Terry Broaders

Weekly Update March 24 2017

“We Are Motorhead, And We Play Rock & Roll” – Lemmy Kilmister


TSX Index Extends Recent Rally

Canada’s main stock index extended its rally for a third consecutive day on Friday after beginning the week at its lowest level this year, as Wall Street idled on the latest “Trumpcare” news. The Toronto Stock Exchange’s S&P/TSX composite index inched forward 9.06 points to 15,442.67, with consumer discretionary and utilities sectors leading advancers. In New York, stock indices were mixed, with little movement in either direction. The Dow Jones industrial average shed 59.86 points to 20,596.72, the S&P 500 index fell 1.98 points to 2,343.98, and the Nasdaq composite index gained 11.05 points to 5,828.74.
The markets continued to tread water despite “some pretty meaningful news,” said Stephen Lingard, senior vice president and portfolio manager at Franklin Templeton Solutions. U.S. President Donald Trump announced the presidential permit to build the Keystone XL pipeline has been granted. The news came more than eight years after the initial application and after his predecessor Barack Obama rejected the project. In currencies, the Canadian dollar fell 0.16 of a U.S. cent to US74.74¢. A Statistics Canada report released Friday showed the country’s annual pace of inflation ticked lower last month. In February, the consumer price index rose 2.0% on a year-over-year basis compared with a 2.1% increase in January.  In commodities, the May crude contract advanced US27¢ to US$47.97 per barrel and the April gold contract gained US$1.30 to US$1,248.50. April natural gas contracts rose US2.5¢ to about US$3.08 per mmBTU and May copper contracts shed about US1.4¢ to US$2.63.


Inflation Ticked Lower in February 

The annual pace of inflation in Canada ticked lower in February as higher prices for gasoline were offset in part by lower costs for fresh fruit and vegetables. Statistics Canada said Friday that the consumer price index rose 2% on a year-over-year basis in February, compared with a 2.1% increase in January. Economists had expected it rise 2.1% in February as well. Prices were higher in seven of the eight major components, with food the only one to decline. Excluding gasoline, the February consumer price index was up 1.3% compared with a year ago following a 1.5% in January. Transportation costs gained 6.6% compared with a year ago, boosted by a 23.1% rise in gasoline _ which was at an unusually low level in early 2016. Shelter costs rose 2.2%. Food costs fell 2.3% as prices for food bought from stores fell 4.1%. Prices for food bought from restaurants rose 2.3% but fresh vegetables dropped 14.0% and fresh fruit slipped 13.3%, partly deflecting a spike in prices last winter.

The annual pace of inflation slowed in seven provinces on a year-over-year basis in February while Ontario and B.C. both held steady at 2.3%. Manitoba was the only province to show an increase in the annual pace of inflation as it increased to 2.3% compared with 2.1% in January. Statistics Canada said the Bank of Canada’s three preferred measures for core inflation saw year-over-year increases last month of 1.3%, 1.9% and 1.6%.



Highlights Of The 2017 Federal Budget

Your Can Now See Fees On Your Statements.  Reread How Fees Work In This Country.

Your Tax Return Checklists for 2016 Tax Year Preparation 

Odette Morin

Highlights to the 2017 Liberal Government 2nd federal budget

Finance Minister Bill Morneau delivered the Liberal Government’s 2nd annual budget today called the “Innovation Budget”. Here are the key budget highlights:
  • The biggest and most welcome news for investors is that no changes were made to the capital gains tax, stock options or dividends inclusion. There were fears that the Liberal government was going to increase the taxation of capital investment gains but they decided to hold off on any tax hikes for now.
  • No major new taxes.
  • 2% tax increase on alcohol and tobacco.
  • Public transit tax credit is cancelled. Instead, the government will invest $20 billion over 11 years – to improve transit systems and encourage usage across Canada.
  • Cancellation of Canada Savings Bonds.
 New programs introduced
  • The budget follows through on promises to let parents take their Employment Insurance parental leave benefits over 18 months rather than 12, giving them the choice of taking the existing 55 per cent benefit rate over a year or 33 per cent over a year and a half. They also propose letting women start their maternity leave 12 weeks before their due dates rather than eight weeks prior.
  • On assistance for families, the government will be pledging $7 billion for affordable child care over 10 years to create up to 40,000 more spaces.
  • The government also plans to devote $6 billion over 10 years for home care and $5 billion over 10 years for mental health initiatives through individual deals with the provinces and territories.
  • $691.3 milions will be spent over five years to expand the caregiver benefit for Canadians supporting critically ill and injured family members.
  • Military spending will also be bumped at a cost of $8.5 billion in capital spending for nearly two decades down the road.
  • $395.5 millions over three years to expand the youth employment strategy.
  • $279.8 million over five years for the Temporary Foreign Workers Program.
  • $57.8 million for mental health for federal inmates.
  • $50 million over two years for teaching initiatives to help children learn to code.
  • $27.5 million for programs to help newcomers get foreign credentials.
  • The government is committing money for skills, innovation and jobs, with $594 million set aside for this year, rising to $1.4 billion by 2021-22.
  • The most expensive item of this budget is spending on infrastructure and social programs, including $20.1 billion promised over 11 years for public transit.
  • $3.6 million over three years to create an LGBTQ secretariat at the Privy Council Office to advance human rights
  • $523.9 million over five years to prevent tax evasion and improve compliance. The budget forecasts the government will make an additional $2.5 billion over five years from those measures to catch fraud and tax evaders.
The federal deficit is projected to be $28.5 billion for the 2017-18 year, compared to $23 billion this year – both higher than projected in the fall. The budget offers no timeframe of when the government will balance the books. The budget predicts the economy will grow slightly this year, keeping the ratio of federal debt to GDP fairly flat, at 31.6 per cent in this year compared to 31.5 per cent last year.
Sources: CTV News, BNN, CBC & Globe & Mail.
Terry Broaders

Weekly Update March 17 2017

“Replace Negative Thoughts With Positive Thoughts And You’ll Have Positive Results” – Willie Nelson


TSX Slips On Materials And Financials

Gold miners and large financial services companies dragged Canada’s main stock index lower Friday, as Wall Street made modest moves. On Bay Street, the S&P/TSX composite index dropped 71.92 points to 15,490.49 with the materials sector being biggest decliner on the commodity-heavy index.  In New York, markets were mixed. The Dow Jones industrial average fell 19.93 points to 20,914.62, while the S&P 500 index inched down 3.13 points to 2,378.25. The Nasdaq composite index gained 0.24 of a point at 5,901.00. The Canadian dollar sat just below the 75-cent mark, up 0.06 of a U.S. cent at US74.98¢. In commodities, the May crude oil contract added US7¢ at US$49.31 per barrel and the April natural gas contract rose US5¢ at US$2.95 per mmBTU. The April gold contract added US$3.10 at US$1,230.20 an ounce and May copper gained a cent to US$2.69 a pound.


Canadian Household Debt Creeps Up To Another Record 

The amount Canadians owe compared with how much they earn hit another record high last year. Statistics Canada said the amount of household credit market debt rose to 167.3% of adjusted household disposable income in the fourth quarter (Q4), up from 166.8% in the third quarter. That means there was $1.67 in credit market debt for every dollar of adjusted household disposable income.

Fuelled by mortgages and low interest rates, household debt has been climbing steadily in recent years. Policymakers have raised concerns about household debt and see it as a key risk to the economy. While interest rates have been low for years, making borrowing money cheap for Canadians, some have expressed concerns about what could happen when rates rise or if there is a shock to the economy that results in a large number of job losses. Total household credit market debt, which includes consumer credit, and mortgage and non-mortgage loans, totalled nearly $2.029 trillion in the final quarter of last year. Mortgage debt accounted for 65.5% of the total. In Q4 2016, households borrowed an additional $28.4 billion on a seasonally adjusted basis, up from $18.7 billion added in the previous quarter. However, even as borrowing rose, household sector net worth at market value rose 1.0% in Q4 2016 to $10.268 trillion, boosted by gains in the stock market. The latest reading on household debt from Statistics Canada came as consumer credit company Equifax said in its national consumer credit trends report that total consumer debt held by Canadians, including mortgages, in Q4 2016 increased 6% cent compared with a year ago to $1.718 trillion.  The Equifax report also noted that while 46% of consumers were decreasing their debt, 37% were borrowing more.




Your Tax Return Checklists for 2016 Tax Year Preparation 


Sources: Bloomberg; Investment Executive;;

Terry Broaders

Weekly Update March 10 2017

“A Liar Will Not Be Believed, Even When He Speaks The Truth” – Aesop


TSX Makes a Small Gain In Flat Markets On Friday

Canada’s main stock index ended barely higher on Friday as sharp gains for gold miners were overshadowed by a slump in shares of Toronto-Dominion Bank after a report it pressured employees to meet high sales revenue goals. The Toronto Stock Exchange’s S&P/TSX composite index unofficially closed up 9.84 points, or 0.06 per cent, at 15,506.68. The index lost 0.7 per cent on the week. Shares in TD, Canada’s No. 2 lender, fell 5.6 per cent to $66, its biggest one-day decline since December 2014. The financials group slipped 1.1 per cent, despite some of its biggest members moving higher as solid domestic jobs data broadly boosted bond yields.  Of the index’s 10 main groups, just financials and energy were in negative territory.

In New York, the Dow Jones industrial average gained 44.79 points to 20,902.98, the S&P 500 index added 7.73 points to 2,372.60, and the Nasdaq composite index advanced 22.92 points to 5,861.73. The loonie gained a quarter of a cent to US74.28¢ while the April crude contract dropped by US79¢ to US$48.49 a barrel.  Crude oil resumed a sharp decline and global equity markets rose on Friday after a robust U.S. jobs report drove home the strength of the world’s biggest economy and set the stage for the Federal Reserve to raise interest rates next week.  Banking stocks in the euro zone hit their highest in more than a year on expectations the European Central Bank, after a meeting on Thursday, will tighten policy in March 2018.


Canada’s Unemployment Rate at 6.6%; Lowest In Two Years 

Canada’s unemployment rate dropped to 6.6% last month, its lowest level in more than two years, Statistics Canada said Friday.  The decline of 0.2 percentage points from the previous month brought the rate down to a number not seen since January 2015.  The agency’s February employment survey indicated the national labour market added 15,300 jobs overall last month, higher than analyst expectations. Economists had projected a gain of 2,500 jobs and the unemployment rate to stay at 6.8%, according to Thomson Reuters. “This continues the string of improving Canadian economic data and suggests that the underlying economy continues to gain steam,” said BMO senior economist Benjamin Reitzes in a note to analysts. “One more piece of evidence that the Canadian economy has turned the corner.”

The Statistics Canada report found most of the February job gains came from full-time work, offset by a decline in the number of people working part-time.  It said an estimated 105,000 more people found full-time employment last month while part-time positions dropped by 90,000. That was in contrast to the January labour market survey, which showed a surge in part-time work.  In the 12 months to February, Canada saw a net gain of 288,000 jobs with most of the increase coming in the last six months of  22016.  Much of the increased job activity was seen in the West with British Columbia, Saskatchewan and Manitoba all seeing gains. In contrast, fewer people were working in Nova Scotia and Newfoundland and Labrador while employment was little changed in the other five provinces.  Women in the 25-to-54 age bracket saw more work, marking the third monthly increase in that category. Men in the same age range saw employment holding steady in February after a notable increase the previous month.



Your Tax Return Checklists for 2016 Tax Year Preparation 


Sources: Bloomberg; Investment Executive;;

Terry Broaders

Weekly Update March 3 2017


“There Is No Elevator To Sucess, You Have To Take The Stairs” – Zig Ziglar


TSX Posts Solid Gain

The Toronto stock market rose, with energy stocks pushed up by rising oil prices, while U.S. indices were generally flat amid the comments from the U.S. Federal Reserve suggesting interest rate hikes were in the offing. On Bay Street, the S&P/TSX composite index gained 71.85 points at 15,608.50. In New York, major indexes had small gains following a speech today by Fed chairwoman Janet Yellen. Yellen said the central bank will likely lift interest rates later this month.At the close, the Dow Jones industrial average added 2.74 points to 21,005.71, the S&P 500 was up 1.20 points to 2,383.12, and the Nasdaq composite index advanced 9.53 points to 5,870.75.

The Canadian dollar, which has been sliding in value as of late, was trading at US74.60¢, down 0.10 of a cent from Thursday’s close. The April crude contract was up US72¢ at US$53.33 per barrel and April natural gas added US2¢ at US$2.32 per mmBTU.April gold shed US$6.40 at US$1,226.50 an ounce and May copper gained a cent to US$2.70 a pound.


Canada’s Economy Smashes Expectations

The Canadian economy outperformed expectations in the final three months of 2016 by growing at an annual rate of 2.6%, Statistics Canada said Thursday.  The agency’s latest report on real gross domestic product said the biggest contribution to the fourth-quarter increase came from household consumption, which rose at an annual rate of 2.6%.  Downward pressures on economic growth were led by an 8.2% decline in business investment..  A consensus of economists had predicted economic growth in the fourth quarter would expand by 2%, according to Thomson Reuters.  Overall, the economy expanded by 1.4% in 2016 ,  compared to 0.9%.  “There are worse ways to end a year,” TD Bank senior economist Brian DePratto in an analyst note.  “Canadians opened their wallets both at stores and construction offices, delivering a solid fourth-quarter economic performance. ‘

The real GDP figures were released as the Bank of Canada and the federal government try to gauge the direction of U.S. economic policy under President Donald Trump. Concern has spread through Corporate Canada and Ottawa over the effects of possible changes to taxation and trade policies by Trump’s administration.  The Bank of Canada held its benchmark interest rate steady on Wednesday and warned that it is keeping a watchful eye on “significant uncertainties” weighing on the outlook for the economy.  The fourth-quarter real GDP result followed growth in the third quarter at a revised annual rate of 3.8 per cent. That third-quarter reading was driven by a strong rebound in energy exports after the devastating spring wildfires in the Alberta oilpatch.  Over the final months of 2016, exports of goods and services increased at an annual rate of 1.3 per cent.  The overall GDP figure received a boost from a sharp quarterly drop in imports, which fell at an annual rate of 13.5 per cent. Statistics Canada said some of the decline was due to the one-time, third-quarter import of a large module for the Hebron offshore oil project in Newfoundland.



Your Tax Return Checklists for 2016 Tax Year Preparation 

Fee Disclosure and the Value of Advice

FundEX Bulletin About Fees

The You First Infokit About Fees


Sources: Bloomberg; Investment Executive;;


Odette Morin

Fee Disclosure & The Value Of Advice

by Odette & Terry

 The other day, we opened our investment statement and it showed us how much of an investment fee we paid.   Though we know that we always paid for investment management and advice, it was still a change to see the dollar figure versus the previously reported percentage of assets.  It’s the same fee that had always applied to our accounts in the past, but now we see it as a dollar figure rather than a percentage that was simply deducted.

This full disclosure of the actual fees is part of the evolution of the mutual fund industry. Whether a fee is imbedded in a percentage or outlined in a separate dollar figure, the key question is, am I getting value for my money.  A lower fee does not necessarily mean a bigger return and a higher fee does not necessarily mean a lower return.

A recent research study shows that households with financial advisors have more than 4 times the assets of households without a financial advisor and as well, households with advisors save at twice the rate of non-advised households (source: “New Evidence On The Value of Financial Advice 2012” by Dr. John Cockerline, PH.D., Investment Funds Institute of Canada and former Director of Research at the Toronto Stock Exchange).

A few months ago, we wrote a detailed Infokit on the subject of fees.  In a nut shell, there are two sets of fees that Canadian Investors pay in investment funds; the management fee paid to the investment company which is typically 0.80% to 1.5%, and the advisory fee you pay to us and FundEX for advice and service.  This fee ranges from 0.50% to 1%.  The more money invested you have, the lesser the fee. Read the two information bulletin here.

FundEX bulletin “Understanding Mutual Fund Fees” and

Our detailed infokit About Investment Fees & Disclosure 

So, what do you get for these two fees?

The investment company fee is used to pay the investment managers, analysts, traders, statements, tax slips and client services.  The advisory fee is used to pay for investment mix selection, asset allocation, investment trades, financial planning which includes tax, retirement and estate planning.

Please remember that we are very sensitive to MERs. Frank and Anthony are very much on the look out to find ways to reduces fees. We are paid on your account value. So the less management fees you pay, the better it is for us as well.

We welcome the new fee transparency because it puts pressure on investment companies to reduce their MERs. You can expect to see a downward trend going forward. The infokit also shows that at You First/FundEX, we tend to charge less and do a lot more with regards to planning and advice.

We feel that our job is to make sure that your retirement cash flow analysis is on target. We want to make sure that your money will last until age 90. We try to get the highest possible rate of return of course and lower fees but want to make sure that your retirement assets are safe and you can enjoy a stress-free retirement.

Please contact us if you have any questions or concerns about this subject or any other aspect of your plan.

(i) Ontario Securities Commission Investor Advisory Panel 2013

(ii) Canadian Investors Perception of Mutual funds and the Mutual Fund Industry, Pollara, 2014.