2%) were also much more like to buy a stock based on the recommendation of a friend compared with women (27.8%). “Men seem particularly influenced by ‘insider advice’ from other males when investing,” said Adam Hennick of Hennick Wealth Management.  “If you do take investment advice for a friend, try to do it from your friends that have been successful in investing. This seems obvious, but sometimes our desire to act on a hot tip can overwhelm our logic. Ask yourself, is this a person who’s actually done financially well in investing, or someone who just talks a good game.”

All savvy investors know that making decisions based on emotions is a recipe for disaster, so it should come as no surprise that 22.7% of Canadians said they have regretted an investment decision they made that was based on emotion. A staggering 69.2% of men with a high income regretted making an investment decision based on a hunch or gut instinct.

Sources: Bloomberg; Investment Executive; advisor.ca

Terry Broaders

Weekly Update June 2 2017

“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