Below is a summary of some of the relevant news items from the Capital Markets and the Economy from the past week extracted from RBC Global Insights and FactSet Research.
You can catch up on the past four weeks’ Weekly Update in the link to my Blog.
Read my latest Smart Investor newsletter on my website. The Q3 2024 edition covers Market Review for first half of 2024, and a list of questions for those thinking about their retirement. Shiuman’s Corner is about my favourite podcasts.
Markets
Market scorecard as of close on Friday September 6th, 2024.
| Country | Equity Indices | Level | 1 week | YTD |
| Canada | S&P/TSX Composite | 22,781 | -2.4% | 8.7% |
| U.S. | S&P 500 | 5,408 | -4.2% | 13.4% |
| U.S. | NASDAQ | 16,691 | -5.8% | 11.2% |
| Europe/Asia | MSCI EAFE | 2,383 | -2.6% | 6.6% |
Source: FactSet
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TSX closed lower in Friday afternoon trading, bit off worst levels. Most sectors lower. Canadian equities recorded a 2.4% weekly drop.
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US equities closed lower in Friday trading, ending near worst levels. S&P finished lower for the week after three straight weekly gains. Treasuries were mostly firmer; curve steepening has vaulted 2/10 spread back into positive territory for its first positive close since mid-2022.
Economy
Canada
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The Bank of Canada (BoC) lowered the overnight rate on Wednesday by 25 basis points for a third straight meeting, adding to cuts in each of June and July. The move was in line with market and our own expectations ahead of the announcement. Governor Macklem’s opening statement for the press conference was again dovish, highlighting a shift in the central bank’s focus to a gradually weakening economy and for that to put further downward pressure on inflation. The BoC reiterated that it is “reasonable to expect further cuts” as long as those expectations are confirmed in the data.
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Employment rose 22k in August after edging lower in each of the two prior months, but the unemployment rate also jumped higher (to 6.6% from 6.4% in July) with a rise in the number of available workers again outpacing job growth. We (RBC Economics) continue to expect the BoC to cut the overnight rate for a fourth consecutive decision point next month.
U.S.
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A drop in the unemployment rate in the U.S., from 4.3% in July to 4.2% in August should quell concerns that what has been a gradual slowdown in labour markets is imminently turning into a sharper downturn. Growth in payroll employment has slowed, the number of permanent job losers is still edging higher slowly, and leading indicators, such as job openings, are still declining into July.
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Now that the Federal Reserve appears to us to have a proper handle on inflation, policymakers say they’re now more focused on the labor market portion of their dual mandate to promote maximum employment and stable prices.
Further Afield
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Eurozone inflation dropped markedly in August to 2.2% compared to 2.6% the previous month, marking the lowest level since July 2021. Much of the decline stems from lower energy prices. Overall, there seems to be enough improvement on the inflationary front for an interest rate cut at the next ECB policy meeting on Sept. 12.
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Japan’s real wages grew by 0.4% y/y in July, a slowdown from the growth observed in May and June. Looking ahead, we expect wage growth in Japan to slow in 2025 due to a softer global economic outlook, easing inflationary pressures, and diminished labor union leverage after two years of strong wage hikes.
Notes About Companies in Model Portfolio
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Pembina Pipeline Corporation (PPL) Announced Monday that Pembina Gas Infrastructure’s (PGI) agreement to acquire midstream assets From Veren Inc. PGI will acquire four batteries in the Gold Creek and Karr areas, which include natural gas handling capacity of 320 million cubic feet per day and liquids handling capacity of 53,000 barrels per day.
Feel free to contact me with any questions and/or to discuss investment ideas.
I appreciate the opportunity to serve you and look forward to continuing to help you accomplish your long-term financial goals.
Regards,
Shiuman