CIO offers cautious optimism about PM Carney for investors, advisors

Mark Carney’s tenure as Prime Minister looks set to be defined by the issue that dominated the campaign trail and, likely, brought him to power: trade with the United States. For investors and advisors, too, the outcome of trade negotiations with our neighbour as well as promised trade and infrastructure projects designed to diversify Canadian export markets will remain key to assessing the success or failure of the fourth successive term of Liberal government in Canada.

While she remains highly attentive to that issue, Theresa Shutt is looking at some of the other promises and signals Prime Minister Carney and his government have made on the campaign trail and since regaining power. The Chief Investment Officer at Harbourfront Wealth Management explained what sectors could face headwinds and tailwinds as more aspects of Carney’s policy come to light, highlighting how a more diversified approach featuring private assets can help investors now and why tariffs remain a make-or-break issue.

“In April we had a very different outlook, and the risks of a recession appeared to be much higher. I think what we’ve seen of Carney’s dialogue with the US President are greater prospects of some kind of resolution and reduction of the tariffs going forward,” Shutt says. “He does appear to be pro business and pro investment, recognizing the need for more resource development and infrastructure… the hope is that he can create more of a united front and bring the provinces together to dismantle some of these internal trade barriers.”

In the light of a more protectionist United States, Shutt views the removal of some internal trade barriers between provinces as “low hanging fruit” for the Canadian economy. She also thinks that deepening trade relationships with countries in Europe and Asia could be wins that might help ameliorate a more limited US export market. While little concrete has been announced on either front, Shutt is watching for a planned meeting with the premiers in June as a first step.

Carney’s new cabinet, Shutt says, offers some more positive signs for investors. While a few Trudeau stalwarts remain, she praised the slightly smaller team and apparent view towards efficiency. She noted that the appointment of Tim Hodgson as Minister of Energy and Natural Resources as “quite positive,” highlighting his experience as an executive and even a former board member for MEG Energy. Shutt says that this role will be crucial in achieving a greater degree of national unity and emphasized Hodgson’s ability to speak directly to executives in the oil & gas industry.

Beyond the tariff threat and internal trade issues, Shutt sees some significant challenges ahead for the Canadian economy that Carney will have to take action on. She notes Canada’s declining productivity as a major issue to address, as well as significant declines in GDP per capita that have put Canada behind even the poorest US states. She wants to see a degree of business investment and tax reform that demonstrates support for Canadian entrepreneurs and innovators.

Housing and the cost of living remain key factors, too. Shutt praised the decisions to remove the consumer carbon tax and the capital gains inclusion rate increase as promising signs. She notes with interest, too, the plans to build prefabricated homes through a crown corporation as a means of opening up more housing supply and increasing affordability. Despite operating a sizeable real estate allocation in her firm’s private asset portfolios, Shutt doesn’t see the proposal as an immediate risk to the Canadian real estate market. She highlights that even if traditional housing investments might not grow at the rate they had between 2009 and 2022, there are still opportunities in the multifamily rental space as well as industrial commercial real estate. She stressed diversification amid these trends.

While offering a tone of cautious optimism, Shutt highlights a wider sense of trepidation felt by many Canadians as well. She notes the sentiment that tax dollars haven’t been spent as effectively or responsibly as they should have. She highlights, too, a strong sense of disunity and alienation in the province of Alberta, something that the proposed construction of a pipeline to Ontario, Quebec, and the Maritimes should help smooth over.

In looking for potential market catalysts and more positive tailwinds, Shutt is assessing how quickly a new trade deal with the US can be negotiated. A resolution within six months, she says, should be positive as the current pall of uncertainty is discouraging investments, mergers, and growth plans. Meaningful progress on interprovincial trade, too, remains a core focus for the CIO as well, as does a clear resolution of disputes with Alberta.

“Those are the three priorities that the government needs to take on. I think the average Canadian expects this to happen quickly,” Shutt says. “Carney ran on his ability to negotiate with President Trump, and we need him to deliver.”