Aug. 30, 2019

S&P/TSX Composite Index

Drivers behind the S&P/TSX Composite Index year to date return of 15.1%:

  • Financials and Energy sectors make up almost 50% of the Index. This used to be closer to 70% before the pipeline debates.
  • Financials represent 31.1% of the index with a performance of only 10.4% and have been challenged with low interest rates and narrowing net interest margins.
  • Energy has the second largest weighting at 15.9% and has barely sneaked a positive return of 3.8%.
  • Information Technology represents only 5.8% but was up 61.7%. Utilities represent 4.6% and up 29.1%, Real Estate represents 3.6% and up 20.5%.

Alberta

  • Alberta government’s first fiscal quarter report showed Alberta’s total debt is on track to reach $119.5 billion by 2023-2024 fiscal year.
  • The Province spent $93 million more on debt servicing last quarter alone.
  • Alberta has the lowest net debt (about 7% of its GDP) of any Province.
  • Expenses fell 2.5% to $14.3 billion driven by an 84% drop in capital spending/grants to cities. These will be paid later this year.
  • Government is working with an expert panel before releasing their fall budget.

Housing

Federal government to launch new home-buyer incentive program starting September 2nd, allowing first-time buyers to save on mortgage payments without increasing down payment:

  • Shared equity between homeowner and government via mortgage insurance providers.
  • Pay back incentive in 25 years or when property is sold.
  • Annual household income less than $120,000.
  • Increase allowable RRSP withdrawal for purchase to $35,000 from $25,000.

June payroll, employment and earnings

  • Average weekly earnings increased in 7 of 10 largest industrial sectors y/y; led by wholesale trade
  • Average weekly earnings were up in all provinces; PEI and New Brunswick had highest increases, Alberta was 7th.
  • Number of payroll employees up 1.8% y/y, highest gains in health care and social assistance (3.4% for both); while declining 1.19% in mining, quarrying, and oil and gas extraction.

Tidbits

  • International travelers visiting Alberta increased by 15% Q12019 over Q12018, 74% are US visitors and 26% from all other countries.
  • Hemp businesses are making Lego-like hemp bricks for home building, as consumers are demanding home building materials with a reduced carbon footprint.
  • Porsche is expanding its app-based monthly subscription service program to Las Vegas, San Diego, Phoenix and Toronto as it tries to reach younger consumers.
  • Royal Bank and TD agreed to pay Ontario Securities Commission fines of $13.55mill and $9.3mill respectively for failing to supervise foreign-exchange traders in 2011-2013.
  • BCE Inc. is reducing its broadband internet expansion in rural communities and smaller towns by 20% (approx. 200,000 households) to protest the federal telecom regulator’s recent rate ruling.