Weekly Economic Update

For the week of March 12 – 16.

After losing 88.0k jobs in January, the Canadian economy added 15.4k jobs in February, which was less than consensus expectations of a 21.0k increase. Full-time employment decreased 39.3k after gaining 49.0k the previous month, while part-time employment increased 54.7k after a 137.0k plunge in January. The unemployment rate also decreased to 5.8 percent from 5.9 percent. Wages measured by average hourly earnings for permanent employees decreased to 3.1 percent year-over-year from 3.3 percent.

Non-farm payrolls in the US economy surged past expectations with a 313k gain versus consensus expectations of a 205k increase, also surpassing January’s upward revised 239k gain. The unemployment rate remained at 4.1 percent; however, consensus expectations were for a 0.1 percent decrease to 4.0 percent. Average hourly earnings also came in lower than expected and slowed from January’s downward revised pace of 2.8 percent year-over-year. Earnings growth came in at a pace of 2.6 percent, lower than the expected increase of 2.8 percent. February’s equity markets retreated, while bond yields surged.

Teranet/National Bank will release their house price index tomorrow, and existing home sales on Wednesday. Manufacturing sales and international securities transactions will cap off the week.

Scheduled releases in the US include CPI, retail sales, various manufacturing data, trade data, housing starts and building permits, and the first print of the University of Michigan’s March sentiment index.

The Canadian dollar is trading similarly to Friday’s market closing levels. Today’s expected trading range is 1.2783 – 1.2883.

Source: Bloomberg

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Weekly Economic Update

For the week of March 5 – 9.

GDP in Canada came in as expected on both month-over-month and year-over-year basis in December at 0.1 percent and at 3.3 percent. However, annualized fourth quarter GDP came in a bit softer than expected at 1.7 percent versus the expected increase of 2.0 percent. Household consumption rose 2.1 percent in the fourth quarter, down from 3.7 percent in the previous quarter; marking the slowest quarter-over-quarter pace since the first quarter of 2016. General government consumption expenditure was up 2.8 percent and gross fixed capital formation was up 9.6 percent. While exports only increased by 3 percent, exports increased by 6.3 percent.

US sentiment came in slightly higher than expectations in February, according to the University of Michigan Sentiment Index. The Sentiment index was at 99.7 versus expectations of a 99.5 reading and increased from 95.7 in January. February’s reading marks the second-highest level since 2004, as ample job opportunities helped Americans sentiments. The current conditions gauge rose to 114.9 in February from 110.5 in January, while the expectations measure increase to 90 from 86.3 in January.

Canada and US government yields are trading 1 to 2bps lower with S&P futures lower (-8.0). WTI crude oil is currently trading at $61.24 per barrel. The Canadian dollar is currently trading 1.2936 against the US dollar.

Source: Bloomberg

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Weekly Economic Update

For the week of November 6 – 10.

It will be a fairly quiet week for Canadian economic data with housing data being the prominent release this week. October housing starts are expected to slow to 210.0k after a revised 217.3k September posting, while September building permits are expected to edge up 0.1 percent month-over-month after declining 5.5 percent in August. On the new housing front, prices are expected to have increased by 0.2 percent month-over-month in September after a slight increase of 0.1 percent in August.

Economic data releases in the US will also be on the lighter side this week. The final print of September wholesale inventories will be released, as well as the preliminary November University of Michigan Sentiment figures. Wholesale inventories are expected to have increased 0.3 percent in September, the same pace as the preliminary release. Sentiment is expected to remain relatively similar to October levels.

US factory orders rose 1.4 percent in September, beating expectations of 1.2 percent. Excluding transportation, September’s increase was 0.7 percent. Durable goods orders came in as expected, rising 2.0 percent, after a 2.2 increase in August. The ISM non-manufacturing composite came in stronger than expected in October, rising to 60.1 from 59.8. Expectations were for a decline to 58.5. This index includes construction services, which thrived in October as post-hurricane rebuilding efforts boosted business sentiment.

The Canadian dollar is trading relatively flat to the US dollar this morning. Today’s expected range for the Canadian dollar is 1.2707 – 1.2807.

Source: Bloomberg

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Executors: What You Need to Know about Probate

Probate[1]. What is it? When is it required? Why is it required? In this post, we’ll discuss probate and its role in the estate administration process.

What is it?
Merriam-Webster defines probate as “the action or process of proving before a competent judicial authority that … the last will and testament of a deceased person is genuine”.

More simply put, probate is a court grant that ratifies the appointment of the nominated executor and acknowledges under the court’s seal that the Will has been properly executed and proved before the court that it is the deceased’s ‘last Will’.

When is it required?
Not all estates require that the Will be probated. But there are a multitude of reasons why it would be requested. Although not a comprehensive list, here are a few of the instances where probate could be required:

  • Real property is solely owned or as tenants in common by the deceased.
  • A transfer agent requires probate to deal with shares held in a publicly traded company.
  • A financial institution requests probate in order to release funds held on deposit.
  • A testamentary trust is established under the Will.
  • There are beneficiaries under the age of majority.
  • The executor has pre-deceased or renounces and no alternate executor is named.

Why is it required?
Obtaining probate is a process that protects the executor in the event a newer Will is found. If probate is not obtained and the assets distributed and a newer Will is later discovered with a different distribution scheme, the executor could be liable.

Financial institutions establish policy for determining whether probate is required to release the funds held at their organization. It is often based on how the account is registered and the value of the asset. As with the executor, probate mitigates the financial institution’s risk when releasing funds.

Applying for Probate
Each province has prescribed forms that must be completed to exact standards with respect to details about the deceased and the beneficiaries. In most provinces an inventory of the deceased’s assets and liabilities establishing the value of the estate is required. The original Will accompanies the application to the court along with the required probate fee[2]. Once granted, probate legally authorizes the executor to proceed with administration of the estate.

The Myths
One myth surrounding probate is that probate fees are charged on the entire estate. Probate fees are only charged on assets that will be distributed through the Will. Assets that are considered non-probatable, and therefore not subject to probate fees, include life insurance policies, pension plans and registered plans where a beneficiary other than the estate has been designated.

Another myth surrounding probate fees is that they are excessively high. Admittedly, there are provinces that do have probate fees higher than others, but the fees range from 0.4% (even lower in Alberta) to around 1.7 %. On a $1,000,000 estate the highest probate fee payable in Canada would be approximately $17,000.

It is always prudent to reduce the probate fees the estate will pay through proper estate planning; however, there are times when the cost of avoiding probate may be higher than the probate fees incurred at the time the estate is administered. Discussing options with an estate professional should be done before implementing any strategies to reduce probate fees.

[1] Certificate of Appointment of Estate Trustee (Ontario)
[2] Estate administration tax (Ontario)
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Weekly Economic Update

For the week of October 30 – November 3.

In the Canadian economic data docket this week, we will see two big releases: August GDP figures and October employment numbers. After increasing 3.8 percent year-over-year in July, consensus is for a 3.5 percent increase for August. Month-over-month GDP expectations are for a slight advance of 0.1 percent versus flat growth a month prior. On the employment front, the economy is expected to have added 15k in jobs in October versus the 10k created in September. Consensus for the unemployment rate remains at 6.2 percent, unchanged from the prior month.

Lots of data is scheduled to be released in the US this week. Personal spending and income figures will be out this morning. By mid-week, ISM manufacturing will be released as well as the FOMC’s rate decision. Consensus is for the Fed to keep rates unchanged at 1.00-1.25 percent. Wrapping up the week, the US will also release its employment numbers as well as other manufacturing figures. After losing 33k in jobs in September, the US economy is expected to add 310k in October. The unemployment rate is expected to remain unchanged at 4.2 percent.

The TSX closed at a record high on Friday at 15,953.51, now up 4.4 percent on the year, as the Bank of Canada continued to talk down rate hike expectations. According to a Bloomberg survey, many economists that once called for another rate hike before the end of the year now see this rate hike pushed into next year. Canadian yields have fallen another basis point across the curve this morning. The Canadian dollar slipped below 78 US cents this morning and is down from the high of 82.6 US cents back on September 11 (closing level).

Today’s expected range trading range for the Canadian dollar is 1.279 – 1.289.

Source: Bloomberg

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