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A short-term money market ETF is not going to be impacted by currency volatility. They're Canadian plays in Canada. Even though the BOC is a lot more aggressive in terms of cutting rates because the Canadian economy is significantly weaker than that of the US.
Includes telcos likes BCE, Telus, and Rogers, as well as utilities. Still likes it a lot, has it in his global dividend strategy. He reduced exposure on recent rally, moving to ZPAY for the lower risk. Before adding, wait for it to hit the low $10s.
He feels that interest rate pressure is coming to long end of the curve. A lot of these utilities are capital intensive, so likely to see additional downside. Underweight for now; look to buy into weakness, but not today (BCE is the catalyst for today's move).
Lots of uncertainty: geopolitical, debt, US election, and on it goes. So, what do you do about it? The answer is to make sure your portfolio is robust. So no matter the outcome or how much uncertainty, your portfolio and retirement savings are geared to long-term goals. Far too many people focus on the noise in the market, taking their eyes off proper portfolio construction.
The debt picture is catastrophic. The fiscal path of US politics has to change, but there's no political will to do it. It won't get better anytime soon, no matter what the party makeup of the White House or Congress. Best outcome for the market is a split, or gridlock, in terms of cost of capital and what that might mean for the deficit. The deficit's really important.
The message for today is to not worry about the noise and uncertainty. Impossible to forecast.
The CPP really does a great job for Canadians. The CPP portfolio was all government bonds in the late 1990s. As interest rates fell, and they knew they couldn't meet the needs of Canadians, they took action by investing in all other kinds of assets like private equity. All the growth is coming from small companies that aren't listed on any exchange.
The average investor needs to think about structuring portfolios for the long term by looking into private markets and other alternatives, to help smooth the ride. This way, you don't have to be nervous about the outcome of an election or some other uncertainty.
Some have criticized CPP for not investing more in Canada, currently only ~12% of its portfolio is here. But Canada is only about 3% of the world's economy. He'd argue 12% is probably too high given what Canada has to offer for investing. If you're investing for the best possible return, you must think globally and be diversified. Use asset classes geared for the long run, not for the uncertainty of tomorrow.
BTE mentioned that it allocate 50% of free cash flow to its balance sheet and the other 50% to allocating capital to shareholders through buybacks and dividends. Net debt reduced 5% in the quarter but remained high at $2.28B. Earnings were solid as production and net income were up for the quarter. The current capital allocation strategy is quite shareholder friendly but we would like to see debt come down more in the future. The call seemed generally positive.
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We have some comments posted on the deal today. For now, with a 10% decline in the stock, we would hold. But the company may have lost credibility here, and with the dividend set to be flat for awhile we think it may struggle a while longer. But we would prefer not to sell into the 'shock' of the news.
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MKC has a market cap of $21B, a yield of 2.2%, historically low to mid-single digit sales and earnings growth rates, and forward earnings margin estimates are quite positive. Its balance sheet is strong, free cash flows are healthy, and its debt levels have been coming down over the years. Over the past 20 years, it has a roughly 10% total return CAGR, and while it has largely been flat over the past several years, we feel that in the coming years it can help an investors' portfolio with downside protection. We would be comfortable holding, or slowly averaging into MKC here.
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Company Highlight: Payfare (PAY.TO)
Payfare (PAY.TO) is a Canadian fintech company that provides earned wage access (EWA) to gig economy workers. A gig economy worker is a contractor, freelancer, or flexible/temporary employee (Ex. food delivery driver and Uber drivers). Through PAY’s digital banking platform, it helps these workers get instant access to their money. Earnings are paid out instantly through a free digital bank account powered by PAY. This was a very strong value add where the traditional direct deposit system would take a few days for money to reach these workers accounts, and for many gig-employees that delay would be troublesome (Ex. Uber drivers needing to pay gas expenses after a day of rides). The business model made plenty of sense and PAY had contracts with blue-chip customers and the biggest employers of gig-workers including Uber, DoorDash, and Lyft.
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Was today's market a dry run for a Harris victory? Doesn't know, but it could be days or weeks before know who wins the election. Yields went down today, instead of up which is expected if the Democrats win. But they went down probably because of a bet in interest rates going lower if Harris wins. Surprising. Neither platform will be good for the deficit, but the consensus is that Trump's will be worse, give his proposed tax cuts and many tariffs.
In USD, and you can buy it in your taxable USD account. Focuses on some of the biggest and best companies in the US. Tax-efficient. Better than withdrawing from your RRSP. Yield is ~6%.