Highlights

• Our Observations
• Current Economic Outlook
• Our Investment Strategy

Our Observations

Global markets continue to navigate a complex environment shaped by political gridlock, evolving trade dynamics, and political uncertainty. While near-term headlines have contributed to fluctuations in sentiment, the broader economic picture remains resilient. Consumer spending, corporate earnings, and labor markets continue to show underlying strength suggesting that despite volatility, fundamentals remain intact. We continue to monitor these developments closely to identify both risks and opportunities.

Current Economic Outlook

The U.S. government shutdown has furloughed approximately 750,000 federal workers. The budget dispute revolves around healthcare spending, with Democrats advocating for its restoration and Republicans pushing for cuts. Both parties seem willing to endure the shutdown, though public pressure is mounting as paychecks are missed.

The table below highlights what each party is advocating for

A short-term extension is the most likely outcome, but this risks another shutdown later in the year. Overall, the economic impact could potentially lower annual GDP growth by up to 0.1 percentage points.

Trade and Tariff Updates

China-U.S. trade tensions have resurfaced after China’s recent decision to impose additional export controls on rare earths minerals. In response, the Trump administration has threatened "much higher" tariffs on China, potentially taking effect November 1st. These latest escalations may be “tactical posturing” ahead of a bilateral meeting between Presidents Donald Trump and Xi Jinping.

The quarterly reporting season is now under way, with U.S. banks setting a positive tone on the back of strong trading and investment banking revenues. In the absence of official U.S. economic data due to the government shutdown, company earnings and management commentary on the outlook will be especially valuable for insight into economic trends and consumer demand. We will be closely watching guidance for the remainder of 2025 and into 2026, particularly around capital expenditure plans and how companies are navigating unpredictable U.S. trade policy and tariff-related costs.

North of the border, Canadian stocks have fared well year to date, benefiting from a rally in gold prices and solid performance from the banks.

Our Investment Strategy

In times of uncertainty and shifting global dynamics, maintaining a disciplined and diversified investment approach remains essential. Market volatility and short-term disruptions such as trade tensions or government shutdowns can create noise, but they also present opportunities for long-term investors.

We believe in staying invested and focused on the fundamentals and our goals rather than reacting to temporary market swings. A well-diversified portfolio helps manage risk while positioning investors to capture growth across various sectors and regions. Diversification not only mitigates the impact of short-term volatility but also enhances the potential for steady returns over time.

Our investment philosophy centers on patience and the power of compounding. Remaining invested through market cycles allows returns to build upon themselves, helping portfolios grow over the long run. While it can be tempting to make reactive decisions in periods of uncertainty, history consistently shows that time in the market—not timing the market—is what drives long-term success.

Our tried-and-true game plan

"One day at a time. One game at a time. Just don't put your head down.
We're the type of team that we never give up."
– Vladimir Guerrero Jr., first baseman for the Toronto Blue Jays
 

As always, we are available to answer your questions.

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

Senior Portfolio Manager and Wealth Advisor