**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!
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
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.
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.
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
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
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
Categorised in: JMRD Updates