**November 13th Issue of The JMRD Market Observer**
In This Week’s JMRD Market Observer
- JMRD Strategy Comments
- 2015 Tax Season Reminders
- JMRD Basket Corner
- Retirement Corner
- Week at a Glance
- Reads of the week
- Economic Calendar
- Earnings Reports
JMRD Strategy comments
It was a volatile week for global equity markets after a positive October and first week of November. The CBOE Volatility Index, as one measurement of volatility, was up 41% this week while the S&P 500 Index slid 3.5% on the week. There is much debate about when the US Federal Reserve will raise interest rates and what the impact will be for equity markets. The US employment data released last Friday was well ahead of the most optimistic expectations and the market took this as a sign that if the economic backdrop is continuing to improve then short term interest rates will have to move higher sooner rather than later. The employment data was a case of good news is bad news, as seen in the equity market volatility this week. Theory suggests that if interest rates rise, equity prices are sometimes adversely affected. However, for the next rate tightening cycle, the Federal Reserve will be starting at a historical low level so rate hikes may not have as much of an initial impact. This is a topic that will continue to be discussed endlessly by economists and strategists. The next Federal Reserve meeting is being held Dec.15th/16th with the interest rate decision coming the afternoon of the16th.
Our thought here is that even if interest rates move higher at some point (and they will) the longer the US Federal Reserve puts it off, the more uncertainty there will be for the market. We also feel that the path to a more normal interest rate environment will be a slow and gradual process because the Federal Reserve does not want to derail the economic recovery that is currently unfolding in the US. Another important thing to note from past interest rate increases is that it’s usually not the first interest rate hike that negatively affects the economy and markets but usually the last one. You will see in the chart below the effects of past interest rate increases have had on the S&P 500. Take note of the SLOW CYCLES trend line.
Please do not hesitate to call if you have any questions or comments on anything.
2015 Tax Season Reminders
As we recently turned the page on another month and are now getting closer to the end of 2015, we thought it would be a good idea to get everybody thinking about TAXES again. You will find below some key dates and figures to have in the back of your mind when preparing for the upcoming tax season. Like last year, we will also feature a special “Tax Edition” email in the New Year which will include tax slip information as well as other helpful tax tips.
- Last day for Tax Loss selling of Canadian Equities – Thursday, December 24th, 2015 (Canadian Markets are closed December 28th in lieu of Boxing Day)
- Last day for Tax Loss selling of U.S. Equities – Monday, December 28th,2015
- 2015 RSP contribution deadline – Monday, February 29, 2016. The 2015 maximum RRSP contribution limit is 18% of “earned income” in 2014, to an annual maximum $24,930. The 2016 contribution limit is a maximum of $25,370.
- 2015 TFSA contribution deadline – Thursday December 31, 2015 – contribution limit $10,000.00
- Note, if you are planning a TFSA withdrawal in early 2016, consider withdrawing the funds by December 31, 2015. The advantage is that you will not have to wait until 2017 to re-contribute that amount.
- The last date to make an RESP contribution is Thursday December 31, 2015.
- As a reminder, in order to benefit from the entire government grant, the contribution per child per year is $2,500. If by chance, there are unused grants from the past, $5,000 can be contributed and still receive the full 20% grant. If your child turns, or already turned 17 in 2015, this will be your last year to receive the government grant, which makes the December 31st deadline all the more important for you.
JMRD Basket Corner
Thomson Reuters (TRI) – Thomson Reuters said Wednesday that it is exploring strategic options for its intellectual property and science business in a move to “sharpen its focus”. The division’s products include Web of Science, Thomson CompuMark, Thomson Innovation, MarkMonitor, Thomson Reuters Cortellis and Thomson IP Manager.
All-Cap Growth Basket
Boyd Group (BYD.un) – Boyd reported Q3 revenue of $301.1 mln (vs. $280.5 mln estimate & $218 mln in Q3/14), adjusted EBITDA of $26.4 mln (vs. $22.2 mln est. & $16.9 mln in Q3/14) and DCPU (NBF definition) of $0.83 reflecting a 15% payout (vs. $0.79/16% est. & $0.69/17% in Q3/14). Results were similarly ahead of the Street’s $287.5 mln top-line & $23.8 mln adj. EBITDA forecasts. NBF’s Diversified Equities analyst Trevor Johnson said, ‘’Operationally BYD is performing the best we have seen, it has one of the healthiest balance sheets and amount of dry powder in the diversified universe, and despite the multi-store acquisition slowdown still provides an above average growth opportunity to investors in a relatively defensive industry (both organically through persistent SSSG and via single-store tuck-ins).” (full report attached) Boyd Group Inc.
US Growth Basket
NASDAQ Inc. – Nasdaq said to be in talks to acquire Chi-X Canada
- “Ten factors to consider when planning to leave an estate” (Globe and Mail)
Week At a Glance
See Week At a Glance Report
Reads of the Week
- “Underestimating the Power of Compound Interest” (A Wealth of Common Sense)
- “The Upside of Being Miserable” (Motley Fool) Today’s good was born from yesterday’s bad.
- “There’s still time to save on tax before end of year” (Globe and Mail)
- “The dollar hasn’t been this overbought for 30 years” (Marketwatch)
- “The Economy Is Better — Why Don’t Voters Believe It?” (FiveThirtyEight)
- “What Interest Rates Can Teach Us About Behavioral Biases” (A Wealth of Common Sense)
Monday November 16th – Canadian Manufacturing Sales, Canadian Existing Home Sales, U.S. Empire Manufacturing
Tuesday November 17th – U.S. CPI, U.S. Industrial Production
Wednesday November 18th – U.S. Housing Starts, U.S. Building Permits, FOMC Meeting
Thursday November 19th – U.S. Leading Index, U.S. Initial Jobless Claims
Friday November 20th – Canadian Retail Sales, Canadian CPI
Monday November 16th – Canadian Apartment Properties REIT, DHX Media
Tuesday November 17th – Home Depot, Wal-Mart Stores
Wednesday November 18th – Loblaw Cos, Metro
Thursday November 19th – None
Friday November 20th – None
Have a good weekend!