The Trump-tariff wobbles has clearly not been good for investors’ nerves. For the week, the S&P 500 is on pace for a decline of 3.1%, while the Nasdaq is on pace for a loss of over 3.50%. For both indices, this week is likely to be the worst week since the week ending back in September 2024. And for the Nasdaq, it will be the third straight weekly decline of 2%+, which would be the longest such streak since late July/early August of last year. The Toronto exchange is down 2.4% on the week. The S&P 500 has gone from firmly overbought to ‘extreme’ oversold territory in only eight trading days. These kinds of swift moves have been very uncommon over time. But, as Petyr “Littlefinger” Baelish from Game of Thrones says: “Chaos is a ladder.” [see link in Weekend Reading]. In other words, perhaps we should be taking advantage of all the confusion and using it as an opportunity rather than a signal to retreat. As shown in the chart below from Bespoke, US indices are more oversold than they were at any point in the last year. Taking a wider look, the last time the indices were this oversold (at least 2.5 standard deviations below its 50-DMA) was back in late September 2023. While it’s expected that market lows should be right around the corner, it’s important to be patient until this does happen in a manner that helps to add conviction. I don’t like the risk/reward of being “out” of the market at this point, and I expect any pullback here to prove an excellent risk-reward opportunity. It remains difficult to try to make a stand at this point with no meaningful evidence of any trend improvement and I will need some evidence of breaking the current downtrend before having much confidence.

Should you have any questions or concerns, please feel free to reach out.

Portfolio Notes

(+) indicates a positive development, (-) indicates negative, and (~) indicates neutral

(+) Alimentation Couche-Tard (ATD-T) The company said it is confident there is a "clear path" to overcome U.S. regulatory hurdles in its proposed $47 billion acquisition of Japan's Seven & i, and expressed frustration at the 7-Eleven owner's "limited engagement.” Couche-Tard said it had identified a portfolio of U.S. stores to potentially offload and had begun talks with prospective buyers at the behest of Seven & i Couche-Tard needed to find a clear divestiture path that identifies specific stores, a time frame, and a credible buyer, before it considers sharing confidential information with its competitor, the person added Couche-Tard said it planned to finance the buyout with a combination of equity and debt. Owned in Core Portfolio.

(new) Blackrock Technology Trust and Private Equity Term Trust (BTX-US) We are buying the dip in this 15.6% yielding closed-end fund. As the name says, the fund also invests part of its portfolio in private equity, which can have bigger returns than public stocks in the long run, while the "term" refers to the fact that the fund will come to maturity in 12 years. The fund is run by Tony Kim and Reid Menge who are excellent managers. New position in US and Opportunity Portfolios.

Sector Highlight: Canadian Banks All Canadian banks presented at the RBC Financial Institutions conference, and overall, it looks like the mood is turning slightly negative given risks of protracted tariff wars. Commentary from the banks suggests that there is an increasing probability that they will have to take higher provisions in Q2 if tariffs stay in place for a prolonged period. RBC’s CEO, David McKay, said that the bank has already seen some slowdown in business activity, as it is harder for corporations to put capital to work given the ongoing uncertainty and unpredictability. We think Lifecos are better placed to navigate the current environment, and their ROE objectives look more achievable in the short term given the relatively low economic sensitivity in their business. Lifeco investment portfolios are also designed to be conservative, and geographically they have smaller exposure to Canada compared to the banks. The only bank we own is Royal Bank.

(increase) Nvidia (NVDA-US) The mega cap chipmaker and bull market leader has pulled back recently, with shares down around 13% in March and 19% in 2025. With the decline in the stock price, Nvidia’s valuation has come down. The stock is currently trading at 23.3x per-share earnings expected over the next 12 months, which is below its five-year historic average of 40x and a drop from the 31.2 times it was trading at on Jan. 1, according to Dow Jones Market Data. We are adding to the shares. Owned in all Newton Group Portfolios.

(~) Spotify (SPOT-US) paid a record $10 billion in royalties to the music industry in 2024. Over the past decade, its total payouts have grown tenfold, with the number of artists earning royalties tripling since 2017. Spotify's latest Loud & Clear report highlights that around 1 500 artists made over $1 million, while 12 500 crossed the $100 000 mark last year. But with ongoing debates around artist compensation, fuelled by a recent Grammy party boycott by songwriters, Spotify is shifting the spotlight to labels and publishers. A company spokesperson said the following: "Spotify does not pay artists or songwriters directly. We pay rights-holders. These rights-holders pay artists and songwriters based on their individual agreements." To its credit, Spotify is the only streaming service providing this level of financial disclosure - something even record labels avoid doing. Owned in Opportunity Portfolio.

(+) Stack Capital Group (STCK-T) As at December 31, 2024, Book Value per Share (BVpS) of the Company was $12.29, compared with $11.05 as at September 30, 2024, an increase of 11.2%. Stack Capital invested in a new portfolio company, CoreWeave, a leading AI hyper-scaler that provides GPU-accelerated infrastructure and solutions for businesses that require significant computational power such as those involved in AI, machine learning, scientific research, pixel streaming, visual effects rendering, and gaming applications. During Q4, the valuation for SpaceX increased to US$350 billion, up significantly from its previous valuation of US$210 billion. Starlink, the satellite communications business owned by SpaceX, also continues to aggressively expand its global reach, having now crossed over 5 million subscribers, an increase of over 100% year over year. The valuation for Canva also increased to US$32 billion during the quarter, up from US$26 billion, reflecting continued growth being generated in the underlying business, along with recently completed secondary transactions at that level. To date, the Company has completed eleven investments contributing $11.10 per share as at December 31, 2024, into the following: SpaceX (space exploration & communications); Locus Robotics (robotics); Omio (travel & leisure); Canva (graphic design); Hopper (travel & leisure); Newfront Insurance (insurance & benefits); Prove Identity (cyber-security); Bolt Financial (e-commerce); Varo Money (neo-banking); Shield AI (military defence) and CoreWeave (AI hyper-scaler). Owned in Opportunity Portfolio.

(new) Tesla (TSLA-US) For some, the hate is on for Elon Musk. In the past month, Tesla has been significantly impacted by global trade tensions, particularly due to tariffs imposed by the U.S. and retaliatory measures from countries like Canada and China. These tariffs have raised concerns about potential impacts on Tesla's sales and supply chain, especially for models like the Cybertruck. Despite these challenges, Morgan Stanley has shown strong support for Tesla, naming it a top pick in the U.S. auto sector and predicting a potential stock price increase to $430, driven by the company's advancements in AI and robotics. However, Bank of America has lowered its price target for Tesla, citing the adverse effects of the tariffs. With shares down 50% in just a few months we picked up a small position. New position in Opportunity Portfolio.

Weekend Reading

Everybody Stay Cool Great charts on the nature of this drawdown from Michael Batnick. BATNICK

Fed expected to keep interest rates on hold, Canadian price growth to move higher The balance of risk around the U.S.’s growth may be shifting, but government data still shows a strong economy and that will likely lead the U.S. Federal Reserve to stand pat on interest rates on Wednesday. RBC

If William Shakespeare Came to Hollywood Today He worked successfully in the entertainment business for 30 years and still sells tickets today—more than 400 years after his death. TED GIOIA

Pure Independence Our desire to be independent, why we want it, what prevents us from achieving it, and why some people sabotage their ability to have it, is such a common story across cultures and generations. A simple formula for a pretty nice life is independence plus purpose. MORGAN HOUSEL

Ranked: The 15 Largest Defense Budgets in the World In 2024, the U.S. spent nearly $1 trillion on its defense budget, equal to 3.4% of GDP. In contrast, NATO members in Europe and Canada spent an average of 2% of GDP on defense. VISUAL CAPITALIST

CoreWeave IPO: S1 Presentation SEC FILING

Notes/thoughts from PDAC 2025 Every time a goldbug dies, a crypto bro gets his wings. Goldbug lives matter, everything else is just a critical mineral. THE OREGON GROUP

Unspontaneous Combustion Nothing roils Canadians quite like arrogance from their overbearing southern neighbor, and the country is experiencing a historic wave of unity, patriotism, and outright anger at Trump. The media frenzy is unlike anything we have observed in decades of following Canadian politics. DOOMBERG

Diversions

Black Bag New spy thriller from Steven Soderbergh with Cate Blanchett and Michael Fassbender. (Theatres)

Douglas Is Cancelled Hugh Bonneville as a British TV host who becomes subject of a scandal. (Britbox)

Riff Raff Bill Murray. Pete Davidson. Jennifer Coolidge. (Theaters)

The Rule of Jenny Pen John Lithgow and Geoffrey Rush star in this horror flick about a man who uses his hand puppet to terrorize. (Theatres)

Selection Sunday. Let the Madness begin. (CBS)

Dope Thief. It was the perfect grift until they chose the wrong mark. Ridley Scott. (AppleTV+)

Bosch: Legacy: Season 3 Third and final season. (March 17, Prime Video)