Edition #778

2019 TFSA CONTRIBUTIONS

With the New Year arriving, $6,000 can be added to your TFSA accounts, up from last year’s limit of $5,500. Please note that maximum lifetime contributions now stand at $63,500. You can either send us some funds electronically, by cheques, or direct us to transfer funds from your cash Jamie Switzer account. You can email Nicky at [email protected] if you have any questions. Vice President Investment Advisor T: 604.643.7070 2018 RRSP CONTRIBUTIONS AND LOAN AGREEMENTS E:[email protected]

We are now inside of two months to get your 2018 RRSP contributions in. We www.jamieswitzer.com realize that everyone is inundated with Christmas bills but don’t forget to MARKET SUMMARIES begin to plan where this year’s contribution will come from if you do indeed S&P/TSX Composite up 2.44% to 15,303 (up 6.85% ytd) need to make one. Manulife will once again be providing loans if you are in need of some financing and they can be paid off in one or two-year terms. S&P/TSX Venture down 0.83% at 601 (up 6.82% ytd)

S&P 500 up 2.85% to 2,670 (up WITH CORRECTIONS, OPPORTUNITY LIES AHEAD 6.54% ytd)

As we had hoped and anticipated, North American stock indices are in the Nasdaq Composite up 2.66% to 7,157 (up 7.87% ytd) midst of a nice bounce and some recent data points show that this could be Oil (WTI) up $2.13 to $54.04 (up the beginning of a nice rally. $8.63 ytd)

Natural Gas (MMBtu) up $0.30 to The markets went through a drastic pullback in the fourth quarter that saw $3.24 (up $0.39 ytd) many sectors drop to severely “oversold” conditions. While it’s always Gold (Spot USD/oz) down $6.90 to difficult to go through these tough stretches, what it does do is create $1,282.60 (up $1.30 ytd) opportunity. As you can imagine, after a few months of selling pressure, all Copper (USD/lb) up $0.06 to $2.72 buy/sell indicators are virtually negative and it creates a very unsettling (up $0.09 ytd) environment, but as soon as the “tax-loss” selling period ending at TODAY’S BEST GIC RATES Christmas time, it was if someone put a pin in a massive balloon and 1 Year Coast Capital 2.85% everyone took a deep breath. Fast forward a few weeks and almost every 2 Year Coast Capital 3.05% buy/sell indicator is now flashing “buy.”

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Charts and momentum indicators are all falling in line flashing the worst is likely behind us and this is a welcome relief for a number of sectors that took it on the chin.

For those looking for value plays on high quality, blue chip names, the financials remain attractive after a solid pullback in the final months of 2018. Average bank yields on Canadian names stand at 4+% and after a 10-15% pullback, it makes for a nice entry point.

If you’re looking for more potential pop on a trade in a beaten up sector, the obvious names that come to mind would be Canfor or Interfor on the forestry side, or Whitecap, NuVista or the Canoe Energy Income fund if you want to play the energy bounce that seems to be developing. CanWel, Superior Plus, Parkland Fuel, Russel Metals and Bird Construction are additional Canadian names we adding to after the Q4 carnage.

On the US side we have seen a big bounce on a number of names we’ve been championing, with Bank of America and Amazon seeing two of the largest moves. Google, Microsoft, Berkshire Hathway and Micron still present terrific value propositions and haven’t seen the same type of bounce.

While most sectors are seeing some lift, we are aiming to grab larger companies and avoiding too much speculation in the early stages of this bounce. Once the rally is firmly established, some of the smaller names will likely catch a bid and may be worth looking at a little further down the road.

SOUNDBITES

• While the so-called “easy money” has been made in the cannabis space, the sector is once again heating up after an abysmal finish to 2018 that saw the stocks get crushed. Shares in the sector have rallied nicely to start the year on a mix of mergers, partnerships and licensing deals that are further legitimizing the sector and attracting big money in the process. A wide range of companies from tobacco producers to wine purveyors are dipping their toes in to create a diverse lineup of products to capture a piece of the “pot craze.” As those that bought shares in the second half of last year can attest, it’s a very volatile place to put money, but the opportunity still exists and with the US just getting going, that may be where the next fortunes are created. In Canada, the bulk of the money has been raised and the players have been established, but we are in the early innings in the US as state and federal governments begin to map out how this is all going to unfold.

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• The recently announced Goldcorp/Newmont Mining merger is another blow in a long list of Canadian companies, particularly on the resource side, that are exiting Canada. Goldcorp founder Robert McEwen, who now runs McEwen Mining, is one that sees the transaction as a major loss. “The corporate heart goes with the head office – so we’re losing another company from Canada,” McEwen told BNN Bloomberg Tuesday. “So I think that’s a loss to the society in Canada.” Vancouver-based Goldcorp agreed last week to a $10 billion USD takeover by Colorado-based Newmont Mining, putting a yet another nail in the once- robust Canadian mining sector. The new head office for the combined entity will be located in Greenwood Village, Colorado and will eliminate a large corporate footprint in Vancouver. More than a decade ago, foreign entities began gobbling up our large cap names with very few new ones popping up along the way. The same would have likely happened in the oil patch has we not run into the issues we are facing regarding pipelines, which has virtually squashed foreign investment.

• The Godfather of “buy & hold” investing has died. Vanguard founder Jack Bogle passed away at 89 and with his passing we have lost one of the most measured, calm voices on Wall Street. Bogle was often asked to appear on a myriad of TV shows to provide investors with a steady message in times of great uncertainty. He took his company from a concept in 1975 to a titan with more than $5 trillion under management at the time of his passing. Vanguard boasts in excess of 20 million clients throughout 170 countries and has established itself as the “gold standard” in the massive US mutual fund industry. “You have to be disciplined and you have to save, even if you hate our current financial system. Because if you don’t save, then you’re guaranteed to end up with nothing.” – Jack Bogle.

MARKETWATCH – A LOOK AT THE WEEK’S NEWSMAKERS

Chorus Aviation Inc (CHR) shares erupted to the upside Monday morning after the stock was halted in pre- market trading. This came on the heels of Air Canada announcing an additional $100 million investment in the parent company of Jazz Aviation. The agreement will extend the Capacity Purchase Agreement (CPA) to 2035, creating the longest term strategic partnership between Jazz and Air Canada thus far. Chorus plans to use approximately 60% of the investment proceeds to purchase nine additional aircrafts to modernize Jazz’s current fleet and generate additional lease revenues under the CPA. In total, the 17-year contract will provide $2.5 billion in minimum contracted revenues, which investors clearly loved as the stock finished the day as the best performer on the TSX. Shares were up 15% on the day.

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General Electric Co (GE) continues to struggle despite a number of high profile investors calling for a “bottom” through the stock’s decline. Shares have traded as high as $18.51 in the past year but have been on a freefall since that time, bottoming at $6.66 recently before seeing a small bounce. The latest to come out and make a case for the bulls is well-known options trader making a multi-million dollar option bet that better days are near. The once iconic name, led by flamboyant CEO Jack Welch, became far too diversified, with too many businesses and too little focus. With no “core business” to concentrate on, incoming CEO Jeff Immelt was saddled with the task of cleaning up a heavily indebted company with too many average businesses as no diamonds. His tenure came to a crashing blow in 2017, leaving the company no better off than when he took over and triggering a sell-off that ran for the better part of two years. Is it over? Who knows, but this doesn’t appear to be a train I want to step in front of. PG&E (PCG) had one of the most treacherous weeks on record this past week, with the company filing for Chapter 11 bankruptcy. This came just one day after losing its CEO Geisha Williams. California’s largest utility is staring down roughly $30 billion in potential liabilities tied to its role in Golden State wildfires in 2017 and 2018 as various officials have determined that the company’s power lines sparked at least 18 wildfires. Following the Chapter 11, shares plunged nearly 60% on the week and now off 85% from its highs this past November. To add worse to wear, PG&E disclosed it has only $1.5 billion in cash on hand, while facing a whopping $30 billion in debt. California lawmakers had weighed steps to rescue the utility company, however PG&E executives decided a state assistance program would simply take far too long to avoid bankruptcy.

5 / 5 FROM THE TWITTERSPHERE TWITTER For those of you looking for more timely market-related alerts; Jamie Switzer @jamie_switzer please follow me on twitter @jamie_switzer Anyone thinking the #bond markets are easy to navigate of late? Bond guru Bill Gross has seen his assets in the #JanusHendersonGlobalUnconstrainedBond Fund drop from $2.24 billion to under $1 billion in less than a year. (combo of volatility and outflows)...

Jamie Switzer @jamie_switzer

2019 is officially open for business, with a bought deal (#CIBC pref) and two takeovers (#Aurora & #WhistlerMarijuana), including a mega-merger in the gold space (#Goldcorp & #Newmont).

Jamie Switzer @jamie_switzer

Our favourite #copper name is breaking out. $ERO has been one of our top performers over the past few years and is already up 18% in 2019. #EroCopper

“QUOTE OF THE DAY” “The time is always right to do what is right.” – Martin Luther King, Jr.