Monthly Archives: January 2013

Terry Broaders

Weekly Update January 29, 2013

“Cannot People Realize How Large An Income Is Thrift ?” -Cicero


Soft Close To A Good Week

The Toronto stock market closed little changed Friday as mining stocks fell alongside prices for gold and copper. The S&P/TSX composite index lost 7.59 points to 12,816..  The Canadian dollar fell 0.36 of a cent to 99.35 cents US. The tumble came a day after closing below parity with the American currency for the first time since mid-November. The loonie has been under pressure since the Bank of Canada indicated Wednesday that any interest rate increases will likely be further down the road than previously expected because of economic weakness. New York was supported by well-received earnings reports from consumer giant Procter and Gamble, oilfield services company Halliburton and from Microsoft.  New York’s Dow Jones industrials was ahead 70.65 points to 13,895.98, the Nasdaq climbed 19.33 points to 3,149.71 while the S&P 500 index rose 8.14 points to 1,502.96.

For the week the TSX was up 88 points or 0.69% while the Dow Jones gained 246 points or 1.8%.


Bullish Indicators

Economic data out of China this week continue to suggest the country has been successful is speeding up economic growth while also keeping a lid of inflation. The debt crisis in the U.S. has been kicked months down the road, and the latest data from the country – including on employment and housing – suggest the economy is picking up steam.

Concerns about the European debt crisis are receding. The European Central Bank said lenders will repay more of its loans than economists had expected. The news that the banks will repay $184.3-billion in three-year loans next year,  an indication that they are comfortable in offloading excess liquidit,  helped the euro to strengthen. Japan’s stock market is also back on firmer ground after stumbling earlier this week on disappointment that the Japanese central bank didn’t go far enough in announcing its so called “bold” new monetary stimulus measures. Overnight, the Nikkei soared 2.8 per cent as the yen dropped sharply against the U.S. dollar.

With so many bullish factors, market participants have been growing increasingly concerned about missing out on further rallies, even while being concerned about short-term pullbacks.


Sources: Bloomberg,, Investment Executive

Terry Broaders

Weekly Update January 22 2013

“I Know That You Can Do the Impossible” -Terry Fox


Positive Markets

The Toronto stock market was higher Friday amid further indications that China continues to recover from a recent economic slump and an analyst upgrade for BlackBerry-maker Research In Motion Ltd.  The S&P/TSX composite index gained 53.89 points to 12,728.62, near its best level in a year, while the TSX Venture Exchange gained 0.74 of a point to 1,233.89.  China reported that its economy grew 7.9 per cent in the fourth quarter, year-over-year, up from 7.4 per cent growth in the third quarter, alleviating concerns that it is headed for a hard landing. In the U.S. the Dow Jones was up 53 points to 13,649 while the S&P500 gained 5 points to 1485.


Positive U.S. Housing and Jobs Reports

Reports this week showed an improvement in the U.S. labour market at a time when housing starts are rising to four-year highs, helping to distract traders from concerns over how the U.S. will resolve its debt and spending problems.  The U.S. Commerce Department reported this week that housing starts jumped to a 954,000 annual rate in December, up from 890,000 the previous month. The report capped off the best year for U.S. home construction since the real estate meltdown.

“There is no denying that the housing market recovery is solidifying, and we expect construction activity to ramp up to the one million annualized threshold by the end of this year,” said TD Bank economist Michael Dolega, adding the improvement in the housing sector is good news for the jobs picture. “The strengthening housing recovery appears to have shown up in construction employment, which rose 30,000 in December. With sectoral employment down over two million off its 2006-07 peak we expect the construction sector to add more than half-million jobs over the course of this year.” U.S. new jobless claims for last week beat economists’ expectations as they fell to 335,000 from 371,000 the week prior. The Street was expecting a worse number closer to 368,000.


Market Update as of January 18 2013

The TSX closed at 12726, up 124 points or 0.98% over the past week. YTD the TSX is up 1.48%.

The DOW closed at 13650, up 162 points or 1.20% over the past week.YTD the DOW is up 4.17%.

The S&P closed at 1486, up 14 points or 0.95% over the past week.YTD the S&P is up 4.21%.

The Nasdaq closed at 3135, up 9 points or 0.29% over the past week.YTD the Nasdaq is up 1.42%.

Gold closed at 1685, up 23.00 points or 1.38% over the past week.YTD gold is up 0.30%.

Oil closed at 95.9, up 2.18 points or 2.33% over the past week.YTD oil is up 3.60%.

The USD/CAD closed at 0.9922, up 0.008 points or 0.82% over the past week.YTD the USD/CAD is up 0.47%.


Sources: Bloomberg, Investment Executive,


Terry Broaders

Weekly Update

“I Tell My Accountant, If You Are In Doubt About Taxes, Pay More” -Arnold Schwarzenegger


Toronto Has Slight Gain – Things Look Up In China and Europe

The Toronto stock market eked out a mild gain Friday as shares of BlackBerry-maker Research In Motion rose ahead of its planned new smartphone launch. The S&P/TSX composite index moved up 2.44 points to 12,602.  The Canadian dollar rose 0.01 of a cent to 101.58 cents US after Statistics Canada reported that the country’s trade deficit with the world jumped to $2 billion in November. In New York, the Dow Jones industrials gained 17.21 points to 13,488 while the Nasdaq was 3.87 points higher at 3,125.63.  The S&P 500 index gave back 0.07 of a point to 1,472.05, remaining at the five-year high point reached on Thursday.
On Thursday China trade figures were stunningly strong. Exports rose 14.1% and imports grew 6%, picking up considerable pace from November when exports rose a modest 2.9 per cent and imports were flat. A broad measure of Chinese credit growth also rose sharply. The World Bank predicts 2013 economic growth of 7.5 per cent in China, which is pretty similar to 2012.
In Europe the European Central Bank president Mario Draghi said that the euro area economy will slowly return to health in 2013 as it benefits from a “positive contagion” of good news – highlighted by retreating borrowing costs by countries such as Spain. On Thursday, the yield on Spain’s 10-year government bond fell 23 basis points, to less than 4.9 per cent, down from 5.9 per cent as recently as November.

Market Update as of January 11 2013

The TSX closed at 12602, up 61 points or 0.49% over the past week. YTD the TSX is up 0.49%.

The DOW closed at 13488, up 53 points or 0.39% over the past week.YTD the DOW is up 2.93%.

The S&P closed at 1472, up 6 points or 0.41% over the past week.YTD the S&P is up 3.23%.

The Nasdaq closed at 3126, up 24 points or 0.77% over the past week.YTD the Nasdaq is up 1.13%.

Gold closed at 1662, up 5.00 points or 0.30% over the past week.YTD gold is down -1.07%.

Oil closed at 93.72, up 0.66 points or 0.71% over the past week.YTD oil is up 1.24%.

The USD/CAD closed at 0.9841, down -0.0038 points or -0.38% over the past week.YTD the USD/CAD is down -0.35%

Sources: Bloomberg; globeadvisor;

Anthony Sabti

Fiscal Cliff Deal Sends Stocks Soaring – Summary of Bill Changes

Late in the evening on January 1st, the House of Representatives approved a Senate-backed plan that scales back the broad tax hikes and spending cuts that officially took effect at the start of 2013.  The republican House voted final approval for the bill by 257-167 late Tuesday.

The “cliff” deal led to a 300 point rise in the Dow on Wednesday, the largest single-day gain in a year.  On Friday, the S&P 500 closed on a five-year high.

Most of the changes will affect only the most affluent Americans in the higher tax brackets.  Here are the key points of the deal:


There is a new top rate of 39.6%, compared with 35% for 2012. The threshold for the top rate is $450,000 of taxable income for married couples filing jointly and $400,000 for single filers.

President Obama originally wanted a tax increase starting at the 250k married / 200k single level.

This increase is expected to raise over $396 billion over the next ten years.

Note:  In Canada depending on the province, the top tax rate is between 39%-48% (BC: 43.7%, Ontario: 46.41%) and starts at about $132,000 (slightly different for each province).


The bill does raise rates on long-term capital gains and dividends for top-bracket taxpayers. People who owe at the 39.6% level (same 450k married /400k single threshold) for income tax will pay 20% on all their net long-term gains as opposed to 15% in 2012.

The increase is expected to raise over $56 billion over the next ten years.

The 15% rate will continue to apply to taxpayers in the 25%, 28%, 33% and 35% income tax brackets.  Those in the 10% and 15% brackets will continue to have a zero rate on capital gains and dividends.

Note: In Canada, for eligible Canadian dividends, most Canadians will not pay any taxes on dividends if their net income is under 40k.  After the 40k mark, depending on the province and income, they are taxed at somewhere between 10-30%.  Capital gains tax is simpler; Canadians are taxed on 50% of capital gains (meaning if you’re in the 30% tax bracket, you’ll pay a 15% tax on capital gains).


The estate- and gift-tax exemption will remain $5 million or more per individual.  However, the current 35% top tax rate on amounts above the exemption will increase to 40%.   President Obama wanted to exemption lowered to $3.5 million.

In addition, the estate and gift tax will remain “unified,” meaning that an individual can use the entire exemption to make gifts while alive.  Also, portability rules will continue to apply.  Any unused portion of the exemption can be transferred and used by the surviving spouse.


Lawmakers allowed the immediate expiration of a two-year, 2% cut in the Social Security payroll tax.  The premium will rise to 6.2% of wage income up to a cap of $113,700.  The break had put an extra $1,000 in the wallets of typical families earning $50,000 a year the past couple years.  For most Americans, this will be the biggest effect of the bill.

Note:  In Canada, CPP premiums are 4.95% of gross income for employees or 9.90% for self-employed workers to a cap (YMPE – Yearly Maximum Pensionable Earnings) of $50,100 for 2012.


The bill will permanently stop the alternative minimum tax from raising levies on millions of middle-income families.  Had this fix not been made, the AMT would have applied to 34 million taxpayers in 2012 and would also have severely disrupted the coming tax-filing season.

The AMT was originally intended to apply to wealthy people using many tax strategies, but over time its reach has spread, especially to people in high-tax states.

Note: Canada also has an AMT for the same purpose, applicable to those who use certain tax strategies.  If often kicks in for those earning a high amount of dividends and no other income.


Lawmakers permanently reinstated the Personal Exemption Phase-out (PEP) and the “Pease” provision, both of which lapsed in 2010. Both apply to married filers with an adjusted gross income in excess of $300,000 or $250,000 for single filers.

PEP will cut or eliminate the value of deducting personal exemptions for taxpayers above those income thresholds. The Pease provision is a complex limitation on all itemized deductions that will eliminate up to 80% of deductions for taxpayers above the thresholds.

The end result is essentially a higher marginal tax rate for those in the top brackets and is expected to raise $152 billion over the next 10 years.


MARKET RECAP (as of January 4th, 2013)

  • The TSX closed at 12541, up 225 points or 1.83% over the past week. YTD the TSX is flat.
  • The DOW closed at 13435, up 497 points or 3.84% over the past week.YTD the DOW is up 2.53%.
  • The S&P closed at 1466, up 64 points or 4.56% over the past week.YTD the S&P is up 2.81%.
  • The Nasdaq closed at 3102, up 142 points or 4.80% over the past week.YTD the Nasdaq is up 0.36%.
  • Gold closed at 1657, changed 0.00 points or 0.00% over the past week.YTD gold is down -1.37%.
  • Oil closed at 93.06, up 2.13 points or 2.34% over the past week.YTD oil is up 0.53%.
  • The USD/CAD closed at 0.9879, down -0.0086 points or -0.86% over the past week.YTD the USD/CAD is up 0.03%.

Sources:, Financial Post, Globe & Mail, Bloomberg

Anthony Sabti

Year End Brief – What to Look Forward for in 2013

News was slow this week because of the holidays plus there were only three open markets days.  The TSX showed little movement, and a lack of an agreement on the “fiscal cliff” situation had a slight negative impact on the various U.S. stock exchanges.

As mentioned in last week’s brief, there was no shortage of big economic and business headlines this year (like in any year).  Despite some of these big negative macro headlines, the Canadian and US markets are up year-to-date.  The 2012 year-to-date numbers (there is one day to go in 2012, the 31st next week) are below.  Well managed companies with healthy balance sheets are making money, which is what ultimately drives up the price of a stock.

Another important note is that for the second year in a row, the S&P and the DOW have outperformed the TSX.  Very few people were “bullish” on the U.S. markets two years ago and were all in favour of having a large portion of their portfolio in domestic equities and very little anywhere else.  This reinforces the basic investing principles of portfolio diversification, buying low, and not looking backwards to try to predict future performance.

With 2012 almost behind us, here is a quick list of key dates and events for 2013:

  • To those who have been maximizing their TFSA room each year, in January 2013 you can add another $5500 to your account.
  • The 2012 RRSP deadline will be on March 1st, 2013.  Please check your CRA Notice of Assessment for your contribution limit.
  • The tax return deadline (to those who have a balance due) is on April 30th, 2013 or June 15, 2013 if you are self-employed.
  • If you have a RRIF and turn 72 this year, you will receive your first RRIF payment.
  • If you have an RESP account and like to maximize your grant room each year, consider setting up an automatic monthly contribution to ensure gets this done.  Also, if your child turns 17 in 2013, this will be his final year of grant eligibility.
  • If you prefer paperless billing, please consider switching your quarterly Fundex statements to electronic delivery (contact us for login instructions).

There will be plenty of reminders throughout the year for all of these items (and more).  Of course, never hesitate to contact us for any questions or comments or if you want to book a meeting.

Finally, on behalf of the whole You First team, thank you very much for your ongoing support and we wish everyone a happy and prosperous 2013!

Market Recap (as of December 28, 2012)

  • The TSX closed at 12316, down -70 points or -0.57% over the past week. YTD the TSX is up 3.02%.
  • The DOW closed at 12938, down -253 points or -1.92% over the past week.YTD the DOW is up 5.89%.
  • The S&P closed at 1402, down -28 points or -1.96% over the past week.YTD the S&P is up 11.45%.
  • The Nasdaq closed at 2960, down -61 points or -2.02% over the past week.YTD the Nasdaq is up 13.63%.
  • Gold closed at 1657, down -3.00 points or -0.18% over the past week.YTD gold is up 5.88%.
  • Oil closed at 90.93, up 2.27 points or 2.56% over the past week.YTD oil is down -8.06%.
  • The USD/CAD closed at 0.9965, up 0.0022 points or 0.22% over the past week.YTD the USD/CAD is up 1.70%.


Sources:, Bloomberg