Insights: Rate cuts, home affordability, how U.S. elections impact Canadians + belsnickeling
Good reads:
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·???????? Weekly Investment Strategy
·???????? A Staggering Amount of Wealth Creation
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Best quote of the week:
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“Halloween is right around the corner. You can tell because all the stores are decked out for Christmas.” – Stephen Colbert
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Best visuals of the week:
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The Bank of Canada reduced its policy rate by 50 basis points this week to 3.75%, which is welcome news to many homeowners.
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The U.S. has been a fair bit slower to act, having only just started cutting in September. This has many investors wondering what their rate cuts might look like over the coming year.?
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Here is a great chart from RBC Global Asset Management with the consensus estimates on the street.? Generally, the market is currently expecting 1.3% in further rate cuts by the end of 2025. The next Federal Reserve announcement is November 7.
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Speaking of interest rates and homeowners, I came across an interesting report that compares real estate prices and wages across 62 different countries.
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According to the report, “homes in Canada cost an average of 179 real monthly wages. To purchase a typical 2-bedroom residential property (1,076 sq. feet or 100 sq. meters), Canadian home buyers need to save their earnings for around 14 years and 11 months. This means that housing in Canada is much more expensive than in the United States, where the price of an equally sized home is equivalent to only 76 monthly wages.”
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Best soundbite of the week:
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As we near U.S. election day, investors have been wondering what the result could mean for portfolios.? Here is a great summary from my Raymond James analysts of what might be expected in the lead-up, as well as what has historically happened after elections:
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As the election approaches, investors should be prepared for increased market volatility—typical in the lead-up to elections. We have seen periods of weakness when there is the greatest amount of uncertainty, especially when a sweep by either political party becomes increasingly likely. It is easier to provide narrower bands of policy outcomes when the election outcomes are known, especially when there is a split government. When the House, Senate, and White House are all controlled by the same party, more policies become possible, and outcomes become harder to predict.
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That said, despite the current close race and potential for numerous factors to sway the outcome, it is crucial to maintain a long-term perspective. Historically, while pre-election periods often experience heightened volatility, the first year of a new presidential term typically sees positive market returns, regardless of which party wins the White House.
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Beyond the markets:
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With Halloween just around the corner, I thought I’d share some interesting facts about the spooky season:
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·???????? Jason Vorhees from Friday the 13th really did drown in the lake...kind of. Diver Doug Klein constructed a Jason Vorhees statue, mask and all, made of plywood, bubble wrap, and foam and had it placed 120 feet down in a water-filled mine pit known as Louise near Crosby, Minnesota. It's only able to be seen by the most advanced divers.
·???????? One in five adults (or 21% of participants) keep the porch lights off and pretend not to be home when the trick-or-treaters come knocking.
·???????? Historians argue that the modern call of “trick or treat” originated from "belsnickeling," a German American Christmas tradition where kids dressed in costumes and went around to their neighbours to see if they could guess the identity of those dressed up.
·???????? The traditional Halloween colours of black and orange trace back to the Celtic festival of Samhain, a Gaelic festival marking the end of the harvest season and beginning of winter — or the "darker half" of the year. Thus, black represents the "death" of summer, while orange represents the life of the fall harvest.
·???????? Every 19 years, there's a full moon on Halloween. The next time it's expected to happen is on Oct. 31, 2039.
·???????? Some Halloween rituals used to be geared toward finding a husband. During the 18th century, women used to throw apple peels over a shoulder, hoping to see their future husband’s initials in the pattern they made when they landed. When bobbing for apples at parties, the winner would supposedly marry first. Most spookily, they even used to stand in a dark room, holding a candle in front of a mirror, to look for their future husband’s face to appear in the glass.
·???????? Ireland has a traditional Halloween bread called barmbrack or just "brack." The sweet loaf typically contains dark and golden raisins, as well as a small hidden toy or ring. Tradition dictates that the person who finds the item will come into good fortune in the coming year.
·???????? Bathurst, New Brunswick, banned teens over 16 from trick-or-treating. According to CBC, anyone over the age of 16 caught trick-or-treating faces up to a $200 fine. The city also has a curfew for all residents, so even those under 16 aren't allowed out after 8 p.m. on Halloween.
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Source: Good Housekeeping
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Thanks for reading, and I wish everyone a wonderful weekend!
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Cheers,
Kim
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Kim Inglis, BCom, CIM, PFP, FCSI, RIAC
Senior Portfolio Manager
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T: 416.777.6417 (Toronto)
T: 604.654.1160 (Vancouver)
T: 250.979.1803 (Kelowna)
TF: 1.877.363.1024
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