Dear Valued Clients,
I hope this message finds you well.
On July 2, 2026, I joined the team on BNN Bloomberg’s The Street segment to discuss recent market developments, shifting investor sentiment, and the investment landscape ahead.
In particular, we discussed the recent market rotation away from narrow leadership in artificial intelligence (AI) and chip stocks, which is a healthy recalibration rather than a trend reversal or cause for concern. We explored the significant implications of the U.S. decision not to renew CUSMA (Canada-United States-Mexico Agreement), the resilience of the U.S. labor market despite weaker June payroll data, and the broadening of earnings growth across sectors. We emphasized that the $1.7 trillion capital expenditure (capex) cycle underway in the U.S. economy extends well beyond AI infrastructure into power, utilities, and energy sectors. Our core conviction is that this rotation validates our second half 2026 growth reacceleration thesis and provides attractive entry points for patient, diversified investors.
To watch the full segment:
- BNN Bloomberg – The Street (47 minutes)
Top picks discussed on the segment can be found here:
- BNN Bloomberg – The Street (5 minutes)
CUSMA: Trade Policy Uncertainty
The U.S. decision not to renew CUSMA creates near-term uncertainty but presents opportunities. While the administration targets trade deficits in autos and steel, well-integrated supply chains limit actual disruption. Canada’s low effective tariff rates and negotiating position provide leverage to sign a favorable replacement agreement.
Market Rotation: Healthy Broadening, Not Reversal
Recent selling in global chip and AI stocks reflects healthy profit-taking, not a fundamental shift. Following a period of de-escalation in the Iran War, capital is rotating into cyclical and defensive sectors including financials, industrials, utilities, and healthcare — broadening leadership beyond the narrow AI trade that dominated prior quarters. This validates our thesis that earnings growth extends well beyond the AI-related names. We remain selective in the technology sector while favoring second and third-order beneficiaries of the AI capex cycle.
Second Half 2026 Global Outlook: Resilient Growth, Easing Uncertainty
The global economy is positioned for constructive growth, driven by declining uncertainty, improving business confidence, and a strengthening investment cycle. Key growth drivers include inventory rebuilding, supportive fiscal policies in major regions, and rising corporate confidence. The AI-driven capital expenditure cycle expanding into semiconductors, infrastructure, and energy serves as a major growth pillar. While sticky inflation may prompt additional central bank tightening, falling uncertainty and supportive financial conditions provide a favorable backdrop for economic activity.
Portfolio Positioning as Iran War Premium Fades; Capex Cycle Booms
We remain overweight U.S. equities, expecting 25% earnings growth in 2026 driven by strong AI capex spending across semiconductors, data centers, and energy infrastructure. Valuations at 20x forward earnings remain reasonable with earnings breadth expanding beyond AI names. In Canada, we see opportunities in financials, industrials, technology, utilities, and real estate supported by fiscal stimulus for infrastructure, defense, and electrification. We maintain a neutral stance on developed markets ex-U.S., though remain constructive on Japan given improving corporate profitability and participation in the AI investment cycle.
On my radar
- Meta Platforms, Inc. (META): Monetizing capex through cloud computing and diversified revenue streams; positioned for 20-30% upside as this build-out matures.
- Canadian National Railway Co. (CNR): Irreplaceable transcontinental infrastructure asset with operational excellence driving earnings per share (EPS) growth through 2027; trading at 20x forward earnings with double-digit upside as market reprices execution quality.
- JPMorgan Chase & Co. (JPM): Fortress balance sheet, best-in-class execution across Consumer, Commercial, and Wealth segments driving 20%+ returns on equity (ROE); trading at 14.4x forward earnings with tangible book value growing 8.5% year-over-year — positioned for multiple re-rating as capital deployment accelerates.
Recent volatility presents an opportunity to rebalance portfolios with durable themes: artificial intelligence capital expenditure broadening, sticky inflation supporting real assets, and the rising importance of energy security. Trade policy uncertainty requires balanced positioning, but fundamentals remain constructive.
If you’d like to discuss how these themes apply to your portfolio, please reach out.
Sincerely,
Nadeem Kassam, CFA, MBA
Chief Investment Strategist, Chief Operating Officer and Portfolio Manager
Marnoa Private Wealth CounselPhone: 519-707-0052
Email: [email protected]
Website: www.marnoa.ca
Connect & follow Nadeem on LinkedIn.
