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

Weekly Economic Update

For the week of August 20 – 24.

According to Statistics Canada, the Consumer Price Index in July had a strong gain of 3 percent year over year, beating expectations of 2.5 percent. The Headline CPI was also up 0.5 percent month over month versus estimates of 0.1 percent. Energy, travel services, and mortgage interest cost categories led the gains: gasoline prices were up 25.4 percent, airline tickets were up 28.2 percent in the past year, and interest rates for mortgages were 5.2 percent higher. Natural gas (-5.7 percent), telephone services (-5.1 percent), and traveller accommodation (-4.1 percent) led the price declines in July. The largest upside and downside contributor to monthly inflation was the recreation/education category and clothing/footwear category, respectively. Inflation expanded the fastest since 2011, which suggests Canada’s retaliatory tariffs had little impact on July CPI gains.

iStock-508730131.jpgInternational investors bought $11.5 billion of Canadian securities in June, including a total of $11.7 of Canadian bonds. Meanwhile, Canadian investors had their largest investment in foreign securities since January 2018, adding $11.3 billion to their portfolios. As a result, international transactions in securities generated a net inflow of $256 million into the economy in June.

This week will be relatively quiet for Canada and US economic releases. We have wholesale trade sales and retail sales data coming out in the middle of the week. In the US, we have existing home sales, August 1st FOMC meeting minutes, Markit PMI data, and durable goods data to be released this week. The focus will be on central bank speak from Jackson Hole on Thursday and Fed Chair Powell’s keynote speech on monetary policy in a changing economy on Friday.

Both US and Canada government yields are trading flat to 1bps lower with S&P futures higher (+6.6). The Canadian dollar is currently trading 1.3071 against the US dollar, todays expected range is 1.3021 – 1.3121.

 

Weekly Economic Update

For the week of August 13 – 17.


iStock-147680107_path into redwood trees_edited.jpgAccording to Statistics Canada, employment rose 54.1K in July from 31.8K in prior month, beating economists’ estimated gain of 17K in employment. The majority of the gain came from part-time employment (+82K), followed public employment (+50k). Full-time employment fell 28K, vs. last month’s gain of 9K, while private employment rose 5.2K in July. Average hourly wages came in lower at 3 percent, from 3.5 percent in June. Canada’s unemployment rate came in a smidge lower than estimate, at 5.8 percent vs. 5.9 percent in June, which is now tied for its lowest level since the 1970s. The unemployment rate in Ontario hit 5.4 percent, matching the lowest rate on record since 2000.

Consumer prices in the United States came in line with expectations on a month-over-month basis and year-over-year basis in July, at 0.2 percent and 2.9 percent, respectively. Weakness in energy was a drag to the headline CPI increase relative to the core CPI. The decline in electricity (-1.4%) and utility gas service (-1.7%) more than offset rising gasoline inflation (0.5%).

Contagion spreading to euro area lenders were a concern last week, after the Financial Times reported that the European Central Bank is becoming concerned about the exposure of some of the region’s banks to Turkey. Turkey’s currency, the Lira, plunged as much as 13.5 percent last Friday. Subsequently, the US plans to double tariffs on Turkish steel to 50 percent, and raise the rate on aluminum to 20 percent. President Erdogan said Turkey was in an ‘economic war’ while ruling out higher interest rates to stem the Lira’s losses or seeking an international bailout.

Scheduled releases in Canada this week include existing home sales, manufacturing sales and consumer price index data. Schedule releases in the US this week include import and export price index, retail sales, various manufacturing figures, and readings for the University of Michigan’s Sentiment. 

Both US and Canada government yields are trading flat to 1bp lower with S&P futures lower (-3.5). The Canadian dollar slid to its weakest level against the dollar since July 24, as haven currencies outperform on fears of Turkey crisis. Today’s expected range of Canadian dollar is 1.3105 – 1.3205.

 

Weekly Economic Update

For the week of July 23 – 27.shutterstock_721776619

It was a strong day for Canadian economic releases on Friday last week. Both retail sales and consumer prices data blew past expectations, and the Canadian dollar shared in the strength. Following the releases on Friday morning, the Canadian dollar strengthened against the US dollar by over one percent. Unsurprising, markets expectations for rate hikes over the upcoming three meetings increased on Friday slightly.

Retail sales grew by two percent for the month of May, twice as much as the one percent growth that was expected, and a drastic improvement from the 0.9 percent drop that was seen in April. Excluding autos, sales growth was closer to 1.4 percent (against expectations of a lesser 0.5 percent). The details of the release show that growth was seen in ten out of eleven measured sub-sections, with the largest upside contribution coming from new car dealers. The lone decline came from the supermarkets section.

Not to be outshined, consumer prices also beat expectations, growing by 0.1 percent and 2.5 percent on a month-over-month and year-over-year basis respectively. Expectations for the two measures were zero percent and 2.3 percent. Growth of 2.5 percent year-over-year marks the fastest acceleration seen since 2012. The largest upside contributor this month was transportation costs, while the largest drag was seen from the recreation and education category.

The Canadian dollar is trading relatively flat against the US dollar this morning. Today’s expected range is 1.3088 – 1.3188.

 

You’ve been named executor. Now what? A 6 step guide to estate administration.

shutterstock_90567055Being named executor for an estate is both an honour and a responsibility. It means that while grieving the loss of a loved one, you also have the obligation to make sure their last wishes are fulfilled.

It can be difficult to get started, and it’s worth taking some time to research the steps involved in administering an estate.

There are SIX main activities related to estate administration you will need to address as executor (although not all activities within each step may apply to you):

Step 1
Locate the Will. Common places to look include safety deposit boxes, personal files, or a home safe. It could also be on file with a professional advisor such as Concentra Trust, a financial advisor, an accountant or lawyer.

Step 2
Make funeral arrangements. There are many decisions to make when arranging a funeral, usually in a short time period. Regardless of instructions or wishes from either the deceased or their family members, as executor, you are ultimately responsible for funeral arrangements.

Step 3
Protect the estate. This includes rerouting mail, ensuring any vacant property is properly insured, notifying financial institutions, advertising for creditors, and safekeeping any valuables.

Step 4
Inventory assets and liabilities. This is required for the probate application and may include contacting government agencies, such as the CRA and Service Canada, locating property titles, valuing assets, as well as notifying lenders and credit card companies. Once the statement of assets and liabilities is completed, you’ll need to provide a copy to the beneficiaries.

Step 5
Complete the Probate application. Probate is commonly required when real property is held solely in the deceased’s name. Probate may also be required by a financial institution. There are three ways you can complete a probate application: do it yourself; have a lawyer complete it; or call Concentra Trust.

Step 6
Distribute estate assets. You will need to file the required tax returns to receive a CRA Clearance Certificate. You will then be able to prepare a final report for the beneficiaries. The beneficiaries must approve the report, your executor’s fee, and sign a release before you can distribute the estate assets and close the estate account.

Since some of these steps are complex, it can be wise to enlist the help of a professional. Our experienced advisors offer executors advice and guidance through the entire estate process. You may only need a little advice, or you may want a complete solution. Our expert team is professional, compassionate, and knowledgeable. And we’re here to help.

Joan McAulay
Senior Personal Trust Specialist
Concentra Trust

For a no cost, no obligation consultation with an estate specialist, call 1-800-788-6311 #1888 or email executorease@concentra.ca.

This information cannot be considered to be legal, tax, real estate or financial planning advice, nor replace professional advice, but can serve as a helpful reference.

 

Weekly Economic Update

For the Week of May 28 – June 1

US durable goods orders declined more than expected in April, falling 1.7 percent versus consensus expectations of a 1.3 percent decline. The decline was concentrated in transportation. Excluding transportation, orders were up 0.9 percent and the increase was fairly broad-based, spanning computers, electrical equipment and metals; however orders for machinery fell another 0.8 percent following a 3.2 percent drop the month prior. Analysts believe that durable goods orders may be reaching a plateau with the level of activity leveling out.

The final print of the University of Michigan Sentiment gauge for May was a bit lower than expectations with a reading of 98.0 versus expectations of 98.8. The latest reading marks a four-month low as consumers wade through less favourable buying conditions for homes and big-ticket items. The current conditions gauge, which measures American’s perceptions of their finances, fell to 111.8 from 114.9 in April. However, the expectations measure improved to a three-month high at 89.1 from April’s 88.4.

There are two main releases for Canada this week – GDP figures and the Bank of Canada’s rate decision. Consensus expectations are for first quarter GDP to have accelerated to a 2.0 percent annualized pace from 1.7 percent in the fourth quarter of last year. Meanwhile, the Bank of Canada is scheduled to announce its rate decision on Wednesday. Consensus is that the Bank will hold rates steady at 1.25 percent. A few manufacturing releases are also scheduled this week. In the US, GDP figures will also be released along with the employment report, various housing numbers and ISM manufacturing.

The Canadian dollar is trading flat to slightly down from Friday’s market close. Today’s expected trading range is 1.2936 – 1.3036.

Source: Bloomberg

Weekly Economic Update

For the week of April 23 – 27

Canadian headline inflation increased 2.3 percent year-over-year in March, which was 0.1 percent lower than consensus expectations but 0.1 percent higher than February’s figure. The average of the core measures came in at 2.00 percent, just shy of the 2.03 percent recorded in February. On a monthly basis, headline inflation was up 0.3 percent. The largest upside contributor to the monthly figure was the recreation and education category, adding 0.22 percentage points while the largest downside contributor was the household operations category, subtracting 0.22 percentage points.

Canadian retail sales matched consensus expectations in February, increasing 0.4 percent month-over-month to $49.8 billion. However, excluding autos, sales were flat to January’s figures with the new car dealers category driving sales for the month of February, contributing 0.39 percentage points to overall sales which happen to be the largest upside contributor to overall retail sales. The largest downside contributor was the gas stations categories, subtracting 0.10 percentages points. Of the 11 subsectors of retail sales tracked by Statistics Canada, four experienced an increase. These four categories represent 47 percent of all retail trade.

Scheduled data releases this week for Canada will be very light. The only major scheduled release this week is the February wholesale trade sales figure. Consensus expectations are for sales to increase by 0.7 percent after January’s 0.1 percent increase. There will be a lot more data releases in the US. Scheduled releases include housing figures, manufacturing numbers, sentiment gauges and GDP. The first print of first quarter GDP is expected to come in at an annualized rate of 2.0 percent, down from the final print of fourth quarter GDP of 2.9 percent.

The Canadian dollar is down a bit more against the US dollar from Friday’s market close. The loonie is down about a cent from Friday morning after Canadian CPI figures came in slightly lower than forecast. Today’s expected trading range is 1.2730 – 1.2830.

Source: Bloomberg

Weekly Economic Update

For the week of March 6 – 10.

Fed Chair Janet Yellen seems to have confirmed that the Fed will be raising interest rates in March; speculators have the rise’s probability at 96%. Yellen said that assuming employment and inflation are still in line with the central bank’s expectations, an adjustment to the overnight rate will be appropriate in March. Yellen also stated that rate adjustments will be less gradual than in the past. Fed Vice-Chairman Stanley Fischer echoed his support of a rate hike: “there is almost no economic indicator that has come in badly in the last three months.”

China’s National People’s Congress announced a 2017 growth target of “around 6.5% or higher if possible,” compared to last year’s range of 6.5% – 7.0%.

Data releases in Canada this week will include international merchandise trade, housing starts, and employment. Friday’s employment release will follow a posting of 48.3K in January which was made up of 15.8K full-time positions and 32.4K part-time positions.

In the United States this week, releases are expected for factory and durable goods orders, trade balance, ADP employment change, wholesale inventories, and employment. Friday’s Nonfarm data release will be under close scrutiny leading into the March 15 Fed policy meeting, where investors are expecting the first rate hike of the year.

Source: bloomberg

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