And now I have to start all over again while the whole world is crashing down around us.

 

That is right folks, it is time for the annual rite of passage wherein I give my top insightful insights into the world, nay, the universe.

 

It is time for The Fearless Forecast TM. That one blog of the year that everyone and their cousin Vinny turns to base investment and asset allocation decisions on. I have heard that no less an investment icon than Jim Cramer regularly references the Fearless Forecast and broadcasts its content on his TV show – in case you were ever wondering where the shrewd investment oracle gets his top stock picks and contrarian plays.

 

Just last week, Warren Buffett asked to be added to the distribution, so I added him. Elon Musk gave me a free blue check mark for telling him to invest in Saputo cheese last year.

 

I could go on, but let me close by saying in that both Donald Trump and Justin Trudeau come to me for advice on global trends.

 

At any rate, here it is. In all its uncensored and unfettered glory.

 

Probably the best Fearless Forecast this year. Be prepared for the riches that will accrue to you by faithfully following my advice.

 

Or not.

 

Because forecasting is a mugs game. Sometimes you win, sometimes you lose. Sometimes it rains.

 

I make easy forecasts that give me softball grades for my midterm checkins and wild ass guesses that I hope no one remembers. How wild? My Super Bowl pick that I made in September had the Atlanta Falcons playing the Bengals in the Super Bowl with the Bengals winning 28-3. Neither team even made the playoffs. WTAF. Bad picks for sure.

 

So don’t follow my advice. Unless you want to. But don’t come crying to me. The fine print and liability waiver says you can’t.

 

Enjoy the ride! And be forewarned. I am not a happy camper for Canada’s prospects.

 

 

Broad Themes

 

 

The basic starting point for any good forecast, or at least mine, is the establishing of what I call “broad themes”. By making them broad, they are really unaccountable and don’t count to the grade, but I can reference them at will and make myself seem smart.

 

I had three, and they aren’t surprising, because they are in the news. All. The. Time. But they matter and if you are going to take anything from this forecast, plan your life around these three critical themes.

 

• Donald Trump – agent of chaos

 

• Inflation and affordability

 

• Trade wars and geopolitical (in)stability

 

Each of these will in some way inform and influence all that follows

 

 

Politics and Stuff

 

 

• Last year, I stated that there would be NO election in Canada. This year, I feel there is a 95% likelihood we will have an election and a 5% chance the Liberals pull off some cunning plan to stay in power even longer. Allow me to explain. The Trudeau government is done. The Dauphin has resigned and the race is on to replace him. Parliament is prorogued and no work is being done. If times were normal the government would have been been defeated and we’d be having an election in the next few weeks to give a mandate to the next PM so he/she could deal with Donald Trump and his tariff threats.

 

But these aren’t normal times. So instead we have a PM who clearly waited way too long to step down and are now in the early stages of a leadership selection process to pick a replacement Liberal leader who may end as the shortest serving PM of all time. This process ends March 6^th and Parliament is back on the 24^th so any defeat of the government would happen within days of that. So, an election is probably in May. By which time Donald Trump may have already invaded Toronto or purchased Alberta.

 

Pierre Poilievere and the Conservatives have a 26% lead on the Liberals. That we have to endure these games while the country potentially burns strikes me as every bit as traitorous as the media paints Dnaielle Smith to be with her reluctance to bankrupt her province so Trudeau can have a Team Canada photo op and we can be subjected to some fake national pride shtick.

 

Meanwhile, clear favourite and likely PM Poilievre is handed a shit sandwich. Nice.

 

The prediction.

 

Mark Carney is anointed as the saviour of the Liberal Party and in the election that should be held by October, it turns out he wasn’t and Prime Minster Pierre Poilievre takes the wheel.

 

Deal with it.

 

The 5% chance? Mark Carney is chosen as savior. He does a deal with the cash-poor NDP and Jagmeet Singh to kick the election can down the road to October under the guise of “national emergency and unity”, then the Liberals rag the puck and convince the NDP to help them push the election further back into 2026 in the hopes that the unelected n-mandate savior can somehow keep them in power.

 

No election, Canadians lose their minds, Alberta separates and Singh gets a pension. But that’s a 2026 prediction.

 

• Over the course of 2025, it will be revealed that Danielle Smith is in fact NOT a traitor and that her approach to tariffs – the avoidance of economic suicide for her province – is in fact an appropriate one for the leader of a province so incredibly leveraged and locked into US trade. Fortunately we supply the one product that no country can do without. They know it. We know it. It is a trade hammer that doesn’t have to be used. And it doesn’t have to milked to subsidize other trade exposed industries in other parts of the country. BECAUSE IT ALREADY DOES SUBSIDIZE OTHER PARTS OF THE COUNTRY!!!!!! Anyway, this is not really a prediction. It’s a beef. Calm down everyone – all this flapping of arms and running around threatening the US and arguing with each other and calling people the enemy of Canada and traitors is just embarrassing and plays into the hands of those we perceive to be threatening us.

 

• South of the border, the new Trump administration is going to be an unchecked and proverbial bull in a china shop, or, as so brilliantly articulated by comedian John Mulaney – a Horse. In a Hospital. Based on his campaign promises we can expect immediate action on tariffs, releasing of January 6 rioters, tax cuts, debt ceilings, the appointment of a veritable rogues gallery of Fox News castoffs, sycophants, hucksters and, surprisingly, a couple of really pretty decent picks.

 

On top of that we have the spectre of Elon Musk hanging over everything and his Department of Government Efficiency.

 

To be honest, no one knows what is going to happen. But he’s going to have a grace period to implement policy before dissatisfaction starts to set in and the backstabbing starts. The GOP is just so happy to be back in power that it may take a while for the some of the more unhinged policies to backfire as they inevitably will.

 

Anyone telling you they know what is going to happen is lying, but I’m going to give some educated guesses. You can sue me later.

 

• The bromance with Elon Musk has a shelf life of about six months. Trump got what he wanted out of him, but once the inauguration is over, he won’t want “President Musk” hanging around too much longer. Two narcissists cannot co-exist and one is the president. He wins. The breakup will be sudden.
• Assuming he gets the appointment, the first cabinet appointee to GET FIRED is going to be RFK Jr. Soon after, Pete Hegseth will be forced to step down due some scandal.
• Ukraine won’t get thrown as far under the bus as everyone thinks, but Trump isn’t a fan so it’s going to be a rough ride for Kyiv.
• When everyone goes home for summer break, they will start hearing from constituents about how their policies are being perceived and it is at the time, thinking about midterms, that the dam will begin to weaken.
• The US will not buy Greenland. Or the Panama Canal. Look for better terms and an expanded base. Economic cooperation agreements.
• Canada is about to go through some things. Trump hated Trudeau. Despises Freeland and hates WEF central bankers. Canadians would be well-advised to consider all of that when voting.
• While we go through things, annexation into the 51st state isn’t going to happen. Calm down. When did we become so fearful and weak.
• At some point we will find out what happened to Vice-President JD Vance

 

Trump has a lot of support, currently out of all proportion to the actual voting results and he will use it to jam as much of his agenda through in the first months of his realm. A lot of these policies will prove to be not very popular with everyday Americans because they are inflationary. Interest rates will not come down and the price of everything will go up. At some point people will stop blaming Hunter Biden’s laptop for the price of gas and will turn their attention to their currently elected leaders and it may go sideways pretty quickly as we head into midterms in 2026.

 

 

• Geopolitical instability is something I mentioned as a theme and it is real and it should scare everyone. From Russia-Ukraine to Israel-Hamas (the cease-fire will never hold) to Iran vs everyone to China-Taiwan, instability is the story that won’t end. In my view, the chief architect of all of this is of course Vlad “the Impaler” Putin and his ill-advised and criminal invasion of Ukraine. I do not foresee any significant de-escalation in this conflict in the short term as the bare-chested buffoon continues to call up 100s of thousands of new conscripts to be used as cannon-fodder for an increasingly battle-hardened if under-supplied Ukrainian army. There is no victory in this war. That said, we now have Trump and his Putin-leaning foreign policy in place and he did promise to end the war in 24 hours. I will give him a pass on the clock but I do see a Trump foreign policy towards Russia and Ukraine to be one of “stop the fighting” and appeasing Putin over the interests of Ukraine. The decision will ultimately be Ukraine’s but the slowing down of arms and support from the US will be the end. China will not invade Taiwan in 2025. That is a 2027 plan when Trump is in lame-duck mode. India is only interested in India. The Israel-Hamas-Gaza conflict will move into an awkward détente, but Iran is going to get squeezed super-hard by Trump and what comes out may not be very pretty. Africa continues to be an afterthought to most of the “first world” except as a repository of minerals and war. In an ideal world, Venezuela becomes a democracy again, but I do not see that happening.
• Will we have a recession? I don’t know. What do I look like? A forecaster? Yeah, yeah. Here’s what I think. There will be a recession – it’s probably already here. But the question you should be asking is if it is going to a real, textbook recession or is it going to still be a recession of perception or a media recession – a vibecession if you will – good lord, if 2025 can give me anything, rid me of this term. We are going to have an economic slowdown here in Canada, it is long overdue, heck it’s already here. If we get tariffs, it’s going to come down hard. Per capita GDP will continue to fall and the Bank of Canada will need to lower rates even further, punishing the dollar and making us generally all poorer. Could the effects be muted by commodities? Yes. Does the Federal government see that? NO! They want export taxes. Regardless of how long or deep a downturn might be, I am hard-pressed to see any recovery being much more than muted. Any rebound will come from Tariffs being applied and then removed. Put that in your pipe and smoke it.

 

• Speaking of tariffs – what is going to happen? Ha! I make this prediction and it will be wrong by Monday. But here’s what I think. A 25% tariff on Canada and Mexico has been floated by the President-elect and who am I to not believe him. I don’t really believe it is tied to border security and defense spending. I think it is the opening salvo in the renegotiation of the USMCA agreement coming in 2026. Trump doesn’t want to punish Canada, maybe even Mexico. He just wants us to know he can. Any. Time. He. Wants. So yeah, we are going to get a taste and it is going to hurt. How we react and how long it lasts is debatable. My prediction is that we are going to get tariffs of up to 25% within the first 100 days of the Trump presidency – maybe he starts lower and goes up – maybe he starts higher and goes down – but they are coming. These will be broad based and exclude nothing but will ultimately be removed over time. The response should be tactical, but I don’t hold out hope for us being devious enough. My own attack mode? Make a list of every billionaire sitting up with Trump during his inauguration and Tariff the F out of all of them and their companies. 50% tariff on Tesla and Starlink. 25% tariff on Apple products. Digital services taxes. Charge duties on any product purchased via Amazon. Let the people who are bankrolling Trump take it on the chin.

 

Then unleash our smart people (preferably not politicians) onto Fox News daily to talk about how damaging tariffs are to the American people and “OMG imagine what would happen if we curtailed oil exports to the Midwest and raise the spectre of gas lines”. Let Fox run with it. Americans hate nothing more than 1973. Look, it’s all bullshit. We aren’t going to curtail. We aren’t going to charge an export tax and kill our industry either and the government isn’t going to halt exports of fossil fuels which, if people don’t realize this, isn’t like electricity, you can’t just turn it off and then turn it back on. Be prepared to take action when and if something happens. This fake nationalism and “Canada First” shtick we have recently been subjected to is nothing but LPC theatre to distract from the garbage job they have done managing the country and give them ammunition to help Mark Carney take on Pierre Poilievre in the theoretical election that we so desperately need. But make no mistake, Trump doesn’t care for Canada. We made fun of him. The Liberal Party showed its disdain. Trudeau treated him, as Stephen Harper said: “disgracefully”. He remembers.

 

 

• I know I said broad trade wars so I should probably elaborate. According to Donald Trump’s basket of promises, pretty much everyone is going to be the target of tariffs, not just his closest and longest tenured allies with whom he has a free trade agreement that he negotiated. Nope. There are plenty of tariffs to go around because there are tax cuts to pay for that he would prefer regular Americans pay for rather than blow up the national debt. So he is using tariffs as a revenue stream and lying to the American people about who is actually paying the bill. Okay, enough “telling it like it is”, let’s see who else is going to get Tariffed. First and foremost is China, which is already dealing with the last round of tariffs that were enacted by Trump and kept by Biden (no one is without blame). Rather than blanket tariffs for no reason, China will see increased tariffs from the United States on select items and industries that are strategic as well as EV’s because President Musk currently owns Donald Trump. Retaliation for any tariff escalation will be in rare earth minerals needed for chips central to AI and soybeans. The tech sector and farmers are going to love that. Trump is also threatening tariffs on Denmark if they don’t give up Greenland – so weird. The only countries that seem to escape the tariff wrath are Russia and Saudi Arabia. Look this is an incredibly complex world of interconnected supply lines and just in time inventory and manufacturing with global companies solving hugely complex needs. The last thing anyone wants is a protracted trade war that, to be honest, is completely unnecessary and unjustified. Look, I get sore points, you want China to have less tech influence and hate selling all your trade secrets to the bad guys in the CCP – so address that, ban Tik Tok. Wisconsin wants more cheese to go to Canada – fine, crack supply management in USMCA 2026. It’s negotiation, not fiat. You can’t stop illegal immigration by putting a 25% tariff on avocados, you just make the avocados picked by the illegal immigrants 25% more expensive.

 

But… As I’ve said elsewhere, he has a honeymoon period to implement all of this tariff nonsense and bluster and the legislative branch is too chicken to stand up to him but that just needs time to change. The American public writ large has NO IDEA what a tariff is or who it impacts,. Don’t believe me? Ask them. I’ll wait… See what I mean? At the end of the day, politicians care about themselves. If they feel at risk from the electorate, the worm will turn. Give it time. The people need to feel the pain and they 100% will. By September, the tariff furor will have run its course and will have been adapted to bunch of tactical measures. The bloom will be off the rose.

 

Bit for now, Trump thinks he can achieve policy goals with an economic hammer. The strong dollar and Biden’s stellar economic turnaround give him that hammer.

 

• Crypto! Fine, I give up. It’s a thing. Buy it if there is a lot of liquidity. If things tighten, sell it. ETF’s are a pretty good play. The United States already has a $20 billion crypto reserve. Sure, it was seized from criminals, but it’s there. Everyone has a coin. Even I have a token. It’s called Hammercoin. Don’t get left behind! I made 10% just today (no mention of the 25% loss I had yesterday). Monorail.

 

 

Energy and Stuff

 

• Driven by still high levels of energy insecurity and high prices, the energy sector is going to continue its gradual transition from a fossil fuel centred colossus of emissions to an “all of the above” source of diversified and, occasionally, low-cost energy. While billions continue to be spent on renewable capacity additions, the lack of attention to or love being shown to base load capacity continues to set the scene for recurring and rotating crises as the “grid” and the “consumer” struggle to balance affordability and availability.

 

For industry participants, it’s precisely this type of chaotic destruction that creates opportunity. The Trump administration will have a lot of influence on the direction of energy investment his proposed head for the Energy role is a bona fide “energy guy” who is smart enough to understand that more of everything is needed, even if Trump doesn’t like windmills.

 

ESG box-ticking is dying a slow death, especially in the US and the financial world. We are soon to find ourselves in a golden age of poking holes in the ground.

 

• Peak Oil Demand, much celebrated around the ESG world has been pushed back, yet again. Demand for oil finished above most forecasts for 2024 and 2025 will not disappoint. My forecast is global demand for oil in 2025 will surpass 104.5 mm boepd. Similarly, demand for natural gas will continue to grow to record levels. It is an accepted truth in the energy industry that demand for energy (all forms) just continues to grow, even while the constituent components shift their relative share. The wildcard here is China. Are they in a depression or not? Can they spend their way back to life or not?
• A prevailing theme across the energy sector (and the economy in general) is going to continue to be cost. Energy prices, while volatile, remain relatively high. The costs for wind and solar are rising. Labour shortages are pushing up labour costs. And finally, the interest rate induced increases in the cost of capital is going to make every project that much more expensive, every hurdle rate harder to clear and every decision that much more difficult. I expect to see investment in wind and solar to slow down and, conversely, investment in low hanging fruit fossil fuel projects, which are easier and typically cheaper to execute, to pick up. This is notwithstanding the governmental and regulatory headwinds that exist. I’m not suggesting places like Canada will be where this happens, because well, business case, but pretty much every other country in the world is investing in energy – all forms. At any rate, some of the project decisions that made sense when money was free will start to unwind over the course of the year as governments seek to profit from their own sources and economically shelter their populations.
• Notwithstanding the urge to Drill Baby Drill, Capex in the oil and gas sector is going to be flat in the United States while Canada will see moderate growth. How do I know this? I don’t. It feels right. The Permian, for all its Landman glory, is the only growth area in the Uited States and it feels like it is getting tired. Production growth has stalled out and no matter what the government tells Texas to do, the growth area is Canada. Don’t get me wrong – there are going to be thousands of wells drilled in the United States in 2025, but it’s treadmill time, not Formula One. Capital is still expensive, yields on the long end are stubbornly high and tariff-caused inflation is going to keep them there. That means the price of everything keeps going up. Expect US Capex growth to be sub-5%. In Canada, capex could grow up to 10% depending on LNG Canada and, of course, f-ing tariffs.

 

With demand growing, expect other areas to spend to grow production. Africa will be a major beneficiary and of course Brazil is going to commit to a lot of capex and growth and ultimately fail to deliver. As they always do.

 

OPEC++++ will observe Canada, Mexico and the US destroy each other with tariffs and silently chuckle to themselves.

 

• The price of oil though 2025 is going to remain volatile. While we have recently seen WTI break out towards $80 on Russian sanctions and general hostility around the world, this feels like a head fake, especially if Trump forces a Russia-Ukraine détente and anything in the Middle East holds. A trade war between Canada, the US and Mexico will affect a fairly large chunk of the global energy trade and will add to the volatility. The price of oil (WTI) feels trapped in a $60 to $80 range with A LOT of action in between.

 

This is the glory call of the Forecast, which is of course why it is buried so low down. I’m forecasting growth but OOPEC+++ has a lot of spare capacity. Loosened sanctions on Russia adds barrels. Sanctioning Iran takes them away. Will capital disciplined producers in Canada and the US be there to add material incremental production if needed – my capex forecast and tariffs say maybe not. Will decline rates ever tip over the Permian? And how willing is OPEC++++ to actually manage the market, will they add surplus capacity? Will the sugar rush of Trump cause US drillers to be stupid and over-produce again? It’s a head-scratcher. End of year price for oil is $69.47 (WTI) and the average for the year is going to be $72.37. This makes me a bear.

 

 

• Gas giveth, and gas taketh away. Last year was probably one of the more disappointing years for natural gas in my memory, rivalled only by the year before. Producers over-produced, LNG was offline, climate changed, LNG projects were paused – the headwinds were all… headwinds. In the Permian, gas-oil ratios are high and associated gas production from all the tight oil growth pushed the Permian and Texas to its highest gas output ever. There was so much gas that producers voluntarily curtailed production by a few million BCF to steady the market. Prices at various hubs frequently averaged less than $0 an MCF and, as usual, AECO was occasionally free.

 

On the other hand, demand has never been higher and it is still growing faster than demand for oil. The perfect storm for natural gas still exists. Russian gas is still sanctionedEuropean demand is up. A global market is forming. Consumption continues to rise everywhere. While US production set records, it is so concentrated in the big three shale regions that any slip up could be cataclysmic. The moratorium on LNG implemented by the Biden administration is going to be dumped in the Potomac by Donald Trump, so the party may start anew. My year end call for natty is $4.67 per MCF and my average for the year is $3.75. I am a gas bull once again. Don’t ask me why. Maybe I shouldn’t have taken an edible before writing this.

• According to the EIA weekly reports The US closed out 2024 with 13 mm bpd of production. According to their Short Term Energy Outlook they will close out 2025 with production of 13.5 mm bpd – 3% growth. Is this the Trump effect? If so, it’s weird because they also are projecting softer oil prices which the last time I checked, held drilling back. But what do I know.

 

For US production, I always go back to shale math – staring from such a high number, decline rates suggest a whole lot of completions need to happen and the rig count and DUC levels don’t currently support that. Producers are tightening their belts and some of the super majors have already scaled back domestic capex. But with my prediction of a sub 5% increase in domestic US Capex, it seems to me that forecasting significant production growth is contrarian. In that context, I project year end 2025 US production of 13.1 mm bpd.

 

• In Canada, I’ve got production growth again ahead of expectations driven by higher overall capex. We have shiny new pipelines and soon a giant freezer up in Kitimat is going to be exporting emissions replacing Canadian natural gas to all the heathens still burning coal (choke) to power their fancy Electric Vehicles. Whether it is 867,000 barrels per day pouring into the Fraser River Delta (heh) or multiple BCF per day high-pressure natty hissing towards Kitimat, the drilling prospects for Canada to fill these respective pipelines are bright. Here in Canada, we typically talk about drilling rather than production numbers, but it wouldn’t be unreasonable to expect a 2%-5% increase in Canadian oil production over the course of the year and a similar increase in gas production. More important will be the 7,000 wells drilled over the course of the year, because that means jobs and prosperity for the service sector. Tariffs will eat into some of that over-played confidence and bravado but my own personal view is that even a 25% tariff, which would be shared between the producer, the refiner and ultimately the consumer isn’t gong to move the needle too much on volumes when all is said and done. Did I just say tariffs don’t matter? There we are with the edibles again.

 

• OPEC +++++++ production is going to managed and driven by price, inventories and the Saudi budget. So as always, it is going to be hard to forecast. But with demand for oil expected to grow by 2 mm bpd, and North America pre-occupied with stealing each others money and suppressing the poor, we may see our friends in OPEC tap into some of that spare capacity by mid year. OPEC discipline matters. Many nations claim to want to grow production but aside from Saudi Arabia and the UAE, none of the other OPEC members are very reliable at actually sustaining elevated production numbers for an extended period of time (Libya, Venezuela, Nigeria, Iraq). Rather than forecast production, I’m going to instead forecast that at least 1 mm of spare capacity will be brought back on-line by year end. This is the same forecast I made last year. It was wrong. This year it will be right.

 

• I am bullish energy stocks for the year. Who am I kidding. I’m always bullish. Consumption isn’t slowing and the price deck, while volatile, is currently favourable. Tariffs notwithstanding, cash flow and dividends will continue to accrue to shareholders as will buy-backs and debt repayment. I have some genius stock picks to pump up your portfolio performance and if I was a real betting man I would wait for some Trumpy Tariffs and LOAD UP on Canadian energy stocks after they get whacked. If I’m right and volumes don’t move materially, any price miss is going to be more than made up for by a cratering Canadian dollar. And maybe some higher quality US names because energy stocks may become meme stocks under Trump. Drill Baby Drill could translate into buy baby buy.
• The M&A market should be strong again this year except for that one nasty variable. Cost of capital. And tariffs. We will always have tariffs. There aren’t too many big plays left in the US, but Canada, as always, is a compelling and discounted target and if tariffs bite into equity prices and valuations, it could be even more attractive. I see at least one big’ish Canadian name being taken out this year. Maybe it will finally rhyme with Cenovus. At some point CNRL will get bored and buy someone just because.

 

In the service sector, with the anticipated growth in drilling and ongoing industry-wide manpower and supply chain issues, there will be deals done throughout the year as companies attempt to secure their client base and steal market share from less well-capitalized competitors. This will be less apparent to observers because this service industry activity will occur amongst the mid-market private companies (yay for our business!) but it will be there and, I believe fairly well distributed from upstream to downstream. Thinking more broadly, with the US Dollar wrecking ball still swinging away, it can be safely said that relative to the United States, Canada is “AFFORDABLE” and American buyers should be paying attention to the Northern Dollarama.

• And my evergreen M&A statement on Canada for all you American readers: Canadian companies are well-known for their technology and solutions-based approaches to innovation and there is a well-worn path of US PE and strategics coming north of the border to snap up cheaper Canadian tech. With an uncertain market in the United States, look for these companies to draw interest, particularly ones that have technologies that address emissions or can reduce costs in an inflationary, supply-chain challenged world. Also, Canada is a currency advantaged, undervalued and stable market for consolidators tired of the madness in other markets. Show me the money people!

 

• The Canadian dollar should be performing way better than it is with commodity prices at their current level. But, all things considered, weak GDP growth, GDP per capita crashing, declining productivity, a coming tariff war, no leadership, runaway debt, bing interest rate spread relative to the US, there is no reason to be optimistic for the Loonie. Great for cross-border M&A, lousy if you are travelling to the US or importing pineapples in February. The Canadian dollar is lucky to be at $0.69. It will be lucky to be there at the end of the year. I give it $0.67.

 

• Inflation will continue to cool off over the course of the year in Canada but will continue to be an emerging and largely self-inflicted problem in the United States. The damage will be ongoing. Tariffs on Canada and everywhere else will increase the costs of everything for the Americans, starting with energy costs, costs of finished goods and the costs of construction materials which will be especially important as the Los Angeles area starts to rebuild after devastating wildfires. While a strong currency helps the Americans, it also makes their exports less attractive. There are trade-offs everywhere and America cannot retool fast enough to onshore what they don’t have, drill enough wells and build enough refineries to replace Canadian oil or grow enough trees to get the lumber needed to build houses. In Canada we are likely to see some popups in inflation as we adjust to a lower Canadian dollar but “fortunately” we will be in a tariff-induced recession so the lack of demand will solve the inflation question. Yay. I expect inflation in Canada to be at the bottom of the policy range by the end of 2025 and for the US to be stubbornly above it for much of the year.

 

• Central banks will be elated at all the policy room they have to combat the economic chaos that is likely to ensue from the Donald Trump induced tariff madness. I also bel9ieve that 2025 is the year that the great refinancing bulge is going to happen. Fortunately, we are not at the peak of the rate-tightening cycle but it is still going to put a large number of mortgage holders into an awkward spot. The US Fed has a lot of dry powder but their hands are tied because of the robustness of the US economy and the inflationary fiscal policies of the Trump administration. In Canada the story is different as I have said many times in the uplifting forecast, so the direction of rates here is down. Expect as much as 150 basis points in rate reductions in Canada over the course of this year, especially is tariffs come in hot and heavy and we need some demand stimulus. In the United States, I am anticipating possibly 50 basis points towards the end of the year.

 

• There will be a lot of talk this year about major export oriented infrastructure but depending on election results, this may not go anywhere. While there is a business case to export LNG to Europe from the East Coast, there is still no business case to get that gas to the East Coast. LNG Canada will come on line soon and there is a strong possibility for expansion – a new Conservative government would likely be well-served to communicate its willingness to support a second train. Cedar LNG is also underway but it’s a relatively smaller project. Here in Alberta, hopes are being pinned on a whole lot of Carbon Capture projects worth billions and we are inching toward actually doing some of them, but that’s all 2024-2030 investment and, depending on what happens with the carbon tax, emissions rules and Donald Trump, they might all go by the wayside in a puff of methane. On the renewables side, Alberta will continue to be the national green pariah for its robust support of the oil and gas sector and for pausing new project approvals while also continuing to lead the country in actual wind and solar investment. It’s fun to live in a place so full of contradictions. Kevin O’Leary has his monorail project near Grande Prairie but that has as much chance of happening as a man having a baby (gratuitous Montreal reference since that’s where the Canadian huckster is from). Finally, there is still some rumbling that Trump would revive the Keystone XL project but the cognitive dissonance that this would cause given its purpose of importing Canadian crude and his tariff plans might be too much to overcome.

 

• My two favourite Canadian E&P picks last year are the defensive ones that I should be picking this year, so I am forced to put on my thinking cap because picking the same two names is lazy. They need to be well-capitalized enough to withstand any tariff nonsense and also international export exposed to offset the pain a protracted battle might entail. Suncor and ARC Resources. I know it’s the easy way out, but with gas to LNG Canada a criteria, ARC is a no-brainer and Suncor is out of the penalty box after their turnaround under new management.

 

• On the service side, it seems like it’s always a crapshoot. Either the market shows no love for a smaller Canadian niche player that never trades so you can’t get a return, let alone liquidity or you grab a beast like Haliburton and they deliver record revenue and an annual return of -15%. So I’m truly stuck. And when I’m stuck, I look at pipelines and infrastructure, which seems weird given my upstream optimism, but I’m just feeling this is the way to go. My first pick is South Bow, which is the spinoff of the crude and liquids pipeline business from TC Energy, created last year – when in doubt, make a pick that charges tolls. My second pick is CES Energy Solutions. Sure the stock is at a five year high, but they provide product at all stages of the lifecycle and they get a shwack of revenue from the US and don’t appear to be too trade exposed.
• In the United States I typically pick a producer and some weird flyer that no one has ever heard of that destroys my credibility. This year I am going political. Donald Trump has two energy guys slated to be in his cabinet so I am going to be super cynical and say that maybe their companies will benefit. Mostly by association, but benefit nonetheless. Trump’s Energy Secretary pick is Chirs Wright, formerly CEO of Liberty Energy CEO and his Department of the Interior pick is Doug Burgum, who while not an energy investor per se is seen as a friend to the energy sector and happens to come from North Dakota, so I’m going to pick a North Dakota producer, because, well, I’m a risk taker at heart. Whiting Petroleum Corp is the one to go with. I have nothing but confidence in these picks.
• Bonus stock pick? Saputo. When the chips are down, I like to eat cheese.
• Sports? Sure. Super Bowl – Detroit beats Baltimore. Sorry Steve. Stanley Cup – Carolina beats Colorado. NBA – Knicks beat Oklahoma City.

That’s it!

 

That was exhausting.

 

My time here is done.

 

Invest wisely.

 

Do as I say, not as I do.

 

Don’t gamble on sports.