From the Seaway to the Budget: A Lesson in Execution
On June 26, 1959, HMY Britannia eased into the new St. Lambert Lock as Queen Elizabeth II, U.S. President Dwight D. Eisenhower, and Prime Minister John Diefenbaker waved to tens of thousands lining the banks of the St. Lawrence Seaway. In just five years, Canada and the United States had carved a roughly 300 kilometre ship ladder of seven locks that lifted vessels about 75 metres from sea level to Lake Ontario, finishing ahead of schedule. The Queen described the Seaway as a “magnificent symbol to the entire world of the achievements possible to democratic nations peacefully working together for the common good”.
Nostalgia is a powerful elixir and in recounting past success, it’s tempting to despair at the present, concluding “we could never do that today”. For months now, Canadians have been told about both “generational investments” and “austerity” that the much delayed Federal Budget would announce. The wait is over, the 493 page document has finally been released. Pro-tip: however last week’s Federal Budget landed with you, don’t pay too much attention. Based on the headlines, nobody seems thrilled—and as investors maybe that’s a good thing!
Budgets Talk, Markets Measure.
What moves prices over the next year or two is simple. Do rules actually land? Can permits get signed? Will real projects win contracts and financing? Does the cost of capital fall or rise? Do firms grow cash flow and return it to owners? On each point we can gather evidence and act without waiting for speeches.
What to Watch Next
Here is what I will watch instead of the headlines:
- Does the Canadian dollar rise or fall?
- Do longer term Canadian bond rates rise or fall?
- Do utilities, pipelines and oil companies rise or fall?
- Do the Big Six Canadian bank stocks rise or fall?
Why it Matters for Investors
The market will render judgement on the budget. While I’m personally pleased with much of the budget, so far, the markets are yawning. The Loonie is heading slightly lower, rates slightly higher. The lesson for investors is clear—there will be winners and losers and the market will determine which are which.
Bottom Line: Own Quality and Stay Disciplined
The St. Lawrence Seaway is a reminder that Canada can build fast when the mission is clear, the rules are simple, and the money flows. The budget is not that moment, but it might be a step toward it. Either way, our job is the same. Own quality. Price trade offs with humility.
We’re on it,
Glen