The rally for stocks and crypto following Donald Trump’s U.S. election win is a head fake that diverts attention from several investing and personal finance pain points ahead.
Mr. Trump was seen as better for stocks than Democratic candidate Kamala Harris, and he’s thought to be a booster of crypto currency. The S&P 500 and several cryptocurrencies surged in morning trading on Wednesday, but signs of trouble were there if you looked for them in the bond market.
Investors sold U.S. Treasury bonds, which has the effect of making bond yields rise. Why we care about bond yields in the United States: They have a big influence on bonds here in Canada and, in turn, on the cost of mortgages.
Mortgage rates are well off their recent peaks, but still well above the level where many homeowners locked in several years ago. Waves of these homeowners will renew mortgages in the next 12 months, and they have to be wondering how much more they’ll be required to pay. Events in the bond market suggest further mortgage rate cuts aren’t imminent, a point worth noting if you’re on the housing market sidelines waiting for lower borrowing costs.
Stocks rise and fall on expectations for corporate profits, while bonds are dependent on how investors view economic prospects, including inflation. Mr. Trump’s plan to introduce tariffs on imports is considered inflationary because it will increase the cost of imported goods, while also potentially slowing growth.
Something else investors worry about is the creditworthiness of bond issuers, an area where the United States is generating concern through its US$35-trillion debt. Neither Mr. Trump nor Ms. Harris focused on government debts and deficits in the election campaign, but his policies were judged as adding more to overall debt levels. There’s justifiable concern about Canadian government’s finances, but the U.S. is in worse shape.
Without attention to government debt in the United States, it’s possible that bond yields could rise from current levels. The Bank of Canada and U.S. Federal Reserve will keep lowering their benchmark interest rates, which in turn will push down rates for variable-rate mortgages, lines of credit and floating-rate loans. But bond yields are a bigger influence on fixed-rate mortgages, which happen to be a popular pick right now.
A takeaway for homeowners from these developments is that variable-rate mortgages are worth a look. If you go variable, each Bank of Canada rate cut – and there are several expected over the remainder of this year and next – will lower your borrowing costs.
Another post-election pain point is the Canadian dollar, which has dropped to 71.9 US cents as of Wednesday morning from 74.2 US cents in late September. Part of the reason for that is that money flows are drawn to the higher interest rates in the United States. A five-year Canada bond had a yield of 3.1 per cent early Wednesday, while a comparable U.S. Treasury bond had a yield of 4.3 per cent.
But Canada’s lack of economic competitiveness also contributes to its dollar weakness. If a Trump government offers tax cuts to business and removes regulations, then we may see additional downward pressure on the dollar. Now seems a good time to buy some U.S. currency if you plan to head south this winter.
Stocks had a great run Wednesday morning on the Trump win, but the comparative returns for the U.S. and Canadian markets suggests another pain point. The S&P 500 was up 1.7 per cent by late morning, while the S&P/TSX composite index was up just 0.3 per cent.
In addition to being seen as friendly for business, Mr. Trump is also regarded as someone who will have policies favouring the mega-size tech companies that are dominant in the S&P 500 and non-existent in the S&P/TSX composite.
The Canadian market has benefited lately from a rebound in blue-chip dividend stocks, but that was driven by the decline in interest rates on bonds. Sticky bond yields could limit near-term gains for dividend stocks.
The rally in the price of bitcoin, ethereum, dogecoin and other cryptocurrencies was a win for investors holding these speculative assets. But if you’re a traditioal investor or money manager who has avoided them, prepare for FOMO, or fear of missing out. Crypto remains a non-essential portfolio holding, but has the potential to move beyond that if it becomes more widely adopted.
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HOLYOKE — Amid a financial crisis in Holyoke, city Auditor Tanya Wdowiak gave her two weeks’ notice to the mayor and City Council president on Thursday.
Holyoke Mayor Joshua Garcia said Thursday that he received Wdowiak’s email resignation but hasn’t had a chance to talk with her.
Garcia said he came into the office to an email that requested he accept her formal resignation, effective Nov. 28.
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WASHINGTON — The government shutdown is creating a lot of uncertainty and disruption for Alaska Native communities, and for tribal organizations that administer federal programs.
These include SNAP, for food assistance, and the Low Income Home Energy Assistance Program, which subsidizes energy bills.
Ben Mallott, president of the Alaska Federation of Natives, said the prospect that both of those programs would run out of money, just as winter begins, puts some Alaskans in a life-threatening bind.
“Without LIHEAP, without SNAP, our communities, our tribal citizens will have to decide between fuel and food,” he testified to the Senate Indian Affairs Committee Wednesday.
During the pandemic, the Federal Subsistence Board allowed emergency hunting to improve food security. Now, with the government shutdown, Mallott said the Subsistence Board can’t even meet to consider it.
Since the second Trump administration began, advocates for Native American and Alaska Native people have stressed that programs that help them aren’t D.E.I. initiatives but the result of promises, treaties and laws. Now, between the administration’s cuts to government services and the shutdown, they say the government is dodging its responsibilities.
Hearing witnesses said tribal Head Start programs will run low on money if the shutdown extends into November, and that many agency experts tribes normally turn to have lost their jobs.
Pete Upton testified about the Trump administration’s plan to abolish a fund at the Treasury Department called the Community Development Financial Institutions Fund. Upton runs the Native CDFI Network, whose Alaska members include the Cook Inlet Lending Center. He said tribal communities are often in banking deserts.
“Native CDFIs are typically the only financial institutions serving these communities, providing access to capital, credit and financial education where no alternative exists,” he said.
Early in the shutdown, the Treasury Department fired the entire staff of the CDFI Fund. With no one at the federal office to certify the CDFIs, Upton said it’s hard for the community finance organizations to attract private-sector and philanthropic investment.
Certification is “a stamp for investors to say that ‘you are investable,’” Upton said. With it, “we bring in private capital at a rate of eight to one.”
Sen. Lisa Murkowski, chair of the Indian Affairs Committee, said tribes face enormous uncertainty as the stalemate in Congress nears the one-month mark.
“We can’t figure out the path forward right now on our spending bills, although I am a little bit more optimistic on that today,” she said.
She didn’t elaborate but said earlier this week that senators are engaged in productive talks.
Police cruisers parked in the Stamford Police Department parking lot photographed on August 7, 2024.
STAMFORD — A member of the Stamford Board of Representatives said he was “disgusted” by the city’s Board of Finance’s decision to delay a potential increase in budgeted officers for the city’s police department.
“I’m angry,” said Sean Boeger, D-15, during the Board of Representatives’ Fiscal Committee meeting Monday.
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Boeger is also a sergeant in the Stamford Police Department. The increase, which was on the committee’s agenda, would have created 13 more officer positions in the department. A grant would help pay for six of the 13 new positions.
It would’ve brought the total number of officers in the patrol division from 217 to 230, resulting in a 300-person force when all other ranks are considered. In the early 2000s, the department had 314 budgeted sworn officers, according to Chief of Police Timothy Shaw.
Lou DeRubeis, Stamford’s director of public safety, health and welfare, said the proposed increase was the first “in quite a number of years.”
The Board of Finance, however, during its Oct. 9 meeting, voted to hold the increase and asked the police department to provide more information, such as where the officers would be used and the total cost of hiring them outside of wages, such as health insurance and overtime.
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Boeger said during Monday’s fiscal committee meeting that he believed there were four officers assigned to traffic enforcement because “patrol demand is so high.” He said the department should be able to double the number of officers for traffic enforcement, which he said was “the top gripe of our citizenry.”
He also said the department was “lucky if we could cover the high schools when it’s busy.”
“If we want to be responsible and we want to have the nice things that a nice city like Stamford should have…we have to do something about this,” Boeger said.
Boeger said the department had opened up testing for new positions and that the department can’t send people to police academies, whether the city’s own or others, until the new positions are approved.
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“We’re gambling with open positions based on academy availability,” Boeger said.
Amiel Goldberg, D-13, said he wanted members of the committee to reach out to the Board of Finance to “let them know how deeply disappointed and frustrated our committee is.”
There had been an attempt to add the 13 police officer positions during the most recent budget process, but the Board of Finance cut the funding for those jobs.
At that time, members of the board said to come back with the request once the department filled out the rest of their 287 budgeted officer positions. The department will reach that goal by December, Bridget Fox, chief of staff of the mayor’s office, said during the Oct. 9 meeting.
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Shaw, in an interview before the fiscal committee meeting, said getting more people for the department would mean less people have to work overtime and because of that, less people would burn out and leave the force. Half the budgeted overtime, he said, is for the patrol division.
During the Oct. 9 meeting, the chief said the 13-person increase could result in a $500,000 reduction in overtime costs.
Laura Burwick, a member of the Board of Finance, said during the Oct. 9 meeting the request of $743,941 for the new positions was “a huge additional expense to the budget” and that she wanted to “see a little bit of the analysis that went into this.”
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Geoff Alswanger, a member of the finance board, said during that meeting that there have been “many sessions” where the board had “angst at the management” of the city’s pension funds and that the board “can’t ignore that as part of this equation.”
Boeger, however, during Monday’s meeting, said the department “has no power or control over that.”
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