**February 21st Issue of The JMRD Market Observer**

February 22, 2014

In This Week’s Market Observer…

  • NBF’s Gold Medalist – Jennifer Jones!
  • RRSP Deadline Reminder
  • Canadian Real Estate Q4 2013 Earnings Preview
  • Retirement Corner
  • Week at a Glance
  • Reads of the week
  • Economic Calendar
  • Earnings Reports

JMRD Wealth Management congratulates Canada and NBF’s “Golden Girl” Jennifer Jones!

Jennifer Jones, senior legal counsel in NBF’s Winnipeg office and the captain of the Women’s Canadian Curling Team, won the Gold Medal yesterday at the Olympic Games in Sochi!

NBF - Jennifer Jones

2013 RRSP Deadline

The 2013 RRSP deadline is fast approaching! The last day to contribute for the 2013 tax-year is Monday March 3rd at 2:00pm. We would encourage clients to make their contributions sooner rather than later, with mail delays and other last-minute issues that can arise. RRSP contributions can also be made online. The contribution limit for 2013 is 18% of prior year earned income to maximum of $23,820.00

Canadian Real Estate Q4 2013 Earnings Preview: Solid Fundamentals and Low Interest Rates Persist in Q4 –Near-Term Macro Outlook Remains Favourable

Company Name Rating Target Price Current

Price Total Return

Est. Q4/13

Q4 2013 ended the year on a quiet note as issuers remained focused on operations and limited their capital markets and acquisition activity (albeit larger REITs continued to take advantage of investment grade credit ratings to issue inexpensive long-term unsecured debt, post-quarter). Low interest rates continue to support valuations and while we are rolling out 2015 estimates taking into account expected increases in government bond yields, moderate FFO / unit growth is expected to prevail. It should be noted that results will be somewhat impacted by harsh weather in Q4 in cases where tenants aren’t responsible for utilities costs.

Yield Spreads Remain Elevated as 10-Year Rates Decline: An unexpected pullback in 10-year government of Canada yields on the back of emerging market concerns and an uncertain economic outlook has resulted in REIT buying, albeit investors seem hesitant to transact on macro volatility. If these yield levels become entrenched they support positive momentum in real estate valuations and will lead to higher than expected FFO growth, particularly for those entities with significant near-term debt maturities.

Retirement Corner

Six ways our brains make bad financial decisions” (Globe and Mail)

“Work longer but work smarter” (Financial Post)

Week at a Glance

Week At A Glance

Reads of the week

Trading on the TSX dropped off noticeably on Friday with Canada’s semi-final matchup vs the U.S.

TSX Trading Volume

 

NBF Hot Charts – Canada: Foreigners prefer to buy equities over bonds: Foreigners continued to “sell” Canada at the end of 2013. Data from Statistics Canada showed a net divestment of $4.3 billion in December. The selling was entirely in bonds (-$10.9 billion), federal debt for the most part (-$6.6 billion) followed by corporates (-$2.9 billion) and provies (-$1.1 billion). Canadian equities, on the other hand, recorded a net inflow of $2.3 billion in December, the fourth consecutive increase. As today’s Hot Chart shows, cumulative foreign purchases of Canadian equities over this period have totalled $22.6 billion, the best showing in a decade. We attribute this renewed foreign interest to the improving earnings outlook for Canadian corporations who benefit from relatively high commodity prices as well as from a cheaper currency. As shown, the earnings outlook which has been negative for most of the past two years is stabilizing. Since positive surprises could be in the offing on the earnings front, the foreign bid on Canadian equities could persist for a while longer

Hot Charts

“Canadian Natural’s $3.13B deal for Devon Energy marks comeback for Canadian energy sector” (Financial Post)

“WhatsApp Shows How Phone Carriers Lost Out on $33 Billion” (Bloomberg)

“Google Borrows $1 Billion With First Bond Sale in Three Years” (Bloomberg)

“Apple, Google, Microsoft: Where does the money come from?” (ZDNET.com)

“The Economist: The petrostate of America” (The Economist) The energy boom is good for America and the world. It would be nice if Barack Obama helped a bit

“FX Traders Facing Extinction as Computers Replace Human” (Bloomberg)

“The Hoover Dam of solar is now live in the desert of California. Here’s why it’s so important

“Factors Investors Overlook in a Mining Stock” (Globe and Mail)

“Outcome or process — what investment focus succeeds over time?” (Washington Post)

Economic Calendar

Monday February 24th– None

Tuesday February 25th – U.S. House Price Index, U.S. Consumer Confidence Index

Wednesday February 26th – U.S. New Home Sales

Thursday February 27th – Canadian Current Account Balance, U.S. Initial Jobless Claims, U.S. Durable Goods Orders

Friday February 28th – Canadian Quarterly GDP, U.S. GDP, University of Michigan Confidence, U.S. Pending Home Sales

Earnings Reports

Monday February 24th– National Bank of Canada

Tuesday February 25th – Bank of Montreal, Davis + Henderson, Innergex Renewable Energy, Macdonald Dettwiler & Associates

Wednesday February 26th – Calfrac Well Services, Extendicare, Pembina Pipeline, Royal Bank of Canada

Thursday February 27th – AltaGas, Artis REIT, Atlantic Power, CIBC, Crombie REIT, Pason Systems, Stantec, Toronto-Dominion Bank

Friday February 28th – Cominar REIT, Capital Power, Canadian Apartment REIT

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