Canadian Political Landscape... it's shifting
Download MP3Welcome to Making Sense with Dustin Lamontagne from Research Capital. My name is Bryn Griffiths. I'm your host, and joining us is Dustin. How are you doing today?
Dustin Lamontagne:Hey. Real good, Brynn. How's yourself?
Bryn Griffiths:Hoo. Boy, you know what? I'm getting dizzy watching everything that's going on with the Canadian political landscape these days. There's so much happening. You know?
Bryn Griffiths:Where do you wanna start? Do you wanna start with the Liberal Party? Because, obviously, we're right in the middle of a leadership debate here.
Dustin Lamontagne:Yeah. I mean, you know, with between, between Mark Kearney and, Christian Freeland, I don't I don't know why either one of them would want to take that job at the moment. The Liberals are so far down. And it's like, you know, climbing out of a hole made of sand. I think the sides are just gonna keep collapsing in on them because they've they've messed up so many things in our economy, our immigration, you know, the, the divisiveness in in the country in the last 10 years that has taken place.
Dustin Lamontagne:You know, we like to, Canada likes to sit back and say, Oh, what a what a screwed up system the US has, how could anybody, you know, elect Trump and, and, you know, the US is, you know, by by, you know, cut cut in half, you know, along political lines.
Bryn Griffiths:Yeah. Right down the middle.
Dustin Lamontagne:That's exactly what Trudeau has has created in Canada in the last, you know, with with regional, divisiveness. Right?
Bryn Griffiths:Yeah. I I gotta ask, though. What's the perception? And you you talk to a lot of people. I'm always worried about how we are perceived outside of our borders because getting forward investment has really been tough here in Canada lately.
Bryn Griffiths:At least that's what I'm hearing.
Dustin Lamontagne:We we've had and and the average Canadian, I don't think realizes, how badly, this government in the last 10 years has hurt our economy. We're in the middle of a resource boom. Whether you're talking about agriculture, whether you're talking about mining, whether you're talking about oil and gas, Canada has potash, uranium, Canada has all the ingredients that the world wants to buy. We supply the world with, you know, pretty much if there's a natural resource out there, Canada has it in in copious amounts, and we supply the world. There has been negative net in investment in our resource sectors in the last 10 years in the middle of a resource boom.
Dustin Lamontagne:So, you know, even if that only equated to 1% of GDP, you know, on a $1,000,000,000,000 economy, you're talking about cumulative in the last 10 years, probably $4,000,000,000 to $500,000,000,000 of investment that did not come into our country. That's a massive amount. There hasn't been a new Oil Sands expansion since 2015. Reason being is because there's been quite a few projects canceled, like Teck had a $1,000,000,000 invested into 1, and they just pulled the pin on it. That was 3, 3 or 4 years ago, because nobody knew where the goalposts are.
Dustin Lamontagne:So we need a government which can effectively communicate to foreign investors, here's what the playing field is, it's not going to change. And whatever that playing field is, they just need to have some reassurance that if they commit $10,000,000,000 to a project in our country that, you know, they're not going to have to add an additional $5,000,000,000 because of some bonehead regulatory change that the government puts in after the fact. And that's what's been going on. So you've seen a giant sucking sound of money leaving our country. Pretty much every major American oil company has pulled pulled roots and left Canada.
Dustin Lamontagne:So and then, you know, Canadian companies have stepped in and bought those assets in in the majority of cases. But you want capital to come to your country, not leave it. And I think if we can get a government, whether it's a new conservative government or just a leader of the Liberals, if if the East decides to vote them in again, you know, stranger things have happened. But you need somebody who understands the business climate, and you need somebody who is gonna champion our primary industries, not try and step on their heads while they're drowning.
Bryn Griffiths:So, I was fascinated by Jean Chretien's comments about the fact that he felt that the Liberal Party needed to be more radical center. And I'm thinking, okay. Is he is he kind of is he poking fun at his party right now? Is he really serious about that type of thing? Does the left have to come a little more center to recognize that if we don't get the economy going, the country is just gonna continue to stumble and bumble over the next little while?
Dustin Lamontagne:Yeah. Well, if you look historically, I don't think you could say other than, you know, on, some some religious aspects and and certain economic aspects, there wasn't a huge difference between liberal and conservative policy going back the last, you know, 50 years. I only say 50 years because I'm only 50 years old. So
Bryn Griffiths:I think you can do that.
Dustin Lamontagne:Yeah. Yeah. So when when we look back, the the Liberals were a little bit left of center, and the conservatives were always a tad right of center. And, you know, every 10 or 15 years, they would, they would trade power, you know, the public would get sick of 1 and vote in the other. But in the last 10 years or so the the NDP has turned into the greens.
Dustin Lamontagne:And can you imagine, you know, Ed Broadbent, for example, in the 80s or 90s, saying that we should get rid of the oil sands? I mean, the NDP was always pro job and pro pro labor, pro union. You know, the oil sands employs how many electricians, welders, pipe fitters, you name it. And here you have the leader of the NDP today saying, Oh, we need to get rid of the oil sands. So the NDPs have turned into the green, and the Liberals have turned into the NDP.
Dustin Lamontagne:They've gone way left. And they're, they're not the party that I think was elected in 2015, which is why Trudeau probably lost his majority, right? And now that he's he's sunk them so down, so far into the abyss that I don't think they can come back from this, certainly not in a 2 month period. So I I fully expect to see a a conservative majority in in the spring election. I I think probably 20% is is, getting back to, the lead that maybe Mulrooney had over over Trudeau in 84.
Bryn Griffiths:Right.
Dustin Lamontagne:And that was a a huge majority for conservatives. So,
Bryn Griffiths:But but I gotta ask you here. With with the way things have shut down and everything's being prorogued, until I think the 24th March here. And I'm guessing there'll be a non confidence vote by the 25th or 26th, but what what what's going on here? Like, how are how's the TSX gonna respond here over the next little while while they are going through this whole leadership thing? The Liberal Party.
Dustin Lamontagne:There's not a huge correlation between stock markets and and and political, elections. Now definitely the the government of the day can influence sectors, and and that can influence sectors, right? Government policy can impact profitability, good or bad. But if, if you're, if you're looking to what's going on now, a comparable, I would say, you remember in 1990, I think it was 1994, when when Quebec was, you know, look, looking at leaving the country, I think the TSX back then, if my memory recalls right, was about 5,000. And when the no vote came in, the TSX had a fairly robust period where they went from about 5 to 6,500.
Dustin Lamontagne:I think they went up 30% in a very short period of time. Because that that prospect of Quebec leaving Canada was very real at the time. And there was a lot of uncertainty in the market. So I'd equate what's going on right now in terms of you've you've got in Quebec now, you've got a Lagos party is not very popular, and the opposition party is the PQs who are gaining steam again. And there's there's a movement to separate from Canada now within Quebec.
Dustin Lamontagne:And and part of that is Trudeau's fault, the terrible, you know, policy. Particularly, Quebec has not been happy with the the immigration policy at the federal level. So you've got that going on right now. And then the, the business climate, when you've had net foreign investment for for the better part of a decade, even though our economy has still cranked out jobs, imagine how we would be doing put it this way, we should be the number one growing economy in the G7 because of our resource base. And it shouldn't even be close, Brent.
Dustin Lamontagne:We're we're not. We're we're we're behind the US, we're behind France, we're behind the UK. I think we're ahead of Germany, because they've got their own issues. But Canada's economy has not been doing well. It's basically been on, you know, we can't help but make money in this country because we're so rich in resources.
Dustin Lamontagne:Right? But we should be doing way better. So, you know, I don't like to make market predictions because it's a fool's game. But if I was going to, you know, look and join that fool's game, the talking heads on CNBC and BNN, I would say if we can get a conservative majority and you get the business climate back up and running in this country, you could see the TSX, go from 25,000 to 30,000 in in short order. It would not surprise me.
Bryn Griffiths:It's gonna be a crazy few months around here. We're gonna be watching very carefully. If somebody's got a question for you on this issue and with Canadian politics, it changes so fast. But if they if they wanna get a hold of you, how do they reach you?
Dustin Lamontagne:You can call me on my cell phone, 780-905-7729 or, by email at dlamontang@researchcapital.com.
Bryn Griffiths:Alright. Well, let's watch and see how this rolls out. Thanks for your time today.
Dustin Lamontagne:Thanks, Bryn.
Bryn Griffiths:Well, that's it for today. We'll have more helpful hints coming your way on our next episode. And don't forget, all opinions expressed are solely Dustin's and do not reflect those of Research Capital. This podcast is for informational purposes only and should not be relied upon for investment decisions. Clients of Research Capital may maintain positions in the securities discussed in this podcast.
Bryn Griffiths:Thanks for listening to Making Sense. Have yourself a great day.
