Good morning. It's Simon Doran here recording at our Vancouver offices on Tuesday, October 21st. Um, I guess sort of a typical October morning outside and a typical market day inside. We have had an interesting year and we continue to try to follow all these trends and all the moving parts in the market. Um, you know your investment committee here is constantly observing and analyzing all the different things that are happening, but a lot of the things have actually been the same since the start of the year. So a lot of the same concerns that are out there are still very much in place. Um, a lot of the trends that are out there are still in place. So, it's a market that's not without some angst and some concern. Uh, but that's in our view probably a good thing. And the reason I say that is because when you should be most worried is when people tell you that the coast is clear and there's nothing to worry about. That's the kind of conditions where something comes in and shocks the market and it sends the market down. Now, it's not to say there isn't potential for a bit of a setback, but again, the same kind of trends, the same concerns have been in place from the start of the year. You're seeing things like the US economy continuing to do actually relatively well while the rest of the world seems to still be struggling with this tariff thing and working out their trade arrangement with the biggest economy in the world. Um, and that's causing all kinds of dislocation economically. Um, but in the US you're seeing US tax receipts from these tariffs in the hundreds of billions of dollars and they don't seem to be changing their posture because they probably very much like this revenue. So the US economy continues to be looking past this as well. We're seeing good things there. Um, and they're, like it or not, the economy that's going to lead the world and certainly they're going to be the markets that are going to lead the world. So the US market obviously comprises about two-thirds of global market cap. So of all the stocks in the entire world, the US is about two-thirds of that. And of the S&P 500, for example, you have a huge concentration in the top 10 names in that index. So the top 10 names comprise probably about 35 to 40% of that index and they're the names that you know, all the names you're thinking of—the Nvidias, the Microsofts, the Apples of the world. So it's tricky in terms of using that as a benchmark, but things continue to move along. So, if you consider the S&P, it's up about 15% on the year. That's a pretty good number, but we don't want to be overinvested in any one thing because, for example, the S&P did see a setback of about 20% plus in April before it resumed its climb again. If you take one of those component pieces, for example, Nvidia, which is one of the best-performing stocks in the world, up probably about 35% on the year since the beginning of the year, it also saw a pullback in that April period of about 35% just in that drawdown. So, this is why we don't want to be overexposed to any one thing. If you had all your portfolio in Nvidia stock, while it would look pretty good now, you would have also had to endure that drawdown in April. And that's not what we do. So, we're always going to be properly diversified. And if you look at other trends, for example, that are closer to home in Canada, such as gold. Gold has been on an absolute tear related to US dollar decline and the general dollar debasement. The gold producers that make up a large percentage of the Canadian index have been following along. They've been in great shape and we have some exposure there. But it's not an overweight position because we don't want to be exposed to the kind of drawdown, for example, that we saw today. Gold fell about $200 per ounce today, but the gold producers as a group fell nearly 10% at the time of recording. I don't know where they'll end up today. So while these kinds of companies, whether it's Nvidia or gold, have been providing leadership for the markets, we don't want to be making any huge bets in any one place. We continue to be well diversified. Generally, I would say very conservatively positioned, but our portfolios continue to put up pretty good numbers. If you look at where we are today, your returns are somewhere between 6 and 9% year-to-date, depending on what model you're invested in. So generally, if you're looking at your statements, hopefully you're very happy with that. We certainly are and we think we can add a little more before the end of the year. So I guess this is just a quick note to say that your investment committee continues to work hard, continues to observe all these developments in the market, and continues to position your portfolio for success, hopefully while mitigating some of that downside, which is really our primary goal. So again, just a quick note for you: if you see anything on your statements or if you see something here that you want to chat about, please do not hesitate to call. Of course, we're still making the rounds, and we hope to get out to all of you with a call or something as soon as possible. Thanks very much. Have a great day.
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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. It's October 14, 2025. I am with Stéfane Marion, our Chief Economist. Hello, Stéfane. A bit different today. You know, in absence of economic news and then the weight of the budget of Mr. Carney, we're going to talk about performance, but also gold.
So, we have a U.S. government shutdown, we're still waiting for a budget in Canada, China and the U.S. are still going at it with tariff threats. But in the meantime, new all time high for equities as of last week, Denis. So, the absence of news seems to be good news for markets. I can't promise we're going to end the year at a record high. It's been a fantastic year, up more than 30% since April. So, let's keep an eye on the next few weeks. As I say, I think there's going to be more volatility.
And all assets are performing well also.
Yeah.
Which is unusual.
In the meantime, Denis, if you want to look at it from an asset class perspective, you couldn't go wrong this year. So, it's a fantastic vintage for a Canadian investor. This is total returns expressed in Canadian dollars. So, we've had, you know, good performance for the Canadian dollar year to date, but up more than 20% for emerging markets. Look at the S&P TSX, up more than 20%. But as I said, you couldn't go wrong this year because every asset classes were up. The only ones not beating inflation would be a Canadian bond market and obviously cash. But all in all, a good vintage for Canadian investors.
And for the first nine months, the S&P and TSX are doing quite well if you compare to the past.
Well, 20.7% for the S&P TSX, 8% for the S&P 500. If you put this in perspective, more than 20% in nine months for the S&P TSX doesn't happen very often, Denis. Last time it happened, you have to go back to 2009 as the economy was rebounding from the Great Financial Crisis. Prior to that, you have to go back to the 2000's, just before the bursting of the NASDAQ bubble, so, fantastic performance. So, let's not be too greedy as investors either, right?
Yeah. And not only that, but all sectors inside the TSX did well.
All sectors delivered positive returns, except for healthcare. But I have to say that, you know, beating the index, 3 sectors beat the index, IT, banks, but the one that had the most leverage on the overall index was materials, up more than 76%, and, within materials, gold stocks were up more than 100%.
And now gold stocks represent a lot inside, you know those indices.
Some people will say, well, it's a record. It's not there yet, Denis. So roughly 11% of the S&P TSX.
Very close though.
The market cap is gold stocks. Going back to the 1970s, the only other instance where we surpassed the current level would have been in 2012. Remember back then people were fearing the debt crisis in the Eurozone. My view, Denis, I do have a strong conviction that we will probably exceed the all-time high in the next few weeks just because of the geopolitical backdrop.
We are at the high right now at $4000 U.S. and the gold.
You're right. So, if you go back to, and if you express this, because I wasn't sure if you were talking about in 2025 dollars, but you were, $4000. If you go back to the 1970s and if you express everything in 2025 dollars, in 1980, yeah, gold prices was lower in nominal terms, but in 2025 dollars it was the equivalent of $2800. Can you believe it's only at the beginning of this tear we were still below $2800 and now we're at more than $4000. So, the question is, is there still upside for gold? If you want still upside, you need more buyers, right?
And there's a lot of buyers. The world is buying gold right now.
Everyone seems to be buying gold. But I think that where it becomes interesting is that there's an institutional demand for gold and central banks are accumulating gold. They own now 36,000 tons of gold, which now represents roughly 1/4 of their total assets. So, and in the meantime, not everyone, that's the global average. If you can look at a country like Germany is at 70%, but a country like China, which is a big central bank, they still own less than 7% of the total assets in gold.
Yeah, which is very unusual. But now, they own more gold than treasuries.
At the global level, you're right. That 26% seems high, but if you put it in perspective going back to the 1970s, it's still much lower than what we saw there in the 1970s. But you are right to say that they are, the central banks, the institutional demand is diversifying out of U.S. treasuries. And now for the first time since the early 1990s, the central banks own more gold than U.S. treasuries. So, that's part of this whole geopolitical backdrop uncertainty. These central banks are big. If they're not sure about whether the U.S. will still have a dominant role in global financial markets, there they are diversifying and they're not buying Bitcoin, they're buying gold as opposed to U.S. treasuries.
They're buying gold, but they want to buy more.
So, you could say at 26% that they had enough. And there's a survey, there's an interesting survey that's published every year and for the first time since the survey has been available, we reached a new all-time high about, you know, the so-called willingness of these central banks to accumulate more gold. And now we have 43% of these banks saying, you know what, I might still buy more over the coming year. So, that's the point of today's presentation. There's demand for gold, people are asking us what's happening. What characterizes the current cycle for gold is this institutional demand coming from these central banks.
Yeah. We're going to change the subject a little bit. It seems that tariffs bring a lot of money and from Trump's pocket.
True. And that puts uncertainty on inflation and that is also a source of demand for gold because these central banks are saying, well, clearly the U.S. wants to disengage from the global supply chain or they want to reindustrialize, it might cost more. And at the end of the day, this old, you know, tariff collection now, Denis, which really started in June, now reaches $360 billion annualized in Q3. Don't forget, Denis, we said it last month, we're going to end the year at $500 billion of tariff collection. So, that is also part of the reason these central banks are saying, well, that might put more pressure on inflation, lower U.S. dollar. Buy gold because of this uncertainty.
Well, thank you, Stéfane, and thank you all for continuing to listen to us. But above all, don't miss our next meeting in November. Thank you.
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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