It's Not Just Tech - Look at Canada eh!

August 15, 2024

Toronto is such a great town.

I hadn't been here since 2019.

It's fun seeing all the ADRs in the wild - Bank of Montreal $BMO, Canadian Pacific $CP, Royal Bank of Canada $RBC and so many others!

Also, the conversations I'm overhearing in the hotel lobby have been about the S&P500 and earnings. You don't hear talk like that in many other cities.

It's not surprising, as we all know Toronto is a big financial hub for Canada. But it's reassuring to experience it and watch it thrive.

The TSX is hitting new all-time highs eh!

I walked by the Toronto Stock Exchange earlier this morning.

And I even grabbed a coffee at Tim Horton's.

The locals just call it Timmy's around here. I learned that today.

Tim Horton was also a hockey player. (Big shocker there!)

He played for decades and spent the majority of his career with the Toronto Maple Leafs.

I'm learning all this for the first time. Cubans don't know much about playing hockey, if you can imagine that...

Meanwhile, good eating in Toronto. Went to a great Omakase spot called MSSM in Yorkville. This was a Howard Lindzon reco. He's from London which is not too far from here.

I think the biggest takeaway from all this is simply that the composition of the Canadian market is much much different than the U.S. Market, particularly the S&P500, but even more so relative to the Nasdaq.

While Technology represents over 30% of the S&P500 and over 50% of the Nasdaq100, Tech is only 8% of the Canadian market.

Financials have the equivalent weighting in Canada, as Tech has in the U.S.

Energy is also the 2nd largest weighting in the TSX, at over 17% of the Index. That's almost 5x the exposure compared to the U.S.

Another thing to note about Canada is the higher weighting in Industrials. The TSX index has almost twice the Industrials exposure compared to the S&P500 in the United States.

Finally, notice Healthcare at zero. With the U.S. Healthcare Index hitting new all-time highs, Canada has no Healthcare exposure whatsoever.

The public healthcare policies, of course, are obviously very different between the two countries. In contrast, Healthcare is the 3rd largest weighting in the S&P500. And it has the 2nd highest weighting of any sector in the Dow Jones Industrial Average.

Big differences.

But the bottom line is that you're seeing this sort of broad strength outside of Technology, that Canada is displaying, in other parts of the world as well, particularly in Europe.

We'll be talking about what this means for markets in the back half of the year during our LIVE Mid-Month Conference Call this Monday for Premium Members of ASC Research.

Make sure to REGISTER HERE so you can be in there live asking questions.

We'll outline my favorite trade right now for the coming months. There's a lot to choose from as sentiment just had a complete reset.

If you're not already a Premium Member to ASC, you can sign up here RISK FREE to get 24/7 access to the trade ideas and live conference calls. The next one is Monday night @ 6PM ET.

See you there!