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Terry Broaders

Weekly Update September 2 2014

“Remember That You Are Absolutely Unique, Just Like Everyone Else” -Margaret Mead

 

Mining Stocks Take TSX Higher

The Toronto stock market erased early losses to close higher Friday as investors bought into beaten-down mining stocks. The S&P/TSX composite index closed 67.56 points higher at 15,625.73. The Canadian dollar was down 0.22 of a cent at 91.97 cents US amid data that also showed stronger than expected Canadian economic growth. U.S. indexes were modestly higher while traders played it cautious going into the long Labour Day weekend amid fears of a wider Russian incursion into Ukraine and a big letdown in U.S. consumer spending data. The Dow Jones industrials climbed 18.88 points to 17,098.45 as other data showed consumer spending dropped 0.1% last month, against the gain of 0.3% that generally had been expected, with weakness most pronounced in the auto sector. The Nasdaq ran ahead 22.57 points to 4,580.27 and the S&P 500 index was up 6.63 points to 2,003.37. Toronto and New York markets both gained ground this past week. The Dow industrials posted a 97- points or 0.57% advance, while the TSX gained 90 points or 0.6%, led by consumer staples, industrials and telecoms. But the TSX was held back by the financial sector, down 1.15% this week despite a steady parade of earnings news from the big Canadian banks that largely beat expectations.

 

Canadian Economy Expands At Fastest Rate in Nearly 3 Years

Canadians sent the economy growing at an annual pace of 3.1% in the second quarter of this year. Statistics Canada says the sharp increase in the gross domestic product was the strongest growth rate in nearly three years and compared with a 4.2% rise in GDP south of the border. The jump came as the agency updated its result for the first quarter to an annual pace of 0.9% compared with an earlier reading of 1.2% in the first three months of the year. Economists had expected a growth rate in the second quarter of 2.7%. On a monthly basis, the Canadian economy grew in June by 0.3% compared with economist expectations for growth of 0.2%.  Statistics Canada said there was growth in every sector during the quarter, save for non-profit institutions serving households. Consumers led the increase, with household consumption up by 0.9% for the three month period ended June 30. Canadians spent 1.2% more on goods in the second quarter, and 0.7% more on services. Spending on housing showed a marked increase with investment in residential structures up 2.9% by quarter and home ownership transfer costs up by a full 9.0% after two previous quarters of decline.  Exports were also up by 4.2% in the second quarter — the strongest performance since the third quarter of 2011 — after declining by 0.2% in the first three months of the year.  Significant increases were seen in exports of vehicles, farm and fishing products, forestry products and packaging materials.  As well, business capital spending was up by 0.8% after two consecutive quarterly declines.

 

Market Update August 29 2014

The TSX closed at 15626, up 90 points or 0.58% over the past week. YTD the TSX is up 14.71%.

The DOW closed at 17099, up 98 points or 0.58% over the past week. YTD the DOW is up 3.15%.

The S&P closed at 2003, up 15 points or 0.75% over the past week. YTD the S&P is up 8.39%.

The Nasdaq closed at 4580, up 41 points or 0.90% over the past week. YTD the Nasdaq is up 9.65%.

Gold closed at 1288, up 7.00 points or 0.55% over the past week. YTD gold is up 6.98%.

Oil closed at 95.85, up 2.28 points or 2.44% over the past week. YTD oil is down -2.80%.

The USD/CAD closed at 1.087169, down -0.0074 points or -0.68% over the past week. YTD the USD/CAD is up 2.25%.

 

Sources: Bloomberg; Statistics Canada; advisor.ca; Investment Executive

Terry Broaders

Weekly Update August 26 2014

“Simplicity Is The Ultimate Sophistication” -Leonardo da Vinci

 

TSX Slips Amid Solid RBC Results

The Toronto stock market closed lower Friday as the financial sector failed to find lift from record earnings at Canada’s biggest bank. The S&P/TSX composite index dropped 20.54 points to 15,535. The RBC profit amounted to $1.64 per share, eight cents ahead of estimates. The other major Canadian banks report next week and “it’s set up for them pretty well to make some money,” said Gareth Watson, vice-president, investment management and research, Richardson GMP.  The Canadian dollar was unchanged at 91.37 cents US as the consumer price index declined 0.2 per cent month over month in July and retail sales for June jumped 1.1%. U.S. markets were mainly lower as U.S. Federal Reserve chairwoman Janet Yellen offered no signal that she’s altered her view that the economy still needs Fed support from interest rates that have been near zero since the financial crisis. The Dow Jones industrials fell 38.27 points to 17,001.22, while the Nasdaq gained 6.45 points to 4,538 and the S&P 500 index edged 3.97 points lower to 1,988.

 

RBC Says Rising Interest Rates Would Cool Housing Market

RBC Economics says higher interest rates will put a strain on the Canadian housing market in 2015 and “substantially” moderate prices increases. In its latest Canadian housing forecast, the bank says Canada’s current historically low interest rates are not “sustainable” and it forecasts longer-term interest rates will rise by the end of the year in anticipation of a return to tightening mode by the Bank of Canada in 2015. RBC says if current rates rise, it anticipates home resales to fall by 0.9% to 463,100 units next year following an increase of 2.1% to 467,200 units in 2014, while it sees home prices increasing just 1.1% in 2015, compared with a jump of 4.3% this year. RBC describes those developments as a cooling not a crash in the housing market, which is supported by a variety of other factors, including steady immigration rates and good employment outlook. The report said condo construction, particularly in the major cities, will be one of the main reasons the housing market will slow in 2015 as more units become available. It cautioned that although there will be slowdown in 2015, the big impact on the Canadian housing market will be likely not be seen until 2016 once higher interest rates are “normalized.”

Market Update as of August 22 2014

The TSX closed at 15536, up 232 points or 1.52% over the past week. YTD the TSX is up 14.05%.

The DOW closed at 17001, up 338 points or 2.03% over the past week. YTD the DOW is up 2.56%.

The S&P closed at 1988, up 33 points or 1.69% over the past week. YTD the S&P is up 7.58%.

The Nasdaq closed at 4539, up 74 points or 1.66% over the past week. YTD the Nasdaq is up 8.67%.

Gold closed at 1281, down -25.00 points or -1.91% over the past week. YTD gold is up 6.40%.

Oil closed at 93.57, down -3.45 points or -3.56% over the past week. YTD oil is down -5.11%.

The USD/CAD closed at 1.09456, up 0.0050 points or 0.46% over the past week. YTD the USD/CAD is up 2.95%.

 

Sources: Bloomberg; RBC; Investment Executive; advisor.ca

Terry Broaders

Weekly Update August 19 2014

 

We Had It All, Just Like Bogie and Bacall” -Bertie Higgins

TSX Ends Little Changed

North American markets came under pressure from a worsening in the Ukraine-Russia crisis. On Friday the S&P/TSX composite index climbed 13.06 points to 15,304.24. But the Dow Jones industrials closed down 50.67 points to 16,662.91, while the Nasdaq gained 11.93 points to 4,464.93 and the S&P 500 index slipped 0.12 of a point to 1,955.06. Markets backed off after NATO said that Russian military vehicles crossed into Ukraine during the night and the Ukrainian president said most of the force was quickly destroyed by his troops. Russia denied any incursion. The report persuaded traders to seek safety but the Canadian dollar was higher amid strong revised jobs data. The loonie rose 0.12 of a cent to 91.84 cents US as Statistics Canada said the economy added 42,000 positions last month. The agency said earlier this week that it had discovered an error in its jobs data originally released last Friday showing the economy had added a meagre 200 jobs.

 

CRA Cracks Down On Biz Owners “Zapping” Sales Records

The consequences are about to get pricey for businesses using technology to avoid paying all of their taxes. After an eight-month awareness campaign about electronic suppression of sales software, new monetary penalties and criminal offences under the Excise Tax will come into effect in September. Revenue Minister Kerry-Lynne Findlay said that small and medium-sized businesses are the economic drivers of Canada. She says the underground economy does give an unfair advantage to those who show a lack of respect for Canada’s tax laws. ESS software or “zapper” software selectively deletes or changes sales transactions in point-of sale-systems like cash registers and business accounting systems. That means there is no record of the original transaction and the business is able to under-report their revenue and avoid paying the full share of their GST, HST and income taxes.

 

Market Update as of August 15 2014

The TSX closed at 15304, up 108 points or 0.71% over the past week. YTD the TSX is up 12.35%.

The DOW closed at 16663, up 109 points or 0.66% over the past week. YTD the DOW is up 0.52%.

The S&P closed at 1955, up 23 points or 1.19% over the past week. YTD the S&P is up 5.79%.

The Nasdaq closed at 4465, up 94 points or 2.15% over the past week. YTD the Nasdaq is up 6.89%.

Gold closed at 1306, down -6.00 points or -0.46% over the past week. YTD gold is up 8.47%.

Oil closed at 97.02, down -0.57 points or -0.58% over the past week. YTD oil is down -1.61%.

The USD/CAD closed at 1.089552, down -0.0078 points or -0.71% over the past week. YTD the USD/CAD is up 2.48%.

 

Sources: Bloomberg; Investment Executive; advisor.ca

Terry Broaders

Weekly Update August 12 2014

“Those Who Fight Corruption Should Be Clean Themselves” -Vladimir Putin

 

Markets Higher On Easing Ukraine Tension

The Toronto stock market closed higher Friday as traders hoped for an easing of tensions between Russia and Ukraine. The S&P/TSX composite index was up 77.88 points to 15,196.31, after Russia’s Interfax reported that Russia had ended military exercises near the Ukraine border. The Canadian dollar dropped 0.42 of a cent to 91.15 cents US as Statistics Canada reported that the economy created a paltry 200 jobs during July. Economists had generally expected that 20,000 jobs would be created.  U.S. indexes surged on the report with the Dow industrials ahead 185.66 points to 16,553.93, the Nasdaq gained 35.93 points to 4,370.90 and the S&P 500 index edged up 22.02 points to 1,931.59.  The Russia/Ukraine standoff is the primary focus for investor worry as traders considered the odds of Russia invading its neighbor in order to prop up Ukrainian rebels. There is also concern about how sanctions and countersanctions could derail a still-fragile economic recovery in Europe. The Toronto market ended the week more or less flat, with a 19 point loss which still left the TSX up 11.56 per cent year to date. The Dow industrials ended the week with a gain of 60.56 points or 0.37 per cent.

 

Russia Bans Western Food Imports For a Year

Russia will ban fruit, vegetables, meat, fish, milk and dairy imports from the U. S., the European Union, Australia, Canada and Norway, Prime Minister Dmitry Medvedev told a government meeting on Thursday. The decision follows a decree signed by President Vladimir Putin ordering the government to ban or limit food imports from countries that imposed sanctions on Moscow for its support of rebels in eastern Ukraine and the annexation of Crimea.  “There is nothing good in sanctions and it wasn’t an easy decision to take, but we had to do it,” Medvedev said.  The ban is valid from Aug. 7 and will last for one year, he said. Canada’s agricultural exports to Russia totalled $428 million in 2013 according to Statistics Canada. Canadian pork producers make up most of that at exports of $260 million. Canada’s worldwide pork exports total $3.2 billion.

 

Sources: Bloomberg; Investment Executive; advisor.ca

Terry Broaders

Weekly Update June 17 2014

“Knives, Guns or Fisticuffs; Keep In Mind That I Am Good At All Of Them” – Lorne Campbell

 

TSX Higher On Price of Oil

The Toronto Stock Exchange rose Friday, pushed higher by burgeoning oil prices amid concerns that global supplies could be at risk if an advance by insurgents in Iraq continues. The S&P/TSX composite index added 91.98 points to 15,001.61–only a few points shy of its record close of 15,073 in June 2008, just before the Great Recession sent stocks plummeting. The Canadian dollar was down 0.01 of a cent to 92.11 cents US. In Iraq, Islamic militants vowed to march on Baghdad after pushing deep into parts of the country’s Sunni heartland northeast of the capital that had been previously controlled by U.S. forces, raising concerns over global oil supplies. The July crude contract advanced 38 cents to US$106.91 a barrel. Meanwhile, gold added 10 cents to US$1,274.10 an ounce, while July copper added a penny to US$3.03 a pound. On Wall Street, U.S. indexes rallied as the Dow Jones industrials rose 41.55 points to 16,775.74, the Nasdaq climbed 13.02 points to 4,310.65 and the S&P 500 saw an uptick of 6.05 points to 1,936.16.

 

Seniors Say They Know It All When it Comes to Finance

Canadian seniors are more likely than other age groups to give themselves a high mark for overall financial knowledge, shows BMO Financial Group’s third annual financial literacy report. The study showed that 55% of seniors give themselves an “A” or “B” when evaluating their overall knowledge of key financial products, programs and terms. This is 10% higher than the Canadian average. But a recent report issued by the BMO Wealth Institute, Mind Your Taxes in Retirement, shows a significant number of baby boomers (those aged 45+) lack knowledge of key personal finance topics that can impact their income during retirement. The report noted that only a small percentage of boomers know how best to maximize their tax savings, leaving them vulnerable to having benefits and credits such as Old Age Security (OAS) and the Age Amount tax credit clawed back.

For example: 79% either answered incorrectly or did not know how dividend income and capital gains are treated from a tax perspective; 34% either answered incorrectly or did not know how interest income is treated from a tax perspective and 41% did not understand the tax implications of making a RRIF withdrawal.

 

Market Update as of June 13 2014

The TSX closed at 15002, up 163 points or 1.10% over the past week. YTD the TSX is up 10.13%.

The DOW closed at 16776, down -148 points or -0.87% over the past week. YTD the DOW is up 1.20%.

The S&P closed at 1936, down -13 points or -0.67% over the past week. YTD the S&P is up 4.76%.

The Nasdaq closed at 4311, down -10 points or -0.23% over the past week. YTD the Nasdaq is up 3.21%.

Gold closed at 1277, up 23.00 points or 1.83% over the past week. YTD gold is up 6.06%.

Oil closed at 106.81, up 3.98 points or 3.87% over the past week. YTD oil is up 8.32%.

The USD/CAD closed at 1.085502, down -0.0073 points or -0.67% over the past week. YTD the USD/CAD is up 2.10%.

 

Sources: Bloomberg; Investment Executive; advisor.ca; BMO

 

Odette Morin

Summer’s the time to bare all.

bare summer

 

June is an exciting month. The Jazz Festival comes alive. Bard on the Beach resonates with our hearts. And, summer officially kicks off.

More exciting still are the new disclosure regulations being launched by the Canadian Securities Administrators (CSA). Alright, perhaps “exciting” is a stretch (though this is to me).

Beginning June 13th, clients will receive a 2-page summary when a new investment fund has been added to their account – instead of an unwieldy 50+-page prospectus.

As a result, returns – as well as costs – will be laid out clearly and openly for you.

New year. New reasons to celebrate.

Better yet, starting next year, advisor compensation and management fees will be listed on statements.

At present, statements display net returns after fees paid.

Typically, advisors are paid an ongoing 1% service fee; investment companies gets 1.5% for a total fee of about 2.5%.  Given how standard the fees are, it may not seem like a relevant change. Yet, the real difference between advisors is not in their prices. It’s in the value they provide through their breadth (or lack of) services.

We provide full financial planning, annual reviews and a host of other services. We also go the extra mile to answer questions on an ongoing basis. So, as someone who’s part of a team of true service providers, I’m delighted with this transparency. It allows clients to comparison-shop and make informed choices about who to trust with so critical a responsibility.

On the subject of full disclosure, I’ll admit that I’ve voiced my displeasure about all advisors being painted with the same brush (when I rant, my voice never raises but my hands fly everywhere!).

Now, thanks to the new regulations, clients will finally be able to see for themselves.

When New Year’s comes around, guess who’ll be celebrating?