June 19, 2019

On Wednesday, the S&P 500 was up 0.3% as the FED held interest rates unchanged but signaled it might now be more open to a cut but that depends on future data. Toronto was roughly unchanged.

Canadian energy stocks did not react much to the Trans Mountain approval – it was fully expected. And of course many hurdles remain and much time will pass before any oil will flow – if ever. My bet would be that the line will get built but it’s too early to count on it.

Shopify surged another 6.8% after announcing new features. It’s Chielf Operating Officer stated that Merchant Services will see one very dominant player (like Google in search, Facebook in social media -a winner take (nearly) all situation). And that Shopify is well positioned to be that dominant winner. If true perhaps Shopify’s stock price is justified. But given a huge multiple to sales it is going to have to continue to grow very rapidly indeed.

At the far end of the spectrum from Shopify, Boston Pizza Royalties (which is profitable and paying out about 102% of earnings but struggling to grow) was up 1.9% to $18.17. This is the first time above $18 since last August. This entity yields 7.6% but it is going to have to resume same-store sales growth soon if it is going to maintain let alone grow its distribution. Hopefully, it is having a good Q2 perhaps boosted by the Raptors success.

Mexico’s Senate has voted 114-4 to approve the new USMCA trade deal. I believe Canada is set to approve it as well. But meanwhile The U.S. is talking about proposing changes. I don’t know how that would work. Passage of the USMCA by all three countries would be positive for stocks. But I don’t know how Mexico and Canada would react to any proposed changes to the agreement that was already negotiated.

A correction – I had mentioned that the interest rate on what is basically a “high” interest account for TD Direct investors (TDB8150) was down to 1.6% for 1.75%. I was mistaken. The rate is unchanged at 1.6%. With longer term interest rates declining I am expecting this rate to go down. It will certainly go down if the Bank of Canada lowers interest rates later this year as some expect it will.

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