JMRD Market Observer for September 29, 2017 – London Community Foundation Event – Tom Deans

September 29, 2017

In This Week’s JMRD Market Observer

 

 

  • London Community Foundation Event – Tom Deans

  • Impact of a Strengthening Canadian Dollar

  • Forex (October 2017) – Are markets underestimating the Fed?

  • JMRD Basket Corner

  • Retirement Corner

  • Reads of the Week

  • Economic Calendar

  • Earnings Reports

 

 

London Community Foundation Event – Tom Deans

 

 

Last week the JMRD Team was one of the main sponsors of an event organized by the London Community Foundation. The speaker was a gentleman named Tom Deans.  Paul Manders had read his book entitled Willing Wisdom and was eager to hear his presentation on the importance of family communication throughout the entire Estate Planning process.  Tom did not disappoint and pointed out the following;

 

Did you know?

 

  • Over 12 million Canadians do not have a will or a power of attorney for property or personal care. 
  • Any will is better than no will at all and it is not just for high net worth families. 

 

Do you know who the beneficiary is when someone passes without a will? 

 

  • That’s right…the government!

 

Many people think wills are for the beneficiaries but they really are for the person putting it in place as it gives comfort that their unique wishes will be followed. 

 

Tom’s main message was that it is not what you give but how you give that has the most impact on a family.  In addition, it is far better to hold regular family discussions to communicate your intentions rather than leaving unexpected surprises for surviving family members when the will is read. He was emphatic in his belief that the positives from early communication far outweigh the negatives because it’s important for your family to know your values and the details of your financial situation. 

 

Many of the JMRD friends in attendance mentioned things that immediately resonated and were going to follow through with in regards to their estate planning process. 

 

JMRD has a few complimentary copies of Tom’s book. If you are interested in a copy, please reach out to your main JMRD contact. 

 

Here are 7 questions from the book and they are meant to be asked in the context of sort of a family meeting with multiple generations.  We feel that these questions are important and would be more than happy to talk to you about them.

 

  1. What word best describes our family.  Share a family story that helps explain the word you selected.

 

  1. Describe how your parents acquired their wealth.  Share a memory about something your parents did to provide for you that left a lasting impression. 

 

  1. How would an inheritance advance your dreams for yourself, your family and your community?

 

  1. In the context of planning for the division of your assets, does fair mean fair or does fair mean equal?  Who are you planning on leaving your wealth to, and will you share a copy of your will with me? 

 

  1. Describe how your parents divided their assets and when you first learned of the contents of their will?  What would you do the same and what would you do differently?

 

  1. Describe the role you play or played in the final care of your parents. Can you name one thing that was or is being done well, and one thing you could change or wish you had done differently? 

 

  1. Describe in detail your last wishes. 

 

 

Impact of a Strengthening Canadian Dollar

 

 

The Canadian dollar has surged more than 10% against the US$ since June and is now on track to post its biggest quarterly appreciation in over a decade in Q3 2017. Though this move has been helped by higher oil prices, it is mostly due to more favourable interest rate spreads with the U.S. Stronger-than-expected Canadian economic data for the first half of the year, which showed the best GDP growth rate and employment creation in 6-7 years, coupled with a further ramp up in already-elevated resale home prices and household debt, turned the Bank of Canada from dove to hawk in a matter of weeks. We have adjusted our interest rate and currency forecasts as a result, expecting USD/CAD to trade in the range 1.20-1.30 over much of the next 12 months. Over the near term, the cross could get even closer to the bottom of the range if not cross it (i.e. 1.20 or below) especially if the Bank of Canada delivers more than the one additional rate hike that is currently priced by markets for 2017. We expect three additional interest rate hikes from the central bank next year ─ which would put the overnight rate at 2.00% by end-2018 ─ in line with our view that fiscal stimulus and an investment rebound will keep real GDP growth hot at around 2.5% in 2018. Our call for the Canadian currency to lose steam next year assumes the Federal Reserve pushes its own fed funds rate up to 2.00% by the end of 2018, something that is currently not priced by markets. But if U.S. inflation continues to disappoint, the Fed could adopt a more patient stance, which would then allow USD/CAD to stick closer to the bottom of our forecast range for longer. And of course, one should not underestimate the ability of foreign investors to boost the loonie via purchases of Canadian securities, the latter well on track to top last year’s record amidst strong demand for corporate bonds and equities. So, while Canadian exporters will hope to see a weaker currency sooner rather than later, they would be wise to make plans while assuming USD/CAD closer to 1.20 for an extended period of time.

 

See the full article

 

 

Forex (October 2017) – Are markets underestimating the Fed?

 

Highlights

  • The Fed is more optimistic than markets, expecting four interest rate hikes by the end of 2018 (versus just one currently expected by markets). Market skepticism is being fueled by the apparent lack of belief in the Fed’s ability to stoke inflation. But if, as we expect, inflation climbs back up over the coming months, markets will have to price more rate hikes. That explains our call for the greenback to make a comeback next year. Of course, the assumption is that the debt-ceiling is raised come December and fiscal stimulus is deployed ahead of mid-term Congressional elections.

 

  • While the European Central Bank’s asset purchase program will eventually come to an end and interest rates will eventually return to positive territory, don’t expect a major tightening of monetary policy anytime soon. Inflation remains tame despite an improving economy and political uncertainties could make an unwelcome comeback with Italy’s elections next year. As such, we do not see a lot of upside for EUR/USD from current levels over the forecast horizon.

 

The Canadian dollar just registered its quarterly biggest gains (Q3 average versus Q2 average) against the USD since 2004. The surge was mostly due to more favourable interest rate spreads with the U.S. But spreads are likely to reverse as growth softens, and that could put the loonie under pressure next year. We continue to expect USD/CAD to be in the 1.20-1.30 trading range over the next 12 months

 

 

JMRD Basket Corner

 

 

DIG Basket

 

Open Text (OTEX) – What’s Going On? “With OpenText around its 52 week low – the two obvious questions are why and what do I do now? In our view, the pullback in OTEX has been due to a shift in sentiment this past year (until recently) into high organic growth names like Shopify and Kinaxis that have attributes similar to those high flying US technology stocks. Beyond that, we believe the pullback in OTEX has also been driven by a view that the Company’s growth engine of acquisitions is about to pause given a number of transactions that’s amounted to +$2 bln in capital deployed over the trailing 4 quarters. When it comes to the second obvious question – what do I do now? – we think you should be buyers.” The attached note runs through NBF tech analyst’s view on the company.

 

See the full article 

 

Pembina Pipeline (PPL) – Pembina announced that due to increased customer demand, it has revised the Phase V estimated capital cost to $385 mln (from $250 mln originally). Recall, the Phase V expansion includes a 20” pipeline from Lator to Fox Creek, Alberta. The revised capital cost will support additional infrastructure and operational flexibility due to incremental volume commitments from customers, with $90 mln allocated towards increased receipt station functionality by adding 40,000 barrels of crude and condensate storage and pump station additions / modifications. The remaining $45 mln increase is due to cost refinements, which includes changes to volume receipt locations. The enhancements to the Phase V expansion will increase system capacity by an additional 45,000 bbl/d (from 260,000 bbl/d), with a targeted In-service date of late 2018.

 

See the full article

 

WSP Global (WSP) – Investor day take-aways: The company reiterated 2017E targets, commitment to 45,000 2018E headcount goal while providing a deep dive on a by-geography basis. We believe investors will appreciate the quality of company’s expertise / business model (asset light, low risk), management’s bench strength and general tailwinds when it comes to organic growth profile. In terms of financial numbers / expectations, we do not believe there is any reason for investors to adjust their views on the name post the investor day.

 

See the full article

 

All-Cap Growth Basket

 

Premium Brands (PBH)Premium Brands Holdings Corporation Announces the Acquisition of Ontario Based Skilcor Foods

 

Cargojet (CJT)How the rise of e-commerce sites have helped to propel Cargojet – Ajay Virmani, President and CEO of Cargojet joins BNN to talk about how e-commerce is propelling his business, his outlook for the company and his view on Ottawa’s proposed tax changes.

 

US Basket

 

Applied Materials (AMAT) – Applied Materials: CEO Dickerson’s A.I. Pitch Dazzles the Street

 

Arista Networks (ANET-US) – Arista Leads the Cloud, Mind the ‘In-Sourcing,’ Says Berenberg

 

Lockheed Martin (LMT-US) – Lockheed Martin unveils fully reusable crewed Martian lander

 

 

Retirement Corner

 

 

 

Reads of the Week

 

‘Death by Amazon’: Why some retailers are withstanding the onslaught

Starved for Capital, Canada Oil Patch Puts Exploration on Pause

Special Report: Drowning in grain – How Big Ag sowed seeds of a profit-slashing glut

So Few Market Winners, So Much Dead Weight

If the ‘end of oil’ is upon us, why’s demand for crude rising at near-record pace?

A Rare Joint Interview with Microsoft CEO Satya Nadella and Bill Gates

The History of Sears Predicts Nearly Everything Amazon Is Doing

The Best Investment Since 1926? Apple

 

 

Economic Reports

 

Monday October 2nd – Market Manufacturing (CAD)

Tuesday October 3rd – Vehicle Sales (US),

Wednesday October 4th – MBA Mortgage Applications (US)

Thursday October 5th – International Merchandise Trade (CAD)

Friday October 6th – Unemployment Rate (CAD) and (US), Consumer Credit (US)

 

 

Earnings Reports

 

Monday October 2nd – None

Tuesday October 3rd – None

Wednesday October 4th – Monsanto Corp, Pepsi Corp

Thursday October 5th – Costco Wholesale

Friday October 6th – None

 

 

Enjoy the weekend!

 

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