Monthly World Markets Report
Budget 2017/18: Same Numbers, More Details
Remember Mr. Markowitz and Stay Diversified!
As investors, we face many potential distractions. From the exuberance over marijuana stocks in the last few quarters to the latest niche exchange-traded fund being launched, investors might lose focus on the importance of maintaining a diversified portfolio. Nobel laureate and one of the founders of modern portfolio theory, Harry Markowitz, once famously quipped that diversification is “the only free lunch in finance”.
Preferred Share Update
Budget 2017/18: Same Numbers, More Details
It’s a somewhat less exciting budget, but mostly because the government scooped itself by laying out all the big numbers last year. With Canada’s economy sparking back to life in recent quarters, near-term deficit projections have eased off, but the targets for the debt-to-GDP ratio in the medium term only allowed for modest new elbow room for spending.
The case for tax-free investing
Market Recap and Commentary
Over the past few months all eyes have been fixated on newly elected President Donald Trump and how his unexpected victory has boosted North American equity markets. Indeed, some of the broad plans he laid out during his campaign, such as a reduction in corporate taxes and a pull-back in financial regulations, could prove to be a huge positive for the U.S. economy (and by extension ours) if implemented.
The Trump Rally which ensued following the election has extended to the Canadian preferred share market as market participants slowly adjust their interest rate forecasts upward. Since the election on November 8th the S&P/TSX has gained 5.1% while the S&P/TSX Preferred Share Index has seen a 7.3% return over that same period.
Economic Outlook 2017
Whether you choose an RRSP or TFSA, most Canadians would be well served by simply making a contribution to either plan. That’s because, no matter which plan you choose, you have the ability to earn tax-free investment income for life – an opportunity that no one should pass up.
While Canadians often ponder whether it would be better, given limited resources, to contribute to a Tax Free Savings Account (TFSA) or a Registered Retirement Savings Plan (RRSP), it’s important not to lose track of the major benefit of each plan – the tax-free growth.
Things That Go Trump in the Night
As we settle into what promises to be a year of transformation, we sat down with CIBC Deputy Chief Economist Ben Tal to gather his thoughts on what 2017 has in store for key economies, currencies and asset classes:
CIBC Miracle Day
It’s not what you know, but what you can’t know at this juncture, that gives food for thought for investment strategies. Our base case economic outlook is akin to a midafternoon tea for two: nothing too exciting, and the number two features prominently. About that rate for real growth and inflation for Canada and the US in 2017-18, and short-term US interest rates heading to nearly that level as well. Longer bond yields and oil prices drift only slightly higher, the Canadian dollar a few cents weaker.
A Trump Bump?
CIBC Miracle Day™ is a proud tradition that has helped to improve the lives of millions of children since it began in 1984. Every year, on the first Wednesday in December, our CIBC Capital Markets team and CIBC Wood Gundy Investment Advisors donate their fees and commissions to help kids in need. Since its inception, CIBC Miracle Day has raised nearly $85 million for children’s charities across Canada and $234 million globally.
Life Insurance Changes
The market reaction since Tuesday night’s election result suggests that investors are keying in on one aspect of Donald Trump’s agenda: fiscal stimulus. Tax cuts for households and businesses are indeed likely to be a feature of the budget for the fiscal year commencing in the fall of 2017. On the spending side, new money could flow for infrastructure and defense. A lighter regulatory climate would also support near-term capital spending.
Year End Tax Tips 2016
Changes are soon coming to the tax treatment of life insurance policies at the end of 2016. If you are considering purchasing permanent life insurance, depending on your personal circumstances it may be beneficial to do so before January 1, 2017, so that the policy is "grandfathered" and the current, generally more favourable tax rules continue to apply. In some cases, however, it may be better to defer the purchase of the policy until 2017. We will discuss the changes and suggested recommendations below.
Tax planning should be a year-round affair. But as year-end approaches, now is a particularly good time to review your personal finances and take advantage of any tax planning opportunities that may be available to you before the December 31 deadline. As we enter the final weeks of 2016, here are some tax tips you may wish to consider.