RAISING THE ROOF
U2. Ariana Grande. Justin Timberlake. Michael Bublé. All performers who, in recent years, have skipped Calgary but played in Edmonton. This because, critics say, the Saddledome roof was not designed to bear the heavy gear that these massive tours hang from the ceiling.
At least partly on that basis, it is great news that the city of Calgary, the province of Alberta and Flames ownership have reached a $1.22 billion deal to replace the now 40-year-old Saddledome, built for the Flames and of course the 1988 Winter Olympics.
I am sure it is just a coincidence that the province has agreed, just one month before a provincial election, to put $330 million towards the project. As the Calgary Herald reports, “The provincial money comes just days before the writ is expected to drop on a provincial election, with campaigning already begun. Calgary is seen as the key battleground in the upcoming election.”
But the deal is not actually done. The contribution from the province still has to be approved by cabinet, by the end of summer. Premier Danielle Smith described that as a “hurdle” still to be jumped.
She continued: “That’s why on May 29, I’m hoping Calgarians give our UCP government a clear mandate to proceed with this arena deal.”
It seems reasonable to conclude that Calgary has fallen behind in terms of its sports stadiums and their ability to attract shows, tourism and jobs to our growing and thriving city. McMahon Stadium was built in 1960 and is the oldest in the CFL. The Saddledome was built in 1983 and is the second-oldest in the NHL, after only Madison Square Garden (home of the New York Rangers), which was built in 1968. Although, it must be pointed out that MSG completed a billion-dollar renovation in 2013.
But will a state-of-the-art arena truly attract the acts that have been flying us over? Not according to Project Calgary, an urban advocacy group. They say it’s actually Vancouver that is stealing our shows, and a Saddledome replacement won’t change that.
Time will tell.
HAPPY ANNIVERSARY COLLEEN!
Speaking of time, April 30th marks five years since Colleen joined RBC and our team. It has been a fantastic half-decade and I am very grateful for everything she does. So are our clients.
Colleen takes great care of everything administrative: new account openings, account contributions and withdrawals, and many matters behind the scenes that keep things running smoothly and keep our clients so happy. Clients are always telling me: “Make sure you thank Colleen.”
Colleen gets things done. She makes things happen, and with a smile on her face. And she makes it all look so easy.
Thank you, Colleen, from me and from our clients. And happy anniversary.
CRISIS OR OPPORTUNITY?
Is volatility in the stock market a good thing or a bad thing?
If you need your money in the short term, it is something to be avoided. But if you are investing for the longer term, we regard it as a positive, because it allows us to buy stocks on sale. And so you must stay invested – an argument I have made before in this blog, for example here and here.
This graph tells the story as well as any words can. No matter the crisis, “markets typically resume their upward course.”
GREAT NEWS FOR FIRST-TIME HOME BUYERS
The first home savings account (FHSA) is a new registered account to help people save up to $40,000 on a tax-free basis to purchase their first home. And, it is something many of our clients have been asking about in relation to their children or grandchildren. The FHSA is a mix between a registered retirement savings plan (RRSP) and a tax-free savings account (TFSA). Like an RRSP, contributions you make to a FHSA are tax-deductible; like a TFSA, withdrawals you make to purchase a first home (including the investment income earned) will not be taxable.
Would you – or your children or grandchildren – like to learn more? Just let us know.
AN OPTIMISTIC VIEW
When it comes to the markets and the economy, there is plenty of reason for optimism. So far this year, the TSX and S&P 500 are up approximately 5% and 6% respectively. Given that stock prices are, to an extent, a forecast of corporate earnings, we note that Q1 earnings have been quite strong, which in turn suggests that fear of a deep recession is not as strong as it was last year. And in Alberta, we have reason for extra optimism, considering that employment is strong, as are home prices.
The story of home prices is remarkable, especially given persistently high interest rates. One would think that with borrowing costs being so elevated, home sales and therefore prices would lag. But the fact is that inventory in Calgary is limited – and when a house goes on sale, the average length of time it’s on the market is just 27 days, down 35% since 2021.
As it usually does in Alberta, the story of home prices and employment starts with energy prices. Almost regardless of what happens elsewhere in the world, if energy prices are strong, which they certainly are now, our province will be doing well.
As for when interest rates might come down, I expect it will not be until next year. Much will depend on whether a recession actually arrives and how deep it is: the deeper the recession, the more likely that central banks will lower rates.
IT TAKES A WHILE
The Bank of Canada is forecasting that inflation will decrease to 3% by mid-2023 and finally return to the Bank’s target rate, 2%, next year. I think it is possible that in fact, 3% inflation could be with us for longer, because higher interest rates have not yet affected as many people as they ultimately will.
For example, people with variable-rate mortgages have been affected and presumably will lower their discretionary spending – but folks with fixed-rate mortgages have not faced that pressure (although high interest rates might be hurting them if they have considerable consumer debt). The bottom line is that it really does take a while for high interest rates to reduce spending throughout the economy.
THE FAMILY FILES
Have you been to LaunchPad? It’s a driving range plus a whole lot more. As they say on their website, it’s “where golf meets entertainment for players of all levels.” We went last month and the kids loved it. There are various games to play that involve driving golf balls at targets. Each ball tees itself up, by appearing automatically from the floor beneath you. I tried explaining to Jake that in real golf, you actually have to bend over and tee up the ball yourself. And, you have to look for it in the woods when you hook or slice. So I’m not sure he would enjoy the real game quite as much.
We also took a weekend drive to Edmonton to visit friends and at the West Edmonton Mall, and especially the waterpark. Jake says it’s better than Mexico – so I know where we’re going for our next vacation.
--
The greatest compliment we can receive is a referral to someone you care about who would appreciate the same value we take pride in giving you. If you have someone in mind, feel free to contact me at any time. Thank you very sincerely.
Jason de Weerd, CFP, CIM
Investment Advisor & Financial Planner
RBC Wealth Management
RBC Dominion Securities Inc.
1-403-213-6731
jason.deweerd@rbc.com
www.jasondeweerd.ca