It might be the best economic news in half a decade, today’s National Employment Report from ADP. Private-sector employers added 297,000 jobs in December, up from a revised 92,000 in November. It’s the eleventh straight month of job growth and beat a consensus forecast of 100,000. And it confirms the strength observed in other data such as freight volumes, manufacturing activity and industrial power demand. Businesses are humming, and after a year’s worth of cleaning up balance sheets and lining up cheap capital they’re in position to expand payrolls.

Getting people back to work is the best way to stem foreclosures and shore up local, state and federal tax bases, two lingering threats to the still-nascent recovery. Not only is employment a substantive measure of economic health. Good news on this front tends to boost confidence in households. Although railcar loadings get people like me, you and Elliott Gue all excited, it’s tough to translate to working folks looking for, well, work, and a way to pay bills, save a little and maybe grab dinner and a movie here and there.

Today’s ADP number is a sign the unemployment rate could start to decline soon. To get it down to 8 percent we need to see 300,000 net private-sector jobs a month for two years. So this is a start. There will remain plenty of room for bears to continue the case for the impending end of US hegemony, led by the destruction of the dollar. But at this rate, by the time my first born starts high school in September 2011 the US will have established durable growth sufficient to absorb existing members of the workforce as well as new entrants.

The state of US employment is one key indicator we’ll be looking at this year. And on the occasion of this encouraging news, and in observance of the first trading week of 2011, here are seven more issues, stories and themes we’ll be following as the next 12 months unfold.

7. Interest Rates

The backup we’ve seen in key benchmarks such as the yield on the 10-year US Treasury Note is the subject of a heated debate among market observers, which breaks down basically between hard-money “Austrians” on one hand and fiat-currency Keynesians on the other. Sparing you the details of this intellectual skirmish, in reality interest rates are likely to go higher from here. And that’ll get them back in the neighborhood of normal.

The recent rapid up-tick in the 10-year Treasury yield hasn’t had the impact such a move once would have on income investments. There is some risk–to already weak corporations that were unable to refinance at an opportune time and to adjustable-rate mortgage holders with rates scheduled to reset in coming months–but in the aggregate rising rates will confirm the building strength of the overall economy.

At a policy level, the Bank of Canada (BoC) must cope with the impact of a stronger loonie against a QE2-and- public-debt-weakened US dollar. Governor Mark Carney is in a tough spot because he doesn’t want to build in too much of a yield spread that will drive the Canadian dollar even higher. But the BoC’s mandate is different than that of the Fed. The Canadian central bank is one of many around the world that practice “inflation targeting.”

The Fed and the BoC are likely to move off what are still historically low target rates. We’ll leave more specific long-distance mind-reading to more accomplished central bank watchers.

6. Oil Prices and the Canadian Dollar

Confirmation of a durable US recovery will keep oil prices elevated, which, all things considered, is generally good for the Canadian economy. The US remains Canada’s most important trading partner, and much of that cross-border commerce concerns oil.

According to research described at the blog Worthwhile Canadian Initiative, the Canadian dollar moves upward along with a rising per barrel price of crude oil–to a point. Although the specific factors at work are unclear and the sample size is limited, what happened in 2007 and 2008, when crude reached USD80 and the loonie soared past parity with the US dollar but only hovered there when the per-barrel price nearly doubled again through July 2008, is instructive.

It seems rather intuitive: There’s a tipping point for consumers where oil prices are concerned. The per barrel price of oil at any given time accounts for approximately 50 to 70 percent of a gallon of gas. We live in a car culture. People use theirs to get to work; in too many cases they have no choice but to drive. It’s a classic captive audience. And when fuel costs start to consume a disproportionate share of income people are forced to trim other spending, and a domino effect through the economy takes down other types of businesses.

Not too hot, not too cold is your mantra if you’re invested in oil producers: You don’t want the per barrel price to get too far north of USD100 for too long.

5. Keystone XL: Jobs, Baby, Jobs

This week the American Petroleum Institute (API) kicked off a campaign to publicize the many benefits of TransCanada Corp’s (TSX: TRP, NYSE: TRP) Keystone XL project, a 1,675-mile extension of the existing Keystone Pipeline. Keystone XL would carry more than 900,000 barrels per day of crude derived from the Canadian oil sands from Hardisty, Alberta, through Saskatchewan, Montana, South Dakota, Nebraska, Kansas, Oklahoma and terminate at refineries on the Gulf Coast of Texas.

High-grade crude from domestic US producers in places like North Dakota will also be able to tie in and get their easily refined output to markets where they can receive premium prices for it. It would, for all intents and purposes, enable the doubling of Canadian oil sands imports to the US. 

Secretary of State Hillary Clinton has “authority to act” on cross-border energy infrastructure on behalf of the US government by virtue of a 2004 executive order signed by President Bush. The process includes a State Dept-led environmental impact study, public comment and consultation with other executive branch offices and key legislators.

Here’s the naked political reality of the Keystone XL approval process: Some members of Congress with constituencies in or around the physical footprint and others who call themselves environmentalists will use the statutory description of the process to as a platform to harass Secretary Clinton, but the pipeline will get built because too many people will enjoy the benefits of a steady, friendly source of oil and too few will see the thing or be harmed if it leaks. Canada is now the No. 1 supplier of crude to the US, and much of what’s shipped south comes from Alberta’s oil sands. Keystone XL will make that supply to hungry processing facilities in Oklahoma and Texas much more consistent, reliable and plentiful.

The API’s advertising and “grassroots outreach” campaign will characterize quick approval of Keystone XL as a massive job-creating act at a time when the headline unemployment rate still lingers dangerously close to double-digits, a message likely to be well received. The clincher for Secretary Clinton and the Obama administration is the potential for more than 300,000 American jobs between 2011 and 2015, an estimate that comes from the Canadian Energy Research Institute.

4. Canadian Real Estate

We’re featuring the Canadian real estate investment trust (REIT) sector in a Canadian Currents article in the January Canadian Edge, which will be published at www.CanadianEdge.com this Friday.

In a nutshell, the Canadian federal government recently promulgated long-anticipated rules that govern what types of assets of how much companies can hold and retain tax-advantaged REIT status. The rules were more favorable than the market anticipated, and define more expansively what can be included in this income investing oasis.

3. Canadian Telecoms

Industry Minister Tony Clement announced in November 2010 a delay in the promised update to foreign ownership rules of Canadian telecommunications companies until his agency could establish new standards for an upcoming auction 700 megahertz of spectrum set to be vacated as part of the transition from analog to digital television signal transmission.

It was only through foreign capital that upstart GlobalLive was able to ramp up its new wireless network to compete with incumbents Rogers Communications (TSX: RCI/B, NYSE: RCI), Telus Corp (TSX: T, NYSE: TU) and BCE’s (TSX: BCE, NYSE: BCE) Bell Canada.

Now average revenue per user in the wireless space is on the decline; the major metric for Canadian telecoms fighting in this space is customer additions. We’ll be following the potential impact, too, of an influx of foreign capital into Canada, keeping in mind the controversy over BHP Billiton’s (NYSE: BHP) thwarted attempt to acquire Potash Corp of Saskatchewan (TSX: POT, NYSE: POT).

New foreign ownership rules are expected this spring, with an auction of the 700 megahertz not likely until 2012.

2. Stephen Harper and Canada’s Permanent Minority Government  

“Canada’s New Government” is now “Canada’s Oldest Minority Government.” Stephen Harper assumed power in February 2006 after his party gained 25 seats and won a plurality in Canada’s House of Commons in January elections. He led his party to a 19-seat gain in October 2008 elections and a 143-seat minority. With another weak leader atop the main opposition Liberal Party of Canada Mr. Harper is poised…to win another minority.

Look, the status quo–a minority Conservative government, led by the sitting prime minister–has, in the aggregate, proven favorable for US investors in Canadian assets. Politically speaking, Mr. Harper may be disposed to exploring a more hard-core ideological approach to governance should he capture his long-sought majority.

It won’t be like guiding a spacecraft into Earth’s atmosphere, but Mr. Harper’s political calculus and his retail touch will have to be precise for him and the Tories to pick off enough ridings in Ontario and Quebec to complement their natural strength in western Canada. And another Harper-led minority Conservative government in Canada is fine by us.

1. Wildcards

There will be something, more likely several, that shake markets, some for seconds, some for days. Many of the risks are well known–public debt levels on the periphery of the eurozone, controversial monetary policy in the US and the fear of some inflation/deflation event. But there’s always the potential for an upside catalyst, such as the commercialization of the Internet, a major innovation on the energy front that significantly reduces emissions and production costs at the same time, for example, or an initiative that maximizes the potential unlocked by the last decade’s bevy of North American natural gas finds. This will be the bridge fuel, if the necessary infrastructure overhaul can be accomplished.

One great protection for US investors against remains a treacherous economic and investing climate is exposure to Canada’s high-yielding corporations, REITs and remaining income trusts. The Canadian income trust era has given way to a new era for income investors. The Great White North is still the place to find the best yields on the planet.

The Roundup

The biggest news this week is, of course, the spate of conversions across the How They Rate coverage universe; details, including name and symbol changes associated with the transition from trust to corporation, are available here.

As we’ve noted–basically all the way back to the fall of 2006–the manner in which Prime Minister Stephen Harper’s minority Conservative government planned to do away with the trust structure facilitated the evolution of a new breed of high-yielding Canadian equity. That’s what Canadian Edge will focus on now, in addition to several holdouts that won’t convert, Canadian REITs and other solid businesses that promise to build wealth over time.

In short, we looked at what was happening on the ground–with the conversion process and, more importantly, with the businesses we follow–and found that the strong would be able to absorb entity-level taxation and continue to pay market-beating yields.

Well, we’re adding a poster child for this argument, Boyd Group Income Fund (TSX: BYD-U, OTC: BFGIF), to How They Rate coverage under Transports in the January Canadian Edge. Not only will Boyd Group not convert. The US-centric auto body shop operator actually announced a 17 percent distribution increase when it made clear its post-Jan. 1, 2011, plans.

The company will fund the payout increase using cash from its US operations, which isn’t subject to the new tax.

Please note that, though we’re making every effort to update information as it becomes available, the process if keeping the information contained within How They Rate involves incorporating many data sources, some of which will update their systems at different times. We’ll do our best, however, to make the transition as quickly as possible.

Here are estimated fourth-quarter and full-year 2010 reporting dates (except where noted) for Portfolio Holdings.

Aggressive Holdings

• Ag Growth International (TSX: AFN, OTC: AGGZF)–Mar. 11, 2011
• ARC Energy Trust (TSX: AET-U, OTC: AETUF)–Feb. 9, 2011
• Chemtrade Logistics Income Fund (TSX: CHE-U, OTC: CGIFF)–Feb. 24, 2011
• Consumers’ Waterheater Income Fund (TSX: CWI-U, OTC: CSUWF)–Mar. 1, 2011
• Daylight Energy Ltd (TSX: DAY, OTC: DAYYF)–Mar. 2, 2011
• Enerplus Resources Fund (TSX: ERF-U, NYSE: ERF)–Feb. 25, 2011
• Newalta Corp (TSX: NAL, OTC: NWLTF)–Mar. 2, 2011
• Parkland Income Fund (TSX: PKI-U, OTC: PKIUF)–Mar. 2, 2011
• Penn West Energy Trust (TSX: PWT-U, NYSE: PWE)–Feb. 18, 2011
• Perpetual Energy (TSX: PMT, OTC: PMGYF)–Mar. 9, 2011
• Peyto Energy Trust (TSX: PEY-U, OTC: PEYUF)–Mar. 10, 2011
• Phoenix Technology Income Fund (TSX: PHX-U, OTC: PHXHF)–Mar. 3, 2011
• Provident Energy Trust (TSX: PVE-U, NYSE: PVX)–Mar. 11, 2011
• Vermillion Energy (TSX: VET, OTC: VEMTF)–Mar. 3, 2011
• Yellow Media (TSX: YLO, OTC: YLWPF)–Feb. 11, 2011

Conservative Holdings

• AltaGas Ltd (TSX: ALA, OTC: ATGFF)–Feb. 23, 2011
• Artis REIT (TSX: AX-U, OTC: ARESF)–Mar. 16, 2011
• Atlantic Power Corp (TSX: ATP, NYSE: AT)–Mar. 29, 2011
• Bird Construction Income Fund (TSX: BDT-U, OTC: BIRDF)–Mar. 11, 2011
• Brookfield Renewable Power Fund (TSX: BRC-U, OTC: BRPFF)–Feb. 9, 2011
• Canadian Apartment Properties REIT (TSX: CAR-U, OTC: CDPYF)–Feb. 24, 2011
• Cineplex Galaxy Income Fund (TSX: CGX-U, OTC: CPXGF)–Feb. 11, 2011
• CML Healthcare Income Fund (TSX: CLC-U, OTC: CMHIF)–Mar. 4, 2011
• Colabor Group (TSX: GCL, OTC: COLFF)–Feb. 24, 2011
• Davis + Henderson Income Fund (TSX: DHF-U, OTC: DHIFF)–Mar. 2, 2011
• IBI Income Fund (TSX: IBG-U, OTC: IBIBF)–Mar. 17, 2011
• Innergex Renewable Energy (TSX: INE, OTC: INGXF)–Mar. 22, 2011
• Just Energy Income Fund (TSX: JE-U, OTC: JUSTF)–Feb. 11, 2011
• Keyera Facilities Income Fund (TSX: KEY-U, OTC: KEYUF)–Feb. 18, 2011
• Macquarie Power & Infrastructure Income Fund (TSX: MPT-U, OTC: MCQPF)–Mar. 2, 2011
• Northern Property REIT (TSX: NPR-U, OTC: NPRUF)–Mar. 17, 2011
• Pembina Pipeline Corp (TSX: PPL, OTC: PBNPF)–Mar. 3, 2011
• RioCan REIT (TSX: REI-U, OTC: RIOCF)–Feb. 9, 2011
• TransForce (TSX: TFI, OTC: TFIFF)–Mar. 2, 2011 (confirmed)