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Trump’s ‘tariff man’ talk spooks investors, sends stock markets plunging

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Stock markets fell precipitously on Tuesday as weekend optimism that the U.S. and China could de-escalate their trade war fell by the wayside.

The Dow Jones Industrial Average fell more than three per cent, or 799 points, to 25,027. The broader S&P 500 fared even worse, losing 88 points to close just above 2,700. And the technology-heavy Nasdaq was worst of all, down almost four per cent, or 283 points, to 7158.

The TSX was comparatively better off, down only 1.3 per cent, or 211 points, to 15,063, as a rebound in oil prices “helped to break the fall of the Canadian markets a little bit,” said Colin Cieszynski, chief market strategist at SIA Wealth Management.

Both the New York Stock Exchange and the Nasdaq will be closed on Wednesday for the funeral of former president George H.W. Bush, so U.S. investors will have to wait until Thursday if they want to alter their currently gloomy view.

“People were willing to pile in yesterday but today perhaps the bulls and bargain hunters were a little more reluctant to step in,” Cieszynski said. “We’ll see what happens when U.S. trading resumes on Thursday.”

The causes of the dour mood were myriad, but they all boil down to fears that the economy is in for a bumpy ride.

“It’s more concerns about China and Trump,” Barry Schwartz, chief investment officer with Baskin Wealth Management, said in an interview. “I thought we had the truce but the market decided to get skeptical on it today.”

‘Something turned out to be nothing’

That gloom was a marked change from Monday, as U.S. markets had a mini rally after the weekend summit between U.S. President Donald Trump and Chinese President Xi Jinping agreed to what seemed like a ceasefire in their roiling trade war.

The U.S. administration on Monday claimed China had agreed to lower several tariffs on U.S. goods, but Chinese media outlets made no mention of such a concession. Then White House officials on Tuesday struggled to explain what — precisely — the two sides have actually agreed to do.

“The sense is that there’s less and less agreement between the two sides about what actually took place,” said Willie Delwiche, investment strategist at Baird. “There was a rally in the expectation that something had happened. The problem is that something turned out to be nothing.”

“As soon as investors digested the information from the discussions, they focused on the uncertainties and lack of details,” said Ryan Nauman, market strategist at Nevada-based Informa Financial Intelligence.

Those smouldering flames then had gasoline poured on them later in the day, when Trump made a series of statements on Twitter that reconfirmed he’s as committed to trade barriers as ever.

“There was no news today,” Schwartz said. “There was some stupid tweets but really no news of substance.”

It didn’t help the mood that the bond markets started making a sign that has a track record of predicting recessions in the past. 

The yield curve on U.S. three-year government bonds versus five-year bonds inverted — meaning the rate for the former is now higher than the one for the latter. (Under normal circumstances, long-term debt has a higher yield than shorter-term debt, to reward investors for locking in their money for longer. For more on why inverted yields are so fearsome, read this story.)

Inverted yields suggest investors aren’t feeling confident about the future, and there’s a strong correlation between the appearance of an inversion and the U.S. economy going into a recession shortly thereafter.

“When short-term interest rates are higher than long-term, it definitely tells you people are worried about the economic outlook for the future,” Schwartz said.

But he thinks the gloom was overblown. The global economy has been growing at a healthy clip for several years in a row now, and he sees no reason to think that won’t continue into 2019. “But skepticism is winning the day,” Schwartz said. “This is where the markets want to be for now.”

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7 Tips For First-Time Home Buyers In Calgary

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Buying a house for the first time can be overwhelming to say the least. If you’re wondering what neighbourhood to go with, what you can afford, or even how to just get started on the process, let us take some stress off your hands! We’ve teamed up with Hopewell Residential to give you 7 tips to ensure the home you end up with is everything you dreamed of.

Hopewell Residential is a five-time Developer of the Year award winner, so their expertise is second-to-none in Calgary and beyond. Who better to learn home-buying tips from than the homebuilders themselves?

Create a checklist of needs & wants

This is a biggie. When you’re buying your very first home, you’ll want to weigh your needs vs. your wants. Ensuring you have what you love in your first home is a big, big deal.

What should you do? Easy. Set up a list of needs and a list of wants, but be pretty strict with yourself, and make sure you take your lifestyle into consideration. With the increase in remote work over the past year, it’s important to keep in mind that a home office or flex room might just be the key to maximizing at home happiness. Especially if you’re thinking you might be expanding your family later on, spare rooms and extra space is key (but more on that later!).

Or for instance, you might need a home in an area with a high walkability score, but you want to be close to certain amenities. Set yourself up with the right level of compromise and the number of homes that actually fit your ‘perfect’ idea will skyrocket.

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‘Don’t give up’: Ottawa Valley realtors share statistics, tips for homebuyers in ‘extreme’ sellers market

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The real estate market in the Ottawa Valley can be summed up this way: people from far and wide are in a buying frenzy, but there’s hardly anything to buy at the “store,” and the limited inventory is overpriced.

This “stampede” — as one realtor described it — will affect rural towns as residents grapple with finding affordable housing and agonize over their inability to purchase homes in their price range.

“We are seeing a lack of inventory in all price ranges,” said Laura Keller, a real estate agent from Carleton Place.

Helen Vincent, a Renfrew realtor, said she’s never seen a market like this in her 36 years of practice. “We postpone offers for four to five days in order to get all the buyers,” she said.

Multiple offers — between seven and 10 — became the norm, with cash offers and no conditions, as buyers faced bidding wars. “In Ottawa, they have up to 50 (offers),” she added.

“It’s very stressful. You’re going to get nine (people) ticked off, and one happy. So many people are disappointed,” Vincent said.

Terry Stavenow, an Arnprior realtor for 40 years, said that “the pent-up need took over with inventory going low. It made a stampede on everything that was available.“

“Brand new housing — it’s very much gone. Several building developers are rushing to get inventory. They usually don’t do construction in the winter months,” said Stavenow.

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10 Tips For First-Time Home Buyers

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Buying a home for the first time is exciting and a commitment to the future. It’s often challenging, too, and the process requires a lot of steps, many of which can be tricky to navigate as a first-time home buyer.

What are some things you should keep in mind as a first-time home buyer?

First-Time Home Buyer Tips

Here are 10 tips to keep in mind as you begin your journey toward homeownership.

1. Have Your Finances in Order

It’s wise to begin saving as early as possible once you’ve made the decision to purchase a house. You’ll need to consider the down payment, closing costs (which often range from 2% to 5% of the down payment), as well as move-in expenses.

You also need to understand the other costs of homeownership, such as mortgage insurance. property taxes, utilities, homeowner’s insurance, and more.

2. How Much Can You Afford?

Knowing how much you can realistically afford in a home is another important financial consideration. Look for the home of your dreams that fits your budget.

One way to avoid future financial stress is to set a price range for your home that fits your budget, and then staying within that range. Going through the preapproval process will help you understand what price range is realistic for your budget.

3. Make Sure Your Credit is Good

Another thing to keep in mind as a first-time home buyer is your credit score because it determines whether you qualify for a mortgage and affects the interest rate that lenders offer. 

You can check your credit score from the three credit bureaus – Experian, Equifax, and TransUnion.

This is another good reason for getting preapproved before you start your search. Learn more about the preapproval process and your credit score.

4. Choose The Right Real Estate Agent

A good real estate agent guides you through the process every step of the way. He or she will help you find a home that fits your needs, help you through the financial processes, and help ease any first-time buyer anxiety you may have.

Interview several agents and request references.

5. Research Mortgage Options

A variety of mortgages are available, including conventional mortgages – which are guaranteed by the government – FHA loans, USDA loans, and VA loans (for veterans).

You’ll also have options regarding the mortgage term. A 30-year fixed-rate mortgage is popular among many homebuyers and has an interest rate that doesn’t change over the course of the loan. A 15-year loan usually has a lower interest rate but monthly payments are larger.

6. Talk to Multiple Lenders

It’s worth your time to talk to several lenders and banks before you accept a mortgage offer. The more you shop around, the better deal you’re liable to get – and it may save you thousands of dollars.

7. Get Preapproved First

Getting a mortgage preapproval (in the form of a letter) before you begin hunting for homes is something else to put on your checklist. A lender’s preapproval letter states exactly how much loan money you can get.

Learn more about the preapproval process and how preapproval provides you with a significant competitive advantage in our article How Preapproval Gives You Home Buying Power.

8. Pick the Right House and Neighborhood

Make sure to weigh the pros and cons of the different types of homes based on your budget, lifestyle, etc. Would a condominium or townhome fit your needs better than a house? What type of neighborhood appeals to you?

9. List Your Needs and Must-Haves

The home you purchase should have as many of the features you prefer as possible. List your needs in order of priority; some things may be non-negotiable to you personally.

10. Hire an Inspector

Hiring an inspector is another crucial step in the home buying process. An inspector will tell you about existing or potential problems with the home, and also what’s in good order. You can learn more about home inspections and how to find a home inspector through the American Society of Home Inspectors website.

Buying a home for the first time is a challenge, but it’s one you can handle with the right planning and preparation.

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