MLD Market Update January 2026 - Allocator’s Perspective - Canoe Financial - Energy Markets

Summary

Chad Larson hosts an MLD Money Matters episode arguing energy is the next major “structural theme” that markets still misunderstand and underweight, then interviews Dave Zabanka (Canoe Financial) on why the current energy cycle still sits in “disbelief” despite improving fundamentals. Zabanka says accelerating power demand (especially from AI and data centres), tighter capital discipline, and consolidation are creating scarcity of quality resources, while public markets remain complacent even as private capital and strategic buyers move aggressively.

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Highlights

• Energy framed as mispriced and underowned: Chad positions energy alongside prior early themes (gold, defence, healthcare, private credit), arguing fundamentals are shifting beneath the surface.
• Demand growth thesis: Zabanka estimates global “energy equivalent” demand has historically grown ~5 million barrels/day per year and could inflect higher due to urbanization, developing-world catch-up, and AI-driven electricity demand.
• Data centre power shock: Zabanka claims the US may need 40–60 GW of incremental power by 2030 from data centres alone, likening it to adding 40–60 “million-person cities” worth of demand.
• Macro regime shift: Canoe’s view is the world is moving toward a commodity-friendlier regime (deficits, deglobalization, populism, energy security), pressuring high-multiple “growth” leadership over time.
• Cycle stage framework: Zabanka describes three stages (disbelief → optimism → euphoria) and argues energy remains in disbelief, citing low S&P 500 energy weighting and continued investor reluctance.
• Consolidation and oligopolies: Fewer companies control more resources (examples cited in Canada and US mega-deals), improving pricing discipline and reinforcing “scarcity of quality resource.”
• Public vs private disconnect: He says private equity, pensions, and even sovereign/strategic capital are returning to energy quietly, while many public investors remain underweight.
• Subsector alpha matters in a sideways tape: Canoe attributes outperformance to shifting exposure (e.g., less oil, more natural gas/power theme) and stock selection in midcaps/services/royalties.
• Natural gas as the reliability bridge: For “five-nines” reliability, he argues only coal/nuclear/gas qualify, and since coal is unlikely and nuclear is slow to build, gas becomes the near-term solution.
• Key risks acknowledged: Energy could stay underowned longer than expected, or a deflationary/AI-driven regime could undermine the commodity thesis; he watches for breakdowns versus long-term historical “lows.”
  

Key Insights

1. The core bet is scarcity, not headlines.
2. The guests repeatedly return to the idea that years of underinvestment plus consolidation are creating a structural scarcity premium for high-quality reserves and infrastructure. In their view, this scarcity can drive returns even if spot prices are choppy, because control of resource and disciplined supply response matter as much as the commodity tape.
3. Power demand is the new accelerant, and it changes the energy conversation.
4. The interview treats AI/data centres as an additive demand shock that did not exist in prior forecasts, pushing electricity needs upward quickly. Zabanka argues the physical constraints of building generation and grid capacity create a “power super cycle,” with natural gas positioned as the fastest reliability-ready fuel while nuclear ramps slowly.
5. Positioning is still lopsided, which is why they think the trade isn’t “done.”
6. Their evidence for mispricing is behavioural and structural: low index weights, broad investor under-ownership, and the claim that many holders stick to mega-caps while midcaps and specific niches offer better upside. They contrast this with rising activity from private equity, pensions, and strategic buyers, implying a potential sentiment-driven rotation later.
   

Conclusion

This transcript is a bullish thesis discussion: energy is presented as an underappreciated, early-cycle opportunity driven by rising power demand, supply discipline, and consolidation, with private capital acting earlier than public markets. The practical message is to treat energy as a long-duration allocation theme, expect volatility, and focus on subsectors and resource-quality scarcity rather than headline-driven trades.

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