**December 13th Issue of The Market Observer**

December 16, 2013

 

In This Week’s Market Observer…

 

  • JMRD Market Strategy Comments
  • Markets Review – November 2013
  • JMRD All Cap Basket Company Update
  • Thackray Market Letter – December 2013
  • 2013 Tax Reminders
  • Retirement Corner
  • Week at a Glance
  • Reads of the week
  • Economic Calendar
  • Earnings Reports

 

JMRD Market Strategy Comments

 

Most global markets are off to a sluggish start in December with the TSX and DOW down 2% at the time of writing.  Despite the fact that economic data around the globe continues to improve and that the US government reached a budget deal this week, investors are still concerned that the US Federal Reserve will ‘taper’ its economic stimulus program when the
governors meet next week.  Regardless of the Fed’s decision on tapering, the global economy should continue its gradual ascent, which is positive for equities.  Interest rates will also remain low on a historical basis, especially short term rates, and we believe that this too provides a favourable environment for equities as we head into the New Year.

 

Markets Review – November 2013

Stocks continued to rally in November, as bond yields settled into slightly higher territory, buoyed by continued loose monetary policies and an improving economic backdrop, particularly in the U.S., China and Europe.

 

In November, most equity indices rose simply because there was nothing to hold them back. After all, earnings continue to grow – albeit moderately – , companies are in good financial standing, valuations remain reasonable and interest rates are low.

 

JMRD All-Cap Basket Company Update

 

This week’s introduction to the JMRD All-Cap Basket with Parkland Fuel and Stella Jones. Parkland (PKI) engages in marketing and distributing refined petroleum products to retail, commercial, wholesale, and home heating fuel customers in Canada. It operates in three segments: Fuel Marketing, Non-Fuel Commercial, and Other Non-Fuel. The Fuel Marketing segment is involved in the sale and delivery of gasoline, diesel, and propane through commercial, retail, and wholesale distribution channels under the Bluewave Energy, Columbia Fuels, Neufeld Petroleum & Propane, Island Petroleum, Fas Gas Plus, Esso, and Race Trac brands. This segment delivers bulk fuel, propane, heating oil, lubricants, agricultural inputs, oilfield fluids, and other related products and services through a nationwide delivery network. It also operates and services a nationwide network of retail service stations that serve Canadian motorists. As of December 31, 2012, this segment operated 120+ commercial locations; and over 770 retail service stations. The company recently entered the U.S. by way of the acquisition of energy marketing firm Elbow River & distributor SPF. Parkland pays a monthly dividend and currently yields 5.62%

Parkland Fuel – Research Report

Stella-Jones (SJ) produces and markets industrial treated wood products in Canada and the United States. Its products include railway ties and timbers, and wood poles used by electrical utilities and telecommunications companies. The company also offers wood preservative creosote and other coal tar based products; used tie pickup and disposal services; switching, locomotive, and railcar maintenance services; and processes ties into woodchips used as tie-derived boiler fuel to the railroad industry. In addition, it provides treated residential lumber products and customized services to lumber retailers and wholesalers for outdoor applications; and marine and foundation pilings, construction timbers, highway guardrail posts, and treated wood for bridges, as well as panelized railway crossings. The company offers its treated wood products through a network of sales representatives. Stella-Jones Inc. was founded in 1992 and is headquartered in Saint-Laurent, Canada. The company has a market cap of $1.85B and a dividend yield of 0.74% that is expected to grow over the next few years.

Stella Jones – Research Report

 

Thackray Market Letter – December 2013

You will find below Brook Thackray’s Market Report for December.  Brook manages the Horizon Seasonal Rotation (HAC) ETF, which is the largest holding in our ETF Basket.  The objective of HAC is long-term capital appreciation in all market cycles by tactically allocating its exposure amongst equities, fixed income, commodities and currencies during periods that have historically demonstrated seasonal trends. The Thackray Market Letter is for educational purposes and is meant to demonstrate the advantages of seasonal investing by describing many of the trades and strategies in HAC. As of the end of November, HAC has returned 9.4% vs 7.7% for the TSX Composite Index and 26.6% for the S&P 500, with lower volatility than the indexes. Since November 19 2009 inception date, HAC has returned 39.2% vs the TSX Composite return of 15.5% and S&P 500 return of 64.9%. This month’s update includes a discussion of current holdings and seasonal trades in Retail, Canadian Banks, U.S. Financials, Agriculture, Natural Gas, Homebuilders, Consumer Discretionary, Utilities, Small Caps, Industrials, Metals, Mining, Materials and the U.S. Dollar

Thackray Market Letter – December

2013 Tax Reminders

  • Last day for Tax Loss selling of Canadian Equities – Tuesday December 24, 2013

 

  • Last day for Tax Loss selling of U.S. Equities – Thursday December 26, 2013 (Canadian Markets closed December 26)

 

Taking advantage of tax-loss selling http://www.marketwatch.com/story/how-to-cash-in-on-year-end-selling-2013-11-01

 

  • 2013 TFSA contribution deadline – Monday December 31, 2013 – contribution limit $5,500.00

 

  • Note, if you are planning a TFSA withdrawal in early 2014, consider withdrawing the funds by December 31, 2013. The advantage is that you will not have to wait until 2015 to re-contribute that amount. 2014 TFSA contribution limit is $5,500.00.

 

  • 2013 RSP contribution deadline – Monday March 3, 2014. The 2013 maximum RRSP contribution limit is 18% of “earned income” in 2012, to an annual maximum $23,820.

 

Retirement Corner

5 things you should know about changing jobs and pensions” (Financial Post)

“For Grandchildren, the Gift of Financial Awareness” (New York Times)

“CPP expansion may finally get off the back-burner” (Financial Post)

Underfunded retirement? Go cold turkey on spending (Financial Post)

 

Week at a Glance

Week At A Glance

Reads of the week

Summary of notes from: Warren Buffett’s Meeting with University of Maryland MBA Students – November 15, 2013

“Why Is Everybody Sitting on Huge Piles of Cash?” (Bloomberg)

“David Rosenberg: U.S. economy in 2014 has more upside than many think” (Financial Post)

“Why Do Forecasters Keep Forecasting?”S&P 500 predictions in 2013: As of yesterday, the best of the major broker forecasts was only off by about 12 percent, the worst by 30 percent. All told the seers’ average miss was a full 17.5 percent.”

“Peter Hodson: 5 takeover failures revisited” (Financial Post)

“The Global Economy Is About to Pop!” (Time) Unless economists are wrong—which, it turns out, they often are 

“Buffett, Slim, Greenspan, El-Erian, Lew Pick Best Books of 2013” (Bloomberg)

 

Economic Calendar

Monday December 16th – Canadian Existing Home Sales, U.S. Empire Manufacturing, Nonfarm Productivity

Tuesday December 17th – Canadian Manufacturing Sales, U.S. CPI

Wednesday December 18th – U.S. Housing Starts, U.S. Building Permits

Thursday December 19th – U.S. Initial Jobless Claims, U.S. Existing Home Sales, U.S. Leading Index

Friday December 20th – Canadian CPI, Canadian Retail Sales, U.S GDP Annualized, U.S. Personal Consumption

Earnings Reports

Monday December 16th – None

Tuesday December 17th – None

Wednesday December 18th – FedEx, Oracle

Thursday December 19th – NIKE

Friday December 20th – Blackberry

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