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Frank Mueller

Weekly Update – May 18, 2018

“If it seems too good to be true, it probably is” – Unknown

British Columbia Securities Commission Cautions Investors of Cryptocurrency Scams

The British Columbia Securities Commission (BCSC) has issued a warning to BC residents on the risks of investing in cryptocurrencies, joining their Ontario counterparts (OSC) and the Bank of Canada in warning investors. The primary concern is that the relatively young market for cryptocurrency is poorly regulated and is breeding ground for scammers. Indeed, the crypto market has been dubbed “the wild west” by many analysts, including former hedge-fund manager Mike Novogratz.

For example, in standard stock markets, there is a well-known and illegal scheme known as the “pump & dump”. The pump & dump involves a person buying a stock at a cheap price, artificially inflating the stock’s price through false and misleading statements, and then cashing out when the stock price has risen. However, in the lightly-regulated world of cryptocurrency, this tactic is not regulated in any way.

In fact, there are companies whose sole operational model involves building paid subscription bases, and then targeting specific cryptocurrencies, at specific times, telling their subscribers when to buy, creating hype around the specific cryptocurrency and running up the price, and then telling their subscribers when to sell. They brazenly advertise their intent to pump & dump as a means to attract subscribers with explanatory videos!

This is a textbook example of the pump & dump scheme in action, but because of the lack of regulation, coupled with crypto investors’ so-called “fear of missing out” (FOMO) on a rapidly-rising cryptocurrency valuation, this is technically legal and can be very effective.

The BCSC has also stated that BC residents should exercise “extreme caution” when considering Initial Coin Offerings (ICOs), where companies attempt to raise capital by issuing newly created cryptocurrencies. The BCSC specifically highlighted unsolicited ICO offerings as dangerous and has asked people who receive such offers to contact the BCSC.

 

WEEKLY MARKET WRAP-UP

North America

  • The TSX closed at 16162, up 179 points or 1.12% over the past week. YTD the TSX is down -0.29%.
  • The DOW closed at 24715, down -116 points or -0.47% over the past week. YTD the DOW is down -0.02%.
  • The S&P closed at 2713, down -15 points or -0.55% over the past week. YTD the S&P is up 1.46%.
  • The NASDAQ closed at 7354, down -49 points or -0.66% over the past week. YTD the Nasdaq is up 6.53%.
  • Gold closed at 1292, down 2.00 points or -1.97% over the past week. YTD gold is down -1.37%.
  • Oil closed at 71.35, up 0.83 points or 1.18% over the past week. YTD oil is up 18.09%.
  • The USD/CAD closed at 0.7765, down -0.0052 points or -0.67% over the past week. YTD the USD/CAD is down -2.36%.
  • The MSCI closed at 2126, up 2 points or 0.09% over the past week. YTD the MSCI is up 1.09%.

Europe/Asia

  • The Euro Stoxx 50 closed at 3574, up 8 points or 0.22% over the past week. YTD the Euro Stoxx 50 is up 2.00%.
  • The FTSE closed at 7779, up 54 points or 0.70% over the past week. YTD the FTSE is up 1.18%.
  • The CAC closed at 5615, up 73 points or 1.32% over the past week. YTD the CAC is up 5.68%.
  • DAX closed at 13078, up 77.00 points or 0.59% over the past week. YTD DAX is up 1.24%.
  • Nikkei closed at 22930, up 171.00 points or 0.75% over the past week. YTD Nikkei is up 0.72%.
  • The Shanghai closed at 3193, up 30.0000 points or 0.95% over the past week. YTD the Shanghai is down -3.45%.

Fixed Income

  • The 10-Yr Bond Yield closed at 3.07, up 0.1000 points or 3.37% over the past week. YTD the 10-Yr Bond Yield is up 27.92%.

 

Sources: Dynamic, Advisor.ca, CNBC.com

Frank Mueller

Weekly Update – May 11, 2018

“Nobody likes high interest rates” – Chanda Kochhar

Bank of Canada Raises Five-Year Fixed Mortgage Rate

The Bank of Canada raised its conventional five-year fixed mortgage rate on Wednesday, from 5.14% up to 5.34%. As we all now know, the BoC’s five-year fixed rate is a crucial piece of information for prospective home buyers in Canada. Exactly how this

Less Than 20 Per Cent Down Payment

These prospective buyers must qualify for their mortgage at the BoC’s five-year fixed rate of 5.34 per cent, rather than the rate offered by their lender. For reference, the current five-year fixed rate at one of the “Big Five” Canadian banks is currently 3.74 per cent.

20 Per Cent Down Payment or More

For home buyers with 20 per cent down or more, they must qualify at the greater of the BoC five-year fixed rate, or the agreed upon rate with their bank plus 200 basis-points (two per cent).

So, using the above current five-year fixed rate, purchasers with at least 20 per cent down will have to qualify at the rate of 3.74 + 2.00 = 5.74 per cent, because the “bank rate plus 200 basis-points” exceeds the BoC’s current 5.34 per cent.

Stephen Poloz: Canadian Economy “Finally Positive”; Future Rate Hikes Possible

Stephen Poloz, Governor of the Bank of Canada recently stated that the economy was “finally positive”, adding that he was more encouraged about the economy than he was six months ago.

Poloz did caution that there are still areas of softness within the Canadian economy, as well as high levels of consumer debt. As such, the BoC will need to exercise caution with future rate hikes, to avoid future instability.

While the BoC opted not to raise its key rate steady at 1.25 per cent, analysts pegged a 70 per cent chance of a BoC rate hike in July.

Canadians should look at the potential of further rate increases as a reminder to diligently pay down debt where possible. As always, if dealing with multiple types of debts (credit card balances, student loans, mortgages, lines of credit, etc), attack those debts with the highest interest rates. This almost always means paying down credit cards first. Credit card debt is portfolio poison.

WEEKLY MARKET WRAP-UP

North America

  • The TSX closed at 15983, up 254 points or 1.61% over the past week. YTD the TSX is down -1.39%.
  • The DOW closed at 24831, up 568 points or 2.34% over the past week. YTD the DOW is up 0.45%.
  • The S&P closed at 2728, up 65 points or 2.44% over the past week. YTD the S&P is up 2.02%.
  • The NASDAQ closed at 7403, up 193 points or 2.68% over the past week. YTD the Nasdaq is up 7.24%.
  • Gold closed at 1318, up -9.00 points or 0.15% over the past week. YTD gold is up 0.61%.
  • Oil closed at 70.52, up 0.77 points or 1.10% over the past week. YTD oil is up 16.72%.
  • The USD/CAD closed at 0.7817, up 0.0017 points or 0.22% over the past week. YTD the USD/CAD is down -1.71%.

 Europe/Asia

  • The MSCI closed at 2124, up 53 points or 2.56% over the past week. YTD the MSCI is up 1.00%.
  • The Euro Stoxx 50 closed at 3566, up 15 points or 0.42% over the past week. YTD the Euro Stoxx 50 is up 1.77%.
  • The FTSE closed at 7725, up 158 points or 2.09% over the past week. YTD the FTSE is up 0.48%.
  • The CAC closed at 5542, up 26 points or 0.47% over the past week. YTD the CAC is up 4.31%.
  • DAX closed at 13001, up 181.00 points or 1.41% over the past week. YTD DAX is up 0.64%.
  • Nikkei closed at 22759, up 286.00 points or 1.27% over the past week. YTD Nikkei is down -0.03%.
  • The Shanghai closed at 3163, up 72.0000 points or 2.33% over the past week. YTD the Shanghai is down -4.35%.

 Fixed Income

  • The 10-Yr Bond Yield closed at 2.97, up 0.0300 points or 1.02% over the past week. YTD the 10-Yr Bond Yield is up 23.75%.

 

 

Sources: Dynamic, Advisor.ca

Frank Mueller

Weekly Update – May 4, 2018

“What’s the use of happiness? It can’t buy you money” — Henny Youngman

*Amazon Headquarters Coming to Vancouver

Prime Minister Justin Trudeau announced Monday that Amazon is expanding its Vancouver tech hub with a new headquarters.

This is expected to bring an additional 3,000 high tech jobs to the city in fields including e-commerce technology, cloud computing, and machine learning.

The new headquarters will be located at the old Canada Post headquarters, at 349 West Georgia Street where Monday’s announcement was made. It is expected to open in 2022.

This is in addition to Amazon’s current Vancouver offices – including its 156,000 square-foot location in TELUS Garden which opened to Amazon employees in 2015. On top of Monday’s announcement, Amazon also confirmed last November its plans to expand into another downtown site on Dunsmuir Street, which will open in 2020.

“Amazon is excited to create 3,000 more highly skilled jobs in Vancouver,” said Alexandre Gagnon, vice-president of Amazon Canada and Mexico. “Vancouver is home to an incredibly talented and diverse workforce, and these thousands of new employees will invent on behalf of our customers worldwide.”

Amazon already employs more than 6,000 people in Canada. It employs more than 1,000 researchers and engineers in Vancouver.

*Note: We are not making a recommendation of any kind. We are simply reporting on a local news story of interest.

WEEKLY MARKET WRAP-UP

North America

  • The TSX closed at 15729, up 60 points or 0.38% over the past week. YTD the TSX is down -2.96%.
  • The DOW closed at 24263, down -48 points or -0.20% over the past week. YTD the DOW is down -1.84%.
  • The S&P closed at 2663, down -7 points or -0.26% over the past week. YTD the S&P is down -0.41%.
  • The NASDAQ closed at 7210, up 90 points or 1.26% over the past week. YTD the Nasdaq is up 4.45%.
  • Gold closed at 1316, down -13.00 points or -0.68% over the past week. YTD gold is up 0.46%.
  • Oil closed at 69.75, up 1.72 points or 2.53% over the past week. YTD oil is up 15.44%.
  • The USD/CAD closed at 0.78, up 0.0016 points or 0.21% over the past week. YTD the USD/CAD is down -1.92%.

Europe/Asia

  • The MSCI closed at 2071, down -21 points or -1.00% over the past week. YTD the MSCI is down -1.52%.
  • The Euro Stoxx 50 closed at 3551, up 32 points or 0.91% over the past week. YTD the Euro Stoxx 50 is up 1.34%.
  • The FTSE closed at 7567, up 65 points or 0.87% over the past week. YTD the FTSE is down -1.57%.
  • The CAC closed at 5516, up 33 points or 0.60% over the past week. YTD the CAC is up 3.82%.
  • DAX closed at 12820, up 239.00 points or 1.90% over the past week. YTD DAX is down -0.76%.
  • Nikkei closed at 22473, up 5.00 points or 0.02% over the past week. YTD Nikkei is down -1.28%.
  • The Shanghai closed at 3091, up 9.0000 points or 0.29% over the past week. YTD the Shanghai is down -6.53%.
  • The Shanghai closed at 3082, up 10.0000 points or 0.33% over the past week. YTD the Shanghai is down -6.80%.

Fixed Income

  • The 10-Yr Bond Yield closed at 2.94, down -0.0200 points or -0.68% over the past week. YTD the 10-Yr Bond Yield is up 22.50%.

 

Sources: Dynamic, Global News

Frank Mueller

Weekly Update – April 27

“It’s tax time. I know this because I’m staring at documents that make no sense to me, no matter how many beers I drink” – Dave Barry
 

Tax Time is Scam Time

We’d like to remind you all that at tax time, there are plenty of robocalls made by fraudsters. Usually, the robocall will state that it is the CRA calling, and you are in danger of legal trouble if you don’t make a payment ASAP.

There are various different robocalls, but usually the request is to pay by credit card, and the call may or may not ask you to call a specific phone number to give your Social Insurance Number or various other pieces of sensitive personal data.

Needless to say, these are in 100% of cases, fake.

If you receive a call that claims to be from the CRA, don’t ever give information up over the phone. If it is a person on the other side of the call, press them for their name and agent ID, and for an extension number.

You can always let us know as well if you receive one of these calls. We are happy to verify with the CRA what situation – if there is any – your CRA account is faced with. Of course, we can only do this if we are authorized to represent you with the CRA. Regardless, let us know if you receive a suspicious call, and we can help you deal with it!

 

WEEKLY MARKET WRAP-UP

North America

  • The TSX closed at 15669, up 191 points or 1.23% over the past week. YTD the TSX is down -3.33%.
  • The DOW closed at 24311, down -152 points or -0.62% over the past week. YTD the DOW is down -1.65%.
  • The S&P closed at 2670, changed 0 points or 0.00% over the past week. YTD the S&P is down -0.15%.
  • The NASDAQ closed at 7120, down -26 points or -0.36% over the past week. YTD the Nasdaq is up 3.14%.
  • Gold closed at 1325, down -11.00 points or -0.97% over the past week. YTD gold is up 1.15%.
  • Oil closed at 68.03, down -0.23 points or -0.34% over the past week. YTD oil is up 12.60%.
  • The USD/CAD closed at 0.7784, down -0.0058 points or -0.74% over the past week. YTD the USD/CAD is down -2.12%.

Europe/Asia

  • The MSCI closed at 2092, down -24 points or -1.13% over the past week. YTD the MSCI is down -0.52%.
  • The Euro Stoxx 50 closed at 3519, up 25 points or 0.72% over the past week. YTD the Euro Stoxx 50 is up 0.43%.
  • The FTSE closed at 7502, up 134 points or 1.82% over the past week. YTD the FTSE is down -2.42%.
  • The CAC closed at 5483, up 70 points or 1.29% over the past week. YTD the CAC is up 3.20%.
  • DAX closed at 12581, up 40.00 points or 0.32% over the past week. YTD DAX is down -2.61%.
  • Nikkei closed at 22468, up 306.00 points or 1.38% over the past week. YTD Nikkei is down -1.30%.
  • The Shanghai closed at 3082, up 10.0000 points or 0.33% over the past week. YTD the Shanghai is down -6.80%.

Fixed Income

  • The 10-Yr Bond Yield closed at 2.96, up 0.0100 points or 0.34% over the past week. YTD the 10-Yr Bond is up 23.33%.

 

Sources: Dynamic

Frank Mueller

Weekly Update – March 2, 2018

“Don’t tell me what you value, show me your budget, and I’ll tell you what you value” – Joe Biden

Liberal Government Announces 2018 Federal Budget

On Tuesday, the Liberals and Finance Minister Bill Morneau announced their 2018 Federal Budget, the third budget of their term.

This budget is a bit of a mixed bag, with some changes but nothing drastic. Indeed, some have dubbed it a “placeholder” budget; the 2019 budget will probably be larger in scope in anticipation of a soon-to-follow federal election.

The Government expects to run a fiscal deficit through 2022-23, and Canada’s Debt-to-GDP is forecasted to decline to 28.4 per cent.

For those interested, you can read our full recap here.

Tax Checklists Have Been Emailed Out

Now that the 2017 RRSP Deadline has officially passed, we turn our attention next to the Tax Deadline.

All clients have been sent a tax reminder, including some notable changes for the 2017 Tax Year, and a link to the You First website’s Tax Centre.

As a reminder to our clients with non-registered accounts & income, you do not need to drop off your taxes until the week starting March 26th, to ensure that we capture all relevant income slips.

Self-employed clients do not need to file their returns until June 15th; however, you are still subject to any late-payment interest on your tax balance starting on May 1st.

Weekly Market Wrap-Up

North America

  • The TSX closed at 15,385, down -254 points or -1.62 per cent over the past week. YTD the TSX is down -5.08 per cent.
  • The DOW closed at 24,538, down -772 points or -3.05 per cent over the past week. YTD the DOW is down -0.73 per cent.
  • The S&P closed at 2,691, down -56 points or -2.04 per cent over the past week. YTD the S&P is up 0.64 per cent.
  • The NASDAQ closed at 7,258, down -79 points or -1.08 per cent over the past week. YTD the NASDAQ is up 5.14 per cent.
  • Gold closed at 1,324, down -17.00 points or -0.53 per cent over the past week. YTD gold is up 1.07 per cent.
  • Oil closed at 61.45, down -2.09 points or -3.29 per cent over the past week. YTD oil is up 1.70 per cent.
  • The USD/CAD closed at 0.7765, down -0.0149 points or -1.88 per cent over the past week. YTD the USD/CAD is down -2.36 per cent.

Europe/Asia

  • The MSCI closed at 2,090, down -27 points or -1.28 per cent over the past week. YTD the MSCI is down -0.62 per cent.
  • The Euro Stoxx 50 closed at 3,325, down -117 points or -3.40 per cent over the past week. YTD the Euro Stoxx 50 is down -5.11 per cent.
  • The FTSE closed at 7,070, down -174 points or -2.40 per cent over the past week. YTD the FTSE is down -8.04 per cent.
  • The CAC closed at 5,137, down -180 points or -3.39 per cent over the past week. YTD the CAC is down -3.31 per cent.
  • DAX closed at 11,914, down -570.00 points or -4.57 per cent over the past week. YTD DAX is down -7.77 per cent.
  • Nikkei closed at 21,182, down -711.00 points or -3.25 per cent over the past week. YTD Nikkei is down -6.95 per cent.
  • The Shanghai closed at 3,255, down -34.0000 points or -1.03 per cent over the past week. YTD the Shanghai is down -1.57 per cent.

Fixed Income

  • The 10-Yr Bond Yield closed at 2.86, down -0.0100 points or -0.35 per cent over the past week. YTD the 10-Yr Bond is up 19.17 per cent.

Sources: Globe Advisor, Dynamic Funds, Franklin Templeton

Frank Mueller

Weekly Update – January 19, 2018

“Wealth consists not in having great possessions, but in having few wants” – Epictetus

TSX Marginally Up for The Week

The Toronto Stock Exchange’s S&P/TSX composite index rose on Friday by 68.99 points (0.42 per cent) to finish up at 16,353.46, a gain of 45.28 points (0.28 per cent) for the week. Though modest, the weekly gain put the index back in the right direction after last week’s loss.

Nine of the 10 main sectors posted wins on Friday. Financials and industrials led the way. The Energy sector was weighed down by an oil pullback. A barrel of Crude Oil fell by 38 cents (USD) on Friday to settle at $63.57 USD per barrel, a down-tick of 86 cents for the week (1.33 per cent).

The oil decrease also affected the Loonie, which weakened compared to the Greenback on Friday. As of 3:59pm EST, the Loonie had dropped 0.64 per cent versus the American Dollar, and sat at 80.01 cents USD.

Investors have now set their sights forward to next week’s NAFTA talks. Some analysts feel NAFTA is a risk, and could pull the Loonie down, should NAFTA be abandoned. Said Mark McCormick, North American head of Foreign Exchange Strategy at TD Securities: “The market is really going to have to price in a negative risk premium on the Canadian dollar, driven primarily on the breakup risks of NAFTA”.

Gold retreated from $1,339 USD per ounce to begin the week back to finish at $1,331.10 USD per ounce, shaving off $7.90 USD per ounce (0.59 per cent).

U.S. Markets Advance, Again

Another week, another plateau hit for the Dow Jones Industrial Average (DJIA). This week, it rose above 26,000 for the first time. On Friday, it gained 53.91 points (0.21 per cent) to close at 26,071.72. On the week, the DJIA was up 268.53 points (1.04 per cent).

The S&P 500 hit its own record closing high, gaining 12.27 points (0.44 per cent) on Friday to close out 2,810.30 (up 0.86 per cent for the week).

The NASDAQ also set a record closing high, climbing to 7,336.38 on the back of a 40.33 point, 0.55 per cent, Friday gain. NASDAQ gained 1.04 per cent for the week.

Disagreements between U.S. Senate Democrats and Republicans could lead to a government shutdown. The deadline is midnight Friday night (tonight). Senate Minority Leader Chuck Schumer and U.S. President Donald Trump met to negotiate an end to the impasse on Friday. The potential shutdown had a minor effect on U.S. markets, but these days, it seems nothing can impede their advance.

As Expected, Bank of Canada Raises Key Rate

As widely expected, the Bank of Canada raised its benchmark interest rate on Wednesday morning. As with the previous two rate hikes, this was an increase of 25 basis-points from 1.00 per cent to 1.25 per cent. This makes three rate hikes in a little over six months after the BoC held rates steady at 0.50 per cent for nearly nine years. Strong employment figures were among the main reasons that the BoC felt comfortable enough to enact the rate hike.

Two further rate increases are expected by the end of 2018.

As mentioned last week, the rate rise will affect new home purchasers (who didn’t have rate holds in place) and those who carry credit balances on their Home Equity Lines of Credit, regular lines of credit, or home owners with variable mortgage rates.

 

Sources: Globe Advisor, Yahoo! Finance