#110 - What You Need to Know About the Canadian Federal Election with Melissa Caouette

  
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In this week's episode of Reformed Millennials, Joel starts the episode with an interview with Melissa Caouette about the different part platforms and her thoughts on Canadian Federal Election. From there we do an abbreviated market update talking about a new frontier of offline innovation in the real world of atoms and what role the government should play in that. We also talk about some of the commonalities Patrick Oshaughnessey has noticed amongst companies after 5 years of podcasting which includes over 300 episodes of Invest Like the Best, and lastly of course we'll look at some specific examples of those longstanding companies including Mailchimp, the 20 year old bootstrapped email marketing tool who just sold to Intuit and a lastly a specific Ottawa based start-up who just raised a seed round which included $$ from the CEO of Shopify.

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👉 For specific investment questions or advice contact Joel @ Gold Investment Management.


📈📊Market Update💵📉

The US Dollar has been trapped in a sideways trading range for the trailing 12 months now. The primary trend is lower, and we continue to see near-term weakness from the DXY Index.

Commodity-centric currencies have been some of the best performers versus the Dollar since early last year.

So, will we see a resurgence back to those risk-on pairs, or will they keep sliding lower against the Dollar?

Let’s Check in with JC at All-Star Charts!

We’re going to focus specifically on the currencies of some of the largest oil-producing countries in the world.

An easy way to aggregate and measure their performance as a group is by analyzing our Petrocurrency Index. It includes

  • Canadian Dollar $CAD, the

  • Russian Ruble $RUB, and the

  • Brazilian Real $BRL

As with anything, the demand for these oil-centric currencies rises along with the demand for crude itself. If you want to buy a countries’ goods, you usually need to buy its currency first.

It may be difficult to see in the chart, but crude oil has been chopping sideways beneath overhead supply at its 2018 highs for months now. So, it should be no surprise that many of the currencies in the index have done the same.

At the same time, if risk assets are going to get moving again, we’d expect crude to participate. And there’s no evidence of it breaking back above those summer highs any time soon.

As you can see in the chart, this index has already given us plenty of leading signals for oil in the form of bullish divergences in the past.

So, new highs from our Petrocurrency Index would definitely bode well for higher crude oil prices.

But, before that happens, we need to see the individual components make some moves.

USD/CAD:

Not only is USD looking increasingly vulnerable against many emerging market currencies, but we’re also seeing weakness against G-10 pairs. Just look at the massive topping formation, and think about the implications of it executing to the downside.

If USD/CAD and USD/RUB break to the downside, it wouldn’t just be bullish for oil. It would also support the stock market and commodities in general. These are risk-on currencies, so seeing them reassert some strength would suggest a potential turnaround in risk appetite.

But, for now, this is just something to keep an eye on.


💸Reformed Millennials - Post of The Week

Founder Led Companies > Everyone Else

A Few of our Favorites:

  • SQ - TWTR

  • SHOP

  • SPOT

  • FB

  • MRNA

  • RH

  • PLTR

  • PTON…

The List Is Deep

From the Bain and Co Article Attached:

A recent study by three professors at Purdue’s Krannert School of Management is part of a growing mountain of evidence of the superior and more lasting performance of companies where the founder still plays a significant role as CEO, chairman, board member, or owner or adviser. Specifically, the study found that S&P 500 companies where the founder is still CEO are more innovative, generate 31% more patents, create patents that are more valuable, and are more likely to make bold investments to renew and adapt the business model — demonstrating a willingness to take risk to invent the future.

This begs the question, why?

Our research shows that engaged employees are 3.5 times as likely to solve problems themselves and invest personal time in innovation as unengaged workers. Imagine if all were engaged!

Lose this clear purpose and your company becomes directionless and uninspiring — especially to the millennial generation.

The second element of the founder’s mentality is a front line obsession — as the founder had. It shows up in a love of the details and a culture that makes heroes of those at the front line of the business and gives them power.

An example I love is how M.S. Oberoi, founder of Oberoi Hotels, role modeled this for the next generation of leaders. He scrawled responses on customer comment cards even at the age of 94 when he could barely see and had to hold the cards an inch away from his eyes.

Lose this deep curiosity for what is going on at the front line, and your company loses its instincts. At the extreme, your company becomes an out-of-touch bureaucracy where power shifts to corporate offices and to people who may never have served a customer or made a product.

The third element is an owner’s mindset, the fuel that propelled the rise of private equity, whose essence is dialing up speed to act and taking personal responsibility for risk and for cost.

This has been central to the success of AB InBev, the $50 billion world leader in beer. The company states at the top of its list of principles that “we are a company of owners and act like one” and translates that idea into minute detail throughout the whole company.

Lose the owner’s mindset and your company becomes complacent, slow to act and decide, and risk averse. Leaders can easily turn into custodians and then into bureaucrats, and bureaucrats are especially vulnerable today.

https://hbr.org/.../founder-led-companies-outperform-the...


🇨🇦 Melissa Caouette’s Canadian Federal Election Coverage 🇨🇦

Excerpt from her most recent weekly newsletter… sign-up here.

What's happening on the campaign trail?

The Liberal Party of Canada, the Conservative Party of Canada, the New Democratic Party of Canada, and the Bloc Québécois have all released full platforms.

Last week was action-packed with the French-language debate on Wednesday and the English-language debate on Thursday. 

It’s tough to say who won or lost the debates. Much of this is subjective.

On relative performance during the English-language debate I would rank the leaders from strongest to weakest showing as follows: Paul, O’Toole, Singh, Trudeau, Blanchet. 

Nobody made any real mistakes per se, but there were different tones coming from each of the Leaders that made some look calmer and more composed than others.

A Leader doesn’t need to be a strong debater to be a strong Prime Minister, but communication skills are important in the role.

Moderation and format of the debates seemed to be discussed more than the performance of any of the Leaders.

In other news, the battle for Quebec continues. Quebec Premier Francois Leagult tacitly endorsed Erin O’Toole’s CPC by saying that a minority government is better for Quebec and calling the Liberals and NDP “dangerous.”

Premier Legault is the highest polling premier in the country in a province where the CPC have room to pick up seats, so this is a pretty big deal for O'Toole. 

During the English-language debate following Legault's comments, the first question raised by moderator Shachi Kurl was to Blanchet on Bill 21 and Bill 96, which sparked debate about whether or not the implication was that Quebecers are racist, warranting a response from the Debate Broadcast Group.

Liberal Leader Justin Trudeau and Conservative Leader Erin O’Toole at separate campaign events asserted Quebecers are not racist, and NDP Leader Jagmeet Singh said it was unhelpful for the fight against systemic racism to single out any one province or territory.  

On Saturday, Jody Wilson-Raybould published a piece in the Globe and Mail in anticipation of her book launch this Tuesday, Indian’ in the Cabinet. 

The question of vaccine passports continues to be an issue. Provinces with rising case numbers and hospitalizations that have not yet implemented one (namely, Alberta) are facing mounting public pressure. 

All this, as political leaders respond to nationwide protests happening at hospitals against COVID-19 measures.

So, what do I think?

So. Many. Thoughts.

On debates: I think we should have more of them, though they should be run differently. 

For people who follow politics closely (a.k.a. political nerds) the debates were irritating because we didn’t actually hear any real debate.

You know, that banter that happens between political leaders when they [are permitted to] disagree and discuss the appropriate remedies for solving the problems our country faces?

When I asked several people who don’t allocate as much time to dissecting politics, what they thought, they said that the debates were a refreshing format because the moderators forced the Leaders to actually answer the question.

So, we can gather it may have been a helpful exercise, it just wasn’t a debate. 

The reality of debates is that no campaign actually wants to do them. So, we end up with a giant Debates Commission compromise, in an attempt to make everyone happy, which ends up making nobody happy. 

On polling numbers: It's too close to call. To get the real story on what's happening, we need riding-by-riding breakdowns (which pollsters and campaigns may have, however I do not!). 

Under Canada's first-past-the-post (FPTP) system, you can actually win the popular vote and not form government. 

That's exactly what happened in the 2019 federal election; Andrew Scheer's CPC won 34 per cent of the popular vote, the Liberals won 33 per cent, and the NDP won 15 per cent.

This is because governments in Canada are formed by how many seats you win under a FPTP system. The goal is actually to win the most seats, not necessarily the most votes. 

On PPC support: Conservatives may take pause with recent polling from Maxime Bernier's PPC, but not for the purposes of this election.

No, it's much too late to change course or apply those learnings to make any real difference in #elxn44, but we need to do a deep-dive after the election (whatever the result) of what kind of an impact PPC supporters had if we hope to learn and subsequently grow the Canadian Conservative base. 

I'm curious to see what percentage of the vote the PPC actually takes in this election. Often times, polls can be misleading and give us an incomplete picture of what is actually going on. 

People may vote for the PPC, but not want to say they have.

In 2016, we witnessed a similar phenomenon with Donald Trump: Americans who voted for him, but struggled to admit it when asked. I don't need to tell you what happened there...

This is significant because the PPC is running candidates in 311 of the 338 ridings in Canada. While highly unlikely, it is absolutely possible they could win some of those if there is vote splitting in just the right way. 

Numbers don't lie, but the people who those numbers represent sometimes do. 

On the CPC election strategy: Erin O’Toole has moved to the centre this election. The strategy is not without its risks. We don’t know if the CPC can win with that strategy yet. We have never tried being a centrist, united conservative party before. 

In 2006, 2008, and 2011 when Conservatives formed government, they did so running as traditional small-c conservatives. There were clear differences between the CPC and Liberals and NDP. 

This election, the daylight that exists between the political parties from where I'm sitting in the cheap seats is most evident when comparing personalities, trust, and character, rather than policy - though I believe the Conservatives have the strongest plan of all the mainstream parties. 

The strategy employed by the Conservative war room this time around is one I am personally excited about. For the first time in a while, I feel that I can proudly talk about my support for the Conservatives openly with friends and family. 

But the question is, will it work?

The move to the centre should, in theory, help the CPC in Metro Vancouver, the GTA, and Montreal; areas where the CPC needs to pick up seats in order to form government. 

But the known unknowns of the election (such as the PPC) could threaten Conservative support in close ridings, allowing for the Liberals or NDP to benefit from vote-splitting.

On JWR: while it’s unlikely that the release of her memoir itself will change the minds of voters, though it could interfere with the Liberal Leaders’ narrative in the last seven days of a very tight campaign. We shall see. 

On our democracy: I'm struggling to see the rationale behind all of the protestors getting in the way of health care workers doing their jobs. 

Are we so perpetually enraged that we cannot for one second think about others before we act? Do we lack the compassion and empathy required to live peacefully in a society? As Conservatives, are we forgetting important virtues such as community and sacrifice when it comes to keeping our neighbours safe?

Political leaders benefit from the constant wedging on issues that have consequential effects on our lives. I get it, we use what works to win elections.

But the COVID-19 pandemic has shown us that if we are to succeed together, we have to be willing to compromise. To think of others, to put down our incessant need to be outraged and triggered over every little thing and instead think about how that might be contributing to the negativity we see now.

In any case, please vote. Please do your part. Please recognize the profound impact that playing an active role in our democracy can have on our future. 

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