Monthly Market Insights: July 2019

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Every month, Cambrian shares the Monthly Economic Commentary provided by our partners at Credential Financial Inc.. If you're looking for advice or have questions about the Monthly Economic Commentary, advisors are here to answer your questions.

Not following the herd.
There can be little doubt that global growth has been impacted by the trade tensions and tariffs brought on between warring economies. As the battles continued, central banks have been forced to react, taking a 180 degree turn from a year ago, and begin considering implementing an accommodative policy. Again. The U.S. Federal Reserve has taken a dovish stance and is playing to the market’s expectation of a rate cut at their next meeting later in July. Equity markets rallied to fresh highs on this anticipation. Over in Europe, the ECB just recently stopped their stimulus in January and may consider turning it back on as they elected Christine Lagarde as their new president. In Canada, however, it’s a different story as our economy heats up after a late-2018/early-2019 lull. Holding its own rate for a sixth straight time, the Bank of Canada sees its rate policy more accommodative already, compared to its counterparts, as GDP is on the upswing and inflation falls within the BoC’s target range. Governor Poloz has opted to not follow the herd for now but may do so later this year—or next—depending how the trade environment plays out.

A good – no, a great - first half.
The unemployment rate serves as a good indication, albeit lagging, of the health of an economy. A strong labour market with low joblessness shows the economy is successfully filling open job positions in response to domestic and foreign demand. In turn, with more people working and earning more, they’ll likely be inclined to increase their spending thereby promoting more economic growth. This was precisely the case in Canada. The sell off and underlying concerns in late 2018 were feared to be the catalyst for a slowdown and possibly even a recession. GDP slowed but jobs were added at a fanatical and record pace. The unemployment rate hovers at 5.5%, just above a four-decade low, with the participation rate at almost two-thirds, and full-time and stable hirings accounting for essentially all the gains in the first half of the year. Similarly, in the U.S., its jobless rate is near a 49-year low at 3.7% with the economy adding jobs for a record 105 consecutive months and at an average of 172,000 jobs per month so far in 2019. The Eurozone, having reached record highs during the 2008 financial crisis, has seen an amazing turnaround with its unemployment rate falling to an eleven-year low of 7.5% with 12.3M people looking for a job, down 1.3M from a year earlier. With eyes focuses on the monthly job numbers, especially by central banks, hopefully the second half of the year will be just as great.

Read the full July 2019 Market Insights. 

Read previous Market Insights:
June 2019
May 2019 
April 2019

*The information contained in this report was obtained from sources believed to be reliable; however, we cannot guarantee that it is accurate or complete. This report is provided as a general source of information and should not be considered personal investment advice or solicitation to buy or sell any mutual funds and other securities.