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Pain on The Markets As Oil Falls Below U.S.$36

Another big drop in the price of oil sent North American equity markets into sharp retreat Friday in a sell-off that also took the commodity-sensitive Canadian dollar below 73 cents for the first time since mid-2004.In Toronto, the S&P/TSX composite index lost 1.7% of its value, closing down 226.64 points to settle at 12,789.95. The Canadian dollar, which has hit several new 11-year lows since it closed last week at 74.76 cents U.S., was down another 0.59 of a cent Friday at 72.77 cents U.S.
In New York, the Dow Jones average plunged 309.54 points to 17,265.21, while the broader S&P 500 fell 39.86 points to 2,012.37 and the Nasdaq shed 111.70 points to 4,933.47. Traders headed for exits as oil fell below US$36 a barrel in the wake of a report by the International Energy Agency that said the global oversupply of crude would continue until late next year. The January contract for benchmark U.S. crude oil was down $1.14 at US$35.62 a barrel.


Morneau Increases Minimum Down Payment For Homes Over $500K

Major changes to the minimum home down payment were announced Friday by Finance Minister Bill Morneau. The amount homebuyers must put forward as a down payment on houses over $500,000 will now be 10%. Homes under $500,000 will still only require 5% down payment.  This is a game changer especially in Vancouver and Toronto where a small condo often costs over $500,000. It’s a move designed to cool off the booming real estate market in some of Canada’s biggest cities.  The stiffer down payment requirement is one of three new measures targeting the stability of the housing market. The Finance Department has tightened mortgage rules on several occasions in recent years in an effort to weed out marginal buyers and excessive speculation in the housing market. One of the changes saw the federal government reduce the maximum amortization period for government-insured mortgages to 25 years from 30 years. The Bank of Canada has also expressed concerns that too many Canadians risk becoming over-extended, especially once interest rates begin to rise.   Note that the down payment is still 5% on the first $500k, even if the home cost is $700k.  For example if you buy a 700k home under the old rules, a 5% minimum down payment is $35k.  With the new rules it would be $25k (5%) on first 500k plus $20k (10%) on the next 200k = a 45k minimum down payment. So a buyer would need to come up with another $10k.  On a $999,999 home, the minimum goes from $50k to $75k; another $25k is required.


Market Update as of December 11 2015

North America
The TSX closed at 12790, down -567 points or -4.24% over the past week. YTD the TSX is down -13.31%.
The DOW closed at 17265, down -583 points or -3.27% over the past week. YTD the DOW is down -3.19%.
The S&P closed at 2012, down -80 points or -3.82% over the past week. YTD the S&P is down -2.24%.
The Nasdaq closed at 4934, down -208 points or -4.05% over the past week. YTD the Nasdaq is up 4.38%.
Gold closed at 1076, down -10.00 points or -0.92% over the past week. YTD gold is down -8.19%.
Oil closed at 35.51, down -4.60 points or -11.47% over the past week. YTD oil is down -32.61%.
The USD/CAD closed at 1.37352, up 0.0367 points or 2.74% over the past week. YTD the USD/CAD is up 17.04%.

The MSCI World closed at 1664, down 14.00 Points or -0.86% over the past week.  YTD the MSCI World is down -2.68%.
The Euro Stoxx 50 closed at 3203, down 128.00 points or -3.83% over the past week.  YTD the Euro Stoxx 50 is up 1.80%.
The FTSE closed at 5953, down 285.00 points or -4.58% over the past week.  YTD the FTSE is down -9.34%.
The CAC closed at 4550, down 165.00 points or -3.50% over the past week.  YTD the CAC is up 6.48%.
The DAX closed at 10340, down 412.00 points or -3.83% over the past week.  YTD the DAX is up 5.45%.
The Nikkei closed at 19231, down 274.00 points or -1.40% over the past week.  YTD the Nikkei is up 10.20%.
The Shanghai closed at 3435, down 90.00 points or -2.56% over the past week.  YTD the Shanghai is up 6.18%.


Sources: Bloomberg; Investment Executive;  Conference Board of Canada; advisor.ca,