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Scott Barlow

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

Well, that happened.

Much of what I thought I knew about the U.S. socioeconomic situation was thrown under a bus last night, and then had the bus back up and run over it a few more times. As a result, I'm less prepared than I'd like to be this morning, and for that I apologize to readers. 'Fools, the lot of us' this morning, as the FT's Kadhim Shubber writes.

Much of the strategic portfolio advice this morning advises investors to reduce risk in their portfolio, to buy safer industry sectors and raise cash. BMO's Brian Belski writes,

"We believe acute emotion should be combated with extreme defensiveness within both US and Canadian portfolios. While we traditionally do not like adhering to near-term sector positioning, we believe emotions and reactions, unfortunately, will define investing over the next few months… US and Canadian Portfolios Should Employ DEFENSE … Canadian Sector Changes = Risk OFF; Follow US lead Real Estate to Overweight from Market Weight, Utilities to Market Weight from Underweight, Consumer Discretionary to Market Weight from Overweight, Industrials to Underweight from Market Weight"

"@SBarlow_ROB BMO advises DEFENCE ' – (research excerpt) Twitter

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Morgan Stanley is slightly more positive,

"We expect investors to act defensively in the near term as they recalibrate a potential policy shift: The "surprise" result will encourage investors to protect still-reasonable YTD gains, and await more clarity … Medium term: Anchoring to realpolitik means a path for risk assets to rebound: Cutting through the uncertainty of the Trump policy agenda, we focus on two likely areas given the motive and opportunity to act: a taxcut- driven "accidental" stimulus and increased trade protection"

"@SBarlow_ROB MS a bit more bullish for medium term" – (research excerpt) Twitter

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The Keystone pipeline and the potential for revisions to NAFTA are the immediate concerns for Canadians. Report on Business' Shawn McCarthy writes,

"Mr. Trump favoured the Keystone XL pipeline that Mr. Obama turned down, and has said he will invite Calgary-based TransCanada Corp. to refile its application. However, the real estate developer said he would want a better deal for the U.S. including wanting "a piece" of the pipeline project for the U.S., though he has never suggested how that stake would be achieved."

NAFTA is, of course, a much bigger deal particularly as the domestic economy looks to exports for growth. Mr. Trump was consistently pro-tariff and anti-trade as a candidate but was never clear on the details. The truly disquieting fact (for investors, I mean, there's plenty of unease to go around in a more general sense) is that the Republican party now controls the White House and both arms of Congress and has much more freedom to ram legislation through, no matter how misguided.

FT Alphaville, a group of writers I've frequently referred to as 'Murderer's Row' for their depth of analytical talent and research capabilities, produced the best global trade oriented piece Tuesday night as the election result were confirmed,

"The Peterson Institute for International Economics has an excellent overview of Trump's stated trade plans, as well as this handy table for understanding what he could do unilaterally (ed note: the Peterson report is here – there is a link to the summary table in the FT Alphaville post) … Aggrieved parties could still sue in the courts for infringement on their rights. For example, pulling out of Nafta – which means reverting to World Trade Organization tariffs on imports from Canada and Mexico – would have significant consequences for industries reliant on cross-border supply chains, especially motor vehicle manufacturing, so expect Ford and GM to loudly protest.

"Trump's victory sends Trudeau's energy, climate strategy into disarray" – McCarthy, Report on Business
"Election AV: Donald Trump has been elected. A few questions about what's next" – FT Alphaville (free with registration)
See Also: "The United States' first emerging-market president: frontier market implications" – FT Alphaville

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For what it's worth, I will not personally be active in markets for the next few days. I'll be following Berkshire Hathaway's Charlie Munger who advised, "It's waiting that helps you as an investor, and a lot of people just can't stand to wait."

There is no way I can get to all the relevant information regarding the election fallout. To partially account for that, here are a few links for those with specific interests,

"OPEC Deal Becomes More Urgent, Harder to Agree After Trump Win" – Bloomberg
"Trump win casts doubt on Fed's plans to hike interest rates" – Report on Business
"Copper hits 15-month high after Trump wins White House" – Reuters
"Gold jumps; oil recovers poise after shock Trump win" – Reuters
"The US election result impact on high yield markets" – Bond Vigilantes
"@fastFT Shares in concrete maker CRH rally on possible boost to US infrastructure spending: on.ft.com/2eL7PZb – Financial Times, Twitter

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Tweet of the Day: "@xvrmdf If you can't separate conspiracy theory from factual analysis, then I don't care for your views on investing and trading." – Twitter

Diversion (that is actually not diverting at all) : " An American tragedy" – New Yorker

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