Tariffs are dominating the headlines, but they’re not the biggest risk Jean-François Tardif sees for investors. The President of Timelo Investment Management is cautious on the economy, skeptical that the massive AI spending boom can last and actively positioning for downside. He explains why he’s short Canadian banks and semiconductors, using puts on the S&P 500 and Nvidia, and preparing his portfolio for what could happen when AI spending eventually rolls over. At the same time, Tardif remains net long equities through gold and oil, explains why he sees gold stocks as significantly more attractive than copper right now and tells us his top gold stock.
Looking to invest in high-quality companies without high fees? The HAMILTON CHAMPIONS™ suite of ETFs offers exposure to diversified portfolios of equity champions across tech, financials, utilities, and dividend strategies, all with a low 0.19% management fee, designed to help you stay invested with confidence for the long term. For more information on the HAMILTON CHAMPIONS™ suite, visit: www.hamiltonetfs.com/hamilton-
FROM AMBER’S DESK
Today’s note will be brief and tomorrow’s note will be absent. I’m going to the other TIFF this week: Toronto Investment & Finance Festival. The Prime Minister is aiming to raise $1 trillion in investments and it starts with the Canada Investment Summit along with adjacent conferences like the Milken Institute Conference. I’ll be going to both and moderating sessions. You can expect a full write up! It may be less star studded – but the pocketbooks are definitely bigger!
Here are five things to know today
1.
Futures drop on AI warning
Tech stocks levered to AI spending are leading lower this morning after Anthropic CEO & co-founder Dario Amodei called for the industry to “pace” itself. In a blog post this weekend, Amodei warned the industry must slow the pace of development in order to improve its capabilities. His concern stems from two factors: AI’s ability to build its own AI and AI’s incidents in which it goes rogue and attacks without being prompted. The market reaction to Amodei’s warning was swift: semiconductors (Nvidia, Marvell, Intel, Applied Materials), data centre exposed stocks (CoreWeave, Nebius, Oracle) and copper are all under pressure this morning. Conversely, stocks that have been trampled on the fear that AI would replace their offering are bouncing this morning: Cybersecurity stocks (Palo Alto Networks, SentinalOne, Crowdstrike), ServiceNow, Salesforce, and Adobe are all higher.
There is surprising industry support for Amodei’s warning with Sam Altman of rival ChatGPT saying he agrees and announcing the IPO of OpenAI will be postponed until 2027. Elon Musk chimed in and also concurred. There are those that are skeptical about the purity of their motivations. “I support your decision to be responsible,” wrote David Sacks co-chair of US President Donald Trump’s Council of Advisors on Science and Technology and Partner at Craft Ventures, “But stop pretending you need anyone else’s permission. Stop pretending antitrust law has to be suspended so you can form a cartel. Stop pretending you need a regulatory approval process that supersedes product liability.” He and others are accusing the industry of “regulatory capture” in an effort to create a moat against open source models primarily from Asia. We’ll get great perspective on our next episode with Dan Niles of Niles Investment Management and veteran tech analyst.
━━━━━━━━━━━━ ◆ ◆ ◆ ━━━━━━━━━━━━
2.
Oil prices advance on Saudi attacks
Crude oil is advancing for the 9th out of 10 sessions and hitting the highest level since May. Last week, Saudi Arabia closed a pipeline that was serving as an alternative to the Strait of Hormuz because of attacks. This week, the oil rich nation also backed out of talks set to take place between Iran and several Gulf nations to discuss shipping lanes in the Strait.
All this has conspired to push oil prices back up and with it, inflation expectations. The market is pricing in a strong chance the US Federal Reserve will increase rates this Wednesday. “After last week’s CPI inflation report came in hotter than expected, we changed our FOMC call,” said BMO’s Shelly Kaushik, “We’re now looking for a 25 bp hike at this week’s meeting with a follow-up move penciled in for December given sticky price pressures.”
━━━━━━━━━━━━ ◆ ◆ ◆ ━━━━━━━━━━━━
3.
Canadian inflation expected at 8:30am
Economists are expecting deflation with headline CPI expected to decline 0.1% from July to August. Year over year inflation is expected to remain firm at 3%. The key will be watching for how core inflation remains contained despite the energy shock. Ultimately trade tensions could matter more than inflation as it exerts downward pressure on growth.
“We struggle to think officials would raise rates when CPI is at the top of the target range only due to higher energy prices,” wrote Citi’s Veronica Clark.
━━━━━━━━━━━━ ◆ ◆ ◆ ━━━━━━━━━━━━
4.
Rogers raised to buy at Desjardins
Desjardin is upgrading Rogers to buy on the value of its sports franchise. Recent transactions have highlighted that Rogers’ ownership of MLSE and Blue Jays could be higher than previously thought, wrote Jerome Dubreuil of Desjardins. All told, Dubreuil thinks that $5/share of value could be created and that isn’t currently priced into the stock. “While the Canadian telecom backdrop remains challenging, the FCF benefits from the recent impressive capex cut and the quiet promotional activity during back-to-school season make the elevated leverage easier to accept,” he wrote in the upgrade.
His top pick in the sector is BCE for its data centre catalysts. Interestingly his positive view on both telecoms isn’t predicated on their main business of being telecoms.
━━━━━━━━━━━━ ◆ ◆ ◆ ━━━━━━━━━━━━
5.
Pledges for Canadian businesses start rolling in ahead of investor summit
TD, Scotia and others have announced investment and financing funds aimed at Canadian businesses ahead of Carney’s Canada Investment Summit. TD and Scotia have pledged over $100 billion each over five years, following on RBC’s $1.4 billion AI announcement last week and a pledge by Sun Life for a $5 billion infrastructure fund. How and when these dollars will be deployed is still unclear, but the fact that companies are stepping up says a lot about the current movement and the PM’s ability to catalyze them.
Over the weekend the tone from US President Trump was also directionally more positive than it had been in the past. While in Ireland he was asked about pulling out of USMCA which he downplayed. He also said if Canada can remove tariffs particularly on farmed goods, “You’ll probably see a deal with Canada fairly soon.”
Don’t miss the next episode! Time to get your questions in! Click here to submit a question!
