BNN: More pain to come in Canadian banks: portfolio manager

Our portfolio manager, Sam LaBell, was a guest on BNN Bloomberg to discuss our outlook for the market for 2024. He also discussed rate cuts, why he likes Air Canada over U.S. airlines and his take on gold companies and banks.

“The consumer in Canada is obviously facing headwinds,” Sam said. “We like stocks here in Canada that have a global outlook because we do see some pockets of strength in the global economy.”

Stocks discussed include:

• Wheaton Precious Metals Corp. (NYSE, TSX: WPM): “We like the streaming model,” Sam said. “You don’t take the operational risk. You get a top-line royalty.”
• Air Canada (TSX: AC): “The Canadian environment is more of a duopoly and the capacity growth that is planned out is far more conservative [than the U.S. market],” Sam explained. “You have the advantage that the [two main Canadian airlines] are not going to go as hard at each other on pricing, and demand is holding up. We think that’s a long-term trend.”
• Canadian banks: “There is still a lot of pain to come,” Sam said. “It has to do with the mortgage rollovers. As mortgages roll over, the debt service ratios in Canada are at 25-year highs. They’re in the red zone. They’re comparable to where the U.S. was pre the Financial Crisis.”