September 23, 2021Money Education Financial literacy In the news News Trending Weekly update Weekly commentary
What's Happening Today
Well the election is done annnnnd everything is exactly the same. Prime Minister Trudeau was hoping to parlay all that spending into a Liberal majority, but aside from an early scare with surging Conservatives, the seats ended up looking a whole lot like they did before the election was called. Nothing ventured nothing gained eh? Markets responded with general indifference to the Federal election, focusing more on the real estate woes of China and the Evergrande story. It was a very volatile week that only calmed after the Chinese government stepped in to allay fears of a spreading fiscal contagion.
Turning to the South, all eyes were yet again on the Fed and their tapering schedule. After some time spent digesting things, here’s where we stand. Taper in November/December is close to a lock, and Powell mentioned that an end to the process in mid-2022 “would make sense”. Take those two statements together and you get a pace of $15bln per month. So not only is the Fed likely tapering by a larger quantity, they’re also going at a much faster pace than before.
Across the pond, the Bank of England left its benchmark interest rate at a low of 0.1% and its bond-buying program unchanged while it downgraded economic growth projections for Q3 of this year. Data from Euro zone purchasing managers showed business activity lost momentum in September after demand peaked over the summer and supply-chain bottlenecks hurt services and manufacturers. Looks a lot like both cycles peaked in the June/July period. Watch for similar results from the US (later this morning) along with Japan (later tonight). European markets are trading higher and have become range bound as tech stocks and carmakers led the advance.
Asian markets rose after Evergrande’s chairman tried to reassure investors after the company said it had resolved a coupon payment on a domestic onshore bond, but investors wait on the deadline for a dollar-bond coupon payment. China’s central bank injected US$17B into financial system, the most in eight months. Long story short, the problem for over-leveraged property developers came into sharper relief when Beijing introduced new measures to monitor and control debt. Large firms in the sector (which accounts for 30% of the economy) have been relying on presales to finance themselves, and new regulations are now forcing them to offload properties at pretty steep discounts.
Oil prices eased, but Brent Crude held above US$75 a barrel, supported by growing fuel demand.
As always, please give us a call if you have any questions, or just to chat. As a reminder, Mike is booking in-person portfolio reviews, so please give us a call to set a date if you’d like to go over everything.
Finally, the whole team is heading to Whistler this weekend for a little R ‘n R, and so will be away on Monday next week. Back to business on Tuesday the 28th.