Canada does not need CUSMA to collapse for trade risk to matter. A less dramatic outcome may be enough. Over the past several weeks, investors have been focused on the conflict between the U.S. and Iran. That was understandable. Energy prices, inflation expectations, and geopolitical risk moved back to the centre of the market conversation. That conflict has now subsided, at least for the moment, after the U.S. and Iran signed an interim agreement outlining terms to end the war and reopen the Strait of Hormuz, with negotiations set to continue over the next 60 days. Market attention may now shift quickly to another deadline that matters for Canada: the July 1 CUSMA review. This is not a side issue for Canadian investors. It goes directly to the reason we remain underweight Canadian equities. The July 1 review was supposed to be a checkpoint. It now looks more like the start of a recurring negotiation. If the agreement is not extended by the deadline, it does not disappear. It remains in force. But the review process shifts into annual negotiations until a 16-year extension is eventually agreed, or until the agreement reaches the end of its original term in 2036. There is no immediate cliff edge. There is, however, a new layer of uncertainty. For investors, that may be the more important point. Trade agreements are not just about the tariff rate on today’s exports. They shape investment decisions. They influence where companies build capacity, where supply chains are located, and where foreign capital decides it has enough visibility to commit for the next decade. Rolling annual reviews do not break North American trade. They tax it. That tax belongs in the risk premium for Canadian assets.
Markets have become increasingly comfortable with geopolitical risk. That is understandable. Earlier disruptions in the Middle East proved temporary. Energy markets adjusted more quickly than many expected, supply found alternative routes, and the global economy continued to expand. The renewed closure of the Strait of Hormuz is not simply another disruption. It is a reminder that the global energy system has become progressively less resilient. Not because the Strait has suddenly become more important. It has always been one of the world’s most strategically important energy corridors. What has changed is the market’s ability to absorb another disruption. The first shock was cushioned by alternative pipeline capacity, inventory drawdowns and expectations that shipping would eventually resume. Roughly one-third of the crude oil that normally flowed through the Strait was successfully redirected through regional pipeline infrastructure, while commercial inventories were drawn down to fill much of the remaining gap. Months later, much of that cushion has disappeared. Commercial OECD oil inventories now sit at their lowest levels in recent history. In fact, inventory levels this low have historically been associated with oil prices closer to US$120 per barrel, underscoring how dependent today’s market has become on the assumption that supply disruptions remain temporary. The market is no longer deciding whether geopolitical risk exists. It is deciding how much of that risk to price. Today, options markets suggest investors still expect Brent crude to trade around US$75 per barrel three months from now, only modestly above the roughly US$70 expectation at the beginning of the month. What has changed is not the market’s base case. It is the probability investors assign to a much larger price spike if the disruption proves more persistent than expected. That may prove to be the correct assessment. But if it is wrong, the economic and investment consequences would likely be far greater than they were during the initial shock. This is not a prediction. It is a risk management discussion.
In the following five-minute video, Simon Bowers, Private Wealth Portfolio Manager with IPC Securities , discusses the key events that shaped markets during the second quarter and what investors should be watching as the year progresses. Despite geopolitical tensions in the Middle East, including the conflict involving Iran and concerns around oil transportation through the Strait of Hormuz, markets recovered strongly during the quarter. While oil prices briefly surged, they have since returned close to pre-conflict levels, helping support renewed market optimism and pushing equity markets toward new highs. However, Simon notes that strong market performance does not necessarily reflect the broader economy. Investors should remain mindful of several risks, including elevated stock valuations, ongoing inflation pressures, uncertainty surrounding trade policies, and high expectations for AI-related companies. As share prices rise, companies must deliver stronger earnings to justify those valuations, leaving less room for disappointment. One area Simon highlights is the shift away from the concentrated leadership of the so-called "Magnificent Seven" technology stocks. While AI-related businesses continue to attract attention, many investors are increasingly finding opportunities in companies with simpler business models, attractive valuations, and consistent dividend income. This broader participation across the market has been an important contributor to recent returns. Inflation also remains a key theme. Although the oil price spike was temporary, its effects may continue to ripple through the economy over the coming months. Combined with ongoing tariffs and evolving trade relationships, inflation in both Canada and the United States is expected to remain above central bank targets. While this could result in interest rates staying higher for longer, Simon emphasizes that moderate inflation is a normal and necessary part of a healthy economy. Looking ahead, there are still reasons for optimism. New trade agreements, reduced trade barriers, infrastructure investment, and continued innovation all support long-term economic growth. While uncertainty remains a constant feature of investing, Simon believes that investors who stay focused on their long-term plan and remain invested are well positioned to benefit from future opportunities. He encourages investors to continue working closely with their IPC advisor to help navigate changing market conditions and stay on track toward their financial goals.
In the following four minute video, Blair Setford, AVP, Product Management, Canada Life Investment Management Ltd. discusses how global equity markets delivered a strong second quarter, demonstrating resilience despite ongoing geopolitical uncertainty and a complex economic backdrop. Optimism surrounding easing tensions in the Middle East, combined with continued enthusiasm for artificial intelligence (AI) and stronger-than-expected corporate earnings, helped drive one of the strongest second-quarter performances in recent years. Across the U.S., Europe, and Japan, companies broadly exceeded earnings expectations, with technology and semiconductor stocks leading gains. Other cyclical sectors, including industrials, travel and leisure, and basic resources, also contributed positively to market returns. In Canada, economic and earnings growth were more subdued. While higher commodity prices supported results and bank earnings remained relatively strong, the country entered a technical recession following two consecutive quarters of negative growth. However, headline economic data may not reflect the full picture. Adjusted for slowing population growth, some indicators suggest the Canadian economy could be moving toward the early stages of recovery rather than a prolonged downturn. Looking ahead, several challenges remain, including weak business investment, a sluggish real estate sector, elevated living costs, and the impact of U.S. tariffs on certain industries. Rising energy prices and geopolitical risks have also heightened inflation concerns and influenced expectations for central bank policy. Despite near-term uncertainty and the potential for continued market volatility, Canada Life Investment Management’s Portfolio Solutions Group maintains a constructive 12-month outlook for equities. Valuations have become more attractive in certain sectors following recent market pullbacks, particularly in technology and semiconductors. Assuming geopolitical tensions stabilize and economic fundamentals remain supportive, global equity markets could continue to advance. Blair concludes by encouraging investors to remain focused on their long-term objectives and consult with their financial advisor to ensure their portfolios remain aligned with their financial plans.
Markets have become increasingly comfortable with geopolitical risk. That is understandable. Earlier disruptions in the Middle East proved temporary. Energy markets adjusted more quickly than many expected, supply found alternative routes, and the global economy continued to expand. The renewed closure of the Strait of Hormuz is not simply another disruption. It is a reminder that the global energy system has become progressively less resilient. Not because the Strait has suddenly become more important. It has always been one of the world’s most strategically important energy corridors. What has changed is the market’s ability to absorb another disruption. The first shock was cushioned by alternative pipeline capacity, inventory drawdowns and expectations that shipping would eventually resume. Roughly one-third of the crude oil that normally flowed through the Strait was successfully redirected through regional pipeline infrastructure, while commercial inventories were drawn down to fill much of the remaining gap. Months later, much of that cushion has disappeared. Commercial OECD oil inventories now sit at their lowest levels in recent history. In fact, inventory levels this low have historically been associated with oil prices closer to US$120 per barrel, underscoring how dependent today’s market has become on the assumption that supply disruptions remain temporary. The market is no longer deciding whether geopolitical risk exists. It is deciding how much of that risk to price. Today, options markets suggest investors still expect Brent crude to trade around US$75 per barrel three months from now, only modestly above the roughly US$70 expectation at the beginning of the month. What has changed is not the market’s base case. It is the probability investors assign to a much larger price spike if the disruption proves more persistent than expected. That may prove to be the correct assessment. But if it is wrong, the economic and investment consequences would likely be far greater than they were during the initial shock. This is not a prediction. It is a risk management discussion.
In the following five-minute video, Simon Bowers, Private Wealth Portfolio Manager with IPC Securities , discusses the key events that shaped markets during the second quarter and what investors should be watching as the year progresses. Despite geopolitical tensions in the Middle East, including the conflict involving Iran and concerns around oil transportation through the Strait of Hormuz, markets recovered strongly during the quarter. While oil prices briefly surged, they have since returned close to pre-conflict levels, helping support renewed market optimism and pushing equity markets toward new highs. However, Simon notes that strong market performance does not necessarily reflect the broader economy. Investors should remain mindful of several risks, including elevated stock valuations, ongoing inflation pressures, uncertainty surrounding trade policies, and high expectations for AI-related companies. As share prices rise, companies must deliver stronger earnings to justify those valuations, leaving less room for disappointment. One area Simon highlights is the shift away from the concentrated leadership of the so-called "Magnificent Seven" technology stocks. While AI-related businesses continue to attract attention, many investors are increasingly finding opportunities in companies with simpler business models, attractive valuations, and consistent dividend income. This broader participation across the market has been an important contributor to recent returns. Inflation also remains a key theme. Although the oil price spike was temporary, its effects may continue to ripple through the economy over the coming months. Combined with ongoing tariffs and evolving trade relationships, inflation in both Canada and the United States is expected to remain above central bank targets. While this could result in interest rates staying higher for longer, Simon emphasizes that moderate inflation is a normal and necessary part of a healthy economy. Looking ahead, there are still reasons for optimism. New trade agreements, reduced trade barriers, infrastructure investment, and continued innovation all support long-term economic growth. While uncertainty remains a constant feature of investing, Simon believes that investors who stay focused on their long-term plan and remain invested are well positioned to benefit from future opportunities. He encourages investors to continue working closely with their IPC advisor to help navigate changing market conditions and stay on track toward their financial goals.
In the following four minute video, Blair Setford, AVP, Product Management, Canada Life Investment Management Ltd. discusses how global equity markets delivered a strong second quarter, demonstrating resilience despite ongoing geopolitical uncertainty and a complex economic backdrop. Optimism surrounding easing tensions in the Middle East, combined with continued enthusiasm for artificial intelligence (AI) and stronger-than-expected corporate earnings, helped drive one of the strongest second-quarter performances in recent years. Across the U.S., Europe, and Japan, companies broadly exceeded earnings expectations, with technology and semiconductor stocks leading gains. Other cyclical sectors, including industrials, travel and leisure, and basic resources, also contributed positively to market returns. In Canada, economic and earnings growth were more subdued. While higher commodity prices supported results and bank earnings remained relatively strong, the country entered a technical recession following two consecutive quarters of negative growth. However, headline economic data may not reflect the full picture. Adjusted for slowing population growth, some indicators suggest the Canadian economy could be moving toward the early stages of recovery rather than a prolonged downturn. Looking ahead, several challenges remain, including weak business investment, a sluggish real estate sector, elevated living costs, and the impact of U.S. tariffs on certain industries. Rising energy prices and geopolitical risks have also heightened inflation concerns and influenced expectations for central bank policy. Despite near-term uncertainty and the potential for continued market volatility, Canada Life Investment Management’s Portfolio Solutions Group maintains a constructive 12-month outlook for equities. Valuations have become more attractive in certain sectors following recent market pullbacks, particularly in technology and semiconductors. Assuming geopolitical tensions stabilize and economic fundamentals remain supportive, global equity markets could continue to advance. Blair concludes by encouraging investors to remain focused on their long-term objectives and consult with their financial advisor to ensure their portfolios remain aligned with their financial plans.
Markets have moved quickly from crisis pricing to relief pricing. That is understandable. The immediate risk of a highly adverse energy shock has faded as a fragile U.S.-Iran agreement reduces the risk that energy flows through the Strait of Hormuz remain severely disrupted. That matters. A prolonged disruption to one of the world’s most important energy chokepoints was never a narrow geopolitical issue. It was a direct threat to inflation, growth, consumer spending, corporate margins and central bank policy. Relief is justified. Complacency is not. The market can reprice in a day. Energy systems do not repair themselves that quickly. Tankers need to be repositioned, insurance markets need to normalize, inventories need to be rebuilt, and production systems need time to return to capacity. Natural gas is even more complicated given the damage to Qatari production. The acute shock has faded, but the after-effects are still working their way through the global economy. That is the right starting point for the quarter ahead. The outlook is better than it was a few weeks ago, but it is not clean.
The market is still being paid to believe in AI earnings growth. It is also starting to be charged for inflation risk again. That is a harder combination than it looks. The AI earnings cycle remains powerful. U.S. equity markets have not been rising on enthusiasm alone. Earnings growth, particularly among the largest technology and AI related companies, has done much of the heavy lifting. But inflation risk is rebuilding at the same time. Labour markets are proving more resilient than expected, energy prices are still working through the data, and central banks may not have as much room to look through this shock as investors assumed even a few weeks ago. This is the market’s central problem. AI supports the growth story. Higher real yields challenge the valuation story. Those two forces can coexist for a while. They may not coexist comfortably if inflation keeps moving higher and central banks have to respond. The issue is no longer whether AI is real. The issue is whether the earnings path is strong enough to absorb a higher discount rate.
The stock market has absorbed a lot. Oil prices are higher. Inflation has reaccelerated. Bond yields have moved up. Geopolitical risk is no longer theoretical. Yet equity markets, particularly in the U.S., remain close to record highs. That does not mean markets are ignoring risk. It means investors are still willing to look through it because the dominant story remains earnings, and more specifically, AI-related earnings. The question is not whether risks exist. They do. The question is what could become large enough to interrupt the earnings narrative that has carried this market higher. In my view, there are three main candidates. Inflation that forces central banks back into a tightening cycle. Energy disruption that lasts long enough to damage growth and margins. A break in confidence around the AI earnings story. There is also a fourth, less obvious risk: the market may soon be asked to absorb a wave of large AI-related equity issuance at the same time that investors are already heavily exposed to the theme. None of these risks is enough, on its own, to say the rally must end now. But together they define the transmission path we should be watching.
Markets have become increasingly comfortable with geopolitical risk. That is understandable. Earlier disruptions in the Middle East proved temporary. Energy markets adjusted more quickly than many expected, supply found alternative routes, and the global economy continued to expand. The renewed closure of the Strait of Hormuz is not simply another disruption. It is a reminder that the global energy system has become progressively less resilient. Not because the Strait has suddenly become more important. It has always been one of the world’s most strategically important energy corridors. What has changed is the market’s ability to absorb another disruption. The first shock was cushioned by alternative pipeline capacity, inventory drawdowns and expectations that shipping would eventually resume. Roughly one-third of the crude oil that normally flowed through the Strait was successfully redirected through regional pipeline infrastructure, while commercial inventories were drawn down to fill much of the remaining gap. Months later, much of that cushion has disappeared. Commercial OECD oil inventories now sit at their lowest levels in recent history. In fact, inventory levels this low have historically been associated with oil prices closer to US$120 per barrel, underscoring how dependent today’s market has become on the assumption that supply disruptions remain temporary. The market is no longer deciding whether geopolitical risk exists. It is deciding how much of that risk to price. Today, options markets suggest investors still expect Brent crude to trade around US$75 per barrel three months from now, only modestly above the roughly US$70 expectation at the beginning of the month. What has changed is not the market’s base case. It is the probability investors assign to a much larger price spike if the disruption proves more persistent than expected. That may prove to be the correct assessment. But if it is wrong, the economic and investment consequences would likely be far greater than they were during the initial shock. This is not a prediction. It is a risk management discussion.
In the following five-minute video, Simon Bowers, Private Wealth Portfolio Manager with IPC Securities , discusses the key events that shaped markets during the second quarter and what investors should be watching as the year progresses. Despite geopolitical tensions in the Middle East, including the conflict involving Iran and concerns around oil transportation through the Strait of Hormuz, markets recovered strongly during the quarter. While oil prices briefly surged, they have since returned close to pre-conflict levels, helping support renewed market optimism and pushing equity markets toward new highs. However, Simon notes that strong market performance does not necessarily reflect the broader economy. Investors should remain mindful of several risks, including elevated stock valuations, ongoing inflation pressures, uncertainty surrounding trade policies, and high expectations for AI-related companies. As share prices rise, companies must deliver stronger earnings to justify those valuations, leaving less room for disappointment. One area Simon highlights is the shift away from the concentrated leadership of the so-called "Magnificent Seven" technology stocks. While AI-related businesses continue to attract attention, many investors are increasingly finding opportunities in companies with simpler business models, attractive valuations, and consistent dividend income. This broader participation across the market has been an important contributor to recent returns. Inflation also remains a key theme. Although the oil price spike was temporary, its effects may continue to ripple through the economy over the coming months. Combined with ongoing tariffs and evolving trade relationships, inflation in both Canada and the United States is expected to remain above central bank targets. While this could result in interest rates staying higher for longer, Simon emphasizes that moderate inflation is a normal and necessary part of a healthy economy. Looking ahead, there are still reasons for optimism. New trade agreements, reduced trade barriers, infrastructure investment, and continued innovation all support long-term economic growth. While uncertainty remains a constant feature of investing, Simon believes that investors who stay focused on their long-term plan and remain invested are well positioned to benefit from future opportunities. He encourages investors to continue working closely with their IPC advisor to help navigate changing market conditions and stay on track toward their financial goals.
In the following four minute video, Blair Setford, AVP, Product Management, Canada Life Investment Management Ltd. discusses how global equity markets delivered a strong second quarter, demonstrating resilience despite ongoing geopolitical uncertainty and a complex economic backdrop. Optimism surrounding easing tensions in the Middle East, combined with continued enthusiasm for artificial intelligence (AI) and stronger-than-expected corporate earnings, helped drive one of the strongest second-quarter performances in recent years. Across the U.S., Europe, and Japan, companies broadly exceeded earnings expectations, with technology and semiconductor stocks leading gains. Other cyclical sectors, including industrials, travel and leisure, and basic resources, also contributed positively to market returns. In Canada, economic and earnings growth were more subdued. While higher commodity prices supported results and bank earnings remained relatively strong, the country entered a technical recession following two consecutive quarters of negative growth. However, headline economic data may not reflect the full picture. Adjusted for slowing population growth, some indicators suggest the Canadian economy could be moving toward the early stages of recovery rather than a prolonged downturn. Looking ahead, several challenges remain, including weak business investment, a sluggish real estate sector, elevated living costs, and the impact of U.S. tariffs on certain industries. Rising energy prices and geopolitical risks have also heightened inflation concerns and influenced expectations for central bank policy. Despite near-term uncertainty and the potential for continued market volatility, Canada Life Investment Management’s Portfolio Solutions Group maintains a constructive 12-month outlook for equities. Valuations have become more attractive in certain sectors following recent market pullbacks, particularly in technology and semiconductors. Assuming geopolitical tensions stabilize and economic fundamentals remain supportive, global equity markets could continue to advance. Blair concludes by encouraging investors to remain focused on their long-term objectives and consult with their financial advisor to ensure their portfolios remain aligned with their financial plans.
When it comes to planning your estate, there are some decisions you’ll want to consider well in advance. This blog will help prime you for one of the most important decisions you can make when you’re planning an estate: how to choose an executor.
Estate planning is a formalized plan which specifies details regarding the management and transfer of your estate in the event of your incapacitation or death.
Many parents are concerned with the issue of “affluenza.” The concern is that a child who receives great wealth with ease may also inherit a lack of drive and wander through life with a sense of entitlement.
