Transcript: Projected budget surpluses for provincial and federal government

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Paul Bagnell and Robert Tétrault

Paul: We’re back one more time with Rob Tetrault. He’s Portfolio Manager and Vice President at National Bank Financial. You’ve got some interesting thoughts on building surpluses. Surpluses that are building at the provincial government level and many provincial governments, and at the Federal level as well, and how that’s likely to be dealt with by those governments, how it may play into Canadian GDP.

Rob: Uh hm. The GDP numbers are – I think – are going to come out tomorrow. I think they’re going to be good, 3 1/2, 3.6, something like that. The surplus spending has caused a ton of dollars in the coffers, taxes now in the government’s coffers, both provincially and federally. They have a built-in buffer, if you will, of about 3 billion federally and 2.5 billion provincially, and in addition to that, we’re looking at anywhere from 5 to 10 billion in addition surplus. Now remember, the annual deficit is only 28 billion federally. So if we’re talking about, you know, maybe a $10 billion buffer that we can do there, the question is always, what have governments typically done? Do they put this to the bottom line or do they spend it? So obviously if they put it to the bottom line, the debt gets reduced, but in my view, we’ve done some research historically, and there’s actually a reverse correlation as to whether or not they actually put it in a growth market, whether or not they actually put the dollars towards the deficit or whether they spend it. We would expect them to likely spend it on infrastructure or payments to the provinces.

Paul: And do you expect that to further drive elevated GDP numbers? 3 1/2% is a pretty strong number, and that is the consensus call for tomorrow’s GDP winner.

Rob: These are very strong GDP numbers, and if you’re adding. It’s the ball that keeps rolling. If you’re adding another 5 to $10 billion, yes you’re going to create spending and GDP number increase.

Paul: Well, Tetrault, thanks a lot of being here. Please come back soon.

Rob: My pleasure, Paul.

Paul: That’s Rob Tetrault of the National Bank financial.

Transcript: Oil Price Outlook from Rob Tétrault

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Paul Bagnell and Robert Tétrault

Paul: We’re back with our guest-host Rob Tétrault Portfolio Manager at National Bank Financial. Based in Winnipeg but we’re lucky enough to have him right here in Toronto. Today you think crude oil is going to $60 U.S. rail. That would be a good thing the Canadian stock market. What do you think get’s crude to sixty this year?

Rob: I think crude gets to sixty in some sort of negotiation/pact that will and I feel has to happen. I think we’ve seen a lot of inventories go up in the last while, and that’s somewhat worrisome for some investors. But we’ve been in that range between fifty and fifty-five and you could see around this fantastic chart your that your wonderful team has put up. And last time I was on the show here, oil had fell to forty-seven, forty-eight and I was of the “you’re going to get back to that trading range. I think once we break on a technical bases through that fifty-five the next trading range is naturally fifty-five to sixty. If we see the Opec agreement if we see it kind of come to fruition and I think we will, that will provide range to move from fifty-five to sixty. Long-term I’m bullish on oil, and short-term I’m mildly bullish.

Paul: What about stock markets generally driven of course by the election of Donald Trump over the past five or six months but cooling off recently as it looks like some of the bloom coming off the Trump rose.

Rob: You know what I’m excited about? I’m excited about the fact that there are people predicting the end of the world and there are people predicting you know, we’ve got another ten years in the bull cycle. I love seeing that. I love seeing the opinion on both sides because that means the market will not surprise us. You know in 2008, in 87, in every significant correction that we’ve seen, every opinion was on one side of the ledger and that’s a bullish opinion. So right now we’re seeing some on both sides. The market will not surprise us. We might see a small correction but I don’t think we’re going to see anything drastic like some people are saying. I anticipate a kind of moderate to good year in terms of gains in the TSX somewhere in the 6…call it 5 to 10 range, which will be fantastic for portfolios once you put the dividend in there, and the valuation I think are somewhat reasonable given what we’re seeing in forward innings.

Paul: What kind of waving do you have in equities compared to historical levels? Are you at the high end of your range on equities?

Rob: Well, fixed income is almost impossible these days so yes, I am at the high end of equities and we’re always looking at alternatives, and whether that’s equity linked GICs in the fixed income space or even mixed mortgage investment corps or whatever that may be. The fixed income space is very, very tough right now, even the new crafts are good, so whatever we can get away from the 2% ten year bond, right?

Paul: And cash position, where are you in terms of your cash holdings right now?

Rob: I don’t believe in holding cash very much. I’m a firm believer in being fully invested. If we do a tactical shift we go from one sector to another, so, very low on the cash side.

Paul: Canadian stocks versus U.S. stocks where do you see most opportunity?

Rob: I like the Canadian sector right now. Specifically we’ve kind of trailed a bit this year. I think there’s an opportunity oil does come back. I think we could see a nice rally in Canada. I think we’ve been lagging, and I think eventually some movement in Canada.

Paul: Thanks a lot for coming by. Great to have you on the show.

Rob: Thanks for having me, guys.

Transcript: Introduction to Rob Tétrault

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The story begins when I watched my wedding video for the first time, and in it my mom makes a speech to the groom. She says, “Rob, you’re so talented. You can do whatever you want in this world. Just make sure you’re always passionate about what you do, and you’ll enjoy your work every single day. So, I had just completed a Finance MBA and at that point I knew then what other business to do than to follow my dreams and my passion which was helping people through managing their money.

When I started my business I knew I’d be successful if I just followed the values and principles of my parents and grandparents who had taught me about business, that is honesty, transparency and hard work. We started having success. The team was growing. I added some key members, operations, administrative support and client management. We added an estate planner and a financial planner, but who better to add to that team but the person who taught me the values that I built my business on…my father. My entire life I’ve wanted to be the best at whatever I do. Whenever I do something, I’ll have to be the best at them. I brought that same approach to this business. I became a Portfolio Manager with the sole purpose of being The Best Portfolio Manager in this entire country.

I’ve always known that I’ve done right by clients in managing their money, but to have the Wealth Professional Institute give us the award best Portfolio Manager of the Year really validates all the hard work we do on a daily basis for our clients. Every day I wake up following my passion, following my dreams, and that is building a business which offers its clients world class wealth advice, service and investment solutions.

Transcript: Sizzle Reel

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Rob: The market has traditionally been overblown on both sides. We know that when there’s blood in the streets, we should be buying. Warren Buffett’s been saying it forever. I’m a firm believer of that. And whenever we see an oversell, which I think is what we had 2015 and in January and in February, it’s time to buy, it’s time to come in. And I believe that long-term again, we’re going to be happy we bought in February, March.

I don’t want the dividend, honestly! Don’t give it to me. Invest it, invest it, invest it. Take care of it and make me more money than I can make with my 1%.

I’m a Manitoban. I’m a homer at heart, that’s why I cheer for the jets. And I’m certainly not a bottom picker, because I do enough of that at home when I change the diapers for my 3 kids. So this is not something that I want to specifically pick the bottom for. We just want to reduce risk.

What you should care about, Rovinescu is all your investors, whether they’re short-term, long-term and medium-term. You need to care about everyone, anyone who owns a stock at that particular moment. And he clearly slapped them in the face today. And they called his bluff. And you know what? The stock’s down 10%.

To me, it strikes of trying to go all in, in a poker game with a pair of 6s, when you know you’re beat. I just don’t like that move at all today.

Its problem, after problem, after problem, and my dad used to tell me, “Where there’s smoke, there’s fire.” So…

If that’s a play you want to make, I mean, just be aware that it could go severely south, but there’s obviously a lot more upside. You can’t have it both ways. You can’t have your lunch and eat it, too, right.

I’m concerned about the stimulus, for sure and I’m concerned about the budget to be frank, because I feel its partially imprudent spending. It’s a lot of billions of dollars that we’re going to be short. And how are we going to pay it back? I don’t like, as you mentioned that there is no roadmap. When are we going to pay it back? When are my kids going to pay that back?

Michael: That’ll be the question for finance minister. Thank you, sir.

Rob: Is it keeping you up? Is it something that’s affecting your health? And if yes, get out. If you have a well built portfolio, if you have a diversified portfolio, you will be fine. One holding will not ruin your portfolio. Get out, cut ties, and move on.

Anyone who’s panicking, anyone whose losing sleep over the market right now, it’s time for you to call your advisors to make sure that you know what some of the amazing buying opportunities are out there.

Sometimes you’ve got to get on the train, right? If it’s running away, you’ve just got to get on it and go for the ride.

Go jets, go!

Michael: Rob Tetrault, the portfolio manager at National Bank Financial, joining us from Manitoba.

Recent Sponsorships

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August 19th & 20th, 2016 – Winnipeg BBQ & Blues Festival

Tétrault Wealth Advisory Group is proud to sponsor for the 3rd year in a row, this “Lip Smackin’ Hip Shakin Street Party”.  This festival takes over Smith Street in front of the Burton Cummings Theatre and features the best in international, national and local blues performers along with the barbeque competition, food and beverage garden and retail vendors.

August 18th, 2016 – Omnium Golf Tournament

Tétrault Wealth Advisory Group is proud to sponsor for the 4th year in a row, this preeminent charity golf tournament in the French community which is held annually at St. Boniface Golf course.

Equipe Omnium

August 8th, 2016 – Cardiac Classic

cardiac classicTétrault Wealth Advisory Group is proud to sponsor for the 4th year in a row, this golf tournament held at the Niakwa Country Club in Winnipeg, MB.  The proceeds of this golf tournament are directed to cardiac care and cardiac medical research at St. Boniface Hospital.

Transcript: 3 Canadian stocks that could see more upside – BNN

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Andrew Bell and Rob Tétrault

Andrew: Back with our guest-host Rob Tétrault Portfolio Manager and Investment Advisor and National Bank Financial. You have a couple of stocks for us. Boyd Group Income Fund and they are the crash-repair outfit.

Rob: Yeah. You’d think it’s not a very sexy business, but you know, people are always crashing vehicles. Insurance companies are their biggest asset, and a very, very, very strong balance sheet. So it’s a stock that I have been personally owning, and telling clients about it for a while. I was on here in December and I was asked for a target and I said something along the lines of, “This is going to be an $80.00 stick in 2016” which was, I think, a 25% gain or so. I think yesterday it was trading at 80 bucks. So it’s done that. I think it’s poised for more growth yet, for a couple of reasons; they don’t do equity raises. So to raise capital they don’t dilute the shares. They do forgivable loans with their suppliers. I really like that.

Andrew: Forgivable loans…sorry, how does that fit in?

Rob: So, if they buy enough products it’s a loan that’s forgiven, right? So it’s really fantastic for balance sheet bottom line. Now it’s forgivable at a specific rate, but its issuing debt basically. So they’re issuing debt on none equity, so. That and New Flyer. New Flyer is another Manitoba companies. I guess you could tell I’m a Manitoba boy, and Artis Reit’s one has been beat up lately, Artis Real Estate Investment Trust. I really like the management, the Martens family. They know what they’re doing, and specifically New Flyer’s CEO Paul Soubry there, they keep, keep getting orders and growing.

Andrew: The bus maker.

Rob: The bus maker and they’ve acquired Motor Coach Industries, tons and tons of synergies there in my mind. The market is underestimating what those synergies are going to be, and Soubry is a great CEO and they’re doing it the right way for sure.

Andrew: Just one thing on Boyd; I mean it’s still an income fund technically but the yield is only .6%.

Rob: Here’s the thing; the dividend yield used to be 4 or 5%. Stock was in the penalty box for so many years because they almost didn’t make it through ’08, ’09, and now the stock has rallied significantly at say, 80 bucks. They were doing new issues raises 4 – 5 years ago in the 5 – 6 dollar range, so the yield is not the play here.

Andrew: Okay.

Rob: The yield is not the play. The idea is that they will pay less, use it to acquire mom and pops so you know, Joe and Jim’s Auto Collision Repair in Memphis, Tennessee, that’s what they’re buying. They buying up that and they’re paying for assets and not client revenue so they’re busying stuff for 50 – 60 cents on the dollar and they’re applying their own model it. They have a strong relationship with the insurance companies so insurance companies want to deal with them because it’s simple, it’s clean, there’s a process, it always works, so really, really impressed with their company. I think there’s poise for a lot of growth there, even though it’s trading at a fairly significant multiple.

Andrew: Yeah, car repairs. That’s an industry that’s ripe for reinvention sometime, but anyway.

Rob: Self-driving cars or something perhaps?

Andrew: Well, yeah. But the information is symmetry. I go in, they say I need a new component, I’m like okay.

Rob: You need a new Johnson Rod, right?

Andrew: [Laughs] Right. Rob thanks very much.

Rob: Thank you.

Canadian CMV Foundation

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“Canadian CMV Foundation (Winnipeg, Manitoba; 2015) – For the 3rd year in a row, Rob Tétrault, a member of National Bank Wealth Management Group and head of the Rob Tétrault Wealth Management Group organized “Le Classique,” the largest outdoor winter ball hockey tournament in Western Canada. The 2015 edition, which drew more than 2,000 people to historic downtown St. Boniface, benefited the Canadian CMV Foundation.”

National Bank Financial Wealth Management Breakfast

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On May 19th, 2016 the Rob Tétrault Wealth Management Group sponsored the National Bank Financial Wealth Management Breakfast in support of the Westland Foundation Education Fund.  Mayor Brian Bowman was in attendance as the guest speaker. The Westland Foundation raises funds to support its mandate of creating post-secondary scholarships for Inner Winnipeg Students.