It was a bit of a mixed bag on the markets this week. Continued strong performance    in US equities thanks to tech darlings such as Nvidia while the TSX was mildly negative. In Toronto our heavy over-weight to the banks is keeping a lid on euphoria and gains. Bonds were essentially flat for the week while oil and the Canadian dollar both saw some gains.


Index Close June 13th 2024 Close June 20th 2024
S&P500 5,431 5,475
TSX60 22,698 21,569
Canada 10 yr. Bond Yield 3.35% 3.38%
US 10 yr. Treasury Yield 4.25% 4.27%
USD/CAD $1.37374 $1.36985
Brent Crude $82.12 $85.59
Gold $2,304 $2,360
Bitcoin $66,836 $65,038

Source: Trading Economics & Factset


It was relatively quiet on the central bank / interest rate front. The Swiss National Bank (SNB) did cut rates by 25bps. The Bank had previously reduced rates by 25bps in March and this latest move was widely expected.  In the UK, headline inflation (CPI) dropped to the Bank of England’s 2% target. This has not prompted an immediate rate cut as Core CPI is still at 3.5% and Services CPI is at 5.7%.  UK inflation peaked at 11.1% in October 2022.


The US consumer is getting a bit stretched and is cutting back. Retail sales rose just 0.1% from the prior month. Total consumer debt in the US is at $17.7 Trillion. Of this total, $12.44 Trillion is mortgage debt and $1.62 Trillion auto loans. While all these amounts have been on a steady upward trend since the 2008/9 financial crisis, the US Consumer is still a net saver.


We’ll contrast that previous paragraph with the profligate ways of the US government. The federal deficit for the current fiscal year is now projected to be $1.9 Trillion. The Federal debt is currently at $ 34.3 Trillion and projected to be over $50 Trillion in 10 years time. The prospect of another downgrade of US sovereign debt is real.


Unfortunately, there is no political will from either side to do anything meaningful. That’s not to say the general electorate is not concerned, but there is no consensus on how to deal with it. At its core, politics is about choices and the allocation of resources. The debates will differ from those in Canada only in terms and magnitude. Do you cut social spending which includes health expenditures and OAS in Canada / Social Security in the US? Do you cut defence spending in an increasingly unstable world? Do you raise taxes, the third rail of electoral politics? I don’t have an answer but as Hemingway wrote in The Sun Also Rises,


“How did you go bankrupt?” Bill Asked


“Two ways,” Mike said. “Gradually and then suddenly.”


In between his bizarre ramblings about shark attacks and electric boats, Donald Trump trotted out the idea of eliminating income taxes and replacing them with tariffs. I’ll leave aside the merits of this policy (it is unworkable) but say that if nothing else it should (but won’t) spur a serious conversation on tax policy for the 21st century. If you want to ruin your next summer barbeque, here are a few ice breakers –


  • Do think consumption taxes are better than income taxes?
  • Did you know that CPP premiums are not a tax?
  • What do you think the optimal depreciation rate should be on capital assets?
  • Shouldn’t the ceiling on the small business tax rate be indexed?


Let me know how those work out for you 😉


There were a couple of records broken this week. Nvidia surpassed Microsoft to become the world’s most valuable company with a $3.34 trillion value. Here at home, Canada’s population is now over 41 million. This number includes citizens, permanent residents, and temporary residents. The latter category includes international students where there is a small decline. It was only a year ago that our population hit 40 million.


It is officially summer and apparently time to gather the wild mountain thyme if you are in the Scottish Highlands, so I’ll leave you with this from Ella Roberts…. enjoy

Russ Lazaruk, RIAC, CIWM, CIM, FCSI
Managing Director & Portfolio Manager