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Citi’s chief U.S. equity strategist (and Montreal-born) Tobias Levkovich published a research report noting that overall first quarter S&P 500 earnings exceeded consensus expectations. Mr. Levkovich also reduced his own forecast for earnings in a way that provided a good example underscoring a pervasive sense of anxious ambivalence for portfolio managers and analysts,

“Gauging the impact of Chinese trade sanctions is nearly impossible, but we suspect trimming forecasts a bit is reasonable. We are pulling down our full year 2019 EPS [earnings per share] projections [for the S&P 500] to $170 from $172, recognizing that further trade war ramifications could lead to more downward adjustments.”

By ambivalence I don’t mean apathy – everyone still cares where the market’s going next. The sentiment is more a throwing up of hands, a “this could get really, really bad. Or not. I dunno, no way to tell.”

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Risks of a major market calamity are certainly rising. Morgan Stanley’s global head of economics Chetan Ahya generated considerable media attention Monday with a report warning investors that they were not taking the economic risks of a trade war seriously enough.

“If trade tensions continue to escalate, with the U.S. imposing 25 per cent tariffs on the remaining [approximately] US$300-billion of imports from China and China responding with countermeasures, we believe that the global cycle will be at risk. We could end up in a recession in three quarters. Is such a prognosis alarmist? We think otherwise, for three reasons: (1) the transmission channels are pervasive, (2) the impact is non-linear and (3) any policy easing will be reactive, with lagged effects.”

Mr. Ahya prefaced all this by noting “Given the many twists and turns in the trade talks thus far, we admit that the outcome is highly uncertain.”

We all know the reason for trade uncertainty. When the leader of the free world seemingly announces trade decisions after spinning a big wheel of policy options written by moody teens, the usual forecasting methods go out the window. (Joke aside, it is also important to note that China’s global economic ambitions, regional military expansion and indifference about intellectual property rights would almost certainly have invoked a confrontation with the U.S. eventually, no matter the president.)

I am tempted to use the ‘eye of the hurricane’ metaphor to describe investors’ current predicament. The initial shocks from U.S. tariffs on China and Mexico have been digested by markets, at least in part, and asset prices have been adjusted accordingly. Markets are calm-ish for the moment but there is almost certainly a big market move ahead.

The hurricane comparison doesn’t work in the end because it implies certain market disaster ahead and that may not be the case. A breakthrough in trade negotiations would spark a significant rally and raise hopes that a slowing global economy can recover along with global trade levels.

The truth is, there is not enough information to make a bet either way and that’s always an uncomfortable position for an investor. ‘Wait and watch’ is not the most helpful advice but it’s likely the most sensible course of action for investors in the coming weeks.

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Scott Barlow, Globe and Mail market strategist

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Stocks to ponder

Canadian Natural Resources Ltd. (CNQ-T). Bay Street is praising Canadian Natural Resources Ltd. for striking a bargain when the oil producer scooped up the Alberta assets of U.S.-based Devon Energy Corp. for $3.8-billion, in a deal announced last week. But for all the gushing from investment bankers, will long-suffering shareholders benefit from the deal? David Berman and Jeffrey Jones take a look (for subscribers).

The Rundown

Where can investors turn as market jitters grow? History says: stocks

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Don’t tell me: You’re looking for a safe place to put your money until market jitters subside. It’s an understandable desire. Economic growth in both Canada and the United States is stumbling. Falling bond yields and slipping stock prices are flashing warning signs. Add in Donald Trump’s erratic trade tactics – including this week’s threat to impose tariffs on Mexican products – and right now seems like a fine time to take shelter. But where? History may offer some pointers. Ian McGugan explains (for subscribers).

Ontario government and regulatory authority developing final rules for financial planner, financial advisor regulation

The Ontario government is moving ahead with plans to crack down on people who use the title of “financial planner” or “financial adviser” when they lack qualifications. Bill 100, which received royal assent last week, requires anyone in Ontario who wants to use those titles to obtain appropriate credentials and remain in good standing. With that groundwork laid, the province’s Ministry of Finance and the Financial Services Regulatory Authority of Ontario (FSRA) are developing the final rules. Clare O’Hara reports (for subscribers).

Fed’s Bullard: Trade, other risks, mean rate cut may be ‘warranted soon’

A U.S. interest rate cut “may be warranted soon” given the rising risk to economic growth posed by global trade tensions as well as weak U.S. inflation, St. Louis Federal Reserve president James Bullard said Monday, the first Fed official to say recent events may require a central bank response. Reuters reports.

Others (for subscribers)

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‘The global market cycle will be at risk. We could end up in a recession in three quarters’ - Morgan Stanley chief economist

Alphabet shares slide 7% on possible DoJ antitrust probe

Oil loses lustre as banks cash in on cleaner commodities

Insiders sense opportunity at Photon Control

Monday’s Insider Report: Three CEOs are trading these dividend stocks

Monday’s analyst upgrades and downgrades

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Monday’s small-cap stocks to watch

Others (for everyone)

Bullish on BHP Group

The Globe’s stars and dogs for last week

Iron ore sticks to fundamentals as other commodities dance to noise

Can Tesla ever be more than a niche automaker? Wall Street increasingly thinks no

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Globe Advisor

Pro bono financial advice for millennials could produce big payoff

Carrying dealers becoming essential to independent advisors

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Ask Globe Investor

Question: I recently retired and withdrew money from my registered retirement income fund. I was surprised that the bank withheld 30 per cent. Is this always the case?

Answer: No. With a RRIF, the government requires you to make a minimum withdrawal each year, starting the year after you open the RRIF. If you withdraw only the minimum, no tax is withheld. However, if you exceed the minimum, your financial institution will hold back a percentage of the excess amount and remit it to the government. The withholding tax rates are 10 per cent for amounts up to $5,000, 20 per cent for amounts from $5,001 to $15,000 and 30 per cent for amounts over $15,000. (Withholding tax rates are different in Quebec).

To be clear, the tax withheld is based on the amount of the withdrawal that is above the minimum, not on the entire withdrawal. However, the entire RRIF withdrawal is added to your income for the year. When you file your tax return, you may end up owing more tax – or getting a refund – depending on your total income from other sources.

There will be times when a RRIF holder needs to withdraw more than the minimum to pay for medical bills, home repairs or other expenses. But, generally, if you don’t need extra cash – and you want to avoid withholding taxes – withdrawing the minimum is the way to go. This will also keep more of your money growing inside the RRIF on a tax-deferred basis.

Minimum withdrawal percentages are based on your age (as of Jan. 1 of the year you make the withdrawal), and these percentages increase as you get older. To determine the dollar amount of the withdrawal, the percentage is applied to the value of your RRIF on Dec. 31 of the year before you make the withdrawal. For someone at the age of 65, for example, the minimum withdrawal is 4 per cent. This rises gradually each year, to 5 per cent by 70, 6.82 per cent at 80, 11.92 per cent at 90, and tops out at 20 per cent for RRIF holders 95 and older. If your spouse is younger, you can elect to use his or her age to determine your minimum withdrawal. This will reduce your taxable income and leave more money in your RRIF.

To avoid unexpected withholding taxes, you can instruct your financial institution to make only the minimum withdrawal each year. Your institution can calculate the appropriate dollar amount on your behalf and provide the cash in a lump sum or on a monthly, quarterly or semi-annual basis. If you don’t need the cash immediately, consider delaying the RRIF withdrawal until the end of the year to maximize tax-deferred growth inside the RRIF.

--John Heinzl

Do you have a question for Globe Investor? Send it our way via this form. Questions and answers will be edited for length.

What’s up in the days ahead

John Heinzl takes a look at how his Model Dividend Portfolio performed in the last month and explains what he’s buying next.

Click here to see the Globe Investor earnings and economic news calendar.

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Compiled by Gillian Livingston

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