Money Sense

[DKG]

The Fed finally admitted high interest rates and inflation will be around longer. Not until 2026 will inflation fall to the sweet spot of 2%, according to the Fed's latest projections. Since its release last week, the forecasts have spooked markets and cemented the idea that higher rates will stick around for longer.

[DKG]

US stocks dropped on Tuesday after Treasury yields once again hit a new cycle high.
The 10-year yield jumped to a high of 4.75%, which is well above the 3.64% level it was at a year ago.

Canada's main stock index closed at its lowest point since October last year as part of a pullback that saw sharper drops in U.S. markets.

The S&P/TSX composite index ended down 156.26 points at 19,020.92.

In New York, the Dow Jones industrial average closed down 430.97 points at 33,002.38. The S&P 500 index was down 58.94 points at 4,229.45, while the Nasdaq composite was down 248.31 points at 13,059.47.

The downward trend came after U.S. job opening data surprised to the upside, indicating continued strength in the economy and the potential need for interest rates to go higher.

Tuesday's report showed American employers were advertising 9.6 million job openings at the end of August, much higher than the 8.9 million that economists expected.

The market is now shifting back to interest rates, potentially keeping things higher for longer.

[DKG]

Job numbers for September come out tomorrow for both Canada and the United States. It's expected to show slowing economies in both countries with much lower job gains. In Canada, the unemployment rate has been ticking up slightly for months. The labour participation dropped slightly too which is a bad indicator.


The Dow is down again today in anticipation of the September employment numbers release. The TSX is essentially flat after oil and gas stocks got hit hard yesterday.

[DKG]

Both Canada and the US had the best months for jobs since January. But, in Canada, it is driven by the low quality education services and in the US health care is the biggest source of job gains.

Tech and communication stocks are the only sector that is doing well this morning.

As long as interest rates stay high or go higher, a hard landing is likely. Right now we are in macro purgatory. This bifurcation of the economy with continuing high interest rates and no end in sight could last well into 2024.

[DKG]

Over the past 12 months industrial production has been flat and the ISM Manufacturing Report has been warning of imminent recession.

Despite the warnings from reliable leading indicators, the dominant view now is that there will be a "soft landing" (a slowdown, but no recession).

The ISM Manufacturing New Orders Index (NOI) bounced during September 2023, but its overarching message continues to be that a recession will begin within the next few months.

Despite the warnings from reliable leading indicators, the dominant view now is that there will be a "soft landing" (a slowdown, but no recession). Before discussing what's behind this divergence, we'll review the current messages from some of our favourite leading recession indicators.

The ISM Manufacturing New Orders Index (NOI) bounced during September 2023, but its overarching message continues to be that a recession will begin within the next few months. It would have to rise to 55 to cancel the recession warning.

[DKG]

Office space has gone from a necessity to a liability in just a few short years, sparking concerns about a collapse in commercial real estate values across North America.

As Kevin O'Leary said, "No one saw this coming." The issue will manifest itself in the regional banking sector. These banks are going to fail because up to 40% of their portfolios are in commercial real estate.

[DKG]

Thank you Garraty for fixing my thread for me.

The two biggest mistakes people make are trying to time the market and maintaining highly concentrated investments.

[DKG]

Approximately 3.4 million Canadians will renegotiate their mortgages — almost all at a much higher interest. Three quarters of them are worried about the looming transaction.

That is about $900 billion owing. This country's economy is on very shaky ground.

[JOE]

Approximately 3.4 million Canadians will renegotiate their mortgages — almost all at a much higher interest. Three quarters of them are worried about the looming transaction.

That is about $900 billion owing. This country's economy is on very shaky ground.

I've heard that for many, the value of a person's home is tied to their sense of financial worth. So if their homes are worth or assessed less, then they tend to spend less. Which of course isn't favorable for the economy, especially in 2024.

Home prices/values seem to be plumetting almost everywhere these days. Even in high priced Vancouver, where many homes are going unsold or are selling way less than they were in 2022.

[DKG]

Income Tax Brackets and Standard Deductions

While tax rates are kept unchanged, the IRS has raised the income level on which such taxes will be charged in 2024:

The lowest 10 percent taxes will apply to individuals making $11,600 or less annually, up $600 from $11,000 in 2023. For married couples filing jointly, the income limit is $23,200, up $1,200 from last year.

The 12 percent rate is applicable to individuals making $11,601 up to a maximum of $47,150, a $2,425 increase from $44,725. For married couples filing jointly, the income limit is $94,300, up $4,850 from last year.

The 22 percent rate is applicable to individuals making $47,151 up to a maximum of $100,525, rising $5,150 from $95,375. For married couples filing jointly, the income limit is $201,050, up $10,300 from last year.

The 24 percent rate is applicable to individuals making $100,526 up to a maximum of $191,950, an increase of $9,850 from $182,100. For married couples filing jointly, the income limit is $383,900, up $19,700 from last year.

The 32 percent rate is applicable to individuals making $191,951 up to a maximum of $243,725, a $12,475 jump from $231,250. For married couples filing jointly, the income limit is $487,450, up $24,950 from last year.

The 35 percent rate is applicable to individuals making $243,726 up to a maximum of $609,350, which is higher by $31,225 from $578,125. For married couples filing jointly, the income limit is $731,200, up $37,450 from last year.

The highest 37 percent rate is applicable to individuals making more than $609,350. For married couples filing jointly, the rate is for incomes more than $731,200.

Overall, income limits for the seven tax brackets have been raised by 5.4 percent for the 2024 tax year from the previous year.

[JOE]

I've often wondered why billionaires in the US(and Canada) get their tax rates capped and at least theoretically pay the same % of tax as millionaires. Yet a billionaire is 1000x richer than a millionaire.

Progressive tax rates apply to everybody else except them.

They should tax the billionaires through the nose.

Help reduce the budget deficits.

[TheProwler]

I've often wondered why billionaires in the US(and Canada) get their tax rates capped and at least theoretically pay the same % of tax as millionaires. Yet a billionaire is 1000x richer than a millionaire.

Progressive tax rates apply to everybody else except them.

They should the billionaires through the nose.

Help reduce the budget deficits.

You know this is "Income Tax", not "Net Worth Tax", right Senile Joe?

You do understand that Net Worth does not factor in when determining an Income Tax rate, right?

[Thiel]

You know this is "Income Tax", not "Net Worth Tax", right Senile Joe?

You do understand that Net Worth does not factor in when determining an Income Tax rate, right?

Of course Jo Jo doesn't understand the difference. I make the money in our relationship.

[DKG]

Here are the changes to CPP deductions starting in 2024.

Middle-income earners will start seeing a larger portion of their paycheques going toward Canada Pension Plan contributions as of Monday.

The CPP includes a new, second earnings ceiling. For those who make more than a given amount, additional payroll deductions now apply.

Previously, everyone earning over the base amount (currently $3,500) contributes a set portion of their income, up to a maximum amount (last year's was $66,600) that increases slightly every year. Those who are self employed pay both the employee and employer portions.

Starting this year, the enhanced pension plan now has two earnings ceilings.

The first tier works similarly to the old system: just like before, workers contribute a set portion of their earnings to CPP, up to a government-set threshold — for 2024, it's $68,500. Those earning that amount or less won't see any changes to their current contribution rates.

What's new, for anyone earning more than that amount, is a second contribution level that tops out at $73,200.

People in this group pay an additional four per cent on their second tier earnings, or the amount they make between $68,500 and $73,200.

For 2024, that means a maximum $188 in additional payroll deductions. Overall, people earning over $73,200 will be contributing an extra $300 in 2024, compared to their previous contribution last year.

[JOE]

The 'Santa Claus Rally' which didn't materialize?

...and what it might bode for the rest of 2024.