Christine Poole, President & Co-Chief Investment Officer, Davis Rea
Focus: North American large caps
Top Picks: Brookfield Corp, Royal Bank, Siemens AG
MARKET OUTLOOK:
Despite the geopolitical volatility of recent years, financial markets have demonstrated remarkable durability. The current conflict involving Iran is the latest test of this strength. Many analysts expect the war to be relatively short-lived, citing the substantial military advantage of the United States over Iran. Furthermore, the Trump administration faces domestic pressure to avoid a prolonged conflict, particularly as voter concerns over affordability mount.
In a decisive move, the 32-member International Energy Agency (IEA) announced a historic 400-million-barrel release from its emergency oil reserves – the largest since its inception in 1974. This release, intended to counter the near-total closure of the Strait of Hormuz, is more than double the size of the 2022 release following Russia’s invasion of Ukraine. Given that approximately 20 million barrels of oil and oil products flow through the Strait daily, the IEA’s action provides roughly 20 days of critical supply relief.
Before this conflict, inflation in many economies had cooled significantly from post-pandemic peaks. Heading into 2026, lower interest rates, fiscal stimulus and an artificial intelligence driven capital spending cycle served as strong tailwinds for economic growth. After a prolonged period of contraction, manufacturing activity in the United States recently turned positive, signaling a recovery in the industrial sector.
S&P 500 companies are projected to deliver 16 per cent earnings growth this year. While the current oil shock has revived concerns of stagflation - stagnant growth coupled with high inflation, especially in oil-importing nations - the underlying corporate fundamentals remain broadly supportive. How much higher energy prices ultimately affect this profit outlook will shape the direction of financial markets.
Our approach remains disciplined and long-term focused, avoiding reactive decision-making. We invest in well-capitalized, financially sound businesses that provide goods and services that are in demand and are trading at reasonable valuations.
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TOP PICKS:
Brookfield Corp (BN TSX)
Brookfield is a diversified global alternative asset manager with a long-term track record of compounding capital.
The company focuses on property, renewable power, infrastructure, distressed credit and wealth solutions.
Brookfield’s global platform and access to liquidity provides strategic flexibility to invest across asset classes and geographies. Its dividend yield is 0.7 per cent.
Royal Bank (RY TSX)
Royal Bank’s diversified business mix consists of personal and commercial banking (49 per cent of earnings), capital markets (25 per cent), and wealth management and insurance (26 per cent).
Geographically, Canada accounts for 63 per cent of revenues, the U.S. 26 per cent and International 11 per cent. The stock provides investors with a current dividend yield of 3.0 per cent.
Siemens AG (SIEGY OTC)
Siemens is a leading global industrial technology company focused on the areas of automation and digitalization in the process and manufacturing industries, intelligent infrastructure for buildings and distributed energy systems, smart mobility solutions for rail transport and healthcare services.
The company is benefiting from secular trends of AI, automation, digitalization and electrification. Siemens has a progressive dividend policy and provides a dividend yield of 2.4 per cent.
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| BN TSX | Y | Y | Y |
| RY TSX | Y | Y | Y |
| SIEGY OTC | Y | Y | Y |
PAST PICKS: FEB. 20, 2025
Microsoft (MSFT NASD)
Then: US$416.13
Now: US$402.11
Return: -3%
Total Return: -3%
S&P Global (SPGI NYSE)
Then: US$535.43
Now: US$435.73
Return: -19%
Total Return: -18%
Enbridge (ENB TSX)
Then: $59.46
Now: $74.38
Return: 25%
Total Return: 32%
Total Return Average: 4%
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| MSFT NASD | Y | Y | Y |
| SPGI NYSE | Y | Y | Y |
| ENB TSX | Y | Y | Y |
