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Will the markets be trumped?

With the inauguration of the 45th President of the United States, the world seems to be holding its breath - what part of Trump’s agenda was campaign rhetoric, and what wasn’t?

While only time will tell, there were subjects discussed during the campaign and promises made that could affect the Canadian economy generally and Canadian investments specifically.

One of those subjects was trade. Trump has said he would withdraw from the North American Free Trade Agreement (NAFTA) or renegotiate it. He also promised to pull the U.S. out of the 12-country Pacific trade deal known as the Trans-Pacific Partnership.  Even though he has not reiterated his statements about NAFTA since the election, Canada’s trade minister Chrystia Freeland has been busy reminding Washington that the $2.4 billion a day that crosses the 49th parallel is good for both countries.  While Scott Sinclair of the Canadian Centre for Policy Alternatives, may say that NAFTA is just part of the story – “Most of Canada’s free trade with the United States is locked in through World Trade Organization (WTO) rules, and doesn’t apply to NAFTA” – a change would have an impact. On the plus side, if the U.S. imports less from Canada, it could mean a lower Canadian dollar, which could boost exports and tourism.

In the energy and environment areas, it is suspected that Trump’s policies will differ from President Obama’s. Trump has pledged to boost U.S. oil and gas production and encourage stepped-up exploration on federal lands and offshore.  He has also signalled that he will approve the proposed Keystone Pipeline project.  Unlike Canada, under Trump the U.S. will not be implementing any kind of national ‘carbon pricing’ policy over the next several years…which could, in turn, mean Canada would be less competitive than the U.S. in traded-goods industries such as energy, mining, materials, forest products, agri-food, vehicle manufacturing, metal fabrication, chemicals and petri chemicals, and cement.

On lumber – a negotiation that has been going on for longer than Trump’s arrival in politics – it is unclear whether an agreement will be reached before the inauguration.

Will Educators’ signature funds be influenced during Trump’s term?

Some of Educators Financial Group’s funds invest in areas that will be affected by the areas discussed above. Some also have exposure to the US; ranging from 0% in the Mortgage Fund to 50% in the North American Diversified Fund.  To find out how much US exposure a fund has, read its Fund Facts. It’s also a good idea to discuss the nature of your investments with your Educators financial specialist.

Volatility is part of investing. The key is finding what’s right for you.

It’s important to remember that it is the nature of stock markets to fluctuate, but that investments have been proven to provide better returns for your money in the long term. Staying invested is key to ensuring maximizing your return.

For more on why investors should stick to their long-term objectives, read: Good news: ‘bad news’ doesn’t mean you should bail from the market.

That being said, everyone’s tolerance for risk is different. Your individual risk tolerance should be discussed with your investment advisor to ensure your portfolio reflects your needs.

If you have questions about your portfolio and its investments, our financial specialists are here to help at any time. Contact us today.

 

Sources:

http://app.tmxmoney.com/news/cpnews/article?locale=EN&newsid=OG1535&mobile=false

http://www.freedomthirtyfiveblog.com/2016/11/donald-trump-affect-canadian-economy.html

http://www.bcbc.com/news-releases/2016/finlayson-trumps-energy-environmental-policies-threat-to-canadian-business-troy-media

 

The statements contained herein are based on material believed to be reliable. Where such statements are based in whole or in part on information provided by third parties, they are not guaranteed to be accurate or complete. The article does not provide individual financial, legal, tax or investment advice and is for information purposes only. Particular investment or trading strategies should be evaluated relative to each individual’s objectives and risk tolerance. Index returns are shown for comparative purposes only. Indexes are unmanaged and their returns do not include any sales charges or fees, as such costs would lower performance. Educators Financial Group will not be held responsible or liable for any losses, costs, damages or expenses incurred by reason of reliance as a result of the aforementioned information.

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