Global markets keep climbing despite geopolitical tension, shifting rate expectations, and nonstop headlines—but how should you actually build an ETF portfolio in this environment? According to Ryan Lewenza, Senior Portfolio Manager, Private Client Group from Turner Investments, it all comes back to one thing: earnings. Strong revenue growth, record profit margins, and resilient fundamentals are what continue to power equities higher, even as uncertainty lingers.
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Here are five things to know:
Peace in the Middle East: Stocks are rallying hard as the US comes back from Memorial Day. The TSX hit a record high yesterday for the first time since the war began. The mood is being lifted by hopes of a peace deal between the US and Iran. Materials lead the gains on the TSX with gold and copper stocks advancing.
Meet the moment: TD is upgrading Gibson Energy and Pembina Pipeline to buy in a sweeping note touting Canada’s moment to shine amidst tensions in the Middle East and improving Canadian policy support. “The U.S.-Israel strikes on Iran and ongoing disruptions at the Strait of Hormuz have elevated global energy security concerns. Even if tensions ease, supply reliability and jurisdictional stability have moved from secondary considerations to primary drivers of energy trade and investment decisions,” wrote TD’s Aaron MacNeil, “Against that backdrop, Canada’s energy industry has taken on renewed strategic relevance. Canadian oil and gas supply offers long reserve lives, low decline rates, and scale that supports multi-decade planning. Canada is positioned to play a more visible role in global energy flows.” MacNeil asks a central question, can Canada meet the moment? His view is that with a friendlier regulatory framework, the answer will be Yes. Enter Canadian infrastructure. MacNeil forecasts that production will be higher than current forecasts and Pembina Pipeline and Gibson Energy will be beneficiaries. Perhaps a sign of renewed interest in Canada is a deal this morning by US-based Northern Oil & Gas to buy assets in Alberta, marking its first international expansion.
Cash cow: Eli Lilly is up in the pre-market using its hoard of cash from weight loss drugs to expand in other treatment areas. This morning the drug maker announced a trio of deals worth nearly $4 billion that would bring them into the infectious disease space. The portfolio of drugs acquired target areas like shingles, bacterial infections and Epstein-Barr virus. Basically they are taking their windfall from weight loss drugs and deploying them in other areas ahead of when patents run out. Something Pfizer tried, and thus far, has failed to do following its Covid windfall. Lilly has been on a roll with drug developments including retatrutide which is more powerful than existing weight loss drugs. While it still needs FDA approval, it was able to achieve nearly 30% weight loss in patients over 80 weeks. It also released promising results from a cholesterol drug trial which effectively silences a cholesterol collecting gene and led to 62% reducing in cholesterol. I own Lilly, and unfortunately, still own Pfizer.
Roid rage: I’ll confess I had no idea that the company behind the Enhanced Games was publicly traded, but boy am I glad because now I can bring it up here. Quick background: the Enhanced Games is backed by Peter Thiel and allows, nay encourages, doping in sport to see how far humans can be pushed. They held their first games over the US long weekend and the broadcast cut out pretty much immediately and didn’t recover for 10 minutes. Enhanced Group went public via SPAC recently and is down 24% in the pre-market. It bills itself as a sports medicine practice, but the head of the USADA called it a “dangerous clown show.” The best part is that “clean athletes” who weren’t doping actually won in three categories including: sprinting and two swimming competitions.
(Photo: James Magnussen before & after training for the Enhanced Games courtesy of Joe Pomopliano)
Electric Porcupine: Shares of Ferrari are down 3% on disappointing reviews of its $640,000 all-electric vehicle. It’s the first EV to be rolled out by Ferrari and was designed by Jony Ive – of Apple fame. And it shows, the look is a departure from the classic Ferrari aesthetic. There are a lot of questions about what high-end demand looks like for EVs, but the horsepower stays true to the brand reaching 100km in just 2.5 seconds. Shares of Ferrari are down nearly 30% over the past year as their growth targets have underwhelmed investors and the shift to producing electric vehicles alongside internal combustion engines has been met with skepticism.
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