Blog for Monday, March 31, 2025
Is it all downhill from here? We’ve got you.
Freezing rain and power outages dominate the news today, a nice change from all things Trump, the Canadian election, Ukraine and Russia, Gaza, Greenland, tariffs etcetera.
I am working on the road from Mont Tremblant this morning after spending a final weekend of skiing here. Saturday was beautiful sunny day with decent temperatures and great conditions. Sunday not so much as the conditions changed over the day. The first sign of trouble coming was around mid-morning when I started getting pelted in the face with ice pellets as I descended the mountain. I initially thought it was a bit of snow hitting me on my breathtaking speedy decent. Not so much. That eased and I managed to get some more runs in before taking a break to warm up.
I was shocked to emerge from the café to find my ski bases had a solid layer of ice on them and my poles the same. I couldn’t slide on the snow until I worked the ice off. Insane. I had never experienced the situation before. I made the call to head out for the day and made my way down the mountain for one final run, only to find I had skied to a chairlift away from the village. Grrr. After traipsing back up, I decided to take the village Gondola back down for safety after noticing my clothing and googles were covered in a thin layer of ice…not conducive for safe skiing.
The Craigleith Ski Club was closed this past weekend due to the storm, so I figure Tremblant will be the end to my season. Not a bad way to end it. I just have to make my way home now in some precarious weather.
Not only is the weather precarious, so are global politics and the stock and bond markets.
Everything is in flux these days with the Trump administration, as I am sure you are well aware. “Liberation day” is coming on Wednesday this week (April 2nd) with the USA applying tariffs to all countries globally. What the roll out of this means is uncertain at best and has caused much uncertainty for the markets. This uncertainty is translating into a decline in the markets globally, with many dipping into correction territory.
The Bank of Canada cut rates March 12th and the Federal Reserve held rates steady last week, commenting that the tariffs are likely to prove “transitory”. They used that word back in 2022 and then got caught with skyrocketing inflation and were forced to raise rates aggressively to combat it. Markets crumbled after that, and it took nearly a year to recover. Both central banks are data dependent going forward. I expect the Bank of Canada to hold rates steady for a bit while economists expect the Federal Reserve to only cut rates once sometime this year.
Corporate profitability is also uncertain at best and likely unpredictable in light of the tariff situation. I anticipate corporations are not going to be as profitable in the near term and therefore how can stock prices be sustainable at these levels on lower profits?
I want to reassure you that our team is taking measures to protecting client portfolios. We moved to sell equities and raise more cash prior to everything falling apart in the early days of Trumps tariff threats. As news and economic data continued to deteriorate this past week, we added to cash again by selling equities and raising cash on an up day in the markets. The majority of our equity models have 25% cash or more in each.
Overall cash varies for each client. I estimate that we are carrying 25% cash now, 35% fixed income and around 40% equities in a balanced portfolio. We are also down less than 1% YTD for such a portfolio. New deposits of money are being held in cash for now for protection.
There is no way to know where this situation goes or ends up. It may be something that we have to deal with as the new norm over the next four years…or is that eight years…or is that indefinitely? Only time will tell. I do believe that we are not going back to the old days (old is now pre November 5th, 2024) and that a new normal is being set for the world with respect to security, trade, politics and the markets.
Hang tight. Limit your exposure to the news. Buy Canadian where you can and elbows up!
Miles…