JMRD Market Observer for December 15, 2017- Forex – Can the Loonie Make a Comeback?

In This Week’s JMRD Market Observer

 

 

  • Year-end Tax Reminders

  • Forex- Can the Loonie Make a Comeback

  • Hot Charts – Canada: Best in a decade

  • JMRD Basket Corner

  • Retirement Corner

  • Reads of the Week

  • Economic Calendar

  • Earnings Reports

 

Year-end Tax Reminders

 

  • Last day for Tax Loss selling of Canadian Equities – Wednesday, December 27th, 2017 (Canadian Markets are closed December 25th  and 26th)

 

  • Last day for Tax Loss selling of U.S. Equities – Wednesday, December 27th, 2017

 

  • 2017 RSP contribution deadline – Thursday, March 1st, 2018. The 2017 maximum RRSP contribution limit is 18% of “earned income” in 2016, to an annual maximum $26,010. The 2018 contribution limit is a maximum of $26,230.

 

  • If you have turned 71 in 2017; December 29th, 2017 is the last day you can contribute to your own RRSP. Forms have been mailed to clients who are converting their accounts to a RRIF in 2018.

 

  • 2017 TFSA contribution deadline – Friday December 29th, 2017– contribution limit $5500.00.  The contribution can be made in cash or securities.

 

  • Note that the 2018 TFSA contribution limit has been confirmed at $5500.

 

  • If you are planning a TFSA withdrawal in early 2018, consider withdrawing the funds by December 29th, 2017. The advantage is that you will not have to wait until 2019 to re-contribute that amount.

 

  • The last date to make an RESP contribution is Friday December 29th, 2017.

 

  • As a reminder, in order to benefit from the entire government grant, the contribution per child per year is $2,500. If there is unused contribution room and available grants, up to $5,000 can be contributed and still receive the full 20% grant.  If your child turns, or already turned 17 in 2017, this will be your last year to receive the government grant, which makes the December 29th deadline all the more important for you.

 

  • Deadline for making a charitable donation that can be claimed for the 2017 tax year is December 29th, 2017.

 

 

Tax planning using Private Corporations – Next Steps

 

In the summer and fall of 2017, the federal government proposed several changes regarding Tax Planning using Private Corporations. On December 13, the Minister of Finance announced the details addressing the measures restricting income sprinkling (i.e. “Kiddie Tax”) applicable to private corporations and confirmed that they will come into effect on January 1, 2018.

 

We encourage clients affected by the proposed changed that they consult their accountant, prior to the end of the year. Please see the attached communiqué summarizing this announcement.

 

See the full article

 

 

Fed Policy Monitor – A rate hike for Christmas

 

A rate hike for Christmas

 

As widely expected, the Federal Reserve increased the fed funds rate by 25 basis points to 1.25-1.50%. The Fed will continue to reduce the size of its balance sheet as announced earlier. It was encouraged by a strengthening labour market and the fact that economic activity “has been rising at a solid rate”. Inflation is expected to remain below 2% in the near term but the Fed still expects it to stabilize around 2% “over the medium term”. The FOMC thinks near-term risks to the economic outlook is roughly balanced. The decision was not unanimous within the FOMC as both Charles Evans and Neel Kashkari preferred to keep rates unchanged.

 

See the full article

 

 

JMRD Basket Corner

 

DIG Basket

 

 

 

All-Cap Growth Basket

 

  • Savaria Corporation: Savaria enters the Australian market with the acquisition of Master Lifts See the full article

 

  • Whitecap Resources: Another Strategic EOR Acquisition Provides Improved Sustainable and Free Cash Flow. An opportunistic move; Weyburn presents a high quality, high netback, low decline addition to Whitecap’s diversified portfolio. By moderating corporate declines, the asset supports meaningful FCF for the company, which provides torque to a price recovery, while limiting downside exposure. Coupled with a history of disciplined capital allocation, this sustainable FCF profile provides continued optionality for further dividend growth and buybacks, while preserving a strong financial position, in the event that oil prices check back. Our more optimistic outlook surrounding the oil space pairs well with Whitecap’s strategy, positioning them as an attractive risk/reward investment, with limited relative downside (see scenario analysis on page 9). We reiterate our Outperform rating and have increased our target price to $13 (was $12) See the full article

 

U.S. Growth Basket

 

  • Waste Management: On Thursday, WM announced it was increasing its dividend by 9.4%, its highest dividend increase in ten years. This is almost double the typical dividend raise vs. historically (WM typically raises by 3-5%), which is a vote of confidence from management in the company’s strong, consistent FCF in coming years. WM’s Board also authorized a $1.25B stock repurchase program which is also higher than previous authorizations. On WM’s most recent earnings call, the company raised its “base line” FCF expectation to $1.6B (vs. previously $1.4-1.5B), signaling confidence in sustainability of recent FCF strength. Credit Suisse is of the view that fundamental EBITDA growth fueling further FCF upside in coming years and continue to favor WM as one of the best capital allocation stories in the waste sector.

 

 

Retirement Corner

 

 

 

 

Reads of the week

 

 

 

  • Capital Economics – Bitcoin bubble is a curiosity, but not a big worry. Unlike the bubbles in the tech sector in the late-1990s and in US residential property a few years later, a bursting of the bitcoin bubble should not have systemic, macroeconomic implications. The total value of bitcoin is (still) too small, and it has few links with the wider economy. (See attached note)

 

 

 

 

 

  • S. transit agencies cautious on electric buses despite bold forecastsThe technology is still a gamble for many cities, says Chris Stoddart, an executive at Canadian bus maker New Flyer Industries Inc (NFI.TO). A top supplier of conventional buses to the U.S. market, the company has just a handful of pure battery electrics in service. “People worry about being an early adopter. Remember 20 years ago someone paid $20,000 for a plasma TV and then 10 years later it was $900 at Best Buy,” said Stoddart, senior vice president of engineering and customer service for New Flyer. “People just don’t want a science project.” Rival electric bus manufacturers expect dramatic growth; the most ambitious forecasts call for all bus purchases to be electric by 2030.

 

 

Economic Reports

 

Monday December 18th – None

Tuesday December 18th – None

Wednesday December 20th – Average weekly earnings (CAD)

Thursday December 21st– Consumer Price Index (CAD), Retail sales (CAD)

Friday December 22nd – Real GDP (CAD)

 

 

Earnings Reports

 

Monday December 18th – None

Tuesday December 18th – None

Wednesday December 20th – BlackBerry Limited

Thursday December 21st– None

Friday December 22nd – None

 

 

Enjoy the weekend!

By | 2018-01-19T21:36:37+00:00 December 15th, 2017|JMRD Updates|0 Comments

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