Cardinal Quarterly – April 2018
MARKET OUTLOOK – Volatility picked up significantly in the first quarter, helped along by the Trump administration’s tariff threats against China, which raises the odds of a trade war. At the same time, Central banks have continued to move toward more interest rate increases as the economy continues to do well and inflation has trended around the 2% mark in most developed countries. These fears have been balanced by what most investors expect to be a strong earnings season as companies benefit from U.S. tax cuts and a strong economy. The recent market pullback combined with earnings growth has also made valuations look more reasonable. We continue to believe that 2018 will be a positive year for the markets.
Click here to read more: Cardinal Quarterly – April 2018
DM – Q1 Portfolio Commentary
Market Review – After many months of virtually unprecedented tranquility in equity markets, the serene backdrop that investors had been enjoying came to a jarring halt in the opening quarter of 2018. Though attempting to assign specific causes to interim market moves is ordinarily a dubious endeavour, in this case the catalysts for flux were fairly identifiable.
The quarter’s first significant stock price decline began at the start of February, when 10-year Treasury yields in the US made their way up toward 3% and investors began to consider the bond/equity tradeoff for the first time in many months.
Click here to read more: DM-Portfolio-Commentary-Q1-18
Cardinal Update – March 2018
FEDERAL BUDGET 2018 – TAXING PASSIVE INCOME – The federal government released a consultation paper last summer targeting tax planning strategies using private corporations. This proposal was met with strong criticism from the business community and resulted in some awkward town hall meetings for Finance Minister Bill Morneau. Five months after the close of the consultation period, we are being presented with a federal budget far less dramatic than originally feared. But there are still some material changes that we need to understand. One of the more impactful changes involves passive income earned within a Canadian Controlled Private Corporation (CCPC). Passive income is earned on corporate investments separate from active business operations.
Click here to read more: Cardinal Update – March 2018
DM Monthly Report – March 2018
A FLOOD OF CASH? Since markets bottomed in March 2009, the most prolific net buyer of stocks has been corporations retiring their own shares. In fact, US companies have bought back about $3.5tn worth since 2010 and, if the nearly $2tn in dividends paid over that time is included the corporate handout to shareholders has dwarfed even the Fed’s massive and much more publicized quantitative easing program. While some of this repurchasing was paid for with debt, as companies took advantage of record low interest rates to reconfigure their balance sheets, the lion’s share was funded with internally generated cash.
Click here to read more: DM-Monthly-Report-March-18
