Darren Sissons, vice president at Campbell, Lee & Ross
Focus: Global equities and technology stocks
The markets are highly politicized now and the training wheels are still firmly in place on Trump’s presidency. Highly-politicized issues such as his recent China spats, the cancellation of the Trans Pacific Partnership, the Mexican border wall and a re-visit of the NAFTA agreement will likely prove to be missteps longer term. Additionally, like the Eurozone’s mercantilist strategy that restricts capital outflows while promoting exports, foreign companies will need to merely establish operating entities (probably low-tech assembly lines) in the U.S. to circumvent Trump’s “America first” strategy.
Positively, Trump’s championing of higher interest rates is a clear winner as quantitative easing, while highly beneficial in stabilizing the broken U.S. and European economies post the global financial crisis, has clearly outlived its best-before date.
Looking forward under a higher interest rate environment, we will see continuing sector rotations out of the safe defensive sectors into banks and insurance companies as financials are positively impacted by rising interest rates. Commodities look interesting here as does the Canadian dollar given the rising price of crude. Emerging markets may sell off further due to Trump’s anti-free-trade agenda and a higher U.S. dollar, so watch for opportunities. Europe, with its continuing political challenges, could also present buying opportunities in the next 12 months. U.S. multinationals are under pressure from the high U.S. dollar, so a modest sell-off would not be a surprise.
VISA (V.N) – Last purchase: US$81.32
NOVO NORDISK (NVO.N) – DKK243.57
CSX CORP. (CSX.O) – US$35.77
PAST PICKS: NOVEMBER 11, 2016
Significant updates: New CEO as of January 2017. First outsider to lead the firm since the early 1900s. He will likely continue the prior CEO’s focus on improving cash flow and possibly will sell the $23 billion+ L’Oreal position.
- Then: $69.59
- Now: $73.40
- Return: +5.47%
- TR: +5.47%
ROYAL DUTCH SHELL (RDSb.N)
- Then: $52.28
- Now: $58.02
- Return: $58.02
- TR: +10.97%
- Then: $58.91
- Now: $62.71
- Return: +6.45%
- TR: +7.43%
TOTAL RETURN AVERAGE: +7.95%