Gold Strategy: Post-Election Quick Take

By Christopher Louney, Gold and Natural Gas Strategist
Published November 6, 2024

Gold prices have slumped dramatically today after the clear electoral win by President Trump. Leading up to the contentious US election, tight polls and the potential for an uncertain or drawn- out outcome added to tailwinds for gold as it crested highs, and we argued that election uncertainty was adding to the rising temperature supporting prices. While we argued just ahead of the election that the biggest upside risk was further uncertainty that could have stemmed from a contested or drawn-out outcome, that did not happen. With that not coming to fruition and the event itself now in the rearview mirror, we think the wiping away of the pre-election fears and the possibility of a drawn-out and contested outcome has similarly wiped away the premiums that had factored into gold prices.

While we do view this as the biggest driver of today’s move, the sharp moves higher in both the dollar and 10-year treasury yields have exacerbated this move lower too. Interestingly, this impressive move lower in gold prices brings prices much closer to our Q4 2024 base case price forecast of $2665/oz, leaving gold at a cleaner base from which to finish the year and enter 2025.

For more information on the full report, please contact your RBC representative.


U.S. Clean Energy 3Q24 Preview

By Chris Dendrinos, Clean Energy Analyst
Published October 23, 2024

We preview 3Q24 earnings for our clean energy coverage.

We believe the current dynamics including the election cycle, elevated current but expected lower future interest rates, changing trade policies and competitive environments, have produced mixed results. We believe investor sentiment remains bearish on the space, with the sector (ICLN) down ~12% YTD and underperforming the S&P 500 by ~35%, and see limited upside opportunity ahead of the November election.

Into earnings, we think risk is largely to the downside across because:

  1. Solar installers: Limited cash gen upside on expectation for increasing competition.
  2. Residential equipment manufacturers: Sluggish demand and increasing competition.
  3. Utility scale: Project delays and election risk that could keep investors sideline.

To hear more election insight from Chris, please click here.


Foreign Policy Impacts on Energy in Focus as the Election Nears

By Helima Croft, Head of Global Commodity Strategy and MENA Research
Published October 21, 2024

Based on our recent meetings in Washington with senior officials from the previous Trump administration, we think there could be significant shifts on foreign policy if the 45th president returns to office. Policy pivots on Russia and Iran could have implications for energy markets, with the former possibly securing a measure of sanctions relief and the latter facing a new raft of coercive measures come Q1 2025. Though a number of Senate Republicans, including Sen. Lindsey Graham (R-SC), continue to call for supporting Ukraine, there is a clear opposing view within Trump’s inner foreign policy circle on the efficacy of pouring so many resources into a war that they view as unwinnable. Hence, these advisors insist that a key priority of Trump 2.0 would be to push for a peace settlement as soon as possible, even if it entails allowing Russia to consolidate its territorial gains.

Click here to read the full article.


Market Momentum Beyond the Ballot: What Clients Need to Know

By Vito Sperduto, Head of RBC Capital Markets US
Published October 15, 2024

As we compare the 2024 campaigns of Kamala Harris and Donald Trump, their economic and trade policies reflect sharp contrasts. With less than a month to go, it’s important to understand these positions, a frequent question from our clients. We’ve drawn on insights from RBC Capital Markets thought leaders, many of whom are featured in our Beyond the Ballot series, and our research publications.

In summary, both Harris’s and Trump’s economic plans would increase the national debt, with Harris adding $3.5 trillion and Trump adding $7.5 trillion over the next decade according to the Committee for a Responsible Federal Budget (CRFB) and the Penn Wharton Budget Model. Harris’s policies emphasize progressive taxation, regulatory oversight, and targeted trade measures, while Trump’s approach focuses on low taxes, deregulation, and broad protectionist tariffs. Their distinct approaches reflect two sharply different visions for America’s future, with Harris prioritizing equitable, sustainable development, and Trump focusing on economic nationalism and corporate-friendly policies.

As the election draws closer, businesses and investors should remain proactive, keeping a close eye on potential shifts in policy direction and the evolving political landscape.

Click here to read the full article.


Spotlight on the Canadian federal election

By Lori Calvasina, Head of U.S. Equity Strategy
Published October 2, 2024

As part of our quarterly RBC equity research analyst survey, we polled our Canadian analysts on their views about the implications of the Canadian federal election for their industry. Elections have been a hot topic in the investment community this year around the globe, and we have recently seen increasing focus on the contest in Canada, with a federal election to take place by October 2025.

In the survey, we asked our Canadian analysts, and those with global coverage that includes companies based in Canada, to assess three things: the relevancy of the Canadian federal election to the industries they cover, the implications of various outcomes for the outlook of their industries, and what specific policies are in focus as they consider their answers. We included Conservative and Liberal majority and minority leadership scenarios, and Conservative, Liberal and NDP official opposition scenarios.

Three big things you need to know:

  • Nearly half of our Canadian equity analysts see the election as relevant or highly relevant to their industry, with Utilities and Energy most in focus.
  • Views were most bullish for Energy and least bullish for Utilities on the Conservative Majority scenario and the opposite was true for the Liberal Minority / NDP Opposition outcome.
  • Taxes generally and the carbon tax in particular, along with immigration, were the issues most in focus.

U.S. elections matter, but perhaps less for equity market broadly

By Lori Calvasina, Head of U.S. Equity Strategy
Published October 2, 2024

In our latest Strategy Spotlight report, we focus on the US elections and the results of a survey we conducted of our global equity research analysts on how potential outcomes of the event may impact the performance outlook for their industries.

In our US election questions, we asked our analysts to assess three things: 1) the relevancy of the US elections to the industries they cover, 2) the potential implications of various outcomes for the outlook of the industries they cover, and 3) what specific policies are in focus as they consider their answers.

Three big things you need to know:

  • First, our survey results, which are bottom-up in nature and driven by domestic policy views, imply that the event is relevant to US equity markets, but perhaps less so than some market participants may believe. For our US analysts, a Republican sweep was seen as the most bullish outcome, while a Democratic sweep was seen as the most bearish outcome, but the tilts were mild.
  • Second, some of the traditional Trump trades continue to emerge in policy assessments. Among our US analysts, Energy and Financials had some of the most bullish tilts in a Republican sweep scenario, and some of the most bearish tilts in a Democratic sweep scenario.
  • Third, we’ve viewed the elections as creating near-term uncertainty in the US equity market and the potential for some short-term choppiness, but the survey results add to our growing belief that the thing that may matter most for US equities (for 2024) is getting past the event so companies and investors know what they are dealing with.

U.S. election most relevant for value-based care

By Sean Dodge, Healthcare Technology Analyst
Published October 2, 2024

Healthcare is very interconnected and there will be lots of data points coming out soon that will help us better understand what to expect when the healthcare information technology (HCIT), value-based care (VBC) and pharma services companies report earnings later in the Q3 season.

However, over the next several months we anticipate more macro influence than usual with the Fed entering a rate-cutting cycle amidst a U.S. presidential election, in addition to the dynamic healthcare utilization backdrop and ongoing debate around biotech funding.

Utilization Trends Remain an Important Factor for Much of Our Coverage. Outpatient utilization began to accelerate in summer 2023 (respiratory/vaccines, primary care, outpatient surgeries) and has remained elevated since, while inpatient began to accelerate earlier this year. Most HCIT companies we cover should benefit from higher utilization, whereas our value-based care coverage could be more negatively impacted by it.

U.S. Presidential Election Most Relevant to Value-Based Care. At a high level, the transition to VBC has tended to garner strong bipartisan support, which we don't see changing. Digging deeper though, conservatives have been more supportive of Medicare Advantage, whereas Medicaid and providers have fared better with liberals.

Fed Cuts/Lower Interest Rates Help Across the Board. More specifically lower rates should help with 1) valuations—benefiting growthier companies most, 2) balance sheets—lower rates equal lower interest expense and 3) end-markets—lower rates make it easier for clients to raise new capital, enabling them to spend more (e.g., biotech funding and the contract research organizations or CROs).


Inflation Risks Still Exist

By Blake Gwinn, Head of US Rates Strategy
Published September 16, 2024

Here’s an excerpt from “Back in Sync”, the latest episode of RBC’s Macro Minutes podcast about the potential upside risk to inflation, including the US election:

Blake Gwinn: “We do still see some potential upside risk to inflation, particularly in the first half of 2025. This isn't something that we're particularly worried about (we're not big inflation hawks), but those risks do exist, and I think we've heard Fed speakers addressing those risks in a way that does put a little bit more emphasis on these remaining inflation risks than markets, who have almost completely written inflation off and out of the narrative.

A few of those we know that shelter, which is going to be providing a lot of the likely drag on inflation in the second half of 2024, that is going to start to turn around in 2025 and become additive to inflation again. We could see a repeat of this kind of Q1 seasonality that we've seen the last few years where we have very hot inflation data in Q1.

We're already starting to see major reversals in immigration trends. As we've discussed in past calls, immigration has been a big reason why we haven't seen more inflation pressure in the U.S., so to the extent that reverses it could put upside risks on inflation. Out of the election we have risks of even further cuts to immigration, tariffs, and geopolitical risks generally represent some potential upside risks to inflation as well.”

Click here to listen to the full conversation or explore the Macro Minutes podcast, which features insights from RBC’s desk strategists and research analysts on the financial market and the economic developments.


Claudia Sheinbaum aims to restore Mexico's investor confidence

By RBC Thought Leadership
Published October 1, 2024

Domestic markets have been reeling since Claudia Sheinbaum’s predecessor Andres Manuel Lopez Obrador (AMLO) initiated judicial reforms that sent the currency in a tailspin, and took a series of measures that upset the U.S. and rocked investor confidence.

However, the AMLO loyalist’s cabinet appointments suggest a market-friendly approach and efforts to speed up the transition to clean energy in the oil-producing nation. Businesses are hoping Sheinbaum will focus on foreign investment and address water, security and power issues.


Election Uncertainty Persists, Policy Getting More Investor Attention

By Lori Calvasina, Head of US Equity Strategy
Published September 10, 2024

One of the primary things the stock market cares about regarding the election is domestic policy, and investors have been getting new information on the policy leanings of both Harris and Trump. While it’s an appropriate time to think through potential impacts, we also think it’s premature to act since we expect Congress to be slip leaving little room for major new laws.

Nevertheless, here are some early thoughts on the stock market read throughs of Trump’s domestic policy agenda as described in his speech to the Economic Club of New York last week.

First, Trump’s linking of a lower corporate tax rate of 15% to domestic production was something we hadn’t heard before, and we aren’t entirely sure what companies would be eligible for the lower corporate tax rate Trump discussed or how the S&P 500 would be impacted in terms of profitability.

Second, Thursday’s speech gave us a better sense of which sectors and industries to watch closely from a Trump election perspective. While it’s an appropriate time to think through potential impacts, we also think it’s premature to act since we expect Congress to be split leaving little room for major new laws.

  • Industrials and Materials – Remain obvious ones to monitor given Trump’s attention to the manufacturing economy, rescinding unspent IRA money, and tariffs.
  • Energy – We knew this issue was in focus for Trump but were still surprised by the emphasis on expanding production.
  • Homebuilders – His housing comments were interesting given the recent focus on it by Harris.
  • Tech/AI and Utilities – We’re curious about both candidates’ stance on AI and found Trump’s comments on the US needing to dominate AI and the need for more electricity noteworthy.
  • Health Care – Barely mentioned in the speech, suggesting to us this may not be a high priority.
  • Financials – Even though Financials tends to be viewed positively from Trump election standpoint, there was virtually no discussion of this sector in his speech on Thursday, aside from the potential link to the broad desire for deregulation that was highlighted.

Renewable Energy: With Election Uncertainty, Investors May Focus on Canada

By Nelson Ng, Energy Infrastructure Analyst
Published September 9, 2024

Although the U.S. renewable energy market is much larger than Canada's, we believe that U.S. election uncertainties (Donald Trump pledged to rescind any unspent funds under the Inflation Reduction Act should he be elected in November) could result in some investors shifting their focus to Canada. Several provinces have started to ramp-up the pace of renewable procurement, and Canada has become the main near-term development focus for renewable developers.

The Canadian electricity grid is pretty clean with over 80% of electricity generation from non-carbon emitting sources (58% hydro, 13% nuclear, 8% wind, and 2% solar). However, renewable development opportunities are quickly emerging from electricity demand growth driven by a combination of electrification of industries (e.g., mining and transportation), decarbonization initiatives, and population growth.


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