The Liberals will be releasing the party's first federal budget tomorrow (March 22, 2016) after markets close. We will see if Justin has learned anything living the insulated upbringing in a family supported by the wealth of politics.
The rumour mill has been churning with speculation that capital gains tax may be tinkered with, which if so, will only inflate the housing market even more as this will be the last bastion of tax efficient vehicles available to Canadians, permanent residents and others who stay or invest here. The Liberals would rather take away all advantages and rewards of those who take on risk of building a company, hiring people and selling it in a tax efficient way. Or perhaps penalizing investors from taking a high risk equity investment in a startup that may become something revolutionary (BlackBerry? Love it or hate it , fortunes were made by dedicated, hard working people, without which none of these companies would be born). The Liberals would prefer to tax these events more similar to someone bringing a pay cheque home every two weeks. Keep your head down, be like everyone else, don't rock the boat. If the Liberals truly want innovation, well they will have just killed it if the capital gains tax is diminished.
Also rumoured, a greater than $20B deficit (or something certainly greater than the $10B Liberals were elected on) or other such surprises as changes for small business owners.
The C$ closed higher at 0.77. Once Morneau (Finance Minister) starts speaking tomorrow (similar to when the Red Atlantic seats started rolling in during election night, during Justin's swearing in ceremony, and comments in Paris at the climate change fiasco), the C$ should begin to tick downward before your eyes. Those US and Mexican vacations will likely be deferred.
How to play it? Buying "put options" on currencies is not that easy as a retail investor. Personally, for reasons that are to be part of another posting, I would be buying gold and buying it in C$ terms. Simply, gold is going to increase (reasons later) and the C$ is going to be weaker starting Tuesday afternoon, Eastern time zone.
More specifically, buy gold in C$ terms such as the Central fund of Canada and Sprott Physical Gold Trust. Links below.
http://mobile.tmxmoney.com/quote/?symbol=CEF.A
http://mobile.tmxmoney.com/quote/?symbol=PHY.U
Or something a little more exotic but still doable in even the most basic online trading account, buy call options on GLD (SPDR Gold Trust, www.spdrgoldshares.com).
May be a way to ease that all inclusive price shock in Cancun or Florida.
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