US Election Sidelines Central Banks - Earnings: PLZ, SRU, REI, ECI, PEY
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The big corporate tax cuts in the US do not look quite so good now, after the President took his cut to boost Republican popularity in the upcoming midterm elections. Many corporations will face an increase in costs from import trade tariffs, partially offsetting the tax savings, and only a few select sectors will benefit. Jobs for the down and out coal sector helped Trump win the Nov-2016 election, adding steel and aluminum workers to further bolster support is another brick in the wall of support for Trump and the Republicans.
The tariffs shake up is likely just the beginning for building voter support as the US mid-term elections swing into view. Politics don't always matter to central bankers except when elections are in the offing. During periods leading up to elections, central bankers typically avoid policy actions that could unfavourably influence an election outcome. This would include US Central Bank Chief Jerome Powell, who was recently appointed by the President. The tariff surprise is likely just the first of political manoeuvring as the US enters an election phase. Comments this week consider the impact of tariffs, on global monetary policy.
Earnings updates include Riocan REIT(REI.UN) SmartCentres REIT(SRU.UN), Plaza Retail REIT(PLZ.UN), Enercare Inc. (ECI) and Peyto Exploration & Development Corp. (PEY). Riocan and SmartCentres were the two largest retail shopping centre focused REITs in Canada, until Choice Properties REIT(CHP.UN) made an offer to acquire Canadian Real Estate Investment Trust(REF.UN) in Feb-2018. Canadian Real Estate Investment Trust has total assets of $5.5B, of which one third are shopping centres. This will make Choice Properties the second largest shopping centre REIT in Canada followed by SmartCentres. Riocan remains the largest of the Canadian shopping centre REITs. The following table lists the main shopping centre REITs in Canada, the current combined yield would be 6.3% from holding an equal weighted portfolio of these six names.
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