November 2019 Volume 1

ECONOMIC UPDATE

increasing output at other site locations to make up for those lost during terrorist strikes). Global output is amazingly steady, given the wild set of geopolitical circumstances that would otherwise seem to be impacting it. Halliburton and others are beginning to pull back on investments as revenue for some of the oil services sectors (not the producers themselves) have fallen of late. Halliburton reported in its earnings release that revenues were down 20%.

the New Democrats or the Party Quebecois. The NDP lost votes as their left-leaning message seemed to spook voters more than expected. Trudeau kept pointing out that a vote for the NDP would really be a vote for the Conservative Party as it would take support away from the Liberals. The Party Quebecois picked up three times the seats they had previously and are back in the role of kingmaker. They have a much focused agenda however and throw their support behind the party that grants Quebec the most in terms of autonomy coupled with massive amounts of aid and assistance. Regardless of the coalition that forms, the Canadian government will be weak for the next few years and many pundits are already asserting that a new The expectation had been upbeat when it came to the housing market.The data suggested that a reboundwas in store for the second half of the year and that is generally very good news for an economy that depends on the continued good mood of the consumer. There is no greater store of wealth for the average American than their home and its value has a lot to dowith their confidence levels. Furthermore, the industry around home sales is massive – encompassing banks, real estate operations, remodelers, insurance providers and so on. The new homes data was pretty decent but the real focus is on the existing market and the data this month was disappointing. election may be called sooner than later. Trouble in the HousingMarket

Auto Sector and the TripleWhammy There are few sectors that have the influence the automotive sector has - in the US and in the rest of the world. It is one of the largest employers in every one of the developed nations – for every person working on the line there are 23 people whose jobs depend on this work. The sector has been struggling of late and there are three factors at work. The first is that most markets are saturated – there are ten cars for every ten people in the US. The numbers are similar in Europe and even in developed Asia. The costs of manufacturing are going up due to factors such as tariffs, emission controls and safety demands. Then there is the ongoing issue of protectionism as every nation wants to preserve their jobs. Add in the emergence of new technology and the reluctance on the part of millennials to buy cars and you have a recipe for declining sales for years to come. TrudeauWins – Sort Of The Liberal Party in Canada won but they didn’t. The story in the Canadian press was essentially that both parties lost but that one lost more than the other. Justin Trudeau will now have to form a minority government by cobbling together a coalition with smaller parties whose positions have differed from his throughout his first term and these parties gained support and votes in this election. Unlike his first election there is no groundswell of support and enthusiasm and even his most ardent supporters from that election have cooled. Analysis: This election was called the “No-Issue” race as the focus of both campaigns were somewhat uncharacteristic of a Canadian election. Trudeau was attacked on personal issues such as his appearance in blackface years ago. He was also dogged by accusations of cronyism for trying to direct parts of some investigations. His opponent – Andrew Scheer – was attacked for being a dual citizen of Canada and the US and essentially for being dull. There was very little conversation about the bigger concerns of the average Canadian – taxes, regulations, climate change, relations with the US, trade and so on. Even the big social issues that Trudeau ran his first race on were missing from the debates. The likely outcome is a coalition between the Liberals and either

There has been a good deal of volatility as far as housing starts are concerned but in general the news has been fairly good over the last several months with a big surge at the end of the summer. The factors driving new home activity are the stock market as that has encouraged the construction of higher end homes and the low mortgage rates which have driven the starter homes. The struggles in the existing home market do not seem to have affected the new home market as yet. Analysis: There was a decline of 2.2% from August to September and the expectation had been there would be a gain. The two key factors seem to have been a shortage of available homes to buy and the fact that prices have risen in part due to that shortage.There have been some trends of late that are causing adjustments in the housing sector. It was once assumed that older homeowners would be selling their larger homes to move to smaller ones or into some kind of retirement community. There is now a great deal more support for “aging in place” and there are fewer of these houses on the market. The remodeling industry now ranks retrofitting homes for elderly

FIA MAGAZINE | NOVEMBER 2019 22