What time is it in the cycle? Now that we are 17 months into a bull market cycle, it’s worth asking how much life there is left. How long can this broadening bull continue? Over the past 100 years, the median bull market on average has produced a gain of 90% spanning around 30 months. And they can come in all shapes and sizes. Cyclical bull markets can be as modest as 48% (the growth from 1966 to 1968) or as grand as 200% or more (1982-1987 and 1994-1998). Jurien Timmer, Director of Global Macro at Fidelity, introduced an interesting visual. One way to visualize the cycle is to show it as a clock. If 12:00 is the start of the cycle, compared to the longest cycles in history, it’s only around 3 pm right now. And the average cycle goes to 6pm. In other words, time is still on our side.

Should you have any questions or concerns, please feel free to reach out.

Portfolio Notes

(+) indicates a positive development, (-) indicates negative, and (~) indicates neutral

(+) Alphabet (GOOGL-US) is working on the biggest shake-up of its search business by charging for new “premium” features powered by generative artificial intelligence, the first time it would put any of its core product behind a paywall. The proposed revamp to its cash cow search engine shows the company is still grappling with a technology that threatens its core advertising business, almost a year and a half after the debut of ChatGPT. Google’s traditional search engine would remain free of charge, while ads would continue to appear alongside search results even for subscribers. But charging would represent the first time that Google — which for many years offered free consumer services funded entirely by advertising — has made people pay for enhancements to its core search product. Google reported $175 billion in revenue from search and related ads last year, more than half its total sales, posing a conundrum for the company over how to embrace the latest AI innovations while preserving its biggest profit driver. Owned in Core, ESG+ and US Portfolios.

(sold) BCE (BCE-T) For the first time in decades we do not own any Bell shares. The shares have been declining ever since the company announced weak earnings and major layoffs. The drop in shares is rather surprising for a normally stable company and may reflect investors’ concern over the safety of the dividend. The dividend was raised this month to 99.75 cents per quarter ($3.87 a year). The stock yields 8.4 per cent, which is unusually high for this company and a strong caution signal. Sold completely across all portfolio.

(+) Berkshire Hathaway (BRK.B-US) Valuation is now at a 6-year high and shares of Warren Buffett’s investment conglomerate have handily outperformed the S&P 500. Berkshire now is trading at an estimated 1.6 times its March 31 book value, against about 1.4 times at the end of 2023 and an average of 1.4 times over the past five years. Unfortunately, some feel that this could mean more limited gains for the stock for the rest of 2024, given that investors have long used that number as a valuation yardstick, even though Buffett has de-emphasized it in recent years. We can blame Apple for the lackluster performance of the $370 billion portfolio, which is mainly overseen by Buffett. Managers Ted Weschler and Todd Combs handled only about 10%. Apple, which accounts for more than 40% of Berkshire’s holdings, was off 11% in the quarter. Other big Berkshire investments were higher, including Bank of America, American Express, Coca-Cola and Chevron. Buffett has signaled he still thinks Berkshire stock is appealing. The company stepped up its purchases of its own stock in late February and early March. Berkshire bought back about $2.3 billion of stock in the first quarter through March 6th. There were about $9 billion of repurchases last year. He admitted in his recent annual letter that chances to do significant deals are scarce now, but that cash, now at more than $150 billion, is earning an ample 5%. Most of it is sitting in Treasury bills. Owned in Core, ESG+ and US Portfolios.

(+) Cameco (CCO-T, CCJ-US) Goldman Sachs initiated coverage on Cameco with a Buy rating and a price target of $55.00. The firm sees approximately 30% upside from the stock's current levels, citing Cameco’s significant role in the uranium/nuclear fuel value chain and the potential for increased demand and higher prices to drive substantial estimate revisions. Cameco, with a market capitalization of $18 billion, operates in Canada, the United States, Kazakhstan, and Australia. Goldman Sachs anticipates that the uranium spot price will average around $95 per pound and Cameco's realized price will be approximately $68 per pound over the coming years. These projections represent a significant increase over historical averages from 2013 to 2023, which the firm attributes to a combination of a meaningful supply deficit and a potential underestimation of demand due to mis calibrated enrichment requirement assumptions. Goldman Sachs also points to the potential for the United States and France, which together account for about 35% of global demand, to shift uranium sourcing to Canada and Cameco due to geopolitical challenges and the need for secure supply chains. Owned in Core and Opportunity Portfolios.

(new) Eldorado Gold (ELD-T) Gold is now solidly up more than stocks this year. Our positive view on gold stems from the belief that foreign central banks will be consistent buyers for many years, especially China. One reasonable explanation for the recent pop in gold prices is therefore that traders are trying to front run outsized central bank purchases later this year. Rising geopolitical tensions make incremental central bank gold reserves more valuable to many countries than just a few months ago. Ever since western sanctions against Russia in the wake of its invasion of Ukraine, the value of holding gold reserves rather than Treasuries has become more obvious to many governments. Both assets are priced in dollars, highly liquid, and respected as a long-term store of value. Physical gold, however, cannot be confiscated or subjected to sanctions once it is housed in a local vault. Eldorado is a gold and base metals producer with mining, development and exploration operations in Türkiye, Canada, Greece and Romania. The Company has a highly skilled and dedicated workforce, safe and responsible operations, a portfolio of high-quality assets, and long-term partnerships with local communities.

(new) Invesco Equal Weight Energy ETF (RSPG-US) The Energy Sector is at its highest level in nearly a decade. The sector hasn’t done much since the Summer of 2022, but it’s still dominating in the post-COVID era. It’s up +380% from the March 2020 lows, while the next best sector (Tech) is up +208%.This sector is clearly waking up from a two-year slumber, and market internals suggest a new leg higher. The price of the North American oil benchmark has topped US$85 a barrel for the first time since October as OPEC production cuts couple with an uptick in demand. New position in Opportunity Portfolio.

(+) Palantir (PLTR-US) shares jumped after they announced a partnership with Oracle to deliver cloud and AI solutions to both businesses and governments globally. The partnership will combine Palantir's AI and decision acceleration platforms with Oracle's distributed cloud and AI infrastructure to help organizations "maximize the value of their data." Under the agreement, Palantir will move its Foundry workloads to Oracle Cloud Infrastructure, and make its Gotham and AI Platforms deployable across Oracle's distributed cloud. Owned in Opportunity Portfolio.

(+) SolarBank (SUNN-T) The common shares have been approved for trading on the Nasdaq with an anticipated opening of trading on Monday, April 8, 2024. This Nasdaq listing is a major validation of SolarBank as a company and its recent performance. Nasdaq Global Market has very high standards that SolarBank has achieved. As SolarBank's operations are primarily focused in the United States, it makes sense for SolarBank to trade in the U.S. as an SEC registered company, and this move will enhance visibility in the marketplace, exposing the company to a larger audience of investors and ultimately increase liquidity and shareholder value. SolarBank is an independent renewable and clean energy project developer and owner focusing on distributed and community solar projects in Canada and the USA. Owned in ESG+ Portfolio.

(+) Spotify (SPOT-US) The stock jumped on a report it is raising prices in key markets again. The company is boosting the cost of its audio service by $1-$2 per month in five key markets by the end of April, including the UK, Australia and Pakistan -- and a price hike in the U.S. will follow later this year, Bloomberg reported. That's part of funding the broader move beyond its key music offering into audiobooks, but it's also an important milestone toward long-term profits. Audiobooks have seen strong consumption and are a key growth lever for a company that has historically handed much of its paid-user revenues over to the music industry in royalties, creating losses. Spotify paid the industry more than $9B last year of $13.2B in revenue. Owned in Opportunity Portfolio.

(+) Stack Capital Group (STCK-T) moved up on the announcement that portfolio holding Prove Identity has entered into a strategic partnership with BetMGM, a sports betting and gaming entertainment company. The partnership will allow BetMGM, a subsidiary of MGM Resorts International (MGM-US), to use Prove’s Pre-Fill identity solution across its entire sports betting platform, including all of MGM’s U.S. land-based and online sports betting, major tournament poker, and online gaming businesses. “Partnering with BetMGM, a leader in digital sports betting and casino services, represents a meaningful milestone for Prove,” said Stack CEO Jeff Parks in a release. “While Prove’s Pre-Fill solution is already used by 1,000+ businesses worldwide, including 9 of the top 10 US Banks, this partnership only serves to further validate the strength of the technology, and the benefits that it delivers.” Owned in Opportunity Portfolio.

(~) Taiwan Semi (TSM-US) Taiwan was rocked by a 7.4 magnitude earthquake, leaving at least 9 dead and nearly 1,000 injured. Taiwan's deadly earthquake briefly stopped chipmaking at TSMC. The plant was only down for a brief time, but the earthquake was a reminder of how much of our chip-driven supply chain could go offline with one really bad event. The epicenter was 90 miles south of the capital, Taipei, where Taiwan Semiconductor Manufacturing’s main facilities are located. While operations were suspended temporarily, it appears there was no damage to critical tools, and overall operations remain normal. With the country making 80% to 90% of the highest-end chips, disruptions would have had a material impact on many major companies. Owned in Cash Flow and Opportunity Portfolios.

(-) Tesla (TSLA-US) delivered 9% fewer vehicles in Q1 of this year than it managed a year prior - the first time its quarterly sales have fallen since the pandemic-induced drop of 2020. The company still shipped some 387,000 cars, giving Tesla back the “world’s largest EV producer” title - a boast it had previously lost to the Chinese battery-producer-turned-automaker BYD, which posted an even more dramatic 42% fall in deliveries. The news sent Tesla shares down this week, capping a tough start to the year that saw TSLA notch the worst Q1 performance of any stock in the S&P 500 index. Having been the industry trailblazer for so long, Tesla is now facing increased competition, relying on its aging Model Y and Model 3 lines to keep its sales engine ticking over — all while battling factory fires, shipping delays, and labor disputes in the Nordics. To jumpstart demand, the company has turned to price cuts and even embraced advertising for the first time, after years of resisting. Ironically, sales of hybrid vehicles (+65% in 2023) are now rising faster than their all-electric counterparts (+46%). Owned in ESG+ Portfolio.

(-) UnitedHealth (UNH-US) Shares of the health insurance and drugstore companies fell after-hours, following the Biden administration's announcement that final Medicare Advantage rates won't change in 2025. Announced rates for the 2025 calendar year will increase 3.7% as previously proposed. Some investors had anticipated a larger hike. We added to our position this week. Owned in Cash Flow and US Portfolios.

(new) Vitalhub (VHI-T) is a Toronto-based international health-care software IT organization with offerings for government funded healthcare only. They offer solutions in three areas, the first being patient flow-based solutions. Those are solutions that help health care organizations automate or understand how their patients are flowing across a particular facility or amongst facilities, as well as patient engagement solutions such as appointment solutions or patient portals to help patients navigate more effectively throughout the health-care systems. They also have community electronic health-care record systems for community social services-based organizations. And finally, they have what is called work force automation-based solutions. They have completed 18 acquisitions to-date since inception in 2017. The strategy is to grow through M&A and organic growth. In 2020, revenue was just under $14 million. In 2023, it topped $52 million and now they are above $60 million. New position in the Opportunity Portfolio.

Weekend Reading

RBC MacroMemo - March 26 - April 8, 2024 Soft landing / Inflation / Central banks / A medley of developments / GDP vs GDI / Private credit / Cap-ex boom? / Mortgage delinquencies RBC

What Australia can teach Canada about getting homes built How a "new home bonus" funding system could spur the development Canada's cities need. THE HUB

The Most Important Concept in Finance A win doesn’t feel as good as a loss feels bad, and the good feeling doesn’t last as long as the bad. Not even close. WEALTH OF COMMON SENSE

How to sell to the Creative Class Implementing audience-driven growth through the four Creative Class segments. SOCIOLOGY OF BUSINESS

EV companies are hungry for Argentina’s lithium. Little is left for Argentines Local projects stall as the mineral’s fourth-largest producer exports to the U.S. and China, and courts Elon Musk. REST OF WORLD

The Last Gasp From Wall Street Anthony Pompliano looks at Wall Street's disdain for cryptocurrencies. He believes that to claim that the $2.5 trillion industry is not an asset class is simply detached from reality. THE POMP LETTER

The Last Palisades The Nuclear Regulatory Commission is the final hurdle to a nuclear renaissance in the US. DOOMBERG

Americans Believe They Will Need $1.46 Million to Retire Comfortably According to Northwestern Mutual 2024 Planning & Progress Study. NORTHWESTERN MUTUAL

Everyone in Japan will be called Sato by 2531 unless marriage law changed, says professor Unless they overturn an outdated law requiring spouses to have same surname. THE GUARDIAN