Financial Update For Oct. 2, 2009

TSX ends at 3-week low after weak U.S. data

• TSX -323.20 to 11,071(Reuters) hit by a mix of soft commodity prices and weak data from the United States that raised concerns about the strength of economic recovery. TSX remains a staggering 48% above the 5-year low it tumbled to in March

• DOW -203.00Discouraging new reports on unemployment and manufacturing reinforced worries that job losses and meagre factory output will make for a weak recovery as the nation climbs out of the worst recession in decade

• Dollar -1.19c to 93.40USD lost the full cent it gained Wed

• Oil +$.21 to $70.82US per barrel.

• Gold -$8.50 to $999.50USD per ounce

• Canadian 5 yr bond yields -.07bps to 2.51. The spread, based on 5 yr rate of 4.09% is 1.58% We are inside the comfort zone again, for the first time since Sept. 11th

• http://www.financialpost.com/markets/market-data/money-yields-can_us.html?tmp=yields-can_us

The yield, rate of return on your bond, can be read through a yield curve, which is the pattern of yields on bonds. This increase in bond yield is something to watch. If the bond yield continues to go up, the spread will continue to shrink and this could be a trigger for interest rates to rise. Ideally lenders are looking for a spread between 1.55 and 1.75

Bulls retreat as markets brace for more gloom

Alia McMullen, Financial Post
North American stocks started the fourth quarter with a sharp drop Thursday, as disappointing U.S. manufacturing figures added to brewing anxiety about the strength of the economic recovery.

Even surprise jumps in U.S. personal spending, pending home sales and construction figures were unable to calm investors, who were determined to act cautiously ahead of Friday's non-farm payrolls figures.

"The general tone to the data is that it is at least as good as expected and in some cases much more so, but markets have priced in perfection such that only very upside surprises to indicators will matter," said Derek Holt, an economist at Scotia Capital.

"It also seems that investors may be coming around to the idea that the mixed data we keep getting suggests that the path to recovery may be a lot slower and harder than had previously been hoped," said Colin Cieszynski, a market analyst at CMC Markets Canada.

The mixed bag of data was largely positive Thursday, with personal spending in the United States up 1.3% - the fourth consecutive monthly gain and the strongest increase since late 2001. That was well above the 0.2% gain in personal income, pulling the savings rate down to 3% from 4%.

"The solid rise in consumer spending in August is heartening and is expected to be a key factor sending overall GDP back into positive growth territory in the third quarter," said Paul Ferley, assistant chief economist at RBC Capital Markets. However, he said the bulk of the jump was attributable to the federal government's "cash for clunkers" car purchasing incentive, an initiative which finished at the end of August. As a result, future spending figures may not be as strong.

Other data showed construction spending up 0.8% in August and pending home sales up 6.4%, also above expectations. However, the positive results were overshadowed by a decline in U.S. manufacturing activity.

The Institute for Supply Management's manufacturing index, which was expected to rise, slipped to 52.6 in September from 52.9 the previous month. The decline was small and the index remained above the critical 50 level that separates expansion from contraction.

However, the unexpected softness was compounded by weak manufacturing data from around the globe. The manufacturing purchasing managers index in China came in below expectations at 54.3, while the U.K. also missed the mark at 49.5.

"The pullback in momentum in the manufacturing sector simply reflects the underlying reality that when you strip away the various fiscal stimulus programs and measures, there is not much underlying strength in spending in the economy," said Brian Bethune, the chief U.S. financial economist at IHS Global Insight.

The soft factory data combined with a drop in Monster Worldwide Inc.'s measure of online job ads and a further increase in those seeking unemployment benefits suggested Friday's U.S. non-farm payrolls figures could come in worse than expected. The market had expected job losses of about 175,000 from Friday's report after 216,000 jobs were lost in August. However, Jan Hatzius, the chief U.S. economist at Goldman Sachs Group said the latest data suggested losses would be higher. He revised outlook to a decline of 250,000 jobs in September from a 200,000 drop previously.

Financial Update For Oct. 1, 2009

Canadians between the ages of 18 and 34 are more interested in saving for a house than for retirement. CP article below

• TSX -.03(Reuters) as a handful of weaker energy and technology players kept the index from adding to already hefty quarterly and monthly gains. The flat close followed data that showed Canada's economy stagnated in July, raising some doubts about whether gross domestic product would return to solid growth in the third quarter

• DOW -29.92

• Dollar +1.28c to 93.40USD

• Oil +$3.90 to $70.61US per barrel.

• Gold +$14.90 to $1008.00USD per ounce

• Canadian 5 yr bond yields -.01bps to 2.57. The spread, based on 5 yr rate of 4.09% is 1.52%

• http://www.financialpost.com/markets/market-data/money-yields-can_us.html?tmp=yields-can_us

This increase in bond yield is something to watch. If the bond yield continues to go up, the spread will continue to shrink and this could be a trigger for interest rates to rise. Ideally lenders are looking for a spread between 1.55 and 1.75

Young Canadians saving less than their parents

Brenda Bouw, THE CANADIAN PRESS
The Canadian Press, 2009

Young Canadians are saving less than their parents and grandparents did at the same age, with young men being the worst at sticking to a budget, according to the results of a new survey.

The TD Canada Trust study released Wednesday suggests 80 per cent of Canadians found saving money "too hard" and that young people between the ages of 18 and 34 were more interested in saving for a house than for retirement.

Among survey responses, 19 per cent 18-to 34-year-olds said they were saving 10 to 25 per cent of their total monthly income. That compared to 29 per cent of people over age 55 who said they saved that amount when they were younger.

Young adults blamed their lack of savings on not making enough money, while people 55 and older said the cost of living prevented them from saving more when they were young.

TD's Carrie Russell said the results were disappointing and prove that saving money is not something that comes naturally to most.

"It has to be practised," said Russell, a senior vice-president at the bank. "And the earlier you start the better off you will be."

The survey found 54 per cent of 18-to 34-year-olds respondents said they have a rainy day fund, compared to 55 per cent of 35-to 54-year-olds and 63 per cent of those 55 and older.

However, 76 per cent of 18-to-34 year-olds considered themselves financially responsible, compared to 82 per cent of 35-to-54 year-olds and 86 per cent of those 55 plus.

Debt was said to be the biggest roadblock for young people trying to save more, in particular for men. Twenty-eight per cent of male respondents cited debt as the reason why they can't save more, compared to 18 per cent of women.

Women were also better at sticking to a budget, the survey indicated.

The gap was greatest in the 35-to 54-year-old range, in which 43 per cent of women said they stuck to a monthly budget, compared to 28 per cent of men.

Russell said women - often cited as being big spenders - are better at budgeting because they have practise doing it at home with family finances.

"They often deal with that tradeoff on what to spend money on, and what not. It's a daily decision," she said.

Vancouver resident Jarleen Clohan, 23, said she is good at saving money, in part because she grew up watching her parents sometimes struggle with making ends meet.

Clohan said she does shop, like most women, but that her spending is "controlled."

She saves money because she likes the "reassurance" of having a savings account.

Armin Barekat, 32, said he doesn't feel the need to save too much money.

Barekat, who lives in Vancouver, said he has a secure job and a good credit rating. He is also confident he can borrow money if needed, and pay it back.

"Saving money is good, but I don't worry about it," he said.

Barekat is saving money for a down payment on a home, but hasn't started saving yet for retirement.

"I am too young to think about that," he said.

The survey suggested 23 per cent of Canadians in Barekat's age group wanted to save for home. That figures rose to 25 per cent for those ages 35 to 54.

Looking back to their younger years, 19 per cent of people age 55 and over said they had saved for a home, while 25 per cent said they saved for retirement.

Besides providing fresh data on Canadian attitudes, such surveys are a popular promotional tool for Canadian companies, who use public opinion polls to gauge consumer thinking and to promote specific brands to ordinary Canadians.

Banks and mutual fund companies have long used such surveys to make consumers aware of financial products and services and to learn more about the public's financial management habits.

The bank released the survey to help promote its Simply Save program, which allows customers to save a preset sum every time they use their debit card.

The survey of 1,000 men and women was conducted by Angus Reid Strategies in late July. It has a margin of error of plus or minus 3.1 per cent, 19 times out of 20.

Financial Update For Sept. 30, 2009

The article below on mobile banking on your Smartphone, is more proof that shift happens.

Did you know you can also access your deals on MERIX EXPLORE on your Blackberry or Smartphone?

Look up which UW has your file,

search by client name to find what the file # is,

search Explore messages

access the latest rate sheet! (attached)

Simply download this link and access through your browser

https://secure.merixfinancial.com/explore/mobile/

To learn more, click here www.caamp.org/elections .

Also below: There is more to a mortgage than a great rate



• TSX +56.27(Reuters)

• DOW -47.16

• Dollar +.17c to 92.12USD

• Oil -$.13 to $66.71US per barrel.

• Gold +$.60 to $993.10USD per ounce

• Canadian 5 yr bond yields +.01bps to 2.58. The spread, based on 5 yr rate of 4.09% is 1.51% This is up .07bps from a week ago, so we are returning to the comfort zone
• http://www.financialpost.com/markets/market-data/money-yields-can_us.html?tmp=yields-can_us

This increase in bond yield is something to watch. If the bond yield continues to go up, the spread will continue to shrink and this could be a trigger for interest rates to rise. Ideally lenders are looking for a spread between 1.55 and 1.75

There's more to a mortgage than a low rate

by Talbot Boggs
Monday, September 28, 2009provided by

(Special) - Homeowners and buyers are in a rather enviable position these days. Interest rates are at historic lows and the cost of borrowing for a home is about as low as it can get.

That's great news. But it's not the only thing homeowners and purchasers need to think about their mortgage.

There are a number of other features to consider before signing up for a mortgage and what is probably the largest debt that most Canadians will ever take on in their lives.

"When it comes to choosing a mortgage, getting a good rate is just the tip of the iceberg," says Mary Gronkowski, regional sales director with Mortgage Intelligence Inc., a national mortgage brokerage company. "You have to be aware of all the other features that may lie below the surface. All features of a mortgage should fit a homebuyer's personal goals, both now and down the road."

One type of mortgage to consider is an assumable mortgage.

An assumable mortgage means it can be transferred to another borrower. It allows a purchaser to take on your mortgage's terms and payments as part of the sale of your home. With extremely low interest rates today, that could be a big selling feature to a potential buyer in the future.

Given the low rates today, many homeowners are thinking about refinancing their mortgage.

Whether you should refinance your mortgage in a period of low interest rates depends on how much it will cost you to break your existing mortgage compared to how much you will save in interest payments.

If you break an existing mortgage you will have to pay the greater of three month's interest or the interest rate differential (IRD).

An IRD is a penalty for early prepayment of all or part of a mortgage outside of its normal prepayment terms. Usually this is calculated as the difference between the existing rate and the rate for the term remaining, multiplied by the principal outstanding and the balance of the term.

For example, if you had a $100,000 mortgage at nine per cent interest rate with 24 months remaining and wanted to renegotiate your mortgage at 6.5 per cent for 24 months, your IRD would be $5,000 ($100,000 x 2.5% $2,500 x 2 years $5,000).

It may only make sense to refinance your mortgage if the interest rate savings over the remaining life of your mortgage exceed the value of the IRD.

Another strategy is to take a variable rate mortgage. If interest rates go down and you keep your mortgage payments the same, you will be paying off more of your principal with each payment and will pay down your mortgage faster.

Many borrowers are taking advantage of low interest rates by accelerating payments on their mortgages. Many lenders will allow you to double up payments periodically or make lump sum payments of up to 20 per cent of the principal once a year.

You should make sure you understand the size and frequency of payments your lender will allow before you sign up.

Some mortgage lenders will have an option to skip a payment without penalty, which may come in handy in today's economy.

Another option that many mortgages have is portability.

This allows you to transfer your existing mortgage over to a new property, another big advantage if you have a mortgage at current low rates.

Not all portability features are the same, however. Some lenders allow up to 120 days to transfer the mortgage while others allow for only a few days or a week.

"Choosing the right mortgage involves considering where you are now and where you may be three to five years from now," says Gronkowski. "Working with a professional can help you make sense of the many options available to you."

Mobile banking expected to rise as smartphones gain ground

By LuAnn LaSalle

MONTREAL — The growing popularity of smartphones is expected to push up the use of mobile banking, allowing consumers to check balances, transfer money and pay bills.

In Canada, mobile banking is attracting small numbers of consumers who are essentially replicating their online banking habits.

Banks including RBC and Scotiabank offer the service and both say smartphones are key to its adoption.

While the Bank of Montreal says demand for mobile banking is still in its infancy and doesn’t offer it, it’s watching it with interest.

IDC Canada analyst Kevin Restivo said a lot of Canadians still don’t have access to the web on their mobile phones and that’s holding them back from trying the service.

“In the short term, it’s very new to Canadians,” said Restivo, who follows mobile devices and their applications.

Smartphones allow consumers to surf the internet, access email, watch video, listen to music, play games and run applications such as stock trading platforms and airline boarding information.

In the next three to five years, mobile banking should become more popular as more consumers get smartphones and wireless network speeds increase making the experience easier, Restivo said.

Scotiabank’s Mike Henry said its mobile banking service hasn’t had a high adoption rate, but noted that until recently cellphones didn’t have the speed or quality of browser to provide a great user experience for consumers.

“We’re seeing interest in this area growing now as smartphones become the norm,” said Henry, senior vice-president of sales and service.

Analyst Emmett Higdon said mobile banking won’t replace online banking because of the screen size and user experience.

“In most cases, it’s simply more difficult to do something on your mobile than it is to go and do it online,” said Higdon, senior analyst in electronic business at U.S.-based Forrester Research.

However, consumers who use mobile phones to do banking are doing it because “it’s in their pocket, it’s available any time, anywhere,” Higdon said from Charlotte, N.C.

Devin Sawyer, director of mobile channel for RBC, said customers using it have smartphones and an “untethered lifestyle” that often has them away from their desk and computer.

“It’s safe to say adoption is relatively low but steadily growing,” Sawyer said.

Younger consumers will push the adoption of mobile banking, he said.

“This younger generation is born to the view that there is no limit as to what a smartphone can do. So they will have an expectation going forward that there is no limit to where online banking can go.”

Aran Hamilton, of Toronto-based EnStream which has launched a mobile payment service called Zoompass, said one of the challenges to get consumers to adopt banking on cellphones is the “so what factor.”

“They don’t actually know why they want to do mobile banking,” said Hamilton, vice-president of strategic partnerships.

Hamilton believes that will change when consumers can do transactions with family and friends and businesses, making the mobile phone like a digital wallet.

EnStream is a joint venture owned by the three major Canadian wireless carriers, Bell Mobility, Rogers Communications Inc. and Telus Corp. Hamilton said he is discussing partnerships with several Canadian banks for Zoompass.

Higdon said banking on cellphones isn’t expected to really take off until mobile payments and commerce really start to take off.

“Right now, the biggest hurdle quite simply is the mobile banking that’s out there is, really, simply duplicating what the customer already has available in many other channels, be that the branch, the ATM and particularly online.”

Higdon said in the United States, about 10 per cent of consumers say they have used mobile banking.

“It’s smaller in Canada simply because the Canadian institutions haven’t pushing it as much as in the U.S.”

The Canadian Press