Financial news- Oct 23, 2020

Financial News for the Week of October 23, 2020

FINANCIAL NEWS HIGHLIGHTS OF THE WEEK

United States
  • Covid-19 infections continued to rise this week, nearing record highs set in July. Concerns regarding this trend weighed on markets, but progress on a new stimulus package helped improve the mood later in the week.
  • Positive housing reports reinforced the sector’s position as a bright spot in the U.S. economy. Existing home sales soared 9.4% in September, blowing expectations out of the water, while price growth accelerated further.
  • Fast-rising prices are good news for builders who have recognized the need to build more homes. Housing starts also pushed higher in September (+1.9%), with gains concentrated in the single-family segment.

 

 


U.S. - Housing Market Remains A Bright Spot

Financial News- Home Resales Surge Higher in September to yet Another Post-great Recession RecordMarkets continued their choppy ride this week, as investors weighed a rising trend in new infections against hopes for fiscal stimulus. Signs of progress on the latter helped put markets in a better mood later in the week, while a strong housing report provided an added fillip.

The September existing home sales report reinforced the notion that the housing market remains a bright spot, even as most sectors of the economy continue to struggle under the weight of the pandemic. After gains moderated in the two months prior, resale activity surged by 9.4% in September, blowing expectations out of the water. Sales are now at a new post-Great Recession high and nearly 14% above their pre-pandemic level (Chart 1). Details from the report suggested that the purchasing of homes in vacation destinations – a trend that appears to have been supported by an improved flexibility of working from home – played a part in boosting overall sales. While the latter are up 21% year-over-year (y/y), sales in vacation destination counties accelerated over the summer and are up 34% y/y according to the National Association of Realtors.

With low mortgage rates and a still-improving labor market, we expect resale activity to continue grinding higher, but at a more moderate pace. A sharp acceleration in home price growth is eroding affordability and a record-low supply of housing means that markets will remain tight. Housing inventory now sits at just 1.47 million or a record low of 2.7 months at the current sales pace (Chart 2). As a result, the median existing home price has accelerated to a sharp 15% y/y – the fastest pace since the “frothy” days of 2005.

Financial News- Months Supply of Existing Home Inventory at Record LowLow inventory and fast-rising prices are good news for homebuilders who have recognized the need to build more homes. More shovels were put to the ground in September, with housing starts up 1.9% on the month. Gains were concentrated in the single-family segment, while multi-family starts fell for the second consecutive month – a trend that seems to align with a tilt to less-denser suburban living as a result of the pandemic. Added supply in the new home market would help by enabling move-up buyers to acquire new homes, thereby easing the gridlock in the resale market. That said, the support from this channel will take time.

The few remaining indicators pointed to a slowing economic recovery outside housing. Initial jobless claims fell by 55k to 787k last week – better than expected, but still slightly higher than at the start of the month. Meanwhile, continuing claims from all programs eased to a still-elevated 23.2 million at the start of the month (data is delayed). Anecdotal evidence from the Beige Book also pointed to a “slight to modest” pace of growth this fall. Coupled with the fact that the virus’ spread is nearing a record high, these elements support the case for added fiscal stimulus.

The outcome of the election, which is now a little over a week away, will have important implications for the economy (see here) and the amount of fiscal stimulus. So far, Joe Biden is leading in the polls. But, judging from what happened in 2016, it’s worth continuing to take these numbers with a grain of salt.

Admir Kolaj, Economist | 416-944-6318


 This report is provided by TD Economics. It is for informational and educational purposes only as of the date of writing, and may not be appropriate for other purposes. The views and opinions expressed may change at any time based on market or other conditions and may not come to pass. This material is not intended to be relied upon as investment advice or recommendations, does not constitute a solicitation to buy or sell securities and should not be considered specific legal, investment or tax advice. The report does not provide material information about the business and affairs of TD Bank Group and the members of TD Economics are not spokespersons for TD Bank Group with respect to its business and affairs. The information contained in this report has been drawn from sources believed to be reliable, but is not guaranteed to be accurate or complete. This report contains economic analysis and views, including about future economic and financial markets performance. These are based on certain assumptions and other factors, and are subject to inherent risks and uncertainties. The actual outcome may be materially different. The Toronto-Dominion Bank and its affiliates and related entities that comprise the TD Bank Group are not liable for any errors or omissions in the information, analysis or views contained in this report, or for any loss or damage suffered.

 


Retirement Saving Strategies for Saving in Your 50s

Retirement: Strategies for Saving in Your 50s

Countdown to Retirement: Strategies for Saving in Your 50s

Strategies for saving in your 50s

Many retirees today are redefining the “golden years.” Forget about endless days of leisure. Retirees seek adventure, travel, and new business pursuits. While these changes may redefine retirement, will retirees be able to finance their plans? Today, many people age 50 and older have not begun to save for retirement or have yet to accumulate sufficient funds.

If you’re in this age group and find yourself facing an underfunded retirement, it’s not too late to take charge. There are actions you can take today to get on the right track. Here are some retirement saving strategies:

What’s it going to take?

First, estimate how much money you will need in retirement. Once you have an idea of the amount, you can work toward meeting that goal. A good rule of thumb is that you may need 60%– 80% of your current annual income in retirement. Your financial professional can help you assess the best amount for your situation.

Maximize your contributions.

If your employer offers a retirement plan, contribute as much as the law will allow. In 2020, those age 50 and over can contribute up to $26,000 to an employer-sponsored 401(k) plan ($19,500 + $6,500 “catch-up” contribution). Many employers also offer a company match, so be sure you contribute enough to claim this “free” money, which can add up over time.

Create a spending plan.

In other words, make a budget. Many people think a budget is restrictive, but look at it this way: You can spend now, or you can have the money to afford your dream adventures later. To start, it is important that you pay down debt and avoid accruing new debt. Next, examine your spending habits and replace some of your discretionary spending with saving. Saving even $20 more per week is a step in the right direction.

Take initiative.

Besides contributing to your employer’s plan, you can save more by opening your own Roth IRA. Contributions are made after taxes, but earnings and distributions are income-tax free, provided the account is at least five years old and you have reached age 59½. Those age 50 and over can contribute up to $7,000 a year in 2020. Eligibility in 2020 for these plans begins to phase out with adjusted gross incomes of $124,000–$139,000 for single filers and $196,000–$206,000 for married joint filers.

Hang out your shingle.

Many Boomers hope to start their own businesses in retirement. Why wait? If you begin your entrepreneurial efforts now, your business has the potential to be in full swing by the time you retire, and any profits between now and then can be added to your savings.

Consider downsizing.

Your home may have significantly increased in value since you first bought it, and you may have already paid off the mortgage. With children at or near adulthood, do you really need all that space? Selling now and moving to a smaller, more affordable location may allow you to transfer some of the equity in your home into a savings vehicle.

Reconsider your retirement age.

If you want to cushion your retirement savings, consider staying on the job longer. Some people actually leave retirement to reenter the workforce because they feel more fulfilled while working. Others seek part-time work, consulting, or entrepreneurial endeavors. Such options may enable you to earn more money to save, which may help to postpone spending down your savings.

Regardless of which options you choose, you can benefit from time and compounding interest. Every year that your savings remain untouched allows more time for growth. It is never too late to start preparing for your future. So, take action now to get on track to saving for your retirement.

Have questions about your current retirement saving strategy? Give us a call at 704-237-4207 or contact us here.

 

“Countdown to Retirement: Strategies for Saving in Your 50s" 2018. Liberty Publishing, Inc. FMEX Editor.https://fmexcontent.s3.amazonaws.com/1289/1289.pdf


Financial News for the Week of October 16, 2020

FINANCIAL NEWS HIGHLIGHTS OF THE WEEK

United States
  • Covid-19 infections are surging in much of the world, prompting new restrictions in Europe and dampening market sentiment early in the week.
  • U.S. data painted a clear picture of pandemic life. Inflation pressures for services hard hit by social distancing have cooled notably.
  • Meanwhile, American consumers continue to snap up goods that will help them to enjoy life at home. That strength in September retailing put markets in a better mood late in the week.

 

 


U.S. - Global Infections Surge

 

Markets had a choppy week as infections surged in parts of the world, and uncertainty about the next round of stimulus continued. A strong retail report for September did put markets in a better mood on Friday.

Earlier in the week, the IMF released their updated global forecast. It emphasized that the recovery will be long, uneven and uncertain. Their forecast contraction for 2020 (-4.4%) is slightly smaller than expected back in June, but the rebound is also shallower. So long as the pandemic is controlled next year, it expects the global economy to rebound 5.2%. Unfortunately, at the moment in many areas of the globe, the pandemic is far from controlled.

Infections have been on the upswing in Europe, where daily infections are well above their spring peaks, and have recently surpassed the U.S. (Chart 1). As a result, countries have imposed new restrictions to turn the tide, from curfews in France’s largest cities, to curbs on socializing indoors in London. New restrictions are more targeted relative to the spring, and therefore, the economic impact is likely to be much less severe. However, it still casts a pall over the outlook for Europe.

In the U.S., the latest inflation report should quiet the stagflation chatter that had emerged after a couple of hot months for core inflation. Both headline and core CPI rose a middling 0.2% in the month of September. However, removing an outsized 6.7% month/month increase in used vehicle prices leaves core inflation flat on the month.

During the pandemic, the prices of many goods have risen sharply. But services inflation has ebbed from 3% year-on-year in February to 1.9% in September, as demand has been hard hit by social distancing. Services account for 63% of the CPI basket, so the cooling heavily influences the overall trend. You have to go back to 2011 to see services inflation pressures as soft as it is today.

The good news came from consumers, who ramped up their spending at retailers in September. Retail sales rose 1.9% on the month, driven by a big jump up in clothing purchases (+11% m/m), department stores (+9.7% m/m), sporting goods, hobby, book and music stores (+5.7% m/m) and vehicle sales (+3.6% m/m). There is some speculation that the strength in clothing may be due to the delayed back-to-school in many parts of the country. Even removing that influence, it was a strong month, and puts some upside risk to our forecast for consumer spending in the third and fourth quarter.

Like price patterns, the trend in retail sales also tells the tale of pandemic life (Chart 2). The hardest hit area is restaurants and bars, which have faced closures and restrictions. Since most consumers are staying home a lot more, there is also less of a need to get dressed up to go out, and even with September’s jump, clothing sales are below their pre-crisis level, as are department stores which would include a fair amount of clothing purchases. The strongest areas, apart from online shopping in general, are for things that make staying home a bit more appealing, such as new gym equipment or other hobbies and materials for home and garden improvement projects.

Leslie Preston, Senior Economist | 416-983-7053


 This report is provided by TD Economics. It is for informational and educational purposes only as of the date of writing, and may not be appropriate for other purposes. The views and opinions expressed may change at any time based on market or other conditions and may not come to pass. This material is not intended to be relied upon as investment advice or recommendations, does not constitute a solicitation to buy or sell securities and should not be considered specific legal, investment or tax advice. The report does not provide material information about the business and affairs of TD Bank Group and the members of TD Economics are not spokespersons for TD Bank Group with respect to its business and affairs. The information contained in this report has been drawn from sources believed to be reliable, but is not guaranteed to be accurate or complete. This report contains economic analysis and views, including about future economic and financial markets performance. These are based on certain assumptions and other factors, and are subject to inherent risks and uncertainties. The actual outcome may be materially different. The Toronto-Dominion Bank and its affiliates and related entities that comprise the TD Bank Group are not liable for any errors or omissions in the information, analysis or views contained in this report, or for any loss or damage suffered.

 


Financial News for the week of October 9, 2020

Financial News for the Week of October 9, 2020

FINANCIAL NEWS HIGHLIGHTS OF THE WEEK

United States
  • Fiscal policy (or lack thereof) drove much of the news cycle this week. On the same day the Federal Reserve Chair made the case for more fiscal support, President Trump tweeted that negotiations were being cut off.
  • Trump changed his mind later in the week, and talks appear to have restarted. Still a deal will require the support of Senate Republicans, and with just over three weeks until the election, time is running out.

This weeks stock market- Oil Recovers, equity markets remain hopeful on fiscal deal

 

 


 U.S. - Fiscal Deal or No Deal

 

Financial News- Two Decades of Deficits Before COVID Shock It was a raucous week news wise and in financial markets. As it has been for the past several weeks, fiscal policy (or lack thereof) was front and center. Arriving back to the White House early in the week, President Trump tweeted that stimulus talks were being cut off and any fiscal package would have to wait until after election. Later in the week he reversed course, suggesting the possibility of standalone bills on specific measures, such as support for airlines, the Payroll Protection Program or stimulus checks. The latest word is that the administration is now pushing hard for a more comprehensive deal.

Assuming a deal can be done between the Trump administration and the House Democrats, it may still have difficulty passing the Senate. On Friday, Senate Majority Leader, Mitch McConnell expressed his doubts, saying he still thought a deal was unlikely over the next three weeks.

For his part, Federal Reserve Chair Powell made a strong case for additional fiscal support in a speech this week. He noted that despite the rebound seen so far, the economy is still in a precarious state. Any slowing in the pace of recovery at this stage risks triggering “typical recessionary dynamics, as weakness feeds on weakness.” It would also exacerbate inequalities, a tragedy in the Fed chair’s view, “especially in light of our country’s progress on these issues in the years leading up to the pandemic.”

Financial News- Debt Service Costs Are Falling In pressing for additional fiscal supports, the Fed Chair noted that there is little risk of doing too much in the current environment. With interest rates falling to record lows, the cost of servicing the federal debt is shrinking even as the stock grows. While the U.S. budget deficit is hardly on a sustainable path – something the Fed Chair also recognized – it has not been for some time. The time will come for hard decisions on the longstanding mismatch between what the federal government takes in revenue and what it spends. However, the near and present risk of cascading bankruptcies and permanent job losses is clearly much bigger than the risk of a future debt crisis.

Indeed, there is much to laud in the fiscal policy response to date. Looking back on the last several months, the success of monetary and fiscal policy in supporting the recovery is everywhere to be seen in the economic data. The support to household income allowed for a swift recovery in goods consumption and production. Retail sales are now higher than pre-pandemic levels – a forecast few would have had a few months ago. While the recovery in service consumption has lagged, this is due to health crisis itself, which makes it impossible to go back to normal in close-contact businesses like restaurants, gyms, movie theatres.

For what its worth, our economic forecast assumed a modest fiscal deal that allows for another round of relief checks and additional unemployment benefits of $300 per week (half the amount under the CARES Act) to be delivered before the end of the year. This still seems possible – the fireworks this week notwithstanding – but if it does not occur, economic growth could get dangerously close to stall speed in the quarters ahead. Activity could still bounce back, particularly if a vaccine becomes widely available by mid-year, but the downside risks are clearly higher the longer it takes for policy makers to reach an agreement.

James Marple, Senior Economist | 416-982-2557


 This report is provided by TD Economics. It is for informational and educational purposes only as of the date of writing, and may not be appropriate for other purposes. The views and opinions expressed may change at any time based on market or other conditions and may not come to pass. This material is not intended to be relied upon as investment advice or recommendations, does not constitute a solicitation to buy or sell securities and should not be considered specific legal, investment or tax advice. The report does not provide material information about the business and affairs of TD Bank Group and the members of TD Economics are not spokespersons for TD Bank Group with respect to its business and affairs. The information contained in this report has been drawn from sources believed to be reliable, but is not guaranteed to be accurate or complete. This report contains economic analysis and views, including about future economic and financial markets performance. These are based on certain assumptions and other factors, and are subject to inherent risks and uncertainties. The actual outcome may be materially different. The Toronto-Dominion Bank and its affiliates and related entities that comprise the TD Bank Group are not liable for any errors or omissions in the information, analysis or views contained in this report, or for any loss or damage suffered.

 


Saving for retirement

Why Should You Start Saving for Retirement Now?

Why Should You Start Saving for Retirement Now?

You are busy dealing with life’s day-to-day issues. To you, retirement may seem like a long way off. But preparing now for your financial future is essential because what you do today can help ensure a secure retirement tomorrow.

Although time may be on your side, there are four factors you will need to consider when planning for your retirement.

1. Inflation.

You may be aware that, over time, inflation can erode your savings. But, many people don’t realize the potentially serious effects of inflation. At 3% inflation, $100 today will be worth only $67.30 in 20 years—a loss of one-third of its value. At 35 years, this amount would be further reduced to just $34.44. Thus, it is important to seek retirement savings vehicles that have the best chance of outpacing inflation.

2. Taxes.

Your present income level, tax bracket, and the types of tax-deferred retirement savings plans that are available can all play an integral part in how much money you can save for retirement. By maximizing your pre-tax contributions to employer-sponsored plans and Individual Retirement Accounts (IRAs), you can take advantage of the tax-deferred benefits of such plans.

3. Compound Interest.

Becoming a disciplined saver is one of the key components of retirement plan success. By making regular contributions to your employer-sponsored retirement plan and your IRA, you can maximize the power of compound interest (the interest earned not only on the initial principal, but also on the accumulated interest from prior periods). With consistent contributions, your retirement savings have a greater chance of accumulating to meet your long-term goals.

4. Personal Savings.

Considering the effects of inflation, it is possible that your retirement plan income may fall short of your needs, especially during a long retirement. Furthermore, Social Security generally provides only a base level of retirement income. Thus, to avoid a potential shortfall, start planning to supplement your retirement income with personal savings.

While understanding these principles is no guarantee of future success, they can get you started down the right path. The sooner you recognize the effects that economic forces can have on your retirement income, the more likely you may be to adopt strategies that can help you achieve your long-term objectives. Being proactive today can help increase your retirement savings for tomorrow.

Have questions about your current retirement saving strategy? Give us a call at 704-237-4207 or contact us here.

 

“Why Should You Start Saving for Retirement Now?" 2018. Liberty Publishing, Inc. FMEX Editor.https://fmexcontent.s3.amazonaws.com/1289/1289.pdf


Financial News for the week of October 5th, 2020

Financial News for the Week of October 5, 2020

FINANCIAL NEWS HIGHLIGHTS OF THE WEEK

United States
  • Following a four-week losing streak, U.S. financial markets regained some gusto, buoyed by optimism on the prospect of a new stimulus package.
  • The labor market continues to mend, albeit at a decelerating pace. The American economy added 661,000 payroll jobs in September, down from 1.5 million in August. Meanwhile, the unemployment rate fell to 7.9%, in part because of a pullback in the labor force participation rate.
  • The House passed a $2.2 trillion coronavirus relief bill this week, but it will not pass the Senate. Talks between Speaker Pelosi and Treasury Secretary Mnuchin continue, but a deal has yet to be reached.

 

 


U.S. - Healing, but Slowing Labor Market

 

Financial News- Drop in Labor Force Participation Rate Following a four-week losing streak, financial markets regained some gusto, buoyed by optimism on the prospect of a new stimulus package. Sentiment soured late in the week however, as news broke that President Trump and the first lady tested positive for COVID-19. Still, the S&P 500 is on track to end the week about 2% above last week’s close (as of writing).

The release of employment data for the month of September was this week’s main economic highlight. The report showed ongoing, albeit decelerating progress in the labor market recovery. Indeed, 661,000 payroll jobs were added last month, down from 1.5 million in August. Overall, 51.5% of non-farm payrolls lost since the pandemic began have been recovered. The unemployment rate fell from 8.4% to 7.9% in September, a welcome improvement, but a markedly slower pace than in previous months. More concerning, the drop was due in large part to a pullback in the labor force participation rate (Chart 1) rather than strength in job growth.

The theme of a stalling labor market recovery was also borne out in the jobless claims data. Indeed, new filings for unemployment benefits have held stubbornly close to the 900,000 per week mark since the end of August, signaling that businesses continue to lay off workers at an elevated rate. While continuing claims have trended lower over the past few weeks, they remain well above pre-crisis levels.

 

Financial News- Expanded Unemployment Benefits Expiration ChartUnfortunately, as the $600/week federal unemployment top-up expired at the end of July, many people saw their income take a big hit in August. In fact, a 52% decline in unemployment benefits resulted in personal income falling by 2.7% month/month in August (Chart 2). While personal spending continued to make up lost ground, advancing by 1.0% on the month, the decline in incomes poses a downside risk to the recovery. What is more, spending on durable goods, which powered the early rebound in consumption, is showing signs of fatigue, while the recovery in services spending is also slowing. The latter is now in jeopardy due to a resurgence in new coronavirus cases.

Similar concerns were echoed in the September ISM Manufacturing report. The Index registered a worse-than-expected 0.6 point retreat to 55.4, pointing to a slower pace of expansion in the manufacturing sector. The details of the report showed a recovery that remains uneven, with a slew of industries continuing to contend with sluggish demand.

On a more positive note, new vehicles sales soared by 7.6% month/month in September to 16.3 million units. Alongside home sales, auto sales are one of the few economic indicators to have exhibited a “V-shaped” recovery and are now within 2.5% of their pre-crisis level from February.

All things considered, the balance of risks to the economic outlook remains tilted to the downside. The absence of a new stimulus package is beginning to take a toll on the recovery. Talks between House Speaker Pelosi and Treasury Secretary Mnuchin continued this week, but a deal has, so far, remained out of reach. Here’s hoping that Democrats and Republicans can close the gap and come to an agreement sooner rather than later.

Johary Razafindratsita, Economist | 416-430-7126


 This report is provided by TD Economics. It is for informational and educational purposes only as of the date of writing, and may not be appropriate for other purposes. The views and opinions expressed may change at any time based on market or other conditions and may not come to pass. This material is not intended to be relied upon as investment advice or recommendations, does not constitute a solicitation to buy or sell securities and should not be considered specific legal, investment or tax advice. The report does not provide material information about the business and affairs of TD Bank Group and the members of TD Economics are not spokespersons for TD Bank Group with respect to its business and affairs. The information contained in this report has been drawn from sources believed to be reliable, but is not guaranteed to be accurate or complete. This report contains economic analysis and views, including about future economic and financial markets performance. These are based on certain assumptions and other factors, and are subject to inherent risks and uncertainties. The actual outcome may be materially different. The Toronto-Dominion Bank and its affiliates and related entities that comprise the TD Bank Group are not liable for any errors or omissions in the information, analysis or views contained in this report, or for any loss or damage suffered.

 


Financial news for the week of September 25, 2020

Financial News for the Week of September 25, 2020

FINANCIAL NEWS HIGHLIGHTS OF THE WEEK

United States
  • Major U.S. equity markets edged lower this week, extending their losing streak to four weeks. This came alongside an uptick in new COVID-19 cases and growing evidence that the economic recovery has shifted into lower gear.
  • Existing home sales rose by 2.4% to 6.0 million units (annualized) in August – another post-Great Recession record. New single-family home sales did even better, rising 4.8%.
  • The labor market is generally still moving in the right direction, but it is doing so at a slower pace. Initial jobless claims rose modestly to 870k last week, extending a flat trend just below 900k. On a more positive note, continuing claims continued to edge lower earlier in the month.

This weeks markets

 

 


 U.S. - More Evidence of Recovery Shifting into Slower Gear

Financial News- Home Sales Have Risen to Multiyear highs Major U.S. equity markets continued to edge lower this week, with the S&P 500 down 1.8% from last Friday’s close as at the time of writing. This disappointing performance, which extends the losing streak to four weeks, came alongside a recent uptick in COVID-19 cases and growing evidence that the economic recovery has shifted into lower gear.

On the data front, the housing market – one of the brightest areas of the U.S. the economy – continued to be a source of good news. Existing home sales rose by 2.4% in August to 6.0 million units (annualized), which marked another post-Great Recession record. The improvement spanned both single and multi-family segments and all four Census regions, though gains in the latter were concentrated in Northeast (13.8%). Meanwhile, in part due to a low inventory backdrop, home price growth accelerated sharply into double digit territory, with the median existing home price up over 11% in August relative to a year ago. New single-family home sales were even more impressive, rising 4.8% even after hitting the highest level in nearly 14 years in July. The level of new home sales has only been higher in the frenzied housing market of the mid-2000s that preceded the Great Recession (Chart 1).

As we argued in a recent publication, housing can’t remain divorced from the broader economy forever (see here). While we expect record-low interest rates to continue to support demand as the economy recovers, the acceleration in prices goes in the other direction. Diminished affordability will become a barrier to further increases. At the same time, the end of mortgage forbearance programs could result in more distressed sales in the quarters ahead. Finally, historically low population growth will weigh on demand growth once the initial recovery phase has played out.

Financial News- Elevated Infection Spread Likely to Slow the Recovery ProcessIndeed, the jobs recovery is already showing signs of fatigue. After a relatively steady drop in the months prior, initial jobless claims have remained near the 900k mark since the end of August. Last week they rose modestly to 870k, extending the mostly-flat trend. On a more positive note, continuing claims decreased by 167k to a still-elevated 12.6 million for the week ended September 12th (this data is delayed by a week). Meanwhile, the number of people collecting unemployment benefits from ‘all programs’ edged lower, but remained elevated at 26 million at the start of the month.

All in all, the labor market is generally still moving in the right direction, but it is doing so at a much slower pace. The capricious nature of the health crisis remains a downside risk, with a still-elevated infection spread to continue weighing on the recovery (Chart 2). In the meantime, without additional income supports, spending could take a tumble as the high numbers of unemployed are forced to reduce consumption. With the Fed clearing up its stance (and limitations) on monetary policy last week, the ball is clearly in Congress’ hands. On this front, yesterday it was announced that Treasury Secretary Steven Mnuchin and House Speaker Nancy Pelosi have agreed to restart stimulus talks, in what marks a small positive step in the right direction.

Admir Kolaj, Economist | 416-944-6318


 This report is provided by TD Economics. It is for informational and educational purposes only as of the date of writing, and may not be appropriate for other purposes. The views and opinions expressed may change at any time based on market or other conditions and may not come to pass. This material is not intended to be relied upon as investment advice or recommendations, does not constitute a solicitation to buy or sell securities and should not be considered specific legal, investment or tax advice. The report does not provide material information about the business and affairs of TD Bank Group and the members of TD Economics are not spokespersons for TD Bank Group with respect to its business and affairs. The information contained in this report has been drawn from sources believed to be reliable, but is not guaranteed to be accurate or complete. This report contains economic analysis and views, including about future economic and financial markets performance. These are based on certain assumptions and other factors, and are subject to inherent risks and uncertainties. The actual outcome may be materially different. The Toronto-Dominion Bank and its affiliates and related entities that comprise the TD Bank Group are not liable for any errors or omissions in the information, analysis or views contained in this report, or for any loss or damage suffered.

 


Estate planning actions for the small business owner

Estate Planning Actions for the Small Business Owner

ESTATE PLANNING ACTIONS FOR THE SMALL BUSINESS OWNER

Two things people avoid talking about are death and money. Combining the two is estate planning—the process of arranging for the management and disposal of a person’s estate while minimizing gift, estate, generation skipping transfer, and income tax. Estate planning includes planning for incapacity, reducing or eliminating uncertainties over the administration of a probate, and maximizing the value of the estate by reducing taxes and other expenses.

Conversations about estate planning, though difficult, provide clarity and prevent conflicts. If you are a business owner, there are three estate planning conversations you should have.

CONSIDER
What You Want

Would you respond with a blank look if a friend asked, “What do you want your estate to do?” Do you think someone else should figure it out for you?

Remember this: Your estate is yours, no one else’s. Think about what your legacy will be from your point of view—not your childrens’, not your employees’, and not your friends’.

Estate planning is not just about splitting up the goodies. Your legacy is about what makes you unique, what wisdom you picked up over the years, and what you want to leave to those who are here after you die.

Of course, your exit strategy will be a significant portion of your estate planning. If you decide to sell or transfer ownership of your company, you’re making an important decision about your legacy as your company will live beyond your lifetime.

TALK
With Your Significant Other

If you’re clear on why you want certain things to happen, share them with your significant other. You and your life partner should have a real conversation about your reasons.

Don’t be surprised if there are some areas where you have different ideas. If both of you are clear on your reasons, it’s easier to find a resolution. If your reason is “just because,” then think harder. Consider those you’re leaving behind and the difference that your estate will make and the effect your exit strategy will have on their lives.

SHARE
Your Thoughts with Your Heirs

The next step is one that too few actually do. That is to sit down with your heirs and let them know what you think and why. Listen to what they have to say. Your decision will affect their lives and the way you’re remembered. If you care about either of these issues, having this conversation is really important. This gives you the opportunity to explain your reasoning behind your estate planning choices and helps those in your family learn about what your motives are and what you hope to accomplish.

Discussing your estate plan with your heirs also prevents unintended consequences. You might assume that the family business should be split equally between your children. However, this arrangement could end up in a major fight between children in the business and those who aren’t.

Clarity is what makes a good estate plan. You really want to ask lots of questions and have an open conversation about what you want. A well developed estate plan can alleviate the burden of probate on your heirs, and leave them without question about your intent.

ESTATE
Planning 101

After talking with your loved ones, you need to start framing your plan. To simplify this process, it can be helpful to consider three estate planning essentials: organizing your financial information, communicating your plans and, of course, taking action.

Organizing your financial and estate information

Create an organized record that details your accounts and legal documents, so your family can easily locate them. Include items such as:

  • Professional and family contacts
  • Location of estate documents
  • Disability and life insurance
  •  Home and auto insurance
  • List of financial institutions, accounts and account numbers
  • Credit cards
  • Beneficiaries of retirement accounts
  • User names and passwords (including those to social media websites or online photo storage)

We tell ourselves we can get organized later, when things finally calm down. But sometimes later can be too late. Most people believe they will live a long and healthy life, but one never knows. A major illness or death may occur before plans are in order, leaving loved ones scrambling to make sense of incomplete information and financial unknowns during a very stressful time.

Discussing your estate plan with family members

Any time you update your estate documents, communication is key. When you name your friends or family members to any role in your plan, you should notify them right away. Confirm that they are willing to take on the responsibilities of the roles, and explain your intentions.

Discussing these matters with children can be sensitive. Here are tips on how to make the conversations age appropriate:

For children in high school and college, let them know that you have plans in place. Tell them who you name to important roles (grandparents, aunts and uncles) and why.

For young adult children, you may choose to name them to primary roles in your documents. Let them know if you plan to do so, and show openness to engaging them in this discussion in the years to come.

As children reach middle age, giving them full knowledge of your financial situation is important. Mature adult children can help parents navigate the challenges that come with aging.

Taking action

Proactive planning requires careful consideration of possible future scenarios and a good understanding of yourself and your family. It also involves communicating your wishes to those close to you.

Finding the time to discuss death and finances in your busy life is difficult and unpleasant. But since one never knows what the future holds, it is best to be prepared.

 

Have question? We can help! Call 704-237-4207.

 

“Estate Planning Actions For the Small Business Owner"ABM.https://abm.emaplan.com/ABM/api/v1/StoredFile/b5f0728a-a93d-4a93-bbc2-5e90da780740/downloadwnload


Financial news for th week of September 18, 2020

Financial News for the Week of September 18, 2020

FINANCIAL NEWS HIGHLIGHTS OF THE WEEK

United States

  • The Federal Reserve is not likely to increase interest rates until at least end-2023, however, this has not been enough to quench investors’ thirst for more liquidity.
  • Retail sales strengthened for the fourth straight month this August, with several categories above or close to pre-pandemic levels of sales. However, the recovery momentum is fading.
  • The labor market recovery has slowed with initial claims flattening at elevated levels. Almost 30 million people are still claiming unemployment benefits.

Canada

  • Financial markets were mixed this week, with the S&P/TSX flat on the week. Meanwhile, oil markets received a boost from a bullish EIA inventory report and Thursday’s OPEC+ meeting.
  • Economic data released this week continued to point to an ongoing recovery. However, improvements are uneven across the sectors. The highlight was the ongoing strength in resale housing markets that left sales 20% above their pre-pandemic levels.
  • Meanwhile, soft CPI inflation readings for August (0.1% y/y) once again served as a reminder that slack remains in the
    economy

 

 


U.S. – The Recovery Shifts In to Low Gear

Financial News: Several Retailers are Above Pre-Pandemic Sales U.S. financial markets had a bumpy ride this week. The highs early on were followed by a sharp drop after Chairman Powell failed to quench investors’ thirst for more liquidity. The declines were primarily led by large cap technology stocks, which have so far made major gains during the crisis. As of writing, the S&P 500 is on track to end the week about 0.1% lower compared to last week’s close.

On the economic front, the Federal Reserve indicated that there will be no interest rate increase until at least end-2023. The Fed said that it would not tighten policy until inflation is higher than 2% for “some time”, a move away from its previous policy goal of “maximum employment” and “symmetric 2% inflation”. This announcement makes the Fed’s desire to make up for past inflation underperformance more explicit. However, the Fed continued to remain vague on the period over which it seeks to achieve higher inflation. Despite the dovish stance, markets thought it wasn’t dovish enough. Equities slid, as investors were hoping for the Fed to magnify its QE by announcing the purchase of more government bonds.

In terms of economic data, retail sales strengthened for the fourth straight month in August with many of the major categories being very close to or even above their pre-pandemic level of sales (Chart 1). However, the momentum is fading as sales grew by a meagre 0.6% month-on-month in August, down from 0.9% in July. Cooling pent-up demand and a decline in income for a significant share of the population (due to CARES Act payments being stopped in end-July) may be responsible for this slowdown. However, the strength in retail has been uneven as it masks the continued weakness seen in clothing, restaurants and bars and department stores. It is important to keep in mind that some of the hardest-hit areas, especially high-touch services (recreation, childcare and haircuts etc.) are not included in these data.

Financial News- Initial Jobless Claims Are Flattening at Elevated Levels Turning to the housing market, starts weakened by 5.1% month-on-month. The decline was primarily driven by the multi-family segment, which fell by 23% on the month, reversing much of the gains seen during the summer. Single-family starts, on the other hand, jumped by 4.1%. Construction for single family homes is continuing at a solid pace on the back of perceived health risks posed by dense living as well as more permanent work from home policies. The housing market is likely to see slower gains in the coming months as economic recovery slows and pandemic-induced uncertainty abounds.

Meanwhile, the labor market recovery has slowed down (Chart 2). Initial jobless claims (860k) were broadly around consensus, down 33k from last week. Continuing claims came in at 12.6 million, beating the consensus (13 million) and down 1 million. Moreover, the number of people collecting unemployment benefits edged higher in late August. At almost 30 million people, the total remains incredibly high. Job growth is expected to be slower through the remainder of the year, with a full labor market recovery not taking months, or quarters, but years.

Sohaib Shahid, Senior Economist | 416-982-2556


 This report is provided by TD Economics. It is for informational and educational purposes only as of the date of writing, and may not be appropriate for other purposes. The views and opinions expressed may change at any time based on market or other conditions and may not come to pass. This material is not intended to be relied upon as investment advice or recommendations, does not constitute a solicitation to buy or sell securities and should not be considered specific legal, investment or tax advice. The report does not provide material information about the business and affairs of TD Bank Group and the members of TD Economics are not spokespersons for TD Bank Group with respect to its business and affairs. The information contained in this report has been drawn from sources believed to be reliable, but is not guaranteed to be accurate or complete. This report contains economic analysis and views, including about future economic and financial markets performance. These are based on certain assumptions and other factors, and are subject to inherent risks and uncertainties. The actual outcome may be materially different. The Toronto-Dominion Bank and its affiliates and related entities that comprise the TD Bank Group are not liable for any errors or omissions in the information, analysis or views contained in this report, or for any loss or damage suffered.

 


Financial news for the week of September 11, 2020

Financial News for the Week of September 11, 2020

FINANCIAL NEWS HIGHLIGHTS OF THE WEEK

  • A wide dispersion of forecasts for U.S. growth over the next year reflects high levels of uncertainty around the duration of the health crisis as well as future government supports.
  • Assuming a modest fiscal package passes Congress this fall and a vaccine becomes available by the middle of next year, the American economy should recover most of what was lost through the pandemic by the end of 2021.
  • Inflation data showed an acceleration in price growth in August. Total CPI was up 1.3% year-on-year in August, continuing its recovery from only 0.1% in May.

Economic Key Financial Forecasts

 

 


A Wide Dispersion of Expectations for Recovery

Financial News: Spending Recovery Retreats as Summer Ends As we head into the final days of summer, it’s a good time to step back and evaluate the prospects for the American economy over the next year. The dispersion of economic growth forecasts has perhaps never been higher. While forecasters all expect a meaningful decline in activity this year, that is due to what’s already been recorded. Meanwhile, forecasts for growth in 2021 in the Blue Chip survey range from over 6% at the high end, to under 2% at the low end. At the high-end, this recovers all the activity lost to the pandemic, while at the low end, it is nothing short of stagnation.

This wide dispersion reflects the unprecedented level of uncertainty around the course of the pandemic, as well as its secondary economic impacts. This can be seen in the wide array of underlying assumptions among forecasters around items key to the outlook. For example: when and if a vaccine becomes available, how effective and permanent it will be, how much future government support will be provided.

We do not claim to have any better insight on these questions than other forecasters, but we have tried to make plausible assumptions to ground our forecast. In the case of the health questions, we assume that a vaccine or effective treatment becomes widely available by the second half of 2020.

Beyond the basic uncertainty around when and if we recover fully from the pandemic, we have little in the way of traditional macro models to gauge how consumers and businesses respond to health crises. This was true on the way down, but also on the way up. We can observe, based on recent data, that after an initial plunge, households have been more than willing to increase spending on durable goods – suggesting little permanent damage to household confidence. Rather, what’s holding back a broader recovery is service-sector areas of the economy where activity is directly impacted by the potential risk of infection. This offers reason to expect a fairly solid bounce back once these fears are allayed.

Financial News: Continuing Jobless Claims Remain Elevated Through the End of AugustIn the case of government policy, we are equally in the dark. The extraordinary fiscal supports early in the year have divorced measures of overall economic activity from household income. Spending rebounded as it did due to these supports. Congress continues to debate another package, but the chasm between Republicans and Democratic bills is roughly 10 times ($300 billion versus $3 trillion). So, we’re left making assumptions. We assume that Congress does eventually come up with some additional support, but closer to the lower range of outcomes, around $400 billion, split between individual checks and unemployment benefits.

With these assumptions in place, and assuming no major second wave of the virus leads to another round of shutdowns, it is reasonable to expect the American economy to recover much of what was lost to the pandemic over the past year. While growth appears likely to slow after its initial burst on reopening, it should pick up again once a vaccine is available. Importantly, much of the deficit in spending is due to high-income individuals, who should be able to dip into these accumulated saving to support growth once the virus threat has passed. As a result, we expect the level of GDP to regain its pre-recession level by the first quarter of 2022. We will be publishing our full views on the economic outlook next week and hope you will give them a read.

James Marple, Senior Economist | 416-982-2557


 This report is provided by TD Economics. It is for informational and educational purposes only as of the date of writing, and may not be appropriate for other purposes. The views and opinions expressed may change at any time based on market or other conditions and may not come to pass. This material is not intended to be relied upon as investment advice or recommendations, does not constitute a solicitation to buy or sell securities and should not be considered specific legal, investment or tax advice. The report does not provide material information about the business and affairs of TD Bank Group and the members of TD Economics are not spokespersons for TD Bank Group with respect to its business and affairs. The information contained in this report has been drawn from sources believed to be reliable, but is not guaranteed to be accurate or complete. This report contains economic analysis and views, including about future economic and financial markets performance. These are based on certain assumptions and other factors, and are subject to inherent risks and uncertainties. The actual outcome may be materially different. The Toronto-Dominion Bank and its affiliates and related entities that comprise the TD Bank Group are not liable for any errors or omissions in the information, analysis or views contained in this report, or for any loss or damage suffered.