My Friday column is divided into two sections. The first uses the long-leading, leading, and coincidental indicator method developed by Arthur Burns and Geoffrey Moore. The second looks at the large equity index ETFs.

There are a large number of credit market numbers in the long-leading and leading indicators and with good reason: credit market problems typically pre-date an economic downturn. Thankfully, the Federal Reserve’s early and aggressive intervention calmed the credit market, which lowered yields across the board.

The yield on all manner of credit rose sharply at the beginning of the recession. But all are now lower. AAA (upper left) and BBB (upper right) are now near 5-year lows. CCC (lower left) rose to just shy of 20% but are now back to the 12.5% level.The shorter-end of the corporate yield curve (1-10 year yields; left) and longer-end (10+ years; right) all spiked at the beginning of the lockdowns. But all are now back to low levels.

The following three indicators sum up the above charts:

The St. Louis (in blue), Kansas City (in red), and Chicago Fed (in green) financial stress indexes all rose at the beginning of the pandemic. All are now back to low levels.

In general, other leading indicators are mostly positive: new orders for consumer durable goods and non-defense capital goods have returned to pre-pandemic levels; weekly hours of manufacturing employees are on the mend; building permits are above pre-pandemic levels (in fact, the housing market is doing very well); the yield curve is positive; and, the stock market has rallied.

Turning to coincidental data, this week, the BEA released its final estimate of 2Q20 GDP.

Real gross domestic product (GDP) decreased at an annual rate of 31.4 percent in the second quarter of 2020 (table 1), according to the “third” estimate

A growing number of homeowners are asking about breaking mortgage early for lower rates (Getty Images)
A growing number of homeowners are asking about breaking mortgage early for lower rates (Getty Images)

Record low mortgage rates might make breaking your term early seem enticing, but the penalty costs will wipe out the potential savings.

Variable mortgage rates have fallen over the course of the COVID-19 pandemic, following a string of interest rate cuts by the Bank of Canada. Fixed rates are also lower because of market forces pushing bond yields lower. 

According to Ratehub, mortgage shoppers will find better deals on 5-year variable mortgages at around 1.6 per cent, compared to around 1.64 per cent for fixed. 

Unless you are able to renew your mortgage at more favourable rates, current homeowners are locked out of the potential savings. That leaves breaking your mortgage early.

Online mortgage agency Nesto says there’s been an increased interest in breaking early in 2020, especially in August.

“Before the pandemic, most users were sticking with their current lenders for close term renewals, while, during and after lockdown, most probably related to the market’s numerous fluctuations, they were more willing to shop around before the end of their term,” Nesto said in a new report.

“In other words, with rates at their current lows, homeowners are shopping around and willing to pay lender penalties to break their mortgages and change to lower rates for a new term.”

Penalty for breaking mortgage offset savings

By cancelling early, with new terms, a penalty will be added to mortgage payments or upfront if you prefer. That penalty, says co-founder James Laird, means it usually won’t be worth it because the penalties are so high that you won’t end up saving any money.

Based on current conditions of falling interest rates, lenders will base the penalty on an interest rate deferral.

“When rates today are

The self-styled mogul has gotten away with a minuscule tax burden by reporting himself to the Internal Revenue Service as a major loser for the better part of two decades. He paid $750 in income taxes in 2016 and 2017 and nothing in 10 of the previous 15 years, according to a blockbuster New York Times story. 

With 36 days until the election, the revelations already are reverberating through the presidential campaign.

The paper’s Russ Buettner, Susanne Craig, and Mike McIntyre got hold of closely guarded tax return information for Trump and his companies dating back more than two decades. They reveal while the president’s business empire has taken in hundreds of millions of dollars a year, it also “racks up chronic losses that he aggressively employs to avoid paying taxes.”

The first revelations from the trove — the Times teased more is coming in the weeks ahead — threaten to tear a fresh hole in the public persona Trump has built on his claims of business success. Indeed, according to the report, the president’s personal finances remain under heavy strain. More than $300 million in loans, “obligations for which he is personally responsible,” are coming due in the next four years. And a judgment pending from the IRS on the legitimacy of an old tax refund could cost him $100 million.

“Ultimately, Mr. Trump has been more successful playing a business mogul than being one in real life,” the Times reporters conclude.

Trump denies the report, but it is already breaking through in the campaign and beyond.

The president dismissed the story as “fake news” at a White House news conference Sunday. “Actually, I paid tax,” the president said, claiming, as he has since his 2016 campaign, that he will release tax returns proving it once the