The start of the new year always presents opportunities and worries.  We have the new U.S. government in office, and it appears to have everyone in its sights for tariffs, including Canada. One thing is certain, and this administration has made it extremely clear, it is putting the U.S. first.

     On the Canadian side, we have a political environment that is on pause as we look for a new Liberal leader and a potential upcoming election. This creates a good amount of uncertainty in light of the above developments regarding tariffs.
     

     Europe continues to struggle economically, but we are starting to see some nice values presenting themselves, and this has our attention. They still have some more work and time to solve this, but the situation is improving.

     In regard to the portfolio, we are continuing to overweight into the U.S. with the three areas of financials – industrials and health care having the best potential going forward. I remain negative on the technology sector, especially on the so-called “Magnificent Seven,” as the valuations are extremely optimistic, and any miss could spell a nice selloff in these areas,
which is healthy for the rest of the market. I have been waiting a while for this, and am never sure when it will happen, but the odds of it happening are getting higher by the day.

     In Canada, we have been lowering some of our positions to prepare for potential tariffs, and we shall see what happens in February. The areas to avoid are consumer-related stocks as they could be the biggest hit. Our dollar has priced in a lot of bad news, and our economy is not in that great of shape, so it is warranted to sit with more on the sidelines for the current
time. I still like the energy sector, financials, and metals and minerals, but caution is the word of the day.

     We are coming into a lot of uncertainty, and this usually causes volatility, however, this does create opportunity, and we will use this to our advantage going forward.