Market Call: Greg Newman's outlook on North American Equities (April 24, 2026)

Key Concepts

• Balance Sheet Normalization: The process of reducing the Federal Reserve's balance sheet to influence interest rates.
• Deflationary AI: The theory that artificial intelligence-driven productivity gains act as a deflationary force on the economy.
• Energy Infrastructure: Companies involved in the transport and processing of oil and gas (e.g., pipelines, midstream).
• Tangible Common Equity (TCE): A measure of a bank's capital strength, excluding intangible assets.
• PEG Ratio: Price/Earnings-to-Growth ratio, used to determine a stock's value while accounting for earnings growth.
• Nation Building: Infrastructure projects (nuclear, energy transport) that drive long-term economic growth.
• Hedged ETFs: Investment vehicles that mitigate currency risk, particularly relevant for Canadian investors holding U.S. assets.

1. Macroeconomic Outlook & Federal Reserve Policy

Greg Newman discusses the transition in Federal Reserve leadership, noting that Kevin Warsh is expected to focus on shrinking the U.S. balance sheet. Newman argues that this strategy, combined with the deflationary impact of AI, provides a path to lower interest rates. However, he identifies oil prices as the primary "wild card."

• Key Argument: The Federal Reserve must maintain independence from political pressure (e.g., Trump’s desire for lower rates) to preserve the integrity of the U.S. economy.
• Energy Prices: Newman believes the global economy can manage current energy price levels. He warns that if oil reaches $170/barrel, it would likely trigger a recessionary environment.

2. Sector Analysis & Stock Insights

Financials

• Citigroup: Newman views this as an improving story with a 13.1% return on tangible common equity. Despite a recent run-up, he suggests holding the stock and potentially buying more if it dips to $118.
• Canadian Banks: Generally viewed as having stronger fundamentals than two years ago, with forward multiples expanding from 12.5x to 14.5x. Newman prefers National Bank for its growth rate and valuation.

Energy & Infrastructure

• TC Energy (TRP): Currently trading at a premium (20x P/E) with 5% growth. Newman suggests holding if already owned but notes there are better opportunities elsewhere in the sector.
• Canadian Natural Resources (CNQ) & Affinitiv: Recommended for those looking to add energy exposure. Newman highlights their strong balance sheets and shareholder returns.
• Pembina Pipeline: Viewed as a solid asset, though Newman prefers CERA (Kierrra) for its better valuation and growth profile.
• South (SOBO): A top pick. Newman describes it as a "Keystone Part Two" play, noting its 6% dividend and potential for 25% growth.

Technology & AI

• Semiconductors (SOXX ETF): While identifying them as great assets, Newman warns against adding at current levels due to the "parabolic" price action.
• Meta Platforms: Newman’s top pick among the "Magnificent Seven." He argues that the stock is undervalued due to recent sell-offs related to legal challenges and high CAPEX. He views the 17x P/E ratio as compelling given its 17% growth.
• Currency Strategy: For Canadian investors, Newman advises using hedged ETFs when buying U.S. tech stocks to avoid currency headwinds.

Speculative & Other

• Dollarama: Currently trading at 30x earnings with 13% growth. Newman finds the risk-reward unattractive at current levels.
• Alamos Gold: Recommended as a reasonable play in the gold sector, trading at 15x 2026 earnings.
• Ibex Technologies: A speculative fintech play; Newman notes it is a "meritorious" but thin-traded stock suitable only for non-registered, speculative accounts.

3. Performance Review of Past Picks

Newman reviewed three previous recommendations from April 2025:

1. Power Corp (POW): 48% total return. Newman remains bullish, citing "stub assets" like Wealthsimple and Rockefeller that continue to surface value.
2. Brookfield Infrastructure (BIP.UN): 29% total return. Praised for its inflation-linked revenues and expansion into AI infrastructure.
3. Kierra (KEY): 23% total return. Remains a "darling" of the sector due to its 15.5x valuation and 18% growth rate.

4. Synthesis & Conclusion

The overarching theme of Newman’s analysis is a focus on "Growth at a Reasonable Price" (GARP). He emphasizes that while macro uncertainties (oil prices, geopolitical tensions, and interest rates) persist, investors should focus on companies with visible project backlogs, strong balance sheets, and clear paths to margin expansion. His actionable advice centers on avoiding "parabolic" tech stocks at their peaks while accumulating high-quality infrastructure and energy names that offer both growth and reliable dividends. He maintains a cautious but optimistic view, suggesting that investors should be prepared to "clean house" on underperforming assets (like Telus) while remaining disciplined with entry points.