Donald J. Trump is now the President-elect of the United States of America.
Instead of dwelling on how he managed to surprise the world with his victory, it is time to consider the impact his presidency will likely have on the Alberta/Canada economies, and the relationship Canada’ provincial and federal governments will have with President-elect Trump.
Canada’s banks have already made proclamations that a Trump presidency will be an economic plus to both Canada and Alberta. Here’s how (according RBC Capital Markets Canadian Equity Strategist Matthew Barasch):
- Stronger U.S. growth driven by tax cuts and potential infrastructure spending will spill over into Canada
- Higher oil prices driven by increased U.S. demand and potential conflicts with Middle East
- Keystone XL approval improves Canadian access to U.S. market and price realizations
- Strict immigration policy improves Canadian access to immigrant labour pool
What’s more, with Trump’s win, for the first time in many years, the entire United States federal government which includes Congress and the Senate will be unified under Republican leadership. Interestingly, through the course of history when there has been a fully unified federal government, the S&P/TSX has done significantly better than it has during periods of divided US government.
“In fact, over the past 7-decades, a united US government has been about 1,000 basis points better on average for Canadian stocks than has a divided government,” wrote Mr. Barasch.
On how Trump’s presidency will impact the price of oil, Barasch appears to also be bullish for the most part.
“Oil prices will likely be higher driven by increased demand (and potentially Iranian disruption); however, increased supplies brought about by more liberal drilling rules could eventually be a drag for Canada,” he writes.
Yet perhaps the largest boon to Alberta (and Canada’s) economy lies with the future of the midstream sector. Donald Trump has made no bones about where he stands on pipelines such as Keystone XL. His unwavering support for the pipeline will undoubtedly go far in finally having the project approved…and dare I say it…built.
And with the potential for Canadian oil to better get to market, that can only mean a narrowing of the spread between West Texas Intermediate and Western Canadian Select. Of course, with that will come the realization of billions of (taxable!) dollars that otherwise would have been left on the table. Good news.
Not surprisingly, after seemingly an eternity of hearing about the US presidential race, from primary season all the way until last night’s election, many people (including yours truly) experienced US Election Fatigue.
Despite this, there was still some level of interest in observing the shock-waves of Trump’s victory and how certain politicians have publicly reacted to the news.
Today, Premier Rachel Notley held a press conference to comment on the forthcoming relationship between Alberta and the newest US president. A golden opportunity it was for her to send her regards; to establish the dialogue on working towards maximizing both Alberta and the United States’ best interests; and to specifically address how much of a positive impact the approval of projects like TransCanada’s Keystone XL will have to the Alberta economy.
Yet after listening to her speak, one wouldn’t be remiss to think she could have further taken advantage of that opportunity. Instead of using simple declarative language to express excitement for the likelihood of Keystone’s approval, Premier Notley chose to use Politicianspeak to express her thoughts on importance of environmental stewardship. And I could go on, but I won’t.
The people have spoken. They want Trump.
It’s morning in America and perhaps so too is it for Alberta and its oil and gas industry.
We just have to wake up and smell the coffee.