A Comment -- General Comments From an Expert (A Commentary)

Believes financial markets had not priced in a Trump Presidency. Market jump is reflecting continued de-regulation, pro-growth policy, lower taxes and falling interest rates. investors also jumping into the markets to chase year end performance. Expecting markets to continue heading upwards and is optimistic. Prospects at major US banks have improved - share prices have began to reflect that (but are still cheap). 

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ABX is a traditional miner who explores, mines, produces, and sells gold and copper properties. ABX also sells silver and energy materials. For the full year ended 2023, gold was ~91% of total revenue, copper 7%, and other  ~2%. Geographically, gold properties were derived 50% from North America, 37% Africa and Middle East, and 13% Latin America and Asia Pacific. For copper properties, the geographic distribution was 79% Africa and Middle East, and 21% Latin America and Asia Pacific.
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He and his team are fairly constructive on equities going forward. Today is a less exciting day, but he's still positive at least for the NASDAQ. Now that the uncertainties around US election are behind us, as well as the typically volatile month of October, we set up pretty nicely for the near term. If you look back to 1950, the next 3 months (November, December, and January) tend to be the strongest 3-month segment of the year. The average return in that timeframe is 4.4%.

The US economy had 2.7% real GDP growth in Q3, pretty solid. Driven a lot by durable sales, inflation down to 2.4%, unemployment down to 4.1%. No signs of recession in the US, which people were worried about a year ago. Now we have more dovish central banks around the world with a path of lower interest rates.

US corporate earnings are forecast to be about 13% for 2025, 11% for 2026. Equities are going to move based on corporate earnings. 

It could be, especially with the new administration in the US being more business-friendly and in favour of tax cuts. Also in the US, money market assets have hit a new record high of $6.5T, lots of dry powder.

Some of the sectors that will do well under a Republican administration: financials, industrials, healthcare, and technology.

When you look at healthcare, there are good growth aspects in many parts of the sector. More of a value play. Of course, there will be rhetoric about what names will be hit by potential government action. Remember that there's a difference between candidate Trump and President-elect Trump.

He'd say that moving to indices has risk involved, especially when you look at the S&P 500. S&P 500 is really 35-40% technology, and its PE is not cheap at this stage. Of course, expensive can remain expensive for some time.

He sees markets expanding now beyond technology into other sectors such as financials, industrials, and healthcare. If you go with an index, you're going to be boxed into that heavy weighting in technology. Not that tech isn't a good place to be, but he'd rather be very selective in that particular space.

He's been overweight US for quite a while compared to Canada or Europe. Stable economic fundamentals, big sandbox. US tariffs and new policies will not be great for places like China and Europe. Come retirement, if the CAD starts moving higher versus the USD then you have currency risk. So you want to have balance, and that will depend on the individual investor.

META is a good company. Though he doesn't own it, fundamentals on META look pretty solid; great technical chart with higher highs and higher lows. He owns other names like AMZN, GOOG, and MSFT.

Stanley Druckenmiller says that "the market is the best analyst". There could not have been a more clear message leading up to the election. Certain sectors benefit more under Republicans, and financials have been leading very strongly over the last few weeks. Industrials, and small- and mid-cap stocks, would benefit from deregulation.

When the market comes into an event like this on solid footing, it's likely to come out the other side the same way. Whatever you think about Trump and his policies, markets are unemotional about this stuff. People have probably put hedges on and taken actions to reduce risk, and all that will have to be unwound over the next little bit.

Pendulum of regulation swings a long way in both directions. Coming out of the financial crisis, a tremendous amount of regulation was built in. No industry has suffered more because of heavy regulation. Market sees an opportunity for efficiencies and M&A.

Very positive on financials such as banks, insurance companies, investment banks, asset managers. Mainly because they went through a 15-year bear market and have only ignited the last couple of years.

At the beginning of September, there were 3 days that saw a giant thrust in breadth, where almost everything went up a bunch. When that happens, generally signals the beginning of a longer-term rally. He guesses that the market's going to look at deregulation, which has a larger burden on small- and mid-sized companies.

It also has to do with the fact that inflation may be a little stickier. So short rates have come down, but long-term rates have gone up, with the bond market saying you haven't done enough perhaps. Those companies tend to be  more cyclical; 73% of the Russell 2000 are cyclical stocks.

Investors are looking forward to the next business cycle. Maybe, after the election last night, there are some who think the economic cycle might be a little stronger.

Likely to see a 25 bps cut. The next question is what comes afterwards?

Not his #1 place to put new money right now. Recent backup in bond yields poses a risk to the discount rate of companies, so they're less inflation-protected. On the software side, it's cybersecurity that's performing really well.

Lots of questions on that. Likely to be more willingness to open pipeline capacity to the US. Regulatory environment might be more friendly. Particularly good for long-life assets. Nice pickup in volume as pipeline capacity to US has gotten better. Price differential has been coming down. Weak CAD has also helped these companies, though you have to separate natural gas from oil. 

We'll have to see what policies come forward. He's sticking with the very long-life assets paying great dividends.

Company Highlight: Franco Nevada Corp. (FNV)

FNV is a gold-focused royalty and streaming company operating through two segments: Mining and Energy. FNV is focused on gold mining making up 75% of its portfolio, however, the remaining 25% is attributed to other precisions metals as well as oil and gas. The company has numerous international assets but primarily operates in North and South America. We will note that FNV is a royalty gold miner which means that it has interests in cash generating assets (mines). This differs from a traditional miner who owns and operates its mining assets.
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He was surprised with today's rally, but the market ignored the hideous action in the bon market with yields jumping. The banks have been unreleased, held back by regulation under Biden. Expect more IPOs and even bank mergers ahead. Despite today's move, the banks remain cheap (valuation), but this parabolic move could pull bank and likely will fall after this week's Fed announcement. Transports and industrials surged today. The former shows confidence in more economic activity, but industrials had already rallied before the vote.