We will be taking a brief pause from our regular communications for the Holidays but will remain available. We wish everyone a safe and wonderful Holiday Season!

Highlights

• Our Observations
• Current Economic Outlook
• Our Investment Strategy

As we move through the final weeks of 2025, markets continue to balance encouraging earnings momentum with a shifting economic landscape. Below is a brief look at the key developments shaping our outlook and investment positioning.

Our Observations

The resolution of the longest U.S. federal government shutdown in history removes a meaningful source of uncertainty that had periodically weighed on investor sentiment. While the shutdown likely caused a temporary dip in activity, past episodes show that lost output is typically recovered as operations normalize.

In Canada, Prime Minister Mark Carney’s first federal budget passed by a narrow 170 to 168 margin and marks a shift toward capital-focused spending. Front-loaded allocations to infrastructure, defence, housing, and tariff-impacted industries result in a projected $78 billion deficit for 2025 – still large but slightly lower than previously forecast. A gradual narrowing is expected through 2029/2030 as spending moderates and efficiencies materialize.

We view the recent pullback as a mild “growth scare,” consistent with typical year-end dynamics such as tax-loss harvesting and institutional rebalancing. Importantly, TSX earnings are still expected to grow at a double-digit pace in 2026.

Current Economic Outlook

Rate cuts are now underway across several major economies. In the U.S., the Federal Reserve delivered its second consecutive cut and signaled flexibility to continue easing should labour-market softness persist and inflation remain contained.

Improving credit conditions, easing inflation, and monetary policy support collectively create a favorable environment for risk assets.

In Canada, Budget 2025’s capital deployment is expected to positively influence economic momentum heading into 2026.

Taken together, the end of the shutdown, strong earnings, and renewed monetary easing reinforce a cautiously optimistic outlook.

Our Investment Strategy

We continue to maintain an invested yet vigilant stance across portfolios, with balanced exposure to both Canadian and global equities. A disciplined, diversified approach remains central to managing risk while positioning us to participate in long-term growth.

Diversification helps soften short-term volatility and enhances the potential for stable, compounding returns across sectors and regions.

We are monitoring the rollout of Budget 2025’s capital programs, which may create opportunities in infrastructure, housing-related sectors, and industries influenced by shifting global trade patterns.

Across asset classes, we continue to emphasize quality, fundamentals, dividend growth, and selectivity as we position for 2026. Our long-standing philosophy remains unchanged. Your personalized financial plan and Investment Policy Statement help tilt the odds in your favour by filtering out the day-to-day noise. When viewed across decades, the markets reveal an almost uncanny steadiness: equities have historically compounded at roughly 9% annually in both the U.S. and Canada. Regular investment, combined with time and discipline, remains one of the most powerful tools for building wealth.

Our tried-and-true approach

 

« I never know whether the market is going to go up or down. I've never had the impression that I can predict it. Over the long term, the markets will go up. But as for knowing what will happen tomorrow, next week, or even next year… I’ve never claimed to know, and I’ve never thought it was important. »

- Warren Buffet, Chairman and CEO of Berkshire Hathaway

 

As always, we are available to answer your questions.

Benoit Legros
Senior Portfolio Manager and Wealth Advisor