November Update - Tariffs, Taxes and a Trump Term

Money is just a tool. It's something to support your life!

 

 

 

 

 

 

 

 

 

Initial thoughts on Trump Victory from our economics department:

The U.S. election results will shift the economic landscape, particularly if the Republicans also manage to hold onto the House. However, there are still plenty of questions around the extent to which the campaign rhetoric translates into policy reality.

 

The lean will certainly be to more tax relief, although the positive growth impact will be countered somewhat by broad trade tariffs and uncertainty, accompanied by a firmer U.S. dollar and higher bond yields. The latter are driven by bigger budget deficits, modestly higher inflation risks, and possibly less Fed easing than previously expected. On balance, this puts some upside risk for our 2% growth call for 2025, but tax relief will take time and so the major impact on growth may be more of a 2026 story.

For the Fed, rates are still on track to fall 25 bps this week, and likely by 25 bps again in December, but we look for a slower pace of rate reductions in 2025, with the terminal rate now likely 3.25%-to-3.50% (50 bps higher than previous).

 

The results are a mixed bag for the Canadian outlook. Ultimately, a healthy U.S. economy is the single most important factor for Canada, regardless of who is in charge. While there is likely to be lots of unwelcome trade uncertainty ahead of the 2026 USMCA review, Canada does have relatively well-balanced trade with the U.S., especially aside from oil exports. The Bank of Canada may need to tread a bit more cautiously on the rate cut front given the sustained downward pressure on the Canadian dollar alongside the prospect of less aggressive Fed cuts and a firmer U.S. growth outlook.

 

Our Portfolio Management Approach

Hopefully everyone has had a chance to listen to the last Market Commentary Podcast.

We are fundamental investors that use technical analysis to manage short-term market risks. We believe that risk management is not a choice, but a necessity. While we cannot control how much downside the market provides during a correction, we can control how much of the downside your account receives. We aim to avoid 60% or more of the decline in any significant downturn. Without our process, there is a good chance you will experience 100% of the downside from the market. We will help you navigate the risks and rewards of the market so that you can stop worrying about your money and start living your life.

Transactions

October was a very busy month in the portfolio:

• We rebalanced all accounts and made stock changes.
• We decreased the number of names in the portfolio and use those proceeds to add to existing names.
• We took profits on positions and decreased the cash in the account.
• The following positions were sold: BCE, GFL, Lundin Mining, Onex Corp, Cenovus, Occidental Petroleum, Philip Morris, Parkland Corp, South Bow, TD Bank.
• Profits were taken on Lundin Gold, Gold, TC Energy and Alta Gas.
• With the rise in interest rates, we added to our bond positions.
• We added a new position: First Trust Rising Dividend Achievers EFT. It holds 50 U.S. companies that have a history of raising their dividends and exhibit the characteristics to continue in the future.

Returns on our 60/40, 70/30 & 80/20 Portfolios, before fees:

Interesting Charts

Technical Comment

https://www.brookstradingcourse.com/price-action-trading-blog/

• The October monthly bar was a bear reversal bar closing near its low with a long tail above.
• Last month, we said that the odds slightly favor October trading at least a little higher. Traders would see if the bulls could create another strong breakout into new all-time high territory or if the market would trade higher but stall and close the month’s candlesticks with a long tail or a bear body instead.
• The market traded higher most of the month but reversed into a bear reversal bar on the last trading day.
• The bulls made a new all-time high in October but have not been able to create another follow-through bull bar.
• They got another leg up, completing the wedge pattern (Mar 21, Jul 16 and Oct 17).
• They also got the third leg up completing the embedded micro wedge pattern (Aug 30, Sep 26, and Oct 17).
• If there is a pullback, the bulls want it to be sideways and shallow (filled with weak bear bars, bull bars, doji(s) and overlapping candlesticks) and form a higher low or a double bottom bull flag with the September low.
• If there is a deep pullback, they want the bull trend line or the 20-month EMA to act as support.
• The bears want a reversal from a wedge (Mar 21, Jul 16 and Oct 17) and an embedded wedge (Mar 21, Jul 16 and Oct 17).
• The problem with the bear’s case is that they have not yet been able to create bear bars with follow-through selling (since Oct 2023).
• To increase the odds of a deeper pullback, they must create a strong entry bar with follow-through selling in November.
• Since October candlestick was a bear reversal bar closing near its low, it is a sell signal bar for November.
• The market remains Always In Long.
• However, the move up since October 2023 has lasted a long time and is slightly climactic.
• Traders will see if the bears can create a strong follow-through bear bar (an entry bar) in November.
• Or will the market trade slightly lower but stall and close with a long tail or a bull body instead (like Aug and Sept)?
• There may be some extreme volatility around Election Day early in the month.

Millennial Minute

Can you believe 2024 is nearly over?! I'm really not sure where all of the time goes, but it's nice to know we made it through yet another year of record breaking temperatures, political news cycles, climate events, and "The Eras Tour". 

The fall is always a time where I start to become introspective. I'm not sure if it's the shorter days, the warm holiday feelings, the upcoming "fresh start" of the new year, but I like to start thinking about how I can try and make the next year better than the last. 

This month's article returns to the wonders of goal planning and how to overcome the obstacles of planning, implementing, and following through. 

 

Click here to read more!

And as always, please feel free to send these articles to friends and family who could benefit from a little light reading and friendly advice!

Planning Tip

Most people spend 90% of their time on financial retirement planning but ignore lifestyle planning, which has the biggest impact on your happiness. Susan Latremoile – in her book 9 Steps to a RichLife Retirement – talks about money and time being your most valuable assets.

The old picture of retirement had two phases: Pre-Retirement and A Life of Leisure, but in Susan’s book, she explores the multi-phase retirement chapter of your life, which she calls the “Third Act”.

We see these multiple phases in so many retirees. There are those who can’t wait to retire, who have their vacations and adventures planned and have filled their social calendars for the first few years. There are others who are unhappy with retirement, who might miss their careers, the businesses they’ve built, or even just the feeling of accomplishment for a day’s work.

Most retirees will fall into either a “Honeymoon” phase of retirement, or a “Doom and Gloom” phase. One where the sky’s the limit and you have all the time in the world to reach it, and another where you can’t imagine a life without the purpose of a career, and you don’t know what to do with yourself once the career is done.

We highly recommend getting a copy of Susan’s book (available on Amazon), and reading through the steps. In it, you will take an introspective journey through the 8 parts of what she calls the “RichLife Mindset”:

We are a team that values life beyond the money, and we want to be sure you are enjoying your retired life to the fullest!

 

­­­­­­­­­­­­­ DISCLAIMER:

The opinions, estimates and projections contained herein are those of the author as of the date hereof and are subject to change without notice and may not reflect those of BMO Nesbitt Burns Inc. (\"BMO NBI\"). Every effort has been made to ensure that the contents have been compiled or derived from sources believed to be reliable and contain information and opinions that are accurate and complete. Information may be available to BMO NBI or its affiliates that is not reflected herein. However, neither the author nor BMO NBI makes any representation or warranty, express or implied, in respect thereof, takes any responsibility for any errors or omissions which may be contained herein or accepts any liability whatsoever for any loss arising from any use of or reliance on this report or its contents. This report is not to be construed as an offer to sell or a solicitation for or an offer to buy any securities. BMO NBI, its affiliates and/or their respective officers, directors or employees may from time to time acquire, hold or sell securities mentioned herein as principal or agent. BMO NBI -will buy from or sell to customers securities of issuers mentioned herein on a principal basis. BMO NBI, its affiliates, officers, directors or employees may have a long or short position in the securities discussed herein, related securities or in options, futures or other derivative instruments based thereon. BMO NBI or its affiliates may act as financial advisor and/or underwriter for the issuers mentioned herein and may receive remuneration for same. A significant lending relationship may exist between Bank of Montreal, or its affiliates, and certain of the issuers mentioned herein. BMO NBI is a wholly owned subsidiary of Bank of Montreal. Any U.S. person wishing to effect transactions in any security discussed herein should do so through BMO Nesbitt Burns Corp. Member-Canadian Investor Protection Fund.