The Wrap Up – April 2017 Update

The month of April ended with the Canadian market, measured by the S&P/TSX Composite, climbing by 0.25% for a year-to-date gain of 1.95%. President Trump’s decision to implement a 20% tariff on Canadian softwood lumber imports has introduced some uncertainty in the Canadian market. However, some analysts suggest that these costs will be passed on to the U.S. consumer given increasing demand in the U.S. housing market and insufficient supply from US producers. This tariff sets the stage for upcoming NAFTA renegotiations in which President Trump has voiced his concern over energy, dairy, and lumber trade with Canada.

After the Federal Reserve in the U.S. chose to maintain its benchmark interest rate to a range of 0.75%-1.00%. The Bank of Canada (BoC) also maintained its target for the overnight rate at 0.5%.  BoC governor, Stephen Poloz, cited relative slack in the Canadian economy compared to the U.S., as well as geopolitical risks as reasons for maintaining the current rate.  Canada closed out March with an unemployment rate of 6.70% in contrast to the U.S. rate of 4.50%.

I reached a personal milestone this past weekend as I turned 50 years old and (I’m sure like many others) said to myself…  “my, that seems to have gone by quickly!” My mind drifted back to 1991 when I was getting started in business. That year the TSE finished around 3,800 and the Dow was around 3,000. Kerri and I had just purchased our first home for $52,500, securing our first mortgage at a rate of 12.25%. The world was concerned about unrest in the Persian Gulf, the Soviet Union was collapsing and the United States was moving into recession. Cell phones and the worldwide web were just beginning to enter our consciousness.

Flash forward to today… we see interest rates at all-time lows and property in Canada at all-time highs (a tricky time for first time buyers should trends reverse, although double-digit interest rates certainly presented challenges as well). Lately, economic and political events continue to dominate the news cycles. Uncertainty surrounding North Korea, a new wave of populism affecting outcomes of political leadership races and major events such as the Brexit decision flood the airwaves and our psyches. While the events and players have changed since ’91, it seems that political and economic events continue to be interrelated and can have a material impact on portfolios and asset allocation decisions. Sifting through the “noise” and info-overload on your behalves, while working to protect your hard-earned capital from market swings is not a responsibility that we take lightly. For this reason we continue to broaden our approach using items such as our Willoughby pool which adds a greater degree of flexibility and decisive execution to our actions. We continue to seek out solid alternative investments to sustain the yields our clients need to build their wealth and live a worry-free retirement.

Reflecting on my first 50 years; I feel extremely thankful to be blessed with a healthy family, a patient spouse, and a wonderful practice. The opportunity to help and support our clients in planning and realizing their dreams while working with the best team in the country are two of the best things I could have ever hoped for on my 50^th birthday. My sincere thanks to you all!

While worries and general “noise” abound and likely always will, it’s most certainly a good idea to occasionally take stock of our lives, be thankful for each other and the fact that we live in a pretty darn-good place.

If you have any thoughts or feedback, I’d love to hear from you. Have a great spring and I look forward to seeing you all soon.

Kelly

 

 

 

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