**March 11th Issue of The JMRD Market Observer**
In This Week’s JMRD Market Observer
- BoC patiently waiting for the federal budget
- JMRD Basket Corner
- Retirement Corner
- Week at a Glance
- Reads of the week
- Economic Calendar
- Earnings Reports
BoC patiently waiting for the federal budget
As was expected, the Bank of Canada left the overnight rate unchanged at 0.50% today. While the Bank acknowledged that Canada GDP growth rate was not as weak as it expected in Q4 2015 – actual 0.8% compared to its January expectations that “growth likely stalled in the fourth quarter” – the Bank still sees the near-term outlook for the economy as remaining broadly the same as in January. It noted that national employment has held up despite job losses in the resource-intensive sector. Supporting growth in Canada were household spending and non-energy exports. As far as the strengthening loonie (up 8% vs USD since January, 20th), the Bank suggests that rebounding commodities prices and changes in market expectations about monetary policy were behind the move. While back in January, financial markets were putting the odds of rate cut(s) in 2016 at more than 60%, these had been scaled down to less than 40% heading to today’s policy announcement. The Bank still expects material excess capacity in Canada to dampen inflation while factors that pushed total CPI to 2.0% y/y in January will unwind in the months ahead. The risks profile for inflation are roughly balance according to the BoC. According to the Bank concerns regarding the global economy appears to be abating. While the BoC acknowledge that downside risks remain, the IMF sounds more worried. David Lipton (IMF) sees a weakening baseline for the global economy while the OECD leading indicators are suggesting slower global growth. Although, according to the Bank, financial vulnerabilities continue to edge higher while the structural adjustment of the Canadian economy is underway, the monetary authority judges that the current policy stance is appropriate given its assessment of the balance of risks. Bottom line: The decision to stand pat on rates was not surprising given the economic and financial markets developments since January. The April MPR will show the Banks updated projections which will include the federal budget’s fiscal measures. We still believe that the future course of monetary policy will to a large extent hinge on what the federal government will deliver on the fiscal front. But listening to Prime Minister Trudeau, it seems that fiscal policy will take the baton allowing the Bank to stay on the sidelines.
Full Report Attached
JMRD Basket Corner
All-Cap Growth Basket
Alimentation Couche-Tard (ATD.b) – Alimentation Couche-Tard Inc. announced they have acquired the Ontario and Quebec retail assets of Calgary-based oil and gas company Imperial Oil Ltd by purchasing 279 Esso brand gas stations for $1.6-billion a “transformative” deal with an attractive link-up to the Tim Hortons brand, one that gives a sizable boost to the company’s leading position in Canadian convenience store retail. The Laval, Que. company was one of five players named Tuesday as acquirers of the 497 Esso sites for $2.8-billion, and Couche-Tard scooped up the highest number — 229 in Ontario and 50 in Quebec; followed by rival 7-Eleven, which acquired 148 sites: 74 in Alberta and 74 in British Columbia.
New Flyer (NFI) – “New Buses Go High-Tech”
Parkland Fuel (PKI) – Parkland announced they acquired 17 Esso-branded retail sites from Imperial Oil. In a separate transaction, the company also announced the acquisition of Propane Nord-Ouest, a propane marketing business that serves the mining industry and other industrial customers in the Abitibi-Témiscamingue region of northwestern Québec. The purchase price was $22.5 million, representing approximately five times trailing EBITDA
U.S. Growth Basket
Nasdaq (NDAQ) – Nasdaq announced on Wednesday that it has agreed to acquire International Securities Exchange (ISE), an operator of three electronic options exchanges, from Deutsche Börse Group. The acquisition allows Nasdaq to improve efficiencies for clients, broaden its technology offering, and provides the capability within the equity options industry to innovate and experiment. The transaction is expected to be accretive to Nasdaq earnings within 12 months of closing and deliver attractive returns on capital.
ETF Growth Basket
- “The retiree’s guide to staying in your home” (Globe and Mail)
- “How to exit the housing market without exiting your house” (National Post)
- “What two retirees kept when they downsized” – The dos and don’ts of downsizing. (Globe and Mail)
Week at a Glance
Full report attached.
Reads of the Week
- “There is a ‘game changer’ technology on Wall Street and people keep confusing it with bitcoin” (Business Insider)
- “Updating My Favorite Performance Chart” (A Wealth of Common Sense)
- Fixing Twitter – How the media-juggernaut-turned-train-wreck is getting back on track after a rough two years. (Fortune)
Monday March 14th – Canada Teranet/National Bank Home Price Index
Tuesday March 15th – Canada Existing Home Sales; US Retail Sales
Wednesday March 16th – Canada Manufacturing Sales; US Housing Starts, US Inflation, US Federal Reserve Interest Rate Decision
Thursday March 17th – US Initial Jobless Claims
Friday March 18th – Canada Retail Sales, Canada Inflation; U Of Michigan Consumer Confidence
Monday March 14th – Amaya
Tuesday March 15th – Couche Tarde, WSP Global, Oracle
Wednesday March 16th – Stella Jones, FedEx
Thursday March 17th – AutoCanada, Badger Daylighting
Friday March 18th – None
Have a good weekend!