March 8, 2017

On Wednesday, the S&P 500 was down 0.2% and Toronto was down 0.7%.

Oil declined about 5% and was down to $50.28.

Bombardier was down 5.8% to $2.10 Canadian (our report is in U.S. dollars because it reports in U.S. dollars) even though it announced delivering another C Series plane to Swiss Air and touted the above expectations performance of the plane. Lower oil prices tends to be negative as it reduces the incentive for airlines to buy new more fuel efficient aircraft.

Linamar was up 1.3% and then posted good earnings after the close and announced a 20% increase to the dividend. The stock will almost certainly open higher on Thursday morning.

Melcor was down 2.4% on thin volume. Lower oil prices are a negative here also. Statistics Canada and CMHC were both out with reports on housing starts /permits that were positive. However any growth in Alberta is likely due to replacement houses in Fort McMurray which will not benefit Melcor.

Interest rates are rising as the market expects the FED to raise rates next week. This has pushed the Canadian dollar lower. Lower oil prices also tends to push the Canadian dollar down.

I have some cash in U.S. dollars (it’s in a U.S. money market account) that needs to come into Canadian dollars. This is in a RESP account which is strictly a Canadian dollar account. In this case I don’t think the Norbert Gambit is possible. I have started to transfer it over but will to do so in several chunks in case the Canadian dollar keeps going down. I then have additional U.S. dollars that I may transfer using the Norbert Gambit with DLR and DLR.un. I first need to decide how much cash I should just leave on the U.S. side relatively permanently. But if the Canadian dollar keeps going down I will likely transfer some of this money. I will not get cute and try to wait for and catch the bottom but rather will just transfer portions of cash as and if the Canadian dollar declines.

Also with higher interest rates most of the rate reset preferred shares continue to recover towards $25. The Canadian Western Bank preferred B shares were up 2.6% today to $22.27. These were $19 at our last update on December 7. Our update of  March 13 last year rated these (higher) Buy at $16.61.

Earning Interest on Cash within the Investment Accounts

For a long time I have not bothered much about putting my cash into the likes of TDB 8150 (See the bottom row of the investments table on the Subscriber Home Page.) There is also TDB 166 for U.S. cash or TDB 169 for U.S. cash over $100k) I probably should have been using these money market accounts since there is a bit of interest and yet the cash remains immediately available for trading. But with the low rates, a bit of inconvenience to get at the cash when needed, my former lowish cash balances and with the money spread around in quite a few accounts, I simply had not bothered. Today, given my cash position is now larger, I corrected that and moved all my cash into these accounts.