A quiet week on the markets with little movement in any direction. The tech heavy S&P500 lost some ground this week, while the TSX was ahead on the week. AI related stocks got a wakeup call from a report put out by MIT. Markets are now waiting to hear what Federal Reserve Chair Jerome Powell will say in his speech at the annual Jackson Hole gathering of economists and central bankers.
| Index | Close Aug 14th 2025 | Close Aug 21st 2025 |
| S&P500 | 6,471 | 6,375 |
| TSX60 | 27,877 | 28,055 |
| Canada 10 yr. Bond Yield | 3.43% | 3.49% |
| US 10 yr. Treasury Yield | 4.29% | 4.33% |
| USD/CAD | $1.38085 | $1.39037 |
| Brent Crude | $66.84 | $67.57 |
| Gold | $3,335 | $3,338 |
| Bitcoin | $117,811 | $112,323 |
Source: Trading Economics & Factset
Canada continued to experience low inflation last month. The consumer price index (CPI) was up 1.7% year over year, down from 1.9% in June. The Bank of Canada’s preferred measure of inflation came in at 3%. Overall, this will give the Bank some room to cut rates, but it is not a given. Groceries and rents seem to be the sticking points.
While there were no new numbers from the US this week, we are paying attention to the apparent decoupling of US CPI and PPI. The Producer Price Index (PPI) tracks wholesale prices and the difference in the two numbers can tell us how much of the tariffs companies are absorbing by not flowing them through to end consumers. The more they absorb, the tighter the margins and lower the profits. The real-world effects were on display this week when Walmart released its latest earnings and forecasts.
Canada and Brazil are in talks to revive the free trade negotiations between the Mercosur group and Canada. Mercosur includes Brazil, Argentina, Uruguay, Paraguay, and soon Bolivia. Earlier talks had stalled in 2021 as the Latin American countries turned to more urgent internal matters. This also ties into the increased communication between Mexico and Canada, including a planned visit by PM Carney to Mexico in September.
More details have been released on the European Union / US trade deal. There are still some areas to be negotiated but it essentially levies a 15% tariff on EU exports but no tariffs on US exports. Europeans are not particularly happy with the deal, but negotiators say it is the best they could get without a full-blown trade war.
Cold Fusion is the holy grail of energy generation. There are currently 2 projects underway in Vancouver. UBC researchers are using electrochemistry to boost nuclear fusion rates. This project is more pure science and a long way from commercial application. It does, however, create a Canadian body of knowledge & intellectual property (IP). General Fusion is a private venture backed by a variety of public and private investors. The company recently completed a $22 million financing to continue its development. Canada has an edge in AI, quantum computing, and cold fusion. What it lacks is domestic risk/venture capital to bring these new technologies to commercial success.
The girls (Charlotte 4, & Sophie 2) have left for Bowen Island this weekend, so we’ll close of with this piece from Harry Belafonte, celebrating islands in the sun….
Russ Lazaruk, RIAC, CIWM, CIM, FCSI
Managing Director & Portfolio Manager
