Insiders bracing for slower US growth

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Throughout the US election campaign, the prevailing chatter in the Canadian media was along the lines that Donald Trump could not possibly win, but in the unlikely event that he did, disaster would be the assured outcome. In fact, there are pockets of the Canadian economy that could win under a Trump administration, particularly if the GOP maintain control of Congress.

The likely Canadian winner under an unlikely GOP sweep on November the 8th would be the oil and gas industry. As I point out in my interview with Jim Goddard, Trump would likely push through the Keystone pipeline expansion. That would be great news for the oil patch, particularly given that we cannot seem to move any major oil pipeline projects forward in this country. Unfortunately, trade would remain a big question mark under a Trump administration. Consequently, the Industrials sector of the Canadian economy could be pressured. Indeed, we are seeing plenty of nervousness right now among Canadian insiders in the Industrials sector. 

Canadian exporters may also have little to cheer about if Hillary Clinton wins as she has been taking a hard line on trade and opposes the Trans Pacific Partnership agreement. More worryingly, short of the Democrats taking control of the Senate, a Hillary Clinton presidency is going to be hard pressed to get anything done. Republicans in Congress are likely to make life extremely tough for her following revelations that not only has the FBI reopened its investigation on her handling of emails as Secretary of State, but that a feud has unfolded between the FBI and Department of Justice over inquiries about the Clinton Foundation. 

While a gridlocked Washington can sometimes be the lesser of two evils for business, America is at a point where some decisions must be made on entitlement and tax reform.

TSL management reports a customer malaise set in starting last week of August

Moreover, if the picture presented Thursday by North America focused Tree Island Steel (TSL) is any indication, the US economy may now be in a soft patch. The manufacturer and supplier of wire products for the construction industry reported quarterly sales and earnings that fell year-over-year. The key driver for the disappointment was what the company described as customer malaise that set in starting the last week of August and continued throughout September. The once high-flying stock price fell more than 20% on the news. The tumble was likely fueled in part by management expectations that the malaise could linger over the short-term. While there may, of course, be industry or even company specific factors at work, the Tree Island Steel experience suggests that policymakers cannot take continued US growth for granted.

The problem is, short of either a Republican or Democratic sweep of the White House and Congress, it is hard to envision anything getting done over the next couple of years. Perhaps that is why US Insiders are remaining relatively cautious ahead of the November 8th vote. 

Listen to the interview below or via YouTube.


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