Fires, Floods & Earthquakes
Happy Friday, !
This past week has been a difficult one for many in both the NWT and Kelowna. As many of you know, I have friends in Kelowna and my family and I spend many of our vacations in that area. We often hear about disasters happening around the world and even in our back yard, but when your friends are packing up their child, pet, a bag of stuff and driving away without a destination, the severity really hits home. They are safe, and the fires appear to have got to their doorstep (quite literally), but no further. My thoughts go to all those that have been affected by these fires recently and hope that they are able to get back to their lives very soon.
Aside from the fires in Canada and floods and earthquakes in LA, we’ve had some interesting financial news recently.
With the Bank of Canada and the US Federal Bank keeping a close eye on inflation as they battle it down to the magical 2.0% rate, we saw an increase in the July inflation numbers. Food inflation came down a bit, but was still at 8.5% and many of the other items in the basket seemed to be heading in the right direction. The biggest contributor to the increase in inflation was… mortgage costs. Now, I might not be one of the geniuses at the BoC, but there does seem to be a correlation between the higher lending rates from the BoC and the rates of mortgages. Mortgage rates are up 30.6% year over year and are increasingly making it more difficult for Canadians in variable mortgages or having to renew. The Bank of Canada meets again on September 7 and there are several indications that the rates could go up again (likely pushing mortgage costs up further).
I discussed in a recent video about the US being downgraded and made some comparisons and contrasts to 2011 when the first downgrade occurred. Since the downgrade at the beginning of the month we have seen the S&P 500 dip by almost 4.4%. This might be a time to make sure you have exposure to Alternative assets to help manage the volatility that will likely continue for the remainder of the year. I also discussed the US banks in that video and the issues with several downgrades and more being put on watch lists. Since then we have seen more downgrades by other credit agencies, furthering the need to move your fixed income portfolio to private credit or other avenues away from traditional bonds.
I hope you enjoy the last week of August and have big plans!
Until next week,
Trevor & the Cherry Hill Team
PS Here are a couple of my pictures from Kelowna over the years!
