In the first segment of my latest Howestreet.com interview, I explain why we are looking at financials such as Canadian Western Bank (Mostly Sunny; CWB) and AGF Management (Sunny; AGF) for clues as to when we might see a turnaround among lagging small-cap oil & gas stocks. This is a theme we have discussed in recent morning reports on CWB and on Yangarra Resources (Mostly Sunny; YGR). In the interview, I try to tie it all together.
In the second segment I summarize my take on Ray Dalio's Paradigm Shift piece that he published this week on LinkedIn. This is more or less the same ground we covered in our July Top 20 Gold Report where we agree with Dalio that we are eventually headed for some sort of a new paradigm or, in the way we describe it, a monetary reset.
I end off the second segment reiterating our view how important it is for stocks, particularly Canadian stocks, that Europe adopt pro-growth policies. The confirmation of Germany's Ursula von der Leyen as the next president of the European Commission is an encouraging sign. With the Fed off its tightening path, trade war intensity possibly peaking and new economic policies potentially coming out of Europe, I conclude that the probability of Canadian stocks outperforming this year is a lot higher than it was at the same time last year. For stocks in the US, I suggest that politics will be a critical factor should the 2020 election boil down to a pro-business Trump versus someone anti-Wall Street on the Democratic ticket.
The third segment gets into some Canadian political weeds, where I suggest, based on polling trends, that the base case outcome scenario for the fall federal election is a Liberal-Green minority government. That will not be great news for the oil patch, although the Green Party has been softening its tone a bit on the industry recently.