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Wednesday morning we started the day off right with a special breakfast event featuring RBC’s Chief Investment Strategist, Jim Allworth. As a part of my ongoing commitment to keeping my clients informed and confident in our future plan, I arranged for Jim to join us for a candid chat over breakfast – and for WOTS this week, I thought you might like to read a brief summary of his thoughts.
Jim has been in the investment business for 49 years, as both a research analyst and portfolio strategist and is a wealth of knowledge we are fortunate to have at the firm, for my team, for our clients and for you. Over breakfast, Jim gave us a ‘tour’ around the world as he described the various economic conditions and outlook for financial markets around the globe. The main takeaways are as follows:
Speaking of the benefit of the doubt – click here for a copy of Jim’s latest Wealth Management Review commentary which elaborates further on his North American thoughts and stay tuned for the July issue of our monthly Global Insight for our thoughts on the rest of the world.
With so much going on and information coming at us from every angle, it's sometimes hard to keep your finger on the pulse of what's happening. In an effort to keep you in-the-know and provide you with some conversation nuggets for this special Canada Day long weekend, I've compiled the following hit list to fill your conversation pipeline.
Now you are in-the-know with Word on the Street.
Enjoy the long weekend and happy 150th Birthday, Canada!
D.
Market Minute
In this week's Global Insight:
Click here for the Global Insight Weekly.
Term of the Week
CPP - Canadian Pension Plan | Although it forms a big part of our retirement income, the Canada Pension Plan is a complex program that's not entirely understood by those who will eventually benefit by it. Here are 13 things you need to know about the Canada Pension Plan | Learn more here
Chart of the Week
And speaking of which, with the celebration of Canada's 150th birthday taking place this weekend, there are a number of reasons for us to look back and be proud to be Canadian. Here are some key financial milestones that have taken place in our country's history:
Market Movers
Canada's economy grows for 6th consecutive month Canada’s economy grew for a sixth consecutive month with gains in a majority of industries, underlining the central bank’s view a durable recovery from an oil shock is emerging. Gross domestic product grew 0.2% in April, Statistics Canada said today from Ottawa, matching the median forecast in a Bloomberg survey of economists. Read more here | Bloomberg
RBC Economics is Now Forecasting two Rate Hikes from the BoC in 2017 RBC Economics has adjusted its interest rate forecast and it is now calling for two rate hikes in the second half of 2017 (the July and October MPR meetings) and two rate hikes in 2018 (also the July and October MPR meetings). RBC Economics had been previously forecasting no rate hikes in 2017 and three rate hikes in 2018 (April, July and October). The full report notes that broadly-based growth and improving business sentiment fueled a hawkish turn from the Bank of Canada. With lower rates having “done their job,” RBC Economics sees the bank removing 2015’s rate cuts with increases in both July and October this year. Read more here | RBC Economics
India’s drive for tax reform will create the largest common market in the world The country’s 1.3 billion residents currently pay a bewildering array of sales taxes, and the administration of each one means the potential for a bribe. On July 1, a new federal GST will replace many of those varied taxes with a single graduated system that applies across the country. Prime Minister Narendra Modi promised to attack corruption and India’s thicket of bureaucracy after his 2014 election, yet critics say his biggest swings so far—including banning all large-denomination bills—haven’t gone far enough. Read more here | Bloomberg
Italy will pump up to €17 billion into two failing banks The bailout—which comes just weeks after a troubled Spanish bank was rescued without taxpayer money—means Italy’s strongest lender, Intesa Sanpaolo, will end up with the failing banks’ good assets after paying a symbolic €1. Italy said using taxpayer funds was warranted because the banks’ failure would have had disastrous consequences for businesses and depositors in the country’s industrial northeast. Read more here | BBC
Investment in the U.S. petrochemicals sector is booming Thanks to the shale revolution, the U.S. is now one of the cheapest places to manufacture plastics. Some US$185 billion in new U.S. petrochemical projects are in the construction or planning phase, making the sector one of the brightest spots for U.S. business investment. Given healthy demand worldwide for all things plastic, annual U.S. petrochemical exports are expected to grow to US$110 billion by 2027 from US$17 billion in 2016. Read more here | Wall Street Journal
A large sell order temporarily rocked the price of gold The yellow metal dropped to its lowest level in 6 weeks on Monday before recovering somewhat. Some observers said it was likely the result of a “fat finger,” or a trade made in error, noting that the 1.85 million ounces sold was likely much more than intended. Gold is still up about 8% so far this year, making it one of 2017’s best-performing commodities. Read more here | Bloomberg
Loonie also celebrates 150 The loonie climbed to its highest level in four months (77.06 cents US) after Canada's central bank head hinted at a possible interest-rate hike. During an interview yesterday morning, Bank of Canada Governor Stephen Poloz said the cuts introduced in 2015 to offset the impact of falling oil prices seemed to "have done their job," adding the country experienced "surprisingly" strong growth in the first quarter of 2017. Read more here | Bank of Canada
Current Events & Politics
Hack Attack Less than two months after a coordinated cyberattack hit more than 150 countries, hackers executed another assault this week targeting hospitals, government offices and corporations across Europe. Ukraine bore the brunt of the attack, with energy companies, banks, bank machines, gas stations, and supermarkets going dark. The ransomware did make its way to the U.S., but its speed slowed throughout the day and only a few places complained of computer issues. Read more here | Financial Post
No-Hacking Handshake Canada and China have officially agreed not to partake in state-sponsored hacking of each other's private sector. "The two sides agreed that neither country's government would conduct or knowingly support cyber-enabled theft of intellectual property, including trade secrets or other confidential business information, with the intent of providing competitive advantages to companies or commercial sectors," read an official statement on the recent meeting. In addition to hacking, representatives from the two governments discussed a range of security matters, including North Korean aggression, terrorism and organized crime. Read more here | CBC News
Trump’s travel ban goes back into effect The US Supreme Court allowed the administration to ban most travel from six majority Muslim countries for 90 days and suspend much of the refugee program for 120 days as it considers the legalities behind the order. The rhetoric around the travel ban has already had an impact: by one measure, tourism to the US is down 16% from last year. And it is big coastal cities and liberal enclaves such as California that are being hardest hit by the decline. A Canadian government spokesperson said nationals of the six affected countries who also hold Canadian citizenship wouldn’t be affected. The situation for Canadian permanent residents appears less clear. Some observers said the ruling opens up a minefield for all involved, since determining who lacks "any bona fide relationship with a person or entity” in the U.S. will be tricky. Read more here | Globe & Mail
China is charging Tesla gets all the headlines for its “Gigafactory” in Nevada, where the electric-car company is building the world’s largest single battery factory. But China is ramping up its battery production even faster. Battery technology is entering a really interesting—and probably bruisingly competitive—growth period: Read more here | Bloomberg
Health Care Lifeline If the Republican health care bill dies in the Senate, the party may have to work with their Democratic counterparts to shore up the Affordable Care Act. That was the warning from the Senate majority leader, Mitch McConnell, as he continued talks with his fellow Republicans over a new version of the bill that he hopes to vote on after the July 4 recess. In Mr. McConnell’s home state, Kentucky, many of his constituents are worried about health care. The Affordable Care Act had a huge impact there — nearly one in three people now receive coverage through Medicaid. Read more here | NYT
Google Penalties The European Union has slapped Google with a record €2.42 billion ($2.7 billion) fine for violating antitrust rules. In the landmark ruling released yesterday, regulators said the search engine "abused its market dominance" by giving preferential placement to another Google product, its online shopping service. "What Google has done is illegal under EU antitrust rules," read a statement from the EU commissioner. "It denied other companies the chance to compete on the merits and to innovate. And most importantly, it denied European customers genuine choice of services and the full benefits of innovation." Google, which can appeal the charges, has been given 90 days to end its practices or face additional penalties. Read more here | Forbes
There won’t be a Trump Tower in Toronto. The troubled condo-hotel complex’s new owners reached a deal with the Trump Organization to sever branding and management ties—reportedly at a cost of at least US$6 million. The Trumps never owned a stake in the project, whose myriad problems have included construction delays, disgruntled investors and more recently, protests. The jury’s still out on what effect the Trump presidency will have on the Trump brand, but even the Trump Organization is going with new names for some of its hotels. Read more here | Financial Post
Minority Report Theresa May is paying a hefty price to stay in power. The U.K.'s Conservative prime minister, who's party lost its majority in the June 8 snap election, has inked a deal with Northern Ireland's controversial Democratic Unionist Party (DUP) to prop up her fragile minority government. The terms of the agreement include $1 billion pounds ($1.68 billion) of new investment over the next two years towards Northern Ireland's economy in exchange for the DUP's support on confidence votes like Brexit and the budget. The alliance will hold for the length of the current Parliament (five years), but will be reevaluated after each session. Read more here | Reuters
Tim Hortons’ fight with franchisees gets bigger Half of the coffee chain’s U.S. franchisees have joined their Canadian peers’ acrimonious dispute with parent company 3G over cost-cutting, which franchisees say benefits shareholders over franchise owners and hurts the brand. (3G disputes that view.) While four-fifths of Tims’ restaurants are in Canada, the U.S. is a key growth market for the company. Franchisees are looking to gain the kind of clout that U.S. owner-operators already have at their sister business, Burger King, in determining supply costs. Read more here | Globe & Mail
6 North Atlantic right whales found dead in June Since June 7, six North Atlantic right whales have been found dead, floating in the Gulf of St. Lawrence, in a loss that amounts to more than one per cent of the population of the endangered species. The whales were all found in the area between New Brunswick's Miscou Island, Quebec's Magdalen Islands and northern P.E.I. "It's a bit of an unprecedented event in that we've never had an incident like this involving right whales where so many animals have been turning up dead just over the last few weeks," said Wimmer. Read more here | CBC
Controversial Schooling A chain of private schools called Bridge International Academies is operating hundreds of schools — and generating lots of controversy — in several African countries. The American-led, for-profit start-up is utilizing the latest tech tools in the classroom. But it’s also clashing with teachers’ unions and critics, including some who question the model of pressing desperately poor parents for payments. Read more here | NY Times
Sock Diplomacy Prime Minister Justin Trudeau of Canada is employing a new political tactic. This past weekend, when the celebrations for gay pride and the end of Ramadan coincided, he pulled a one-two punch: Rainbow socks that said “Eid Mubarak,” or blessed feast. He’s previously employed socks to plug “Star Wars,” NATO and Canadian maple leaves. “Rarely have a man’s ankles said so much,” our fashion critic concluded. “It’s pretty clever.” Read more here | NY Times
Upcoming Events
How to Taste Beer Like a LadyBoss | An exclusive Women of Ambition event on Thursday, July 13th at 6:30pm. We’ll be sampling 4 brews from Toronto’s Henderson Brewing paired with some tasty cheese with beer sommeliers Crystal Luxmore and Tara Luxmore, aka the Beer Sisters | Click here for more info.
Just for Fun #Canada150 edition
#Make150Count When we invest in youth, great things happen. To celebrate Canada’s 150th, we gave thousands of Canadian youth $150 each, with no strings attached, and challenged them to Make 150 Count. Read more here | RBC
150 Facts about Canada in 150 Seconds Watch the video here | CBC
50 Fantastic Canada Day Potluck Recipes Check out our collection of tasty treats and authentic Canadian eats to celebrate the nation's 150th birthday in style. Read more here | Food Network
Break out the red and white July 1 is just around the corner, and CBC is marking the 150th anniversary of Confederation with a full day of special programming from coast to coast to coast. Whether you're blasting the radio at a backyard barbecue or just curling up in front of the TV, we've got you covered from sunrise to the last firework over Parliament Hill. Here's an overview of everything that's going on. Read more here | CBC
Country Stroll Dave Durkee is exploring Canada's splendors from coast to coast without ever leaving his town. Since October, the 62-year-old has walked a three to four-hour route around Yarmouth, N.S. while mirroring his steps on a virtual map of Canada. "Usually by noon I have the 29,500 steps necessary to give me 25 kilometers," he said in an interview. The ambitious journey, which you can track here, has taken Durkee clear across the country with the goal of arriving in Vancouver on Canada Day. "Just goes to show how far you can get by continuing to put one foot in front of the other," he wrote on his Facebook page. "Never quit, never stop, never give up." Read more here | CBC
What the Duck? Pictured below swimming by my office earlier today … Torontonians will flock this weekend to an attraction that has no relationship to Canada Day at all: a giant rubber duck. Whether people are drawn by the idea that the massive toy bird figuratively transforms Toronto Harbour into a giant bathtub or the novelty of a record-setting duck, its call beckons. Read more here | CBC
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