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Mike’s Comment – Sept 25

Same old politics – just as nasty along with the free lunch express – but the question is, would we have it any other way?

Many investors are fearing a crash. Stocks are at record highs. Inflation is on the rise. More COVID waves and variants. Supply chain issues. An increasingly chaotic political environment under the Biden & Trudeau administrations. Etc. Etc. Etc. BUT THE REAL RISK IS THE GOVERNMENT BOND MARKET.

Join Michael’s guest Andrew Ruhland on Saturday, Sept. 25th @ 11:00am MST (10am Pacific), after the Money Talks Podcast to watch their free, exclusive webinar, “Don’t Be Fooled: It’s About the Bond Market”. CLICK HERE to register or for more information on the webinar. A must see for anyone with bonds in their portfolio.

Federal deficit hit $48.5B over first four months of fiscal year

The federal government ran a deficit of more than $48 billion over the first four months of its fiscal year, about $100 billion less than the treasury pumped out during the same period one year earlier.

The Finance Department’s regular fiscal monitor says the budgetary deficit between April and July was just under $48.5 billion, down from the almost $148.6 billion recorded over the same months in 2020 when COVID-19 first struck.

Friday’s fiscal monitor says the deficit to date now reflects current economic challenges caused by COVID-19, including ongoing public health restrictions.

Program spending, excluding net actuarial losses, between April and July was $154billion, a decline of about $58.1 billion, or 27.4 per cent drop, from the $212.1 billion in the same period one year earlier…read more.

Canadian Job Vacancies Are Soaring Due To Stimulus, But Wage Growth Isn’t: BMO

Canadian employers are making jobs faster than people can fill them. In two separate reports, BMO economists took a dive into rising job vacancies and wages in Q2 2021. They found job vacancies hit a new record high last quarter. A lack of labor doesn’t appear to have much urgency though, as wages are still only showing modest growth.

Canadian Job Vacancies Soar To A New Record High

Job vacancies continue to climb, reaching the highest level on record. Statistics Canada (Stat Can) reported 731,900 job vacancies in Q2 2021. No data was recorded last year due to the pandemic, but vacancies are 25.8% higher than Q2 2019. About 4.6% of jobs across the country are currently vacant.

The gaps are due to the pandemic, but perhaps not the parts you might expect. Economists have attributed the issue to “disincentives” created by generous government unemployment benefits. BMO sees an additional reason — a rising demand for goods. Stimulus and low interest rates are driving consumption, pushing the need for labor…read more.

‘More spending, more deficits, more lacklustre GDP growth’: Reaction to election results

It’s a federal election that put Prime Minister Justin Trudeau right back where he started from: another minority government.

With just one more seat for the Liberals after this election than the last one in 2019, a new cabinet is expected to be announced in the coming days.

So, where does that leave the turbulent state of Canadian finances?

Here’s how economists and business executives are reacting to another mandate for Trudeau following Election Day:

Ryan Lewenza, senior vice-president and portfolio manager at Turner Investments

We now have the exact same thing that we already had going into this election. So, for us, this is more spending, more deficits, more lacklustre GDP growth, and likely, more taxes on the way.

Kevin Page, former parliamentary budget officer

There will be a lot of spending and a higher deficit than what the PBO projected a few months ago… How we will taper out those subsidies and fiscal support programs will really depend on our progress on really reducing the number of COVID-19 infections.

John Manley, senior advisor at Bennett Jones, former Liberal deputy prime minister and former finance minister

Foreign investment is one side of the coin, but retention of Canadian investment is another. A combination of tax policy and other policies — regulatory, in particular — has been causing many Canadian firms to invest abroad rather than here at home.

We’ve got to reverse that, we’ve got to make Canada a welcoming place for investment, we’ve got to reward innovation and resilience and we’ve got to reward success…read more.

 

Canada stocks, dollar climb after Trudeau wins third term

Canadian stocks climbed along with the country’s currency after Prime Minister Justin Trudeau won a historic third term in a federal election that did little to reorder the political balance of the country.

Canada’s benchmark S&P/TSX Composite Index was up 0.7 per cent at 9:58 a.m. in Toronto, in line with gains in other equity markets, while the Canadian currency strengthened against the U.S. dollar.

“The status quo is exactly what markets like, especially stocks,” Kristina Hooper, chief global market strategist at Invesco, said Tuesday in a phone interview. “So while Trudeau didn’t get what he had hoped for in calling the snap election, that means really no disruption as it relates to markets.”…read more.