Global Insight Weekly

Global Insight Weekly - November 21, 2025

Many economic headlines over the last year have referenced the U.S. economy as “K” shaped – but what exactly is this? At a high level, it is a multidecade process of economic divergence that has resulted in what is effectively a two-tier economy. Higher-income households increasingly driving the economy and enjoying the benefits of its advance, with lower-income households facing increasing cost pressures and finding it difficult to get ahead. While wages have increased, so too has the cost of living, thus making it difficult for lower income households to afford discretionary investment.

The largest component of the U.S. economy is by far consumer/household consumption. Consumer spending accounts for almost 3 times as much economic activity as government or business spending. That spending, however, comes from the top 10% of households. Consumption by 10% of households drove 34% of all economic activity in the U.S. in Q2/2025. In fact, the U.S. today is near the highest levels of economic inequality since record keeping began nearly 60 years ago.

When viewed from a different perspective, the top 20% of income earners, directly or indirectly hold 90% of stock investments. This consumption behavior is almost certainly driven at least in part by the performance of the stock market and could mean that even a relatively small shift in consumption patterns could have large implications for the overall economy.

Historically, the methods used by the U.S. Federal Reserve, including keeping interest rates low to encourage spending does not appear to be as effective anymore. While the use of lower interest rates and a weaker U.S. dollar can still be effective, the focus and target of these tools must be revamped to include a broader portion of the population.

Please click here to access this week’s Global Insight Weekly where I have highlighted what I consider interesting/important takeaways. 

Global Insight Weekly - November 14, 2025

After more than 40 days, the longest federal government shutdown in U.S. history has officially ended, with President Donald Trump signing a bill to restore federal funding this week. From a market standpoint, we see two key implications. First, the resolution helps remove a notable source of uncertainty that had, at times, weighed on investor sentiment and confidence in the economic outlook. Second, while the shutdown likely caused a short-term slowdown in economic activity, history shows the economy tends to make up lost ground once normal operations resume.

It will take time for federal agencies to restart operations, but the reopening is a positive development—reducing near-term risks to the economy and improving visibility into economic trends.

While the broad indexes recovered from the closing low of the previous week, they surrendered their initial gains as investor enthusiasm for the end of the government shutdown gave way to concerns over a slowing economy.

Canadian Federal Budget

Canada’s federal government released its first budget under Prime Minister Mark Carney last week. The budget built on campaign promises to balance an agenda of substantive investment with fiscal responsibility, featuring expansionary spending aimed at infrastructure, defense, housing and tariff-affected industries.

The fiscal plan is front-loaded: the projected $78 billion deficit for this year (-2.5% of GDP) is materially higher than previously forecast, but the government expects the deficit to decline to $57 billion by 2029–30 (-1.5% of GDP) as expenditure review and operational efficiency savings—including headcount reductions—take effect. While sizeable, the deficit came in lower than some economists anticipated and has not sparked a notable bond market reaction. The minority Liberal government still needs parliamentary support from other parties to pass the budget, but broadly, the budget appears to strike a reasonable balance between strategic investment and fiscal prudence.

Please click here to access this week’s Global Insight Weekly where I have highlighted what I consider interesting/important takeaways.

Global Insight Weekly - October 31, 2025

The U.S. Federal Reserve opted to cut interest rates by 0.25% this week. While inflation remained above the Fed’s 2% goal, the softer-than-expected reading and steady underlying trends gave officials confidence to ease policy.

Fed Chair Powell cautioned, however, that continued data disruptions, given the U.S. government shut down, could complicate future decisions. He noted that another rate cut in December “is not a foregone conclusion,” stressing the Fed’s need to balance “upside risks to inflation and downside risks to employment” amid an increasingly uncertain data environment.

The muted reaction from ‘risk’ assets (ie. equities and corporate bonds) suggest that markets might be content with the Fed positioning.

In Canada, the BoC also lowered rates by 0.25%. Despite a modest uptick in headline inflation, easing business inflation expectations, the removal of retaliatory tariffs, and a tepid labour market provided scope to cut for a second consecutive meeting.

However, policymakers tempered expectations of more cuts in the months ahead, noting that persistent trade disruptions could cause structural scars to the economy, potentially making monetary policy a less effective tool in stimulating growth while keeping inflation anchored around its target range.

Q3 reporting also in the news with just over 50% of the S&P 500 having reported. So far, revenue growth of 7.3% is surpassing the 5.9% consensus. Earnings growth is tracking at 11.1% compared to the initial 7.4% consensus.

Takeaway

With corporate earnings season off to a broadly positive start and central banks moving to support growth, the foundation for cautious optimism in equity markets appears to be intact. The combination of interest rate cuts and resilient earnings reinforces our view that maintaining an “invested but selective” stance remains appropriate.

Please click here to access this week’s Global Insight Weekly where I have highlighted what I consider interesting/important takeaways.

Global Insight Weekly – October 17, 2025

The U.S. federal government remains shut down. While the broader economic impact has typically been modest, the absence of official economic data releases during the standoff adds a layer of uncertainty. For now, investor attention is shifting to the Q3 earnings season, with renewed U.S.-China trade tensions adding to the backdrop of uncertainty.

Quarterly reporting season kicked off this week, with U.S. banks setting a positive tone on the back of strong trading and investing 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 insights into economic trends and consumer demand.

Given elevated valuations that already reflect a favorable outlook, strong earnings delivery will likely be essential to support the ongoing uptrend in equity markets.

Canadian stocks have fared well year to date, benefiting from a rally in gold prices and solid performance from the banks. As Canadian companies begin reporting financial results, focus will be on gauging the impact of U.S. tariffs and insights into domestic spending trends.

Trade Tension

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 1. The latest escalations may be “tactical posturing” ahead of a bilateral meeting between Presidents Trump and Xi Jinping, which is still expected to take place in late-October. Moreover, the Trump administration has so far shown a reluctance to fully follow through on policies that have generated significant adverse market reactions. The risk of elevated volatility in the near term could linger if talks falter or rhetoric intensifies.

With the U.S. government shutdown clouding the economic picture and renewed U.S.-China trade frictions contributing to uncertainty, we expect the Q3 earnings season to play a central role in providing an update on the economy and anchoring market sentiment. While some short-term volatility is possible, we believe "invested, but watchful" remains a sensible stance for portfolios.

Please click here to access this week’s Global Insight Weekly where I have highlighted what I consider interesting/important takeaways.

Global Insight Weekly - October 10, 2025

Equity markets are showing resilience and strength. Despite a murky backdrop, and negative headlines, optimism has continued to benefit those who have remained invested.

Major indices are hitting fresh highs, buoyed in large part by momentum in the technology and AI sectors. However, we have also seen a welcome broadening of this strength in non-AI sectors.

The AI boom shows no signs of fatigue. Yet at the same time, gold is having a “contrarian boom” of its own: bullion has surged as risk-averse investors hedge their portfolios amid macro uncertainty. Indeed, gold’s advance reflects a rising fear in markets, with participants seeking shelter even while chasing growth upside in tech.

That said, several headwinds loom. Inflation remains sticky, economic data is mixed (and in some cases weakening), and central banks face the challenge of threading the needle between containing inflation and supporting growth. These forces are largely contradictory—but for now, the stock market continues to rise. In effect, markets are balancing divergent narratives and betting that growth and earnings optimism will overpower the risks.

Within our funds, all these dynamics are being closely monitored and actively managed to balance opportunity with caution. Our investment teams continuously assess market trends, economic data, and sector developments to position portfolios effectively. By dynamically adjusting exposures and maintaining disciplined risk controls, we aim to reconcile near-term volatility with the pursuit of sustainable long-term returns.

In this environment, we must remember that markets can stay resilient even amid conflicting signals—and focus on maintaining a balanced, long-term perspective rather than reacting to every headline.

Please click here to access this week’s Global Insight Weekly where I have highlighted what I consider interesting/important takeaways.

Global Insight Weekly - October 3, 2025

We have previously reviewed the increasing strength and influence the BRICS association is having on restructuring and reshaping global economies and trade. This geopolitical order continues to shift amid fracturing trade ties and high tariff levels.

The original BRICS nations—Brazil, Russia, India, China, and South Africa—are steadily increasing their strength and influence in the global economy. The Association has expanded amidst geopolitical changes and has grown from five members in 2023 to 10 members today. The ‘newest’ five member countries are: Egypt, Ethiopia, Indonesia, Iran and the UAE.

Together, they represent a large share of the world’s population (48%), natural resources, and economic growth (40% of global GDP), making them powerful drivers of international trade and investment. By creating their own financial institutions, deepening cooperation, and pushing for alternatives to Western-dominated systems, BRICS is challenging the traditional global order.

Three BRICS currency-related initiatives strive to further reduce the proportion of global trade in U.S. dollars and within the Western-backed SWIFT payments network.

1. Trading in national currencies – members want to expand bilateral trade in their own currencies and improve financial and banking systems. This trend picked up steam following economic sanctions on Russia.
2. Cross-border payments initiative – fortify and enhance their own interbank communications system and provide an alternative to SWIFT that cannot be disrupted by Western government actions.
3. Grain exchange – new commodity and exchange to trade grain and other agricultural products and commodities. An alternative to an industry dominated by U.S. and other Western exchanges in USD.

This translates into three practical read-throughs for portfolios –

1. Increased focus on more active asset management of country, industry and specific company investment exposures.
2. Continued importance and focus on geographic diversification. Many clients have long held a “home bias”, whereby portfolios are more heavily weighted in their own country. Increasing allocations to international and emerging markets is becoming increasingly important.
3. Maintaining exposure to equity industries geared toward sovereign development.

BRICS growing influence reflects a shift toward a more multipolar world where economic power is more widely distributed.

Please click here to access this week’s Global Insight Weekly where I have highlighted what I consider interesting/important takeaways.

Global Insight Weekly - September 26, 2025

A lot of investor focus this year has been on the implications of U.S. President Donald Trump’s tariff policies.

Some estimates have the weighted-average applied U.S. tariff rate on imports at between 17-19% - up sharply from the 2% at the start of the year.

However, the increase in actual tariff rates has been less severe, with customs duty collections suggesting the average tariff rate is closer to 10.5%. This difference has helped keep the economic fallout more contained than initially feared, however still significantly higher than before.

There are two main reasons for the gap between the headline tariff rate and actual collections.

Trade diversion and supply chain adjustments – Higher tariffs on certain countries and products incentivize companies to find alternatives. This can be done through reconfiguring and rerouting supply chains through third-party countries with lighter duties, or from alternative markets and substitute products.

Exemptions – a large share of U.S. imports is exempt under existing free trade agreements. For example, the Unites States-Mexico-Canada Agreement (USMCA) provides many exemptions for Canadian and Mexican goods. RBC estimates nearly 90% of U.S. imports from Canada are duty free.

The overall cost of tariffs is still substantial with an estimated annualized U.S. tariff revenue of $354 billion – roughly $275 billion more than in 2024.

Who is paying?

Evidence thus far suggests U.S. businesses are carrying a significant portion of the burden as pre-tariff product costs have remained steady and inflation lower than expected. This outcome, however, may not last indefinitely as companies’ reluctance to raise prices could gradually fade as the pressure on profitability increases.

The road ahead for trade policy is far from clear. Legal challenges over U.S. tariffs remain, in addition to the USMCA review slated for next year. Although U.S. trade policy has generally evolved favorably for markets and the economy, there are renewed concerns around growth and inflation in the months ahead as the effects of tariffs fully pass through.

Please click here to access this week’s Global Insight Weekly where I have highlighted what I consider interesting/important takeaways.

Global Insight Weekly - September 19, 2025

Central banks in both Canada and the U.S. cut interest rates following signs of weakening labor market conditions, thus resuming monetary easing cycles that had been on hold.

The U.S. Federal Reserve lowered its benchmark rate by 0.25% at its meeting this week, a move widely expected by markets and the first cut since December 2024. A series of softer-than-expected labor market data over the summer heightened concerns over a potential growth slowdown, while recent inflation readings showed less tariff pass-through than previously anticipated, giving the Fed room to act to cushion against downside risks in the economy.

The Bank of Canada matched the Fed’s decision, reducing rates by a quarter-point this week. A high degree of USMCA compliance in trade flows and the removal of retaliatory tariffs on the U.S. has helped keep inflation in check, opening the window for the BoC to cut rates to support some trade-impacted sectors and a labor market facing rising unemployment.

Markets had largely priced in the latest rate cuts, with the messaging being that the evolving balance of risk between inflation and the labor market led central banks to place a greater emphasis on keeping the labor market on steady footing.

For consumers, lower rates mean reduced borrowing costs, increased disposable income, and greater financial flexibility, which can stimulate economic growth through higher consumption.

For investors, falling interest rates create a more favorable environment for stocks by improving corporate profitability, encouraging growth initiatives, and enhancing valuations. Additionally, bonds benefit from rate cuts as existing higher-yielding bonds become more attractive, and demand for stable income-generating assets increases.

While easier financial conditions should provide broad support for the economy, there remains significant uncertainty over how far and how fast interest rates will fall, as central banks are also committed to maintaining inflation stability that is aligned with their long-term targets. How this balance is managed will be closely watched.

Please click here to access this week’s Global Insight Weekly where I have highlighted what I consider interesting/important takeaways.