Canadian banks affected by the oil slump

“Canadian banks are facing a tough economic environment, raising some uncertainty among observers over what the Big Six’s quarterly financial results will look like this week.

At home, oil prices are in the dumps and Canada’s economy has contracted for five straight months. Abroad, ongoing worries about Greece’s position within the euro zone and China’s recent decision to devalue its currency are raising alarms about the health of the global economy,” wrote David Berman, Banking Reporter for The Globe and Mail on Sunday August 23, 2015.

Berman continued, “Bank stocks have slid more than 11 per cent since April, hitting 18-month lows. Valuations, based on earnings expectations, have also fallen sharply over the past several months, to levels that reflect some pessimism about the sector’s growth prospects.

Indeed, analysts expect third-quarter bank earnings will rise by an average of just 2 per cent over last year – a cautious forecast that will be tested over the next several days.

Bank of Montreal kicks things off with its results on Tuesday; Bank of Nova Scotia wraps things up on Friday.”

Read the full article here.

Raymond Matt, CFP, CLU, TEP, CHS

Tentative deal reached by OPSB Association and Ontario government

“Ontario’s public high school teachers have reached a tentative agreement with the Ontario government and the Ontario Public School Boards’ Association.

The OSSTF posted a note early Thursday morning on its Facebook page announcing the tentative deal that still must be ratified by the union’s 60,000 members. The agreement will be presented to local union leaders at a meeting later this week, according to the OSSTF post.

No details of the deal were announced, ” wrote Jane Taber for The Globe and Mail on Thursday August 20, 2015.

Taber continued, “Other provincial teachers’ unions, including those for Catholic and elementary teachers, are still bargaining — and their members are poised to go out as the school year begins.

Unions representing 115,000 teachers across Ontario remain at the bargaining table with school boards, but one union official says they haven’t even started talking about the government’s demand for “net zero” wage increases.

Premier Kathleen Wynne has said the government will not fund any salary increases for civil servants or anyone in the broader public sector — more than one million Ontario workers — until it eliminates an $11.9-billion deficit, which it plans to do by 2017-18.”

Read the full article here.

Raymond Matt, CFP, CLU, TEP, CHS

Rising costs + low mortgage rates; To rent or buy?

“The question of whether it’s better to buy a home or rent needs some fresh thinking.

Rents have been rising and mortgage rates are so low they almost look fictional. Have the economics of housing turned against renting?

Far from it, actually. But we do need to start recognizing that rising rental costs are a factor in the debate over housing affordability. If nothing else, we may see more millennials having to move homes because neither renting nor owning work,” wrote Rob Carrick for The Globe and Mail on August 16, 2015.

Carrick continued, “To understand the differences in living costs between renting and owning, let’s start with Canada Mortgage and Housing Corp.’s latest data on the average rent for a two-bedroom apartment in nine Canadian cities. In an effort to zero in on better quality properties in more desirable locations, we’ll mark up the average rents by 10 per cent.

For housing costs, we’ll use average June resale prices from the Canadian Real Estate Association and assume a 10-per-cent down payment plus a five-year fixed rate mortgage at 2.59 per cent. Monthly carrying costs are the total of mortgage payments and one-twelfth of property taxes and maintenance/upkeep costs pegged at an annual 1 per cent of the home price.

In each of the nine cities, average monthly rent was cheaper than the mortgage payment on the average-priced home, and that’s without property taxes and maintenance included. Winnipeg is the city where renting and mortgage costs are the closest. The average rent for a two-bedroom apartment (with the 10-per-cent markup) was $1,136, which is just $37 below the monthly mortgage payment for the average Winnipeg house in July.”

Read the full article here.

Raymond Matt, CFP, CLU, TEP, CHS

Harper slams ORPP after new details revealed

“The feud over the proposed Ontario pension plan escalated Tuesday after Premier Kathleen Wynne revealed new details about the retirement supplement and Stephen Harper labelled it a payroll tax that will kill jobs and hurt middle-class families.

The Ontario Retirement Pension Plan, which starts in 2017 with benefits paid out to workers beginning in 2022, has been a political flashpoint between the Liberal Premier and the Conservative Leader even before he called the election more than a week ago.

The province says its initiative will help 3.5 million Ontarians when they retire, but will be rolled out over several years. Contributions from employers and employees will also be phased in,” wrote Jane Taber for The Globe and Mail on Tuesday August 11, 2015.

Taber continued, “Beginning in January, 2017, employers with 500 or more workers, who do not have registered pension plans, will contribute to the plan. The contributions will be phased in. For example, in 2017, large employers and their employees will each contribute 0.8 per cent, and by 2019, they will contribute 1.9 per cent.

In 2018, medium-sized employers – 50 to 499 employees – will start their contributions. In 2019, small employers, with fewer than 50 employees, will join. By 2020, the government hopes every Ontario employee will be enrolled in either the ORPP or a comparable workplace pension.

An employee earning $45,000 a year would collect $6,410 a year at the end of 40 years; an employee earning $90,000 a year would collect $12,815 after 40 years.”

Read the full article here.

Raymond Matt, CFP, CLU, TEP, CHS

2015 Campaign – First election debate

“Canada’s federal party leaders locked horns over how to resurrect the country’s faltering economy, the discredited Senate and national unity on Thursday, the first election debate of the 2015 campaign.

Liberal Leader Justin Trudeau and NDP chief Tom Mulcair tried to paint Stephen Harper as an out-of-touch leader who’s frittered away government revenue on tax breaks and remains insulated from the weakening economy,” wrote Steven Chase for The Globe and Mail on Thursday August 6, 2015.

Chase continued, “The 2015 campaign is the first serious three-way race in recent memory with the Conservatives, New Democrats and Liberals nearly tied among decided voters, according to polls.

These verbal sparring contents that took place Thursday will help determine a crucial question still unanswered at this early stage of the campaign: will the NDP or the Liberals emerge as the main challenger to Mr. Harper?

The Conservative election strategy requires the New Democratic vote to be sufficiently strong to steal support from the Liberals, and Mr. Harper’s conduct in the debate reflected that.

Where he could, the Tory chief supported Mr. Mulcair.”


Read the full article here.

Raymond Matt, CFP, CLU, TEP, CHS



BMO warns Canada’s economy is heading for its non-recession worst

“Canada’s economy is heading for its worst non-recession showing in more than 50 years, Bank of Montreal warns.

But while the first half of 2015 was ugly, the rest of the year should show a pickup, BMO Nesbitt Burns said in a new forecast today.

We already know that the economy contracted at an annual pace of 0.6 per cent in the first three months of the year, and BMO now believes it shrank 1 per cent in the second quarter,” wrote Michael Babad for The Globe and Mail on Wednesday August 5, 2015.

Babad continued, “Mr. Guatieri predicts economic growth will perk up to about 2.5 per cent in the second half of the year, but that would bring the year’s total to a measly 1.2 per cent.

There are some bright spots: Exports showed a dramatic bounce in June, the oil shock will “at least abate,” and the government’s new child benefit tax scheme will put more money in the pockets of consumers.

On top of that is the pre-election spending “in the longest federal campaign since around Confederation.”

Housing markets are also strong, Mr. Guatieri said.

The Bank of Canada has already cut its benchmark rate twice this year, and is counting on a loonie-sparked rebound in exports.”

Read the full article here.

Raymond Matt, CFP, CLU, TEP, CHS


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