What We Are Watching This Week
- US Retail Sales
- Empire Manufacturing Survey
- Housing Starts and Building Permits
- Federal Reserve Rate Announcement
Highlights From Last Week
- US Consumer Credit
- US Consumer Price Index
- Producer Price Index
Stocks posted solid gains, recovering much of the ground lost during the previous week’s sharp decline when the S&P 500 experienced its worst weekly drop since March 2023. Growth stocks significantly outperformed value stocks, driven by strong technological sector gains. NVIDIA played a key role in the rally, with its shares surging after the company provided an optimistic forecast for artificial intelligence at an investment conference.
The TSX saw solid gains for the week, driven by a 2.6% rise in the financials sector. Over the past 12 months, the market has climbed 13%, with earnings anticipated to grow at an annual rate of 15%. The gold industry also had a solid week, increasing by 6.6%, contributing to a 26% gain over the past year. Earnings in the Gold sector are expected to grow by 29% annually. On the economic front, Canadian building permits surged 22.1% month-over-month in July, reaching $12.4 billion.
The pan-European STOXX Europe 600 Index rose 1.85% for the week, driven by an interest rate cut from the European Central Bank (ECB). Germany’s DAX gained 2.17%, France’s CAC 40 added 1.54%, Italy’s FTSE MIB rose 0.83%, and the U.K.’s FTSE 100 increased by 1.12%. The ECB reduced its deposit rate by 0.25% to 3.5%, marking the second rate cut this year. The decision aligns with expectations and comes amid signs of slowing economic growth and inflation in the eurozone. However, the ECB provided no clear indication of future rate moves. While headline inflation forecasts remained unchanged, core inflation was revised slightly higher due to stronger services prices. Economic growth forecasts were lowered for 2023, 2025, and 2026.
In July, U.S. consumer credit rose at a seasonally adjusted annual rate of 6.0%, bringing total outstanding credit to $5.093.7 trillion. Revolving credit, primarily driven by credit card debt, reached $1.360 trillion. Non-revolving credit increased at an annual rate of 4.8%, with the total amount rising to $3.734 trillion. The federal government remains the largest holder of non-revolving credit, accounting for 39.9%, primarily due to student loans. Depository institutions hold 24.4%, while finance companies account for 19.2% of non-revolving credit.1
In August, the Consumer Price Index for All Urban Consumers (CPI-U) rose 0.2% on a seasonally adjusted basis, maintaining the same increase as in July, according to the U.S. Bureau of Labor Statistics. Over the past 12 months, the all-items index increased by 2.5% before seasonal adjustment, marking the smallest 12-month rise since February 2021. The primary driver of the overall index increase was a 0.5% rise in the shelter index, which played a significant role in pushing up prices. Food prices grew more modestly, with the food index increasing by 0.1% in August, down from a 0.2% increase in July, while food prices at restaurants (food away from home) rose by 0.3%, grocery prices (food at home) remained unchanged. Energy prices, however, fell by 0.8% in August after remaining flat in the previous month. Excluding food and energy, the core CPI rose by 0.3% in August, compared to a 0.2% rise in July. This increase contributed to higher costs in areas such as shelter, airline fares, motor vehicle insurance, education, and apparel. In contrast, prices for used cars and trucks, household furnishings, medical care, communication, and recreation saw declines. Over the past year, the all-items index rose by 2.5%, while the core index, excluding food and energy, increased by 3.2%. Energy prices dropped by 4.0% over the 12 months ending in August, while food prices increased by 2.1% during the same period.2
For the week ending September 7, the U.S. Bureau of Labor reported the seasonally adjusted initial claims for unemployment benefits rose to 230,000, up by 2,000 from the prior week’s revised figure. The previous week’s claims were revised upward by 1,000, from 227,000 to 228,000. The 4-week moving average increased by 500 to 230,750, compared to the last week’s revised average. For the week ending August 24, the total number of continued weeks claimed for benefits across all programs was 1,824,657, a decrease of 43,120 from the previous week. In the comparable week of 2023, there were 1,772,148 weekly claims filed. The prior week’s average was also revised upward by 250, from 230,000 to 230,250.3
In August, the U.S. Producer Price Index (PPI) for final demand increased by 0.2%, after remaining flat in July and rising 0.2% in June, as the U.S. Bureau of Labor Statistics reported. Over the 12 months leading up to August, the PPI rose by 1.7%. The August rise was driven by a 0.4% increase in final demand services, while prices for final demand goods were unchanged.4 Excluding food, energy, and trade services, the core PPI increased by 0.3% in August, the same as in July, and rose 3.3% over the past year. For final demand goods, prices remained stable in August, following a 0.6% rise in July. Energy prices fell 0.9%, offsetting increases in other areas like food and non-electronic cigarettes. Significant price movements included a 10.5% drop in jet fuel and a 2.3% rise in non-electronic cigarettes. Final demand services prices increased by 0.4% in August, largely driven by a 4.8% rise in guestroom rental. Other notable increases were seen in automotive fuel retailing and machinery wholesaling, while airline passenger services and food and alcohol retailing saw price declines.4
On Friday, the University of Michigan released the preliminary results of its Surveys of Consumers for September, reporting that consumer sentiment has risen to its highest point since May 2024, increasing for the second consecutive month by about 2% compared to August. This improvement is largely attributed to more favorable prices for durable goods. Expectations for personal finances and the economy over the next year have also improved, although views on the labor market have weakened slightly. Since its low in June 2022, sentiment has grown by about 40%, but consumers remain cautious, particularly due to uncertainty surrounding the upcoming election. A growing number of both Republicans and Democrats expect a Harris victory, which has led to increasing partisan gaps in sentiment. Year-ahead inflation expectations have decreased for the fourth consecutive month, at 2.7%, the lowest since December 2020. Long-term inflation expectations have slightly risen from 3.0% to 3.1%, remaining above pre-pandemic levels.5
| WK | Year to Date | |
| Dow | 2.60% | 9.83% |
| S&P500 | 4.02% | 17.95% |
| Nasdaq | 5.95% | 17.80% |
| S&P400 Mid-cap | 39.65% | 9.09% |
| Russell | 4.42% | 7.67% |
| TSX | 3.50% | 12.50% |
| Oil | 2.20% | -3.50% |
- https://www.federalreserve.gov/releases/g19/current/g19.pdf
- https://www.bls.gov/news.release/archives/cpi_09112024.htm
- https://www.dol.gov/ui/data.pdf
- https://www.bls.gov/news.release/ppi.nr0.htm
- http://www.sca.isr.umich.edu/
Important Information:
Warren Gerow is an independent investment wealth consultant to Sightline Wealth Management.
Sightline Wealth Management LP (“Sightline”) is an investment dealer and is a member of the Canadian Industry Regulation Organization (CIRO) and the Canadian Investor Protection Fund (CIPF).
Sightline provides management and investment advisory services to high-net-worth individuals and institutional investors. Sightline Wealth Management LP is a wholly owned subsidiary of Ninepoint Financial Group Inc. (“NFG Inc.”). NFG Inc. is also the parent company of Ninepoint Partners LP, it is an investment fund manager and advisor and exempt market dealer. By virtue of the same parent company, Sightline is affiliated with Ninepoint Partners LP. Information and/or materials contained herein is for information purposes only and does not constitute an offer to sell or solicitation to purchase securities of any issuer or any portfolio managed by Sightline Wealth Management or Ninepoint Partners, including Ninepoint managed funds.
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