Credit card performance stable in Q3: Fitch
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Fitch Ratings reported on November 22, 2024, that Canadian credit card performance remained stable in Q3 2024, with delinquencies and charge-off rates largely unchanged. The three-month average for late-stage delinquencies was 1.12%, unchanged from Q2 2024 and slightly below pre-pandemic levels. The net charge-off index was 2.91%, down from 2.93% in Q2 2024 but up from 2.47% in Q3 2023. The Monthly Payment Rate Index averaged 57.76%, a decline attributed to more cardholders revolving balances. Fitch anticipates stable credit card performance for the remainder of 2024 due to easing inflation and declining interest rates.

#CreditCards #FitchRatings #Delinquencies #Chargeoffs #FinancialStability #Canada #Q32024 #HouseholdFinances #Inflation #InterestRates

https://www.investmentexecutive.com/news/research-and-markets/credit-card-performance-stable-in-q3-fitch/ 

 OECD growth edges higher in third quarter
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OECD reports Q3 2024 GDP growth at 0.5%, up from 0.4% in Q2; Year-over-year growth at 1.7%, up from 1.6%; G7 quarterly growth stable at 0.5%; U.S. leads G7 with 0.7% growth; Canada and Japan slow to 0.2%; U.K. and Italy also slow; France's growth rises to 0.4% due to Olympics; Germany rebounds to 0.2% growth; Ireland leads OECD with 2% growth; Mexico at 1.3%, Lithuania at 1%; U.S. year-over-year growth at 2.7%, Germany contracts by 0.2%.

#Oecd #Gdp #EconomicGrowth #G7 #France #Us #Canada #Germany #Inflation #Olympics

https://www.investmentexecutive.com/news/research-and-markets/oecd-growth-edges-higher-in-third-quarter/ 

 It’s time to re-evaluate U.S. equities allocation
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Michael Nairne discusses the need to reassess U.S. equities allocation due to high valuations and market concentration; Goldman Sachs forecasts a 3% annual return for the S&P 500 over the next 10 years, with a range of -1% to 7%; Vanguard estimates returns between 3.2% and 5.2%; Research Affiliates predicts 6.5% and 3.3% for large-cap U.S. stocks; J.P. Morgan and State Street forecast 6.7% and 6.0%, respectively; the average expert forecast is 5.0%, contrasting with the S&P 500's 15.4% return over the past decade; historical CAPE ratios indicate current valuation at 36.6, warning of potential future losses; recommendations include diversifying into segments with better values, using low-cost ETFs, and considering active global equity managers; despite high valuations, there remains a possibility for high single-digit returns over the next decade.

#UsEquities #InvestmentStrategy #FinancialForecasting #MarketAnalysis #PortfolioManagement #CapeRatio #Diversification #ActiveManagement #LongtermReturns #FinancialAdvisory

https://www.investmentexecutive.com/insight/columns/its-time-to-re-evaluate-u-s-equities-allocation/ 

 Japan's central bank survey underpins optimism about growth
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Japan's economy grew at an annual rate of 2.9%; Business sentiment among large manufacturers unchanged at plus-13 for July-September; Large non-manufacturers index rose to plus-34 from plus-33; Average wages holding up or rising; Tourism booming post-COVID restrictions; Bank of Japan ended negative interest rates in March 2024; Short-term policy rate raised to 0.25% in July 2024; Companies expect consumer prices to rise 2.4% in the next year; Prime Minister Fumio Kishida resigned on October 1, 2024, with Shigeru Ishiba expected to succeed him.

#Japan #Economy #BankOfJapan #Growth #Inflation #InterestRates #Manufacturing #Tourism #Wages #PoliticalChange

https://www.investmentexecutive.com/news/research-and-markets/japans-central-bank-survey-underpins-optimism-about-growth/ 

 China's economy weakening, as Beijing steps up support: surveys
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China's economy shows signs of weakening with a fifth consecutive month of contraction as per the National Bureau of Statistics survey; Caixin purchasing managers survey indicates new manufacturing orders fell at the fastest pace in two years in September; Purchasing managers index at 49.8 in September, up from 49.1 in August; Chinese stock markets surged with Shenzhen index up 8.2% and Shanghai Composite up 5.7% following new policy measures; Central bank to cut mortgage rates by Oct. 31; Guangzhou lifted home purchase restrictions; Property sector struggles due to past government crackdowns; Economy expanded at 4.7% in last quarter, slightly below the 5% target.

#China #Economy #Manufacturing #Stimulus #Property #Surveys #StockMarket #NationalBureauOfStatistics #Caixin #PolicyMeasures

https://www.investmentexecutive.com/news/research-and-markets/chinas-economy-weakening-as-beijing-steps-up-support-surveys/ 

 Reforms to revive insured mortgages, DBRS says
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Morningstar DBRS states that recent federal government reforms will effectively rejuvenate the insured mortgage market; reforms include allowing 30-year amortizations for first-time home buyers and increasing the price cap from $1 million to $1.5 million; DBRS revised its outlook for insured mortgages positively, contrasting with previous budget measures expected to have minimal impact; since mid-2016, the value of banks' insured mortgages has decreased by approximately $150 billion to $385 billion, while uninsured mortgages have nearly tripled to $1.2 trillion; DBRS anticipates renewed growth in the insured mortgage segment starting mid-December 2024, despite some risks associated with higher-priced properties.

#Mortgages #Housing #FinancialServices #Reforms #Dbrs #Canada #Insurance #Economy #Banking #RealEstate

https://www.investmentexecutive.com/news/research-and-markets/reforms-to-revive-insured-mortgages-dbrs-says/ 

 Report offers solutions for Europe's sluggish economy
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A report led by Mario Draghi, former head of the European Central Bank, outlines solutions for Europe's sluggish economy, which grew only 0.4% in 2023 compared to 2.5% in the U.S. The report emphasizes the need for increased public investments of 4.4%-4.7% of annual economic output, amounting to $750 billion-$800 billion, to transition to clean energy and enhance defense capabilities. It highlights Europe's dependency on external sources for energy, growth, and defense, urging better collaboration among EU member states. Draghi points out the innovation gap with the U.S., noting that no EU company worth over $100 billion has been established in the last fifty years. The report also stresses the importance of reducing reliance on U.S. defense equipment and investing in joint military projects. The effectiveness of these recommendations depends on political will from EU governments and parliament.

#Europe #Economy #Investment #MarioDraghi #Eu #Defense #Energy #Innovation #Regulation #Growth

https://www.investmentexecutive.com/news/research-and-markets/report-offers-solutions-for-europes-sluggish-economy/ 

 U.S. economy added 818,000 fewer jobs than reported in year that ended in March
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The U.S. economy added 818,000 fewer jobs from April 2023 through March 2024 than initially reported; job growth averaged 174,000 a month, down from 242,000; unemployment rate rose to 4.3%; July jobs report showed only 114,000 jobs added; Federal Reserve raised rates 11 times in 2022 and 2023; inflation decreased from 9.1% in June 2022 to 2.9%; revisions aimed to better account for business fluctuations; Robert Frick, economist, noted muted job growth signals pressure on Fed to cut rates.

#UsEconomy #JobMarket #FederalReserve #InterestRates #Inflation #Employment #EconomicIndicators

https://www.investmentexecutive.com/news/research-and-markets/u-s-economy-added-818000-fewer-jobs-than-reported-in-year-that-ended-in-march/ 

 U.S. economy added 818,000 fewer jobs than reported in year that ended in March
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The U.S. economy added 818,000 fewer jobs from April 2023 through March 2024 than initially reported; job growth averaged 174,000 a month, down from 242,000; unemployment rate rose to 4.3%; July jobs report showed only 114,000 jobs added; Federal Reserve raised rates 11 times in 2022 and 2023; inflation decreased from 9.1% in June 2022 to 2.9%; revisions aimed to better account for business fluctuations; Robert Frick, economist, noted muted job growth signals pressure on Fed to cut rates.

#UsEconomy #JobMarket #FederalReserve #InterestRates #Inflation #Employment #EconomicIndicators

https://www.investmentexecutive.com/news/research-and-markets/u-s-economy-added-818000-fewer-jobs-than-reported-in-year-that-ended-in-march/ 

 Economy sees securities outflows in June: StatCan
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Canadian investors added $16.4 billion worth of foreign securities in June, with a $12.5 billion investment in U.S. equities; Domestic investors also added $2.4 billion in U.S. corporate debt and $2.4 billion worth of foreign money-market instruments; Foreign interest in Canadian securities slowed in June, with foreign investors adding just $5.2 billion in Canadian securities, primarily bonds, and selling Canadian equities; The economy recorded a net outflow of funds of $11.2 billion from cross-border securities transactions in June; Canadian pension funds led the offshore buying activity.

#Economy #Securities #Investors #StatisticsCanada

https://www.investmentexecutive.com/news/research-and-markets/economy-sees-securities-outflows-in-june-statcan/ 

 U.S. recession signal likely a false positive: Fitch
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The recent rise in the U.S. unemployment rate that triggered renewed recession concerns was likely a false positive, says Fitch Ratings; The rise in the jobless rate was largely driven by workers joining and re-joining the labour force, rather than meaningful job losses; Permanent job losses are still contained, only making up less than 20% of the increase in the unemployment rate; The July triggering of the Sahm rule, which indicates that the economy is entering recession when the three-month moving average for the unemployment rate rises by 0.5 percentage points from its low over the past 12 months, likely wasn't valid; Fitch expects the jobless rate to rise to 4.4% by the end of the year, as demand continues to slow in response to the lagged effect of higher interest rates and tightening credit conditions; Economic growth is expected to come in at 2.1% for 2024.

#UsRecession #UnemploymentRate #JobLosses #SahmRule #FitchRatings #EconomicGrowth

https://www.investmentexecutive.com/news/research-and-markets/u-s-recession-signal-likely-a-false-positive-fitch/ 

 Shaky markets won't dent credit quality: DBRS
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Recent turmoil in global stock markets is unlikely to have a significant impact on credit quality, according to rating agency Morningstar DBRS. The agency expects the effects of increased market volatility to be limited and primarily affect weaker, low-rated companies. Consumer spending may be pressured by deteriorating labor market conditions and declining wealth effects. Certain issuers may have difficulty accessing capital as investors shift to safer investment-grade debt. However, DBRS maintains a cautiously optimistic outlook for the macroeconomic environment in North America and Europe, with credit rating outlooks remaining generally stable. Investment-grade corporate issuers with robust capital and liquidity positions are expected to benefit from geographic diversification, economies of scale, and market positions. Companies in stable sectors such as utilities, telecommunications, pipelines, and food retail are better positioned to withstand market headwinds, while companies in cyclical or discretionary sectors may be more impacted by weaker consumer spending.

#CreditQuality #StockMarkets #Volatility #ConsumerSpending #Investmentgrade #MacroeconomicOutlook

https://www.investmentexecutive.com/news/research-and-markets/shaky-markets-wont-dent-credit-quality-dbrs/ 

 U.S. retail sales unchanged in June from May
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U.S. retail sales remained unchanged in June from May, defying economic forecasts for a pullback. Retail sales were revised upward to a 0.3% increase in May. Sales at gas stations and auto dealerships weighed down the figure, but excluding gas prices and auto sales, retail sales rose 0.8%. Online sales rose 1.9%, clothing and accessories store sales rose 0.6%, and department stores posted a 0.6% increase. Control retail sales, which excludes volatile categories, rose a solid 0.9% in the month. The report does not include many services, but restaurants registered an uptick of 0.3%. Inflation declined 0.1% from May to June. Federal Reserve Chair Jerome Powell said the Fed is becoming more convinced that inflation is headed back to its 2% target. The U.S. economy added 206,000 jobs in June. The retail sales report comes amid upheaval in the retail landscape, with Saks Fifth Avenue acquiring Neiman Marcus Group and Macy's terminating buyout talks with investment firms.

#UsRetailSales #ConsumerSpending #Inflation #RetailLandscape

https://www.investmentexecutive.com/news/research-and-markets/u-s-retail-sales-unchanged-in-june-from-may/ 

 Investors sour on U.S. equities: S&P
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Institutional investor confidence in the U.S. equity market weakened in June, according to a survey by S&P Global Market Intelligence. The survey, conducted from June 3 to June 6 with almost 300 fund managers managing a total of $3.5 trillion, found that risk appetites have faded compared to the previous month. Investors' return expectations for U.S. equities turned negative in June, and their views on equity fundamentals dropped. The survey also revealed that investors see the global macroeconomic environment as a stronger driver of equity returns than the U.S. economy. The financial, energy, and consumer discretionary sectors saw the biggest drops in investor optimism, while views on the utilities and real estate sector improved. The decline in investor sentiment can be attributed to concerns over subdued demand due to higher interest rates and worries about the pace of economic growth. Overall, investors have adopted a more pessimistic stance towards U.S. equities.

#UsEquityMarket #InvestorSentiment #FundManagers #ReturnExpectations #EquityFundamentals #GlobalMacroeconomicEnvironment #FinancialSector #EnergySector #ConsumerDiscretionarySector #UtilitiesSector #RealEstateSector

https://www.investmentexecutive.com/news/research-and-markets/investors-sour-on-u-s-equities-sp/ 

 Interest rate policy in Canada and U.S. set to diverge
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Experts predict that the monetary policy at the Bank of Canada and the U.S. Federal Reserve will diverge, potentially leading to volatility in the Canadian dollar. If the Bank of Canada cuts rates significantly below the Fed's rates, it could negatively impact the loonie and increase inflation. The Bank of Canada recently announced its first interest rate cut in over four years, while the Fed is expected to hold its key interest rate steady. Canada's economy is more sensitive to interest rates due to shorter mortgage terms and a reliance on commodities. Market watchers expect the Fed to make its first rate cut in September, but this could change depending on economic data. The Bank of Canada will continue to assess interest rate decisions based on inflation and economic conditions.

#InterestRates #BankOfCanada #UsFederalReserve #CanadianDollar #Inflation #EconomicData

https://www.investmentexecutive.com/news/research-and-markets/interest-rate-policy-in-canada-and-u-s-set-to-diverge/ 

 Fed’s target of 2% inflation could be years away
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Blerina Uruçi of T. Rowe Price predicts that the US may not reach the Federal Reserve's target of 2% inflation until late 2025 or early 2026 due to the lack of destruction in domestic demand. She suggests that investors should continue to position portfolios with inflation hedges in mind. Uruçi recommends asset classes such as mortgages and short-dated credit, as well as exploring opportunities in credit and inflation-linked bonds. She notes that the US is experiencing demand-pull inflation rather than cost-push inflation and that wage inflation is coming down despite the unemployment rate not increasing. Uruçi also acknowledges the challenge faced by central banks in recognizing and mitigating inflationary trends. The article was written by Blerina Uruçi and sponsored by Canada Life.

#Inflation #Investment #Portfolio #UsEconomy

https://www.investmentexecutive.com/soundbites/equities/feds-target-of-2-inflation-could-be-years-away/ 

 Capital markets rebound offsets U.S. banks' weakness
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The U.S. banks managed solid first-quarter results, as strong fee income and cost control combined to offset continued pressure on net interest income. Net interest margins came under increased pressure in the first quarter, and loan growth was weak, particularly for commercial lending. However, the revival in capital markets activity produced strong revenues that helped offset this weakness in lending. Debt issuance surged in the first quarter, with investment grade new issue activity reaching near-record levels, along with a pickup in merger and acquisition activity, high-yield debt issuance, and syndicated loan activity. Looking ahead, net interest income is expected to start growing once again in the second half of the year. Turmoil in commercial real estate intensified in the first quarter, and troubles in commercial real estate are expected to weigh on results in the coming months. However, given the strength in banks’ capital positions, their high loan-loss reserves, and strong earnings power, any fallout is expected to be manageable. The banks’ capital ratios are generally stable, and regulators are anticipated to increase their capital requirements in the near future. Green bond issuance rebounded in Q1 according to Moody’s.

#UsBanks #CapitalMarkets #NetInterestIncome #LoanGrowth #CommercialRealEstate #CapitalRequirements #GreenBondIssuance

https://www.investmentexecutive.com/news/research-and-markets/capital-markets-rebound-offsets-u-s-banks-weakness/ 

 Wall Street firms poised for strong Q1
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Wall Street's big banks, including Bank of America Corp., Citigroup Inc., Goldman Sachs Group Inc., JPMorgan Chase & Co., Morgan Stanley, and Wells Fargo & Co., are expected to report improved first-quarter earnings driven by a surge in revenues from investment banking, according to Moody's Investors Service. Moody's expects the banks to announce stronger earnings as investment banking revenues are up significantly from the same quarter a year ago. Debt issuance and equity follow-on issuance have increased, which should boost investment banking revenue. However, the initial public offering market remained weak, and merger and acquisition activity was flat. Revenues from trading are expected to be lower despite strong trading volumes. European banks may have more muted first-quarter results due to ongoing restructurings and muted growth in Europe. Wall Street firms with stronger equity capital market franchises are best-positioned to benefit from a recovery if improved market sentiment translates into higher business volumes. Higher equity prices should have boosted fee revenues at firms with large wealth management businesses. The growing private credit market represents a rising source of revenue for banks that view this business as compatible with their risk policies, with JP Morgan and Goldman Sachs leading the way.

#InvestmentBanking #BankingIndustry #HighYieldBonds #MergersAndAcquisitions #WealthManagement #MonetaryPolicy #Commodities #GoldmanSachsGroupInc #JpmorganChase&Co #Moody'sInvestorsService #CitigroupInc

https://www.investmentexecutive.com/news/research-and-markets/wall-street-firms-poised-for-strong-q1/ 

 U.S. corporate defaults hit post-pandemic high: Moody's
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U.S. corporate debt defaults surged in 2023, with non-financial defaults almost tripling to 92 from 31 in 2022. The annual issuer-weighted default rate was 5.6% by the end of 2023 and is expected to rise to 5.8% in early 2024 before slowly reversing. The weakest credit ratings also rose in Q4 2023. The telecommunications and durable consumer goods sectors are projected to have the highest default rates in 2024. Private equity-backed companies led the way in defaults, with more loan defaults than bond defaults. About half of the defaults in Q4 2023 involved repeat offenders. Moody's expects the trend of above-average default rates to continue in the first half of 2024.

#U.s.CorporateDefaults #Moody's #Debt #DefaultRate #Telecommunications #ConsumerGoods #PrivateEquity

https://www.investmentexecutive.com/news/research-and-markets/u-s-corporate-defaults-hit-post-pandemic-high-moodys/