March 1, 2018

Markets fell on Thursday and Trump indicated he will impose tariffs on steel and aluminum imports to the U.S. I am not very familiar with the rules but for things subject to NAFTA the partners are allowed to impose anti-dumping or countervailing tariffs in situations where goods are being sold abroad at lower prices than domestic (so-called dumping) or when goods are subsidized by government (countervailing tariff allowed). I would think that if the new tariffs apply to Canada then there will an opportunity to challenge it under NAFTA and the associated dispute rules.

The U.S. markets fell on this news because it is more evidence that Trump is anti trade in general. For at least several hundred years most of the world has generally been increasingly pro-trade. The U.S. is less dependent on trade than most nations (and far less than Canada) and is in a position to try a more protectionist approach if it wishes.

The S&P 500 was down 1.3%, the DOW was down 1.7% and Toronto was down 0.3%.

It’s interesting that U.S. markets fell so much on this news about tariffs. Tariffs that Trump believes will be good for the U.S. or at least good for some of his voters.

Linamar was down 2.75%.

Canadian Western Bank fell 3.0%. I thought that they were reporting earnings today but in fact they report a week from today.

Toll Brothers will be my next update. I added a small amount to my Toll Brothers position today.

After the close, the Melcor REIT reported Q4 and 2017 results. For the year, the results were about flat. In Q4, Adjusted Funds from Operations were down 3% but in general results were fairly stable and occupancy remained at about 92%. While there was some loss in fair value of the buildings during the year there was actually a small increase in Q4. I don’t see why the markets would react negatively to the report but we shall see. The REIT hosts a conference call tomorrow morning.