Although there is a lot talk about how Donald Trump’s tax reform and infrastructure plans have dragged the markets up and given investors some much-needed optimism, there is also another consensus: that the U.S economy was actually doing pretty well before the new president was elected. When Trump won the election back in November unemployment was at its lowest since 2011 and the economy had expanded at an annual rate of 3.2% from July through September. The new president inherited quite a healthy economy and if the United States is able to achieve the 3 – 4% GDP growth that his administration is talking about the markets will remain very strong.
“For a country of the size and scale of the U.S, that type of growth trajectory will create a strong ripple effect in the short to medium term,” explains Joe Canavan, President and CEO at LOGiQ Asset Management. “As long as we remain constructive in our dialogue with the US, Canada will also be in pretty good shape. I’m pretty bullish; I feel pretty confident when I look out to the end of 2017.”
Although he does envisage the potential for a correction, Canavan is confident the markets will not experience a significant downturn this year. From an asset allocation perspective, Canavan likes the look of Canadian financial services, particularly CIBC, RBC and Manulife. “CIBC has great leadership and opportunities for growth and is not overpaying for acquisitions,” Canavan says. “I also like RBC’s strategy of getting out in front of fintech by spending tonnes of money and time on artificial intelligence. They know what’s going on in the Silicon Valley and are acquiring tech companies before they get really big. Both of those companies are showing they are focusing on the next 5 – 10 years.”
Canavan also believes investors have an opportunity to make money in the energy sector, U.S. financials, online retailers and innovative tech firms. He is particularly impressed with Tesla and the company’s efforts to push the envelope on innovation. “Yes, I like the cars, but I also like the new solar roof tiles they’ve launched; those are going to enable people to take themselves off the grid depending on where they live,” Canavan says. “Things like that are very exciting to me. Anything that has sexy new technology, financial technology, artificial intelligence and machine learning are all businesses that I think are going to do well.”
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