Optimism #82 - February 3, 2025
Dear clients and friends,
In light of the recent trade war with the US, a quick commentary seems sensible.
- The tariff issue is to some degree already priced into stocks. We have known this was coming for a while.
- Bad news does not always mean stocks go down. Weird but true.
- It’s Sunday about 10 pm BC time as I write. Futures markets are off 1% to 2%. Oil and Natural Gas are up 2% and 8% respectively. Our dollar is 1.4% weaker.
- I see no big market reaction at the moment.
- Further interest rate cuts are projected, which may push stock and bond prices up faster than expected.
- The markets are more emotional than people would like to admit. Expect some volatility.
- The companies we own can easily withstand a downturn in the economy. It’s business as usual for them.
- In January 2025, Imperial Oil, Metro (grocery) Maple leaf Foods, Brookfield Infrastructure Partners as well as Brookfield Renewable Energy, CN Rail, Atco Industries and Canadian Utilities all raised their dividends. That’s what we need to keep our eyes focused on. And for Canadian Utilities, that’s 53 years in a row of dividend increases, the longest in Canada.
- I am incredibly optimistic about Canada in the more distant future (hopefully) getting a new government this year, becoming more productive and efficient.
Because of the high quality of our holdings, I am not concerned about a short-term correction, if one comes. Holding and reinvesting dividends remains the sensible approach. In a few years we likely won’t even remember this event.
Have a super week. I am here if you have questions.
