May 2026 - Your Monthly Update

Hi,

 

Hope this note finds you and your family well as we enjoy a warm return of spring.

 

Your investment portfolio posted strong gains in April. It remains with positive performance over the last twelve months.

 

Over the last few months, day-to-day volatility of share prices have fluctuated over a much wider range than normal. On the one hand, that leads us to act with more caution than usual when making changes to our investments. At the same time, it is also creating more mispricing which provides opportunities to carefully add new businesses to the portfolio.

 

Interest rates (and mortgage rates) moved somewhat higher to extend the trajectory of March. When rates go up the price of bonds temporarily adjusts lower.

 

Zooming out from these short-term trends reveals a medium-term economic trajectory that is largely unchanged from the past few years.

 

The data released in April continues to reflect the medium-term trend of investment by the private sector in their own productive asset base. This underpins the foundation for economic growth in the United States (U.S.) and the steady repetition of this trend into the future.

 

In the first quarter, non-residential business investment increased by over +10% on an annualized basis. Factory orders rose +1.5% in the first month of the war (surpassing the +0.6% consensus forecast and accelerating from an upwardly revised +0.3% in February). The U.S. manufacturing expansion is being powered by a variety of factors: the restocking of business inventories that had been deferred during the onset of tariffs compared with strong underlying sales, the ongoing AI data center buildout, and the replenishing of defence equipment inventories. Final domestic (U.S.) demand is solid, increases to input costs are being partly passed on and the previously mentioned private sector productivity growth is protecting margins.

 

We continue to leverage this trend as a filter to identify businesses that are successfully investing in themselves to be leaders in innovation, scalability and efficiency while bringing new products and services to market sooner.

 

Our investment strategy is steady. We continue to focus on real businesses exposed to the domestic North American economy. You and your wealth are in a strong position

 

The view from Brent Joyce, BMO Wealth’s Chief Investment Strategist:

“Most global equity indices turned in a surprisingly robust performance in April despite the unresolved Middle East conflict. Gasoline prices soared… These sharp spikes quickly translated into higher headline inflation numbers and nearly universal handwringing among energy strategists. They have been predicting dire consequences because the knock-on impacts can potentially burrow their way deeper into core inflation readings. Decision makers at central banks heard the message loud and clear. They postponed talk of continued rate cuts until far into the future and formally debated the possibility of rate hikes if the Strait fails to open soon. Equity investors, on the other hand, missed the memo… Although stock investors are wary of sustained high inflation, they are typically more mindful of factors that impact growth. Thus, they spent the month leaning into the continued potential that spending on AI and other technologies (e.g., robotics, cloud, cyber security and advanced manufacturing) might provide. It’s worth noting too that stocks can play a key inflation-hedge role relative to fixed income instruments (given the potential for growth in earnings and dividends)… Solid earnings results at the start of the Q1 reporting season buttressed the more optimistic bias of stock investors… The participation is spread broadly: eight of 11 sectors reported bottom-line growth of 10% or more… Key themes there include resilient consumer spending; hearty capital markets activity (mergers and acquisitions, trading and debt issuance); growing backlogs and deliveries for key industrial and transportation companies; and better volumes for purveyors of consumer goods… Bottom line Companies in aggregate are executing well despite (or perhaps because of) the repeated challenges thrown at them over the last few years. Just like sports teams tend to play better against a worthy opponent, the muscle memory honed from repeated supply chain disruptions, policy changes and shifting trade and alliance relationships shows up in the data. Many policy changes (U.S.) and proposals (Canada) are also supportive. Case in point: in the U.S., immediate deduction of R&D expenses, reduced regulation in key industries, and broader tolerance for large M&A are goosing activity and facilitating growing backlogs, new orders and ever larger acquisition activities in a broad swath of industries.”

 

• Stocks in your portfolio that made a new 52 week high this past month: Canadian National Rail*, Fortis*, organ Stanley*, TD Bank*, Royal Bank*

• Stocks in your portfolio that made a new 52 week low this past month: Home Depot*, Oracle*, Qualcomm*, Telus*

• The Loonie gained one and a half cents versus the U.S. dollar to $0.735

 

Thank you,

Ian, Gab, Kaitlyn, Naina, and Meeral