Last month things got spicy, with the US S&P 500 down 6.6% in May and as the markets love to do, the S&P 500 was up 6.9% in June.

This roller coaster is to be expected and people should get used to volatility. It is a part of life.

I don’t run from it, I don’t hide from it and I prefer to bring it to my clients’ attention so that I can walk them through the process of understanding it.

Volatility is not something to run from in itself.

Like all relationships, there will be ups and downs and this is no different than the relationship with your portfolio.

In this newsletter I will discuss:

  • Market Overview
  • Podcasts over the last month
  • Mortgage rates
  • Annuities
  • Wealth Tip

What caused the ups and downs? Here’s our overview of the last 30 days of economic data.

Market Overview:

  • US S&P 500 up 6.9% in June (down 6.6% in May)
  • Canadian TSX up 2.15% in June (down 3.3% in May)

The S&P 500 continue to perform better than the TSX year to date and the US S&P 500 is making new highs, it seems as though Canada isn’t having the same animal spirits to drive it to new highs. I believe this is due to the economic fundamentals of the Canadian consumer and the hesitation of the Bank of Canada to lower interest rates. As a result of the interest rate differential changes, the US/Canadian dollar is changing where the Canadian dollar gained strength.

Major concerns are that trade uncertainty and tariffs hit corporate earnings more and that it causes business investment to continue to hold back. This in turn would cause a repricing of stock multiples to accommodate lower growth and would cause a sell-off in markets.

Sell-offs are necessary, normal and the judgement comes from determining if they are recessionary or not. If the upcoming sell-offs, which will eventually come, are temporary repricing of risk then they are nothing to worry about.

We have seen regional disparities with respect to economics economics.

Germany, Europe’s largest economy seems to be holding on with slightly improving manufacturing, employment strong and reasonable retail sales. Inflation was weak but reasonable and the European Central Bank discussed more accommodative monetary policy. Together I think this is a positive for the German economy.

China seems to be weak in vehicle sales and manufacturing, and inflation within a reasonable range. Given China is a controlled economy, I’m less worried about the slight contraction as the Chinese government has more control over a soft landing and can reignite the economy.

In the United States, import prices were lower, inflation remains on the lower side and producer prices were reasonable. These all point for the US Fed to be in no rush to raise rates. Given the weakness they are seeing on the international front they are expected to take out a metaphorical insurance policy in the form of an interest rate decrease. Australia has been lowering interest rates as well. Given the US decrease in rates, mortgage rates have dropped and will help housing.

US Employment remains solid although I find this to be a lagging indicator. Manufacturing looks weak although not in contraction yet, it will be a part of the economy to watch.

In Canada auto sales in Canada looked weak. Inflation was right around 2% or more depending on which measure you look at. 

Wage increases were solid. Employment was solid with a beat for full time employment gains.

Housing starts also had a big number as more shovels hit the ground although manufacturing was in a slight decline.

Overall, I still believe the Canadian consumer debt to be an injury to long term growth and will be fuel for a sell off should economics deteriorate. I favour the US economy and markets, with diversification coming in the form of Germany to a small extent.

On an equity/debt exposure level I believe that we are nearing the end of a cycle in the next few years and that the end will not likely be well telegraphed.

If this last year has taught me anything, it is to remain patient and wait for sell-offs as they come quickly so be ready to put money to work when the timing feels wrong.

Yes, that is not a typo. When the timing feels wrong. When everything is selling off and everyone is talking doom and gloom, that is usually the time to put money into the markets. Focus on the economics and filter out the noise. Look forward and envision various senarios of all types. Then put probabilities on them and pick a path. Do this regularly.


Podcasts over the last month can be found at and also on iTunes, Spotify, Google Play and Stitcher.

The last one has an embarassing photo of my hair in the included YouTube video. Check out the post If Your Hair Is Lame, Up Your Game.

  • The Fear of Climbing Mountains: How people become more risk averse the more money they have even though they have greater ability to weather downturns in the market.
  • Army of Weeds: How it is important to not compare yourself to others and focus on where you currently are. Comparison is the thief of joy. Enjoy the fruits of your labor while you continue to build.
  • Not Doing Today: How being comfortable holds you back from growth.
  • Go on the Offense!: How not making regular moves in our finances causes you to be a defensive player in life.
  • Retirement Acceleration Syndrome: How the closer you get to retirement, the sooner you want to retire.
  • Hierarchy of Wealth: How there are three phase – Own, Outsource and Outlier – and how each play a role in your life
  • If Your Hair Is Lame, Up Your Game: Embarassing comparison of my hair cut and how waiting for life to give you some sort of catalyst to make a decision is wrong. You create your life so don’t wait for someone else to force your hand into a decision.

Mortgage Rates:

Mortgage rates have been decreasing this year and now have 5 year mortgage rates available at 2.79%, subject to change, subject to approval, conditions apply.

This is down from over 3.14% at the beginning of the year.


Annuities are something that most people understand the concept however few people understand how to actually get one. They are not usually appropriate to put an entire amount of wealth into.

They do serve a purpose of creating a fixed income cash flow.

The approach that I find best to take is to reverse engineer the amount of annuity needed.

Find out how much cash flow you need per month and then we can figure out how much capital is needed to create that cash flow.

The great thing is that there is no medical exam even though these are a life insurance product.

You can also set them up with guarantee death benefits, set them up as joint and also use money inside or outside of your RRIF or RRSP.

The terms get better the older you get and over 65 years old tends to be a good time to start looking at them from a cost perspective.

Wealth Tip:

This month I’d like to bring up the concept of focus. Focus is everything and it allows for deep dives into topics and the ability to notice details.

It was a common theme as I refine the client that I resonate best with. Over the next month I will be directing communications at two audiences:

  1. People who are heading into retirement and require wealth planning so that they can understand what retirement can look like, how to structure their finances and reduce their costs which maximizes their cash flows.
  2. Mortgages over $1 million and financing houses over $1.5 million.

In both cases it is a clientele that I understand the most and have a lot of similarities with. They understand what I do best and we generally fit well together.

How does this relate to you?

Where in your life are you focusing on areas that do not resonate the best? You may do many things really well, but where are you amazing?

That’s what I’ve done and I’ll suggest that you find one area to focus on and leverage that area as much as possible. Focus on that area as it will bring the most success.

Until next time,

Trevor Dale, CFA