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S&P/TSX gains almost 100 points, U.S. markets also higher ahead of rate decision

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TORONTO – Strength in the base metal and technology sectors helped Canada’s main stock index gain almost 100 points on Friday, while U.S. stock markets climbed to their best week of the year.

“It’s been almost a complete opposite or retracement of what we saw last week,” said Philip Petursson, chief investment strategist at IG Wealth Management.

In New York, the Dow Jones industrial average was up 297.01 points at 41,393.78. The S&P 500 index was up 30.26 points at 5,626.02, while the Nasdaq composite was up 114.30 points at 17,683.98.

The S&P/TSX composite index closed up 93.51 points at 23,568.65.

While last week saw a “healthy” pullback on weaker economic data, this week investors appeared to be buying the dip and hoping the central bank “comes to the rescue,” said Petursson.

Next week, the U.S. Federal Reserve is widely expected to cut its key interest rate for the first time in several years after it significantly hiked it to fight inflation.

But the magnitude of that first cut has been the subject of debate, and the market appears split on whether the cut will be a quarter of a percentage point or a larger half-point reduction.

Petursson thinks it’s clear the smaller cut is coming. Economic data recently hasn’t been great, but it hasn’t been that bad either, he said — and inflation may have come down significantly, but it’s not defeated just yet.

“I think they’re going to be very steady,” he said, with one small cut at each of their three decisions scheduled for the rest of 2024, and more into 2025.

“I don’t think there’s a sense of urgency on the part of the Fed that they have to do something immediately.

A larger cut could also send the wrong message to the markets, added Petursson: that the Fed made a mistake in waiting this long to cut, or that it’s seeing concerning signs in the economy.

It would also be “counter to what they’ve signaled,” he said.

More important than the cut — other than the new tone it sets — will be what Fed chair Jerome Powell has to say, according to Petursson.

“That’s going to be more important than the size of the cut itself,” he said.

In Canada, where the central bank has already cut three times, Petursson expects two more before the year is through.

“Here, the labour situation is worse than what we see in the United States,” he said.

The Canadian dollar traded for 73.61 cents US compared with 73.58 cents US on Thursday.

The October crude oil contract was down 32 cents at US$68.65 per barrel and the October natural gas contract was down five cents at US$2.31 per mmBTU.

The December gold contract was up US$30.10 at US$2,610.70 an ounce and the December copper contract was up four cents US$4.24 a pound.

— With files from The Associated Press

This report by The Canadian Press was first published Sept. 13, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

The Canadian Press. All rights reserved.

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Trump and Musk promise economic 'hardship' — and voters are noticing – MSNBC

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Trump and Musk promise economic ‘hardship’ — and voters are noticing  MSNBC



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Economy stalled in August, Q3 growth looks to fall short of Bank of Canada estimates

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OTTAWA – The Canadian economy was flat in August as high interest rates continued to weigh on consumers and businesses, while a preliminary estimate suggests it grew at an annualized rate of one per cent in the third quarter.

Statistics Canada’s gross domestic product report Thursday says growth in services-producing industries in August were offset by declines in goods-producing industries.

The manufacturing sector was the largest drag on the economy, followed by utilities, wholesale and trade and transportation and warehousing.

The report noted shutdowns at Canada’s two largest railways contributed to a decline in transportation and warehousing.

A preliminary estimate for September suggests real gross domestic product grew by 0.3 per cent.

Statistics Canada’s estimate for the third quarter is weaker than the Bank of Canada’s projection of 1.5 per cent annualized growth.

The latest economic figures suggest ongoing weakness in the Canadian economy, giving the central bank room to continue cutting interest rates.

But the size of that cut is still uncertain, with lots more data to come on inflation and the economy before the Bank of Canada’s next rate decision on Dec. 11.

“We don’t think this will ring any alarm bells for the (Bank of Canada) but it puts more emphasis on their fears around a weakening economy,” TD economist Marc Ercolao wrote.

The central bank has acknowledged repeatedly the economy is weak and that growth needs to pick back up.

Last week, the Bank of Canada delivered a half-percentage point interest rate cut in response to inflation returning to its two per cent target.

Governor Tiff Macklem wouldn’t say whether the central bank will follow up with another jumbo cut in December and instead said the central bank will take interest rate decisions one a time based on incoming economic data.

The central bank is expecting economic growth to rebound next year as rate cuts filter through the economy.

This report by The Canadian Press was first published Oct. 31, 2024

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StatCan latest wealth survey shows stark disparity between homeowners, renters

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TORONTO – Statistics Canada‘s latest financial security survey shows a stark disparity between the wealth of homeowners and renters, even as it fails to capture the true scale what’s owned by Canada’s richest families.

The survey, conducted only every few years, shows home-owning families whose main earner was 55 to 64, and who had an employer-sponsored pension, had a median net worth of $1.4 million in 2023. Renters without a pension plan in the age group had a median net worth of $11,900.

Home ownership was the main factor in the difference, as those who owned their home but didn’t have a pension had a median net worth of $914,000, while those with a pension but did not own had a median net worth of $359,000.

The data released Tuesday also shows Canadians of all income brackets are trying to get into real estate, said Dan Skilleter, director of policy at economic inclusion non-profit Social Capital Partners.

“The most striking numbers they have in here are about just the growth of real estate as an asset class,” he said.

“So it’s clear everyone’s been getting signals about how important that is, and I think that is dysfunctional, and has been leading to an unsustainable situation where real estate has become an essential stepping-stone to really have any financial security in Canada.”

The picture in the report was similar for families whose main earner was under 35, as the median net worth of those who own their principal residence was $457,100, compared with $44,000 for those who don’t.

The gap for young families is even larger than at first glance though, as Statistics Canada notes that of that $44,000 net worth, an increasing amount is due to renters owning real estate that is not their principal residence.

It noted that of renters without pensions, 15 per cent had a net worth above $150,000 in 2023, compared with five per cent in 2019, as more buy into real estate.

Overall, the survey found the median net worth of Canadian households was $519,700, up 57 per cent from 2019 when it was last conducted.

The median wealth of households under 35 was $159,100, up from $56,400 in 2019, while the 55 to 64 category was the richest at $873,400, up from $797,000 four years earlier.

The survey involved a 45-minute questionnaire sent to a sampling of almost 40,000 homes to provide a detailed view of what families own and what debts they have.

“It’s really the only survey we have where the government gets to peer into the full financial story of families,” Skilleter said.

The survey, however, has a significant blind spot for Canada’s wealthiest. Statistics Canada divides the survey in tiers to make sure various household categories are represented, but the highest tier is the wealthiest five per cent in Canada, meaning anyone above about $2.4 million for the 2019 survey.

The broad top category means the top one per cent, and 0.1 per cent, are hardly captured, Skilleter said.

“What’s not part of the survey is to take a broader look at the Canadian economy and see: is wealth concentration in general getting worse or getting better,” he said.

“And much to my dismay, they can’t even take a stab at answering that question, because they don’t set up their survey to even have a good chance of getting a single billionaire or 100 millionaire to take the survey.”

The richest family in the 2012 version of the survey had a net worth of $23.7 million, and $27.3 million in the 2016 report, while Credit Suisse estimates there are more than 5,500 Canadians with a net worth of more than $50 million, including 120 with a net worth of more than $500 million, Skilleter noted in an April report.

Statistics Canada said the share of wealth held by the top one per cent will be understated in this data source. Skilleter notes that the U.S. specifically carves out a tier for billionaires to make sure they’re represented in the results of its wealth survey, which helps to show the economic inequality in that country.

Canada has looked more equal based on the data from the survey, but it can be misleading.

Data from the 2019 survey was used to estimate Canada’s top one per cent held about 13.7 per cent of wealth, and the 0.1 per cent held 2.8 per cent. But combining the survey with outside data like the Forbes rich list, the Parliamentary Budget Officer estimated that the top one per cent held 24.8 per cent, and the top 0.1 per cent held 11.2 per cent of overall wealth.

“We’re not even being made aware of the ways in which ownership of capital is dramatically increasing the fortunes of some,” Skilleter said.

“That would give rise to a more frank conversation about the different ways that public policy…could intervene and make people’s lives better.”

This report by The Canadian Press was first published Oct. 29, 2024.

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