January 10, 2018

Wednesday was a rare negative day in the markets.

The S&P 500 was down 0.1% and Toronto was down 0.4%.

Canadian stocks were likely negatively affected by the announcement that the U.S. is imposing countervailing duties on newsprint imports from Canada. This and other reports has heightened the concern that Trump will attempt to scrap NAFTA.

As far as the countervailing duties go, if Canadians looking at this are being honest, I think they have to admit that this and other Canadian industries have in fact been subsidized. And the fact that the U.S. also subsidizes some industries is really not much of a defense. A useful argument can be made that the duty will harm U.S. customers. But I doubt that a useful argument can be made that the subsidies do not in fact exist.

Probably related to NAFTA fears, CN rail was down 2.7%, TFI International was down 1.3% and Linamar was down 1.9% and the Canadian dollar was down as well. These and other stocks that would be hurt by a loss of NAFTA may very well continue to slide if and as it becomes apparent that Trump will attempt to scrap NAFTA.

Meanwhile Toll Brothers was down 2.9%.

Berkshire was up 1.3% after Buffett announced that two key executives would join the Board of directors as vice Chairs. Edmonton native Greg Abel is vice-chair non-insurance operations and Ajit Jain is vice-chair insurance operations. These two have long been the main heir-apparents for the CEO role. It was not entirely clear but it appears that these two will effectively be in charge of their two areas such that Buffett’s direct reports will presumably decline from over 60 to probably just these two plus a few head-office staff including the CFO. Buffett retains primary responsibility for investing although he has two proteges in the wings in that role who have been for about five years independently investing a large but still modest portion of the investment funds. Although Buffett is definitely not retiring, this does seem to be a partial step back which I did not predict but guessed just might happen in my January 1, 2018 comment.