That was a better week. Gains were made across almost all asset classes, giving investors and their beleaguered advisors a bit of relief. There was some mid-week volatility around the FOMC rate decision on Wednesday, but we will take the win. Gold continues to be a star performer this week reaching a new all-time high on Wednesday. The Canadian 10 yr. bond yield did dip below 3% again before recovering to current levels.
| Index | Close Mar. 13th 2025 | Close Mar. 20th 2025 |
| S&P500 | 5,584 | 5,661 |
| TSX60 | 24,200 | 25,060 |
| Canada 10 yr. Bond Yield | 3.07% | 3.03% |
| US 10 yr. Treasury Yield | 4.27% | 4.24% |
| USD/CAD | $1.44310 | $1.43151 |
| Brent Crude | $70.21 | $72.23 |
| Gold | $2,988 | $3,044 |
| Bitcoin | $80,248 | $84,527 |
Source: Trading Economics & Factset
Starting with rates, The US Federal Reserve (technically the Federal Open Market Committee or FOMC) decided to hold rates steady. In the post meeting press conference, Chair Jerome Powell said that there was a lot of uncertainty. (no kidding Captain Obvious) Although the chance of a recession has moved up to moderate, it is still not high enough to cause any angst at the Fed. He did point to the potential inflationary impacts of tariffs. Markets are still pricing in 2 more rate cuts.
The argument for more rate cuts was reinforced by falling consumer confidence in the US. After climbing for the last 6 months of 2024, it has come off this year to 57.9, the lowest point since November 2022. The lack of confidence was reflected in lower-than-expected growth in retail sales. While sales did increase by 0.2%, that was below expectations of a 0.6% rise. It also comes on the heals of a 1.2% decline in the previous month. Uncertainty breeds caution.
Here in Canada, inflation ticked up after the GST holiday ended. The 2.6% annualized rate is still within the Bank of Canada’s target range but does make future interest rate decisions more complicated. Tariffs, due April 2nd, are yet to be factored into CPI. While US consumers and businesses will pay for the trump tariffs, Canadians will pay for the countervailing levies. Offsetting some of that will be consumers substituting tariffed products for locally sourced ones. Rye not Bourbon.
Germany has amended its constitution to remove the “debt brake” on government borrowing. The new measures will allow Germany to re-invest heavily into infrastructure plus dramatically increasing debt spending. The bill, passed in the last few days of the current Bundestag (Parliament) was passed by a coalition of the Social Democrats (SDP), the CDU alliance, and the Greens. It needed a 2/3s majority, which they could not muster in the new parliament. Markets like the package as they see the potential for a re-invigorated German economy.
There were also a few stories out of China this week. The central government has announced ambitious plans to boost consumption by increasing wages and reducing financial burdens. The plans include subsidized childcare, encouraging domestic “snow and ice” tourism, and support for AI powered products.
China has also made big advances with nuclear fusion. One of its nuclear fusion reactors set a record by generating a steady loop of plasma for 17 minutes. While this is not the ultimate break through, it does bring us another step closer to a limitless supply of clean energy.
At a more prosaic level, car maker BYD announced that it will deploy a new EV charging platform that will add 249 miles (400 km) of range in 5 minutes. Just about the same amount of time it takes to fill up a tank of gas. If you were wondering why Tesla shares have fallen, this is the reason. Not Elon Musk’s political antics.
Félicitations et merci à Pierre Lassonde pour son très généreux don à Polytechnique Montréal. This week the Lassonde Foundation and the school announced a $50 million donation dedicated to disruptive innovation. M. Lassonde is an alumnus of the school and its current Board Chair. He was a very successful mining entrepreneur while also supporting his late wife in her successful technology venture Enghouse Systems.
We’ve managed to avoid tariffs for most of this week’s diatribe. But here is a story of the impact of tariffs and where they will really hurt the American consumer. It will drive up the price of beer. The duties on aluminum (beer cans) and barley (no barley, no beer) have raised the input costs for the brewers. Ironically, most US barley production is under contract to the large Mexican breweries. So, the US based brewers import barley from Canada. It will hit the craft brewers the hardest. Homer Simpson will not be amused.
With beer on my mind, we’ll close off with this piece from the Reklaws because you are apparently only One Beer Away… enjoy and have a great weekend.
Russ Lazaruk, RIAC, CIWM, CIM, FCSI
Managing Director & Portfolio Manager
