On Thursday, the S&P 500 was up 0.4% while Toronto was up 0.9%.

Stantec was up 3.4% but has yet to report Q1 earnings. It made what appears to be a modest acquisition of a U.K firm announced yesterday.

Apple was up 2.2% and then releases earnings and is up a further 6% in after-hours trading.

AutoCanada got spanked down 16% as margins on car sales have come down to more normal levels after having risen for a couple years due to low inventory. Interest rates are also a big headwind for the company. management appears to remain quite optimistic.

Reports today said that markets rose after fears of higher interest rates abated. That seems a little strange given that for months the reports were that stocks were holding their lofty levels partly on strong hopes of lower rates. Hopefully we are not in the Wile E. Coyote moment.

I see where David Rozenberg seems to be predicting economic gloom. In other breaking news, the sun rose today. He is the permiest of perma bears.

On Wednesday, the S&P 500 was down 0.3% while Toronto was up 0.1%.

Starbucks got clobbered down 16% after reporting a weak quarter. “China comparable store sales declined 11%, driven by an 8% decline in average ticket and a 4% decline in comparable transactions”. I’m confident that this remains a high quality company with one of the strongest brands in the world. I had a modest position in it and added to that today.

It could be that consumers are finally having to cut back. But over time Starbucks will continue to grow.

The FED today kept interest rates unchanged and said they could stay that way for some time yet. That’s not good news for stock valuations.

Oil has started flowing int he Trans Mountain pipeline expansion. This is a major good news story for Alberta that has been years in the making. The Alberta economy is relatively strong and seems set to be probably the strongest growth province in Canada for the next few years.

On Monday … I forgot to make a comment… Tesla was up about 16%….

On Tuesday, markets were weak as the S&P 500 was down a hefty 1.6% and Toronto was down 1.4%.

I see some  Cannabis stocks which are tiny slivers of what they used to be were up very substantially today. I really don’t care to even glance at the reasons why. Not my thing. But going to BNN I could not help seeing that the reason was a potential reclassification of it in the U.S. Whatever.

Canada’s GDP number for February was lukewarm at best. That’s actually a good thing for those who are hoping for lower interest rates.

One of Warren Buffett’s companies a utility named PacifiCorp is facing potentially $30 billion in liabilities for allegedly causing or contributing to destructive wildfires. These awards and potential awards are outlandish. If push comes to shove, Buffett will likely declare bankruptcy of that utility. He would not want to do that but he also is not about to let this take down his other utilities. As big as $30 billion is, it’s not large enough to be any major threat to Berkshire as a whole. And in any case I doubt that Buffett will pay anymore than is legally required and the way to minimise that is to declare bankruptcy of PacifiCorp if the $30 billion number stands.

I worked in the field of utility rates and regulation for 29 years. The “deal” on rate regulated utilities has always been that all costs are passed on to customers other than minor forecast errors (short-term cost overruns)  and other than sort of gross negligence. I have a hard time believing that PacifiCorp was grossly negligent. Basically the regulators are reneging on the long-standing “regulatory compact”. We shall see where this ends up.

On Friday, the S&P 500 was up 1.0% and Toronto was up 0.4%.

Alphabet / Google (unfortunately not on our list) was up a huge 10.0% after releasing results.

Toll Brothers was up 2.4%

The prospect of lower interest rates continues to float out a little later in the year. (seemingly keeps slipping from our grasp.) The 5 year Canada bond yield is now 3.89%.  In general, higher rates lead to lower prices on longer term bonds and perpetual preferred shares. Rate reset preferred shares are affected on a more individual basis depending if they have a near-term reset coming up or instead will pay the same distribution for up to five more years.

On Thursday, the S&P 500 was  down 0.5% while Toronto was roughly unchanged.

Meta was down 10.6% but of course remains a monster performer over the past couple of years and even more so in the long term.

Canadian restaurant and bar sales for February were reported yesterday and were strong. On a seasonally adjusted basis, February sales were up 3.8% versus January and up 4.4% year over year. For Alberta it was a 2.6% gain versus January and a 5.8% gain year over year.

On a raw non-seasonally adjusted basis the figures are: For Canada a 2.2% increase versus January (unadjusted) and a 7.7% increase year-over year. For Alberta a 2.7% increase versus January and an 8.4% increase year-over-year.

Notice the year-over-year gain differs quite a lot when seasonally adjusted versus not adjusted.  While February was the exact same season both years the different occurrence of weekend days could make a big difference for restaurant and bar sales.

Retail sales data for Canada were also reported yesterday and were somewhat weak. These are seasonally adjusted figures, which is what StatsCan always favors, and rightly so. For Canada February retail sales versus January were down a microscopic 0.1% – call it flat. Year over year they were up 1.2% which is not much growth given inflation (volume was likely down) and given the population increase.  For Alberta, there was a 1.1% decrease month-over-month and a 2.1% DROP year-over-year. With higher grocery prices adn higher interest rates people are apparently cutting back on non-discretionary purchasing. (Most of us have enough stuff already and can take a break). Not good news for the like of Canadian Tire.

Statistics Canada used to give nice summary tables with the percent change month over month and year over year and broken down by category and/or province. They seem to be doing a lot less of that more recently and it is very annoying.

On Wednesday the S&P 500 was down just 0.1% while Toronto was down 0.7%.

Tesla, which is not on our list but which I believe I have mentioned in the comments was up 12%.

CN Rail was down 4.8%. This will likely prove to be a little buying opportunity.

I added a little to my Enbridge position today.

Aecon Group reported another loss after the close. I barely glanced at the press release but once again this pathetic management blames “four legacy contracts”. They build huge projects but seem to be terrible at cost control. But those particular four projects are thankfully winding down. They have a new CFO and when I get time I will toss a few insults his way. It’s cathartic if nothing else. Any insults I toss will be based on some detailed analysis.

Next I will be diving into Stantec’s annual report and results for an update. It has a fantastic long term track record. But it did have a weak patch some years ago when they got into some of the fixed price construction business like Aecon does. They got into that in England sort of accidentally when they made an acquisition that came with some construction business in addition to their bread and butter fee-for-service engineering work which is WAY less risky.

On Tuesday, the S&P 500 was up a hefty 1.2% while Toronto was up 0.6%.

Shopify was up 4.6%. American Express was up 2.6%

Toll Brothers was up 5.0%.

The majority of stocks were up.

CN Rail announced weaker results after the close.

On Monday, the S&P 500 was up 0.9% and Toronto was up 0.3%.

lululemon was up 2.6% and Restaurant brands was up 2.3%. Both are strong companies and long term keepers in my view.

That’s it for this comment. I’ll try to have something more substantive tomorrow.

On Friday, the S&P 500 was down 0.9% while Toronto was up 0.5%.

Enbridge which I just updated was up 2.8%.

American Express was up a hefty 6.3% after releasing Q1 earnings.  It just over 10 years sicne U added it to this site and it’s up 166% since then. Not earth shattering by any means but a great return and that’s not counting the dividends. Looking back I see it fell pretty hard for most of the first two years after it was added here. There was a nice bottom in early 2016 and of course it dipped in with the COVID market panic in the Spring of 2020. So a bumpy but ultimately nice ride.

I notice Statistics Canada reported investment in building construction. For Canada they headline that February was down slightly from January and digging into the tables I see Canada was down modestly versus February last year.

I focus on year-over-year and I focus on Alberta because of my Melcor investment. Alberta was up bigly (25%) versus February last year and was down modestly versus January. Alberta is doing well. Actually it’s busting at the seams in many ways.

The report on Enbridge Inc. is updated and rated Buy at $48.

Really I probably did not need to do any analysis to conclude that this is a Buy given the 7.6% dividend yield and given its massive and important assets. But I went ahead and read the annual report pretty closely and ran my usual numbers.

This stock is not too likely to soar but it is pretty likely to keep paying its dividend and to grow earnings and the dividend slowly over the years. It will likely do better than preferred shares over a ten year period. But both can have their place in a portfolio.

I plan to add to my position although Being largely fully invested, I don’t have much cash to invest. (I’ll dig around under the couch cushions and see what I can come up with).

On Thursday the S&P 500 was down 0.2% while Toronto was up 0.2%.

A while back I mentioned I was buying a few shares in TH International which is Tim Hortons in I believe China. I don’t know much about it at all but someone was recommending it and it sounded credible. Since then it went down but today it was up 24% after releasing earnings. At $1.28 it’s basically a penny stock which are usually high risk investments.

Tesla was down 3.5%.

Tamarack Valley Energy CEO said today that Canada will need more pipeline after Trans Mountain. It’s scary to think of the battle that would be needed to get that done.

Wednesday’s action saw the S&P 500 down 0.6% while Toronto was up 0.1%.

Let’s see, oil is at $83 which is solidly profitable for the oil companies while not too hard on the consumer. (I mean it could be a lot worse for consumers, $120 oil is not out of the question).

The five year government bond yield at 3.76% is still  saying “don’t held your breath” when it comes to interest rate declines. A very well known political advisor and campaign manager)to Bill Clinton in 1990 said in his next life he might like to come back as “the bond market” because then you can intimate anyone. That was very very true in the ’80’s and ’90’s. Then the bond market went pretty docile for 25 years (with a temporary fit of anger around the year 2008 especially if you were Greece). Now its loins are stirring again.

Looking at individual stocks:

Perennial loser Andrew Peller was down 4.75% but on small volume.

No other particularly notable moves. I’ll be looking at Enbridge tomorrow.

A big day today:

1. March inflation numbers came out and the the headline increase was 2.9% year over year (so still running hot). BUT key core measures used by the Bank of Canada were lower than expected at around 2%. Good news!
2. The federal budget came out. The big surprise was an increase in the capital gains inclusion rate but with a $250k level for individuals remaining at the old 50% level.
3. The security issue that was blocking a lot of users from getting to my site has finally been resolved. I’m more than willing to refund some subscription fees for anyone that wants that. I’ll do it on a request basis.

Meanwhile the S&P 500 was down 0.2% and Toronto was down 0.45%.

Tesla was down about 3% today and is laying off 10% of stocks. I don’t have a rating on it and it is a volatile stock. But id do own a little and I drive a Tesla and I will add on dips, funds permitting. I got to use the Full Self Driving free trial for only about 5 days. But I liked it a lot. I’d consider a monthly subscription at the expected price around $150 Canadian. You can’t snooze while in that mode. The software require you to pretty much keep your hands on the wheel. It will even disable self driving for a week if you fail to keep hands on wheel enough. It’s okay to take hands off for a minute or two. I got two warnings as I was enjoying the novelty of hands off.

Next update will be for Enbridge now that the crazy certificate issue is resolved.

On Monday, the S&P 500 was down 1.2% and Toronto was down 0.7%.

I don’t see any news about the stocks on our list to speak of.

Tesla is doing layoffs but is also going to start bringing big revenue from subscriptions to its full self driving software. I have A Tesla and we all got a free trial of Full Self Driving this month. It’s not 100% and requires driver attention but it’s still pretty awesome – and will get better. I think nibbling on Tesla if and as it drops might work out well.

The yield on the Canadian government 5 year bond has risen to 3.8%. That is signalling no imminent reduction in interest rates at the Bank of Canada or in mortgage rates.

Tomorrow’s big news in Canada will be the federal budget. Although most of it has already been announced. The size of the deficit might be the focus tomorrow.

On Thursday, the S&P 500 was up 0.7% while Toronto was down 0.4%.

Apple was up 4.3%. Other than that no particularly noteworthy moves in the stocks on our list.

The new measures announced today for first time buyers of new homes and the enhanced RRSP home buyer loans should be positive for Melcor Developments. As I wrote to their CFO, if they can’t make a decent ROE this year (I said minimum 15% although that may be wishful thinking) then they are a lost cause. My suspicion is that they have a cost management problem. They also hold far too much land and I have asked them to do a projected cash flow analysis to determine the present value of each parcel of land in case the alternative to sell now is a better option. But they just seem to hold onto land. They also overpay their executives given the poor performance.

In other news Trump’s lawyers apparently are desperate to get at least one juror who will not vote guilty no matter what.  In my mind they have charged him with too many things. Should have focused on a couple of key things like inciting a riot at the Capitol and the fake electors and attempt to not accept the election results. And also its crazy to be charging him regarding this Stormy Daniels thing almost 8 years later. It’s a crazy world. It’s amazing that the S&P 500 takes all this in stride.

On Tuesday, the S&P 500 was down 0.95% and Toronto was down 0.7%.

Most stocks were down but Cameco was up 3.4%.

The Bank of Canada left interest rates unchanged today and seemed to signal that cuts might not come as soon as hoped and might ultimately not be as deep as hoped.

The 5 year government of Canada bond rose to 3.78%.

You might still find some good rates on GICs given this development.

Pref shares are likely to be a bit weak on this news until hoped for rate cuts revive again. We need bad economic news before Bank of Canada will cut. Or at least lower inflation.

Monday’s session saw the S&P 500 and Toronto both essentially unchanged on the day.

There were no particularly notable moves in the stocks on our lost.

Trudeau continues to dole out more borrowed money. Every incremental dolalr of spending is borrowed money given the deficit.

On Wednesday there will be updated comments from the Back of Canada but no interest rate decrease is expected. On Friday the U.S inflation figures come out.

The CEO of Royal Bank was saying what a great thing it is that its takeover of HSBC will mean that the profits and dividends of that that bank will now flow to to Canadians. I think he mentioned $700 million per year. He did not mention that the purchase price presumably left this country.

He also grumbled that Canada now requires big banks to hold more capital than is required of large US banks. The US had been expected to adopt Basel III which Canada already has. Now the U.S. is backing off and RBC says unfair – it won’t be able to compete as well internationally he said. He wants a level playing field.  Well in my view that’s just too bad, so say. Why should Canada change and make its big banks more risky just because the US wants to let big banks be more risky than contemplated under Basel III? The vast majority of Canadians are not cheering for a bit more profit at RBC. And perhaps the RBC CEO forgets that his operations in Canada are largely protected from US competition. Canadian banks buy up U.S. banks frequently but U.S. banks are not allowed to buy Canadian banks nor are they allowed to offer banking services in this country unless they open a subsidiary here. The whole Canadian financial sector is HIGHLY protected from foreign competition. No level playing field there. That’s something that seldom gets mentioned.

Today, I updated the Emera rate reset EMA.PR.H in the Subscriber home page to Buy at $22.46. The last update called it Strong Buy at a somewhat lower price. This preferred share has been quite volatile. It’s been as low as $18.30 in October and was certainly a great buy under $19.

The rate resets have done well in the past year or so. For example, using Friday’s prices the six rate resets that I featured in the Newsletter article sent on July 2, 2023 are up an average of 18.4% – with a range of 3.69 to 36.2%. The TD Bank one rocketed up apparently on the assumption that it will be redeemed this fall although I don’t think that is guaranteed to happen.

In general it’s probably still a good time to hold both rate resets and perpetuals but the perpetuals will have more upside if and when interest rates drop. The Preferred shares in the article linked above are only up an average of 3.2%.

The report for CWB.PR.B is updated and rated Buy at $21.81 to yield 7.3% and the report for CWB.PR.D is updated and rated Buy at $25.30 to yield 7.56%.

See the Subscriber Home page. Both of these have one more dividend at their former lower rates that will be paid on April 30 and the higher dividends start three months later.

For a limited time during April there is an opportunity to convert to a floating rate that will initially start at about 9.0% but only if enough share holders elect the conversion option.

On Friday, the S&P 500 was up 1.1% and Toronto was up 1.0%.

Dollarama was up another 3.7%.

Constellation Software was up 2.6%.

Canada’s jobs survey was quite weak on Friday morning. Given this is a survey it is subject to statistical error. I’d wait another month before concluding that the trend is as negative as Friday’s report suggests. This survey has been subject to some pretty swings up and down in the past. Swings that appear to be statistical errors at times.

I see news that RBC has fired its female CFO after an undisclosed personal relationship with another employees who she gave preferential treatment to including a promotion. Wow that is a BIG job to be fired from. Her compensation last year was $4.1 million. She had been with the bank for 25 years. The other employee was also terminated. RBC has named an interim CFO.

A lot of people have no sympathy for this sort of thing but I would say let’s not be vindictive. She is apparently to get no severance and this is a big loss. I wonder if there would have been an opportunity to simply disclose the relationship and have the other person work in a different department? Possibly that would not have worked either. What if the CFO was already married?  Can’t exactly disclose an affair. What if it was a same-sex relationship? That can be tricky to disclose. Humans are programmed to have relationships. Anyhow, she did wrong and she’s paid a heavy price. Such is life.

On Thursday, the S&P 500 fell sharply in the later part of the day and ended the day down 1.2%. Toronto was down 0.3%.

Dollarama was very strong with a 10% gain after posting strong earnings and boosting its dividend.

lululemon was down 4.4%.

Given the pull-back in Costco I have bought back the shares I sold recently. Perhaps I should have waited and hoped for a bigger pull-back but if that happens I will buy more, funds permitting.

I also added a little to my Starbucks position as the price dipped.

I’m hoping to be more concentrated in strong companies like Costco and Starbucks and Visa and Dollarama and others as time goes by. Shopping in the bargain bin (Melcor) has not worked out well in recent years. And in most cases my U.S. investments have done better than the Canadian ones, although there are certainly some real gems in Canada as well.

The report on Canadian National Railway Company is updated and rated (lower) Buy at $177 or US $131. It remains a great long-term hold.

Spruce Point Capital Management has issued a strong-sell report on WSP Global and they are “short” the company. The stock is down a relatively modest 5% to $210.

Listening to the Spruce Point founder this morning on BNN, I think he had some valid points. But I am not in a position to do the forensic examination of their accounting that would be needed to confirm some of his point.

The WSP report on Subscriber Home Page is marked “out of date”. I marked it that way for the start of 2024 because the report was from March 2023 AND because the price had jumped since then.  I was planning to update this month. If you click on the report, my last rating was Weak Sell / Hold at $173. Based on this news and on my weak assessment last year at $173 I would be very much inclined to sell on this news. Most holders have big gains on this stock and so it’s not such a bad thing to sell. At a minimum I would sell half at this time. I’d be even more inclined to sell if held in non-taxable accounts.

BHP Group is updated and rated Sell at $59 for the ADRs that trade on New York.

Due to a weak outlook and also due to its unpredictability and complexity we are rating this a Sell and this will be the last update for this company.

We have a capital gain of 31% since the original “speculative Buy” recommendation at $44.66 six years ago. But investors who held since then have received $14.00 in dividends and a value of $8.64 in the “spun-off” shares of Woodside Energy received including dividends on Woodside. That’s a total return of 82%. We are not following Woodside and would sell those shares as well.

On Monday, the S&P 500 was down 0.7%  and Toronto was down 0.5%. The market is beginning to fear that interest rate cuts are not so imminent after all. The Canadian 5 year bond yield is at 3.67%.

Oil is strong at US $85 which is good news for Alberta.

Most stocks were down modestly.

Costco has slipped down to $711. I have already bought back some of the Costco shares that I sold around $760. I really would not mind seeing it go lower as I would buy more at lower prices.

Starbucks has dipped below $90 for the first time since October and I may add to my position in this high-quality company.

The report on Berkshire Hathaway is updated and rated and rated (lower) Buy. It is somewhat expensive in relation to earnings and book value. On the one hand if I had a large position I would be tempted to trim it. On the other hand selling Berkshire has always been a mistake unless it then fell and was bought back at a lower price. I have a modest position and will likely continue to hold.

On Monday, the S&P 500 was down 0.2% while Toronto was up 0.1%.

Cameco was up 8.15%.

Oil is at $84 which is nice for Alberta.

CWB.PR.B will reset to pay 6.371% of $25 (2.76% spread plus today’s 3.611% 5 year Canada bond yield) so $1.59275 per year. This is a 7.39% yield on today’s price of $21.54. I believe this is attractive since it also seems likely that there will be a capital gain if interest rates fall. However there is no guarantee of a capital gain and the shares could fall in price particularly if there is a panic in the markets for any reason.

Holders also have the right to convert these to a floating rate preferred share – but only if a certain minimum number of shares are elected for conversion. The initial floating rate will be 7.759% annualized on $25 or 9.0% of today’s $21.54. Usually not enough shares elect the floating option, but this high floating yield might attract enough shares. Note however that this floating dividend will be expected to decline as interest rates fall.

CWB.PR.D will reset to pay 7.651% of $25 (4.04% spread plus today’s today’s 3.611% 5 year Canada bond yield) so $1.91275 per year. This is 7.58% of today’s $25.22 share price. This is attractive but may not have much of a capital gain if interest rates fall since it is already above the $25 price at which it could be redeemed in 5 years. But that’s a log ways off and it could possible get as high as $26 or even $27 if interest fall rapidly.

Note that I had been saying the spread on this share was 5.04%. I apologise for that error, it is 4.04%.

Holders also have the right to convert these to a floating rate preferred share – but only if a certain minimum number of shares are elected for conversion. The initial floating rate will be 9.039% annualized on $25 or 8.96% of today’s $25.22. Usually not enough shares elect the floating option, but this high floating yield might attract enough shares. Note however that this floating dividend will be expected to decline as interest rates fall.

And note that for both of these preferred shares the April 30 dividends will be at the old lower rates and the higher dividends begin on July31.

Here is the press release from CWB.

After a disastrous attempt to move to a new host location, the site is back up, as you can see. I will resume updates and comments tomorrow. Looking forward to it. My apologies for this site being down so long.

U.S. markets were strong today with the S&P 500 up 0.6% while Toronto was down very slightly.

Auto Canada was strong with a 4.1% gain.

Canadian Tire has slipped under $130. It is suffering as people cut back on non-discretionary spending. But Canada Tire had been doing very well for many years before the recent profit decline. It has been very well managed. If they can turn things around then the stock will rebound. Q1 is never a strong quarter for them but hopefully by the time they report Q1 they will be able to point to a better outlook ahead.

On Friday the S&P 500 was down 0.65% while Toronto was up 0.1%.

TransAlta was down 3.5%. It seems to be living up to its old reputation as a poor investment. I was hoping it was on better footing with new management and a lot of changes to its assets in the past few years. There is  uncertainty about future electricity policy in Alberta as the government is eyeing some changes and that is weighing on this stock.

Cameco was up 2.6%

You may notice this web site starting to look a little different. More changes are coming.

Thursday’s session saw the S&P 500 down 0.3% and Toronto down 0.6%.

AutoCanada was up 2.3%.

Toll Brothers was down 3.95%.

One of the larger investors int eh Melcor REIT (Firm Capital ) has written to the REIT Board asking tthat Melcor take the REIT private at a price close to its book value. Nothing may come of that. But It would be the fair thing to do in my view. The REIT and its strategic Review Committee have not commented on this or let investors know about the letter as far as I can see.

On Wednesday the S&P 500 was down 0.2% while Toronto was up 0.6%.

West Texas Oil is just under $80 U.S. dollars.

After the close Melcor Developments released Q4 and 2024 earnings. The results seemed “okay” but for some reason they lowered the dividend from 16 cents to 11 cents. The book value per share is reported as $39.45. There appears to be some mistakes in the press release. Most of the percentages in the selected highlights table appear to be wrong.

In better news, I notice that American Express at $223 is up 19% this year to date and it’s up 57% since I rated it a (higher) Buy on October 20 at $142. The forward P/E is 17.3 and therefore it is not overly expensive. If I had a very large position I’d consider trimming it. I have a modest position and have no plans to sell.

The report on AutoCanada is updated and rated Speculative Buy at $23.75. Revenues have been increasing strongly. Earnings per share are volatile and have declined in recent quarters after very strong results in 2021 and 2022. The gross margin or markup on new vehicles seems very strong at over $5000 per vehicle. And then they make an additional $3500 on finance and insurance products on average. Management is aggressive but admits that certain cost have been too high and they are working on improvements.

Profits should increase in the long term but the high debt level of the company is a concern. It will benefit if interest rates decline as expected.

One investment company (EdgePoint) has made a very large bet on AutoCanada and owns about 28% of the shares. This is a strong vote of confidence.

Tuesday was a positive day for stocks as the S&P 500 rose 1.2% and Toronto rose 0.3%.

Toll Brothers was up another 2.4% and then announced a 10% dividend increase after the close.

Cameco was up 2.95%.

Costco was up 3.2%.

TransAlta went the other way losing 6%. This was after news that Alberta will move to curtail the ability of certain large generators in Alberta to offer in power only at very high prices in certain circumstances. It may also be thought that TransAlta’s plans to buy additional generators in Alberta (the Heartland acquisition) will be in jeopardy as the government is concerned about market concentration.

On Monday the S&P 500 was down 0.1% while Toronto was up 0.15%.

West Fraser Timber was up 2.6%.

AutoCanada was up 11.4% in what seems to be a slightly delayed reaction to its Q4 earnings report. I will update the report on this company in the next day or so. It appears to be attractively priced. It has certainly been somewhat cyclical and faces the headwinds of higher interest rates. But I continue to think it is quite well managed and has a good future. Its reported earnings in Q4 and 2023 were distorted (lowered) by an usually large stock compensation expense.

The two Brookfield Office Properties preferred shares on out last have had a big recovery from their lows. These shares are guaranteed by its immediate parent Brookfield Property Partners L.P. but not by the ultimate Brookfield Asset Management parent. Apparently the market is now more confident about Brookfield Property Partners. But it is a complex entity. It might be reasonable to reduce this position somewhat. These shares continue to be higher risk.

Aecon Group is updated and rated Sell at $17.03. This company has a volatile history and remains extremely unpredictable.

It has been very poorly managed resulting in huge cost over-runs and therefore losses on a number of major fixed price contracts. They have also tried to distance themselves from their past mistakes by labeling certain problematic projects as “legacy” contracts.

In addition its disclosure is very poor in our opinion.

The recent rebound in the share price is a good opportunity to exit. A reasonable approach would be to sell at lest half of positions. I just sold two-thirds of my modest position in this company. I’ll retain the rest in case management really has finally turned the corner on their troubles.

On Friday the S&P 500 was down 0.65% and Toronto was down 0.3%

Costco finally has a little pull-back falling 7.6% after releasing earnings. But this just gives back a small part of its recent increases.

Cameco was down 6.2%. It remains long-term bet on uranium prices and the nuclear power industry.

My next date will be for Aecon Group. It has had a good recovery but continues to face big cost over-runs on what it calls “legacy” projects. I will likely sell at lest half of my small investment in this company. They undertake many fixed price contracts but have a track record of cost over-runs. They are trying to reduce the percentage of fixed-price contracts but those still make up about 50% of projects in backlog and possibly a higher percentage of current projects.

Stocks were hot on Thursday as the S&P 500 rose 1.0% and Toronto rose by 0.9%

Linamar was up 11.4%. Cameco was up 5.4%. Aecon Group was up 4.8%.

Constellation Software was up 4.5%.

One of the rate reset preferred shares on our list and that I keep an eye on is TD,PF.A . It has a low spread over the 5 year Canada bond of just 2.24% and is scheduled to reset on October 31. It was featured in my newsletter article on July 2, at $17.49. Now it’s at $23.07 for a gain of 32% (plus the dividend). Although I said it was a buy on July 2, that size of gain is NOT something I expected. At the start of this year it was at $18.35 and I rated it only a (lower) Buy. But I mentioned the possibility of it being redeemed at $25. That must be what the market is now expecting. This share is over-priced at $23.07 unless it is assumed that it will most likely be redeemed on October 31 at $25. TD has been issuing a lot of a certain type of bond (5 years but extendible to 10 at the bank’s option) this year, apparently aimed at retail investors. They have had those bonds as new issues many times in the past 8 months or more. It may be that those bonds will replace these rate reset shares in TD’s capital structure. TD has redeemed other rate reset shares in the recent past. But there is no guarantee that this one will be redeemed.

Canadian (and by province) building permit data for January and was strong whether compared to December (seasonally adjusted, as always) or compared to January last year. Alberta’s building permits were up 26% year-over year and single family home building permits were up 33%. This should bode well for Melcor Developments stock price and god knows it could use a reason to rise. Whether it’s builders took on a good number of lots in Q4 or not, (and at good prices) remains to be seen. What may be more important is if Melcor has good things to say about its outlook.

Ontario led the gains when comparing January to December, seasonally adjusted.

https://www150.statcan.gc.ca/n1/daily-quotidien/240307/dq240307b-eng.htm?utm_source=mstatcan&utm_medium=eml&utm_campaign=statcan-statcan-mstatcan

The Melcor REIT has suspended its distribution due to a cash crunch and is undertaking a strategic review. Meanwhile it is is still generating cash and it does not appear to be in danger of going broke. There’s potential upside from the strategic review but there are no guarantees. The report labels it a Speculative Buy at $2.60.

On Wednesday, the S&P 500 was up 0.5% and Toronto was up 0.3%

Aecon Group was up 11.8% after reporting Q4 earnings. Perhaps it is finally doing better operationally after years of cost over-runs on projects.

The Melcor REIT bounced up 8% after reporting Q4 earnings. I have read its results closely and spoken to the CFO. While the distribution suspension is very disappointing, the stock price over reacted to the downside. It’s very unlikely that these units are headed to zero. The REIT has a number of good properties. They are facing a cash crunch at this time and needed to preserve cash. It does appear that the strategic Review is genuinely meant to be beneficial to unit holders in the end. I’ll update the report tomorrow and I expect to rate it Speculative Buy. I fully admit my track record on this one has been bad.

After the close, Linamar posted a strong earnings report.

The Q4 results for the Melcor REIT show some continued weakness but were not dire.

The conference call was very brief and the two or three analysts that cover this are probably  not too interested in promoting it. They like all of us owners have been burned.

I just had a 20 minute call with the CFO and she explained that the REIT does face a cash crunch but I definitely did not get the sense that things are dire. She indicated that it is possible that the distribution will be reinstated at some level later this year. If not they could face income tax. But dealing with the cash crunch is a higher priority than paying a distribution.

It’s hard to say what is up here. Melcor Developments may want to take the REIT private back into Melcor. If so it would be unfair to do it at a really low unit price.

The units have recovered a little bit today and I think they do have value here. But obviously things can continue to be volatile.

I have no plans to either buy or sell units.

On Wednesday the S&P 500 was down 1.0% while Toronto was essentially unchanged.

West Fraser Timber was down by 3.0%.

Shopify was down 2.9%.After the close the Melcor REIT released Q4 and 2024 results. As expected profits and cash flows were down due to higher expenses. But the report certainly does seem to be cause for panic. The REIT has a lot of debt coming due in 2024 and that is problematic. But it appears that they have substantial equity in the buildings involved and should be able to renew the debt although at higher interest rates.

Overall, I’m hopeful that the units will now stabilize or hopefully increase somewhat in value. That will depend partly on how analysts react to the news and to the conference call tomorrow.

On Monday, the S&P 500 and Toronto both ended the day down 0.1%.

West Fraser Timber was up 2.6% and continues to do very well.

Canadian Western Bank was up 1.6%.  After it released earnings on Friday the headlines said it has higher loan losses. That’s true but that was in comparison to a NEGATIVE provision for credit losses in the year ago quarter. CWB’s loan losses this latest quarter were at the low end of its normal range and are lower than the big banks. CWB’s results overall were about as expected. But it did have very low growth as its customers are more focused on paying down debt than taking on new debt. CWB expects only modest growth this year but it’s share price already reflects that. They now have three branches in Metro Toronto and one will soon open in Kitchener. They are laying the groundwork for higher growth ahead but it has been a slow process.

I sold half my Costco position day because it seems very expensive at 47 times forecast earnings per share. In general selling Costco is usually a mistake. I’d love to buy it back at a more reasonable price. It releases earnings later this week and as long as the overall market sentiment stays strong it could certainly keep going higher.

On Friday the S&P 500 was up 0.8% and Toronto was up 0.9%.

Cameco was strong with a 3.5% gain.

The Melcor REIT got hammered down 13% to $2.39. The market may fear that this is going to zero but that still seems unlikely.

Thinking about the Melcor REIT I wondered exactly what led the independent Trustees to pursue a strategic review. The press release says it is the (full) Board that is undertaking the review although it will be led by a committee of the independent Trustees. That Committee has retained legal counsel to represent it and I’m not sure if that is normal or represents a red flag and may be indicative of a disagreement among Board members.

It seems clear that the REIT was and is facing a liquidity crunch due to upcoming debt maturities including a line of credit that needs to be renewed in June.

It may also be the case that the auditors and or management have determined that a significant write-off of building values is required. That in turn could make it even harder to borrow and might even lead to being in breach of debt covenants although the debt covenants appeared to be set as a percent of original cost of the buildings and not market value.

The press release announcing the restructuring mentions three times that the goal is to preserve value for unit holders. While anything is possible, there was no indication that the REIT was going to have to (as a drastic example) enter creditor protection. Melcor Developments owns 55% of the REIT and certainly will not want to lose its investment.

The suspension of the distribution on its own has certainly driven the unit price down. But it does not fundamentally change the true value of the units. However, the market has probably considered that the suspension signals that the true value is lower than previously thought.

We’ll know more on Tuesday afternoon when the REIT’s financial results are to be released.

CWB’s results were “okay” as I expected. Headlines say their provision for loan losses was up year-over-year (also up from last quarter). But one year algo they had a negative provision for credit losses (income as opposed to expense). The provision this quarter was 19 basis points. That’s at the lower end of their historic average of 18 to 23 . It’s lower than most banks. It’s not something to worry about.

Meanwhile loan growth was slow at just 1% year-over-year. Deposits are also up only 1% as businesses are cautious about borrowing and instead some are drawing down the cash they have on deposit. Net interest margin was improved. Overall it’s steady progress report. They are only looking for mid-single digit EPS growth this year and they indicate they are on track for that.

This is not a high growth company and the ROE has been a bit low- They hope to move the ROE up. The stock is good value for money but not likely be any kind of barn-burner return in the next year.

Capital ratios are good. It’s still not clear if they will redeem one or both of the rate reset preferred shares. I think we will know on March 22 or by April 1 latest. The CCEO has indicated they like having some “excess” capital at this time since it gives them options and flexibility. Looking at their capital ratios I think they have room to redeem possibly both rate reset shares but I don’t know. I’ll try to see if this was brought up on the earnings call. I suspect not given that CWB.PR.B is down a little at the moment. The highest likelihood is that they will redeem CWB.PR.D but not CWB.PR.B.

On Thursday the S&P 500 was up 0.5% and Toronto was up 0.6%.

The rate reset preferred share TD.PF.A was up 2.5% to $21.88. It’s up 17% this year to date which is pretty darn good a preferred share. It resets on October 31 and the market may be placing weight of the possibility of it being redeemed then at $25. Its reset spread at 2.24% is on the lower side but it has one of the higher credit ratings.

The Melcor REIT plunged another 9% to $2.73. With a strategic review underway and with its debt I don’t know what a realistic value is on this. Hopefully the decline is just people bailing out. The Alberta economy is reasonably strong and population has been booming. I’m hopeful for a recovery but it’s likely to take some months before there is any clarity. Their Q4 report is due out next week but may not give much information. It seems likely that they will have a write-down on the market value of their buildings due to higher interest rates (higher cap rates – lower values in the market). At last report they seemed to be doing fairly well on leasing space. They may also disclose difficulties in renewing their debt as it matures. To the extent that some of their debt is non-recourse and secured by a particular office building they might even decide to let the lenders foreclose. At their last report they claimed to be close to selling some Saskatchewan properties. That may have fallen through. With two trustees announcing they will leave on March 5 it seems likely that there was a disagreement among Trustees as to the best course of action.

Toll Brothers was up another 2.2%. It often seems to be the case that the best companies keep getting stronger and the weak continue to stumble.

I have my fingers crossed for decent results from Canadian Western Bank. Loan loss provisions can make bank earnings unpredictable. In terms of being a particularly strong or weak company, CWB seems to be somewhere in the middle. If things are not going well then we might expect to hear about some job cuts by attrition if nothing else. They’ve been opening branches in Ontario and making other moves that has added to their costs. They also face relatively high deposit costs such as on GICs. What works much better for them is business chequing accounts that don’t pay much interest on. Last year they were hopeful of luring clients away from HSBC as it gets swallowed up by RBC. I don’t think they have given any update on that.  I just listened to their CEO at an investor conference on January 9th. It sounds like Q1 will be steady. Net interest margin should improve but loan and deposit growth will be minimal if any. No indication of bad debt problems. The Bank remains strong and has plans to grow but nothing dramatic for growth. We’ll see what the morning brings as they report earnings and then see how the market reacts.

On Wednesday, the S&P 500 was down 0.25 and Toronto was down 0.35%.

After the close Stantec and WSP Global were out with earnings reports. I believe WSP was a good report but a headline suggests that Stantec “missed Q4 estimates”. Stantec itself said it had record 2023 earnings and increased the dividend by 7.7%. Whatever the case the stock price should largely reflect the news at the open tomorrow morning.

The report on TransAlta is updated. It’s been “generating” attractive levels of free cash flow. It looks under valued. But it is a very cyclical and hard to predict business. It also has a weak balance sheet although the CEO claims it is a strong balance sheet.

I have a particular interest in the Alberta electricity market and that is the reson I wanted to look at this company. The annual report is 278 pages and so there was LOT to look at.

I may also take a look at its preferred shares.

Tuesday’s action saw the S&P 500 up 0.2% and Toronto about unchanged.

West Fraser Timber was up 4.3%. It continues to do well even while shutting and curtailing certain mills. It may be that the industry is being smart and refusing to under-cut each other.

There’s more economic data coming in this week as well as the big banks continue to report earnings.

On Monday, the S&P 500 and Toronto were each down 0.4%.

Canada’s big banks will be reporting earnings this week with two reporting tomorrow. It will be interesting to see the loan loss provisions and what percent of residential mortgages have amortizations of over 30 years. It will also be interesting to see if they are experiencing higher credit card delinquencies.

Canadian Western Bank will report on Friday morning. I’m hopeful of continued results that are at least okay. They continue to grow slowly. But they also face high deposit costs. So far their bad debt and loan provisions have been modest and not a problem. But there can always be surprises in that area.

There are a number of important U.S. economic figures due out this week and those could move markets in one direction or the other.

The five year Canada bond yield is sitting at about 3.61%. That’s positive for the Canadian Western bank rate reset preferred shares. I believe CWB will announce on March 22 whether they will redeem those at $25 or not and if not they will set the reset yields on April 1. CWB.PR.B has risen as we get closer to the reset date and as the 5 year bond yield has risen since its lows just before Christmas.

Another rate reset that I have featured for a long time is ENB.PF.A. It does not reset until December 1. The reset could be at an attractive yield (at least 8.1% of today’s price) if the 5 year bond rate remains above 3.0% by then. I’m hopeful for capital gains on that reset share as well. But many things (positive or negative) could happen by December 1.

On Friday the S&P 500 was about flat while Toronto was up 0.45%.

The Melcor REIT got clobbered down 23% after the news that I mentioned on Thursday. I’m hopeful that something good will come out of the review but there is certainly no guarantee of that. The REIT found itself with too much debt as interest rates rose and it was prudent to cut the distribution. It’s an age-old rule of corporations that debt interest and debt principal must rank ahead of equity distributions. As of Q3 they though that they would be able to sell some properties in Saskatchewan to take care of the liquidity issue. It seems likely that did not happen or was insufficient.

Penny stock Ceapro was up 57% (from a very low level) after its press release touting various research irons that it has in the fire. Unfortunately, this company has a long history of projecting future developments which never seem to occur. In March it will hold a vote on a proposed merger with another company. This stock is definitely high risk and unpredictable.

TransAlta bounced up 5.3% after releasing Q4 earnings. I have going over its results in detail. It appears to be under-valued on a cash flow basis. But it is also very unpredictable due to changing commodity prices. And it has a lot of debt and a weak balance sheet. (The company claims the balance sheet is strong but that’s not the case.) I will do have an update on it in a day or two.

On Thursday the S&P 500 was up 2.1% and Toronto was up 0.7%.

Nvidia was the big news with a 16% gain in price which was a $277 billion dollar gain in wealth and market cap overnight.

I will admit to feeling left out of the gains of Nvidia and the other members of the magnificent 7.

The other gainers today pale in comparison to Nvidia but Visa was up 2.5% and lululemon was up 2.7% and Toll Brothers was up 2.0%.

The Melcor REIT announced after the close that it is suspending the dividend and undertaking a strategic review. The distribution elimination is unfortunate but it’s possible that the Strategic Review could result in the unit price rising. But it could take a number of months before anything good comes out of this. Meanwhile there could be some panic selling.

It seems to be increasingly the case that it is better to invest in large higher quality companies. Many smaller companies have not been good investments.

In other news Canadian Retail sales for December were reported today. Retail sales in December were up 2.9% year-over-year. I found it interesting that “beer, wine and liquor” sales were down 5.5%. That’s in spite of inflation. People are cutting back on alcohol. That’s probably mostly due to tighter budgets due to inflation on necessities and may also be for health reasons. Other discretionary categories were down as well. Sporting goods were down 5.1%. That echoes the weak results at SportChek that Canadian Tire reported and was partly related to the unseasonable warm weather in December. Furniture retailers were down 6.6%.

https://www150.statcan.gc.ca/n1/daily-quotidien/240222/t002a-eng.htm

I’ve been mentioning the Canadian Western Bank preferred shares that are due for a dividend rest at the end of April. I realised today that the new dividend rate will be reset based on the 5 year government of Canada bond yield on April 1 plus the reset spread applicable to each of the two shares. The CWB.PR.B shares are trading at $21.50 and it’s possible that CWB might decide to redeem them at $25. If not the dividend yield will rise to a reasonably attractive level. The CWB.PR.D shares ate at $24.86. They will pay a dividend of 37.5 cents on April 30 and I expect them to almost certainly be redeemed on April 30.  .

On Wednesday, the S&P 500 was up 0.1% while Toronto was down 0.2%.

Shopify bounced down 4.0%.

Toll Brothers was up 4.0% after posting another great quarter of earnings growth.

Trudeau was in Edmonton handing out $175 million to spur home building. Surely Melcor Developments will see some benefit from this.

Meanwhile the Melcor REIT seems to be over-due with its distribution announcement for this month. They may also need to announce replacements for two Trustees that left rather suddenly.

On Tuesday the S&P 500 was down 0.6% and Toronto was down 0.2%.

Canadian Western Bank was up 3.0% after upgraded their recommendation on it.

Couche-Tard was up 3.7%.

After the close, Toll Brothers came out with very good earnings.

Canadian inflation came in lower than expected at 2.9% year over year. This gave hope that the Bank of Canada can soo start reducing interest rates.

Mortgage interest costs are one of the bigger drivers of inflation. BNN indicated that mortgage interest payments are up on average by 27% year over year. That has a 3.8% weight in CPI and so that would account for 27% times .038 = 1.0% all by itself. And it seems to me that average mortgage interest payments are going to keep rising as more mortgages renew at higher rates. Certain core inflation numbers are coming down but its not clear that headline CPI will go down given higher and higher mortgage interest.

The Bank of Canada will likely want to see evidence that high interest rates are cooling the economy in terms of business expansion. I think they actually need to see layoffs before they will cut rates.

Inflation in overall shelter costs was 6.2% year over year and it has a 28% weight in CPI. That means shelter accounted for 1.7% of the 2.9%. It appears that a a lot of prices are finally not rising much or are down year-over year. Gasoline and airfares were down.

Click the following link and then click “latest Snapshot” to see all the basket weights. Very interesting. And click price trends to explore inflation by the individual major basket items.

https://www150.statcan.gc.ca/n1/pub/71-607-x/71-607-x2018016-eng.htm

Markets are closed today for the holiday.

On Friday, the S&P 500 was down 0.5% while Toronto was up 0.2%.

Shopify (always volatile) bounced down 3.0% and lululemon was down 2.0%.

One of the worst performers that I have followed for quite a long time is Andrew Peller. Last week there was news that much or even virtually all of the Okanagan wine vines have been killed by a bitter winter cold spell in January. If so it’s more bad news for Andrew Peller as they have substantial assets there in terms of both vineyards and also wineries.

Andrew Peller made no mention of this in its February 12 earnings release. It’s perhaps par for the course for this management not to mention the bad news. It’s hard to imagine that they were not negatively impacted.

The report on Canadian Tire is updated and rated Hold at $140. It’s Q4 earnings released last week were very disappointing.

Same-store sales were down 6.8% in Q4 And it appears that shipments to the Canadian Tire dealers were down double digits which suggests tat the dealers see continued weak sales ahead. Part of the weakness in same-store sales was due to the warm December weather. Unfortunately the mild winter has mostly continued in much of the country.

2023 earnings were also impacted by inefficiencies after a distribution center fire. Therse indirect impacts were not adjusted for. Interest expense has also risen. But overall it is hard to understand why adjusted earnings per share have declined by about 335 on average over the past three quarters.

Unless management can turn things around through significant cost cutting it looks like 2024 may not see much recovery in earnings if any.

Canadians are facing and have faced significant inflation in groceries, utilities and property tax and in some cases in interest expenses. It appears that discretionary spending has taken a noticeable hit.

Looking at these results I’m now a bit surprised that the shares did not decline after this earnings release (other than a temporary blip down on Thursday morning which was quickly recovered)

As I have mentioned, I fully expect CWB to redeem their CWB.PR.D shares on April 30. Those shares would otherwise reset at a huge spread of 5.04% above the 5 year Canada bond yield.

I had thought that the CWB.PR.B rate reset preferred shares would not likely be redeemed given their lower 2.66% spread. But I was taking another look at the fact that CWB issued a $250 million in subordianted debt  paying 5.95% (a non-viability contingent capital debt) on January 15 “for general corporate purposes). The two preferred shares together can be redeemed for $250 million and that may be what they are planning. Bank capital rules are constantly changing and CWB has been using the new “Limited  Recourse Capital Notes” as well as using more subordinated debt.

Overall it is still very uncertain but I am starting to think that the CWB.PR.B shares may well be redeemed at $25 on April 30. That would be a nice gain from the current $21.52 price. But it’s far from certain that they will be redeemed. If the 5 year Canada bond yield, currently at about 3.7% is down towards 3.0% on April 30, the bank may be less inclined to redeem these.

The various preferred shares have done well since I updated them in mid December. Today I updated the Enbridge’s ENB.PF.A. It was rated Strong Buy on December 16 at $15.47 and is up 12% since then.

It will reset to a higher dividend on December 1 this year. The level and attractiveness of the dividend at that time will depend on interest rates and the outlook and the market at that time.

Overall it still looks like it should offer a capital gain and so I left the rating at strong Buy.

Markets gained ground on Thursday with the S&P 500 up 0.6% and Toronto up a hefty 1.6%.

Canadian Tire ended the day down only 0.3% after reporting a very weak Q4. The weakness is not shocking and it seems likely to persist for some time. Still, the stock trades at a low valuation and that’s likely why it held up well today. It was down about 7% at the open today and so it may well bounce lower tomorrow. So far it looks like today’s early bird traders basically got to eat a worm.

CMHC reported January housing starts this morning. It’s interesting how there can be different interpretations of the same data. BNN’s headline says annualized housing starts down 10% versus December. That figure is from the CMHC press release. But CMHC also said that the trend was down (just) 2% year-over-year.

Looking at the data, January housing starts in Canada were UP 13% year-over-year overall with single-detached starts down 3%.

Looking at Alberta starts were up 48% overall and 50% for single-detached. Calgary single-detached starts were up 60% and Edmonton up 43%. That should be good news for Melcor Developments.

Overall, it does not look like a bad report to me and it’s amazing how the same data can be interpreted so differently.

On Wednesday markets recovered much of the ground lost yesterday.

The S&P 500 was up 1.0% and Toronto was up 1.5%.

There are lots of Q4 earnings reports coming in.

After the close, West Fraser reported a substantial loss but the stock was virtually unchanged in after-hours trading. I mentioned a few times that I am surprised how well it is holding up.

The Boston Pizza Income Royalty Trust reported good earnings this morning and raised the distribution by 5.6%. The yield is almost 8.8% and it looks like a good investment. Keep in mind the distribution is taxable and so this is better suited to non-taxable accounts.

Yesterday, after the close RioCan reported results that were okay but none too exciting. They increased the distribution by just 2.8% and are not projecting much growth this year. Still, it’s very well managed and should do well over the years.

The report on these shares is updated and rated Buy at $20.95. The last update was December 18 when they were at $17.76 and looked quite attractive. They are less attractive after the gain since then but are still reasonably attractive.

Tuesday was quite a negative day in the markets after U.S. core inflation came in hotter than expected. This means that interest rate cuts are not likely to happen as soon as was hoped.

The S&P 500 was down 1.4% and Toronto was down 2.3%.

Investors should not be shocked by the decline today. Markets have been doing extremely well of late and so a pull-back is no surprise.

Shopify was down 12.5% after releasing earnings with a weaker than hoped for outlook.

The U.S. inflation report also pushed bond interest rates up.

The Canadian 5 year government bond rose 12 basis points to 3.83%. That seems likely to push up the rate for 5 year mortgages.

This is also definitely negative for perpetual preferred shares. Those have given us good gains lately but it seems likely that some of those gains will now be given back. Rate reset preferred shares tend to be harder to predict. The Canadian Western Bank rate reset CWB.PR.B that will reset on April 30 has risen sharply to $20.95 in recent months. I’m tempted to reduce my position but then again it’s possible (although probably unlikely) that they would decide to redeem this at $25 on April 30. These shares were issued in 2014. It’s possible that with changing bank capital rules they are no longer as useful to the bank. CWB also has CWB.PR.D that will reset on April 30. That one would have a very high interest rate upon renewal and therefore I am relatively certain that it will be redeemed at $25.

Toll brothers was down 5.1%.

On Monday, the S&P 500 edged down 0.1% while Toronto as up 0.3%.

Toll Brothers was strong with a 4.4% gain.

AutoCanada bounced up 4.5%.

Andrew Peller was up 4.4% (to a pathetic $4.47) after its announcement yesterday about the big payout to John Peller on his promised retirement.

Then, after the close today, Andrew Peller announced earnings for its fiscal third quarter ended December 31.

The headline was “Andrew Peller Limited Reports Solid Performance in Third Quarter of Fiscal 2024”. So “Solid Performance”, that sounds good, let’s see what that consisted of:

Versus Q3 of the prior year:

Sales down 4.5%
Gross margin dollars down 18%
EBITA down 15%
Net loss of $0.4 million versus a larger loss of $3.9 million the prior year

In what world is this “Solid Performance”? According to the company it is solid given “continues macroeconomic headwinds across our sector” and indicated that “our brands often outperformed the industry”.

I find it rather disgusting to call this Solid Performance. If this is outperforming the sector then it would seem that they are stuck in a terrible business. Canadian wine producers face very stiff competition from imported wine.

Well, we’ll see how the stock reacts tomorrow. They did claim that things will be improving. I regret that I ever started looking at this company. With the shares down do much int he past few years, I am holding onto my shares in this weak company hoping for better days ahead. That has proven to be a mistake so far.

Tomorrow, the markets will be eying the U.S. Consumer Price Index results for January hoping it will come in low and give the FED reason to start thinking about cutting interest rates. Apparently, the headline number is expected to come in low but analyst and the FED will look into the details and will focus on the trend after possibly adjusting for the more volatile items such as gasoline prices.

In Canada, the 5 year government bond yield is reported as 3.74% today, up slightly on the day. That is NOT indicative and any imminent reduction in interest rates.

5 year fixed mortgage rates are apparently available as low as 4.69%. It appears that competition between banks has kept those rates edging down this new year despite the higher government bond yield. I would not bet on mortgage rates going lower still unless the government yield starts to go down again as it did late last year.

cc

The report on Linamar is updated and rated Buy at $65.33.

It looks quite cheap based on valuation and is very well managed. But it is in a tough and cyclical industry and the ROE is not as high as it was historically. I think its a good bet at this price. They will likely increase the dividend with the Q4 earnings announcement in early March.

On Friday the S&P 500 was up 0.6% and Toronto was up 0.4%.

Shopify was up another 3.3%. Amazon was up 2.7%.

On Friday afternoon Andrew Peller had some announcements: They are appointing five new directors. (On November 9th all four of its independent directors resigned at the same time and these are the replacements.) John Peller reiterated his intention to retire as CEO by the end of this year. These new Board members have approved a $4.5 million dolalr retirement bones for John Peller AND after his “retirement” he will be paid $2 million per year as a consultant (the time period that lasts was not indicated but there was hint that it might be at least two years). On top of that the company is paying $3.0 million in consulting and legal fees incurred by the controlling Peller family as part of the arrangement.  To put these numbers in some context: The company lost $3 million in fiscal 2023, and made $12 million in fiscal 2022 and $27 million in fiscal 2021. This all strikes me as an overly generous payout for John Peller and I don’t see any reason that the controlling family’s legal and consulting costs should be paid. To me it smacks of “legalized theft”.  Unfortunately this is the sort of nonsense that can happen at smaller companies controlled by management.

They also announced this news in the middle of the trading day which is certainly not best practice. I would assume the four previous Board members left because they were not willing to go along with this nonsense – but I don’t know. The market so far seemed unperturbed by the news.

I mentioned last week that two Trustees at the Melcor REIT were leaving abruptly. That could also be a case of not being willing to go along with something the controlling family wants to do.

On Thursday. the S&P 500 was up just 0.1%. I did officially poke it’s nose over the 5000 level for the first time before closing at 4998.

Toronto was down 0.2%.

Shopify was up 3.1% after reports that it may raise some of its subscription prices.

lululemon was up 3.3%.

TFI International reported lower earnings acter the close but projects growth ahead and increased its modest dividend by 14%.

Interest rates on the bond markets moved higher today. The reported yield on the 5 year Government of Canada bond rose to 3.68%. After a steep decline this past Fall from highs around 4.5% it bottomed at about 3.1% in late December but is up quite significantly since then.

Similarly, the U.S. ten year treasury bond closed at 4.15% today after starting the year at 3.95%.

All else equal, higher interest rates push down the values of almost all stocks and bonds and preferred shares. One exception would be any rate reset preferred shares that are close to a reset date. For example CWB.PR.B that will reset at the end of April.

Stocks and preferred shares had been mostly increasing since the start of this year despite the interest rate increases. That may have been driven by confidence that these rates would soon turn around and go lower. The expected timing for that has now been pushed to somewhat later this year than was earlier hoped but stocks including preferred shares have not been negatively impacted it seems.

If the market starts to turn more attention to various risks, it will tend to push the value of most investments down. Exceptions could include government bonds. Having some cash and near-cash in a portfolio is never a bad idea as ONLY cash (and cash equivalents) can be counted on not to decline when fear mounts.

Having recent read Nassim Taleb’s The Black Swan (a tough read) I think his main message was that markets are always risky and unpredictable. The trick is to be positioned such that when an unforeseen slump occurs, you will not be decimated or too badly hurt by it. Holding cash could certainly be part of such an approach.

Our reference article that gives a list of Canadian ETFs and their fundamental value ratios and comments on their attractiveness is freshly updated. This includes, ETFs for stocks, bonds and commodities (Oil, gold, silver and natural gas). This is a beast of an article and includes numerous links for more or (as time passes) updated information.

You can easily build a portfolio using this list or augment an existing portfolio.

At the top of our list on the Subscriber Home Page there is also a link to our article on Global Exchange Traded Funds. And simplest of all is our article on single ETFs that give a broad globally diversified portfolio in one ETF. (Example VBAL).

On Wednesday, the S&P 500 was up another 0.8%. It touched 5000 (well 4999.9) for the first time ever.  Toronto was up just 0.05%.

TFI International was up 3.5%. What a winning company this has been over the years.

Shopify was up 5.3%.

Canadian Tire was down 2.8% and has now given up most its strong gains from January.

I noticed the Melcor REIT was down 5.3% to $3.94. That seemed odd, given it has risen to $5.00 at the end of January. I then saw news that two of the REIT’s seven Board of Trustee members have left (resigned) with a departure date of March 5 (or possibly earlier if the REIT decides). Normally Trustees would leave by simply not standing for re-election at the Spring Annual meeting. Larry Pollock and Carolyn Graham are resigning as Trustees. Larry Pollock was a long-time President and CEO at Canadian Western Bank and Carolyn Graham was his long-time CFO and she remained CFO for quite a few years after Larry retired as CEO. This move likely suggests some major disagreement. It could be about cutting or not cutting the distribution. It could possibly have to due with asset sales that are happening or not happening. Or it could be a disagreement over some other major strategic move. These two are extremely qualified and were in a position to be financially independent. They were not relying on their director fees for their income. This is a disturbing development.

Tuesday’s action saw the S&P 500 up 0.2% and Toronto up 0.4%.

I see news today that several regional bank share prices in the U.S. have declined. At least one bank, New York Community Bank could be facing a run on deposits and its share price is apparently down 60% since January 1.

It’s always the case that something can come along to pull markets down. The trick is to be positioned in such a way that you don’t panic in those situations.

The report on Starbucks is updated and rated Buy at $95.41. This is a very high quality company but it’s valuation is arguably somewhat high. Overall, this is probably a good stock to take an initial position in with a view to holding for the long term and adding to it on dips.

On Monday the S&P 500 fell 0.1% and Toronto was down 1.0%.

Hopes for an imminent decrease in interest rates were further dashed by comments that the FED chair made in a television appearance on 60 minutes.

The yield on the five year government of Canada bond rose about 13 basis points to about 3.6% Despite that, mortgage rates in Canada edged down. That may be be due to stiff competition between banks and may not last if that 5 year bond rate keeps increasing.

Most of the stocks on our list were down today.

It’s not surprising to see stocks come down a little after all the recent gains. So far the North American markets are ignoring the war in the Middle East. That could change.

I see news that the Chinese stock market was down 8% today. That may not have much relevance for North America but it does not seem like good news at all.

On Friday, the S&P 500 was up a very hefty 1.0&% but Toronto was down 0.2% as oil prices were lower.

Shopify was up 8.7%.

The BIG story of the day was Meta (facebook) being up 20.3% and also Amazon being up 7.9%.

I will admit to being a little bummed at not owning these two. At least I do own some Shopify.

I calculated that the market cap gain for Meta was about $215 billion and for Amazon the gain was $130 billion.

That’s a $345 billion dollar gain in wealth in just two stocks that appeared out of thin air on Friday.

It gets me thinking about the implications of how wealth is measured. There was no real change in the amount of actual goods and services in this world overnight Thursday. It’s not like a massive new and useful nickel or oil or natural gas deposit was suddenly discovered. We just had a sharp upward revision to the estimated value of the future earnings on these two companies based on their strong results in the past three months and comments on their outlook.

The stock market creates and destroys wealth every day. Stock valuations go up most days . And in  sense this is wealth from thin air, especially when it happens very suddenly. Over time companies do created actual products and services and that’s very real. But when we have an increased opinion of value that create hundreds of billions in new wealth overnight, it’s maybe not quite so real. (And I am not opining on the true value of those shares).

I just think it’s newsworthy and thought provoking when the market value of their shares increases and just two companies can create $345 billion in brand new wealth overnight.

The owners of these two companies could sell and lay claim to an extra $345 billion in actual goods and services or other assets if they wanted. Luckily, they mostly won’t do that. You might think that someone else had to lose $345 billion for these share owners to gain it and yet that’s not the case at all. No one had to lose anything.  But if wealth goes up materially for a few people and GDP and the real goods and services and real and even intangible assets have not increased is there a some collective loss for the rest of us? Is this a sort of indirect currency devaluation? I don’t know but these are just things I wonder about.

Meanwhile though if we too can own shares destined to rise we will get our share of this action over time.

On Thursday, markets recovered much of Wednesday’s decline.

The S&P 500 was up 1.25% and Toronto was up 0.5%.

Aecon Group was up 3.8%. It has done well lately. I’ll wait until I see its Q4 numbers before commenting on whether or not it has put its troubles behind it.

Costco was up 1.5% and closed above $700 for then first time. I had thought it was too expensive but I said before that betting against this company tends to turn out badly. Yahoo Finance shows it trading at 48 times trailing earnings and 44 times forecast foreword earnings. That’s about as high as I have seen it. Soon it will report January same-store sales and we will see how that looks.

Cameco was up 5.4%.

Most of the preferred shares on our list were also up today.

Shopify was down 4.6%.

Markets were weak on Wednesday and the FED chair indicated that interest rate cuts are not as imminent as the market was hoping.

In response the S&P 500 was down 1.6%.

Oil was down about 3% and Toronto stock index was down 1.0%.

Accordingly the great majority of stocks on our list were down modestly

lululemon was notable with a 5.7% drop.

This decline should come as no big surprise at all after all the recent gains.

On Tuesday, the S&P 500 was down 0.1% while Toronto was uo 0.1%

After the close MicroSoft reported what one analyst said was insanely high operating earnings growth. But in After hours trading the shares are down although only down 0.3%.

Meanwhile I saw headlines that Starbucks reported earnings and outlook were quite disappointing and yet that stock is up 4.2% after hours.

A clearer picture will emerge tomorrow when analysts have a chance to digest the news.

AutoCanada was down 5.1% giving back yesterday’s gain.

There seems to be an increasing number of announcements of layoffs. Today it was Enbridge and UPS. It may be that the long-predicted recession will emerge.

The report on Ceapro is updated and rated Highly Speculative Buy / Hold at $0.16.

This company has been quite a disastrous investment over the years. At the end of 2022 it looked like it might be set for much better days. Instead, revenue has plunged in 2023. And now they are proposing a merger that is actually more of a take-over of Ceapro although Ceapro share owners will own 50% of the purchasing company -f the deal proceeds. It’s all VERY uncertain. On a positive note it has cash of about 15 cents per share and a book value of 38 cents per share. So in theory it looks under-valued. But I’m not inclined to add to my position. And on the other hand I can’t see selling it at this price.

I’ve never had much luck with the few penny stocks I have looked at. They tend to have a highly deserved reputation for being risky.

Monday was another positive day in the markets as the S&P 500 rose 0.8% and Toronto rose 0.35%

AutoCanada was notable with a 6.6% gain.

Restaurant Brands and Shopify and Visa were each up 2.1%.

The Melcor REIT was up 2.2% to $5.00 which is a good recovery from what was likely a ridiculous recent low of $3.60.

Most of the preferred share were up today and have done quite well since I started emphasizing them last Spring.

Markets were quiet overall on Friday with the S&P 500 down 0.1% and Toronto up 0.1%.

But American Express was up a stout 7.1% after releasing earnings and a strong outlook.

Preferred shares have been doing well.

The two Brookfield Office Property preferred shares on out list were up 5.6% and 3.3%.

I noticed that CWB.PR.B is back to $20. These shares had briefly hit $25 in December 2021 before tumbling to a low of $16.20 last Spring. (Looking back, I’m glad to see I had them rated as a Sell at $24.72 near the end of 2021.) They are set to reset on April 30. An ideal scenario here would be if the 5 year Canada bond stays high until then so they reset at a high level but then interest rates fall after that so that the high dividend would be more attractive. The “spread” on these (see report on Subscriber Home Page) is moderate at 2.76% and so they not get back to $25. I do not expect CWB to redeem these at $25 on April 30 although that is a possibility. The current yield at $20 is only 5.4% but they are now trading based on the fact that the dividend and yield is likely to reset significantly higher on April 30. (This depends on the 5 year Canada bond yield at that time – it’s currently 3.6% but is generally expected to be lower at the end of April.)

The perpetual preferred shares have also done well this month and that’s somewhat surprising given that interest rates (such at the yield on the 5 year Canada bond) have rebounded quite a bit this month.

On Thursday, the S&P 500 was up another 0.5% and Toronto was up 0.4%.

U.S. GDP for Q4 came in strong which could have spooked markets due to inflation concerns but apparently a price index came in showing lower inflation.

Toll Brothers was up 2.3% recovering a portion of its recent decline.

Visa Inc., reported earnings after the close with adjusted earnings per share up 11% and beating estimates. But the stock declined modestly in after-hours trading. I think it continues to be a strong buy and hold stock.

The Royal Bank rate reset preferred share RY.PR.S that is on our list announced its reset dividend today. And the information is updated on the Subscriber Home Page. At today’s closing price the yield is 6.7% and the dividend (with first payment April 24, 2024 will not change for 5 years). This could offer a capital gain of several dollars if interest rates decline.

On thing I found confusing is that Yahoo Finance indicates it paid a dividend yesterday at the old rate but the prospective indicates that the new dividend is set to cover the period beginning February 24. Something seems strange here. The Prospectus seems to say that the dividend is paid in February, May, August and November. But according to Yahoo Finance it has been paid always in January, April, July and October. It seems the date that Yahoo is giving is the ex-dividend date. Checking further I now see that the ex-dividend date was yesterday January 24 but the dividend is not paid until February 23 or 24 which I think is an unusually long time after the ex-dividend date. If you buy tomorrow you don’t get the first dividend until almost four months from tomorrow.

I usually don’t pay a much attention to ex-dividend dates because I find that stocks often change in price by more than the dividend amount many days. And in general in the past I have almost always bought stocks for the capital gain potential and not so much for the dividend. So buying based on the dividend date is just not something I have done. But it can make sense on thinly traded stocks and/or higher dividend stocks to be more aware of the ex-dividend date. And it makes sense to look at that with preferred shares.

On Wednesday the S&P 500 edged up 0.1% while Toronto was about unchanged.

CN Rail was down 1.8% despite reportedly beating expectations with its earnings release.

The Bank of Canada left its key policy rate (the overnight inter-bank target lending rate) at 5.0% and seemed to indicate that no one should hold their breath waiting for an interest rate cut. It will happen only when inflation is under better control.

The Trans Mountain pipeline is finally inching towards completion with line fill to take place mostly in March and the first shipments around the start of April. This is good news for Alberta.

A report indicates that light vehicle sales in December rose 14% year-over-year in Alberta, the strongest of any province. This is good news for AutoCanada which has a relatively heavy concentration of dealers in Alberta.

On Tuesday, the S&P 500 ended the day up 0.3% and Toronto was up 0.5%

The two Brookfield Office Properties preferred shares were up another 6.3% and 3.3%. BPO.PR.A has a 52 week range of $7.06 to $16.09 and closed today at $10.63. That’s some wild volatility on a security that should normally be considered relatively safe.

After the close, CN rail reported Q4 earnings which although modestly lower than last year (adjusted earnings per share) were better than expected. The dividend is being increased 7%. CN has been an enormous winner over the long term. (It’s good to be in a duopoly position in Canada.)

I notice CWB.PR.D is up to $24.93. I believe today was the last day to buy it and receive the next 37.5 cents dividend which will be paid on January 31 to shareholders of record as of tomorrow January 24. (If you buy tomorrow you will not be a shareholder of record until at least the next day).

CWB will have the right to redeem these shares on April 30 at $25 and I believe they will do that because of the high dividend.

It will be interesting to see if they drop about 37 cents tomorrow to about $24.57. At that price I think they would definitely be a buy. Even at about $25 tomorrow they would not be a bad investment given one more 37.5 cent dividend around April 30 and a probable redemption at $25. And if not redeemed the yield is likely to be very attractive.

CWB also has the CWB.PR.B outstanding. I definitely do not expect those to be redeemed on April 30 and neither does the market expect it. See the Subscriber Home Page for more details on both of these.

The report on Metro is updated and rated (lower) Buy at $69.76. It should do well long term. But the company itself is project earnings per share this year to be flat to down 2% due to some learning curve costs as new distribution centers become operational and as depreciation and interest costs for those new buildings start to hit the income statement. (These costs typically only start to get expensed when a building becomes operational).

They report Q1 discal 2024 earnings on January 30.

On Monday, the S&P 500 was up 0.2% and Toronto was up 0.1%

The two speculative Brookfield Office Properties preferred shares on our list were up 3.7% and 6.9%.

After the close, West Fraser Timber announced it will permanently close a sawmill in Fraser Lake B.C. due to a lack of economically available “fibre” (trees). The stock has been holding up remarkably well in light of other recent closures.

On Friday, the S&P 500 surged 1.2% and Toronto was up 0.7%

The two Brookfield Office Properties preferred shares on out list ere up 5.9% and 4.5%. This has been an extremely volatile and mostly losing investment. These are risky but it appears that better days are ahead.

My next update will be for Metro the big Quebec-based grocer and pharmacy chain. They had a very strong fiscal 2023 (which ended September 30). But they project adjusted earnings per share  in 2024 to be flat to down about 2%. So the timing may not be the best but it looks like a solid long-term investment. I may buy a few shares tomorrow as an initial position. Honestly, Loblaw may be a better choice but I have not looked at it in a very long time. Loblaw is a stronger and more dominant company but it also trades at a somewhat higher P/E ratio.

Thursday’s action saw the S&P 500 up 0.9% and Toronto up 0.3%.

Apple was up 3.3%. It’s “almost” like Warren Buffett knew what he was doing when he bought about five? years ago at far far lower prices and put in $30 billion or so!

WSP Global a long-time winner was up 2.6%.

Couche-Tard – a huge long-term winner was up 3.0%.

Shopify was down 3.6%

Ceapro, a penny stock and a long-term loser was down another 3%.

The 5 year government of Canada bond yield is back up to 3.57%. Higher long-term rates are a gravitational force on stock prices but stocks defied that gravity today.

On Tuesday, the S&P 500 finished the day down 0.3% and Toronto was down 0.5%.

See also my comments from earlier today.

The guest on BNN’s market call this morning mentioned TH International. Time Hortons International with apparently 1000 stores in China (or mostly China) and growing fast. Not profitable yet but expected to be at some point. I grabbed some shares on something of a whim. The symbol is THCH.

On Wednesday the S&P 500 was down 0.6% and Toronto was down 1.2%.

Strong retail sales figures for the US are dashing hopes of an imminent decline in interest rates. The five year Canada bond yield is back above 3.5%. Lower oil prices weighed on the Toronto index.

TFI International was down 3.0%.

Royal Bank announced today that it will not be redeeming its rate reset preferred share Series BO. The press release did not give the trading symbol which is very annoying. (Likely some lawyer suggested no including the symbol for some reason.) The symbol is RY.PR.S and we have that one on our list.  These shares qualify for the bank as non-viability contingent capital. I believe that means they would be converted to common shares in the very unlikely event that RBC runs into significant financial trouble. This feature is meant to protect bank depositors. And it is perfectly correct and right that depositors should be protected well ahead of investors.

If the 5 year Canada Bond yield is at 3.5% on the reset date of February 24 (It’s 3.53% today) then the yield on these will reset to 5.9% of $25 or $1.47 or about 6.5% of the current $22.65 price. Basically, RBC probably can’t redeem these and issue new ones at a lower rate. So there is no incentive for RBC to redeem these it seems.

It’s not that hard to find a 6.5% yield today but it’s not a bad yield for investors given the strength of RBC. However the dividend might well be lower at the next reset in another five years. And investors have had a bad experience with rate reset shares over the years. Therefore it’s not clear that these shares will offer capital gains. They could fall in price of course.

If investing in preferred shares it seems wise to have some diversity of companies and to have some perpetuals as well as some rate resets.

Markets are down modestly today.

Canadian inflation for December came in as expected at 3.4%. “Excluding gasoline, the headline CPI slowed year over year, from 3.6% in November to 3.5% in December.” Hopes for the Bank of Canada to lower interest rates by April appear to be fading somewhat. The 5-year Canada bond yield is back up to about 3.43%. It fell below 3.2% in early January after plunging over 100 basis points in the last part of 2023 on hopes of interest rate cuts. A lower 5 year yield can be good news for stocks – unless it signals recession. Some investments benefit from a higher rate. I think the CWB.PR.B would benefit from a higher rate when it resets at the end of April. Other rate reset preferred shares (with a long time until the next reset) and certainly perpetual preferred shares benefit from a lower 5 year Canada bond yield.

CMHC released December housing start figures this morning. For Canada overall, housing starts were up 1% in December but down 7% for the year. In Alberta housing starts were up 65% in December (single-family up 39%) and were down 1% for the year. Alberta is finishing the year strongly. This is positive for Melcor Developments which will hopefully report a decent Q4 although I am not expecting the overall 2023 year to be all that high. Their ROE remains substandard.  New Brunswick was up 170% in December but one or two multi-family projects in a small province can make the numbers highly volatile. New Brunswick was down 5% for the year. Nova Scotia was up an impressive 29% for the year driven by multi-family starts.

January 15, 2024: U.S. markets were closed for the Martin Luther King jr. holiday today. Toronto was up 0.3%. I did double my rather small position in TransAlta this morning. It was up 2.1% today. Capital power might have been a better choice but I have not looked into it. Capital Power was up 3.3% today as it announced  it is exploring the feasibility of a small nuclear reactor in Alberta (That would be years away). And Capital will have an investor event on Wednesday to look at its outlook.

After the close Canadian Western Bank announced it will issue $250 million of subordinated debentures (you could call these bail-in bonds but that ‘s a long story Non-viability contingent capital NVCC is the official term). The interest rate is 5.95% for the first five years and then it floats for five years. and also CWB will have the right to redeem in 5 years.  They current already have $525 million of such debentures. It does not look like any of the existing will be redeemed. The 5.95% rate on subordinated debt is not very low but it’s also not very high and probably demonstrates market confidence. These bonds will apparently be issued to the public as far as I could see. If they do come up as an IPO you should only buy if you are fully prepared to hold for the 5 to ten year term.

I suspect that CWB may redeem (at $25 at the end of April) the preferred shares CWB.PR.D that trade at about $24.78. The CWB.PR.B preferred shares that trade at about $19 are probably very unlikely to be redeemed – but it would be a great bonus if they were redeemed. The D shares have a huge spread over the 5 year Canada and I have long figured these would be redeemed. The B shares have a modest spread and so there may not be much reson to redeem – unless they are simply not as useful under the ever-changing bank capital rules. I hold a tiny amount of the D shares. I might sell those after the next ex-dividend date which is apparently January 23. I hold a fair amount of the B shares which I expect to continue to hold but it would definitely be a welcome bonus if they were redeemed – which would be at $25. See the reports on these two shares on the Subscriber Home page if interested in more detail

January 14, 2024: On Friday, the S&P 500 ended the day up 0.1% while Toronto as up 0.3%. TFI International was up 2.0%. What a long-term winner it has been. Constellation Software was up another 2.3%. Its gains over the years are stunning.

I may add to my TransAlta position tomorrow. Wholesale power prices in Alberta have been through the roof the last few days due to cold weather. The price cap is $1.00 per kWh and it has hit that cap many hours. A more normal wholesale price is more like 5 to 6  cents average over all hours. The average the last two days was 66 cents and today will be similar. As far as I could tell most of TransAlta’s Alberta generation is sold at the floating wholesale price. If so they have made a lot of money these past few days. That won’t show up until Q1 is reported. Meanwhile prices were much lower in Q4 with mild Alberta weather. So maybe the Q4 report will be disappointing. So TransAlta may not be any screaming buy but I like it chances to do well.

Related to the cold weather in Alberta, Canadian Tire is doing a booming business in batteries and probably automotive service. Huge lineups for batteries.

January 12, 2024 12:15 pm eastern time: Apologies for this site being unreachable on most browsers for the last two days. A security certificate had expired.

An interesting development on Wednesday was that Brookfield Office Properties announced a buy back program on all its preferred shares listed on Toronto. We have two of those on our list and they have been HIGHLY volatile and are marked highly speculative Buy / Hold. BPO.PR.A rose about 8% on the news while BPO.PR.G did not seem to react. The buy back program will be restricted to very small volumes (due to the low trading volumes) and that will limit its impact. I see this as good news that shows that Brookfield Office Properties and its immediate parent Brookfield Property Partners apparently have confidence that its office properties will weather the current weak office market. These shares remain quite speculative but this buyback news is certainly welcome for anyone holding these.

Cameco is up 8.0% today to a new high. It’s been volatile but has been a big gainer. It’s expensive in relation to earnings but with nuclear power coming back in favor this stock has potential to keep gaining.

January 9, 2024:

On Tuesday, the S&P 500 was down 0.15% and Toronto was down 0.5%.

But there were a couple of notable gainers among the stocks I track.

Cameco bounced up 5.1% recovering some of the ground it recently lost.

Shopify was up another 3.4%. It’s at a 52 week high but remains well below it’s all time high.

After the close, West Fraser Timber announced it will shut one mill and curtail another. This stock has been surprisingly resilient all year. I would think that this news is quite negative however.

January 8, 2024: Monday was a strong day in the markets as the S&P 500 surged 1.4% and Toronto was up 0.7%. Most stocks were higher. Shopify was up 4.2%.

January 6, 2024: On Friday, the S&P 500 was up 0.2% and Toronto was up 0.3%. West Fraser Timber was up 2.3% and has been a surprisingly strong company lately.

Costco reported December same-store sales which showed the highest growth in About 6 months or more. U.S. same-store growth was strong at 7.4%. Canada has remained strong all year and was up 11.9% year over year. Some of that (perhaps most) is due to price increases. Some can be attributed to Canada’s surging population. Some of it may be Costco gaining market share. The stock was up 1.2% on this news on Friday. I view the stock as expensive but betting against it usually works out badly.

January 3, 2024: On Wednesday the S&P 500 was down 0.8% and Toronto was down 0.3%. The FED minutes that came out today threw some cold water on the notion of near-term interest rate cuts. The market did not react too strongly but might react (drop) more tomorrow after mulling this over.

January 2, 2024: The first few comments of 2024 will be posted here. On this first day of trading for 2024, the S&P 500 was down 0.6% and Toronto was down 0.4%. Most stocks were down today. Markets moved up so fast in the past few months that it should certainly be no surprise if we now give some of that back.

January 1, 2024: The first few comments of 2024 will be posted here. Our stock picks did well in 2023 and I will update the performance numbers in a few days. Heading into 2024 I have marked some of the ratings are out of date.  I want the performance tracking for 2024 to be based only on ratings that I am comfortable with at this time.

Also, in terms of performance tracking I have way more preferred shares now and so I will track all those as a separate category this year. The main performance figures will only include the equities this year. Prefs were always a bit problematic to include there since they are mainly meant to provide income whereas the performance tracking is all about capital gains as I have never included dividends or other cash distributions. My own portfolio performance has always included everything I own and includes dividends and interest that will continue in 2024.

A lot of stocks were up quite a lot in the last few months of 2023. Entering 2024 I think most investors (especially those at or near retirement) should be cautious. Stocks don’t go up in straight lines and I think we are likely to see some pull backs. I’d like to be positioned to withstand and even take advantage of pull-backs.

2024 could be a tumultuous year. The S&P 500 seems somewhat over-valued. (Not a big deal but a bit of a concern.) And then we have wild cards like the US election cycle. It’s frightful to think of Trump getting elected again and it’s perhaps equally frightful to think about what happens if legal troubles prevent him from running. There is also the prospect of the various wars escalating. Bizarrely, that seems less of a concern than what happens with Trump and the divided US population. Interest rates are expected to decline. But the bond yields may have already anticipated too much decline and could certainly head back up temporarily and that’s bad for stocks.

The bottom line for me is that most investors should not be positioned too aggressively. Cash and near-cash and fixed income may prove to stabilize portfolios in 2024. But of course a reasonable exposure to equities should be maintained.