JMRD Market Observer for February 17, 2017 – JMRD Strategy Comments; Estate Planning Series

February 17, 2017

In This Week’s JMRD Market Observer

 

 

  • JMRD Strategy Comments

  • National Bank Estate Planning Series Part 1 of 5

  • National Bank House Price Index

  • JMRD Basket Corner

  • Retirement Corner

  • Reads of the week

  • Economic Calendar

  • Earnings Reports

 

 

JMRD Strategy Comments

 

So far it has been a pretty encouraging start to 2017.  Currently, there appears to be reasonable global economic growth and continued low interest rates.  Stock markets are in the green, continuing where they left off last year.

 

After a good finish to 2016 in the financial markets and current headlines regarding markets at all-time highs, it seems like a good time to look at long term market data and to remind investors that markets do not go up in a straight line.  As investors, it is important to remember these facts over the past 110 years of market data:

 

  • We tend to have a 5% pullback two or three times a year. 
  • We tend to have at least a 10% pullback once a year.
  • We have a 20% pullback every 4 or 5 years. 

 

We are not of the opinion that one of the above is happening in the immediate future but it is inevitable to happen again at some point.  In the meantime, the best course of action is to have a financial and investment plan that represents your unique circumstances and objectives.  Stick with that plan unless your personal or financial situation changes. 

 

 

National Bank Estate Planning Series Part 1 of 5

 

The JMRD Team recently met with one of our partners, National Bank Trust. With a primary focus on Estate Planning, we feel National Bank Trust will play a larger role as part of our business in the coming years. As an introduction, we felt it would be beneficial to provide some basic, but often misunderstood, estate planning information. Over the next five weeks we will attach an article we feel will be of interest to you.

 

Part one: How to choose your Executor

 

Your choice of an executor is one of the most important decisions for you to make in your estate planning.  Your executor will be responsible for the administration of your estate and for carrying out the provisions of your Will and must do so in compliance with all relevant laws.

 

See the full article.

 

 

National Bank House Price Index

 

On a 12-month basis, national house prices were growing in January at their fastest post-recession pace (top chart). With prices in Vancouver having declined a cumulative 2.5% over the last four months, the strength at the national level really reflects Toronto, nearby Hamilton and Victoria (top chart). Incidentally, those are the three sole markets where house prices, together with the Composite Index, are at a record level (middle table). In the eight other metropolitan markets covered, house prices have some way to go just to come back to their previous peak. House prices in Toronto currently grow at the highest 12-month growth rate since the inception of the index. This is mostly due to dwellings other than condos (middle chart), where supply is notoriously tight. Given that Toronto is a relatively expansive market, house price growth is weighing on affordability for first time home buyers. This, together with the new rules on qualification for an insured mortgage, should sooner or later take steam out of that market.

 

See the full article.

 

 

JMRD Basket Corner

 

DIG Basket

 

Keyera (KEY) – KEY reported Q4 adj. EBITDA of $154 mln, matching our estimate (Street: $152 mln) with lower Marketing contributions offset by higher G&P and Other margins. Keyera has increased its growth capex guidance for 2017 by $100 mln to $600-$700 mln, announcing several new growth opportunities, including the $147 mln Keylink NGL pipeline project, the $100 mln Simonette liquids handling expansion, and the acquisition of 1,290 acres of undeveloped land in the Fort Saskatchewan area. Overall, with >$1.6 bln of secured growth projects coming online, we continue to forecast a sector leading AFFO/sh CAGR of 11% through 2020e (was 10%). Meanwhile, KEY is advancing the proposed Wapiti gas gathering and processing complex towards sanctioning the first 150 mmcf/d phase, with both phases (300 mmcf/d) representing a $625 mln investment (~5% valuation upside).

 

See the full article.

 

TransCanada (TRP) – TRP reported Q4 Comparable EBITDA of $1,890 mln, in line with our estimate of $1,880 mln and slightly above consensus of $1,824 mln. Meanwhile, the company announced a 10.6% dividend increase to $2.50/sh, while reiterating its dividend growth guidance at the upper end of its 8%-10% range through 2020e (NBF: 10%).

 

See the full article.

 

All-Cap Growth Basket

 

New Flyer (NFI) – NBF hosted CEO Paul Soubry and CFO Glenn Asham for investor meetings, their messaging reaffirming our favourable bias. Positive considerations include: 1) NFI already pays near the maximum 35% corporate tax rate on its U.S. business, which is ~90% of the overall portfolio; 2) Increased “Buy America” content has already been mandated through 2020 in order to receive federal funding for buses; 3) Trump plans to invest heavily in infrastructure, which could result in elevated spending on public transit; and 4) 60-70% of MCI’s volumes are commercial (vs. public), these buyers positioned to benefit from favourable tax changes. Negatives include: 1) uncertain impact of a border tax (NFI has a large production footprint in Winnipeg); and 2) Trump policies a wildcard (NFI directly exposed given its reliance on government funds.)

 

See the full article.

 

U.S. Growth Basket

 

Arista Networks (ANET) – Arista Networks shares rally as results, outlook top Street views

 

Waste Management (WM) – Waste Management profit falls short of targetShares traded to a new 52-week high on Friday as the company’s guidance for 2017 was seen as conservative with improving margins

 

 

Retirement Corner

 

 

 

 

 

 

Reads of the Week

 

 

 

 

 

Economic Reports

         

Monday February 20thCANADIAN MARKETS CLOSED FOR FAMILY DAY HOLIDAY; US MARKETS CLOSED FOR PRESIDENT’S DAY

Tuesday February 21st – US Manufacturing PMI

Wednesday February 22nd – Canada Retail Sales; US Existing Home Sales, US FOMC Minutes

Thursday February 23rd – US Initial Jobless Claims; US Chicago Fed Index

Friday February 24th – Canada CPI (Inflation); US New Home Sales, US Consumer Sentiment

 

 

Earnings Reports

 

Monday February 20thCANADIAN MARKETS CLOSED FOR FAMILY DAY HOLIDAY; US MARKETS CLOSED FOR PRESIDENT’S DAY

Tuesday February 21st – Capital Power Corp., Home Depot, Wal-Mart, XPO Logistics

Wednesday February 22nd – Cipher Pharmaceuticals, Exchange Income Fund, Hudbay Minerals, Lundin Mining, Maple Leaf Foods, Pason Systems, Trican Well Services

Thursday February 23rd – Altagas, Bonavista Energy, CIBC, Chicago Bridge and Iron, Crescent Point Energy, Innergex Renewable, Loblaws, Northland Power, Pembina Pipelines, Stantec, Tricon Capital

Friday February 24th – Enerplus, Husky Energy, Magna, Royal Bank,

 

 

Have a good long weekend!

 

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