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Top Links: Time to think about a 'President Trump' portfolio strategy

U.S. Republican presidential candidate Donald Trump speaks during a campaign event at Iowa Central Community College in Ft. Dodge, Iowa, November 12, 2015.

SCOTT MORGAN/REUTERS

A roundup of what The Globe and Mail's market strategist Scott Barlow is reading this morning on the Web

Markets are notorious for posing questions no one saw coming, but the "How do I position my portfolio for President Trump?" conundrum is the equivalent of a meteor out of a clear blue summer sky.

Any hopes that Mr. Trump's parade of lunacy would end at the nomination process were dashed last night with his resounding victory at the Republican Nevada caucus. Mr. Trump won among all demographic groups including, shockingly, Hispanic Republicans. Mr. Trump has repeatedly voiced plans to build a wall at the Mexican border and his primary combatants were a Cuban America, fluent Spanish speaking Marco Rubio and an erstwhile Canadian named 'Cruz'.

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Canadians hoping that nominee Trump will lose handily to Hillary Clinton should read "Unless the Democrats run sanders, a Trump nomination means a trump presidency " in Current Affairs. Nathan Robinson writes, "Every one of Clinton's (considerable) weaknesses plays to every one of Trump's strengths."

Is it even possible to adjust investment strategies to a Trump presidency? I don't know at this point, but the time to consider this dilemma is now, not later. The Mexican wall is unlikely to ever happen, but Mr. Trump has also posed trade tariffs on Chinese goods to protect American jobs. Evidence to date suggests he might very well wake up in a mood one morning to slap duties on Canadian auto parts.

"Nevada 2016 Republican results: Donald Trump wins the caucuses" – Vox
"Unless the democrats run sanders, a trump nomination means a trump presidency" – Current Affairs
"The best predictor of Trump support isn't income, education, or age. It's authoritarianism." – Vox

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Jean-François Tardif, a portfolio manager for First Asset Investment Management Inc, believes the Vancouver housing bubble will end badly and soon. In a recent fund commentary, Mr. Tardif wrote,

"We read a January 21st article from Business Insider that the China capital crackdown is finally starting to be felt in the Sydney real estate market, quoting a Chinese-born Australian real estate agent: "It is getting harder for them to send money out … I've been told since the start of the year it has tightened up," and she expects properties below the $5 million price will start to feel the hit. We believe Vancouver-area real estate is a disaster waiting to happen. Led by the huge influx of foreign capital (mostly Chinese) and spurred further by Realtor/Investor shenanigans, housing prices are hitting record highs in absolute terms and are wildly inflated in terms of affordability. In our view it is a matter of when, not if, the Chinese government is successful in stemming the flow of capital out of China and into markets such as Vancouver. When this happens, the house of cards is likely to fall."

"Is Vancouver's Housing Boom Over?" – Tardif, First Asset

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Royal Bank posted flat-to-lower year over year profit growth this morning while raising their dividend,

"Net income for the period ended Jan. 31 fell 0.4 percent to C$2.45 billion ($1.77 billion), or C$1.58 a share, from C$2.46 billion, or C$1.65, a year earlier, the Toronto-based firm said Wednesday in a statement. Adjusted profit, which excludes some items, was C$1.64 a share, trailing the C$1.66 average estimate of 14 analysts surveyed by Bloomberg. Revenue fell 3 percent to C$9.36 billion."

In a separate story, Bloomberg identified a disquieting trend in Canadian credit markets,

"Canada's largest commercial-mortgage lenders, including Sun Life Financial Inc. and Royal Bank of Canada, are turning more cautious as the commodities slump stunts economic growth and raises the risk of default.

"We're concerned about the stage in the real-estate cycle Canada's in right now -- there's more risk in the market," Michael Andrews, managing director of Toronto-based Sun Life's Canadian commercial-mortgage team, said in an interview at a real estate conference in the city Tuesday. 'We wanted to ensure our portfolio could withstand, for example, a 25 percent drop in prices. Do we think that will happen this year? No. But what about in five years? It's just prudent to test.'"

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Domestic economic growth is dependent on non-commodity capital investment to compensate for lower global resource demand. Major financial firms getting skittish about new loans is, to say the least, not conducive to this process.

"RBC Profit Misses Estimates as Capital Markets Revenue Falls" – Bloomberg
"Royal Bank of Canada, Sun Life Grow Cautious on Commercial Loans" – Bloomberg

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Tweet of the Day: "@Noahpinion It's gonna be President Trump. You know it is. Deep down in your heart, you know it." – Twitter

Diversion: "Paula Scher's Insanely Detailed US Maps Elevate Data Viz to Fine Art" – Wired

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