adplus-dvertising
Connect with us

Investment

Four stocking-stuffer investments for your TFSA.

Published

 on

A down year for investing means upside potential ahead in 2023 and beyond.

Your tax-free savings account is an ideal way to exploit the opportunities ahead. TFSAs offer the supremely attractive benefit of allowing you to generate gains and then withdraw your money without paying any tax. The flexibility of TFSAs allows you to use up the $6,000 in contribution room for 2022 in the few remaining trading days this year, or carry it forward to next year and beyond. The contribution limit for 2023 is $6,500.

Here are four ideas for your TFSA that play off of financial market developments in 2022:

Suggestion #1: A 5-per-cent GIC

300x250x1

Rising interest rates were bad for stocks and bonds in 2022, but they pushed up returns from low-risk guaranteed investment certificates. The tax hit on GICs held in non-registered accounts is harsh because interest is treated as regular income. In a TFSA, you keep all your GIC income. Don’t delay if you want a GIC yielding 5 per cent. GICs with terms of one through five years were available as of late this week, but from a slowly declining number of alternative banks.

#2: A 6-per-cent dividend stock

TFSAs work well if you want to generate tax-free dividend income, and if you’re a total-return investor who wants both dividends and strong capital gains. The stock market pullback in December has created opportunities for both types of investors. Consider Bank of Nova Scotia (BNS-T), which had a dividend yield of 6.3 per cent late this week and a one-year loss of 24.8 per cent. High yield, plus a candidate for a bounceback. Other 6 per cent blue chips included Enbridge Inc. (ENB-T), TC Energy Corp. (TRP-T), Canadian Imperial Bank of Commerce (CM-T), BCE Inc. (BCE-T) and Power Corp. of Canada (POW-T).

#3: A 4.6-per-cent parking spot for cash

Cash-equivalent exchange traded funds hold bank deposits that provide an after-fee return of about 4.6 per cent these days. If the Bank of Canada raises its overnight rate again next year, the increase will be reflected in the return of these ETFs. These funds are a good way to earn an acceptable low-risk return on money in a TFSA while you plot your next big move. Again, the tax-free structure of TFSAs means you keep all the interest you earn.

#4: An asset allocation ETF

Both stocks and bonds had a rough time in 2022. Exploit a rebound for both of these portfolio-building pillars with an asset allocation ETF that offers a completely diversified portfolio in a single purchase. There are asset allocation ETFs for investors of all types – from young investors willing to embrace stock market risk to retirees seeking balance or a conservative approach. The difference between these funds is the emphasis on stocks versus bonds.

— Rob Carrick

This is the Globe Investor newsletter, published three times each week. If someone has forwarded this e-mail newsletter to you or you’re reading this on the web, you can sign up for the newsletter and others on our newsletter signup page.

Stocks to ponder

Short sales on the TSX: What bearish investors are betting against

As Santa Claus prepares his eco-friendly, reindeer-powered sled to deliver gifts to investors this week, what companies are the grinches – short sellers and their minions – targeting in December? Larry MacDonald takes a look.

The Rundown

How well were you paying attention to the markets in 2022?

It was a bad year for financial markets. It was an excellent year for financial drama. From surging inflation and collapsing crypto exchanges to the “moron premium” and misbehaving gazillionaires, 2022 dented portfolios and shattered assumptions. How closely did you follow the people and forces that shaped this dramatic, painful, farcical period? Take this quiz to find out.

The year in Canadian markets: stocks and bonds both tumbled in ‘perfect storm’

Investors had few places to hide this year. The pressure is unlikely to let up heading into 2023. The U.S. Federal Reserve has suggested interest rates may continue to rise and further hikes from the Bank of Canada are on the table, too. Investors face the possibility of a recession and what that will mean for corporate profits already being squeezed by rising costs, writes Craig Wong of the Canadian Press.

How 2022 shocked, rocked and rolled global markets

Trillions of dollars wiped off world stocks, bond market tantrums, whip-sawing currency and commodities and the collapse of a few crypto empires – 2022 has been perhaps the most turbulent year investors have ever seen, and for good reason. Marc Jones of Reuters reviews the year.

 

728x90x4

Source link

Continue Reading

Investment

Weaker Orders, Investment Underscore Ailing US Manufacturing – Yahoo Canada Finance

Published

 on


(Bloomberg) — US manufacturing showed more signs this week of succumbing to the Federal Reserve’s aggressive interest-rate hikes that are taking a bigger bite out of demand and risk upending the economic expansion.

Most Read from Bloomberg

The government’s first estimate of gross domestic product for the fourth quarter and a report on December factory orders for durable goods pointed to sizable downshifts in both spending on business equipment and bookings for core capital goods.

300x250x1

The durable goods report Thursday showed orders for nondefense capital goods excluding aircraft — a proxy for business investment — dropped 0.2% in December after no change a month earlier. Over the fourth quarter, bookings for these core capital goods posted the weakest annualized gain since 2020. Shipments, an input for GDP, decreased for the third time in four months.

“Taken in tandem with the output data where industrial production has declined in six of the past eight months, it is increasingly evident that the manufacturing recession is well underway,” Wells Fargo & Co. economists Tim Quinlan and Shannon Seery said in a note to clients.

Also on Thursday, the GDP report showed outlays for business equipment dropped an annualized 3.7%, the largest slide since the immediate aftermath of the pandemic. That decline was part of a broader demand slowdown, which included a smaller-than-forecast advance in personal spending.

While GDP growth beat expectations, details of the report that offer a clearer picture of domestic demand were decidedly weak. Inflation-adjusted final sales to private domestic purchasers, which strip out inventories and net exports while excluding government spending, rose at a paltry 0.2% rate — also the weakest since the second quarter of 2020.

Last month’s retreat in core capital goods orders indicates manufacturing output, which already registered sharp declines in the final two months of 2022, may struggle to gain traction this quarter.

Read more: Weak US Retail Sales, Factory Data Heighten Recession Concerns

The slump in housing is also spilling over into producers of non-durable goods. Shares of Sherwin-Williams Co. tumbled this week after the paintmaker pointed to pressures stemming from a weak residential real estate market and inflation.

“We currently see a very challenging demand environment in 2023 and visibility beyond our first half is limited,” Chief Executive Officer John Morikis said on a Jan. 26 earnings call. “The Fed has also been quite clear about its intention to slow down demand in its effort to tame inflation.”

An accumulation of inventories only adds to the headwinds. Inventory building accounted for about half of the 2.9% annualized increase in fourth-quarter GDP. For the year as a whole, inventories grew $123.3 billion, the most since 2015.

With demand moderating, there’s less incentive to ramp up orders or production as companies make greater efforts to sell from existing stock.

In addition to the aforementioned data, the latest surveys of manufacturers show sustained weakness. Measures of orders at factories in four regional Fed surveys have all indicated multiple months of contraction.

All surveys released so far for this month are consistent with an overall contraction in activity that extends back through most of the second half of 2022.

Next week, the Institute for Supply Management will issue its January manufacturing survey and economists project a third-straight month of shrinking activity.

Most Read from Bloomberg Businessweek

©2023 Bloomberg L.P.

Adblock test (Why?)

728x90x4

Source link

Continue Reading

Investment

Canada expected to buck trend of big investment banking layoffs – Reuters

Published

 on


TORONTO, Jan 26 (Reuters) – Some of Canada’s top investment banks plan to maintain staffing levels to meet client expectations for the same level of coverage through the ups and downs of business cycles, head hunters and industry executives said.

U.S. investment banks, including Goldman Sachs (GS.N), began cutting over 3,000 employees on Jan. 11 citing a challenging macroeconomic environment, raising fears Canadian banks may follow suit. Like their global peers, many Canadian investment banks had staffed up during the pandemic only to see dealmaking slow last year.

At Royal Bank of Canada (RY.TO), the country’s biggest lender, for instance, headcount at its capital markets division jumped by 71% over the two years ending Oct. 31, 2022 to 6,887 employees.

But in the meantime Canadian dealmaking fell 39.7% last year to $89.7 billion. That is more than the 36% drop in global deal values to $3.8 trillion following a stellar 2021, according to data from Dealogic.

Yet, Canadian banks have not announced layoffs and some even say they may increase headcount, though dealmaking in the new year is down nearly 50% to $3.2 billion from a year ago, according to Dealogic.

“Right now there is a sense that there isn’t a need for cuts in the system,” Dominique Fortier, partner at recruitment firm Heidrick & Struggles’ Toronto office, told Reuters.

“When there was an upswing in 2021, it happened so quickly that there was no corresponding increase in hiring and so I don’t see that we’ll have the same decrease in terms of headcount coming.”

Toronto Dominion Bank (TD.TO), which last year agreed to buy New York-based boutique investment bank Cowen Inc (COWN.O), expects to continue to grow its global investment banking business as it work towards closing the deal, a spokesperson said.

Desjardins, another Canadian lender, will continue to invest in its growing capital markets division, a spokesperson said.

EXPENSIVE PROPOSITION

Bill Vlaad, a Toronto-based recruiter who specializes in the financial services sector, said that while there was some nervousness around the stability of investment banking teams, Canada is unlikely to see U.S.-level redundancies aside from the annual cull of poor performers called “maintenance layoffs.”

“The U.S. is very nimble. They will go in and out of hotspots very quickly. Canada doesn’t have that same luxury and has to stay relatively consistent in coverage,” said Vlaad.

“You have a consistent group of people working…and they don’t fluctuate all that much year to year, decade to decade.”

But another down year for dealmaking could see bonuses taking a hit.

RBC, which was ranked No. 2 in Canada M&A, equity capital markets and debt capital markets last year according to Dealogic, has no layoff plans for investment banking in Canada, a source with knowledge of the matter said.

Spokespeople for JP Morgan, which topped the M&A league table last year, Scotiabank (BNS.TO) and Canadian Imperial Bank of Commerce (CM.TO) declined to comment. BMO did not respond to requests for comment.

Headhunters and lawyers say it’s less expensive to lay off bankers in the United States compared to Canada.

Howard Levitt, senior partner at employment law firm Levitt Sheikh, said Canadian investment banking employees would be entitled to somewhere between four and 27 months severance with full remuneration depending on their status, re-employability, age and length of service.

Reporting by Maiya Keidan
Editing by Denny Thomas and Deepa Babington

Our Standards: The Thomson Reuters Trust Principles.

Adblock test (Why?)

728x90x4

Source link

Continue Reading

Investment

Weaker Orders, Investment Underscore Ailing US Manufacturing – BNN Bloomberg

Published

 on


(Bloomberg) — US manufacturing showed more signs this week of succumbing to the Federal Reserve’s aggressive interest-rate hikes that are taking a bigger bite out of demand and risk upending the economic expansion.

The government’s first estimate of gross domestic product for the fourth quarter and a report on December factory orders for durable goods pointed to sizable downshifts in both spending on business equipment and bookings for core capital goods.

The durable goods report Thursday showed orders for nondefense capital goods excluding aircraft — a proxy for business investment — dropped 0.2% in December after no change a month earlier. Over the fourth quarter, bookings for these core capital goods posted the weakest annualized gain since 2020. Shipments, an input for GDP, decreased for the third time in four months.

300x250x1

“Taken in tandem with the output data where industrial production has declined in six of the past eight months, it is increasingly evident that the manufacturing recession is well underway,” Wells Fargo & Co. economists Tim Quinlan and Shannon Seery said in a note to clients.

Also on Thursday, the GDP report showed outlays for business equipment dropped an annualized 3.7%, the largest slide since the immediate aftermath of the pandemic. That decline was part of a broader demand slowdown, which included a smaller-than-forecast advance in personal spending.

While GDP growth beat expectations, details of the report that offer a clearer picture of domestic demand were decidedly weak. Inflation-adjusted final sales to private domestic purchasers, which strip out inventories and net exports while excluding government spending, rose at a paltry 0.2% rate — also the weakest since the second quarter of 2020.

Last month’s retreat in core capital goods orders indicates manufacturing output, which already registered sharp declines in the final two months of 2022, may struggle to gain traction this quarter.

Read more: Weak US Retail Sales, Factory Data Heighten Recession Concerns

The slump in housing is also spilling over into producers of non-durable goods. Shares of Sherwin-Williams Co. tumbled this week after the paintmaker pointed to pressures stemming from a weak residential real estate market and inflation.

“We currently see a very challenging demand environment in 2023 and visibility beyond our first half is limited,” Chief Executive Officer John Morikis said on a Jan. 26 earnings call. “The Fed has also been quite clear about its intention to slow down demand in its effort to tame inflation.”

An accumulation of inventories only adds to the headwinds. Inventory building accounted for about half of the 2.9% annualized increase in fourth-quarter GDP. For the year as a whole, inventories grew $123.3 billion, the most since 2015.

With demand moderating, there’s less incentive to ramp up orders or production as companies make greater efforts to sell from existing stock.

In addition to the aforementioned data, the latest surveys of manufacturers show sustained weakness. Measures of orders at factories in four regional Fed surveys have all indicated multiple months of contraction. 

All surveys released so far for this month are consistent with an overall contraction in activity that extends back through most of the second half of 2022. 

Next week, the Institute for Supply Management will issue its January manufacturing survey and economists project a third-straight month of shrinking activity.

©2023 Bloomberg L.P.

Adblock test (Why?)

728x90x4

Source link

Continue Reading

Trending