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Boom Bust Report: A New Year Update

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It is hard to believe a new year has begun. First, some housekeeping as it is that time of year.

RRSP: The deadline is Friday, March 1. SaskWorks will be sold out long before that date so please contact ASAP if interested. The current tax credit for SaskWorks is 32.5% over and above the RRSP deduction to arrive at your total tax savings.


TFSA: The limit has increased to $6,000 for 2019.

As you may have noticed the stock market has had some difficulties of late. This is my attempt at humour. More like the stock market is having convulsions1. Of course, everyone focuses on the stock market because that is what the media shows us. Debt markets are what is most important and where the fireworks are.

Think about debt in its simplest terms. In one Australian community of 13,240 households2, 4,711 are currently experiencing mortgage stress3. I only quote this information as it is current, but this mortgage stress is not limited to Australia. Canada also has mortgage holders with significant debt and rising interest rates as do much of the rest of the world4.

Debt’s impact is not confined to just mortgages. Car sales5, unfunded pensions6, stalled productivity growth7, defaulted student loans8, etc. Companies that borrowed to buy their own shares back are now reaching record levels of debt “diverting capital from productive long-term investment to further inflate a financial bubble”9.

As this is coming to a head, almost silently in the background gold and silver have been steadily climbing. You will see an increase on the year-end statement and prices continue to reach milestones. This form of downside protection or insurance is doing just what it should.

Please contact our office to book a time to chat in person or on the phone.

 
“The opinions expressed within this article/communication are those of the Financial Advisor and are not necessarily those of Keybase Financial Group Inc. Any data provided is for illustration purposes only. Clients and prospective clients should always read a product prospectus and fully understand all of the risks associated with the product before purchasing. Any information relating to the discussion of taxation issues is considered to be only general in nature. Clients should seek a qualified tax professional to discuss their specific tax requirements.” Keybase Financial Group Inc. is a member of the MFDA and is a member of the MFDA IPC.
 
 
1)        https://www.theglobeandmail.com/investing/markets/inside-the-market/article-assets-to-draw-the-defensive-investor/
a.         https://www.livemint.com/Money/QW87Zzt7I4nKODqW6lQZpK/Biggest-worry-for-traders-They-dont-know-why-stocks-are-mo.html
 
b.        https://www.nbcnews.com/business/markets/dow-jones-plummets-second-straight-day-nasdaq-flirts-correction-n919136
2)        from google search and cross multiply to calculate # of households.

 

3)        https://www.youtube.com/watch?v=GyDTmTurf3k  13:30 mark

4)        http://www.hurriyetdailynews.com/bracing-for-higher-global-interest-rate-environment-brainstorming-for-2020-138979 There are some signs now that we’re in a rising rate environment both in the U.S. and globally
5)        https://www.bbc.com/news/business-46774053
6)        https://www.fraserinstitute.org/article/243000-bill-courtesy-canadas-governments
a.         https://www.pionline.com/article/20180827/ONLINE/180829848/moodys-unfunded-liabilities-for-50-states-jump-to-16-trillion-in-fiscal-year-2017
7)        https://www.wsj.com/articles/u-s-productivity-growth-stalled-in-fourth-quarter-1520429659
8)        https://www.cnbc.com/2018/08/13/twenty-two-percent-of-student-loan-borrowers-fall-into-default.html
9)        https://business.financialpost.com/news/economy/beware-the-mother-of-all-credit-bubbles