JMRD Market Observer for December 22, 2017 – Happy Holidays!

In This Week’s JMRD Market Observer



  • Year-end Tax Reminders

  • Geopolitical Briefing: Update on NAFTA Negotiation

  • Economics & Strategy comment: Best showing in 57 years for the S&P 500

  • 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.



Geopolitical Briefing: Update on NAFTA Negotiation


Despite the pessimism surrounding NAFTA talks, we still maintain that no country is likely to walk away from a deal because the economic and political costs of doing so are simply too high.


This report analyzes:


  • Main sectors up for negotiation
  • Possible changes to NAFTA
  • Why Trump will not attempt to withdraw from NAFTA
  • Why Canada and Mexico cannot afford to abandon negotiations


See the full article



Economics & Strategy comment: Best showing in 57 years for the S&P 500


  • Best showing in 57 years for the S&P 500: The S&P 500 reached a landmark last week: 372 days and counting without a correction of 5% or more. As the chart below shows, this is the longest sequence since 1960. Previous longer rallies were those beginning in November 1963 (369 days) and December 1994 (369 days). With the S&P 500 now trading at 18.6 times forward earnings, the odds of a correction have certainly increased. Yet we do not foresee a severe or extended pullback because of the underlying strength of the economy. As explained in our latest Monthly Equity Monitor, the nonfinancial components of the leading indicator are growing at the fastest pace in eight years, earnings revisions are still positive, and the yield curve remains unusually steep at this point in the economic cycle (i.e. the matured phase).


  • Poloz; nightmares before Christmas: In a speech in Toronto last week, Bank of Canada Governor Stephen Poloz offered a rather mixed interpretation of the economic situation in the country. On the one hand, he acknowledged that “the [Canadian] economy has made tremendous progress over the past year, and it is close to reaching its full potential”. This was encouraging news for the BoC which is now “increasingly confident that the economy will need less monetary stimulus over time”. Taken on its own, that’s statement would have pointed in the direction of a rate hike in early 2018, but the Governor blurred thing up by adding that “while a mechanical approach to policy would suggest that monetary policy should already be less stimulant, the Bank still see signs of ongoing, albeit diminishing, slack in the labour market”, a reality which posed a downside risk to the BoC’s inflation anticipations. Counterbalancing that risk was “the fact that the economy is operating near its capacity, and that growth is forecast to continue to run above potential”, two factors that could end up lifting inflation more quickly than the Bank currently expects. Those conflicting risks, Poloz said, were being monitored “in real time”, in line with the “data dependent” approach to monetary policy now being favored by the central bank. Poloz is certainly more upbeat than he was a few months ago, but not too much. Incoming data will could have a big impact on his future mood.


See the full article



JMRD Basket Corner


DIG Basket


  • Capital Power (CPX): New wind project expected to start operating in 2019 outside Medicine HatThe Alberta government is targeting a move to 30-per-cent renewable energy by 2030, and Capital Power will help the province achieve that goal with its new wind power project. Capital Power will build the 201-megawatt Whitla Wind project about 45 kilometres southwest of Medicine Hat, Alberta. BNN gets more details from Brian Vaasjo, CEO of Capital Power.



All-Cap Growth Basket


  • New Flyer: Grand River Transit has awarded New Flyer with a contract for 39 Xcelsior® clean diesel forty-foot, heavy-duty transit buses, and nine Xcelsior® clean diesel forty-foot, bus rapid transit (BRT) style heavy-duty transit buses. The order, which incorporated nine new BRT-style buses, converted 39 buses from the option backlog to the firm order backlog.


U.S. Growth Basket


  • Steel Dynamics (STLD): Credit Suisse – Steel Dynamics remains a compelling growth story in our view as organic investments can continue to “move the needle” and capital allocation is likely to drive additional upside in 2018 given a full pipeline of potential acquisitions. STLD is set to see a major FCF benefit from tax reform and the structural factors supporting US flat rolled fundamentals are well in place for 2018. All of this warrants multiple expansion given the current overall equity market and macro dynamics in our view.




Retirement Corner





Reads of the week



  • A miracle on Main StreetEvery day, main street businesses across the country shutter their doors, falling victim to the tremendous pressures of competition, globalization and technological change. Yet despite it all, a crew of hardy business owners manages to beat the odds and stay open. From Halifax to Vancouver, the stories from the owners of some of these businesses – a bakery, a seed store, a barbershop, and more – to learn how they’ve managed to thrive, decade after decade.











Economic Reports


Monday December 25th – North American Markets closed

Tuesday December 26th– Canadian Markets closed; US S&P/Case Shiller Home Price Index

Wednesday December 27th – US Pending Home Sales, US Consumer Confidence

Thursday December 28th – US Initial Jobless Claims, US Chicago PMI

Friday December 29th – None



Earnings Reports


Monday December 25th – None

Tuesday December 26th – None

Wednesday December 27th – None

Thursday December 28th – None

Friday December 29th – None



Enjoy the long weekend!

The Market Observer will return on January 5, 2018

By | 2018-01-19T21:36:02+00:00 December 22nd, 2017|JMRD Updates|0 Comments

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