The U.S. midterm elections are over, but what do the results mean for your portfolio? With Washington’s political landscape shifting, investors are weighing the implications for stocks and the broader market. Could the election results set the stage for the next leg of the rally, and is healthcare emerging as one of the biggest opportunities? On this episode of In the Money with Amber Kanwar, Paul MacDonald, President & Co-Chief Investment Officer at Harvest ETFs and head of Canada’s largest healthcare ETF, explains why the midterms could be a turning point for healthcare stocks.
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FROM AMBER’S DESK
Today I am 40. It feels fitting that I officially enter middle-age on a Monday. Although I feel like I got a jump on mid-life when I slept wrong on my shoulder a few months ago and haven’t been able to raise my arm up without pain since.
On a serious note, I feel quite grateful. I have my family, my health, and this – you. Thank you for starting your day with me, reading the newsletter, watching our shows, and your endless support. I don’t know how I got so lucky.
Here are five things to know today
1.
Futures rebound after brutal sell-off
Jeez, I leave you for two days and the Nasdaq entered a correction and oil prices plunged 15%. The central concern is that the Democrats sweeping the midterms will lead to two things: a slower AI buildout and a bigger push to end the war in Iran. Let’s assess the damage in the markets. Semiconductors are down 37% since June, the S&P 500 is down 5% from its record high, the TSX has fared better only down 3% since its last record, while energy stocks are on the verge of a 10% correction.
Here is the positive spin. First, we’ve been here before. The Nasdaq’s 10%+ pullback is the third one this year. Second, multiples have collapsed while earnings estimates are moving higher. “This remains an earnings-led bull market,” wrote Ed Yardeni of Yardeni Research, “Valuations are falling while earnings are soaring. We still view the AI backlash as another speed bump, not a roadblock.” A big test will come this week when the neoclouds report: CoreWeave is Tuesday and Nebius is Thursday. I’ve made my bet on CoreWeave. The results will likely be stellar but that might not matter as guidance is the only thing that matters this earning season. As a vote of confidence in the tech trade, Anthropic reportedly is going to still go ahead with its IPO (or a sign of how desperate they are for cash if you want to be a pessimist).
2.
Nvidia -5% after CEO Jensen Huang admits affair
Huang admitted to the affair as reports suggest it was with a woman who was a Chinese spy. Huang said Nvidia’s board would be launching an independent investigation. “I love our country and our company, and I am committed to protecting Nvidia and supporting America’s national security,” wrote Huang in the statement. Can one man’s personal life topple the market? Nvidia is 8% of the S&P 500 and backs some $500 billion in AI spending. It is bad enough to have shaken the faith of stalwart bull Dan Ives. “This is a black eye moment for Jensen and will spark multiple congressional inquiries at a minimum and will create an overhang on the stock for a myriad of reasons,” wrote Ives in a note to clients.
The big question for investors is whether Nvidia is bigger than Huang who has become the face of the AI revolution and many say there is no obvious successor. It’s an important one to get right because you can now buy a company that is projected to grow sales 90% next year, see its profit double and generate nearly $200 billion in free cash flow – and it is trading at 19x forward earnings.
3.
Strathcona buys Greenfire in cash & stock deal
In a deal that should surprise no one – Adam Waterous is consolidating his two publicly traded oil sands plays: Strathcona will buy Greenfire in a nearly $3 billion tie-up. The offer price represents a nearly 40% premium to where shares closed Friday thanks to a major sell-off in crude. A week before that the stock was trading near $10/share. “Deal is on-strategy and appropriately priced,” writes Menno Hulshof of TD. It will give Strathcona bigger reach into the Fort McMurray region, add long-life inventory, and they have $75 million worth of cost cutting opportunities. Cenovus’s purchase of Athabasca likely made this transaction necessary as there was less out there to buy.
4.
Barrick +2% on earnings beat, IPO on track
Barrick Mining beat profit expectations, aided by lower taxes, thanks to strength in gold mining offsetting weakness in copper. Cost controls were a bright spot with no major hiccup in production. Barrick maintained its gold mining production forecast. The company also said that its Nevada Gold Mines IPO is on track slated to hit the markets either late 2026 or early 2027.
5.
Constellation Software misses profit expectations
The stock could come under pressure after earnings per share missed, however when you make adjustments EBITDA was higher than expected. Sales were slightly better but weakness in licensing and professional services will likely steal focus with the latter the biggest part of their business. The source of weakness was its US healthcare software companies. Cash flow was also lighter than expected. Not a good report when you are fighting for your life against Saas-polcalpse fears. Organic growth was a tepid 2%. M&A has also been slow with the company spending less while net cash is sitting at a record for the company.
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