CSI Blog & Newsroom

  “Several Federal Reserve policy makers said a rise in their median projection for the main interest rate exaggerated the likely speed of tightening, according to minutes of their March meeting. ‘Several participants noted that the increase in the median projection overstated the shift in the projections,’ the minutes of the March 18-19 Federal Open Market Committee meeting showed. Some expressed concern the rate forecasts ‘could be misconstrued as indicating a move by the committee to a less accommodative reaction function.’ Treasury yields rose last month after policy makers predicted that the benchmark interest rate would rise faster than previously forecast. Janet Yellen, presiding over her first meeting as chair, later downplayed the importance of the forecasts, even as she said that rates might start to rise ‘around six months’ after the Fed ends its bond-purchase program.” According to Financial Post article by Bloomberg News. Article continued with “The Fed reduced the monthly pace of purchases by US$10 billion, to US$55 billion, and repeated it is likely to continue paring the program in ‘further measured steps.’ ‘Members agreed that there was sufficient underlying strength in the broader economy to support ongoing improvement in labor-market conditions,’ the minutes show. The FOMC next meets April 29-30. The committee last month scrapped its pledge to keep the main interest rate low at least as long as unemployment exceeds 6.5%, saying it will look at a broader range of data when considering when to increase borrowing costs. Fed officials predicted that the benchmark interest rate would rise faster than previously forecast. Read the full article here. | Raymond Matt, CFP, CLU, TEP, CHS  

“Canada’s economy will pick up speed in 2014, thanks in great part to stronger growth in the United States, as both countries shake off a chilling start to the year, the world’s key lending agency said Tuesday. But the International Monetary Fund, in its latest analysis of global growth and trends, cautioned external risks still exist for both countries and urged the Bank of Canada, in particular, to hold off raising its key interest rate until solid growth takes hold. ‘Although external demand could surprise on the upside, downside risks to the outlook still dominate, including from weaker-than-expected exports resulting from competitiveness challenges, lower commodity prices, and a more abrupt unwinding of domestic imbalances,’ the Washington-based IMF said in its report.” Gordon Isfeld wrote for the Financial Post. Isfeld continued, “‘Indeed, despite the recent moderation in the housing market, elevated household leverage and house prices remain a key vulnerability. With inflation low and downside risks looming, monetary policy should remain accommodative until growth gains further traction.’ The Bank of Canada’s trendsetting lending rate has been at a near-record low of 1% since September 2010. In October, bank governor Stephen Poloz dropped the pro-rate-hike stance, saying instead that policymakers had adopted a neutral position — meaning borrowing costs could eventually go down if the economic data deteriorates.” Read the full article here. | Raymond Matt, CFP, CLU, TEP, CHS

“Highway 93 will be known as the Sarah Burke Memorial Highway. The road runs for 24 kilometres through Simcoe County, the region where Burke was born and raised. ‘That’s a great idea,’ said Chloe Dufour-Lapointe, Canada’s silver medalist in freestyle moguls at the Sochi Olympics. ‘She was such a great skier, everything that you heard about her was only positive, a girl who smiles.’ ‘A perfect inspiration for young girls’, added Chloe’s sister Justine, who won moguls gold in Sochi.” As stated in an article written by the Canadian Press and posted on ctvnews.ca on March 26, 2014. Article continues with, “The 29-year-old Burke, who was born in Barrie, Ont., and grew up in Midland, died after a training accident in Utah in January 2012. Burke was a four-time X-Games champion and a driving force behind the inclusion of half pipe and slopestyle in the Olympics. The events made their Olympic debut last month in Sochi.” Read the full article here. | Raymond Matt, CFP, CLU, TEP, CHS      

“Until recently the Canadian version of Libor was just an obscure acronym known only to a handful of traders, but it is ‘probably the most important benchmark’ in the country and the Bank of Canada is taking steps to rein it in, one of the central bank’s leaders said Monday. Cdor, short for the Canadian Dealer Offered Rate, is used to price an enormous amount of financial products, everything from plain vanilla consumer loans to complex interest rate swaps. This means it underpins a huge portion of the Canadian economy, over $10-trillion in total, Timothy Lane, Deputy Governor of the Bank of Canada said. It was the first time an official from the Bank of Canada or any other regulator in this country has produced such an estimate.” John Greenwood wrote for Financial Post. Greenwood continued “‘We will examine how these posted rates are currently used by market participants to see how any possible changes could affect market functioning,’ Mr. Lane said in a speech on Monday at York University’s Schulich School of Business. ‘Given Cdor’s importance, making sure it is robust is essential to the whole Canadian financial system’. Since 2012, a string of international lenders such as Barclays Plc, Citigroup, JPMorgan and the Royal bank of Scotland have paid more than US$6-billion in settlements and fines over allegations they manipulated Libor. Now investors have begun launching civil suits and experts predict that by the time the dust settles, the total amount paid will be close to US$35-billion. Like Libor the Canadian rate is calculated by a group of banks with scant regulatory oversight. After Libor was exposed, policymakers around the world started working together to shore up confidence on major financial benchmarks that are viewed as lynchpins of the financial system. Still, concern is starting to spread to other benchmarks including foreign exchange and gold.” Read the full article here. | Raymond Matt, CFP, CLU, TEP, CHS  

“Federal Finance Minister Jim Flaherty has resigned from cabinet to prepare for work in the private sector, he announced in a news release Tuesday. ‘Yesterday, I informed the prime minister that I am resigning from cabinet. This was a decision I made with my family earlier this year, as I will be returning to the private sector,’ Flaherty said in a statement. Conservative sources told CBC News that Flaherty spoke to his family at Christmas and made the decision then. He started calling close friends at 4 p.m. ET Tuesday, after the markets closed, to let them know of his decision. Flaherty isn’t immediately going to a job in the private sector. ‘As I reflect on my almost two decades in politics, I am proud of the accomplishments of the governments I was part of, provincial and federal…. Now, I will focus on life beyond politics as I return to the private sector. I believe that I have served my country, province and constituents of Whitby-Oshawa to the best of my abilities and thank them for their continued trust and support for almost two decades,’ Flaherty said in the statement. Flaherty is staying on as an MP for the time being, his spokesman told CBC News.” Laura Payton wrote for CBC news. Payton continued “Prime Minister Stephen Harper said in a statement that he accepted Flaherty’s resignation reluctantly. Natural Resources Minister Joe Oliver will be named Flaherty’s replacement on Wednesday. ‘In a political career of almost 20 years, Minister Flaherty has exemplified the best qualities of those who enter public life: a true commitment to service, and a sincere desire to leave the country in better shape than it was when he entered politics,’ Harper said. ‘Since 2006, he has been a steady hand, ably guiding Canada through the most challenging economic times since the Great Depression and gaining the country a solid global reputation for economic management.’ Flaherty was Harper’s only finance minister. He was an MP who carried a great deal of influence in the Conservative caucus. He differed from Harper last month over a 2011 campaign promise to offer income splitting to couples with children. Kenney said he wants the party to stick with the promise, despite Flaherty’s opposition.” Read the full article here. | Raymond Matt, CFP, CLU, TEP, CHS  

“We may never agree on music, but Canada’s Baby Boomers and Millennials have more in common than we might think. Recent data from Statistics Canada shows we’re riding a wave of unprecedented fortune, with the median net worth of Canadian families up 44.5 per cent from 2005 to $243,800 in 2012. That’s an 80 per cent jump over the 1999 median of $137,000, adjusted for inflation. Much of the increase is due to our frothy housing market as principal residences were found to be the largest asset among Canadians in 2012, followed by private pension assets, which include Registered Retirement Saving Plans (RRSPs) and company pensions.” Darah Hansen writes in an article for Yahoo Finance. Hansen continues, ” Hold the celebration, though, because we’re also spending like never before. Between sky-rocketing mortgages, car loans, lines of credit and credit cards, Canadians, young and old, managed to rack up $1.3 trillion in debt in 2012, putting our collective wealth under siege by growing debt. Kim Thompson, senior vice president of advisory services with the national wealth-management firm Credential Financial, has been following this trend closely and believes the statistics tell an interesting story about who we are and what we think about money. Notably, the data suggests a shift in our comfort levels towards debt from one generation to the next, driven, in part, by low interest rates that ‘trick’ us into thinking we can afford to consume more than we actually can or should.” Read the full article here. | Raymond Matt, CFP, CLU, TEP, CHS  

“It’s enough to make middle-class Canadians go dizzy. One set of numbers suggests their wages are stagnating and they’re mired in debt. Then another set comes along suggesting the net worth of those same Canadians has been rising quite healthily. Politicians are hoping to spin those numbers to court voters, but trying to assess the true economic state of the middle class is not as simple as they might like Canadians to think. ‘Two political parties are focusing very much on this,’ says Charles Beach, a retired economics professor from Queen’s University in Kingston, Ont.” according to March 17th, 2013 cbcnews.ca article. “‘You can see how the Liberal Party is focusing more on [how] incomes particularly in the labour market have just not been keeping up, whereas Conservatives are focusing more on ‘Hey, look, net worth is going up.’ ‘They’re both pointing to evidence which is true. It’s out there, but it’s selective.’ Everyone can agree on what the basic evidence is, says Beach. It’s provided by Statistics Canada, which offers up reams of data on incomes and how they’ve changed over the years, along with other information such as the net worth of Canadians. Some people will opt for a rosier picture that real incomes are going up, but others will say if they are going up, it’s only slowly ‘and it’s because we’re working harder to get it, so we’re stretched to maintain the standard of living, to say nothing of getting ahead,’ Beach says.” Read the full article here. | Raymond Matt, CFP, CLU, TEP, CHS

“For anyone who has thought about donating to a charity but hasn’t yet found the time or will to do so, this might be the year to finally commit. As of March 20, 2013, first-time donors can claim an additional 25 per cent ‘super credit’ on the first $1,000 they donate. The new temporary credit supplements the usual charitable donation tax credit — which, federally, is 15 per cent for donations of less than $200 and 29 per cent for those over $200 — and can be claimed once in the tax years 2013 to 2017. But regardless of whether you’re a first-time donor or a veteran philanthropist, there are a number of things to keep in mind when it comes to charity and taxes.” writes Ian Munroe in an article for CBC News. Munroe explains, “You are eligible to claim tax credits for donations up to 75 per cent of your net income for the year — and up to 100 per cent in the year of death. Charitable donations are eligible for both federal and provincial tax credits. The federal credit is the same across the board, but the provincial credit varies depending on where in the country you file your tax return. In B.C., for example, those who make donations of less than $200, get a provincial credit equal to 5.06 per cent of the donation amount. In Quebec, it’s 20 per cent. The rates go up once your donation exceeds $200 — to anywhere from 11.16 per cent in Ontario to 24 per cent in Quebec. Credits are deducted from the amount of tax you owe and can be delayed and claimed in any of the five years following the one in which you donated.” Read the full article here. | Raymond Matt, CFP, CLU, TEP, CHS      

“High-profile central banker Mark Carney is taking it on the chin these days with blows landing from both sides of the Atlantic. The former Bank of Canada governor, who made international news last year by jumping ship to head the storied Bank of England, has been undergoing a serious grilling in London over the bank’s tame response to manipulation of foreign exchange rates. And in Canada, CIBC chief economist Avery Shenfeld has written a note suggesting Carney may have left his successor, Stephen Poloz, with an economy more damaged than it needed to be.” According to a Financial Post article by Julian Beltrame. Beltrame continues, “In Shenfeld’s view, Poloz’s puzzle about why Canadian exporters have not been able to take advantage of the expanding U.S. economy can be traced to decisions Carney made in 2009 and 2010 when Canada was coming out of recession. To boost growth, the Bank of Canada slashed interest rates that stimulated consumer spending and housing, and it worked. Canada’s economy came out of the slump quicker and stronger than any other country in the G7. But Shenfeld said Carney failed to check the appreciation of the Canadian dollar as foreign central banks dumped the U.S. currency and bought up loonies, at that time regarded as a safe haven.” Read the full article here. | Raymond Matt, CFP, CLU, TEP, CHS