Opinions
Christine Tan A Comment -- General Comments From an Expert A Commentary N/A Aug 31, 2017
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Believes momentum will continue. What's holding us back are Donald Trump's tariffs, which are very specific. About 90% of goods are moving across the border tariff-free under USMCA. It's a very complicated setup.
On the other hand, our economy's been "liberated" by turning on a big gas and a big oil export facility on the West Coast. These have pumped a lot of $$ into the Canadian economy. Gold production with the price rising has also added a lot.
The pessimism around Trump's noise has flattened the housing market. But we are going to get rate cuts, which should hopefully rekindle that market. Bruce's wife is in real estate, and so he's had feedback that housing is starting to pick up a bit.
The TACO part of Trump is coming through, and people are starting to ignore Trump and just get on with their lives. The outlook looks very good.
Canada has lots of technology expertise, so we're well-equipped for the AI revolution and will benefit from that.
For Canadian energy, we're finally turning on exports to countries other than the US (who always paid us at a discount). So now that we'll get a better price, Canadian energy is probably in for a better run than the world is. Canada enabled Putin 20 years ago, because we wouldn't build pipelines and he did.
The unemployment rate remains the same. But the job-loss number isn't too surprising given that we are expecting a bit of softness in the Canadian economy in the middle 2 quarters of the year. Jobs market will continue to be a bit choppy, especially with the push and pull between part-time and full-time.
That Canadian manufacturing posted gains is surprising, but is probably just a result of the ebbs and flows of the economy. And there's the tariff issue affecting everything.
In the US, technology makes sense. Financials also make a lot of sense in this environment. Likes industrials, they've been right at the top of the 11 sectors so far this year in terms of performance. Among the very diverse healthcare industries, you have to be selective; some names have been beaten up, others have held up quite well.
He's being very selective in the Canadian market and somewhat cautious.
When you look at the US market, we're seeing about 8.5-9% YOY Q2 growth. That's more than expected. Good news. Technology continues to lead -- great reports from MSFT, NVDA, GOOG over the last month or so. About 81-82% of US companies so far this quarter have beaten earnings expectations.
The word he'd use right now would be "resilient".
In his portfolio he has AMZN, AAPL, GOOG, and NVDA. Those are the names he favours. META screens well, but he doesn't own it because you can't have 90% of a portfolio in tech/Mag 7 names. MSFT always seems expensive.
TSLA is a different animal entirely, based on expensive valuation. Concerned about management and where management attention is at any given moment.
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Market. One of the biggest, puzzling factors is inflation. Where is it? Economic data is clearly getting better in the US, and that is because of automation improving productivity, so wage pressures are nowhere to be seen. E-commerce has also improved the economy. Inflation is probably going to stay constrained. She is optimistic on the industrial space, although we are not going back to the 2006-2007 levels of growth. Europe and China are looking better than expected. There is a slight adjustment down for the US, but it is still growing. The most important thing on commodities is that supplies have really been rationalized over the last 2 years. She sees the whole supply/demand balance coming back into a better picture. The emerging-market index is trading at a much lower multiple than the world Index, and certainly the S&P 500. However, you have to look at the region. She continues to prefer Asia. It is a net importer of commodities. Commodity prices where they are, is still slightly better for those that use it as opposed to those who produce it. She is wary of the Middle East because their reliance on oil is extremely high. On Latin America, she is cautiously optimistic. Likes Brazil although there might be some volatility going into the next election.