Posted by John Woodfield on May 3, 2012 | No Comments
John Woodfield is flying in a very well-known US lawyer to Kelowna on May 9th to present to his contacts and clients in the Okanagan area. His name is Robert Ward and he has offices in Maryland and Vancouver.
The presentations will take place in his Kelowna office on May 9th at 2:30PM, 4PM and 6PM. Each session will provide an overview of how US tax laws affect Canadian citizens and give you a chance to have your questions answered. He will cover property ownership, Canadian and US citizen tax rules and then address questions.
Please RSVP by May 4th or phone as soon as you can and let us know which session works best for you. Please contact Margot at 250-979-2710 or 1-877-979-2700.
John Woodfield, B.Comm, CFP, FMA, FCSI│Raymond James Ltd.
Financial Advisor
Suite 500 – 1726 Dolphin Ave.
Kelowna, B.C., V1Y 9R9
Posted by John Woodfield on May 3, 2012 | No Comments
A Balancing Act:
Global equity markets have been taking their cue from European bond markets for the better part of the past two months. Fears that sluggish economic growth in the region will only compound the debt problems has resulted in government bond yields in both Spain and Italy moving higher. On top of this, politics in the region are providing another source of concern, not only because of the surge that populist parties are seeing in the polls but also because many of these parties are questioning the efficacy of austerity and the undue (from their perspective) focus on debt. The initial round of the French presidential election, where the socialist challenger Hollande beat Sarkozy, seems to confirm this trend. The French results (especially voting amongst the young) resulted in Marine Le Pen’s far-right National Front party capturing 20% of the vote. Both Hollande and Le Pen are hostile to austerity programs and the impact they are having on growth. In the Netherlands the far-right Freedom Party (a coalition member of the centre-right minority government) refused to back deep budget cuts to meet EU deficit-cutting targets. If these recent political trends continue with European countries backing away from the need for austerity we should expect volatility in the Euro bond markets to persist with corresponding negative consequences for equities – especially European equities.
Full story: http://pcsresrch/assets/attachments/112-insightsmay2012custom.pdf
Posted by John Woodfield on April 9, 2012 | No Comments
Will and Succession Planning event on Wednesday, April 18th, 2012.This is a free session featuring Aaron Dow, a lawyer with Farris, Vaughan, Wills & Murphy LLP, who specializes in Will & Estate matters, and Julia Chung who is our Succession Planning Specialist at Raymond James Financial Planning Ltd.
The session details are as follows:
Raymond James Ltd. Suite 500 – 1726 Dolphin Avenue (Landmark #1), Kelowna BC
4:30 or 6:30PM (separate sessions)
Feel free to pass along this invite to anyone you know who may be interested to learn about this important subject.
Seating is limited, so please RSVP to this email or contact my assistant Margot at 250-979-2710 or 1-877-979-2700.
Posted by John Woodfield on March 29, 2012 | No Comments
The recent economic data have been mixed, suggesting relatively weak GDP growth for 1Q12, but better job gains. Implicitly, either one of these stories is wrong or productivity growth has slowed sharply. Higher gasoline prices are expected to dampen consumer spending growth, and in turn overall economic growth, in the near term. However, the impact from gasoline depends on how high prices go and how long they stay high. Stronger job growth should help support the housing market, but the market will remain flooded with foreclosures. The Fed is certainly less likely to unleash QE3, but the Fed has told us that further stimulus is conditional on a weakening of the economic recovery and a reduction in the inflation outlook.
The personal income and spending data for January, released a few weeks ago, showed that inflation-adjusted consumer spending had been flat in November, December, and January. Even assuming a moderate improvement in spending for February and March, the math works out to a subpar pace (less than a 2% annual rate) for 1Q12. Consumer spending accounts for about 70% of Gross Domestic Product. As a consequence, most economists have reduced their forecasts of first quarter GDP growth. Now, we could see revisions to the spending data. In fact, the February Retail Sales Report showed upward revisions to figures for December and January. However, the quarterly spending figure is still likely to be a lot smaller than many had hoped for at the start of the year.
Shipments of nondefense capital goods ex-aircraft, a rough proxy for business fixed investment, appeared to trend weakly into early 2012. In contrast, aircraft orders have been strong in recent months and a fair portion of February’s jump in unit auto sales went to businesses rather than consumers. Business investment, while mixed across sectors, may be moderate overall. We now only have one month of inventory data for the quarter (and that is subject to revision), but it looks likely that the pace of inventory accumulation will decrease slightly, subtracting modestly from overall GDP growth.
We don’t have much information on international trade for 1Q12. The trade deficit figure for December was revised higher and we saw a further widening in January, suggesting that net exports will make a negative contribution to 1Q12 GDP growth. While an increase in the trade deficit subtracts from GDP growth, in this case it appears to be a sign of strength (higher imports).
Putting the pieces together suggests that GDP growth will likely be well under 2% in 1Q12. In contrast, aggregate private-sector hours appear to be tracking at a 3.0% annual rate through January and February. Some of that likely reflects the mild winter, but it also implies weakness in productivity growth.
Productivity is perhaps the most important variable in the long-term economic outlook. However, it’s also one of the most poorly measured. Productivity figures tend to be choppy from quarter to quarter and are subject to large revisions. That said, the recent trend has been soft. The first quarter numbers (reflecting soft GDP growth and an increase in labor input) are likely to add to concerns that productivity is weakening. The softening in productivity growth could reflect a response to the business behavior of the last few years. Firms have generally required more from their workers, but there are limits to how much you can squeeze employees. In addition, as expectations of demand increase, firms are more likely to hire, leading to some softening in productivity in the short term.
Better job growth and low mortgage rates should provide support to the housing sector. However, the mortgage foreclosure settlement is likely to boost the foreclosure pipeline in the near term, generally pushing home prices lower. This, in turn, may have a dampening impact on consumer spending.
Near term, the bigger concern for consumer spending is gasoline. A year ago, the economic gears appeared to be catching. We saw better job gains and improved spending. However, gasoline prices rose to more than $4 per gallon in early May. Inflation-adjusted consumer spending stalled in late spring and early summer. Are we due for a repeat? That depends on how high gasoline prices go and how long they stay high.
Higher oil and gasoline prices will add to consumer price inflation in the near term. However, higher energy prices are currently seen as more of a restraint on economic growth than as a catalyst for a higher inflation trend. The mild winter has reduced home energy consumption, freeing up some extra cash for the consumer, but that effect should be overwhelmed by the impact of higher gasoline prices in the near term. Some of the rise in transportation costs may be passed along by businesses, but at the same time, overall demand should fade as gasoline takes a bigger bite of household budgets, putting downward pressure on core inflation. Gasoline prices are not going to rise forever. As they eventually flatten out and begin to reverse, headline inflation will come down. The Fed expects that higher oil and gasoline prices will have only a temporary impact on inflation.
Nothing in the recent economic data suggests that the Fed is any closer to raising short-term interest rates. However, the figures also imply that further Fed asset purchases are less likely. While the Fed did not surprise last week, the bond market had factored in some chance that the Fed would eventually undertake QE3. In the short term, the recent pop in bond yields may simply be a case of “be on the bus or be under it.” However, bond yields seem unlikely to rise sharply from here, at least for now.
Posted by John Woodfield on March 7, 2012 | No Comments
John Woodfield, B.Comm, CFP, FMA, FCSI│Raymond James Ltd., Financial Advisor 1-877-979-2700 (offices in Vancouver and Kelowna)
https://www.raymondjames.ca/rjl_marketing/3%20John%20Woodfield/
https://www.raymondjames.ca/rjl_marketing/Library/FA%20Website%20Toolkit/F/F2/WeeklyTrends.pdf
Oil prices have rallied to their highest levels since last May on a multitude of concerns. Foremost amongst these has been the impact that reduced supply from Iran will have on world oil markets. Over the past several months the world leaders have stepped up pressure on Iran in an effort to punish that country for its nuclear program. Sanctions have included targeting Iran’s central bank and a threatened oil embargo. Iran has responded by cutting off supplies to Europe and threatened to close the Straits of Hormuz – a global choke-point for about one-fifth of the world’s oil. The impact of these actions has been to send oil prices (both WTI and Brent benchmarks) higher.
This move in oil prices has caught many investors by surprise. Given the weakness in the global economy as we exited 2011, especially in Europe, many thought that oil would remain range bound until the economic growth got on a more secure foundation. The bottom line is that many have underestimated both the strength of the cyclical rebound that’s been gathering steam over the past few months and the global oil supply situation. The strength of oil over the past couple of months then has not just been a function of developments in Iran. Consequently we expect that the path of least resistance for oil is to move higher.
Demand for oil seems to be reaccelerating, especially in the emerging markets (49% of global demand). Emerging market oil demand for oil reached a low point in the third quarter of last year at a 2.6% year-over-year rate. Since then demand has picked up with 2.9% growth in the fourth quarter and evidence that demand is now growing in excess of 3%. In the developed world oil demand contracted for much of last year but is now expected to be down just fractionally. Most of the weakness in the developed world, as would be expected, is coming from Europe but even here the picture is improving. Offsetting the declining demand trend in the developed markets has been Japan where, due to last year’s earthquake and nuclear disaster, the country has dramatically increased its oil imports. Overall global oil demand for 2012 is expected to come in at 1.5% which is just below the 2003-2007 trend of 2% annual growth.
Apart from Iran, there have been other pockets of restrained supply. North Sea production is coming in below expectations, labour and political troubles in Yemen have cut production there by 50%, most of Sudan’s exports have been halted, and Syria’s oil industry is suffering under that country’s civil war. Going forward Venezuela could see disruptions as regime change is increasingly likely, political problems continue in Nigeria, and Iraq continues to be prone to instability. In an environment of constrained supply Saudi Arabia typically acts as the swing producer, adding supply when needed to stabilize prices. The country’s oil minister has recently stated that it could add from 0.9 to 1.0 million additional b/d within a matter of weeks. However, this would barely cover the above noted lost production. Moreover, with spare capacity apparently low and utilization rates high, there’s little room for error in setting OPEC production targets.
Generally higher oil prices are bad for the global economy. But at what price level do we begin to see signs of demand destruction. The recent run-up in prices will likely have an impact on European demand, less on the U.S., and even less on the emerging markets. Europe continues to suffer the effects of a banking crisis and slowing economic growth which should serve to keep demand from growing significantly. But because of high tax rates the impact of higher oil prices is felt much less by the consumer. In the U.S. the potential impact on the consumer is higher (because of the lower tax rate) but oil prices (based off of WTI) are lower and at less risk of running up because most of the potential supply issues are related more with Brent oil. In the emerging markets because of strong fiscal positions many governments can continue to subsidize oil prices so the impact on the consumer is limited. We also note that consumers have had time to adjust over the past several years to periodic spikes in the price of oil and make the necessary behavioral adjustments (less driving, buying smaller cars, etc.) much like the modifications that were made in the 1970s and early 1980s when oil prices spiked. As for the economy as a whole, oil price shocks seem to have less of an impact on growth than in past decades – at least for the U.S. economy. Studies (by the OECD) have shown that a 10% increase in the price of oil results in a loss of 0.1 percentage points in GDP growth whereas in the 1970s and early 1980s it was closer to 0.5 percentage points. Another point worth noting is that with the weakness in natural gas prices the total spending on energy for the consumer is not as high as the spike in oil would suggest. With this in mind we think that oil can continue to move higher before we run into significant demand destruction.
https://www.raymondjames.ca/rjl_marketing/Library/FA%20Website%20Toolkit/F/F2/WeeklyTrends.pdf
Posted by Shaida on August 26, 2011 | No Comments
I read an encouraging article on Castanet yesterday about housing starts in Kelowna. CMHC expects housing construction to increase 30% in 2012 which is great news for the economy based on the employment and population growth.
http://www.castanet.net/news/Kelowna/64019/Kelowna-housing-starts-up-for-2012
The buyers have shifted from invement purchases to local families and seniors. BC is seeing growth through employment and demand for housing.
It looks like it will be a great weekend with lots of sunshine. Get out and enjoy all our fair city has to offer this weekend!
Posted by Shaida on August 12, 2011 | No Comments
I read a great article about the increase of home sales in July in BC. Follow the link,
http://www.ctvbc.ctv.ca/servlet/an/local/CTVNews/20110811/bc_real_estate_110811/20110811?hub=BritishColumbiaHome#.TkReHrb2auA.email
Hope your having a great summer and enjoying the sunshine!
Posted by Shaida on June 16, 2011 | No Comments
The average home price in Vancouver has risen by 25.7 per cent to $831,555 making the area the most expensive in the country and pushing the prices elsewhere up by 8.6% according to the Canadian Real Estate Market.
Posted by Shaida on May 13, 2011 | No Comments
April’s real estate market dipped compared to sales reported in April of 2010. Housing sales slowed down after a busy start to the 2011 year to reflect a more balanced market.
The Kelowna Real Estate Market is still recovering albeit at a slow and steady pace. Nothing like the brisk years of 2006 and 2007.
View Kelowna’s April Real Estate Market Report 
The following are Year-To-Date Home Sales Graphs that show how the current market compares to years past. Kelowna and area home salesgraph 2004-YTD 2011
My long-term experience in the local market is an advnantage during all market conditions as I am able to properly price homes to reflect the current market conditions.
Posted by Shaida on May 10, 2011 | No Comments
There was a great article on Castanet yesterday about new housing starts in our fair city. Kelowna is up 7% in single family deatched home starts and up 72% in multi-family due to the increase in apartmental rental contruction starts. Kelowna saw a 74% rise in combined housing starts last month. This is good news for us all!
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