By Peter Kenter
January 8, 2026
Excerpt from article:
Re-industrialization or stagflation?
For Stephen Johnston, director of Calgary- and Toronto-based private equity firm Omnigence Asset Management, the U.S story is all about reindustrialization.
“Military power is 100 per cent downstream of industrial power,” he says. “As soon as you deindustrialize, you’re not the world’s dominant military power. Tariffs are part of that reindustrialization.”
He notes that an outward focus by the Canadian government on U.S.-imposed tariffs overlooks a similar necessity for Canada to re-establish its sovereignty and strategically rebuild its industrial base.
“We’re not competitive on corporate tax rates, on regulations, or on energy prices,” Johnston says. “Without those three things, the choice between building a factory in the U.S. or Canada becomes obvious.”
Government efforts to replace the U.S. as Canada’s major trading partner are “mostly political optics” and will likely fail, he adds, because the increased costs of transportation to markets such as Europe will make those goods uncompetitive. And yes, the world wants Canada’s energy, even as the national will to ramp up energy production falters.
Without major policy shifts, Johnston expects to see foreign direct investment into Canada continue to plummet, even as Europe experiences the same fate. In this environment, where can investors deploy their capital?
“If I want to have a balanced allocation to the United States, Canada, Europe and Asia, then my bets in Europe and Canada have to be short aggregate growth and long inflation because they’re creating stagflationary macro conditions,” Johnston says. “However, if you position yourself appropriately, you can make good returns in stagflation by targeting sectors that have pricing power and are not correlated to GDP.”
Those sectors include environmental services and healthcare, which are price insensitive. If Canada falters in addressing the construction of new housing, look instead to companies and suppliers of building materials that will repurpose the existing housing stock. Whereas car manufacturing may stumble, downstream providers of car maintenance could see an upside.
Original article here