July Market Update

Money is just a tool. It's something that supports your life!

Portfolio Management Comment

The following is from the BMO Investment Strategy Team:

First Gas at LNG Canada: A Good Omen for Canada’s Investment Landscape

Maintaining a Slight Overweight Recommendation on Canadian Stocks and Slight Underweight Position on U.S. Equities

The LNG Canada facility in British Columbia has produced its first liquefied natural gas for export. This has positive implications on several fronts. First, it shows that Canada can still build massive infrastructure projects roughly on time and within budget in partnership with private companies. Second, it diversifies our gas exports toward Asia and reduces our dependence on the U.S. Lastly, it is a tangible step toward achieving Prime Minister Carney’s stated goal of making Canada an energy superpower. The upshot is that after a “lost decade”, Canada could once again become attractive for international investors with positive implications for longer-term growth and productivity trends. As our readers know, we consider Canada’s lagging productivity vs. our neighbours to the South to be one of our greatest handicaps. Productivity growth is one of the holy grails of stock market performance as it contains inflation while increasing the potential growth rate and corporate profitability by extension.

 

 

We are starting to see some encouraging trends in commodity prices, particularly precious metals, copper, and natural gas. While oil briefly spiked on Middle Eastern tensions, the fundamental supply/demand outlook is still relatively weak. On balance, though, strength in commodities has historically been associated with relative strength for the Canadian dollar and for the S&P/TSX. At this point, our team’s conviction is higher for gold and natural gas, and we would encourage investors to look at high-quality stocks in those areas (i.e., strong balance sheets, low cost of production, productive assets in politically safer regions, and high free cash generation).

 

Inflation Risks

 

While the rebound from “Liberation Day” has been impressive, the S&P 500 is significantly underperforming the S&P/TSX and European stocks in U.S. dollar terms. We believe this is due to tariff uncertainty and the fact that inflation risk remains, especially in the U.S.

 

 

Tariffs have had a more muted impact to date than many expected (including us) but we think it is too early to declare victory on that front. Inflation data in the next few months will be important for markets since that is when tariffs will really start to be felt by manufacturers, retailers, and consumers. The high level of “pre-buying” has largely shielded them to date, but we suspect that Wal-Mart and other companies will have no choice but to raise prices substantially to avoid seeing their profit margins plummet. Everything will depend on the level of increase. In other words, the market can probably digest a sub-3% plateau but we do not believe the S&P 500 is discounting something much higher than that at this point.

 

 

The bond market reaction will also be crucial with the U.S. 30-year having already breached the psychologically important 5% barrier earlier this year while the benchmark 10-year rose above 4.5%. The housing market has been struggling for a while, but our rule of thumb is that equity valuations get negatively impacted above the 5% level (on 10-year bonds). The Federal Reserve is expected to remain on hold to combat higher inflation from tariffs while the economy slows, but later this year cut rates by as much as 50 basis points. As for Canada, the BoC is also holding rates steady to fight inflation despite a slowing economy, but each meeting will be heavily dependent on the latest CPI report. Finally, credit spreads in Canada have returned to multi-year tight levels as credit concerns are muted.

Labour inflation could be another driver of inflation, but over a longer time frame. Many industry leaders in the U.S. are already reporting a lack of qualified workers1 as a key business risk. This problem could be compounded if deportations2 continue to accelerate. This would be especially problematic in the large agricultural, construction, leisure, and senior care industries.

 

 

Our Portfolio Management Approach

*We hope everyone is enjoying our podcasts. This season we are exploring Financial Planning!*

 

We are fundamental investors that use technical analysis to manage short-term market risks. We believe that risk management is not a choice, but a necessity. While we cannot control how much downside the market provides during a correction, we can control how much of the downside your account receives. We aim to avoid 60% or more of the decline in any significant downturn. Without our process, there is a good chance you will experience 100% of the downside from the market. We will help you navigate the risks and rewards of the market so that you can stop worrying about your money and start living your life.

 

Transactions

We added to a few of our positions. The following is a chronological list of the trades:

 

Added to Canadian National Railroads

 

Added to Nurtien Ltd.

 

Added to Canadian Natural Resources

 

Returns on our 60/40, 70/30 & 80/20 Portfolios before fees:

Interesting Charts

https://slopeofhope.com/2025/07/i-would-lose-my-mind.html

https://slopeofhope.com/2025/06/the-triumph-of-trash.html

https://www.cnn.com/markets/fear-and-greed

 

Technical Comments

https://www.brookstradingcourse.com/analysis/strong-emini-retest-all-time-high/

Market Overview: S&P 500 Emini Futures

The market formed a strong Emini reset all-time high on the monthly chart.

The bulls want a big leg up lasting many months. The bears want a higher high major trend reversal and a double top.

 

• The June monthly Emini candlestick was a bull bar closing near its high.
• Last month, we said traders would see if the bulls could create a follow-through bull bar which would increase the odds of retesting the all-time high, or if the follow-through buying would be disappointing instead.
• The bulls got a strong follow-through bull bar testing near the all-time high.
• They then got a breakout above the all-time high in early July.
• They want a big leg up lasting many months.
• They need to create follow-through buying above the December 6 high to increase the odds of a successful breakout.
• The bears see the current move as a retest of the all-time high (Dec 6) and want a higher high major trend reversal and a double top.
• They want a failed breakout above the December 6 high.
• They must create strong bear bars to show they are back in control.
• Since June was a bull bar closing near its high, it is a buy signal bar for July.
• The odds slightly favor the market to trade at least a little higher.
• Traders will see if the bulls can create a strong breakout above the December 6 high.
• Or will the market trade higher, but close with a long tail above or a bear body instead?
• For now, the buying pressure is stronger (strong consecutive bull bars) in the last 2 months.

Planning Article

A smart tax plan doesn’t just maximize your registered accounts; it structures your finances in a way that optimizes every dollar you earn on the road to retirement – and beyond. It uses a range of financial strategies – from income splitting to trust structures to estate planning – to ensure your wealth grows in the most tax-efficient way possible.

Keeping up with the ever-evolving tax code isn’t easy, but here are a few savvy strategies you may not have considered.

 

Click here to read more!

 

Millennial Minute

Are you a part of the “Sandwich Generation”?

Many Gen X and Millennials are finding themselves in a situation where they need to offer support to their parents in their retirement. Whether it’s to help them with day-to-day errands, providing a small monthly income, or even medical expenses; aging parents are also struggling with the effects of inflation, and some may need to rely on their children for assistance.

 

For more information, click here to read this month’s article!

 

 

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The opinions, estimates and projections contained herein are those of the author as of the date hereof and are subject to change without notice and may not reflect those of BMO Nesbitt Burns Inc. (\"BMO NBI\"). Every effort has been made to ensure that the contents have been compiled or derived from sources believed to be reliable and contain information and opinions that are accurate and complete. Information may be available to BMO NBI or its affiliates that is not reflected herein. However, neither the author nor BMO NBI makes any representation or warranty, express or implied, in respect thereof, takes any responsibility for any errors or omissions which may be contained herein or accepts any liability whatsoever for any loss arising from any use of or reliance on this report or its contents. This report is not to be construed as an offer to sell or a solicitation for or an offer to buy any securities. BMO NBI, its affiliates and/or their respective officers, directors or employees may from time to time acquire, hold or sell securities mentioned herein as principal or agent. BMO NBI -will buy from or sell to customers securities of issuers mentioned herein on a principal basis. BMO NBI, its affiliates, officers, directors or employees may have a long or short position in the securities discussed herein, related securities or in options, futures or other derivative instruments based thereon. BMO NBI or its affiliates may act as financial advisor and/or underwriter for the issuers mentioned herein and may receive remuneration for same. A significant lending relationship may exist between Bank of Montreal, or its affiliates, and certain of the issuers mentioned herein. BMO NBI is a wholly owned subsidiary of Bank of Montreal. Any U.S. person wishing to effect transactions in any security discussed herein should do so through BMO Nesbitt Burns Corp. Member-Canadian Investor Protection Fund.