A recap of last week s top economic news and what s to come Welcome to Gridlock: Markets sigh with relief U.S. midterm elections delivered on a much-anticipated outcome: the Democrats wrested control of the House of Representatives, while the GOP tightened its grip on the Senate. The race, widely seen as a referendum on Mr. Trump s term, wasn t quite the decisive rebuke Democrats had hoped for. Democrats gained 27 House seats, below the average number lost by a president s governing party in midterm elections. The Democrats also lost ground in the Senate, which usually doesn t happen with opposition parties in midterm years. Markets rallied on the results in line with historical trends. Since 1946, markets have risen more than 15% in the 12 months following a midterm election. The U.S. Federal Reserve left interest rates unchanged and stayed on course to hike in December despite recent jitters in financial markets and a critical president. The U.S. central bank said economic activity has been rising at a strong rate and job gains have been strong, acknowledging a drop in the unemployment rate, while repeating its outlook for further gradual rate increases in its statement last week following a twoday meeting in Washington. Risks to the outlook appear roughly balanced, the Federal Open Market Committee said, leaving that language unchanged from the prior meeting in late September. Inflation expectations, which have slipped slightly in recent weeks according to some measures, were described as little changed, on balance, the same as in the last statement. A preliminary reading on consumer sentiment for November released on Friday came in slightly above expectations. The University of Michigan's consumer sentiment index hit 98.3 for this month. Economists polled by Refinitiv expected the preliminary read to come in at 98, slightly below an October print of 98.6. Canadian building permits up, real estate market forecast to slow The Canadian real estate market is expected to moderate over the next two years as the growth in housing prices begins to slow to be more in line with economic fundamentals, according to the Canada Mortgage and Housing Corporation. In its annual outlook released last week, the national housing agency forecasts housing starts and sales to both decline in 2019 and 2020. It anticipates housing starts for single and multi-unit starts will fall to between 193,700 and 204,500 in 2019, while sales are expected come in between 478,400 and 497,400 units. Prices are anticipated to range from $501,400 and $521,600. The value of Canadian building permits increased by 0.4% in September from August, according to Statistics Canada data. The residential sector edged up in the multi-family component, while the institutional component in the non-residential sector registered gains. The value of building permits rose in six provinces, with a record high posted in Quebec. Polling by Nanos Research for Bloomberg News shows household sentiment gauges have fully recovered from a four-month lull that coincided with often testy negotiations to update the North American Free Trade Agreement. The overall index averaged 57.01 last month, which was the strongest level since May. The index hit its lowest levels this year in July, when frictions between Canada and U.S. were at their worst. Canada and the U.S. signed the USMCA in late September. The change in sentiment highlights just how much the trade
friction with the U.S. had been weighing on the Canadian economy, crimping confidence among both households and businesses, and suggests the potential for upside surprises now that uncertainty is receding. The data shows the improvement has been most acute in Canadians expectations for growth, which had fallen to the lowest in years amid concerns trade talks would falter. Chinese exports/imports up, Britain s economy grows Chinese exports and imports for the month of October that exceeded forecasts, the country's General Administration of Customs reported. China recorded a trade surplus of $31.78 billion with the U.S. in October down from a record $34.13 billion in September. The country's cumulative trade surplus with the U.S. in the first 10 months of the year was $258.15 billion. China's overall trade surplus was $34.01 billion for October, lower than the $35 billion economists had expected. Britain enjoyed its fastest economic upturn since late 2016 during the third quarter, spurred by a surge in consumer spending over the hot summer and the soccer World Cup, which now appears to be tailing off ahead of Brexit. The economy expanded 0.6% in the three months to September, matching the consensus forecast in a Reuters poll of economists and accelerating from 0.4% the quarter before, the Office for National Statistics said last week. What s to come U.S. Federal budget, CPI numbers, Canadian housing and manufacturing sales It will be a busy week in the U.S. with the release of Federal budget numbers, CPI, industrial production and business inventory numbers. In Canada, new figures MLS sales figures will be released by the Canadian Real Estate Association, while manufacturing stats will also be reported. Source: BMO Economics, TD Economics, Reuters, CNBC as of November 9, 2018 2
Return (CAD, %) Annualized Return (CAD, %) CANADIAN EQUITY INDEXES Close Week YTD 1 YR 3YR 5 YR 10 YR 52 wk high 52 wk low S&P/TSX Composite PR Index 15,274 1.0-5.8-5.0 4.2 2.7 4.8 16,586 14,640 S&P/TSX Composite TR Index 52,151 1.0-3.4-2.2 7.4 5.8 7.9 56,066 50,189 Energy TR 3,334 1.6-8.7-9.8 1.8-2.7 2.5 3,903 3,197 Materials TR 2,441-2.7-13.1-10.3 8.9-0.2 2.0 2,944 2,349 Industrials TR 4,274 0.9 6.6 9.1 14.6 12.2 14.6 4,543 3,762 Consumer Disc. TR 3,134 0.4-8.8-5.7 5.6 10.0 12.6 3,750 3,022 Consumer Staples TR 6,023 5.0-0.5 0.8 5.3 13.7 14.7 6,175 5,509 Health Care TR 722 6.1 16.3 49.3-25.4-16.4 8.8 890 458 Financials TR 4,967 0.8-3.0-1.9 10.0 9.3 11.1 5,296 4,812 Information Technology T 325-0.9 15.2 19.6 14.3 18.7 4.6 376 271 Telecom Serv ices TR 3,013 2.1-1.9-2.0 6.9 9.3 10.8 3,157 2,798 Utilities TR 4,317 4.2-6.8-7.2 6.6 6.3 7.2 4,703 4,142 S&P/TSX 60 TR Index 2,523 1.3-2.4-1.0 8.1 6.6 7.8 2,693 2,401 MSCI Canadian Small Cap PR Index 334-0.2-8.1-6.7 4.3 0.1 6.5 374 326 Return (CAD, %) Annualized Return (CAD, %) WORLD EQUITY INDEXES Close Week YTD 1 YR 3YR 5 YR 10 YR 52 wk high 52 wk low CAC 40 PR Index 5,107 0.5-4.4-4.1 2.9 5.1 3.9 5,657 4,897 DAX 30 PR Index 11,529 0.5-11.2-11.2 3.8 6.3 8.8 13,597 11,051 DJIA PR Index 25,989 3.7 11.0 15.5 13.4 15.8 12.5 26,952 23,243 DJIA TR Index 57,142 3.9 13.1 18.2 16.3 18.6 15.5 59,109 49,981 FTSE 100 PR Index 7,105 1.1-6.4-2.3-1.2 1.6 4.1 7,904 6,852 FTSE 100 TR Index 6,253 1.2-3.0 1.8 2.9 5.6 8.2 6,831 5,884 FTSE/Xinhua A200 8,398-4.1-21.6-21.0-8.1 8.1 6.9 11,660 8,051 Hang Seng PR Index 25,602-2.6-9.9-8.7 3.5 7.0 7.1 33,484 24,541 Hang Seng TR Index 71,460-2.6-6.8-5.5 7.5 11.1 11.0 89,476 68,623 MSCI EAFE TR Index 7,522 1.1-2.7-1.0 5.2 8.0 8.7 8,675 7,559 MSCI Emerging Markets TR 2,178-1.2-9.0-7.7 7.7 7.2 9.8 2,772 2,085 MSCI Europe TR Index 9,248 1.1-3.3-1.2 4.4 7.2 8.6 10,736 8,924 MSCI Far East Free (ex-japan) TR 1,264-1.8-9.9-9.6 7.5 9.3 12.0 1,613 1,243 MSCI World TR Index 8,485 2.2 5.5 8.0 9.4 13.0 12.3 9,058 8,116 MSCI World AC TR Index 1,004 1.8 3.7 6.0 9.2 12.4 12.0 1,093 960 NASDAQ Composite PR 7,407 1.5 13.2 14.4 13.1 19.0 17.5 8,133 6,631 Nikkei 225 PR 22,250 0.3 2.1 0.9 6.9 11.6 9.6 24,448 20,347 Russell 2000 TR 7,701 1.0 7.6 11.0 10.7 13.7 14.7 8,632 7,187 Russell 2000 Growth TR 6,887 0.4 9.4 13.2 10.6 14.5 16.1 7,876 6,294 Russell 2000 Value TR 11,596 1.6 5.6 8.5 10.8 12.8 13.2 12,066 10,924 S&P 500 PR Index 2,781 3.0 9.8 12.2 10.0 14.6 12.8 2,941 2,533 S&P 500 TR Index 5,627 2.9 11.3 14.0 12.2 17.0 15.3 5,836 4,914 Shanghai Comp PR 2,599-3.0-22.4-24.5-13.4 6.4 5.0 3,587 2,449 ECO_RELEASE_DT Interest Rates Current Next Meeting Bank of Canada Ov ernight Lending Rate Bank of England Repo Rate European Central Bank Min bid rate at refi tende Federal Funds Target Rate 1.75% 0.75% 0.00% 2.25% 12/5/2018 12/20/2018 12/13/2018 12/19/2018 3
Total Ret (%) Historical Prices 52 wk 52 wk Commodities ($US) Close Week YTD 1 YR 3YR 5 YR 10 YR high low Copper 268-4.4-18.7 309 223 325 170 332 255 Corn 370-0.4 5.4 342 367 427 376 412 330 Crude Oil 60.19-4.7-0.4 57.17 43.87 94.60 61.04 76.90 54.81 Gold 1,210-1.9-7.1 1,285 1,092 1,289 737 1,366 1,160 Natural Gas 3.72 13.2 25.9 3.20 2.30 3.56 6.76 3.91 2.53 Nickel 11,403-3.9-10.3 12,248 9,550 13,859 10,826 15,693 10,751 Platinum 853-1.9-8.4 937 913 1,446 855 1,029 755 Soybeans 875 0.0-8.0 975 874 1,306 912 1,071 811 Silv er 14.16-4.0-16.5 17.00 14.59 21.51 10.06 17.71 13.94 Wheat 502-1.3 17.6 429 502 650 521 593 387 Zinc 2,585-0.6-22.5 3,216 1,624 1,874 1,066 3,606 2,285 CPN MATURITY Bond Yields Coupon Maturity Date Canada 2 Year Treasuries 2.000 11/1/2020 10 Year Treasuries 2.000 6/1/2028 30 Year Treasuries 2.750 12/1/2048 ECB 2 Year Treasuries 0.000 9/11/2020 10 Year Treasuries 0.250 8/15/2028 30 Year Treasuries 1.250 8/15/2048 Japan 2 Year Treasuries 0.100 11/1/2020 10 Year Treasuries 0.100 9/20/2028 30 Year Treasuries 0.900 9/20/2048 US 2 Year Treasuries 2.875 10/31/2020 10 Year Treasuries 3.125 11/15/2028 30 Year Treasuries 3.375 11/15/2048 Current Price 99.36 95.76 104.71 101.12 98.52 105.32 0.00 0.12 0.88 99.90 99.51 99.81 Yield to Maturity 2.33 2.50 2.53-0.61 0.41 1.04 0.00 0.12 0.88 2.93 3.18 3.39 Total Ret (%) Historical Prices Currencies Close Week YTD 1 YR 3YR 5 YR 10 YR high low CAD / EURO 0.67-0.30 0.59 0.68 0.70 0.71 0.66 0.68 0.62 CAD / USD 0.76-0.76-5.01 0.79 0.75 0.95 0.84 0.82 0.75 CAD / UK POUND 0.58-0.80-1.15 0.60 0.50 0.60 0.54 0.60 0.54 USD / AUSTRALIAN $ 1.38-0.42 8.01 1.30 1.42 1.07 1.48 1.42 1.23 USD / BRAZIL REAL 3.73 0.82 12.75 3.25 3.80 2.31 2.16 4.21 3.12 USD / EURO 0.88 0.47 5.91 0.86 0.93 0.75 0.79 0.89 0.80 USD / MEXICAN PESO 20.14 0.61 2.43 19.04 16.77 13.17 12.80 20.96 17.94 USD / UK POUND 0.77-0.05 4.06 0.76 0.66 0.62 0.64 0.79 0.70 USD / YEN 113.83 0.56 1.07 113.47 123.18 99.05 98.24 114.55 104.56 Source: Bloomberg, as of November 9, 2018 4
Commentaries contained herein are provided as a general source of information based on information available as of November 9, 2018 and should not be considered as personal investment advice or an offer or solicitation to buy and/or sell securities. Every effort has been made to ensure accuracy in these commentaries at the time of publication; however, accuracy cannot be guaranteed. Market conditions may change and the manager accepts no responsibility for individual investment decisions arising from the use of or reliance on the information contained herein. Published Date: 5