Q4 OUTLOOK: A NEW TRADE DEAL REACHED
It happened at the eleventh hour. After months of aggressive negotiations, a new trade agreement between the U.S., Canada, and Mexico was reached on September 30, 2018, mere hours ahead of a deadline. Despite the dramatic negotiations, we were of the view that a good deal would be reached, in part, thanks to the tremendous efforts of Prime Minister Justin Trudeau and Minister of Foreign Affairs Chrystia Freeland. Certainly, trade tensions have weighed on Canadian equities; after the first three quarters of 2018, the U.S. S&P 500 Index has rallied 10.2% on a total return basis, while the S&P/TSX Composite Index has edged higher by a more modest 1.9%. Threats of economic sanctions by the U.S. towards Canada and other trading partners made investors more reluctant to invest in these countries in fear that any products produced in these countries and exported to the U.S. would be hit with significant tariffs. Given that we now have a new trade deal in place, how should we position our portfolios from a sector perspective?
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