Market Update – December 2016

Market Update – December 2016

The American Central Bank finally raised interest rates last week by ¼ of 1%.  Here in Canada the Bank of Canada have not raised interest rates.  However, the bond market is reflective of rising interest rates in the short end of the yield curve where five year Canada bonds have moved from 0.60% to 1.22% within two months.  This is why you may have noticed the Canadian banks moving to adjust mortgage rates slightly higher.

The U.S. election created uncertainty about market direction initially with the Dow futures declining 1,000 points the night of the election win for the Republicans.  However, that quickly reversed before markets opened the next day and we have had quite a rally since.  Canadian auto parts stocks have moved higher after being weak following Mr. Trump’s threat to rip up Nafta and the Biopharma group in the U.S. remains weak after Democrats had campaigned on introducing drug price controls.  I believe this group represents the best current value in the U.S.

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In November, you may have noticed a change we made to our reporting statements.  Hopefully, you will find this new statement easier to follow.

This year, your December statement (and every year end statement going forward), will have four new pieces of information.  It will include, a reminder of what you paid National Bank Financial for wealth management expressed in both dollars and as a percentage of your portfolio for the year, your performance expressed as both time weighted portfolio performance and money weighted portfolio performance.  You are used to seeing time weighted performance from every portfolio review we have had with you – which is really a smoothed average.  Money weighted is a bit more jagged suitable for portfolios that fluctuate in size with significant money inflows/outflows.

Recently we completed a review of tax loss selling for client portfolios and are nearly finished a campaign of discussion with all of you about the importance of having an Enduring Power of Attorney.  If you think about it, an Executor might be important to settle your eventual estate, but you are not directly impacted by what happens once you have passed away.  However,  not having a Power of Attorney could very much impact you if you were ever incapacitated and not able to act on your own behalf.  Not sure about who could act for you?  You can also utilize Natcan our sister trust company.  If you already have established a Power of Attorney, please don’t make the mistake of tucking it away in a file cabinet where it could prove effectivley useless.  Make sure your Power of Attorney has an original or notarized copy and let your bank as well as us know about it by letting us see an original or notarized copy which we will keep on file – just in case.

In just over one week, you will be eligible to contribute to a Tax-Free Savings Account (TFSA).  In January, you will be eligible to contribute $5,500 per individual for 2017 and a combined total of $52,000 in contributions if you have never contributed to a TFSA in the past.  Remember you can contribute stock as well as cash – yet another reason to have your TFSA with us at NBF.

We will be closing at 1pm on Friday December 23rd and will be open December 28th – 30th.

I have prepared this commentary to give you my thoughts on various investment alternatives and considerations which may be relevant to your portfolio. This commentary reflects my opinions alone, and may not reflect the views of National Bank Financial Group. In expressing these opinions, I bring my best judgment and professional experience from the perspective of someone who surveys a broad range of investments. Therefore, this report should be viewed as a reflection of my informed opinions rather than analyses produced by the Research Department of National Bank Financial.

Best wishes to you and your family this Holiday Season!

 

National Bank Financial

Rob Hunter
Senior Investment Advisor
Vice President

 

*Sources: Thomson Reuters, NBF Week at a Glance

National Bank Financial is an indirect wholly-owned subsidiary of National Bank of Canada. The National Bank of Canada is a public company listed on the Toronto Stock Exchange (NA: TSX).

This information was prepared by Rob Hunter, an Investment Advisor with National Bank Financial and Life Underwriter with National Bank Insurance.  The particulars contained herein were obtained from sources that we believe reliable but are not guaranteed by us and may be incomplete.

The opinions expressed herein do not necessarily reflect those of National Bank Financial.

The investment advice given only applies to residents of the provinces of British Columbia, Alberta, Manitoba and Ontario.

National Bank Financial is a member of the Canadian Investor Protection Fund.

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