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
Provisus Monthly Insight – March 2018
STOCK SECTORS AFTER RATE HIKES – Last year the Bank of Canada (BOC) implemented its first interest rate hike since 2010 and many investors reached for their crystal balls to try and forecast the future. While rising rates tend to signal stronger economic conditions and inflationary pressures, they can also have a meaningful impact on stock market sector returns. Changing the overnight interest rate, which is the cost that depository institutions pay to borrow money, is how the BOC attempts to control inflation. When the BOC increases the overnight rate, it does not directly affect the stock market but it does have a ripple effect that can rock the market. However some sectors benefit from interest rate hikes and others do not.
Click here to read more: Monthly Insight – March 2018 – Stock Sectors after Rate Hikes
Cardinal Update – February 2018
NAFTA – Concerns surrounding NAFTA have been top of mind as a sixth round of negotiations wrapped up in late January. There is a real risk of a U.S. announcement to pull out from NAFTA. This may well be a negotiating tactic; however, the Canadian market would react negatively. Over the longer term, the markets will adjust to whatever new trade rules take the place of NAFTA. But until then, the uncertainty could impact various companies including Magna and Gildan.
Click here to read more: Cardinal Update – February 2018
