Major News This Week

Last Friday, data was released on Canadian employment and, to no one’s surprise, the unemployment rate held steady at 7.2% in April. Some 12,500 jobs were created during this period, a marked improvement over the 54,500 jobs lost in March. Employment figures in the U.S. continued to improve, with 323,000 initial jobless claims in the last week. This was the best performance since 2007! On Thursday, the Reserve Bank of Australia trimmed 25 bps off its key interest rate, bringing it to 2.75%. The stated reasons were slower job growth and subdued inflation. Since the beginning of the year inflation has hovered around 2%, compared to close to 3% last year. This drop in the key interest rate brought the Australian dollar down 2% last week. Have a great week!

The Loonie
In order to succeed, your desire for success should be greater than your fear of failure. Bill Cosby

The environment of artificially low interest rates created by the U.S. Federal Reserve and other central banks is creating unprecedented activity in several global stock markets, despite the very real risk of another slump. The Dow Jones and Standard & Poor’s 500 indices set new records last week, reaching 15,144.83 and 1,635.01, respectively.

Ben Bernanke, Chairman of the U.S. Federal Reserve, said that the Fed will continue buying bonds, despite U.S. April employment data that significantly exceeded expectations. As you will remember, the Fed plans to maintain this extremely expansionary monetary policy until unemployment falls to 6.5% or inflation rises to 2.0%.

This encouraging result helped calm concerns over the impact of budget cuts and income tax increases (the fiscal cliff) south of the border at the beginning of the year. That was all it took for investors to jump into the equities market.

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