David Burrows, president and chief investment strategist, Barometer Capital Management
FOCUS: North American large caps
Top Picks: Wheaton Precious Metals, Expand Energy, Cash
MARKET OUTLOOK:
Investors have been dealing with narrowing market breadth throughout 2025. Barometer has been defensive.
While the rolling news flow surrounding tariffs accelerated and broadened the selloff, structurally the market has been rotating since June of 2024 when most heavily owned tech and semis began underperforming. Inflation oriented assets in general have been the best performing assets since before tariffs were announced.
This includes:
- Financials
- Precious metals
- Global stocks
Global stocks have been outperforming for months and while targeted with tariffs, continue to be more resilient and have better market internals than the U.S. Partly because MSCI World ex U.S. from a sector perspective has more inflation-oriented assets and now unfriendly trade stance increases U.S. recession risk.
A weaker U.S. dollar, sloppy U.S. Treasury bond market and weaker stock markets have incented global investors to begin to reverse years of overweight investments in the U.S. to bring capital home. The carry trade could take a long time to unwind, and this poses a risk to U.S. asset prices given the premium valuations built into U.S. equities versus the rest of world.
When breadth measures weaken at the sector or market level, Barometer raises cash (10 per cent) systematically, uses stop losses as a discipline and holds back on new investments until breadth shows improvement.
Global markets are constructive, Canada and the U.S. are not.
At the asset class level, Barometer is constructive on Global ex. U.S. equities, commodities, and short-term deposits.
Client accounts currently:
- 35-45 per cent cash/short term bonds
- 10-15 per cent precious metals
- 10-15 per cent global equities
- 25-30 per cent North American equities
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TOP PICKS:
WHEATON PRECIOUS METALS (WPM TSX)
Gold is moving higher due to structural inflation risks and high government debt levels are likely to incent easier monetary policy. Precious metals producers are being led higher by strong commodity pricing and growing cashflows. High quality asset base with significant exposure to low-cost operations in safe jurisdictions and offers solid diversification with 18 different operating mines. Stream cos offer a great way to play the trend given reduced operational risk relative to the miners. WPM has been benefiting from both the rise in gold (60 per cent revenue) and Silver (38 per cent revenue). Strong balance sheet with zero debt and available liquidity of more than $2 billion. Dividend has grown 12 per cent per year over the past five years and likely to accelerate.
EXPAND ENERGY (EXE NASD)
It is the largest U.S. gas producer and the combination of Chesapeake and Southwestern Energy closed in October 2024. Its production is based in two centers, Marcellus (Pennsylvania) and Haynesville (Louisiana) - meaning it can access gulf coast and northeastern U.S. gas infrastructure.EXE is the largest supplier of gas into gulf coast LNG liquefaction. The company is levered, sitting at six times net debt to earnings before interest, taxes, depreciation and amortization (EBITDA). This is not unusual in the space and the leverage continues to be derisked as longer-term supply contracts (like into LNG) are signed. It continues to realize synergies from the combination, it took synergy guidance up and likely will continue to do so.
It yields 2.4 per cent, we don’t really have a good look at its dividend growth algorithm because of the recent combination, but there is a good case for dividend growth going forward. Company will prioritize debt reduction this year and begin dividend growth in 2026. Added to the S&P 500 in March
CASH
For flexibility and defensive characteristics - will be deployed in as market internals show improvement.
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| CASH | N/A | N/A | N/A |
| WPM TSX | Y | Y | Y |
| EXE NASD | Y | Y | Y |
PAST PICKS: April 22, 2024
Brookfield Corp (BN TSX)
- Then: $54.28
- Now: $67.72
- Return: 25%
- Total Return: 26%
NextEra (NEE NYSE)
- Then: US$65.31
- Now: US$67.24
- Return: 3%
- Total Return: 6%
Alimentation Couche-Tard (ATD TSX)
- Then: $77.76
- Now: $71.22
- Return: -8%
- Total Return: -7%
Total Return Average: 8%
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| BN TSX | N | N | N |
| NEE NYSE | N | N | N |
| ATD TSX | N | N | N |
