Back to school, school is cool

September 08, 2017 | Dian Chaaban


A true nerd at heart, this time of year still makes me smile when I think of the excitement the first day of school would bring. So, with all of the students back at school this week, I thought it would be timely to share some fast facts about paying for education along with some valuable tax planning strategies for students.


Fast Facts:


$17,359 - That is the average cost for one year of post-secondary education for students in Canada; here is how we came up with that (reference featured image):


6.3% - This is the average annual increase in university tuition costs since 1990.


$1,340,105 – ROI. That is what a student’s bachelor degree translates to in terms of total cumulative earnings. Compared to $963,075 for a college certificate and $749,975 for a high school degree.


20% - This is perhaps the biggest advantage to contributing to an RESP: the CESG — a powerful grant incentive from the federal government. With the basic CESG, the government will add 20% annually to the first $2,500 contributed to an RESP. That adds up to $500 per year. The maximum CESG over the life of the plan is $7,200 per beneficiary. Click here to request our report out giving the gift of knowledge and remember that we can manage your family’s RESP here as well.


15% - You may be eligible to claim a 15% non-refundable credit for tuition fees you paid. Read more about this and 11 other handy tax planning tips for students by requesting the ‘tax planning checklist for students’ article. Click here to request a copy.


With so much going on and information coming at us from every angle, it's sometimes hard to keep your finger on the pulse of what's happening. In an effort to keep you in-the-know and provide you with some conversation nuggets for the weekend, I've compiled the following hit list to fill your conversation pipeline.


Now you are in-the-know with Word on the Street.


Enjoy the weekend,


Dian Chaaban
Investment & Wealth Advisor


Market Minute


In this week's Global Insight:


  • MKT Update: The TSX Financials sector has pulled back 2% so far this week despite the BoC’s rate hike.
  • Storm Season: Markets have much to digest as the end of summer has seen quite a bit of uncertainty and as equity performance often becomes choppy when the calendar turns to September. But we think stable economic growth will keep the long-term equity story intact. (pg 1)
  • Canada Section: BoC’s surprise rate hike signals confidence in economic growth. Additional decline in Toronto home prices viewed as a healthy correction. RBCCM provides its take on Canadian utilities in light of Hurricane Irma. (pg 3)
  • Other Regional Developments: Interesting twist to the debt ceiling deal; Macron takes aim at France’s labour laws; China’s currency a new safe haven? (pgs 3-4)

Click here for the Global Insight Weekly and for the Global Insight Monthly September edition.

Mixed success | What if the market indexes went into some longer trading ranges of about 10%–15% wide, and then stayed there for the next 12–24 months, much as they did in 2014–2016? We think this is a possible scenario as some groups stall and fall, but the investor sentiment remains so negative, that we don’t think the downside risk is that great. Instead of a major move either way, a market that consolidates can be a frustrating pattern in that it is difficult to generate decent returns unless you are in the right stocks and groups, while avoiding those that are correcting. The popularity of a strategy like “indexing” could also lose its luster during a more sideways period that lasts many months.

In focus this week: Rising Interest Rates

In a widely anticipated move, the Bank of Canada chose to increase interest rates by 25 bps this week, which in effect removes the emergency stimulus instituted in 2015. RBC Global Asset Management’s Chief Economist, Eric Lascelles discusses our outlook of future rate hikes and the Canadian Dollar in the latest report but here are some of the highlights:

  • The market was mixed around whether a rate hike would occur this week or in October.
  • The move is being deemed hawkish as a function of their decision to hike now rather than any specific language around future decisions. To us, this implies less certainty about future rate increases.
  • Looking forward, we think October is a possibility for the next round of hikes, but would require further significant economic strength in the near-term.
  • A more likely scenario is a December hike at the earliest.
  • We view that over the medium-term there are a number of headwinds facing the Canadian economy, which are expected to moderate the long-term upside potential for the currency:
    • Protectionism and risk of NAFTA renegotiations may result in an unfavorable outcome for Canada
    • A growing divide between taxation in Canada and the U.S.
    • Increasingly tougher labour laws in Ontario and Alberta, particularly as minimum wage increases come into effect
    • Stricter environmental standards in Canada
    • High electricity costs in Ontario that will impact competitiveness
    • Oil and the extent to which rising U.S. shale production will contain prices over the medium-term

Click here to request Eric’s full report.

Market Movers

Canada adds 22,200 jobs in August

Canada's labour market extended its winning streak in August with the economy adding 22,200 net jobs - the ninth month in a row for job creation. The unemployment rate fell to 6.2%, which is the lowest since October 2008.

Read more here | Financial Post


Tricky Trade

As the latest round of NAFTA negotiations draw to a close, insiders say there's been very little progress or agreement in the trade trifecta. "The tone is negative," said one source to the Canadian Press, especially on more contentious issues like greater access to work visas for Canadians and Canada's supply-management system, which has irked the U.S. dairy industry. A new deal likely won't be reached by the group's target date of December 2017.

Read more here | CBC News


Montreal is Hot

Montreal’s housing market recorded its hottest August ever in terms of sales activity. Data from the real estate board of Canada’s second-largest city indicated there’s still fire left in Canada’s housing market, only it’s moved east. Sales across the Montreal region rose 8% in August from a year ago, continuing a string of increases in 29 of the past 30 months. Powering the increase: a Quebec economy that’s growing at its strongest pace in 15 years, according to RBC Economics, which today is boosting its 2017 growth projection for the province to 2.8% from 1.9% previously.

Read more here | RBC Economics


Ontario will sell pot in 150 LCBO-run stores

Ontario plans to sell marijuana in as many as 150 stores run by the province's liquor control board after the federal government legalizes its recreational use next summer. The LCBO will also sell marijuana online through a government-run website. The sale of marijuana will be restricted to those 19 and older.

Read more here | Financial Post


Shopping Around

Amazon is looking for some new digs. The e-commerce giant says it will spend upwards of US $5 billion to build a second North American headquarters. “We expect HQ2 to be a full equal to our Seattle headquarters,” said Amazon founder and CEO Jeff Bezos. "Amazon HQ2 will bring billions of dollars in up-front and ongoing investments, and tens of thousands of high-paying jobs." In response to the announcement, Toronto Mayor John Tory said he'll be overseeing a bid that will pitch Ontario's capital city as a prime choice for the new office. Amazon is expected to announce the lucky location sometime next year. Among its preferences: a metropolitan area of more than 1 million people, a business-friendly environment and a city ready to “think big.”

Read more here | Globe & Mail


Dollarama is Shining Bright

The dollar-store chain said sales rose 11.5% in the latest quarter from a year earlier, helped by higher traffic to existing stores and the opening of 17 new locations. The company—which has a market value six times that of Hudson’s Bay—doesn’t have much in the way of tough competition in Canada. On its radar: preparing for rising minimum wages in several provinces by installing more self-checkouts and pursuing other cost-saving measures.

Read more here | Reuters


Lego got too big and complicated

The world’s most profitable toymaker announced a drop in revenue and a big workforce reduction, and admitted that top management was too removed from the folks who buy its plastic bricks. (Lego’s workforce has more than tripled in a decade.) The disappointing sales report came less than a month after Lego said its new CEO would leave after eight months on the job. One of Lego's challenges: figuring out how the digital world fits with its toys.

Read more here | Quartz


A blockbuster deal

United Technologies is buying Rockwell Collins for US$23 billion, creating a behemoth that manufactures everything from engines and landing gear to airplane seats. The merged company will be in a strong position to withstand pricing pressures from powerful customers like Boeing and Airbus, who are on the lookout to slash costs as they roll out a new generation of airplanes. The deal isn’t expected to meet strong regulatory opposition as the aircraft parts industry remains fragmented.

Read more here | Bloomberg


Going Dutch

Canada's oldest retailer has crossed the pond. Hudson's Bay Co. opened its doors in Amsterdam, marking the company's very first location outside the country, which will eventually grow to include 10 stores in the Netherlands. "As one of the world’s most exciting department stores, Hudson’s Bay will deliver a fun and modern shopping experience to consumers in the Netherlands where there is an unmet demand for a premium department store." said CEO Jerry Storch in a statement. The move comes amid increasing challenges for brick and mortar stores worldwide and less than two weeks after HBC's international president announced he was leaving the company.

Read more here | Financial Post


Chinese T-shirts, made in America (by robots)

The story of the apparel industry over the last few decades has been the hollowing out of the industry in developed markets as production moves to cheaper emerging economies. Chinese clothing manufacturer Tianyuan Garments Co. is reversing that trend—although not in a way that’s likely to win any applause from those who want to see the “onshoring” of manufacturing jobs again. Tianyuan will open its new T-shirt factory in Little Rock, Arkansas next year—but the clothes will be made almost entirely by robots

Read more here | Bloomberg


Wardrobe Change Up

There could soon be a gap where your neighborhood Gap used to be. Approximately 200 Gap and Banana Republic locations are set to shut in the next three years, according to a Gap Inc. corporate announcement. On the flip side, the company will be opening 270 Old Navy and Athleta stores, citing the brands' continued success. "We will leverage our iconic brands and significant scale to deliver growth by shifting to where our customers are shopping – online, value and active,” said CEO Art Peck in a statement. The company says it expects to save $500 million over the next three years and plans to reinvest a portion of that money in its growth initiatives.

Read more here | CNBC


Manulife Class Action Law Suit

In June 2017, it was announced that Manulife Financial Corporation had reached a settlement in the amount of $69 million as a compromise of disputed claims. Please review the Manulife Financial Corporation Securities Class Actions news item for key details and procedures. Please let me know if you need help determining if you are eligible to make a claim, and what factors will determine the payout.

Email Dian here


Current Events & Politics

Angry Backlash

Prime Minister Justin Trudeau was in the hot seat again yesterday, forced to defend the Liberals' proposed tax changes for incorporated small businesses. While Trudeau thinks the new tax will "level the playing field," entrepreneurs don't exactly feel the same way — and many are pretty angry about it. Justin Trudeau tried to convince Canadians the changes won’t affect those earning $150,000 or less, but it wasn’t yet clear he was winning the PR war against the opposition Conservatives. The Liberals may not have done enough to explain who’ll benefit from the changes.

Read more here | CBC


A New Weather Nightmare

The most powerful earthquake to hit Mexico in 100 years struck off the nation’s Pacific Coast late Thursday, rattling millions of residents in Mexico City with its violent tremors, killing at least 32 people and leveling some areas in the southern part of the country, closer to the quake’s epicenter. About 50 million people across Mexico felt the earthquake, which had a magnitude of 8.2, the government said.

Read more here | NYT


Irma will test Florida building codes

Before Irma, there was Andrew. In 1992, Hurricane Andrew hit Florida hard, destroying 25,000 homes and damaging 100,000 more at a cost of US$26 billion (or US$45 billion today, adjusted for inflation). In its aftermath, Florida instituted changes to its state building code, making it one of the strictest in the country. This weekend will be the true test of that policy.

Read more here | The Wall Street Journal


The credit bureau got hacked

Yesterday evening, one of the big three consumer credit bureaus, Equifax, announced that hackers had compromised its website and stolen data—names, birth dates, social security numbers and driver’s license numbers—on up to 143 million Americans (along with “limited personal information” on some Canadians and Brits). It’s another in a long line of such major security breaches, but this one hits at the heart of one of the major arbiters of our financial lives. Brian Krebs, one of the more thoughtful commentators on cybersecurity, says one major problem is the existence of such huge, all-you-can-eat databases in the first place, to which thieves will always be irresistibly drawn.

Read more here | NYT


Siding with the Democrats

Against the wishes of his Republican colleagues, the president agreed with Congressional Democrats on a package that ties relief aid for Hurricane Harvey to a plan to raising the debt ceiling for three months. The Republicans had been pushing to raise the debt ceiling for 18 months. Trump’s move dismayed those who say it sets the parties up for a showdown on government funding in December and thereby strengthens the Democrats’ leverage in legislative battles in the coming months.

Read more here | NYT


Ending DACA has a human cost—and a business one

The Trump administration moved to end the Deferred Action for Childhood Arrivals program. The future of 800,000 young illegal immigrants who benefitted from the Obama-era policy enabling them to work in the U.S. now lies with Congress. Failure to find a legislative solution to their plight would impose a heavy financial burden on U.S. companies, according to the Cato Institute, a U.S. think tank. It puts the employee turnover costs at US$6.3 billion, noting that 91% of DACA’s beneficiaries have jobs and would have to be replaced.

Read more here | NYT


Tech Cheat

Two weeks after New York Yankees general manager Brian Cashman sent a formal letter to the commissioner’s office requesting an investigation into possible sign stealing, the league has reportedly found that Red Sox staffers were relaying game information to players using the Apple Watch. While conventional sign stealing by players is considered a baseball faux pas, using technology to gain an upper hand is outright cheating. In typical Red Sox-Yankees fashion, Boston responded to the investigation by filing a formal complaint against the Yankees for using television cameras to steal signs.

Read more here | NYT


Fake Friends

Facebook said hundreds of apparently fake Russian accounts bought political ads on its network during the U.S. presidential campaign Facebook officials said the fake accounts and pages had been connected to a shadowy Russian company called the Internet Research Agency, which is known for using “troll” accounts to post on social media and comment on news websites.

Read more here | NYT


Bond, James Bond

For hints about where the film industry is headed, watch James Bond. While the distribution rights to the 007 franchise have been up for grabs for a while, interested bidders now include not only traditional studios like Warner Bros and Universal but Apple and Amazon. The tech giants’ growing appetite for content is no secret, and their interest in James Bond suggests they’re willing to pay a hefty price for an iconic franchise some say is worth at least US$2 billion. The looming presence of Apple and Amazon likely hasn’t gone unnoticed by the film-industry players arriving in Toronto today for the start of TIFF.

Read more here | NYT


Upcoming Events

5th Annual Stocks, Suits, Scotch | More details coming soon...


Just for Fun

Back to school doesn't have to be boring

Check out these cool schools from around the world where you can learn some amazing (and surprising) skills.

Read more here | CBC


TIFF 2017: Celebrations and soirées greet film fest stars

Priyanka Chopra, Shia LaBeouf and Grace Jones were among the celebs out on the town for TIFF's first night

Read more here | Globe & Mail


US$2.2 billion

That’s how much billionaire restauranteur Tilman Fertitta will pay for the Houston Rockets, the highest price ever for an NBA team and considerably more than the US$81 million he offered for the Rockets back in 1993.

Read more here | Forbes


270 days

That’s how long the Pentagon’s X-37B autonomous drone could be up in space. Other than its successful launch on Thursday by Elon Musk’s privately held SpaceX, little is known about the mission.

Read more here | The Washington Post


Ruby Chocolate

It's the hottest colour of the year, and now there's a chocolate to fit right in. Discovered by Barry Callebaut, a chocolate manufacturer based in Switzerland, ruby chocolate (which really isn't ruby at all, but more of a pale pink) is the first new natural chocolate discovery in 80 years. (The last was white chocolate, which is made with cocoa butter instead of cocoa beans.) Ruby chocolate is made with the ruby bean and Callebaut says it "offers a totally new taste experience, which is not bitter, milky or sweet, but a tension between berry-fruitiness and luscious smoothness.” With a description like that, who could turn it down?

Read more here | New York Times

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