Things that Go Trump in the Night

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.

 

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A Trump Bump

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.

 

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Life Insurance Changes

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.

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