Weekly Economic Update

For the week of January 14 – 18

It will be a very quiet start to the week for Canadian data. However, Friday includes big releases such as consumer prices data, and an update on international securities transactions. Data releases in the United States this week include empire manufacturing, retail sales, housing starts, building permits, industrial production and U. of Mich. Sentiment. Prices are also expected to have dropped by 0.3 percent on a month-over-month basis in December after falling by 0.4 percent the month before. On a year-over-year basis, the growth rate of 1.7 percent seen in November is expected to remain through December.

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Consumer prices in the United States for the month of December posted almost entirely in line with expectations. On a headline basis, prices dropped by 0.1 and increased by 1.9 percent on a month-over-month and year-over-year basis. This is the first drop in headline month-over-month growth for this indicator since March of 2018. When excluding food and energy prices, growth levels were closer to 0.2 and 2.2 percent respectively. The headline figures were largely weighed down by falling energy prices, as is apparent based on the above numbers.

The Canadian dollar is currently trading down against the US dollar. Today’s expected range is 1.3233 – 1.3333.

Source: Bloomberg

Weekly Economic Update

For the week of January 7 – 11

Markets continue to react in anticipation of news from ongoing trade conversations between the United States and China. The United States has mentioned the conversations have been going well over the past couple of days, and the two countries should be able to reach what they call a “reasonable” deal. A deal between the two countries would come as a great relief to most, especially following the negative release by Apple, who pointed a finger primarily at China for recent weakness in sales figures.

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The President of the United States Donald Trump will be addressing American citizens today with the hopes of convincing many on the dire need of a border wall between the United States and Mexico. The lack of funding for the wall over the past two weeks (approximately 5 billion dollars) has led to a partial government shutdown in the United States. Trump has threatened this shutdown could continue to last months, or even years.

Canadian markets will see a release for international merchandise trade this morning, and housing starts figures on Wednesday.

The Canadian dollar is currently trading up against the US dollar. Today’s expected range is 1.3230 – 1.3330.

Source: Bloomberg

Weekly Economic Update

For Week of December 31 – January 4

Another slow week for data is expected out of Canada this week. Despite not having many indicators releasing data, we are still expecting to see updated employment numbers on Friday. December employment numbers are expected to show an increase of 10.0K positions after remarkable 94.1K positions were added a month earlier. The unemployment rate is expected to tick slightly higher to a level of 5.7 percent from 5.6 percent in the previous reading.

In the United States, we are expecting to see a bit more data this week including releases for wholesale inventories, new home sales, ADP employment change, ISM manufacturing, construction spending and finally nonfarm payrolls. Nonfarm payrolls for December are expected to show an increase of 180K positions after a disappointing 155K a month earlier. The unemployment rate is expected to remain at a level of 3.7 percent.

There are talks of a potential meeting being set up between the President of the United States Donald Trump and Fed Chair Jerome Powell. Although many think a meeting such as this could ease tensions between the two, many others are warning Powell it may not be a good idea. A meeting between the two could give investors the impression that the Fed is not as independent as originally thought.

The Canadian dollar is currently trading up against the US dollar. Todays expected range is 1.3575 – 1.3675.

Weekly Economic Update

For the week of December 17 – 21.

Friday started on a negative tone with the release of disappointing industrial production and retail sales data out of China. Industrial production came in below consensus at 5.4 percent year-over-year, vs. consensus and previous of 5.9 percent. Retail sales came in at 8.1 percent year-over-year, vs. consensus of 8.8 percent and previous of 8.6 percent, which is the weakest pace since 2003. In Europe, both France and Germany also released weak PMI numbers that were below expectations.

November retail sales in the United States rose 0.2 percent, beating expectations of 0.1 percent, while retail sales ex-auto dealers, building materials and gasoline stations rose 0.6 percent in November. Nine out of thirteen retail categories rose for the month of November, while eleven categories contributed to the retail sales growth in August. Unfortunately, the decent United States retail sales data wasn’t enough to offset the sluggish market sentiment.

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Data releases in Canada this week include existing home sales, manufacturing, consumer price index, retail sales and GDP data. Releases out of the United States this week include housing starts, existing home sales, consumer spending, personal incomes, durable goods orders, GDP, and University of Michigan sentiment readings. Although the markets are still not fully priced for a hike, the Federal Reserve is forecast to increase the overnight target range by another 25bps at the conclusion of the Federal Open Market Committee on Wednesday. Attention will be on the Federal Reserve statements, particularly on neutral rates and inflation forecasts.

Both US and Canada government yields are trading flat to 1bps lower with S&P futures lower (-7.3). The Canadian dollar is trading flat against the US dollar this morning, today’s expected range is 1.3334 – 1.3434.

Source: Bloomberg

Weekly Economic Update

For the week of December 10 – 14

Employment figures crushed expectations in Canada for the month of November. The country added 94.1K new positions against expectations of a mere 10K. This position increase is the largest one month gain since 1976. Digging further into this release unveils another positive fact which is that of the 94.1K positions, 89.9K of them were the more desirable full-time positions. The posting shows resilience in the job market despite the headwinds stemming from an oil crisis. One darker spot of note is wage inflation which fell to a level of 1.5 percent, down from 1.9 percent in the previous month and short of the expected 1.8 percent. The unemployment rate fell to 5.6 percent from 5.8 percent in the prior reading.

Nonfarm payrolls in the United States missed expectations for November with only 155K new positions created, shy of the 198K expected. Average hourly earnings missed expectations slightly on a month-over-month basis at 0.2 percent, but are still in line with the 3.1 percent year-over-year growth that was expected. The unemployment rate in the US remained unchanged at 3.7 percent.

It is shaping up to be a quiet week for data released out of Canada this week with the only potentially market-moving data coming from housing starts and building permits this morning. November’s housing starts are following a posting of 205.9K a month prior. In terms of October’s building permits, today’s reading is following growth of 0.4 percent in September. Data releases will be a bit more exciting out of the United States this week, with releases expected for consumer prices, retail sales and market US manufacturing PMI among others.

The Canadian dollar is currently trading slightly up against the US dollar after a large spike on Friday from stronger than expected jobs data. Todays expected range is 1.3264 – 1.3364.

Source: Bloomberg

Weekly Economic Update

For Week of November 26 – 30, 2018

It will be a relatively slow week for data releases out of Canada until Friday when we will see the release of September GDP figures as well as third quarter GDP figures. Although economist expectations are not available yet, the postings will follow a quarterly annualized GDP posting of 2.9 percent, a month-over-month GDP posting of 0.1 percent and a year-over-year GDP posting of 2.5 percent.

In the United States this week we are expecting releases for wholesale inventories, annualized quarter-over-quarter GDP growth, new home sales, personal income and spending, and new home sales. In addition to these data releases, the FOMC will also be releasing their November 8 meeting minutes on Thursday.

Retail sales in Canada beat expectations in September, growing by 0.2 percent when expectations were for zero growth. Excluding autos from this figure brought the growth level down slightly to 0.1 percent. Consumer prices jumped by 0.3 percent on a headline month-over-month basis in October, triple economist expectations. On a year-over-year basis, price growth is sitting at a level of 2.4 percent. The largest contributor on the upside was the transportation category while the largest contributor to the downside was the gasoline category.

The Canadian dollar is currently trading up against the US dollar this morning. Todays expected range is 1.3150 – 1.3250.

Source: Bloomberg

Weekly Economic Update

For the week of November 12 – 16

It will be a quiet and short week for data in Canada, with the only market-moving data coming in the form of manufacturing sales and international securities transactions, both of which release on Thursday. We will see a bit more out of the United States this week with releases expected for consumer prices, retail sales and industrial production, among others. Consumer prices are expected to have grown by 0.3 percent on a headline basis during October, three times the speed that was seen in September. On a year-over-year basis, this should put growth at 2.5 percent. Excluding food and energy, growth rates are expected to sit at 0.2 and 2.2 percent respectively.

The string of declines in oil prices has reached eleven business days as priced ended the day down by 0.43 percent on Monday. Prices are down by a further 1.94 percent this morning. Prices shrugged off news that a potential 2019 output-cut could be on the table at an OPEC meeting over the weekend. Crude production the United States was at a record high last week with a level of 11.6 million barrels per day.

The Canadian dollar is currently trading up against the US dollar. Todays expected range is 1.3182 – 1.3282.

Source: Bloomberg

Weekly Economic Update

For the week of August 27 – 31.

shutterstock_242365438.jpgFed chairman, Jerome Powell, made his first speech at the Kansas City Fed’s Annual Policy Symposium in Wyoming on Friday. Powell noted the current path of the gradual interest hikes is FOMC’s approach to balancing the expansion shortening if rates move too fast, or overheating if rates move too slowly. Powell acknowledged although unemployment is low, “there does not seem to be an elevated risk of overheating.” He continued to note estimates regarding academic model usage were at best “hazy” navigational guides, further distinguishing the fact that monetary policy is based on economic performance, and one of the main contributing factors to the conservative approach of gradual rate hikes. The Fed chairman said he expects the economy’s “strong performance will continue” and the “gradual process of normalization remains appropriate.”

During an interview in Wyoming on Friday, Bank of Canada Governor, Stephen Poloz, noted although the recent headline inflation of 3 percent is transitory and will eventually reverse, the focus is on the stability of core inflation, which is near its 2 percent target. Poloz also commented digitization is one of the main reasons why not only economies have more capacity to grow without fueling inflation, but also why interest rate normalization by traditional models is slower than predicted. Digitization has already led upward revisions of growth and investment in previous years, and possibly under-reported international trade.

This week will be relatively quiet for Canada; the only notable economic release will be the Q2 GDP figures on Thursday, which is the last piece of important data before the Bank of Canada (BoC) policy meeting on September 5. Although the BoC has previously raised interest rates four times within the last year, market participants are expecting as many as three more future hikes. Major releases in the US this week include wholesale inventories, FDP numbers, personal income/spending data, and the University of Michigan Sentiment gauge.

Both US and Canada government yields are trading flat to 2bps higher with S&P futures higher (+10.3). The Canadian dollar is trading slightly lower this morning after Poloz’s comments this weekend. Today’s expected range of Canadian dollar is 1.2998 – 1.3098.

 

Source: Bloomberg

 

The Lifecycle of Estate Planning

People have different estate planning priorities and needs during the course of their life. Estate planning isn’t just planning for death; it’s also about planning for life.

Car driver womanYoung adults, especially those in their 20’s and 30’s often feel they don’t need a Will because “I don’t have anything”. Here’s the challenge: if you have a bank account, a credit card, a car … you do have an estate and need a Will with an appropriate executor named to deal with these assets in the event of your death. And since you’re at it, you may as well execute a power of attorney and advance health directive.

As adults become more secure financially they start purchasing. It could be a condo, a house or a cottage at the lake. The questions become slightly different. Is the mortgage life insured? What are your insurance needs for life, disability, property, etc. Is there adequate coverage?

These questions become even more pressing when entering a relationship, whether common-law or marriage. If the house was solely owned before the relationship, will it be re-registered joint with right of survivorship? Is there a marriage or cohabitation agreement in place? Does the Will, power of attorney and advance health directive need to be updated to reflect these changes? In all provinces except Alberta and British Columbia marriage revokes a Will. In Saskatchewan, cohabitation can revoke a Will. If there is no Will, some provinces don’t recognize a common-law partner as having rights under the laws of intestacy. Are appropriate beneficiary designations in place on insurance policies, pensions and RRSPs? Has a financial planner been engaged to help achieve personal financial goals?

Happy Children Enjoying Piggyback Ride On ParentsChildren? A new set of questions. Does the Will include a guardian appointment for the children? Are testamentary trusts established in case both parents die in a common accident? Has an RESP been set up to take advantage of available grants?

Has organ donation been discussed yet? It’s never too soon to discuss this very important topic and understand the other person’s wishes.

Relationship breakdown. Unfortunately, it happens. This should again spur a review of your estate plan. Many of the same questions that need to be answered when entering a relationship have to be answered when exiting one. Is there a property settlement? This may be an important factor in being able to update your Will.

You own your own business. Do you have plans in place in the event you are incapacitated or die? Who would run the company? Does the attorney named in your power of attorney or the executor named in your Will have the ability to continue the business? Is key man insurance in place? Who has signing authority on the accounts? Consider the impact on employees should these questions not be answered before illness or a tragedy strikes.

As we age, so do our parents. Do you know your parents’ end-of-life wishes? Do your parents have a Will with an appropriate executor? If they’ve pre-planned or pre-paid their funeral, do you have the details? Is it time to think about pre-planning or pre-paying your own funeral, or at least discussing it with your own family?

Nurse Making Notes During Home Visit With Senior CoupleThe children leave home (hopefully) and start their own lives. Retirement is approaching. What is the most appropriate way to distribute your estate? Will it be shared amongst your children, grandchildren or a favourite charity? If you have a child with disabilities, is an absolute discretion trust appropriate? If leaving money to charity, what is the most tax-effective way to do so? Does it make sense to open an RESP for the grandchildren? If a child predeceases you, will their children benefit? Has money been lent to a beneficiary? If so, will that money form part of the estate or will the loan be forgiven?

Life has a cycle and evolves. So too does estate planning. It’s always a good time to establish your priorities, look at your current and future needs, and evaluate your estate plan.

Joan McAulay, Senior Personal Trust Specialist, Trust Relationship Management & Sales
Concentra Trust, A wholly-owned subsidiary of Concentra Bank