May 09th 2019

“April hath put a spirit of youth in everything”

― William Shakespeare, Sonnets

“If you wait for the robins, spring will be over” 

Warren Buffett, NY Times Op-Ed, October 16, 2008

 Finally, and happily, spring is here.  Global capital markets have rebounded strongly to post mainly positive results for the first quarter of 2019.  Equity markets appeared to be lifted by the prospect of easier monetary policy, while bond markets benefited from economic data showing slowing global growth.  At the end of 2018 there were a number of issues that had markets worried.  These have mostly dissipated or at least the cans have been kicked down the road.  The Brexit issue (the United Kingdom leaving the European Union) has been given a new deadline in October 2019.  The trade and tariff issue with the US and China is said to be 90% resolved, according to the insiders.  The constitutional crisis in the US regarding the Mueller report will require much more work from Democrats in Congress to press impeachment charges.  There are a lot of cans being kicked down a lot of roads.

 For the first 3 months of 2019, the MSCI World Index, which reflects equity market results for 23 developed market economies, climbed 9.77% in Canadian dollar terms, with broad-based gains across markets in North America, Europe and Asia. In the U.S., the S&P 500 Index finished the quarter with a gain of 10.93% (also in Canadian currency), led by strong results for the information technology, energy and industrials sectors. Emerging markets equities also made gains during the quarter, up 7.5%.  The Canadian benchmark S&P/TSX Composite Index posted a robust quarterly gain of 12.42%. Although most sectors added value, Canada’s resource-heavy market was particularly lifted by much higher oil prices, while the industrials, information technology and health care sectors also performed well.  Oil prices increased by 26% this quarter, the Canadian dollar increased 2.17% versus the US$ and Gold dropped slightly to $1,292.38 US$ (down 1.37%).

 The equity rebound came despite economic data indicating growing slack in the global economy, and central banks responded by striking a more dovish tone in the first quarter. After moving to raise interest rates several times in 2018, the U.S. Federal Reserve left rates unchanged and put further increases for 2019 on hold. Yields for 10-year U.S. Treasury Bonds moved lower through the period as bond prices rose. The Bank of Canada also left rates unchanged, and 10-year Canadian government bond yields declined as investors discounted the probability of further rate cuts in the near term. The FTSE Canada Universe Bond Index, a broad measure of Canadian government and corporate bonds, returned 3.91% for the quarter. 

 Since the bull market in North American equities began more than 10 years ago, investors have drawn confidence from the gradual expansion of the global economy, particularly in the U.S. where corporate earnings have been healthy and employment, housing and consumer spending data have been strong. However, late in the economic cycle, corporate earnings are slowing, along with global economic growth. While interest rates remain low and this certainly helps to support business investment and equity prices in the near term, the market volatility we have seen over the past few quarters may become a more common occurrence as the cycle matures.

 The fourth quarter of 2018’s steep decline and the dramatic reversal in the first quarter of this year is a timely reminder of how quickly markets can turn, and underscores the importance of staying invested for the longer term. Given this backdrop, I continue to believe investors are best served by a diversified approach to investing – one that provides exposure to a broad range of actively managed investments from equities to bonds, with public and private holdings, depending on your personal objectives and risk tolerance.

 2019 Federal Budget

On March 19, 2019, the federal government of Canada tabled its budget, entitled “Investing in the Middle Class.” The big themes in this pre-election budget were making home ownership more affordable and investments in skills training. There were also a number of tax-related and other items that may be of interest to you. Selected items are noted below.

Modernizing the Home Buyers’ Plan – Currently, the Plan allows first-time home buyers to withdraw up to $25,000 from their Registered Retirement Savings Plan (RRSP) to purchase or build a home, without having to pay tax on the withdrawal. The withdrawal must be repaid over a 15-year period, or included in the individual’s income if not repaid. Budget 2019 proposes to increase the Plan withdrawal limit to $35,000. Furthermore, it proposes that individuals who experience a breakdown of a marriage or common-law partnership be permitted to participate in the Plan, even if they do not meet the first-time requirement. This would be available for withdrawals made after March 19, 2019. 

First Time Home Buyer Incentive – The Incentive is a shared equity mortgage that would give eligible first-time homebuyers the ability to lower their borrowing costs by sharing the cost of buying a home with the Canada Mortgage and Housing Corporation. The Incentive would provide funding of 5% or 10% of the home purchase price. No ongoing monthly payments would be required. The buyer would eventually repay the Incentive, for example, upon selling the home. This program is expected to be operational by September 2019, and more details will be released later this year. 

 Canada Training Credit – This new non-taxable credit would help Canadians pay for training fees. Every year, eligible workers between the ages of 25 and 64 would accumulate a credit balance of $250 per year, up to a lifetime limit of $5,000. Starting in 2020, Canadians would be able to apply their accumulated Canada Training Credit balance against up to half the cost of training fees at colleges, universities and eligible institutions providing occupational skills training. 

Registered Disability Savings Plan (RDSP) improvement – To open an RDSP, an individual must be eligible for the Disability Tax Credit (DTC). When a beneficiary no longer qualifies for the DTC, the RDSP rules can require that the plan be closed, and that grants and bonds be repaid to the Government of Canada. To address concerns that this treatment does not appropriately recognize the financial impact that periods of severe, but episodic, disability can have on individuals, Budget 2019 proposes to eliminate the requirement to close an RDSP when a beneficiary no longer qualifies for the DTC. Doing so will allow grants and bonds that otherwise would be required to be repaid to the Government to remain in the RDSP. 

 Future limits on stock option deduction – The Government intends to move forward with changes to limit the benefit of the employee stock option deduction for high-income individuals employed at large, long-established, mature firms. Specifically, the Government will move toward aligning Canada’s employee stock option tax treatment with that of the U.S., by applying a $200,000 annual cap on employee stock option grants (based on the fair-market value of the underlying shares) that may receive tax-preferred treatment in the hands of employees of large, long-established, mature firms.  Under this approach, the vast majority of employees of the firms that may receive employee stock option benefits would be unaffected. Further details will be released in the summer of 2019. 

Closing tax loop holes – Budget 2019 seeks to make the tax system fairer by proposing to prevent the use by mutual fund trusts of a method of allocating capital gains or income to their redeeming unit holders where the use of that method inappropriately defers tax or converts fully taxable ordinary income into capital gains taxed at a lower rate and stop the use of individual pension plans to avoid the prescribed transfer limits, which are meant to prevent inappropriate tax deferrals when individuals transfer assets out of certain types of pension plans.

 Of course these are only some of the budget measures. If you would like more information on the budget you can find it at

 We are moving !

In June 2019 you will notice a new address for our office.  We are relocating to a bigger space in the core of beautiful London Ontario.  The new office will be at 640 Colborne Street, which is just south of the railroad tracks and Pall Mall Street.  This central location has more interior space, more parking at our door, with ground floor access and yes, a new paint colour on the walls!  I will send you another reminder closer to the date.  Our phone numbers and email addresses will not change.


We do on occasion receive clients who have found us on the internet or in the phone book.  However the vast majority of our existing clients have come from referrals.  And I really like referrals.  Those referrals underline the good work we do here and the value we add to someone’s financial health.  Your friends, relatives, neighbours and co-workers may be confused and concerned over today’s complex and uncertain markets.  If you feel one of them could benefit from our services, I would be very happy if you would pass on my name and phone number or email address, so that I can help them achieve their financial success. 

 Thank you

In closing, I would like to thank you for your continued trust in us and in using our services.  If you have any questions or concerns about your account, the financial markets or your investments, please do not hesitate to contact my office to schedule an appointment to meet with me.   If you would like to wait to see our new office, please feel free to call my assistant Susan to book a meeting for this summer. I look forward to seeing you then.

 Yours sincerely,


Mark McConnell, BA (Economics), DipBIS Senior Investment Advisor

 Mandeville Private Client Inc. is a member of the Investment Industry Regulatory Organization of Canada and a member of the Canadian Investor Protection Fund.

 This publication contains the opinion of the writer.  The information contained herein was obtained from sources believed to be reliable, but no representation or warranty, express or implied, is made by the writer, Mandeville or any other person as to its accuracy, completeness or correctness. The information in this letter is derived from various sources as of 3/31/2019, including CI Investments, Signature Global Asset Management, Cambridge Global Asset Management, Fidelity Investments Canada, Globe and Mail, National Post, and Trading Economics. Index information was provided by Bloomberg. This material is provided for general information and is subject to change without notice. Although every effort has been made to compile this material from reliable sources; no warranty can be made as to its accuracy or completeness, and we assume no responsibility for any reliance upon it. Before acting on any of the above, please contact me for individual financial advice based on your personal circumstances.


Jamie Hodgins