February 25, 2018

Friday was another strong day in the markets. The S&P 500 was up a hefty 1.6% and Toronto was up 0.8%.

Stantec was down 1.8% and I added modestly to my position in that company.

Warren Buffett’s annual letter came out on Saturday. I will comment further regarding the letter in the next few days.

On Friday, Statistics Canada released inflation figures for January.

One item of note is that Restaurant prices were up 3.9% year over year for Canada and 4.9% in Ontario. This could be linked to the higher minimum wages. All else equal, this should lead to higher revenues for the Boston Pizza Royalties Income Fund. Even if traffic goes down a bit I would think that revenues would be higher. That was not yet evident as of Q4 however and so we won’t know until Q1 is reported whether or not the higher prices are benefiting Boston Pizza. It could be a situation where the franchisees are somewhat harmed by the higher wages (given that prices may not rise enough to fully offset the higher wages especially net of any decline in customer traffic) while owners of the Royalty income Fund units benefit. Or, maybe the Fund unit holders will be harmed as well if customers respond negatively to higher prices.

When it comes to same-store-sales increases (for any “retail” business), an increase due to volume and traffic is preferred. But an increase due to higher prices is also usually beneficial.

The “Russian etc.” probes are catching fish very close to Trump. So far, the stock market totally shrugs that off. Maybe now that the Trump tax cuss are in place the market does not care if he gets charged at some point.