Meanwhile, the tech industry is going through a ‘labour metamorphosis.’  More than 20,000 potential job cuts Meta and Microsoft were revealed last week, just months after Amazon announced its most widespread layoffs ever, and that may only be the beginning for an industry that is rapidly shifting to a business model that incorporates far fewer active workers and more agentic AI assistants.  The same companies that are collectively spending hundreds of billions of dollars a year to build out artificial intelligence infrastructure to meet soaring demand for AI services are also seeking efficiencies from AI by slashing head count.  They’re also still trying to right size from the pandemic-fuelled over hiring.  Many economists and industry experts are fearful that a labour crisis may be approaching much more rapidly, given how quickly AI is sweeping across corporate America.  As of this week, over 92,000 tech workers have been laid off so far in 2026, bringing the total to almost 900,000 since 2020.

Currency and commodity markets have been rocked since the beginning of the war.  Gold sold off sharply early at the outset as central banks looked to increase the liquidity on their balance sheets if it was needed to support increased fiscal spending.  That meant a return to buying of U.S. treasury securities (almost solely at the short end of the curve) and a consequent surge in the U.S. dollar.  Central banks had been the preeminent buyer of gold throughout the bull market of the past two years as they attempted to diversify their holdings away from the U.S. dollar.  But the data is now showing that this sudden selling may have been short-lived.  The World Gold Council published official central bank gold buying data for February, which showed a rebound in net purchases to 19 tonnes, up from only 5 tonnes in January.  The buying was led by Poland (20t) and Uzbekistan (8t), with the Czech Republic, Malaysia, China and Cambodia also buyers.  Sellers included Turkey (8t) and Russia (6t). While encouraging to see a stronger month of purchases in February, this is still below the 27t per month average 2025 run rate and is before reported selling (e.g. Turkey) over March triggered by the Iran conflict.

While we remain positive on the outlook for gold prices going forward and find gold stocks particularly cheap at their current levels, the commodity where we see much stronger long-term prices coming is Uranium.  There has been a deficit of annual production compared to annual demand for decades, but this has been overshadowed by the massive inventory buildups from two sources.  First was the end of the Cold War in 1989 and the mutual disarmament by the worlds two major nuclear weapons players, the U.S. and the (former) USSR.  The de-enrichment of the supplies used in nuclear warheads became part of the overall uranium inventories for reactors.   The second event was the Fukushima nuclear accident in 2011.  This cut the demand for uranium as reactors across Japan were all shut down and Germany decided to do the same.  Inventories then built up even further. But in the last few years, with many of the safety issues around nuclear reactors satisfied due to new builds and improved disposal practices, nuclearl has once again risen in stature as a new source of ‘clean’ energy.   Japan is in the process of re-starting all of their shut in nuclear production.  Meanwhile, as can be seen from the chart below, nuclear capacity is projected to increase dramatically over the next decade, particularly from China, which is expected to more than double their output.  With the Cold War and Fukushima inventories mostly run down, demand increasing and supply constrained by various geo-political issues, new sources of Uranium need to be found.  What we know for sure is that the current price of around US$85 per pound is not high enough to entice producers to expand output or look for new sources.  Uranium prices need to rise from current levels.  The best and most direct way to play this potential risk in prices is through the Sprott Physical Uranium Trust (U.un-T).   This is a trust that holds nothing but uranium in various forms and tends to trade right in line with its net asset value.      

Another strong area of the market over the past two months has been the energy sector.  This is no surprise given the sharp rise in oil prices after Iran started blocking the Strait of Hormuz, where almost 20% of global supplies had been freely travelling through.  But Canadian stocks have lagged the move in crude oil as investors seem to believe that this conflict will be short-lived and that prices will revert back to pre-bombing levels.  We see it differently and believe that the recent events in the Gulf are going to change how investors view the security of supply in much the same way that the events of 9/11 changed air travel forever.  Canadian energy stocks are undervalued and should start to garner much stronger foreign investor focus due to their long-lived reserves, increasing investments in energy infrastructure and absence of the geo-political risks seen in so many of the major international energy providers.  We should not underestimate the importance of the news this week that Shell International is making a bid to buy Canadian E&P company, ARC Resources.  We have seen nothing but selling of Canadian energy assets since 2014 as international players left due to ESG issues, poor pricing on heavy Canadian oil and a lack of infrastructure support (i.e. pipelines and LNG).  The geo-political risks demonstrated currently in the Gulf region will only highlight the value of Canadian assets and should draw more foreign buying.  Meanwhile, the futures curve on oil continues to increase at the back end which is a much better indicator for long term value.  All the initial gains were at the short end of the curve, which is mostly just financial players.  As the physical market for oil remains in deficit, the value of the longer-term assets is going to become much more apparent.   Our top names to hold in this sector are Canadian Natural Resources (CNQ-T), Cenovus Energy (CVE-T) and Whitecap Resources (WCP-T).  The acquisitions in the past two years of MEG Energy by Cenovus and Veren Inc by Whitecap are looking particularly astute in retrospect as they were both done when oil was trading in the $65 range and both had huge reserves.

The April meetings of the Bank of Canada, the U.S. Fed, the European Central Bank and the Bank of England were all expected to be total ‘non-events’ in terms of interest rate changes since the war is weighing on both the inflation outlook on the upside and the growth outlook on the downside. That turned out to be true in three of the central banks, but politics once again reared its head in the U.S. meeting.  As Kevin Warsh moves closer to becoming the new chair at the Fed, his future colleagues are moving further from supporting the resumption of interest rate cuts that President Donald Trump is expecting.  In their last meeting under current Fed Chair Jerome Powell, policymakers on Wednesday were almost unanimous in agreeing to hold interest rates steady. But a deep split emerged over where rates might go from here, with three officials dissenting over language that still pointed to future cuts.  Powell also confirmed that he’d be staying on as a member of the Board of Governors after his term as chair ends in May, delaying the opportunity for Trump to name a new governor more sympathetic to lowering rates.  Warsh has long signalled he sees room to lower rates, but hasn’t explicitly said he’ll immediately ask his Fed colleagues to do so once he’s sworn in. He could end up agreeing with the majority of Fed policymakers who’ve signalled interest rates are well positioned for now. It’s also possible a sudden shift in the economy could force the committee’s hand.  But absent a clear signal from the data, Warsh is set to inherit a divided committee that’s becoming more resistant to lowering rates.  His view that inflationary pressures are subsiding is no more convincing than its predecessors.  Reason number one was artificial intelligence. The technology, Warsh argued, will at some point push down inflation by enhancing workers’ productivity, so he believes the Fed should get ahead of the curve by lowering rates now. Yet the AI investment boom has so far had the opposite effect, turbocharging demand for everything from construction workers to graphics processing units.  The May meeting of the Fed could provide some fireworks, particularly when it comes to the post meeting press conference. In theory, if Warsh were to say he wanted to lower interest rates, but the majority of the committee voted to leave rates unchanged, then we would have the unprecedented situation where the head of the Federal Reserve dissented from a decision by the committee.  The long, invasive arm of the U.S. president continues to show up and disrupt the relationships and norms that have been an integral part of institutions and global alliances for many decades.

Meanwhile, at the Bank of Canada meeting there were no changes, but the commentary afterward did put some pressure on the bond market.  Despite higher oil prices driving up inflation, the Bank of Canada held its policy rate steady once again.  And it said only small changes will be necessary if everything goes as expected.  But the central bank also acknowledged that things don’t always unfold as expected and that geopolitical developments may require a quick change of course.  Governor Tiff Macklem highlighted scenarios where the central bank would be forced to move rates, such as if the Iran war is prolonged and inflation spreads through the economy, or if trade negotiations with the US go poorly and dampen growth further.  “Monetary policy is focused on ensuring the jump in energy prices does not turn into persistent inflation, while helping the economy adjust to global headwinds,” he said.  The governor also did a slightly unusual thing: he talked about how the bank might respond in a hypothetical scenario of “generalized inflation” caused by higher energy prices. In that case, “there may be a need for consecutive increases in the policy rate.”

What should investors do amidst these competing and volatile forces?  Continue to own technology stocks but certainly not to the index weight in the U.S. (which is almost 50% of the S&P Index).  Stick with the big names that have decent valuation and can monetize AI more quickly.  Alphabet, Amazon, Microsoft, Salesforce, Oracle, Adobe and Meta top our list on the U.S. side.  Canadian oil and energy infrastructure stocks continue to look not only like good value but may also start to attract more foreign interest as a resource with less geo-political risks.  Also, stick with the gold trade.  We like to take geo-political risk out of the equation so are sticking to large producers with primarily a North American base.  Barrick Mining (B-T), Agnico-Eagle Mines (AEM-T) and Torex Gold (TXG-T) top our list.  We have also added to holdings in BCE, Rogers and Telus recently.  Telecom stocks have lagged the overall market for most of the past four years due to worries about increased wireless competition, slower population growth and increasing regulation.  Meanwhile valuations have fallen to the bottom end of their traditional range just as wireless price war risks appear to have diminished.  Dividend yields are also strong.  Most importantly for Rogers, the recent release of earnings showed a decidedly strong downward revision to capex, which lead to a subsequently strong increase in the forecast for free cash flow.  This is a logical move that should accelerate debt repayments, increase dividend growth potential and delineate more clearly the value proposition of owning telecom stocks. 

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