March 2025 - Monthly Update
Kaitlyn Richardson - Mar 01, 2025
Hope this note finds you and your family well as the daylight hours grow longer and we enter spring.
Your portfolio declined in February to send back some of the gains made in January. It remains with positive performance over the past twelve months.
Sooner or later, the tariffs imposed by the United States (U.S.) on Canada and Mexico will become clear. With each passing day, we are one day closer to putting them behind us. From that clarity, the private sector in North America will get back to doing what it does best: being the engine for growth, innovation, and prosperity for the continent.
In the meantime, a few of the existing trends have become more likely to continue.
On Canadian interest rates, the next step in the journey to below two percent occurred on March 12th with another 0.25% cut to bring the rate down to 2.75%. In the United States, the comparable overnight rate sits between 4.25-4.5% for a difference of over 1.5%. Canadian overnight rates will continue to move lower and the gap between interest rates in Canada and the U.S. will continue to widen.
On foreign exchange, it’s very unlikely the Canadian dollar will strengthen towards eighty cents versus the U.S. dollar over the next year. That said, on a relative basis the Canadian dollar is likely at the lower end of the medium-term trading range.
In Canada, there is now a clear consensus and mandate to overhaul some of the structural elements of our economy, beginning with reducing the trade barriers between provinces.
Initial estimates from the CD Howard Institute forecast that breaking down these barriers could boost Canada’s GDP by as much as 7%—adding up to $130 billion annually to the Canadian economy.
Fourth quarter earnings (Q4) are now largely complete in the U.S. with year-over-year growth coming in at over +18%. Back in November of 2023, the estimate for 2024 Q4 was +9%.
Here are the latest economic growth estimates from the Organisation for Economic Co-operation and Development (OECD) for 2025:
+3.1% Worldwide
+2% Canada (or +0.7% with 25% tariffs)
+2.9% U.S. (or 2.2% with 25% tariffs)
Our investment strategy remains steady and unchanged. You and your wealth are in a strong position.
The view from Brian Belski, BMO's Chief Investment Strategist:
“Following a relatively strong start to 2025 during January, the S&P 500 reversed some of its … gain last month by [declining] during February, with much of the slide occurring during the final 10 days of trading. The weakness has spilled over into the early part of March as a host of uncertainties have plagued the market and investor confidence. Tariffs have become the main concern since most investors and economists seem to be viewing their implementation as a net negative for both economic and market conditions. However, even before tariffs became the hot button issue, concerns about stubbornly sticky inflation, some signs of economic cooling and increasing doubt surrounding the idyllic AI narrative were weighing on stock prices. For our part, we will continue to take our cues from the hard data and for now many important indicators that we track (i.e., jobless claims and earnings growth) continue to suggest strength. However, we are also not entirely surprised by recent volatility given the high expectation bar that had been set for 2025, so while we continue to believe that the 2025 path for US stocks will be higher, we also believe it will be bumpier compared to the prior two years. As such, we continue to advocate of more selective approach to stock picking and would urge investors to use periods of weakness as an opportunity to increase exposure to preferred positions.… Despite all the noise so far this year, the S&P/TSX has climbed the wall of worry and was up … as of the end of February, outperforming the S&P 500. However, as we enter March, the market was plunged back into the worry phase erasing all the gains for the year and shifting decisively toward “classically” defensive sectors. From our perspective, this is reactive and ultimately the duration of the tariffs is key and likely shorter than many now expect. As we have said many times, investors need to remain non-reactive, disciplined and focused on fundamentals. Yes, fundamentally we believe Canada remains a relative value play with a rebounding growth profile. Although TSX revision momentum appears to have stalled in the last few months as analysts digest trade negotiations, from our perspective this suggests a more powerful positive revision cycle in the second half of the year as many of these trade issues resolve.”
Stocks in your portfolio that made a new 52 week high this past month: Accenture*, Fortis*, Johnson & Johnson, MasterCard*, S&P 500 Index, Thomson Reuters*, Waste Management*( Waste Connections*)
Stocks in your portfolio that made a new 52 week low this past month: CN Rail*, Kraft Heinz, (Rogers Communications*, CPKC Rail*), United Parcel Services*
The Loonie was unchanged versus the U.S. dollar at $0.69
Thank you,
Ian, Gab, Kaitlyn and Nataliia