Jan 16-31, 2025

2025-01-17

[BNN Bloomberg, Brian Madden]: After two back-to-back years of very strong equity market returns, investors might rightly wonder whether stock prices can continue rising in 2025. We think they can. Looking ahead, we see a number of promising opportunities in front of us, including:

·         Ongoing leadership in secular growth areas in the U.S. (i.e. tech, AI, EVs, e-commerce)

·         Potential pro-growth policies from the new U.S. administration (i.e. tax cuts, big deficits, broad de-regulation)

·         Possible policy shifts in Canada favouring economic growth, investment, and productivity

·         Modest rate cuts in both Canada and the U.S. supporting rate-sensitive sectors of the economy and the stock market

·         Waning credit loss provisions boosting earnings for banks and easing credit conditions for households & businesses

·         Increased merger and acquisition activity driven by improving business confidence and lower financing costs

·         On the other side of the ledger, we remain mindful of new and ongoing risks, including:

·         Potential re-acceleration of U.S. inflation disrupting the monetary easing cycle

·         Risk of recession in Canada if immigration reforms curtail population growth

·         Escalation of trade and tariff disputes in North America

·         Intensification of U.S./China trade tensions

·         Broadening geopolitical conflicts in Ukraine and the Middle East

·         Concentrated and “crowded” market leadership in the Magnificent Seven, with the risk of sharp sentiment reversals

Overall, we are cautiously optimistic that the bull market that began in late 2022 will extend into 2025 and we will be working diligently to capitalize on the opportunity this presents.

[Investopedia, USA]: China said that it met its annual 5% gross domestic product (GDP) growth target for 2024. According to the country's National Bureau of Statistics, China posted a 5.4% expansion in the fourth quarter, when it unveiled stimulus measures that buoyed economic activity.

The data follows China's reported GDP growth of 5.2% in 2023. Its export-led growth comes as President-elect Donald Trump has threatened an additional 10% tariff on Chinese imports.

[BNN Bloomberg, Canada]: Liberal race off and running: It’s been another eventful 24 hours in Canadian politics as former Bank of Canada head Mark Carney and former finance minister Chrystia Freeland have both officially tossed their hat into the ring to be the next leader of the Liberal Party and Canada’s Prime Minister. Carney kicked off his campaign at an event in Edmonton yesterday, offering an economy-focused pitch pumping up his bona fides on the file. Freeland, meanwhile, is making it official this morning on social media, noting an official launch party will be on Sunday.

TikTok on the clock: The clock is still ticking on TikTok’s status in the U.S. as a Sunday deadline for the app’s Chinese owners to either divest its U.S. operations or face a ban rapidly approaches. The Supreme Court has promised to rule on the company’s last-ditch appeal of the ruling, but they’ve signaled they are unlikely to overrule the ban. And even if they were going to, they are running out of runway to do it before the Jan. 19 deadline. It’s far from clear what’s going to happen to the app and its 170 million U.S. users, and many market participants aren’t expecting any clarity one way or the other before markets close today. Mark Kelley at Stifel told Bloomberg this morning that his base case scenario is that the decision gets extended so that it’s a football for the incoming Trump administration set to come in next week. Kelley doesn’t expect a ban overall, but if one were to happen, the obvious beneficiaries would be companies like Meta, Google and Snap, which would see a surge in advertising dollars currently being gobbled up by TikTok.

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2025-01-16

[BNN Bloomberg, Canada]: Tariff tantrum: Canadian officials have readied a list of products that they are prepared to slap retaliatory import tariffs on if U.S. president-elect Donald Trump follows through on this threat to tariff Canadian goods after his inauguration next week. The list is so far preliminary, but officials say the annual value of the products on it would be in excess of $150 billion. That’s more than a third of the almost $490 billion worth of goods that Canada imported from the U.S. in the 12 months up until the end of November. By category, the two biggest types of imports are cars and car parts, at more than $80 billion, followed by in excess of $55 billion worth of consumer goods. Officials stress that the tariff list will only be brought in as retaliation if the U.S. moves first, but similar to an exasperated parent threatening to a toddler that they’ll turn the car around, one hopes both sides have the good sense to smarten up and realize nobody actually wants that. Provincial premiers met with Prime Minister Justin Trudeau yesterday and were nearly unanimous in their resolve to work together to fight back, with the notable exception of Alberta, where Premier Danielle Smith is balking at the notion of putting export levies on any of the province’s energy exports.

New Zealand, Australia and U.S. accuse Canada of dumping cheap dairy: Speaking of trade fights we can’t afford, New Zealand, Australia and U.S. dairy companies are asking their governments to intervene to stop Canada from doing what they say is dumping low-priced milk products on world markets. Groups from the three nations have written to their trade and agriculture ministers raising concern over the impact of “Canada’s trade delinquency” on dairy markets, the Dairy Companies Association of New Zealand said. The group says Canada’s supply management system is “purposeful” in compelling producers to produce much more dairy than they need domestically and then “incentivize disposal onto world market.” The Australian Dairy Industry Council alleges that Canada intentionally produces surplus product and then exports it below the cost of production. Canada exported $500 million worth of dairy products in 2023, official data shows, the majority of which went to the U.S.