It was generally a good week on the markets as August and the summer holidays wind down. Hints of a rate cut by the Fed gave an early week lift to equity markets. The bond market was a bit more mixed with yields dropping on shorter maturities (prices up) while the drop in yields was more muted for longer maturities. Friday’s inflation report (PCE) will give us a better picture of future rate decisions. Gold and the Loonie were also up as the greenback weakened on the prospects of lower rates.
| Index | Close Aug 21st 2025 | Close Aug 28th 2025 |
| S&P500 | 6,375 | 6,506 |
| TSX60 | 27,055 | 28,435 |
| Canada 10 yr. Bond Yield | 3.49% | 3.43% |
| US 10 yr. Treasury Yield | 4.33% | 4.21% |
| USD/CAD | $1.39037 | $1.37537 |
| Brent Crude | $67.57 | $68.21 |
| Gold | $3,338 | $3,416 |
| Bitcoin | $112,323 | $111,970 |
Source: Trading Economics & Factset
This should be a quiet period for central banks as we wait for September’s rate announcements, but it’s not. Donald Trump has taken another run at the Federal Reserve’s independence. He has “fired” Fed Governor Lisa Cook, who is a voting member of the FOMC. Fed Governors can only be fired for cause. The Trump administration alleges Cook committed mortgage fraud on applications before she was nominated to the Federal Reserve. The allegations have not been proven, and Cook has sued the Administration. Central bank independence is critical to a modern economy ensuring monetary policy is free from political interference of favouritism. I offer up Turkey as an example of how bad the political take-over of a central bank can be.
The US government has taken a 10% stake in Intel. The company had been awarded a grant under the Biden administration’s CHIPS Act which is now being converted to an equity stake in the company. The White House says this is the first of many such deals as they try to build a sovereign wealth fund. However, when looked at in the light of the Nvidia shakedown earlier this month, it looks more like state capitalism. A far cry from the free markets touted by Ronald Reagan.
Staying with Nvidia for the moment, their earnings came out strong but not quite strong enough for the markets. Uncertainty over future sales to China (or their profitability given the kickback to the government), plus a lowering of expectations for the next quarter weighed on investor sentiment. NVDA is currently the largest company in the world with a $4.4 trillion market cap. It is 7.51% of the S&P500. Not quite the level of Nortel in the TSX “back in the day” but still significant. The top 9 companies in the S&P500 are all tech/AI companies and account for 36% of the index. #10 is Berkshire Hathaway with a 1.81% weighting.
US / India relations are on ice as a 50% US tariff kicks in this week. India was already subject to a 25% tariff but had an additional 25% layered on top. The reason given for the additional 25% was India’s purchase of Russian oil. The US had been courting India for the past 20 years as a counterweight to the rise of China. That initiative has been put back years if not killed completely.
The tariffs, amongst other things, will be a topic of conversation when Xi Jinping (China), Narendra Modi India), and Vladmir Putin meet at the Shanghai Co-operation Organization this weekend. While each of these leaders will be acting in their own narrow interests, it is also a sign that the US’ soft power is declining. Also in attendance will be luminaries from Iran and North Korea.
In Canadian news, the Federal Government will be concentrating some of its first infrastructure dollars on ports. Churchill (LNG), Montreal (containers), and another east coast port (critical minerals and LNG) are on the initial list. At the same time the Prime Minister has announced a partnership with Germany to develop critical minerals production and the export of LNG.
A few (many) decades ago, I spent some time working in Stewart BC. For those of you who have never been, the town is at the head of the Hood Canal and borders Hyder Alaska at the tip of the Alaska Panhandle. Aside from its record snowfalls, Stewart is also an export port for mines in northern BC and the Yukon. This week the Nisga’a and Tahltan first nations partnered with Arrow Transportation Systems to buy Stewart Bulk Terminals which owns and operates the port facilities. The transaction typifies a what could be the model for future resource and infrastructure development in Canada.
There are changes coming to RRIFs and the Guaranteed Income Supplement (GIS). In an interview with the Globe & Mail, Secretary of State for Seniors Stephanie McLean said the Government would follow through with its campaign pledges of a 5% increase in the GIS and a 25% reduction in the minimum RRIF withdrawals. The new rules are not yet in effect and may only be temporary. They do offer some relief for seniors though.
Our house is now much quieter as the girls have flown back to Toronto. Unfortunately, they had to take the red eye. Fortunately, they slept the whole way. Amongst other things it means the music selection moves back from Coco-Melon and the 5 Little Ducks to, well let’s just say age-appropriate music. I’ll leave you with a boomer classic from Carlos Santana… Enjoy the Labour Day Weekend,
Russ Lazaruk, RIAC, CIWM, CIM, FCSI
Managing Director & Portfolio Manager
