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Hart Investment Group - Weekly Round Up
Hello everyone, and welcome to our weekly roundup. Today, we’re focusing on economic growth, interest rates, and market sentiments. After some light conversation about the weather and winter blues, we dive into the main topics. The IMF predicts a slight cooling of economic growth in 2026, and questions arise about the key drivers behind this anticipated slowdown and how investors might respond.
This year’s economic activity has generally exceeded expectations, particularly in Europe and the US, where interest rates were cut last year and have since been held steady. US consumption has also outperformed predictions, and China’s rate cuts have helped ease financial conditions. Canada stands out as an exception, with its economy facing some temporary recessionary trends. The overall picture suggests we experienced a bit of an economic overshoot this year, with better-than-anticipated numbers, while the IMF expects some moderation next year. Despite mixed signals, there remains optimism—especially regarding continued spending in the US and ongoing stimulus in China. Asset prices may not see dramatic surges, but there could be opportunities for moderate equity gains and sector rotation, particularly from high-growth stocks to more stable consumer staples.
Turning to interest rates, the government shutdown has delayed key employment reports, leaving the Federal Reserve with less data ahead of its December meeting. The Bank of Canada has already indicated it’s looking past recent volatile inflation figures, and it’s likely the Fed will adopt a similarly cautious approach. Futures markets recently suggested about a 70% probability of a rate cut, and rising unemployment supports the case for more accommodative policy. With the government now back at work, there’s room for policy adjustments as new data emerges.
The shutdown also impacted market liquidity, leading to sideways and choppy trading. Major indices like NASDAQ, TSX, and the Dow all saw dips, reflecting investor uncertainty. However, with liquidity expected to return, markets may stabilise and resume upward movement.
We then review research from ISI Evercore, focusing on youth trends in social media, streaming, quick service restaurant chains, and clothing brands. Instagram remains the most popular social platform among 13- to 36-year-olds, though its growth rate is declining. YouTube is gaining rapidly, signalling positive prospects for Google, while TikTok also shows strong engagement. In streaming, Netflix maintains its lead despite some surprises, while Amazon Prime is regaining ground. Traditional cable is nearly absent from younger viewers’ preferences. When it comes to fast food, Chipotle has overtaken Chick-fil-A as the top choice in 2025, with both brands now present in Ottawa and attracting attention. Clothing brands Lululemon and Nike remain favourites, with Apple making a notable comeback in popularity. The emergence of Alo as a competitor to Lululemon is also highlighted, suggesting new opportunities in the yoga wear market.
From an investment perspective, these shifting trends offer insight into potential upside for certain stocks, especially those that have recently underperformed. The discussion closes with reminders that opinions shared do not necessarily reflect those of National Bank Financial, and do not constitute investment advice.
Looking ahead, the agenda for next week includes monitoring post-shutdown market calm, government data releases, and ongoing trade and tariff developments. Earnings season is wrapping up, with notable movements in stocks like Disney and Cisco, as well as some M&A activity. Liquidity’s return and market reactions will be watched closely.
Thank you for joining us. Please remember to visit, subscribe, and follow us on YouTube and LinkedIn at Heart Investment Group. Links to our daily financial heartbeat are available in the video caption and via email for subscribers. Clients are encouraged to reach out to Ben for questions or to book review meetings. Have a great weekend!
Hello everyone, and welcome to the weekly roundup. In today’s session, we’ll discuss Canada’s proposed budget, recent economic news, and prevailing market sentiments. Ben and Eva exchanged greetings, touching on the early November snowfall, a sign that winter is settling in and boots are coming out a bit sooner than expected.
The discussion began with Canada’s proposed budget and the implications of a projected 78 billion dollar deficit for the next fiscal year. They considered which sectors might benefit most and outlined potential risks for investors. The budget was described as a positive read, though some critics felt more aggressive action, such as corporate tax cuts, would have drawn more businesses to Canada. The splitting of operational and capital expenditures in the budget was noted as a more business-like approach, making it easier for Canadians to understand. Infrastructure appears set to benefit, with possible investments in pipelines, refineries, retooling factories, and green power initiatives. The conversation highlighted the government’s tilt toward ESG investing and efforts to diversify away from reliance on the US economy. Execution timelines—ideally 18 to 24 months for major infrastructure projects—were emphasized as crucial for success.
The conversation then shifted to the ongoing US government shutdown, which has now extended into its second month and, by some measures, has become the longest ever. The shutdown has tightened financial conditions, as funds are being shuffled to keep operations running under a self-imposed debt ceiling. This has created uncertainty due to outdated data for central planners, raising concerns about the reliability of economic indicators. There’s a 75% chance of an interest rate cut at the next US meeting, but doubts persist about decision-making in the absence of current data. Once the shutdown ends, an influx of liquidity is expected as government operations resume. The team expects a resolution soon, possibly by mid-month, but it remains important to monitor the situation closely.
Reflecting on October, the market performed well overall, despite some volatility at month’s end. Bonds moved sideways throughout the year, while equities showed gains. The gold market experienced a significant correction after a short-term peak in mid-October, with gold and gold miners struggling to find support since. The Canadian dollar weakened slightly following the budget announcement, though this is expected to be temporary. November has started with considerable market choppiness, partly due to the US shutdown. The Supreme Court also began hearing a case regarding the legality of tariffs imposed by the previous US administration, which could have far-reaching financial implications depending on the outcome.
As the roundup continued, Ben reviewed charts illustrating the split between operational and capital expenditures in the Canadian budget, noting a plan to balance day-to-day government operations while maintaining investments in infrastructure. The budget also aims to reduce around 40,000 public sector jobs, through retirements, runoff, and consolidation, reflecting a business-oriented approach to government spending. Program spending is being locked in, with minimal new initiatives, focusing on maintaining and reducing operational costs. The growing public debt and associated interest charges were discussed, especially as higher interest rates make carrying the deficit costlier. However, comparisons were made to other countries like Japan, suggesting that low interest rates can make large deficits more manageable, and that Canada may be able to leverage debt for future growth in the current global context.
Ben concluded with a standard disclaimer, reminding listeners that the opinions expressed do not necessarily reflect those of National Bank Financial, and advising everyone to consult their advisers with questions, as individual risk tolerance varies. Looking ahead to next week, the team will continue tracking the Supreme Court tariff case and the US government shutdown, both key events likely to impact markets. Earnings reports remain influential, with mining companies showing significant market movement in response to news. Notably, prominent investors are taking short positions on AI stocks, signalling possible downside risks despite an overall upward direction in money supply and market trends. Ben encouraged everyone to stay vigilant about valuations and risks.
The session ended with reminders to visit, subscribe, and follow the group’s YouTube channel for daily financial updates. Clients were invited to reach out to Ben for portfolio review meetings. The hosts thanked everyone for joining and wished all a good weekend.
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Economic news
Economic Impact
To keep you informed and stimulate your thinking, Stéfane Marion and Denis Girouard take a look at economic news and share their perspectives in our monthly informative videos.
Hello everyone, welcome to Economic Impact. Today we are November 12, 2025, and as usual, I am with our Chief Economist, Stéfane Marion. Stéfane, once again we need to talk about, you know, Canada versus U.S., but rate cuts now.
There are so many things we want to speak to you Denis today, but let's start with the rate cuts because that's your specialty as a former head of fixed income. So yes, monetary easing cycle continued in Canada in October. 9th. It was the 9th easing rate cut since the beginning of the cycle that started in the summer of 2024. You know, we spoke last month, could there be more? The Bank of Canada was cautious on this one, Denis. It says, "I'm giving you one, but I think rates are neutral and I think I might be done for this easing cycle". So there's a considerable gap that remains with the U.S., you know, to reflect some of the challenges that we face on this side of the border. But it seems like the Bank of Canada is comfortable now saying, "Well, maybe monetary policy is where it should be".
Do you think it's unusual thinking that the rates will not go lower, considering what we see in the economy right now?
I would have thought so, like you, but the surprise in the Canadian economy over the past month, the past two months, is the uncanny resilience. So, the service sector in Canada, which is the biggest chunk of the Canadian economy, is indicating growth for the first time in nine months, right. And the manufacturing sector is still showing contraction, but nowhere near as bad as what we saw, so it seems like the Canadian economy is stabilizing with growth. It's not a boom Denis, but it's better growth than we had forecasted. So, you could justify the Bank of Canada's message based on the recent evidence that we're getting from economic reports.
And this is also what we get from the unemployment number, which was a big surprise.
All these surveys are meaningless if you can't confirm it with real data. And the real data shows that we've had some job creation to the extent that, good enough, to the extent that the unemployment rate actually edged below 7% for the first time in a few months. And more importantly, the wage inflation is growing at roughly 4%, which is above inflation. So that means that there is purchasing power at the consumer level that could help stabilize the Canadian economy, despite the fact that the export sector remains challenged.
It's quite interesting seeing that because this is not the perception we have when we're listening to the news. It's very negative compared to the results here.
You're right. And if you look at the, you know, there's been announcement that Ottawa's thinking about reducing quite significantly the size of the civil service in Ottawa. But having said this, what's happening in the private sector in Canada shows again, this resilience. So, notice in the U.S., the trend on private sector employment, this is a private survey Denis because, as you know, the government is still shut down-reopening, but it's going to take time to get the official data. But the private sector suggests this downtrend in U.S. employment growth. Canada is more volatile. So, I can't say that we have broken the trend with the U.S., but clearly in the last month we did. So again, that just speaks to some resilience in the private sector because the earnings season was better than expected on the S&P/TSX, so that would be reflected on employment. So, private sector holding up relatively well at this point in time. Again, suggesting that the BoC, the Bank of Canada, might have been justified to say, "Well, maybe we've done enough".
Now we have the reason. Ok. And now we have to talk about the budget in Canada because we spoke about it the last time. Now it's done.
Yeah, so we spoke last month. Ok, so one of the reasons the Bank Canada says, "Well, I need to pause now" is because, you know, we are getting fiscal stimulus in Canada. Maybe the budget was not as transformational as we thought it would be last month where we were arguing for $100 billion deficit, 3% of GDP. It came in that $80 billion. So, Denis, close enough to say, is it a structuring budget? I think it is because if you look at the composition of the spending for the years ahead, look at these blue bars, this is investment. This is not just spending that just goes to consumers and then that disappears in the economy through some import leakages. Absolutely not. This is a commitment to invest in the Canadian economy and to start to reindustrialize the country. So, notice that on the operating balance, you know, Ottawa says "Well, we'll be in surplus in three years from now, but we are committing roughly $280 billion to investment in the Canadian economy". So, Denis, that is structuring.
And this is how you build confidence in an economy when you see that amount of investment, which are not expenses, which down the road will produce revenue.
Yes, so, so you're going to run a 2.5% deficit as a share of GDP this year. But the commitment to skew it towards investment means that investors are unlikely to say, "Well, we don't believe in your story". They're going to say, "Ok, finally". And it's not just the spending Denis, it's also the commitment to reduce the substantial amount of regulation in this country. And also, importantly to say, maybe assets will be available for these pension funds to buy into Canada. So, in terms of, you know, positioning this budget, I would say it is structuring. So, we spoke about that last month and that was important and I think that they went in the right direction. Now there's a few things that need to be settled among which, you know, trade negotiations with the U.S. need to resume because that stopped since last time we saw each other. So. But again, it's certainly a big step in the right direction.
And that new picture to see deficit probably translates also positive on the stocks in the equity market because, we're not at a new high, but we're doing quite well.
Well, the performance this year has been stellar. I mean, more than 20%. Last time we saw that was 1993. By the way, that's the last time the Blue Jays won the World Series.
Well, we were close this year.
You were close.
Very close.
But we did more than 25% in 1993. So, we didn't win this year, but maybe, you know, more than 20% is great. So, aside from the Blue Jays, there's the fact that again, this budget is credible. And if you cut regulations for corporation, that means that you will help profitability down the road and that's more sustainable for the Canadian economy. We need to bring investment back to Canada. It's making Canada investable again. And I think on that side, the budget was important for investors. So, a lot of good news already priced in Denis. I can't promise you a repeat performance next year, but this proves that, you know, the budget was relatively well received. Now it's a matter of execution.
Yeah, exactly. And we see also that the Canadian dollar are fine, kind of. We saw the bottom, but now I think it's above $0.70. It's natural that the Canadian dollar is there.
No, you're right. And since the start of the year, we've seen, you know, Canadian dollar depreciation. Our forecast is, well, we might go to 1.42. You can see we went to 141.5, which is close enough to 142. I think you'll agree with me. Now, have we found the cruising altitude? A key condition to finding the cruising altitude for the Looney was this budget. So, the budget is credible. Now, what we're missing is, the budget was necessary, but not sufficient. Now we need to execute on bringing the regulation but also restarting these trade discussions with the Americans to provide, to have the full impact of the budget. So again, not out of the woods, but I think we're starting to find a cruising altitude. So, there might be more side for Canadian dollar appreciation in the quarters ahead.
Well, thank you Stéfane and thank you all of you. Today is my last presence on the stage. I would like to thank all the people, the investors who are listening to us and the positive comment that we get and we had. Very, very helpful to make that, you know, capsule better and better every day hopefully. I would like to thank also all the people here who make that thing happen. Spectacular team, all the technicians and the people around these stages are fantastic. And Stéphane, thank you very much for let me do that for you for the last past two years or so. It was a lot of fun, a lot of pleasure and long life to Economic Impact.
Denis if I may, I just have to thank you for the 35 years you spent at the Bank. And I would just want to say it was a privilege to work with you.
Thank you Stéfane.
Thank you very much.
Goodbye.
5 • 4 • 3 Market Outlook
5 minutes, 4 graphs, 3 key takeaways! Discover a fresh focused quarterly review of markets, the economy and investments with expert Louis Lajoie from our CIO Office.
Hello everyone. Today, September 4, we're going to take a few minutes to look back on the key events that have happened over the summer months for the economy, for markets, as well as what this all likely implies for investors going forward.
Without further ado, we must say that we have enjoyed a remarkably clement summer on the financial markets with for instance equities remaining well anchored on an upward trend, now up by about 13% year to date and even almost 18% for Canadian equities, which continue to outperform, thanks notably to good returns on the part of the materials sector. But what really stands out from the last, the last few months is just how little volatility we saw across financial assets with bonds, for instance, still treading water, but also even on the currency front, which for the most part have essentially consolidated their recent moves or moves from earlier in the year in the case of the Canadian dollar, that's a gain against the U.S. dollar.
So quite a contrast with the extreme volatility from earlier in the year, a contrast that can be largely explained by the fact that the most severe fears that were stoked by the arrival of the U.S. economic agenda have simply not materialized into actual economic data. For instance, inflation continues to largely send the same signal message it was saying earlier before the arrival of tariffs, with for instance Canadian inflation around 2% and U.S. inflation higher, in their case around 3%. So that remains something to keep a close eye on.
But behind these figures, there seems to be a shift in the backdrop, an inflationary backdrop. When you ask U.S. small businesses what is your most important problem right now, you see that the answer is less so inflation as before and increasingly so poor sales that are becoming problematic. And that is an important change in the backdrop because the more sales top line growth is problematic, the more, the higher the chances that eventually that will result into layoffs. And that explains effectively the tight relationship between poor sales and the unemployment rate. So, we'll have to keep a very close eye on how the labour market will evolve over the coming months.
And, accordingly, how the U.S. Federal Reserve will adjust its policy stance against these changing conditions. We are already starting to see a bit of a change in tone, a change in guidance, with President Powell, for instance, saying that the balance of risks appears to be shifting, essentially opening the door to rate cuts. Now that may seem insignificant as a statement, but bear in mind that equity markets and financial markets are entirely focused on the future, not present conditions. And that's why policy guidance is absolutely crucial for financial markets. And effectively, if you look at the last few years, very often key turning points in equity markets were not at key turning points in present conditions in the economy, but at key turning points in policy guidance, mostly from the Fed. But that's also the phenomenon that we have witnessed with the tariffs policy earlier in the year. And for as long as global economic activity remains relatively decent, as we expect, that change in tone at the Fed could actually help support equities to keep staying on an upward trend.
All right, three takeaways for today. Again, as I was saying earlier, the last few months, essentially the relative calm after the tariff storm, given that that storm didn't produce as many damages as initially feared, although the economy is definitely transitioning towards greater pressure on labour markets, which will likely lead to a change in interest rates towards the downside south of the border, a few rate cuts. For investors, what this all mean is summer is over. What I mean by that is we should reasonably expect volatility to pick up at some point. That would be entirely normal. But nonetheless, there is still grounds for optimism given resilient earnings growth and, again, a more favourable policy backdrop.
That's it for today. Thank you for listening and we will talk again in December.
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