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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 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, CNBC.com

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.

WEEKLY MARKET WRAP-UP

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%.

Europe/Asia
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