Our team has been very excited to hear the news about the increased eligibility for vaccines this week.  It feels like we are one step closer to having face to face meetings with our clients and visits with friends and family!  It is hard to believe that it has been a year since we have had to shut down our office to client visits and our team has been working all or part of the time at home.  We appreciate all of our clients' patience with us and your willingness to meet us virtually!  Even though we may not see you in person we enjoy 'seeing' you during our virtual visits.  Hopefully vaccine supply will increase in Canada and we will be welcoming you into our office soon.  We promise to have fresh coffee and tea!

Volatility was relatively subdued  last week, helping global equity markets edge higher. The COVID situation remains a near-term headwind but does not seem enough to dissuade investors from the view that a sustainable growth trajectory is around the corner.  In Canada there was an acceleration of new daily infections.  Ontario saw a sharp increase and sadly hit new record highs in reported cases.  We are not alone, Chile, Japan, Germany and Turkey are also facing accelerated spread.  Israel represents the best example of what hopefully lies ahead for most countries.  Due to their aggressive and efficient vaccination campaign, where now more than half of their population is vaccinated, their infection figures have dramatically fallen.  We are also starting to witness drops in infection from record peaks in the US and the UK.  If you are curious to see how Canada has been faring relative to other nations there is some great comparison data available through Our World in Data website. This organization believes data will help inform the issues impacting our world and allows you to track and see where we are making progress and where we are falling behind.  The researchers at the University of Oxford and the scientific editors of the website are supported by grants from organizations like the World Health Organization and the Bill and Melinda Gates Foundation.  The graph below is an example of comparison data available through their interactive site.  This graph compares Canada to the UK and shows the rolling 7 day average of new cases per million people. The UK COVID variant led to rapidly increased cases last fall in the UK which led to shutdowns.  Their stay at home orders combined with their vaccination rollout was effective in dealing with the variant. 

 

The Budget

This week saw the first federal budget in two years and featured an unprecedented $101 billion of stimulus aimed at ramping up Canada's economic growth.  Despite previous hinting, this budget did not include increases to the capital gains inclusion rate nor did the government address housing policy or introduce a wealth tax.  The budget did focus on helping those Canadians most hurt by the current pandemic. Some of the key initiatives:

• Canada Recovery Hiring program aimed to help businesses hire back laid-off workers
• Continued support for business owners through extending wage subsidies and rent support
• Extended recovery payments for Canadian workers
• Support for working parents - supporting affordable child care
• Protecting and supporting seniors through increases to OAS and strengthening long term and supportive care to allow seniors to remain in their homes for longer
• Supporting students by waiving of interest on student loans and grants and repayment assistance for low income households
• The introduction of a luxury tax on purchase of new cars and aircrafts over $100,000 and boats with a price over $250,000

To learn more details about these and other measures, RBC Wealth Management has summarized the budget in Federal budget 2021: Key measures that may have a direct impact on you.

 

Housing Market

Home prices spiked further across Canada in March despite more sellers.  Despite concerns of an overheated market, a buying frenzy has continued - a local Hamilton couple has bid and lost in 21 house negotiations, sometimes seeing homes going hundreds of thousands of dollars over asking price.  They finally decided to buy land and build, the downside is they are living with parents in cramped quarters. 

The average home price according to CREA was $678,091 as of February 2021, with Ontario averaging $887,695.  It is these peak values and the hot market that is challenging some Canadians dream of owning a home.  A recent RBC Poll found that 36% of non-homeowners under the age of 40 have given up on their plans to own their own home.  62% of Canadians believe that most people will be priced out of the market in the next decade.  This poll found that coming up with the downpayment can be one of the biggest barriers to buying a home.  This is not a surprise to us as we have been hearing about this issue from many of you who are worried about your children and grandchildren's ability to buy a home.  In the current market, where demand is outstripping supply, reducing demand is one way to put downward pressure on home prices.  While this may not be great for our personal net worth statements, it may prove to be better for the economy in the long run.   RBC Economics discusses this issue and considers some potential solutions in Hot Canadian housing markets call for a policy response.

 

Financial Health

There has been an increase in fraud attempts during the pandemic and tax season seems to bring on new ways that scammers try to trick you into parting with your cash.  It is important to continue to be vigilant in protecting both your money and your information.  This article outlines 7 Tips to Keep You Safe This Tax Season.

More Canadians than ever are reaching 90, or even 100 years of age.  We know that when we do financial planning many of us struggle to believe that we could live this long but we know from the data that this can occur.  We want to support our clients so you are both healthy and financially secure well into your 90s.  RBC Wealth Management, Royal Trust and the National Institute on Ageing (NIA) are hosting a discussion on how financial planning for and during retirement should consider:

• Longer life expectancies and unforeseen life events
• Issues impacting financial security in and into retirement
• Best practices for decumulation strategies

This virtual event will take place Thursday, April 29, 2021 at 12:00 PM ET.  If you are interested in attending this webinar please email Sarah Kilpatrick and she will send you an invitation to the event.  During your next financial planning review we can 'test' the financial flexibility your portfolio can provide if you live longer than you expect.

In the most recent podcast in the RBC's Disruptor's Series the discussion focuses on how The pandemic could help unleash a creativity boom.   Most of us can relate to this after the past year, where we have seen businesses needing to adapt to continue operating and we are hearing from many of you that you have started creating at home, from baking to gardening to painting.  In this podcast the CEO of Cirque du Soleil is interviewed sharing his insights.

"For a businessperson, if you don't have any creativity, what is going to happen one day,is that whatever you do will become obsolete" Daniel Lamarre, CEO Cirque du Soleil

We hope that you are remaining healthy and safe.

Hayes Vickers Private Wealth