January 22, 2018

On Monday, as the partial government shut-down looked to be a short-lived situation the S&P 500 rose 0.8%while Toronto was about unchanged.

Berkshire was up 1.3%, Costco up 1.1%, Toll Brothers 1.3%, Visa 1.3%, Amazon 2.5%… The good times roll on it seems.

TFI International was down 3.2%. CN rail was down 1.6%.

Statistics Canada reported on the investment in new home construction in November and indicated:

“Alberta stood out with a $77.0 million increase in single-family house construction, accounting for nearly three-quarters (73.1%) of the total increase in spending on new house construction in the province. Spending on new housing construction in Alberta increased year over year for all components for the first time since April 2015.”

This supports my view that the Alberta economy continues to recover and that 2018 may be a good year for Alberta-based companies.

However, Statistics Canada also reported that sales at food service and drinking places were down 1.3% in Alberta in November.

The highly respected Billionaire Octogenarian investment manager Stephen Jarislowsky was on BNN today. Among other things he mentioned that with the lower income taxes, U.S. companies would be more competitive versus Canadian companies trying to sell into the U.S. No doubt he is right. But it seems to me that the way that would happen is that the U.S. companies would be able to lower their prices to compete more aggressively against Canadian imports while still making higher profits than before due to the lower income taxes. If so, that supports my point that some of those income tax reductions are going to flow to customers in the form of lower prices and not all of it to higher profits. After all if the U.S. companies maintained prices  in spite of lower income taxes that, in isolation, would leave them unchanged in regard to competitiveness with Canadian imports.

Of course there are other changes planned and maybe the U.S. companies will not have to worry about Canadian imports as Trump will impose higher import duties.

Jarislowsky also indicated that the Canadian dollar might rise making Canadian exporters less competitive.