September 2025 - Monthly Update

Hi,

 

Hope this note finds you and your family well as the sunny days of summer continue.

 

Your portfolio posted steady gains in August. It remains with positive performance over the last twelve months.

 

North American investment markets have carried their steady and consistent trajectory from the end of spring through the summer to date. The private sector remains the foundation of stability as well as the engine for growth and prosperity here in North America. This reflects the investments the private sector has made in themselves over the last four years. In particular, applying a whole host of technologies to their own individual businesses and processes to be better.

 

In the short and medium turn, we expect the resumption of the cycle of interest rate cuts in both Canada and the U.S.. As investors, the valuable insight is not the date or amount of any individual cut, but rather the trend lasting into the future. This is a neutral to net positive trend for investment in the private sector and the productive capacity for the economy.

 

As part of our investment discipline, we identify a range of future events (positive and negative) and assign probabilities to these events as to how likely they are to occur.

 

From there, we look at the medium-term trends to inform our strategy as to what is more and less likely to occur over the short to medium-term.

 

To illustrate, let’s look at the recently released gross domestic product (G.D.P.) data for the United States (U.S.).

 

In the second quarter, the U.S. economy (as measured by G.D.P.) expanded at an annualized rate of +3.3%.

 

Given this as a starting point, the likelihood that the U.S. economy experiences a recession in the short term (next 12 to 18 months) has declined. It's a long way to go from +3.3% to zero, much less to a negative percentage over that time. As an aside, a recession is defined as two consecutive quarters of negative economic growth (contracting G.D.P.).

 

The current quarter for private sector earnings and guidance have been ahead of expectations. The present conditions are constructive on the future path of earnings and growth.

 

The above reinforces our strategy to remain focused on the domestic North American economy and the services sector.

 

The investment strategy remains unchanged: Own a diversified set of high-quality U.S. stocks aligned with the growth trajectory of the U.S. domestic economy and complimented by a selection of Canadian bonds and bond like stocks to benefit from Canadian interest rate cuts.

 

You and your wealth remain in a strong position.

 

The view from Brian Belski, BMO’s Chief Investment Strategist:

“US stocks posted their fourth consecutive month of gains with the S&P 500 … hitting another series of records along the way. Much of the momentum was driven by a favorable July [Consumer Price Index] report that signaled potential Fed rate cuts may soon be on the horizon. In terms of sector performance, contributors were broad-based with seven outperforming the index, the highest tally since January... But despite relatively strong year-to-date gains … we continue to believe a fair amount of investor skepticism remains particularly as we enter what is traditionally a seasonal weak spot for the market. Nonetheless, as we have been contending for much of the year, we continue to expect “more of the same” with investors likely reacting sharply to headlines in both directions in the short term, but with the longer-term upward trend in US stocks remaining intact. As such, we continue to recommend that investors use any potential periods of weakness as a buying opportunity to increase exposure to favored positions… The S&P/TSX gained.. in August, outperforming the S&P 500. The outperformance was largely driven by strength in the overweight resource sectors... On a three-month basis, the TSX is trading in line with the S&P 500... Overall, despite this recent commodity-driven outperformance, we believe much of the TSX valuation advantage has narrowed and the sharp outperformance of Canadian equities we saw over the last year is likely to fade.” Portfolio Strategy – September 2025. BMO Capital Markets.

 

• Stocks in your portfolio that made a new 52 week high this past month: Fortis*, Johnson & Johnson, MasterCard*, Royal Bank*, S&P500, TD Bank*

• Stocks in your portfolio that made a new 52 week low this past month: Canadian National Rail*, United Health

• The Loonie gained half a cent versus the U.S. dollar to $0.735

 

Thank you,

Ian, Gab, Kaitlyn, Naina, and Meeral