Tariffs, Trade and Your Investment Portfolio

Canadians have an understandable bias towards building investment portfolios that own Canadian stocks and bonds. Our partners at National Bank Financial Economics suggest that the world of Trump tariffs and trade policies may require a new approach to how to analyze your investments.

In an article from Investment Executive Canada, National Bank Financial recommends, “In this new global environment, Canadian investors must do more than simply analyze a company’s fundamentals. They must focus on the country that the company considers its home base, and determine if that country’s relations with its main trading partners are strained in a way that might impact its bottom line. “

Technology, Tariffs and Trade are Linked

Angelo Katsoras from National Bank Financial warns that while “a trade deal between China and the United States would be good news for the markets in the short term, it would not change the long-term fundamentals fuelling tensions between the two countries. This includes the battle for geopolitical influence and dominance of tomorrow’s technologies.”

To enjoy Angelo’s in-depth analysis please review the report here. Make sure to contact your Hampton Securities Advisor to discuss your specific investment needs.

Oh, Canada? Business Is Positive But …

Trade wars and tariffs, and many other aliments don’t seem to be impacting Canada’s business owners, but? Gross Domestic Product (GDP) crept up mildly by .1% or 10 basis points with the Friday, June 29 Statistics Canada announcement. Results were modestly in-line with Canada’s economic expectations for April 2018. These results coincided with Bank of Canada (BoC) survey taken BEFORE the G7 June kerfuffle which also offered positive sentiment from private business, as outlined by Investment Executive Canada.

How have trade talks impacted business sentiment?

While we have no formal data yet, the Globe and Mail offer an opinion that Canada’s outlook would be rosy “if it wasn’t for that U.S. trade war.”  Before the ‘Trump’ tariff and trade friction, a focus towards full-employment and hiring had increased substantially. As outlined by the NBF Economics chart below Canadian firms were eager to hire at the expense of investment. However, the business outlook has weakened.

“Despite an upbeat outlook, the balance of opinion on investment moved downward and that even though “almost all interviews” were conducted before the announcement of tariffs on steel and aluminum imports from Canada by the U.S. Business optimism likely took a subsequent dive, especially after the disastrous G7 meeting of June 8th/9th when Canada-U.S. trade relations took a turn for the worse.”

Oh Canada! Business Sentiment Survey Before G7 Meetings and Tariff Talk

It may have become ‘Oh, Oh’ Canada as business sentiment survey before the G7 meetings enjoyed some of the most positive sentiment since 2011. What is next? For a fulsome discussion on how the recent geopolitical trade wars may impact our future economic outlook, enjoy the detailed discussion from our partners at NBF Economics, HERE.

Trade wars and counter measures never result in positive outcomes with the exception of local sourcing. Here’s a quick review of the potential provincial impacts from CTV News. As consumers we may wish to spend your summer travels and vacation supporting local producers to the benefit of many.