Market Outlook

The global economy and financial markets have just entered a period of profound change. The rise of populism and economic nationalism means investors must keep an open mind when positioning their portfolios for the future.

U.S. President Donald Trump means what he says. Investors should quell their emotions and realize that the White House is focused on an agenda of national security, economic nationalism, and the deconstruction of the “administrative state.” He will not change and his policies have been presented consistently in his speeches. Canada should realize this and investors should to build portfolios accordingly. Trump’s policies will be pro-growth and inflationary.

Political uncertainty in Europe and the rise of populism must be on everyone's radar. Will Germany realize that unless they soften their stance on policies, populism will sweep over Europe? The big risk to markets is that policy makers around the world don’t take the rise of populism seriously and change policies accordingly.

We expect the Federal Reserve to raise rates two to three times this year, and feel that they’re way behind the curve and risk creating another bubble.

As for Canada, the recovery in commodities prices masks an economy that is structurally weak. Canada isn’t competitive in manufacturing. We don’t believe that we’re in a new commodity super cycle. Thus, the acceleration present in the Canadian economy caused by the recovery in commodities will dissipate.

James Thorne takes viewer questions on U.S. dividend stocks on BNN’s Market Call.