Remember the good old days of 2024, when all we worried about was inflation, interest rates, and earnings? Some days it seems like another era. Needless to say, this was not a good week for risk assets (equities, crypto currencies…). On the bright side, bonds held their ground, and gold made an all time high.
| Index | Close Mar. 6th 2025 | Close Mar. 13th 2025 |
| S&P500 | 5,740 | 5,584 |
| TSX60 | 24,584 | 24,200 |
| Canada 10 yr. Bond Yield | 3.09% | 3.07% |
| US 10 yr. Treasury Yield | 4.30% | 4.27% |
| USD/CAD | $1.43007 | $1.44310 |
| Brent Crude | $69.40 | $70.21 |
| Gold | $2,911 | $2,988 |
| Bitcoin | $89,175 | $80,248 |
Source: Trading Economics & Factset
The Bank of Canada lowered its overnight rate by 25-bps this week. In its press release the Bank hi-lited the risks facing the economy from the pending trade war with the US. It must balance off the need to maintain price stability and support an economy that may slip into recession thanks to the tariffs. There will only be so much the Bank can do. Fiscal policy (government spending) can offer some relief, but that will be limited as well. Do not expect a pandemic style relief package. In fact, austerity is not out of the question.
In the good news column was a slight decline in the US inflation rate. Both the February Consumer Price Index (CPI) and Producer Price Index (PPI) fell slightly from January’s readings. Tariffs have not yet been factored into these readings, so the next few months should see a jump in both indices. The benign numbers did give the markets a mid-week bounce, but it was short-lived.
I could write a 1,000-word essay on what happened with tariffs this week, but I won’t. The Cole’s Notes version is: The US imposed a 25% tariff on Canadian aluminum & steel, Ontario put a 25% export tax on electricity sales to the US, the US doubled its tariff, both sides backed off. There was an apparently productive meeting on Thursday between Canada (Finance Minister Dominic LeBlanc, Minister of Innovation, Science & Industry Francois-Philippe Champagne, & Ontario Premier Doug Ford) and the US represented by Commerce Secretary Howard Lutnick. More meetings are scheduled for next week.
If you think we are the only ones being hit by tariffs, the US has threatened a 200% tariff on all alcohol imported from the European Union. This is in response to a 50% tariff put on American whisky (Bourbon). Dry January will be extended.
Foreign Ministers of the G7 countries meet this week in La Malbaie Quebec. Canada is hosting the meetings this year and this one is in advance of the Leaders’ meeting to be held in Alberta this June. While tariffs and trade will be on the agenda, Ukraine, Russia and global security may dominate the discussions.
By the time you read this, Canada will have a new Prime Minister. Mark Carney won the Liberal leadership by a landslide last Sunday. He and his reduced cabinet will be sworn in at Rideau Hall on Friday. He is expected to call an election very quickly. Not the best time to have an election, but the country needs it. Whoever is the winner will need a firm mandate to deal with the changing world order.
Talking about governments, the tax season is rapidly approaching. If you have any queries about your tax slips, please reach out directly to Sam, who will be able to help.
Speaking of taxes…. Did you know that the top marginal tax rate in the UK reached 99.25% in the Second World War? It fell to 97.5% through the 1950s and 60s. By the time this song was written it had dropped to 75% but had a 15% surcharge on investment income. All that was inspiration for this song from the Beatles…… enjoy and don’t forget to file.
Russ Lazaruk, RIAC, CIWM, CIM, FCSI
Managing Director & Portfolio Manager
