The 2019 tax season is almost behind us and we want to thank all You First clients for your patience in adapting to the new processes this year.

As a reminder, you have until August 31 to remit your balance owing without incurring any late-payment interest.  This also applies to those who must make March 15 and June 15 instalments.


Financial Markets

The good news 

The S&P is back over 3000 points and is only 10% its pre-COVID high.

The technology-heavy NASDAQ index briefly hit the 10,000 point mark for the first time ever last week.

The TSX is 15% lower than its pre-COVID high.

Overall, markets have come a long way from the almost 40% decline they saw in March.


The bad news (from Myles Zyblock, Chief Investment Strategist, Dynamic Funds)

On Thursday, The S&P 500 was down by nearly 6% and faced relentless selling pressure throughout the day. It was the worst return recorded since March 16, a day when the market was down by 12.0%. The risk-off tone was widespread, with high-yield bonds dropping 2.6%, crude oil prices off by 8.2%, while long-term U.S. Treasury bonds and the U.S. dollar were higher by 2.9% and 0.8%, respectively.

The fundamentally-broken, low-quality equity constituency which have the most to gain from economic recovery were down by 10% or more on Thursday, helping to erase 30% of their value over the past three days alone. The market’s change in tone offered notice that many things about the world remain in a highly agitated and uncertain state.

Some of the old ghosts started to creep back into the market’s psyche, such as the risks of a renewed wave of infection. Caseloads are re-accelerating in a number of U.S. states such as Arizona, Florida, California and Texas. Houston-area officials said that they are close to re-imposing a stay-at-home order. While we are not certain whether the increased caseloads of recent days are due to better testing or the protests, it is an uncomfortable reminder that the virus is a lingering problem.

Political uncertainty is also taking on greater focus, with President Trump’s popularity declining meaningfully in the polls over the past couple of days. At the same time, anti-trust law has been brought back into the spotlight with European officials announcing that they are preparing charges against Amazon for abusing its dominant position in internet commerce.

This all follows Wednesday’s comments from Chairman Powell when he said that the economy was probably entering into a long and hard road to recovery. To reinforce the point, the Chairman told reporters in his hour-long press conference that “We’re not even thinking about thinking about raising [interest] rates”.

Uncertainty is the invariable characteristic of investing. Remind yourself of your most important investment goals. Take the diversification steps necessary to maximize the odds of achieving those goals. Diversification has been, and is likely to always be, the most reliable way to reach your intended target. It is the elegant mixture of stocks, bonds and alternatives that helps to eradicate a lot of the unnecessary guesswork from investing.



CERB penalties

The federal government is planning to legislate fines and jail time for people who submit fraudulent claims under the Canada Emergency Response Benefit.

These programs are having teeth added to penalize those who cheat and there are whistle-blower programs being set up.

This legislation is not intended to hammer those in a grey area – but rather to hit hard the abusers who are double-dipping or manipulating accounting records.