Highlights

• Our Observations
• Current Economic Outlook
• Our Investment Strategy
• Our Community Involvement

Our Observations

After 36 days of campaigning, Canadians have elected the Liberal Party of Canada for fourth consecutive mandate, giving Mark Carney the task of leading a minority government (so far) to take on the unpredictable U.S. President Donald Trump.

The outcome of the election appears to have had a moderate impact on the currency and stock markets, though the final results are still pending. The next few days should shed some light on the matter.

 

Current Economic Outlook

Increased volatility in global equity markets over the short term is likely. Whether the S&P 500 and other major equity indexes can advance will depend on a meaningful scaling back of trade issues that would limit economic damage.

For now, we believe investors should remain cautious and watchful, but invested. We will ensure our stock holdings have staying power and are best positioned to perform throughout the business cycle.

Global equity markets have taken various trajectories throughout the first four months of 2025, from corrections to new highs, all against a backdrop of deep economic uncertainty. While we see potential for equities to perform well going forward, there are still several factors now in play that will influence the direction markets take from here.

Key points:

• The S&P 500 did much better in the rally that followed the U.S. election than major non-U.S. equity markets, but much worse in the recent correction. Investor sentiment has become one-sidedly pessimistic.
• An oversold rebound may arrive in the coming weeks, but moving on to sustainable new highs could require a re-energized earnings picture catalyzed by a meaningful scaling back of trade issues – namely, Donald Trump’s tariffs.
• Most importantly, the U.S. needs to avoid recession. If it fails to do so, most equity markets are likely to face weaker earnings and share prices.

The nature of stock market corrections reminds us of the old adage: “It has happened before, and it will happen again.”

• Since 1928, the S&P 500 has experienced 103 corrections of 10 percent or more and 27 corrections of 20 percent or more.
• In the modern era since 1980, the average maximum peak-to-trough decline in the S&P 500 each year was 13 percent. In other words, corrections have been commonplace.
• Nevertheless, the S&P 500 traded higher year over year in 35 out of the last 45 years.
• Since 1980, the market fell in consecutive years on only one occasion, in 2000, 2001, and 2002, a period when the technology bubble burst, the 9/11 attacks occurred, the U.S. began its military intervention in Afghanistan, and a mild recession arose.

Our Investment Strategy

We continue to manage portfolios in this environment with a degree of caution, ensuring our equity exposure has been rebalanced and does not exceed the targets laid out in the investment policies and financial plans that we have designed for our clients. Those plans assume that market drawdowns, such as the one we are living through, may occur from time to time and to varying degrees. Sticking to a plan ensures that we remain disciplined in our approach which is particularly important during periods of market duress where emotions can often get in the way.

 

Prosperous in good times, resilient in bad times.

As Howard Marks famously said:

"We can’t predict, but we can prepare.”

- Howard Marks, American investor and writer

 

Our Community Involvement

True to our dedication to community involvement, my team and I are proud to announce our participation in La Soirée des Grands 2025 for the benefit of the young people of the DYP coming up on May 15th.

In line with our commitment, it is a pleasure to make our contribution. Indeed, the Foundation finances programs which would have usually been provided by parents or family. Through its six divisions, the Foundation acts in tandem with existing resources for the benefit of young people in vulnerable situations.

 

As always, we are available to answer your questions.

 

Benoit Legros, B.A.A., CIM, FCSI

Senior Portfolio Manager and Wealth Advisor