December and January market info seemed to be more news driven than data driven. 

Overall perspective is weakness in Canada and strength in the US. This can be seen in the comparative returns between the US S&P 500 (up 28.9% in 2019 not including dividends) versus the TSX (up 19.1% in 2019 not including dividends).

The markets continue to drive higher after concerns about higher escalations between the US and Iran have abated recently.

Bond yields for the US and UK are down from July 2019 but in Canada, Japan and Germany they are up… meaning higher interest rates.

Canada

Manufacturing Sales were weak and have been for much of the year. Inflation both headline and the core which strips out more volatile items have been healthy around 2% which is within the desired Bank of Canada range.

October month over month GDP was soft. Further Manufacturing indicators were mixed as Canada had difficulty competing in US markets but saw improved demand from China.

Industrial Product Prices dropped overall with notable decrease in chemicals and chemical products which would be used in the manufacturing and industrial industries. This confirms weakness in productivity.

Germany

Inflation is still below 2% and interest rates will likely remain accommodative.

This is further confirmed by weak wholesale and producer prices.

Manufacturing is still stabilizing.

If we’re going to get international exposure, Germany is where we look for it.

United States

Inflation remains within range but on the higher end.

With oil prices increasing on the back of the Iran/US tensions, the fed may look through a rise in inflation and look at it as transient.

Jobs data remains good. Producer prices are weak. Retail sales are hanging in there. Manufacturing is good. Not hot or cold. Industrials are soft. Construction is improving.

Overall we’re optimistic about the US markets.

China

There have been reports of financial company write offs. The amount of default on debt that is reported on is multiples of 2017 as 2018 and 2019 were very high in comparison. The concern is about financial troubles by non-reporting entities and we may not have visibility into it.

Industrial production and retail sales improving. Manufacturing is stable from previously weak data.

We use Chinese data as a bellwether for global economic activity but are not investing directly.

Personal Finance

In our experience there is no one size fits all solution. Whether that be for investments, life insurance or mortgages both personal or commercial.

When looking at life insurance there are many considerations with family, work benefits, estate planning and current health of both the person and their immediate family.

Investing is very customized as to someone’s cash flow needs or potential needs.

Mortgages are catered to cash flow and budgeting to provide solutions that help repay debt faster. Plus if the person has a risk tolerance and understanding of the stock market then the two can be combined to utilize available debt to create a tax deductible mortgage plan.

The first step in this process is to gather as much information as possible and put it together in one viewable package.

Once this is done then planning can begin.

With the New Year now here this is the perfect time to do a financial check up.

Until next time,

Trevor Dale, CFA

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