2018

The US/Canadian Discrepancy

Good day,

It’s no secret the US economy is thriving while Canada could barely be seen in the rearview mirror. Canadian employment figures for May show a loss of 7000 jobs, which represent a third decline in just five months. On the other hand, US unemployment figures continue to decline which reflects the US economy’s approximate 3% GDP rate versus Canada’s 1.5%. 

The negative economic impacts of the Canadian government’s spendthrift policies will only accelerate as corporations reduce their investment plans. Statistics Canada’s recent annual survey found that, as was the case last year, Canadian companies plan on decreasing investment by 1% this year. The US’ latest survey found that companies which were planning to increase their investing this year by 2.7% have revised that figure up to 10%.

Tax reductions in the US will create more jobs as corporations have the means to reinvest in their businesses. Unfortunately, the very policies we’ve put in place to help Canadians, are and will be doing just the opposite. As more companies reduce their investment spending, hiring decreases and layoffs increase, and the numbers already show this.               

The Financial Post says that job data in Canada shows a decline of 50,000 jobs since December, while the US unemployment figures show a growth in jobs for the same period of close to 1 million.

Given the discrepancy in the economic climates, it is highly likely that US corporate earnings will outshine those in Canada for the years ahead. Our investment approach has not changed. We continue to filter the stocks trading on North American exchanges in search for those with superior fundamentals in positive trading trends. Coupling this equity strategy with negatively correlated privately held debt securities provides us with the recipe to make our investment goals a reality. 

Have a good weekend.

Danny

 

“I have prepared this commentary to give you my thoughts on various investment alternatives and considerations which may be relevant to your portfolio. This commentary reflects my opinions alone and may not reflect the views of Harbourfront Wealth Management. In expressing these opinions, I bring my best judgment and professional experience from the perspective of someone who surveys a broad range of investments. Therefore, this report should be viewed as a reflection of my informed opinions rather than analyses produced by Harbourfront Wealth Management Inc.”

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