Following Democrat Joe Biden’s projected U.S. election win, CNBC Make It considers where best to put your money.
Global stock markets rallied sharply on Monday, after Biden was named U.S. president-elect over the weekend, and were propelled even higher by promising news of an effective coronavirus vaccine.
The all-important election proved closer than expected, with forecasts of a Democratic “blue wave” — which many financial analysts had expected — quashed. The projected Democratic House and a Republican Senate also look likely to limit the amount of dramatic policy change Biden could enact as president.
But what does this mean for markets?
David Henry, investment manager at U.K. firm Quilter Cheviot, told CNBC via email that history suggests this election outcome could actually be the “best-case scenario” for stock investors.
Analysis of all possible political scenarios going back to 1945, he said, showed that a Democratic president alongside a split Congress generated the best average annual returns for the U.S. stock market, of nearly 14% in dollar terms.
As it stands, the Democratic party is projected retain its hold of the House of Representatives. Control of the Senate is still to be determined, with run-off elections for two seats in the state of Georgia in January.
However, asset manager BlackRock said Monday that a Democratic takeover of the Senate looked unlikely. As such, it said a split Congress would constrain the ability of a Biden administration to introduce a larger economic stimulus package, public spending, tax or health reform, and climate related-legislation.
When it comes to specific stocks, Quilter Cheviot’s Henry said that if Congress was split, there wouldn’t be “strong, single-minded legislature to curb excessively successful business models.”
“We should expect companies which were doing well before the election to continue doing well,” he added.
According to Willem Sels, chief market strategist at HSBC Global Private Banking, technology and healthcare stocks were likely to benefit, as markets have “feared more regulation” in these sectors.
As such, HSBC remains positive on technology themes such as online consumption, automation, 5G and health tech, Sels added.
‘Fewer trade wars … more trade negotiations’
The 2020 election followed a difficult four years for international relations under current President Donald Trump, who sparked a trade war with China and multiple disagreements with Europe.
Louise Dudley, global equities portfolio manager at investment manager Federated Hermes, told CNBC over the phone that a Biden presidency could see a possibly “softer … certainly more collaborative” approach to global trade relations.
She said this would likely mean less “macro, top-down” stock market volatility, as seen over the last few years with Trump, with “maybe fewer trade wars and maybe more trade negotiations.”
This would create a better business environment for companies that thrive on certainty, Dudley added.
Quilter Cheviot’s Henry said that if the U.S. became “more outward looking … with some kind of move back towards globalization” under Biden, he expected the benefit of this to “filter out globally.”
“Regions which are a little more sensitive to global economic growth would likely benefit – Europe and Japan in particular, through their prominent manufacturing sectors,” he said.
Even with the constraints of a likely split Congress, Dudley highlighted Biden’s plans to tackle climate change as another area for investors to watch.
Biden has pledged to rejoin the Paris Agreement, the international plan for tackling climate change, which Trump announced the U.S.’s withdrawal from in 2017. Biden also has plans for the U.S. to reach net-zero carbon emissions by 2050.
Dudley said this could again be seen as a “collaborative move,” as the likes of China and Europe have also implemented similar climate goals.
In the U.S., she suggested possible increased infrastructure spending around this environmental refocus would benefit industries such as electric vehicles, batteries, wind and solar.
COVID-19 Investment Warning: The CRA Can Tax Your TFSA! – The Motley Fool Canada
A lot of Canadians weren’t actually that great at saving before the pandemic. Many lived during the last decade in relative ease, knowing that we had a strong economy that was only getting stronger. However, what we probably weren’t aware of was the increasing debt that both our country and others racked up.
Then the pandemic hit, bringing the Canadian government’s debt up another $15 trillion between January and September for a grand total of $272 trillion as of writing. We’re actually leading the charge in debt, ahead of countries like Japan, the United States, and the United Kingdom.
So, Canadians started to get their affairs in order, and that included their cash. In many cases, it meant opening up or taking advantage of a Tax-Free Savings Account (TFSA). With another TFSA contribution limit on the way in January, many are looking for another opportunity during perhaps another market crash. But before you do, the Canada Revenue Agency (CRA) has a word of warning.
The TFSA can be taxable
The TFSA can be taxed, but only under certain conditions. The TFSA is meant to get Canadians investing in Canadian business. So, the first problem is if Canadians are investing in companies outside Canada. If so, you’re subject to taxation on those returns. This can be a serious problem, as with a market crash, there were tons of great companies that saw the share price plummet. Just make sure those shares are Canadian. This also means making sure you’re investing in a company on the Canadian market, as many companies are listed on both the TSX and NYSE, for example.
Second, you can be subject to tax if you go beyond the TFSA contribution limit. If the TFSA was limitless, you could invest any time you wanted, as much as you wanted, and potentially make a killing! The CRA doesn’t want to miss out on those taxes. So, it creates a limit year by year. That way, if there’s a huge initial public offering (IPO), you only have a couple thousand to invest, rather than a hundred thousand.
You also can’t use your TFSA like a business. This happens if you’re making huge trades, trading too often, or making too much money basically. This is a bit of a grey area, so you must be careful. It seems the number right now the CRA is going off of is $250,000. If you make that much in returns, the CRA will want to take a closer look at how you’re making that money.
Finally, beware the TFSA contribution limit! Yes, I already mentioned this, but there’s another problem. You have $69,500 worth of contribution room this year. But let’s say during the pandemic ,you took out $20,000 to help with bills. Now, you’ve made that money back and want to put it back in your TFSA. Not so fast!
If you’ve already reached the TFSA contribution limit for the year, you cannot put money in your TFSA again, or it will be subject to taxes. You have to wait until next year, and then check out MyAccount on CRA or call CRA to see how much room you have available. Don’t mess it up!
The TFSA is an excellent tool to use during the pandemic, but be careful. You don’t want to take full advantage and then fall under these categories. If you do, it’ll make that TFSA contribution limit basically worthless.
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Ontario government increasing investment in video surveillance systems – The Review Newspaper
The Ontario government is investing $1.6 million in Closed-Circuit Television (CCTV) systems to help 18 police services across the province better detect, investigate and prevent criminal activity. Funding through the new Ontario CCTV Grant will help police services and their municipal partners install new or additional surveillance cameras in areas where gun and gang violence and other criminal activity are most prevalent.
“By strengthening CCTV surveillance systems across the province, Ontario’s police services will be better equipped to prevent criminal activity, identify and apprehend offenders,” said Solicitor General Sylvia Jones. “This expansion will support the local fight against guns and gangs while deterring other crimes such as drug and human trafficking, street racing and stunt driving. The use of CCTV cameras will also help hold criminals accountable by providing important visual evidence to support investigations and the prosecution process.”
The Ontario CCTV Grant, which was announced in August 2020, is providing police services with a total of $6 million over three years to expand CCTV systems in their communities and improve public safety.
The CCTV grant builds on the province’s approximate $106 million investment to combat gun and gang violence, with the support of the federal government, through Ontario’s Guns, Gangs and Violence Reduction Strategy.
“Improving the technology and information available to Ontario’s frontline police is critical to deterring unlawful activity and holding offenders accountable in our communities,” said Minister Jones. “Ontarians need to feel safe in their homes and their businesses without fear of crime as communities recover from the impacts of COVID-19.”
Sunshine Coast investment fund receives $2 million from Telus – Coast Reporter
A local investment firm is one of the first three companies to receive support from a $100-million corporate impact fund recently launched by telecommunications giant, Telus.
Rhiza Capital, an “impact investment group of companies” co-founded by Community Futures Sunshine Coast, Sunshine Coast Credit Union and Powell River Community Investment Corporation, will receive $2 million from Telus’s Pollinator Fund, which it launched Nov. 24.
The Pollinator Fund will invest in early-stage companies focused on health care, sustainable food production, improving the environment and on social and economic inclusion, according to the Nov. 24 release. Companies don’t have to be Canadian.
Rhiza was described as one of three “cornerstone partnerships,” alongside Windmill Microlending, a registered Canadian charity that offers small loans to skilled migrants and refugees, and U.S.-based company Tidal Vision, which produces a biopolymer out of crab, shrimp and other crustacean shells.
Rhiza will use its money for a fund that invests in eligible business corporations (EBC) – a B.C. designation that offers investors a tax credit – and businesses that “deliver impact aligned with the UN’s Sustainable Development Goals,” according to its website.
This is Rhiza Capital’s third impact venture fund and at slightly more than $3 million, is the largest. “Our goal is to reach just over $10 million by the end of the year,” Rhiza Capital CEO Brian Smith told Coast Reporter.
No decisions have been made about how the capital will be invested yet, as the company is not yet receiving applications.
Rhiza was chosen following a six-stage “gating process,” said Smith, who also acknowledged “we were fortunate to have a relationship with the team at Telus even before the fund was launched,” and supported the telecommunications giant in its shift to impact funding.
Blair Miller, a managing partner with the Telus fund, told Coast Reporter a “key reason” they tapped the Sunshine Coast company was its focus on B.C. companies that “enable inclusive communities” and on economic development in smaller regional communities, which he said are “underserved by traditional capital.”
“From a Telus perspective, we believe that we have an accountability to invest in and support new responsible businesses to ensure their success and impact. And we believe that the Pollinator investment in Rhiza Capital will help us forward that,” Miller said.
‘No plan’ for economy will work without more access to COVID-19 tests, vaccines: O’Toole – Global News
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