Inflation Cools to 1.8% Year-over-Year in February

Why It Matters

A lower inflation rate gives the Bank of Canada room to keep policy accommodative, bolstering Canadian equities that are already advantaged by commodity exposure and making value‑oriented stocks like Barrick and Algonquin attractive for global investors.

Key Takeaways

• Canadian inflation slowed to 1.8% year‑over‑year in February
• Commodity price volatility drives Canadian market performance amid geopolitical tensions
• Siona Investment expects Canada to outpace US due to commodity exposure
• Barrick Mining undervalued; target price $70‑80 with strong cash flow
• Algonquin Power seen as value play despite dividend cut and utility focus

Summary

The video opens with a market update and quickly shifts to an interview with Kim Shannon, co‑chief investment officer at Siona Investment Managers, to discuss Canada’s February inflation reading.

Shannon notes that Canada’s consumer‑price index eased to 1.8% year‑over‑year, the lowest pace in over two years. She links the dip to softer commodity price dynamics, but warns that any resurgence in oil or gas prices could reignite inflationary pressure. Historically, Canada’s commodity‑heavy economy has allowed its equity market to outperform the United States, a trend she expects to continue amid ongoing geopolitical uncertainty.

During the conversation, Shannon highlights two stock ideas. She argues Barrick Gold (BARRICK) trades at a discount to its intrinsic value, citing a net‑cash position of over $2 billion, a 4% dividend yield and a pending Nevada mine that could lift its NAV to $70‑80 per share. She also recommends Algonquin Power (ALGP), noting its price‑to‑book near one, a stable utility franchise, and a re‑focused business model after shedding renewables, despite a recent dividend cut.

For investors, the takeaways are clear: monitor commodity price swings, favor Canadian equities that benefit from commodity exposure, and seek undervalued, cash‑rich issuers with dividend yields above market averages. The inflation slowdown reinforces a relatively benign rate‑setting environment, supporting continued outperformance of Canadian assets relative to U.S. benchmarks.

Original Description

Kim Shannon, founder and co-CIO of Sionna Investment Managers, joins BNN Bloomberg to discuss the outlook on the markets.

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