Bank Of Canada Admits Economy More Sensitive To Hikes

Bank of Canada increases overnight rate target to 1 1/4 per cent

The Bank of Canada today increased its target for the overnight rate to 1 1/4 per cent. The Bank Rate is correspondingly 1 1/2 per cent and the deposit rate is 1 per cent. Recent data have been strong, inflation is close to target, and the economy is operating roughly at capacity. However, uncertainty surrounding the future of the North American Free Trade Agreement (NAFTA) is clouding the economic outlook.

The global economy continues to strengthen, with growth expected to average 3 1/2 per cent over the projection horizon. Growth in advanced economies is projected to be stronger than in the Bank’s October Monetary Policy Report(MPR). In particular, there are signs of increasing momentum in the US economy, which will be boosted further by recent tax changes. Global commodity prices are higher, although the benefits to Canada are being diluted by wider spreads between benchmark world and Canadian oil prices.

In Canada, real GDP growth is expected to slow to 2.2 per cent in 2018 and 1.6 per cent in 2019, following an estimated 3.0 per cent in 2017. Growth is expected to remain above potential through the first quarter of 2018 and then slow to a rate close to potential for the rest of the projection horizon.

Consumption and residential investment have been stronger than anticipated, reflecting strong employment growth. Business investment has been increasing at a solid pace, and investment intentions remain positive. Exports have been weaker than expected although, apart from cross-border shifts in automotive production, there have been positive signs in most other categories.

Looking forward, consumption and residential investment are expected to contribute less to growth, given higher interest rates and new mortgage guidelines, while business investment and exports are expected to contribute more. The Bank’s outlook takes into account a small benefit to Canada’s economy from stronger US demand arising from recent tax changes. However, as uncertainty about the future of NAFTA is weighing increasingly on the outlook, the Bank has incorporated into its projection additional negative judgement on business investment and trade.

The Bank continues to monitor the extent to which strong demand is boosting potential, creating room for more non-inflationary expansion. In this respect, capital investment, firm creation, labour force participation, and hours worked are all showing promising signs. Recent data show that labour market slack is being absorbed more quickly than anticipated. Wages have picked up but are rising by less than would be typical in the absence of labour market slack.

In this context, inflation is close to 2 per cent and core measures of inflation have edged up, consistent with diminishing slack in the economy. The Bank expects CPI inflation to fluctuate in the months ahead as various temporary factors (including gasoline and electricity prices) unwind. Looking through these temporary factors, inflation is expected to remain close to 2 per cent over the projection horizon.

While the economic outlook is expected to warrant higher interest rates over time, some continued monetary policy accommodation will likely be needed to keep the economy operating close to potential and inflation on target. Governing Council will remain cautious in considering future policy adjustments, guided by incoming data in assessing the economy’s sensitivity to interest rates, the evolution of economic capacity, and the dynamics of both wage growth and inflation.

Information note

The next scheduled date for announcing the overnight rate target is March 7, 2018. The next full update of the Bank’s outlook for the economy and inflation, including risks to the projection, will be published in the MPR on April 18, 2018.

First Global Announces Q3 2017 Financial Results

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TORONTONov. 30, 2017 /CNW/ – First Global Data (“First Global” or the “Company”) is pleased to announce that it has released its Q3, 2017 financial statements.

First Global Data Limited (CNW Group/First Global Data Limited)

Please note that financial statements are prepared in US dollars, while the Company’s stock price and market cap as presented on the TSX Venture Exchange are reflected in Canadian dollars.

Revenues:
The Company continued to realize and increase in revenues. The three month ending September 30, 2017 revenues were $4,504,979 as compared to the three-month ending September 30, 2016 of $1,112,116.

Net Income:
Net income for Q3 showed a loss of $35,053 as compared to Q3, 2016 net income loss of 4,363. Among other things, the company continues to focus on increasing licenses in the USA which adds additional costs.

Profitability and Capital Position:
As at September 30, 2017, the Company maintained an overall positive net income and the capital position of the Company continues to be strong.

“We are generally pleased with our financial results for Q3, 2017. The Company is focused on implementing business deals that have been announced and we believe that as they are deployed they will have a material positive impact to our transactional revenues,” said Andre Itwaru, Chairman and CEO of First Global.

About First Global: (www.firstglobaldata.com)

First Global is an international financial services technology (“FINTECH”) company. The Company’s two main lines of business are mobile payments and cross border payments. First Global’s proprietary leading edge technology enables the convergence of compliant domestic and cross border payments, shopping, Peer to Peer (“P2P”), Business to Consumer (“B2C”), and Business to Business (“B2B”) payments. First Global enables its strategic partners and clients around the world with our leading edge financial services technology platform.

Caution:
Neither TSX Venture Exchange Inc. (“TSXV”) nor its Regulation Services Provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this release.

The securities offered have not been registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements. This press release shall not constitute an offer to sell or a solicitation of an offer to buy nor shall there be any sale of the securities offered in any jurisdiction in which such offer, solicitation or sale would be unlawful.

Forward Looking Information:
This news release contains “forward-looking information” within the meaning of applicable securities laws. Although First Global believes in light of the experience of its officers and directors, current conditions and expected future developments and other factors that have been considered appropriate, that the expectations reflected in this forward-looking information are reasonable, undue reliance should not be placed on them because First Global can give no assurance that they will prove to be correct. Readers are cautioned to not place undue reliance on forward-looking information. Actual results and developments may differ materially from those contemplated by these statements. The statements in this press release are made as of the date of this release. First Global undertakes no obligation to comment on analyses, expectations or statements made by third-parties in respect of First Global, its securities, or financial or operating results (as applicable). First Global disclaims any intent or obligation to update publicly any forward-looking information, whether as a result of new information, future events or results or otherwise, other than as required by applicable securities laws.

SOURCE First Global Data Limited

Peter Lacey Joins First Global Data Board

First Global Announces Corporate Changes to Directors and Officers

Canada NewsWire

/NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES./

TSX Venture Exchange: FGD
Frankfurt Stock Exchange: 1G5

TORONTONov. 27, 2017 /CNW/ – First Global Data (“First Global” or the “Company”) would like to announce the following corporate changes.

First Global Data Limited (CNW Group/First Global Data Limited)

CFO Appointment
The Company would like to announce that its previous CFO, Nayeem Alli has agreed to take on the appointment as CFO for an interim period until the end of April 2018. The Company’s CFO position was made available in October 2017 when Mr. Alli decided to step down for personal health reasons. Mr. Alli will continue to be supported by the existing finance team and the Company will be actively sourcing a full time qualified candidate.

Director Changes:
The Company would like to announce that Nayeem Alli has resigned as a Director and that it has appointed Mr. Peter Lacey to its Board of Directors. Mr. Lacey is the founder and Chairman of Cervus Equipment Corporation (TSX:CERV) a Canadian public company headquartered in Calgary, Alberta. Annual sales exceeded $1.1 billion for Cervus in 2016. Mr. Lacey received his ICD.D designation from the Rotman School of Business and the Institute of Corporate Directors and serves as Chair of the Audit Committee for another public company. Mr. Lacey also serves as Director of multiple TSX listed companies and other private companies.

“The CFO position at First Global is an important role. We are happy that Nayeem has agreed to take on the role on a temporary interim basis. This will allow us the time necessary to source a qualified candidate who is able to meet the obligations of the job on a full-time basis as we move to the next stage of our evolution. We are very pleased that Mr. Lacey has accepted our offer to join our Board of Directors. Peter has tremendous experience and will add a level of discipline, professionalism and expertise that the company needs in our Audit and Corporate Governance committees, and to the company overall. I have had the pleasure of getting to know Peter over the past few months and am very confident that he will contribute in a significant way as we embark on the next phase of our evolution”, said Andre Itwaru, Chairman and CEO of the Company.

About First Global

First Global is an international financial services technology (“FINTECH”) company. The Company’s two main lines of business are mobile payments and cross border payments. First Global’s proprietary leading edge technology enables the convergence of compliant domestic and cross border payments, shopping, Peer to Peer (“P2P”), Business to Consumer (“B2C”), and Business to Business (“B2B”) payments. First Global enables its strategic partners and clients around the world with our leading edge financial services technology platform.

Caution:
Neither TSX Venture Exchange Inc. (“TSXV”) nor its Regulation Services Provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this release.

The securities offered have not been registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements. This press release shall not constitute an offer to sell or a solicitation of an offer to buy nor shall there be any sale of the securities offered in any jurisdiction in which such offer, solicitation or sale would be unlawful.

Forward Looking Information:
This news release contains “forward-looking information” within the meaning of applicable securities laws. Although First Global believes in light of the experience of its officers and directors, current conditions and expected future developments and other factors that have been considered appropriate, that the expectations reflected in this forward-looking information are reasonable, undue reliance should not be placed on them because First Global can give no assurance that they will prove to be correct. Readers are cautioned to not place undue reliance on forward-looking information. Actual results and developments may differ materially from those contemplated by these statements. The statements in this press release are made as of the date of this release. First Global undertakes no obligation to comment on analyses, expectations or statements made by third-parties in respect of First Global, its securities, or financial or operating results (as applicable). First Global disclaims any intent or obligation to update publicly any forward-looking information, whether as a result of new information, future events or results or otherwise, other than as required by applicable securities laws.

SOURCE First Global Data Limited

First Global Achieves More Than 1 Million Users and Provides Corporate Update

/NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES./

TSX Venture Exchange: FGD
Frankfurt Stock Exchange: 1G5

TORONTONov. 23, 2017 /CNW/ – First Global Data (“First Global” or the “Company”) is very pleased to announce that it has exceeded 1 million users, and would like to provide the following corporate update.

Annual General Meeting:

On October 26, 2017 the Company conducted its Annual General Meeting (“AGM”). The meeting was well attended with a record number of shareholders in attendance. The Company’s Chairman and CEO, Mr. Andre Itwaru presented the Company’s corporate overview, lines of business, corporate strategy, objectives and direction.

Mr. Itwaru shared that the Company’s corporate strategy includes a three-phased approach. Firstly, the Company partners with large strategic organizations which have an embedded customer base. Secondly, it works with its strategic partners to penetrate that embedded customer base by encouraging them to download the mobile app/register. Thirdly, the Company works with its partners to encourage those customers to use one or many of the services offered to drive revenues.

The Company’s current objectives include:

  1. Customer Acquisiton: by leveraging partners’ base of existing users
  2. Penetrating: 1 Million Active Users
  3. Monetizing: Drive annual revenue per user (“ARPU”) to $280
  4. Continue to increase profitability
  5. Increase customer penetration beyond 1 Million
  6. Duplicate model in each corridor and every deploy

Mr. Ken Zheng, Chief Operating Officer of one of the Company’s China based strategic partners, Lianlian Pay presented Lianlian and shared that Lianlian:

  1. Is the 4th largest mobile payment service provider in China
  2. Has a customer base of 150 million registered users
  3. Has 10,000+ online merchants
  4. Has processed in excess of US$ 80 Billion in transactions to date in 2017

Mr. Zheng demonstrated the world’s first social messaging based cross border remittance service which has been launched in partnership between Lianlian Pay and First Global on the WeChat messaging platform. Mr. Zheng also shared his views on the growth and potential of the partnership with First Global. The presentations were quite interactive and there was significant interest by shareholders with many questions and answers. Presentations are available for view at: www.firstglobaldata.com/agm

India Progress and User Base:

First Global is pleased to advise that in India, through its partnership with Vijaya Bank and the VPayqwik mobile wallet offering, the Company has achieved 972,364 users. The company is pleased with this penetration given the short timeframe services have been available in the Indian market. The Company is working with Vijaya Bank to continue increasing the number of users and to drive incremental transactions and revenues per user.

Remittances User Base, Lianlian Pay, and US Licenses:

First Global is pleased to announce that its user base for remittances services in the USA and Canada which includes the Happy Transfer service launched in cooperation with Lianlian Pay has achieved 322,024 users.

Happy Transfer is a service available in the USA on the WeChat social messaging platform. It allows a person in the USAto send money from their mobile phones to a user in China in approximately 9 seconds. The service is the first of its kind in the world. Launch of services occurs on a state-by-state basis. The Company has launched this service in 24 states, continues its launch program into the other 10 states and has been working with Lianlian Pay toward launch in Canada.

In 2017, the Company has increased its US state money transmitter licenses by 13 and continues to work toward achieving all 50 licenses. The full complement of state licenses will enable the Company to offer all of its services country wide in the USA.

AnalytixInsight:

On July 5, 2017 the Company announced that it had entered into a Letter of Intent with Analytixinsight to expand First Global’s mobile payments services across Europe and elsewhere in a revenue sharing model. AnalytixInsight will leverage its partnerships with organizations such as Samsung and Intesa Sanpaolo, to expand First Global’s mobile payments services across Europe and elsewhere as determined by the Parties in a revenue sharing model. Intesa Sanpaolo – one of Italy’s largest banks with a market cap of over €45 billion – has shared ownership in AnalytixInsight’s subsidiary Marketwall. Under the partnership, Intesa Sanpaolo will migrate approximately 8 million mobile banking users in 8,000 retail branches to Marketwall’s mobile platform across five European countries, to provide a range of mobile payment services.

The Company would like to advise that it is actively working with Analytixinsight to conclude the definitive agreement and to engage project teams toward service deployment anticipated to occur in Q1, 2018.

China Smartpay:

On September 25, 2017 First Global announced that it has entered into a Binding Memorandum of Understanding (“MOU”) with China Smartpay to deliver cross border payment solutions for Chinese vacation travelers and students studying overseas. The Company would like to advise that it is actively working with China Smartpay toward conclusion of the definitive agreement and service launch in time for Chinese New Year on or prior to February 16, 2018.

In the September 25, 2017 announcement, Mr. Xiong, the President of China Smartpay Group Holding advised that, “Chinese outbound tourism will continue to experience consistent rapid growth. In 2016 Chinese outbound tourists spent 216 billion US dollars, of which the United States accounted for 120 billion US dollars. This shows that the North American market is one of most important destinations for Chinese tourists…China Smartpay Group…is partnering with First Global Data for its leading technology, licenses, and wide payment network and capabilities in North America to carry out the North American market mobile payment business.”

“The AGM was a great success. I sincerely appreciated meeting our shareholders, sharing our vision and progress, answering their questions and listening to their perspectives and advice. I am also very pleased with the progress we have made toward increasing our customer base. We are focused on having all of our deployments around the world contribute toward achieving 1 million active users generating $280 of revenue per user per year. We are very pleased with the progress we have made with our China based partners as we deploy innovative solutions for the very large overseas Chinese demographic and shoppers. We also continue to improve our technological capabilities which includes enhancing our existing mobile wallet to encompass the acceptance of crypto currencies in a compliant and regulatory manner, and this solution will be available on a white label basis to our strategic partners. We believe that the impact of the progress we have made will be better understood toward the end of 2017 and into 2018″, said Andre Itwaru, Chairman and CEO of the Company.

About First Global

First Global is an international financial services technology (“FINTECH”) company. The Company’s two main lines of business are mobile payments and cross border payments. First Global’s proprietary leading edge technology enables the convergence of compliant domestic and cross border payments, shopping, Peer to Peer (“P2P”), Business to Consumer (“B2C”), and Business to Business (“B2B”) payments. First Global enables its strategic partners and clients around the world with our leading edge financial services technology platform.

Caution:
Neither TSX Venture Exchange Inc. (“TSXV”) nor its Regulation Services Provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this release.

The securities offered have not been registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements. This press release shall not constitute an offer to sell or a solicitation of an offer to buy nor shall there be any sale of the securities offered in any jurisdiction in which such offer, solicitation or sale would be unlawful.

Forward Looking Information:
This news release contains “forward-looking information” within the meaning of applicable securities laws. Although First Global believes in light of the experience of its officers and directors, current conditions and expected future developments and other factors that have been considered appropriate, that the expectations reflected in this forward-looking information are reasonable, undue reliance should not be placed on them because First Global can give no assurance that they will prove to be correct. Readers are cautioned to not place undue reliance on forward-looking information. Actual results and developments may differ materially from those contemplated by these statements. The statements in this press release are made as of the date of this release. First Global undertakes no obligation to comment on analyses, expectations or statements made by third-parties in respect of First Global, its securities, or financial or operating results (as applicable). First Global disclaims any intent or obligation to update publicly any forward-looking information, whether as a result of new information, future events or results or otherwise, other than as required by applicable securities laws.

SOURCE First Global Data Limited

For further information: Andre Itwaru, Chief Executive Officer, t: (416) 504-3813, e: ir@firstglobaldata.com

Related Links

www.firstglobaldata.com

Cautious tone sweeps markets

Global financial markets saw sentiment shift distinctly more negative this week. A variety of concerns pushed virtually all major equity indices into the red (save for the NASDAQ, which climbed to another record high). Signs of opposition to the details of U.S. tax reform efforts began surfacing while a political scandal in Alabama threatened to reduce the Republicans’ senate majority. A slew of weaker economic data in China, especially a sharp pullback in lending, raised fears of an imminent slowdown in activity and put pressure on industrial commodities. Oil prices declined sharply after industry data showed U.S. stockpiles unexpectedly rising and as Russia was seen to be wavering on the need to extend output cuts.

Stronger U.S. inflation numbers boosted expectations of a steady pace of interest rate hikes from the Federal Reserve. But, even as short term rates rose, a decline in long term yields (‘flattening the yield curve’) suggested investors are increasingly concerned that the pace of rate hikes may crimp economic growth.

The heavily weighted energy sector took the biggest toll on the Canadian benchmark S&P/TSX Composite, which slumped from its record high reached last week. The drop in crude prices also weighed on the Canadian dollar, seemingly reasserting the tight link between oil and the Loonie that dominated the currency’s moves for a number of years until Canadian and U.S. relative interest rates took over more recently. The beginning of the fifth round of NAFTA negotiations, with an overhanging threat of the treaty’s nullification by President Donald Trump, added to the worries of Canadian investors. The health care sector also declined sharply, as big drops were registered by both Valeant Pharmaceuticals International Inc. and Canopy Growth Corp., which together comprise over 60% of the sector’s index weight. Telecom services, technology, and consumer discretionary were among the sectors with the best gains.

In the U.S., consumer stocks generally gained ground after a report that September retail sales increased more than expected, signalling resilient demand heading into the holiday shopping season. Telecommunication services and financials were also among advancing sectors. Regional banks, in particular, got a boost from a senate deal to lift the Systemically Important Financial Institution (SIFI) designation for banks with less than $250 billion of assets. But the S&P 500 retreated slightly overall, with the index unable to overcome the big drop in energy stocks.

Major European indices all fell, taking their cue from global growth concerns, and ignoring continued strength in economic data out of the Euro area itself. An acceleration in German gross domestic product (GDP) anchored a solid GDP report for the region. In the United Kingdom, investors continue to worry about increasingly negative Brexit headlines, inflation stuck at a five-year high, and the fragility of Prime Minister Theresa May’s leadership. In Asia, bond yields and equity prices both reacted with concern over tightening credit conditions in China. And in Japan, stocks retreated from recent 25 year highs as third quarter GDP reportedly decelerated sharply from the previous quarter.

What’s ahead next week:

Canada

  • Retail and wholesale sales (September)

U.S.

  • Leading index (October)
  • Existing home sales (October)
  • Durable goods, capital goods orders (October – Prelim.)
  • University of Michigan sentiment survey (November – Final)
  • Markit purchasing managers indices (November – Prelim.)

Canadian stocks climb to record highs as Middle East tensions lift oil

Growing tensions between Saudi Arabia and Iran – combined with a Saudi crackdown on corruption – lifted oil prices to a two-year high and briefly pushed stock indices in both Canada and the United States to record highs this week. As U.S. President Donald Trump marked the anniversary of his election win – touring Asia with important stops in Japan and China – bond yields eased and tax reform questions grew, taking more wind out of the so-called “Trump trade.” And in New York, the unexpected early retirement announcement of Federal Reserve Bank of New York President William Dudley added more uncertainty back to the future course of the U.S. Federal Reserve monetary policy – all this just one week after Jerome Powell’s appointment as next Fed Chairman seemed to quiet that source of market anxiety.

Canada’s S&P/TSX Composite stretched to another record high early in the week, boosted by strength in energy stocks as crude prices climbed, as well as by a jump in precious metals prices that buoyed the materials sector. “Bond proxy” groups – real estate, staples – that tend to benefit from falling interest rates, were also generally higher, holding onto their gains even though rates turned higher late in the week. The lesser-weighted health care sector saw the most impressive gain, as Valeant Pharmaceuticals International Inc. surged after better than expected financial results, and an announced deal to sell its female sexual dysfunction drug back to the company’s former owners in exchange for a royalty on sales. The financials sector – the flip side of the “Trump trade”, whose profitability improves with higher rates – was among the decliners, as was the consumer discretionary sector, led by weakness in Magna International Inc. The technology sector fell as shares of Open Text Corp. continued the slide that began after last week’s earnings report, and as Shopify Inc. remained under pressure due to concerns raised by a prominent short seller.

Once again, all major U.S. stock indices touched new highs, but later retreated as tax reform worries grew. Performance in the S&P 500 clearly reflected the easing of global bond yields early in the week, especially after dovish comments from Bank of Japan Governor Haruhiko Kuroda. Sector leadership lay squarely with the bond proxies (real estate, staples) while the financials sector led decliners. Department of Justice concerns with the proposed AT&T/Time Warner merger continued to pressure the telecommunications services sector.

European equity indices mostly lost ground, even as the European Commission (EC) lifted its forecast for euro-area growth. But the EC also warned that the United Kingdom was headed for a prolonged slowdown. U.K. Prime Minister Theresa May is coming under mounting pressure over scandals and cabinet resignations, just as European Union negotiators seem to be losing patience with her government in ongoing Brexit negotiations.

Japan and China ranked among the best performing markets globally this week, despite President Trump’s tough talk on trade with both countries as he toured the region. As the yen fell Monday to a nearly eight month low against the U.S. dollar, the Nikkei index surged to its highest level in more than 25 years.

What’s ahead next week:

Canada

  • Teranet/National Bank home price index (October)
  • Existing home sales (October)
  • Manufacturing sales (September)
  • Consumer price index (October)

U.S.

  • NFIB small business optimism index (October)
  • Producer and consumer price indices (October)
  • Empire manufacturing survey (November)
  • Retail sales (October)
  • Import and export price indices (October)
  • Industrial production and capacity utilization (October)
  • Housing starts and building permits (October)

Toronto stocks finally join the record-setting party

Canada’s S&P/TSX Composite index crossed the 16,000 level for the first time this week, setting its first new record high since February. During the intervening eight months, virtually all other major equity market indices globally posted new highs relentlessly without Canada joining suit. The broad advance in recent weeks came as strong economic data around the world pushed oil and commodity prices higher. But in Canada itself, the run of amazing economic data came to a screeching halt as August gross domestic product (GDP) declined. A solid employment report for October did little to lift investors’ moods and the S&P/TSX managed only a small gain for the week.

It was another busy week on the central banking front. The Bank of Japan kept its policy on hold and the Bank of England raised rates, both as expected. The U.S. Federal Reserve’s meeting was also a non-event, indicating there was still a consensus towards gradual rate hikes, with the next coming as early as December. Arguably the biggest central banking news was President Trump’s appointment of Jerome Powell as the next Federal Reserve Chair, to replace Janet Yellen when her term expires in the new year. Powell is seen as possibly the smoothest transition from Yellen because they are closely aligned in policy preferences. After a few weeks of anxiety over the possibility of the job going to the more hawkish John Taylor, Powell’s appointment put downward pressure on North American and European bond yields.

The jump in the heavily-weighted energy sector provided the greatest lift to the S&P/TSX, but the smaller health care sector saw the sharpest advance. Medical marijuana producer Canopy Growth Corporation, which saw a big drop just two weeks ago, surged as Constellation Brands acquired a major stake in the company. Technology and industrials led the declining sectors in Toronto.

In New York, the release of tax reform proposals had little impact on markets, but all major equity indices again notched new record highs. The S&P closed out October with a solid gain, so that it has seen a positive total return for all 10 months so far this year. It hasn’t managed a streak like that in almost 100 years. As in Canada, energy was near the top of the sector leader board, along with real estate, which tends to do well as interest rates decline, and technology which got a big boost from Apple after its earnings report. Telecommunications services was the poorest performing sector, coming under pressure as media reports pointed to the termination of merger talks between Sprint and T-Mobile, and to possible Justice Department opposition to the AT&T/Time Warner merger.

European stocks were broadly higher on strong economic data. Spanish stocks were particularly strong as political risk deflated. Catalan leader Puigdemont fled to Belgium after the central government seized control over the region, leaving the independence movement aimless. In Japan’s holiday-shortened trading week, the Nikkei climbed to yet another 20-year high after the Bank of Japan’s meeting led to a weaker yen.

What’s ahead next week:

Canada

  • Ivey purchasing managers survey (October)
  • Housing starts (October)
  • Building permits (September)
  • New housing price index (September)

U.S.

  • JOLTS job openings survey (September)
  • Wholesale inventories and sales (September)
  • University of Michigan consumer sentiment (November)

Dark anniversary for market passes without fret or consequence

The 30-year anniversary of the Black Monday (October 19, 1987) came and went without generating fits of anxiety in equity markets. Equities were also mostly able to shake off rising geopolitical risk as the Spanish government took steps to suspend Catalan autonomy – the latest move in a standoff over the region’s drive for independence. In the U.S., Treasury yields and the dollar moved higher as investors contemplated the candidacy of John Taylor for the next Chair of the Federal Reserve (a “Taylor Fed” is viewed as likely to take on a distinctly more hawkish stance on monetary policy). Meanwhile, third quarter earnings reports continue to come in with mixed results.

Canada’s S&P/TSX Composite index saw its biggest sector moves driven not by earnings reports, nor by the apparent near collapse of NAFTA negotiations, but rather by other company-specific headlines. The industrials sector posted the best gains, as shares of Bombardier soared on news of the company’s deal to bring in Airbus as a partner on the all-important CSeries passenger jet program. The health care sector led decliners, for once not because of Valeant Pharmaceuticals. Instead it was Canopy Growth Corporation that got smoked. The medical marijuana producer saw a big drop after the TSX said marijuana firms with activities in the United States that might violate the country’s federal law could be subject to delisting. The materials sector was also weak as both base and precious metals declined (with the notable exception of copper). Oil prices started the week higher on fears of new Iran sanctions, and the outbreak of fighting between Iraqi and Kurdish forces near Kirkuk and its oil fields. But by week’s end, higher U.S. fuel inventories helped crude settle back to roughly where it began. The loonie was similarly little moved by the week’s events, but dropped Friday on weaker than expected sales and inflation data.

The S&P 500 Composite index once again touched new all-time highs. Sector strength was seen especially in financial services and health care, driven by strong earnings reports. The real estate and consumer staples sectors led losses, declining as they typically do in the face of rising bond yields. Macro-economic news, including strong manufacturing surveys and a 44-year low in unemployment claims, provided some lift to the broader market, and worries that political infighting will impede or derail attempts at tax reform faded as the U.S. Senate managed to pass a budget resolution.

European stock indices were mostly flat in light of the tension in Spain. Shares in London were further pressured by continuing difficulties in Brexit negotiations, as well as mixed economic news. Although unemployment remains near a multi-decade low, the Office of National Statistics reported that retail sales in the United Kingdom unexpectedly plunged in September. Things were more upbeat in Japan. The Nikkei 225 stock index added to its 20-year high on solid corporate earnings, a weaker yen, and positive sentiment ahead of Sunday’s general election.

What’s ahead next week:

Canada

  • Bank of Canada rate decision
  • Wholesale inventories (August)

U.S.

  • Markit manufacturing and services PMIs (October-preliminary)
  • Durable goods order (September-preliminary)
  • New home sales, pending home sales (September)
  • Wholesale and retail inventories (September)
  • GDP (3rd Quarter-advance)
  • U. of Michigan sentiment survey (October-Final)

Markets surprisingly calm as earnings season kicks off

 

Reporting of third quarter earnings got underway this week with hopes that continued improvement in corporate results will deliver another month of positive returns to equities. On a total return (USD) basis, the S&P 500 Composite index has been up each month of 2017 so far. There has never been a full calendar year when this has happened all 12 months. Trading was pretty slow in North America (on Monday Canadian markets were closed for Thanksgiving and U.S. fixed income trading shut for Columbus Day), but news headlines bristled with activity that could normally be expected to move markets.

 

The Catalan push for independence from Spain remained at the forefront of geopolitical news, with investors breathing a sigh of relief when the Catalan leader put off an immediate declaration of independence. Meanwhile tensions between the U.S. and North Korea continued and a diplomatic standoff between the U.S. and Turkey became more heated. Closer to home, U.S. President Donald Trump’s feud with Senator Corker raised concerns that attempts at tax reform will fail, and the President’s comments as NAFTA talks resumed in Washington elevated fears that the trade agreement might collapse. In spite of all these growing risks, markets saw only mild downward pressure on the U.S. dollar and Treasury yields as gold gained. Yields got some support from the Federal Reserve’s September meeting minutes that clearly signaled rates would likely be hiked again in December.

 

In Canada, the S&P/TSX Composite index managed a fractional gain in mostly listless trading. Major sectors posting advances included industrials and financials, as well as the “bond proxies” (utilities, real estate, staples) that benefited from the downward drift in interest rates. The health care sector led decliners as Valeant Pharmaceuticals came under pressure once again, and the heavily-weighted energy sector extended the losses seen last week when crude prices dropped on news of growing supplies. Even as energy equities slid, oil prices were recovering after Saudi Arabia said it will cut exports, and the Organization of the Petroleum Exporting Countries predicted robust demand next year.

 

The advance in equities was even less impressive in the U.S. than in Canada, but all major indices, including the S&P 500, the Dow Jones Industrials Average, the NASDAQ Composite, and the Russell 2000, notched new all-time highs. The bond proxies led the gainers along with the technology sector. The telecom services sector stood out on the downside as subscriber losses at AT&T highlighted the threat to the industry of consumers “cutting the cord.”

 

As tensions in Spain cooled, European equities got an added lift from strong industrial production numbers for the euro area, particularly Germany. Almost all major European equity indices saw modest gains. In Britain, the most recent round of Brexit talks ended with Prime Minister Theresa May’s hopes for a transition deal before year end looking increasingly unlikely. Asian markets were mostly higher as the International Monetary Fund (IMF) raised its forecast for global economic growth and Chinese shares played catchup after missing out on last week’s global rally due to the Golden Week holidays.

 

What’s ahead next week:

Canada

  • Existing home sales (September)
  • Bank of Canada senior loan officer survey (Q3)
  • Manufacturing sales (August)
  • Consumer price index (September)
  • Retail sales (August)

U.S.

  • Empire manufacturing survey (October)
  • Import price index (September)
  • Industrial production and capacity utilization (September)
  • Housing starts and building permits (September)
  • Conference Board leading index
  • Existing home sales (September)

 

OSFI Changes May Signal Expectations of 2% Increase in Mortgage Interest Rates

This month the Office of Superintendent of Financial Institutions for Canada is finalizing changes in legislation that will include requiring those that purchase a home with a minimum down payment of at least 20%, not needing mortgage insurance, to prove they could still afford their mortgage payments if interest rates were 200 basis points (two percentage points) higher than the rate they negotiate.

Jeremy Rudin, the Superintendent of Financial Institutions, told reporters. “But we do know this: Housing prices are still near their all-time highs, and mortgage rates are still near their all-time lows. And while sound underwriting is always important, it’s never been more important than it is now.”

Though OSFI, nor the banks have stated that interested rates are headed 2% higher, the fact that they are stress-testing for this to happen, tells me that they are planning for it to happen.

Meanwhile, the Bank of Canada has already announced that they are expecting to increase interest rates again later this month.

Banks have already tightened their lending policies and I’m getting reports of strong applicants having their mortgage applications turned down by the banks.

Globe and Mail article on OSFI announcement

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Originally published by Baldo Minaudo on BaldoMinaudo.com, Baldo Minaudo, M.B.A. is a Real Estate Broker located out of Toronto serving local and international clients. He may be reached through is office 416-698-2090 or through his website.