One thing is certain, 2019 is going to be very different from 2018.  Based on their latest economic report in November, the Liberals are going to continue their relentless efforts to close the Canadian energy sector.  For some unknown reason they hate this sector and the province of Alberta.  Yet, it loves Alberta’s transfer payments to Quebec, which today they do not need. As the Globe and Mail reports, “Quebec will receive $13.1-billion in equalization payments next year – a $1.4-billion increase – while Alberta, Saskatchewan and Newfoundland and Labrador continue to be left out even though Canada’s oil-producing provinces are facing deficits and hard times.” 

Canada has enjoyed a booming economy, of which Trudeau’s party has only limited its growth.  They have no intention to curb their wasteful spending.  It will take a decade to rein in Ottawa’s finances.  Young people today can look forward to rising taxes in the years ahead.  These added taxes will be needed just to pay the huge increase in interest charges Ottawa is creating.

Washington is also a mess and it is set to get worse. The only changes made under their new free trade agreements are an increase in tariffs that have so far hurt the American consumer the most.  Trump is pushing for all countries to work together based on U.S. rules only.  He is under the false impression countries want to trade only with his country.  He is from another planet for thinking so.  The U.S. market is 360m people, whereas Asian countries have a population ten-times them and becoming wealthier.  The average American (and Canadian for that matter) has experienced very little income growth.  The States is losing respect in many parts of the world.  As a result, global trade pacts are being developed without them. Most nations want little to do with America. Who can blame them?

American stock markets will eventually slide to their 119-year average price-earnings ratio of 14.2, versus today’s 21.1. The TSX has done nothing under Trudeau and is at the same level it was in August 2014.  This is a sure sign that foreign investors have no faith in our government.  Can you blame them when Ottawa’s only intention is to close Canada’s biggest industry?  Trudeau’s solution to all of Canada’s troubles is to impose a carbon tax.  This will do nothing for the environment and make all Canadians poorer.  If the Toronto stock market (TSX) perceives Trudeau will lose the next election, the TSX will become one of the world’s hottest stock markets and foreign investment will pour back into Canada.

If Trudeau gets re-elected, the Canadian economy will slide into recession.  If you believe he will win, we strongly suggest you build up a huge cash reserve.  You will need it as interest rates will have climb.  Fewer investors lending to Ottawa means they must bribe these people with higher coupon rates to buy our government debt.

A 1% Guaranteed Investment Certificate over the past 4.5 years has outperformed the TSX and just about every mutual fund.  Dividends probably earned investors at least a 5% gain in each of those 4 years. As we stated in the 206^th issue (August 1, 2016), “rising dividends will be the main source of investment gains for 2017 and 2018.”  We now extend the prediction for 2019.  If Trudeau gets elected until 2023, we will have a leader who makes it clear he hates Western Canada and constantly tells foreign investors go elsewhere.

Canada has so much economic potential, yet so little interest by our current politicians.  So sad.