Market Factors: The biggest winners from an eventful summit

NEWSLETTER Market Factors: The biggest winners from an eventful summit SCOTT BARLOW MARKET STRATEGIST PUBLISHED 2 HOURS AGO COMMENTS SHARE SAVE FOR LATER Listen to this article Learn more about audio Log in or create a free account to listen to this article. This edition of Market Factors discusses the Canada Investment Summit as a potential inflection point for the domestic economy, starting with the biggest winners from the tax changes. I then summarize a long talk I had with a former investment banker and good friend during which we discussed what we want to see from new investment - notably a forward-looking emphasis and not the ideal plan for 1965. The diversion covers a potential disastrous idea from the Trump family and we have Quick Hits as always. EQUITY SECTORS Summit winners It is not an exaggeration to see this week’s Canada Investment Summit as a potential watershed moment for the domestic economy. There were executives representing trillions of investment dollars at the Four Seasons this week, with Blackstone president and chief operating officer Jon Gray calling our country “a bit of a sleeping giant, economically.” Rosenberg Research senior economist Robert Embree published a report attempting to uncover the biggest beneficiaries of the new growth initiatives, notably the tax changes encouraging fresh capital investment. In sector terms, the expected winners are transportation and warehousing, energy, mining, construction, agriculture, fishing and forestry. The marginal effective tax rate [METR] for the capital-heavy transportation and warehousing sector falls more than 15 percentage points from 13.3 percent cent to -2.3 per cent. Construction gets a smaller but still significant break in METR, which falls from 18.3 per cent on average to 13.0 per cent. In the energy sector, pipeline builders will benefit (this is potentially important for reasons discussed in section two below) with LNG equipment a particular standout. I’ll try and get to individual stock names next week and hopefully I can find some that are not in old economy industries. ECONOMY Where the investment should go RBC Capital Markets chief economist and head of investment strategy research Eric Lascelles detailed Canada’s failure to improve productivity over the past four decades. He estimates Canadian prosperity as roughly equal to the U.S. in the 1980s and falling to roughly 73 per cent as wealthy as the Americans now (as measured by real output per hour…