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Weekly Update for the week ending December 13, 2024

How Economic Indicators Influence the Stock Market

Ever wonder how the broader economy ties into your investments? Economic indicators like Gross Domestic Product (GDP), unemployment rates, and inflation serve as the heartbeat of the economy, giving us a window into its health and influencing stock market movements. Understanding these metrics can feel like unlocking a cheat code – helping you spot trends, anticipate changes, and make decisions with confidence. Let us explore these key indicators and their influence on your investments.

Weekly Update for the week ending November 29, 2024

How Global Events Affect Your Portfolio: A Beginner’s Guide

If you are new to investing, you might assume your portfolio – especially if it is packed with Canadian or American stocks—is safely tucked away from global drama. But the truth is, events like geopolitical tensions or economic slowdowns often send ripples through the markets, and your investments can feel the effects. Let us take a look into how these international factors influence your portfolio and how you can navigate them.

Weekly Update for the week ending October 4, 2024

October: A Month of Market Mayhem or Opportunities?

September may be notorious for its volatility, but October is when the real drama unfolds in the markets. October has witnessed some of the stock market’s most jaw-dropping crashes, earning its reputation for volatility. One of the earliest examples was the Panic of 1907, which peaked in October, wiping out about 50% of the market’s value due to a banking crisis sparked by failed speculation. Then there’s Black Tuesday, October 29, 1929, a date forever linked to the crash that ushered in the Great Depression. Preceded by Black Thursday (October 24) and Black Monday (October 28), this period erased massive wealth and sent shockwaves across the global economy. Fast forward to October 19, 1987—Black Monday—when the Dow Jones nosedived 22.6% in a single day, the largest one-day percentage drop in US history. Fueled by program trading, overvalued stocks, and low liquidity, this crash triggered investor panic.

However, October is also known for remarkable recoveries. After the 1987 crash, the markets began to recover within months, regaining most losses by year-end. Similarly, October 2002 signaled the bottom of the bear market that followed the dot-com bubble burst, paving the way for a bull run that lasted until October 2007, during which the S&P 500 more than doubled, driven by economic recovery, low interest rates, and strong corporate earnings. While October is notorious for downturns, it also marks key turning points toward recovery.

Weekly Update for the week ending September 20, 2024

Connecting the Dots II: US Economic Data and Fed Policy
Last week, I talked about how Canadian economic reports connect [link to sept. 13] and impact Bank of Canada (BoC) decisions, which in turn affect investors. This week, I will dive into the American economic reports, exploring how the US Federal Reserve (Fed) uses data to shape interest rates, and what that means for us Canadian investors.

Weekly Update for the week ending August 23, 2024

Inflation and pricing

It was a relatively quiet week for the markets in terms of economic news. In the USA, investors focused on the mid-week release of the minutes from the Federal Reserve’s (Fed) last Federal Open Market Committee meeting and Fed Chair Jerome Powell’s speech at the Jackson Hole Economic Symposium, at the end of the week. These two events are crucial in indicating whether the Fed plans to lower the US benchmark rate at their September meeting.

In Canada, the biggest economic headline was the July Consumer Price Index (CPI) inflation report, which reveals whether inflation is rising or falling. Spoiler alert: it is still falling. 😊 But here is an important point—just because inflation is down does not mean prices are lower. It only means that the pace of price increases has slowed.