- Meet the Team
- Learn More
- Portfolio Manager's Notes
- Contact Us
Toll Free: 1-800-363-6732
1501 avenue McGill College
Enclosed in this Portfolio Managers’ notes, we present BMO Nesbitt Burns’ latest portfolio strategy report to give you an update on equity markets and our strategist’s perspective. In addition, we have included an article discussing how stimulus and low inflation continues to support financial markets.
We also attached, in pdf format, an article on Costco, one of our core holdings in the Food Retail sector which continues to perform very well.
In the Wealth Management section, we have included two articles: one on the importance of a wealth plan for business owners, and the second speaks to the benefits of using appreciated securities for charitable donations.
We are here to help if you have any questions or would like to review your investment portfolio or your financial plan.
Stock Research of Interest
Analyst: Stéphane Rochon, CFA, Equity Strategist
Recession Probabilities Have Increased but 1990s Parallels Keep us Positive
An interesting disconnect is developing between the stock market and the seemingly never-ending refrain of bad news coming from the wires: global slowdown, trade uncertainty, Middle Eastern tension and more and more pundits trying to convince investors that a recession is on the way. And yet, major North American stock indices are at or close to record highs. What gives?
Fixed Income Strategy
Richard Belley, CFA
Fixed Income Strategist
Stimulus and Low Inflation Continue to Support Financial Markets
It was only a couple of months ago that what seemed to be the sum of all fears was leading global yields to multi-year lows, some deeper into negative/record territory with US and Canadian yield curves flirting with inversion as geo-political risks were raising the spectre of a domestic and global recession. For many, the next logical step was for much lower yields, but it failed to materialize, despite further stimulus from some of the largest central banks, including the European Central Bank (ECB) restarting its bond purchase program. Since early September, interest rates have, in fact, trended higher in major markets – Canada included.
We admit that in a fairly volatile environment, especially for bonds this year, this is not surprising, but what has changed? For one, North American economies appear to continue to be more resilient than initially expected. The de-escalation of the China-US trade war and confirmation that Brexit is again delayed further by 3 months as British citizens are called to the polls for December definitely helped. It is still early, but some credit should also be given to central banks’ policies, including the US Federal Reserve’s (Fed) pre-emptive rate cuts, made to further support the current economic expansion.
BMO Capital Markets
Analyst: Kelly Bania
Costco Wholesale: A Long-Term Keeper
Bottom line: COST's F4Q19 results were largely in line with our forecast aside from the impact of a one-time tax assessment reserve charge. All core metrics in COST's business continue to remain strong and we still believe that the company has a substantial growth runway with its advantaged business model, both domestically and internationally. We maintain our Outperform rating on COST and raise our target price to $320 as we shift our valuation out to our F21E EPS and assume COST maintains its current 2-year forward P/E multiple.
Key Catalysts: We believe that COST's advantaged business model (low Gross Margin%, higher margin online business, membership fee income stream), consistent execution and increasing connection with its loyal membership base (solid renewal rates, increasing Executive penetration and increasing digital connection) makes it deserving of its premium valuation, which is rare among retail/consumer staples. Catalysts include: 1) monthly sales and comps; 2) upcoming earnings; and 3) additional news from Amazon surrounding Whole Foods Market.
Read more (please contact us)
The RRSP contribution limit for 2019 is $26,500. You can find your eligible amount on your federal notice of assessment which you should have received by now.
TFSA contribution amount for 2019 is $6,000 or cumulative of $63,500 for 2019 if you have never contributed to a TFSA account.
The RESP offers an attractive opportunity to parents to save for their children’s education. If you contribute $2,500, you will be receiving a 30% combined governments’ grants.
Financial & Estate Planning
With the Holiday Season fast approaching, we would like to remind you of the following important dates for your 2019 taxes:
Trades Settling in 2019: December 27th
Charitable Donations: December 31st
Tax Deductions and Credits: December 31st
Interest payment on family loans: January 30th 2020 to avoid income attribution for 2019.
Personal Tax Calendar
The value of a wealth plan for a business owner
Business owners need to integrate their personal goals with the needs of their business as they journey through the various stages of their personal and business life cycles. With so much time and effort invested in the business, there is often little time left to address personal and family issues. A well-thoughtout wealth plan will help to identify a business owner’s personal and business needs and priorities.
Donating Appreciated Securities
The benefits of making a charitable donation are countless – from helping those in need to the personal satisfaction of giving back to the causes that are important to us. Charitable giving also makes good sense from a tax perspective. With proper planning, you can reduce your total income tax liability and maximize the value of your donation.
In an effort to increase charitable donations, the tax law allows for the full elimination of any capital gains tax on donations of publicly-traded securities to a registered charity. Qualified securities include equities, bonds and shares/units of mutual funds listed on a prescribed stock exchange.
Tim, Catherine, and Edward