Alright folks, pull up your chairs because it is time once again to bask in the fonts of wisdom that is my annual set of insightful predictions, wild guesses and prognostications that form what can only be charitably called the greatest annual forecast blog of all time.

 

That’s right. It is time for the Annual Fearless Forecast^TM. A set of predictions that is unparalleled on this the sixth floor of Highstreet House in Calgary’s Beltline district. I defy you to find one better anywhere nearby.

 

As always, the Fearless Forecast comes with a caution of sorts, well more of a strict warning. Unlike last year I will not be settling any lawsuits with people who, for whatever personal reason they may have, decide to follow any of my investment advice. In fact, just by reading this sentence you are indemnifying me against any recourse you may think you have.

 

Caveat Emptor and to the forecaster go the spoils as they say.

 

This year I am going to try and keep it short since in prior years it did develop into something way too cumbersome and I suspect that many people chose not to read to the end, which is a shame because they would have missed all my sports picks which would have won them a LOT of money.

 

As always, aside from my usual caveat about this whole shlemozzle not being investment advice, I feel that I need to point out that in true forecaster fashion, I make bold calls to make your hair stand on end and also I make easy calls because I like to get the free and easy marks when I do my quarterly reviews.

 

Some of the bold calls are really off the wall and outlandish. Like all of my natty pricing calls. Don’t hate me because I’m a perma-bull.

 

Also, forecasting is a mugs game. Sometimes you win, sometimes you lose. Sometimes it rains.

 

Let’s go!

 

Broad Themes

 

The basic starting point for any good forecast, or at least mine, is the establishing of what I call “broad themes”. By making them broad, they are really unaccountable and don’t count to the grade, but I can reference them at will and make myself seem smart.

 

I have three, and they aren’t surprising, because they are in the news. All. The. Time. But they matter and if you are going to take anything from this forecast, plan your life around these three critical themes.

 

• Donald Trump – agent of chaos
• Inflation and affordability
• Trade wars and geopolitical (in)stability

 

Each of these will in some way inform and influence all that follows. Note that they are all chaos induced or causing.

 

Politics

 

• Unlike last year it is unlikely that we will see a Canadian election. Instead, Canadian federal politics is going to be dominated by the annual review of Pierre Poilievre at the upcoming Conservative convention (spoiler alert – he will stay on as leader even though there are rumblings of dissatisfaction) and the trials and tribulations of the Mark Carney led Liberal minority government (I don’t see any more floor crossings). The major issue of course is the economy, Carney’s handling of it and trade relations with the United States and, of course pipelines. Did I say pipelines? Oops, I meant national unity. Or pipelines. Or both. More on that later. Canada’s third national party is in the middle of a leadership race no one is paying attention to with candidates no one has ever heard of. Sorry NDP – I calls it as I see it.

Further to the national unity/pipeline question above, both Quebec and now Alberta have emerging separatist movements. Quebec via its traditional separatist political parties that are almost guaranteed to be elected this year and Alberta via its referendum petition gathering attention seekers, posers and rabble-rousers, encouraged with a nod and a wink by none other than Danielle Smith who has to do the dance with the nutty separatist wing of the UCP party.

The Quebec separatist movement has legs, as evidenced by its more than 40% polling support. The Alberta petition movement is loud and punches above its polling weight. Mark Carney can let the air out of that by greenlighting the pipeline proposal that Smith promises by July 1^st. I am unsure what he can do about Quebec. That said, he does have a lot of Brexit bonafides to call on.

There will be no Federal election in Canada this year unless the USMCA negotiations fall off a cliff and the government gets toppled. If the pipeline proposal gets nixed, expect either a snap provincial election or a referendum.

 

• South of the border, the second year of the Trump administration is going to be an unchecked and proverbial bull in a china shop, or, as so brilliantly articulated by comedian John Mulaney – a Horse. In a Hospital. To be honest, no one knows what is going to happen. I don’t even know what is left to happen. Depending on what happens in the mid-terms (if they even happen 😊) the next 9 months are the last fully effective ones of his term. He could be a lame duck by the end of the year. So there is every possibility for more unhinged policies except for the fact that most of them are already in place.

Anyone telling you they know what is going to happen is lying, but I’m going to give some educated guesses. You can sue me later.

• The Trump administration is going to lose the mid terms. Right now it looks like it’s going to be bigly. A problem for him in the mid-terms is that he isn’t running so the various congresspeople and senators running don’t have coattails to ride. This year they don’t and constituents in general appear unhappy.
• In an effort to bolster his midterm chances, someone prominent is going to get fired. I am actually surprised his cabinet has held together so well through this first year given the revolving door that existed in his first term. Right now his weakest link is RFK Jr. but he would get the most popular response if he made Kristi Noem walk the plank and hinted he might rein in ICE
• Ukraine will still be at war with Russia when the year ends. Depending on his mood, Putin or Zelensky will be responsible for holding up a peace deal.
• The US will not buy or conquer Greenland.
• The USMCA negotiations will get under way. Canada will get bent and twisted and I suspect that Quebec and Ontario dairy farmers are going to have to take it on the chin.
• At some point we will find out that the Epstein files have been on Hunter Biden’s laptop this whole time

 

 

• Geopolitical instability is something I mentioned as a theme and it is real and it should scare everyone. From Russia-Ukraine to Israel-Hamas (the cease-fire will never hold) to Iranian counter revolution China-Taiwan to now Venezuela, instability is the story that won’t end. In my view, the chief architect of all of this is of course Vlad “the Impaler” Putin and his ill-advised and criminal invasion of Ukraine. I do not foresee any significant de-escalation in this conflict in the short term as the bare-chested buffoon continues to call up new conscripts, North Koreans and now African mercenaries to be used as cannon-fodder for an increasingly battle-hardened if under-supplied Ukrainian army. There is no victory in this war. That said, we are now seven months into the negotiated peace process. The Trump foreign policy towards Russia and Ukraine appears to be “stop the fighting” and appeasing Putin over the interests of Ukraine. The decision will ultimately be Ukraine’s but the slowing down of arms and support from the US will be the end. China will not invade Taiwan in 2026. That is a 2027 plan when Trump is in post mid-term lame-duck mode. The Israel-Hamas-Gaza conflict is in its cease-fire part 2, so they only fight each other on even numbered days. The protests in Iran have the dictatorial theocracy on its heels but the regime has the IRGC and they have the guns – and until those turn around or the US puts boots on the ground they have a 10% chance of toppling the bad guys. In an ideal world, Venezuela becomes a democracy again, but I do not see that happening.
• Will we have a recession? I don’t know. What do I look like? A forecaster? Yeah, yeah. Here’s what I think. My recession fears have receded – but it’s ugly out there. Growth in Canada is going to continue to be anemic until we solve our trade issues – so likely not until mid year – and get some clarity and direction on export infrastructure. Without this recovery, per capita GDP will continue to fall and the Bank of Canada will need to lower rates even further, punishing the dollar and making us generally all poorer. Could the effects be muted by commodities? Yes. Will it? Only the LPC knows. A trade deal for wont of anything else would be a jolt to the economy. Doubling trade with China is a lofty and laudable ambition but it doesn’t move the needle. Meanwhile housing will remain unaffordable for the average Johnny and Janey Canuck. The US will dodge a recession this coming year but will likely be rewarded with some form of stagflation as opposed to Canada with our stagnation. High unemployment, persistent inflation (thanks to govt spending and Fed easing). The fix of course is removing tariffs, but that is unlikely to occur in the short term, especially iof the tariff free tech-data-centre bros keep the stock market on a sugar rush. Put that in your pipe and smoke it.

 

• Speaking of tariffs – what is going to happen? Ha! I went there last year and got my ass handed to me. Tariffs are like a big game and cudgel for the Trump administration. That they have managed to convince so many people that what is in essence a tax on consumption is somehow paid by other countries is beyond me. But the pendulum I feel is going to start swinging back the other way. First, he has kept tariffs way too high on inputs, the impact of which has been absorbed by manufacturers but is now increasingly being passed off to end-users. This is especially true for things like base metals, steel and aluminum. Canada supplies 75% of US aluminum and is subject to a 50% tariff. Steel is the same (although we don’t supply as much). The tariff system is massively complicated and has created bureaucratic bottlenecks. The cost of everything can’t help but rise. I predict that 2026 will see the beginning of the “great unwind” where blanket tariffs give way to industry and country specific adjustments followed by gradual and eventual lowering and abandonment of wholesale tariffs against everyone except China. And it’s going to start with Canada. Donald Trump says he “doesn’t need anything from Canada”. Fortunately the rest of the US does. They need us as a customer and they like to buy our cheap stuff, without tariffs.

 

Further to this trade war/tariff nonsense, the legislative branch is too chicken to stand up to him but that just needs time and shitty midterms to change. The Supreme Court has yet to rule on the legality of Trump’s tariffs because they know they have to rule against him and are afrtiad if the backlash they will get. At the end of the day, politicians care about themselves. If they feel at risk from the electorate, the worm will turn. Give it time. The people need to feel the pain and they 100% will. Expect tariffs and trade wars to be as much of a factor in the midterms as ICE, immigration and actual wars. The bloom is off the rose.

 

• Crypto! Fine, I give up. It’s a thing. Buy it if there is a lot of liquidity. If things tighten, sell it. ETF’s are a pretty good play. Don’t buy the scam coins. Everyone has a coin. Even I have a token. It’s called Hammercoin. Don’t get left behind! I made 10% just today (no mention of the 25% loss I had yesterday). Bitcoin and crypto isn’t going away anytime soon. Once the commodity hysteria is over, money will rotate out of gold/silver/copper/oil/wheat and back into Bitcoin. Monorail.

 

Energy and Stuff

 

• Driven by still high levels of energy insecurity and high prices, the energy sector is going to continue its gradual transition from a fossil fuel centred colossus of emissions to an “all of the above” source of diversified and, occasionally, low-cost energy. While billions continue to be spent on renewable capacity additions, the new kid on the block is Data-centre power – limitless demand for electricity and computing power so that basement dwelling trolls can swap bikinis on AI generated internet hotties. This power is increasingly coming from base load capacity additions and a fixation on non-existent (for now) small modular nuclear. Who pays for this is being debated in real time as the “grid” and the “consumer” struggle to balance affordability and availability. All supposedly backstopped by the government – if the billionaires get their way.

For industry participants, it’s precisely this type of chaotic environment that creates opportunity.  ESG box-ticking is dying a slow death, especially in the US and the financial world. We are soon to find ourselves in a golden age of poking holes in the ground, even if we are forced to do so in Venezuela. 2026 will be a banner energy year.

 

• Peak Oil Demand, much celebrated around the ESG world has been pushed back, yet again. Demand for oil finished above most forecasts for 2025 and 2026 will not disappoint. My forecast is global demand for oil in 2025 will surpass 106 mm boepd. Similarly, demand for natural gas will continue to grow to record levels. It is an accepted truth in the energy industry that demand for energy (all forms) just continues to grow, even while the constituent components shift their relative share. The wildcard here is price. The cheaper the energy, the more of it we consume. Are we going to be $50 or $70 for oil? $50 oil and a tariff off second half could kick oil demand into high gear.
• A prevailing theme across the energy sector (and the economy in general) is going to continue to be cost. Costs to develop energy, while volatile, remain relatively high. The costs for wind and solar are rising. Labour shortages are pushing up labour costs. And finally, stubbornly high cost of capital (interest rates and risk premia) is going to make every project that much more expensive, every hurdle rate harder to clear and every decision that much more difficult. I expect to see investment in wind and solar to slow down and, conversely, investment in low hanging fruit fossil fuel projects, which are easier and typically cheaper to execute, to pick up. This is notwithstanding the governmental and regulatory headwinds that exist. Pretty much every other country in the world is investing in energy – all forms, but affordability is going to separate winners from losers.
• Notwithstanding the mantra of Drill Baby Drill, Capex in the oil and gas sector is going to be flat in the United States while Canada will see moderate growth. How do I know this? I don’t. It feels right. The Permian, for all its Landman glory, is the only growth area in the United States and it feels like it is getting tired. Production growth has stalled out and no matter what the government tells Texas to do, the growth area is Canada. Don’t get me wrong – there are going to be thousands of wells drilled in the United States in 2026, but it’s a treadmill. Capital is still expensive, yields on the long end are stubbornly high and tariff-caused inflation is going to keep them there. That means the price of everything keeps going up, while the commodity price flounders. In addition, the recent takeover of Venezuela is going to take money out of Permian driller pockets (great move in an election year). Expect US Capex growth to be sub-5%. In Canada, capex could grow up to 10% depending on pipeline progress and, political stability?

 

With demand growing, other areas will grow production. Venezuela is going to be the beneficiary of a lot of capital and private military contractors. What could go wrong? Guyana is now free to develop production without threat of invasion. Africa will be an emerging player and of course Brazil is going to commit to a lot of capex and growth and ultimately fail to deliver. As they always do.

 

If the Iranian regime is toppled all bets are off.

 

• The price of oil though 2026 is going to remain volatile. Trump wants oil to be $50 (now $53) so that gas prices will be lower ahead of mid terms. OPEC++++ probably wants it to be closer to $70. Here in Canada, we would be just fine if it pushed the envelope a little higher. The reality is that no one knows and the political instability and uncertainty surrounding a number of energy producing countries is a massive wildcard. Alse, we were talking glut a month ago but now demand is picking up. The price of oil (WTI) feels trapped in a $45 to $70 range with A LOT of action in between.

This is the glory call of the Forecast, which is of course why it is buried so low down. I’m forecasting growth but there is a lot of spare capacity. Even modest gains in Venezuela adds barrels. Liberating Iran takes would be a game changer. There are no risk premia in the current oil price – the market thinks everything will work out just fine. My capex forecast and tariffs say maybe not much growth in North America. Will the Permian ever tip over as I’ve been calling for the last few years? And what of OPEC++++? It’s a directionless head-scratcher but I’m going to be an end of year bull. End of year price for oil is $75.49 (WTI) and the average for the year is going to be $62.01.

 

 

• Gas giveth, and gas taketh away. Last year was probably one of the more disappointing years for natural gas in my memory, rivalled only by the year before. As always, producers over-produced, LNG was offline then online, climate changed, the usual headwinds were all… headwinds. In the Permian, gas-oil ratios are high and associated gas production from all the tight oil growth pushed the Permian and Texas to its highest gas output ever. There was so much gas that producers voluntarily curtailed production to steady the market. Prices at various hubs frequently averaged less than $0 an MCF and, as usual, AECO was occasionally free.

 

On the other hand, demand has never been higher and it is still growing faster than demand for oil. The perfect storm for natural gas still exists. Russian gas is still sanctioned. European demand is up and their storage levels are being tested by winter demand. A global market is forming. Consumption continues to rise everywhere. While US production set records, it is so concentrated in the big three shale regions that any slip up could be cataclysmic. LNG construction has a new life under Trump. My year end call for natty is $5.36 per MCF and my average for the year is $4.25. I am a gas bull once again. Don’t ask me why. Maybe I shouldn’t have taken an edible before writing this.

• According to the EIA weekly reports The US closed out 2025 with 13.8 mm bpd of production. According to their Short Term Energy Outlook they will close out 2026 with production of 13.5 mm bpd – a marginal decline. It’s weird because they also are projecting softer oil prices which the last time I checked, held drilling back. But what do I know.

 

For US production, I always go back to shale math – starting from such a high number, decline rates suggest a whole lot of completions need to happen and the rig count and DUC levels don’t currently support that. Producers are tightening their belts and some of the super majors have already scaled back domestic capex. But with my prediction of anemic domestic US Capex, it seems to me that forecasting either production growth or marginal decline is contrarian. Plus $50 mid term oil. In that context, I project year end 2026 US production of 13.1 mm bpd.

 

• In Canada, I’ve got production growth again ahead of expectations driven by higher overall capex. We have shiny new pipelines and a giant freezer up in Kitimat that is sending sweet frozen molecules all over the world. And now as part of the MOU pipeline bunfight, we have TMX and Enbridge looking to expand capacity on each of their networks. Whether it is 867,000 barrels per day pouring into the Fraser River Delta (heh) or multiple BCF per day high-pressure natty hissing towards Kitimat and new projects advancing, the drilling prospects for Canada to fill these respective pipelines are bright. Here in Canada, we typically talk about drilling rather than production numbers, but it wouldn’t be unreasonable to expect a 2%-5% increase in Canadian oil production over the course of the year and a similar increase in gas production. More important will be the 6,000 wells drilled over the course of the year, because that means jobs and prosperity for the service sector.

 

• OPEC +++++++ production is going to managed and driven by price, inventories and the Saudi budget. So as always, it is going to be hard to forecast. But with demand for oil expected to grow by close to 2 mm bpd, and the Saudi supporting Trump wanting prices to come down for November, we may see our friends in OPEC actually produce some of their announced capacity additions. That said, while many nations claim to want to grow production, the reality is that only Saudi and UAE are reliable as evidenced by Kazakhstan losing 35% of it capacity last month and Venezuela being, well, Venezuela. Rather than forecast production, I’m going to instead forecast that at least 1 mm of spare capacity will be brought back on-line as actual barrels for export by year end. This is the same forecast I made last year. It was wrong. This year it will be right.

 

• I am bullish energy stocks for the year. Who am I kidding. I’m always bullish. Consumption isn’t slowing and the price deck, while volatile, indicates upside. Tariffs notwithstanding, cash flow and dividends will continue to accrue to shareholders as will buy-backs and debt repayment – unless Trump tries to do the same thing to energy companies that he has pulled with defense companies. I have some genius stock picks to pump up your portfolio performance and if I was a real betting man I would LOAD UP on Canadian energy stocks. If I’m right and volumes don’t move materially, any price miss is going to be more than made up for by a cratering Canadian dollar. And maybe some higher quality US names because energy stocks may become meme stocks under Trump. Drill Baby Drill could translate into buy baby buy.
• The M&A market should be strong again this year except for that one nasty variable. Cost of capital. And tariffs. We will always have tariffs. There aren’t too many big plays left in the US, but Canada, as always, is a compelling and discounted target and if tariffs bite into equity prices and valuations, it could be even more attractive. I see at least one big’ish Canadian name being taken out this year. Maybe it will finally rhyme with Cenovus. At some point CNRL will get bored and buy someone just because.

 

In the service sector, with the anticipated growth in drilling and ongoing industry-wide manpower and supply chain issues, there will be deals done throughout the year as companies attempt to secure their client base and steal market share from less well-capitalized competitors. This will be less apparent to observers because this service industry activity will occur amongst the mid-market private companies (yay for our business!) but it will be there and, I believe fairly well distributed from upstream to downstream. Thinking more broadly, it is a truism that relative to the United States, Canada is “AFFORDABLE” and American buyers should be paying attention to the Northern Dollarama.

• And my evergreen M&A statement on Canada for all you American readers: Canadian companies are well-known for their technology and solutions-based approaches to innovation and there is a well-worn path of US PE and strategics coming north of the border to snap up cheaper Canadian tech. With an uncertain market in the United States, look for these companies to draw interest, particularly ones that have technologies that address emissions or can reduce costs in an inflationary, tariff happy, supply-chain challenged world. Also, Canada is a currency advantaged, undervalued and stable market for consolidators tired of the madness in other markets. Show me the money people!

 

• The Canadian dollar should be performing way better than it is with commodity prices at their current level. But, all things considered, weak GDP growth, GDP per capita crashing, declining productivity, a tariff war, yet to be battle-tested leadership, runaway debt, positive interest rate spread relative to the US, there is no reason to be optimistic for the Loonie. Great for cross-border M&A, lousy if you are travelling to the US or importing pineapples in February. The Canadian dollar is lucky to be at $0.72. It will be lucky to be there at the end of the year. I give it $0.705.

 

• Inflation will continue to cool off over the course of the year in Canada but will continue to be an emerging and largely self-inflicted problem in the United States. The damage will be ongoing. Tariffs on Canada and everywhere else will increase the costs of everything for the Americans, starting with energy costs, costs of finished goods and the costs of construction materials. While a stronger currency helps the Americans, it also makes their exports less attractive and the currency is weakening. There are trade-offs everywhere and America cannot retool fast enough to onshore what they don’t have, drill enough wells and build enough refineries to replace Canadian oil with theirs or Venezuela’s or grow enough trees to get the lumber needed to build houses. In Canada we are likely to see some popups in inflation as we adjust to a lower Canadian dollar but “fortunately” we will be in a tariff-induced economic funk so the lack of demand will solve the inflation question. Yay. I expect inflation in Canada to be at the bottom of the policy range by the end of 2025 and for the US to be stubbornly above it for much of the year.

 

• Central banks spent much of 2025 carefully trimming rates as inflation eased and the impact of trade wars became clearer unless you were the US Federal Reserve, then you were forced to fight a rear guard action against not only inflation but also a commander in chief who wants rates to be basically zero. In Canada, rates were cut 4 times and now stand at 2.25%. In the US, where inflation was persistent through the year and growth showed counter-intuitively high, rates were cut 3 times from 4.25% to 3.50%. The US Fed retains dry powder but their hands are tied because of the robustness of the US economy and the inflationary fiscal policies of the Trump administration but slowing employment (if data was available) and a deseire to stay out of jail gives them cover to do some cuts. In Canada the story is different, as I have said many times in this uplifting forecast, with our sluggishness the direction of rates here is down. Expect as much as 75 basis points in rate reductions in Canada over the course of this year, especially if trade negotiations go sideways. In the United States, I am anticipating possibly 75 basis points before Labour Day.

 

• There will be a lot of talk this year about major export-oriented infrastructure but depending on what Danielle is able to cobble together under the auspices of the MOU, this may not go anywhere. While there is a business case to export LNG to Europe from the East Coast, there is still no business case to get that gas to the East Coast. LNG Canada online and there is a strong possibility for an FID on expansion as long as Shell doesn’t get distracted by Venezuela. Cedar LNG is also underway but it’s a relatively smaller project and Ksi Lisims LNG is heading for FID.

 

Here in Alberta, hopes are being pinned on an export pipeline proposal and the Pathways Project. These are billions of dollars in infrastructure projects but highly dependent on achieving a specific set of circumstances. I see a legitimate pipeline proposal coming from Alberta under the terms of the MOU being delivered and putting the onus on the Carney government to hold up their end. On the renewables side, Alberta will continue to be the national green pariah for its robust support of the oil and gas sector and for pausing new project approvals while also continuing to lead the country in actual wind and solar investment. It’s fun to live in a place so full of contradictions. Finally, there is the ever-present rumbling that Trump would revive the Keystone XL project but the cognitive dissonance that this would cause given its purpose of importing Canadian crude and his Venezuela plans might be too much to overcome.

 

• My two favourite Canadian E&P picks last year are ones that I should be picking this year, so I am forced to put on my thinking cap because picking the same two names year after year is lazy, although can you blame me for just riding CNRL into the sunset? They need to be well-capitalized enough to withstand any Venezuela nonsense or gassy. Wait. That means CNRL. Fine, that is my first one. For my second pick I am going with Kelt Exploration because they came out of my random name generator and I wanted a smaller cap producer.

 

• On the service side, it seems like it’s always a crapshoot. Either the market shows no love for a smaller Canadian niche player that never trades so you can’t get a return, let alone liquidity or you grab a beast like Haliburton and they deliver record revenue and an annual return of -15%. Plus, the names I wanted to choose have already had big runs so I’m not seeing huge upside. Since I’m not feeling the love on upstream stock performance this year my first pick is Enbridge because if you want a giant pipeco in your portfolio, pick the giantest. My second pick is Terravest. Sure, the stock had a huge run last year and I have picked them before, but they are a highly diversified business with revenue coming from a variety of industry verticals.
• In the United States I typically pick a producer and some weird flyer that no one has ever heard of that destroys my credibility. This year I am going to Venezuela. Donald Trump has his play and he’s going to force companies to go there. But the situation for the Venezuelan industry and infrastructure is so dire that it’s going to be decades before any producer sees a return. So I’m playing the rebuild. Haliburton is my number one pick to get a lot of work (and really only one of two companies that have the scale to do it) and my second pick is a company called Amentum. Why would I pick that company? Well, they acquired DynCorp who just happens to be a private military contractor with more than 10,000 employees with experience in Iraq and combatting cartels in Colombia and Peru on behalf of the US government – so boots on the ground security. So all my American stock picking is counting on a rebuild of Venezuela.
• Bonus stock pick? Brookfield Asset Management. If you have to ask why…
• Sports? Sure. Super Bowl – San Francisco beats … Denver. Sorry Steve. Stanley Cup – Les Canadiens beat the Nordiques. NBA –Oklahoma City beats Detroit.

That’s it!

 

That was exhausting.

 

My time here is done.

 

Invest wisely.

 

Do as I say, not as I do.

 

Don’t gamble on sports.