Posthaste: 'Buy' Canadian is going strong except in one very important marketplace

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5 days ago

Canadians say they are buying more domestic goods and steering clear of the United States on their holidays, but there is one area where the 'Buy Canadian' movement appears to be falling short.
Canadian investors have been snapping up U.S. stocks at an unprecedented pace since President Donald Trump took office in January, according to recently released data from Statistics Canada on international securities transactions.
'So what kind of U.S. assets are Canadians buying? You name it,' said National Bank of Canada economist Warren Lovely in a note on the data.
Most of the buying has been in stocks, but Canadians have also added $20 billion in U.S.-issued debt in the latest four months, most of it U.S. Treasury securities.
'In other words, Canadians have been helping to finance the deficit of the government that's repeatedly threatened our economic livelihood. Curious,' said Lovely.
On Monday, Ontario Premier Doug Ford renewed his call to buy 'Canadian-made everything' to pressure the United States to negotiate a trade deal.
'We're encouraging all provinces and territories: start buying Canadian-made vehicles, start buying Canadian-made everything — that will hurt more than anything at all,' Ford told reporters at the premiers' meeting near Huntsville, Ont.
The Bank of Canada's consumer survey out yesterday also showed that Canadians plan to keep up their boycott of U.S. travel and products. (See today's chart below).
It's a boycott that apparently doesn't extend to the stock market where Canadians bought $14.2 billion in U.S. shares in May alone.
Meanwhile, foreign investors are pulling back from Canadian equities. In May, non-residents cut their holdings of Canadian securities by $2.8 billion, the fourth straight month of divestment.
Foreigners are still buying Canadian bonds, but stocks not so much.
'For the first time on record (back to 1988), the first five months of the calendar year produced no net foreign buying of Canadian portfolio assets,' said Lovely.
May marked a turnaround for stocks on both sides of the border after three straight months of decline. America's S&P 500 rose 6.2 per cent from the end of April and Canada's TSX was up 5.4 per cent, said Statistics Canada.
The S&P 500 has hit record highs, but so has the TSX, climbing to 27,000, a 9.3 per cent gain since the beginning of the year, said National.
National Bank still advocates being overweight in Canadian stocks, and stands by its allocation of 21 per cent Canadian equities, 15 per cent U.S. stocks, and 3 per cent each to foreign equities and emerging markets. Fifty per cent fixed income and 8 per cent cash round out the portfolio.
The outperforming sectors on the TSX this year have been materials, consumer discretionary and banks, they said. The laggards have been health care, energy, consumer staples and real estate.
Though President Trump's threat to impose 35 per cent tariffs starting Aug. 1 is hanging over Canada, National economists say the outlook for the TSX is 'not entirely bleak.'
A trade deal, which would be positive for the economy and corporate profits, is still possible before Ottawa tables its fall budget.
The economists are also encouraged by what they call Make Canada Investable Again — Prime Minister Mark Carney's business agenda which includes efforts to reduce red tape and revive business investment.
to get Posthaste delivered straight to your inbox.The trade conflict between Canada and the United States continues to affect what Canadians buy and where they spend their vacations, the Bank of Canada's consumer survey revealed Monday.
Half of consumers said they plan to cut their spending on U.S. goods and vacations south of the border. About 60 per cent say they plan to spend more on goods made in Canada and a third plan to spend more on vacations within their own country.
'I won't be going to the U.S. anytime soon. I don't feel good about spending my money there,' one respondent told the central bank.
Price, however, still remains a key decider for many consumers, the survey said. Most Canadians said they would be willing to pay up to 10 per cent more for goods made in Canada.
'Ultimately, I'm going to do what works for my wallet. So, whether that's a Canadian brand, whether that's an American brand, I buy what works for my budget,' a survey participant said.
Ontario Premier Doug Ford, Saskatchewan Premier Scott Moe and Alberta Premier Danielle Smith will sign a Memorandum of Understanding to build new energy and trade infrastructure at the premiers' meeting near Huntsville, Ont.
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Today's Posthaste was written by Pamela Heaven with additional reporting from Financial Post staff, The Canadian Press and Bloomberg.
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