Opportunities in an Evolving Geopolitical Landscape

Shifting expectations around growth, inflation, fiscal policy and trade are creating openings for resource development and investment across North America.  

These dynamics set the stage for the panel called “The Intersection of Geopolitics and Investment Strategy: Navigating Policy, Politics and Trade”, at the 12th Annual Canadian High Yield Dinner & Conference in Toronto. The discussion focused on how trade policy, geopolitics and government spending are reshaping the investment landscape.  

The panel included:  

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  The Honourable Jason Kenney, Senior Advisor, BMO Financial Group   

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  François Trahan, Chief Investment Strategist, BMO Capital Markets  

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  Kathleen Palmer, Managing Director, Federal Government, U.S. Government Affairs, BMO Financial Group  

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  Nicole Miljevic, Director, Global Markets, BMO Capital Markets (moderator)  

Here are some of the highlights from the discussion:   

While tariffs have been a recent concern on both sides of the border, Jason Kenney sees the current trade environment with the U.S. as an opportunity for development in Canada.

One of those opportunities is natural resources. “I think we are on the cusp of a new resource boom,” he said, noting Canada is working on accelerating approvals for major projects at home and becoming more self-reliant.   

Working in tandem, strong commodity prices from ongoing tensions in the Middle East could improve the economics of large-scale capital investment.   

But, he cautioned, maintaining momentum on deregulation and faster project approvals will be important to realizing these opportunities.  

Technology also has an important role to play in the opportunity set, he said. Kenney highlighted Western Canada’s appeal to technology companies, particularly Alberta, where abundant energy and a cooler climate make the province attractive for AI data centers.   

The panel also examined the implications of the upcoming U.S. midterm elections for the U.S. policy environment. “Trump is not on the ballot, but whatever happens will absolutely shape the next two years,” Kathleen Palmer said.   

The Republican party currently controls both the U.S. House of Representatives and the Senate. She noted a change in congressional control would affect legislative priorities, oversight and negotiations over government funding.  

For instance, a Democratic House could ramp up oversight investigations. They’d also control committee agendas, which could allow them to push different bills forward and exercise more leverage over funding negotiations. A shift in Senate control could affect the confirmation of the administration’s executive branch appointments and judicial nominees.  

François Trahan noted that U.S. policy may be shortening the economic recovery by adding to inflationary pressures just as growth begins to gain momentum. Tariffs, tighter immigration policy and fiscal stimulus are adding price pressures that could mean a longer stretch of monetary tightening.  

Tariffs have already contributed to higher inflation this year, he said, with rising energy prices adding to the pressure.  

Tighter immigration policy is also an inflationary factor and often gets overlooked, Trahan added. He argued that restrictions on immigration and a smaller labour force could intensify wage pressures and contribute to inflation.   

Fiscal stimulus can compound inflationary pressures, particularly when unemployment is relatively low, as it has been in the U.S. Trahan pointed to the U.S. administration’s “One Big Beautiful Bill Act” as an example. “We basically got the kind of stimulus that you normally see in response to a recession, but we didn't have a recession,” Trahan noted. In a downturn, higher unemployment gives the economy room to recover without immediately fuelling inflation. Without that slack, stimulus can add to price pressures.  

For investors, Trahan highlighted the potential appeal of inflation hedges, including energy, materials, industrials and companies with strong pricing power.  

The discussion highlighted opportunities for Canadian resource development alongside the risks of renewed U.S. inflation. Faster project approvals could help unlock investment in Canada, while persistent price pressures could mean higher interest rates and a more challenging environment for growth stocks.