Unrest and oil

Unrest and oil
The chase by Greg Bonnell:

Unrest. That’s what’s been missing from the oil story in recent weeks. We’ve been focused squarely on OPEC refusing to cut production as North American producers pump it out as fast as they can. Today, unrest re-enters the narrative – labour strife and armed conflict. That means we have conflicting drivers influencing the trade. Libya is halting output from some oilfields amid armed clashes. In Nigeria, oil workers are on strike as they push for reforms. Meanwhile, OPEC is still talking tough, apparently willing to tolerate prices as low as $40. Mix it all together and WTI is still below $58 a barrel, but it’s fluctuating in a narrow range between gains and losses.

North American futures are pointing to a solid open in the green as heavy hitters like Exxon Mobil and Chevron make gains in the pre-market. We’ll be watching the Canadian energy names carefully at the open. U.S. futures, however, did weaken a touch as the Empire manufacturing survey for December fell unexpectedly.

In Corporate News, we have a report out of Spain that Repsol’s board is meeting today to approve a bid for Talisman. TLM’s shares are up 16% in the New York pre-market. Talisman confirms, again this morning, that it’s in talks with Repsol, but also others.

With so much happening in the Energy space, BNN’s Jameson Berkow takes to the streets of Calgary to take the pulse of Canada’s energy capital. He’ll have live reports throughout the day.

And watch out for Gold. The yellow metal is under selling pressure ahead of the Fed. Bets appear to be mounting that Yellen and Co. are getting closer to raising rates after repeated vows to keep borrowing costs low for a “considerable time.” And it’s those two words that are in the spotlight ahead of Wednesday’s Fed statement. Will they be dropped from Fed speak, thus signaling a hawkish stance on rates? And what does that have to do with Gold? It’s widely accepted, but always debatable, that as rates rise you can expect to see non-income paying Gold fall.

With the precious metal down almost $12 this morning we could see some pressure on mining stocks in Toronto.

At the place where politics and stimulus meet – Japanese voters have re-elected Prime Minister Shinzo Abe’s Liberal Democrats. While that can be read as a vote in support of Abenomics, bear in mind it was a record-lower voter turnout.

Finance Minister Joe Oliver is singing the same tune on the housing market – no bubble, no crash, no dramatic moves to rein in the mortgage market, soft landing. I mention his reprise only in the context of the Bank of Canada saying our homes may be overvalued by up to 30%. That’s why Mr. Oliver is facing questions yet again about what Ottawa plans to do.

One more piece of corporate news before I run off. PetSmart has agreed to a buyout by a consortium that includes the Caisse de dépôt et placement du Québec. The deal is worth $8.3 billion, and I sincerely hope we have some footage of cute puppies to play as we tell this story.

p.s. Fear not dear note readers, my mentor and most excellent BNN newsroom desk neighbour Frances Horodelski returns this Wednesday.

Tax Free Saving Account auditing by the Canada Revenue Agency

Here's what will get your TFSA audited by the Canada Revenue Agency

The Canada Revenue Agency has an audit project targeting Canadians it feels are in the business of trading securities and using their tax free savings accounts to shelter the proceeds. Canadians with too many wins in their TFSA are being targetted by CRA Tax-free savings accounts are increasingly being challenged by Canada Revenue Agency auditors targeting…

The Canada Revenue Agency has an audit project targeting Canadians it feels are in the business of trading securities and using their tax free savings accounts to shelter the proceeds.
 
To determine whether something is operating as a business, the CRA typically weighs eight factors, legal sources say. And although none of the eight factors listed below may be sufficient on its own, a combination of them can lead to an audit, tax and legal experts suggest.

Ultimately, the CRA can say a taxpayer has broken the rules on a balance of probabilities and it’s up to the person to prove otherwise.

The eight factors are:

• Frequency of transactions — a history of extensive buying and selling of securities or of a quick turnover of properties

• Period of ownership — securities are usually owned only for a short period of time

• Knowledge of securities markets — the taxpayer has some knowledge of or experience in the securities markets

• Trading experience — security transactions form a part of a taxpayer’s ordinary business

• Time spent — a substantial part of the taxpayer’s time is spent studying the securities markets and investigating potential purchases

• Financing — security purchases are financed primarily on margin or by some other form of debt

• Advertising – the taxpayer has advertised or otherwise made it known that he is willing to purchase securities

• Nature of the shares - normally speculative in nature or of a non-dividend type

BNN recap After Canada Market Correction

Market Call:

Bruce Campbell, president and portfolio manager, StoneCastle Investment Management

FOCUS: Canadian Equities

Market Outlook:

Historically the best time of the year to invest is from the last week in October to the start of May (“Buy it when it snows, sell it when it goes”). This is the time frame we are currently in and so far this is working according to history. It is also important to remember two other positive factors when investing - The Presidential Cycle and years ending in 5. The third year of the USA Presidential Cycle has produced the highest rates of return of any year in the four year cycle. We began the third year of the cycle just after the mid-term elections in early November.

We are also heading into 2015. Years ending in 5 are no ordinary years. There is a strong historical bias to the number the year ends in. Years ending in 3 tend to be good years; years ending in 4 are lackluster years, and years ending in 5 are strong years. Looking back at the 9 decades that data for the S&P/TSX is available; years ending in 3 have been positive 88 percent of the time with an average return of 14 percent. Years ending in 4 have been positive 55 percent of the time with an average loss of 1 percent, and years ending in 5 have had a positive return in 9 out of 9 years with an average return of 16 percent. 2015 looks to be exciting if not we will have to wait 10 more years for 2025.

The data on the S&P500 is even longer and shows the same results. Average return for years ending in 3 is 11 percent and positive 75 percent of the time. Years ending in 4 have been positive 60 percent of the time with an average return of 3 percent and year ending in 5 has been positive 100 percent of the time with the average return of 19 percent.

Backing up this data is a positive and growing North American economy. The Leading Economic Indicator (LEI) continues to improve and is comfortably above the 18 month moving average. When the LEI crosses below the 18 month moving average, the odds of a recession increase, this isn’t the case right now.

Energy will be a headwind and tailwind for the economy. It will take more data to see where it will have the most impact. As oil prices drop, it is a huge saving for consumers. It is estimated that with the current drop in gasoline prices it is saving every consumers between $400 and $500 per year. At the same time, the energy business has been a growth industry in North America and a slowdown will hurt GDP. Estimates run from 0.25 percent of annual GDP lost at these prices to as high as 1.25 percent. So watching this data in conjunction with the LEI and yield curve should give us a good warning sign of any possible recession.

Top Picks:

Patient Home Monitoring (PHM.V)
Nobilis Health (NHC.TO) - Formerly NorthStar Healthcare 
CGI Group (GIBa.TO)

Click here for more information on Bruce Campbell's top and past picks

TSXFallng Fast = Opportunity To Buy Index Funds See These

Warren Buffet says the retail investor should stick with the NO COMMISSION Index funds, and in times of volatility we have followed this advice and enjoyed gains of up to 9% in 1 mth holding period do 2-3 times in a year and you will average what we did this year 17.5%.

Check the TSX index today it is officially down 10% which is termed as a correction.
In the next 3-6 trade days this will be at the bottom from a technical review. The bottom was 13646.49 Oct 2014 and today we have touched 13890 Dec 10 2014 another 250 approx points down and this will be ready to turn around according to our chart analysis. Expectation 3-6 days.

A suggestion is to look at a product like TD E -Series, low MER and no commission but a minimum hold of 30 days. This is what makes sense in turbulent times, buy at the bottom and ride it back up. The death cross happened on the TSX Nov 24th, and now the sell signal is being fulfilled. We are not brokers or agents but we do invest in these funds when market conditions are like they are right now, 10% correction on TSX. We feel a few more days to go yet but we will be buyers.

TD Canadian Index Fund - e

Price As On: Dec 9, 2014
$23.48   0.09 (0.38%)

                            TD Mutual Funds - F-Series                                                TD Mutual Funds - Investor Series                                                TD Mutual Funds - e-Series                     

Fund Code-TDB900

Fund Facts and Related Documents ›

PDFInvest Now

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Objective

The fundamental investment objective is to provide long-term growth of capital primarily by purchasing Canadian equity securities to track the performance of the S&P/TSX Composite Total Return Index. The Index is comprised of Canadian issuers traded on the Toronto Stock Exchange.

Key Reasons To Own

• One-step exposure to large, well-established Canadian companies
• Low MER
• Lower turnover of securities results in fewer realized (taxable) capital gains, making this Fund tax efficient

Td Asset Management