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Stockchase Insights A Comment -- General Comments From an Expert A Commentary COMMENT Feb 07, 2025
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He's diversified globally. In a 30-stock portfolio, he'll have 4 Canada, 13 US, and 13 international. We had the risk-off period when all the fear from tariffs was out there. And now we've had this big market rally back, given that they want to reduce tariffs. The moral of the story there is that you cannot time the markets. So don't be sitting in cash, you have to be invested because of what happened Monday, when we had a 1-day rally of 3-4%.
Be diversified. Whether we get stagflation and rates go higher, or a bull market again with rates going down, you still have to be invested.
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We've seen a big rally from the bottoms of liberation day in early April, almost 20% in the S&P. On the S&P, we're now in positive territory YTD. The TSX is up 3% YTD.
She gets that the worst-case scenario is no longer priced into the market with the 90-day pause on tariffs. But there's still a lot more to unfold. When she looks at the economy, the data coming out is not looking great. It's mixed, at best. Then there are other things like increasing geopolitical risk.
In Canada, consumer confidence is coming down. Housing starts are the lowest they've been since 2009. Job numbers are not great, unemployment is starting to tick up, and that's without the impact of tariffs yet. Highly indebted consumer. Mortgage prices will come up as they get rolled over.
In the US, consumer confidence has really plummeted since Trump was elected. Retail numbers were OK, but the number released this morning reflects a lot of pre-tariff surge in buying. Manufacturing is in contraction territory.
The economy is murky at best. We're already seeing softening GDP numbers in both Canada and the US. She wouldn't be surprised if Canada's already in a recession or at the start of one, and we're just waiting for those data prints to come out. In the US employment's still strong, but the main hiring has been done by government; with DOGE, not sure if government jobs are going to come to the rescue this time.
Doesn't own any right now. She's not confident on consumer spending and the retail space. The rental space would be interesting, but none of the particular companies capture her attention yet. Industrials already had their day during the pandemic -- cheap space, easy to replicate, and prices will come down.
No idea. We've got a slowing US economy, which is a major trading partner, and tariffs. After the talks between US and China, everyone saw that as a buying opportunity and the market's rallied ever since. You can see that clearly in the chart for the TSX.
But when you look at slowing economy, quantities of debt, unemployment, and deteriorating credit metrics, this is probably a time to take some profits rather than adding extra exposure. The optimism isn't warranted at all.
The Trump presidency has been a chaos magnet, and what it's done is to reprice some sectors. There was a buying opportunity about 6 weeks ago. If you participated in that, you've been well rewarded. But it looks as though the market's ahead of itself.
If we don't get interest rate cuts, we're going to see more unemployment and problems with company balance sheets. There are problems out there, and the Chinese tariff deal hasn't changed that.
That's probably the $1M question. A tariff is effectively inflation. Could take 1-2 quarters to hit. Rising prices will put companies under pressure. We're seeing companies that were marginally profitable already start to cut employees. Some boards are making opportunistic cuts. CEOs are being replaced.
Tariffs will be a catalyst for other changes to occur. It's providing cover for a lot of activity that's probably been needed for quite some time.
April Market Recap
The TSX Index was down -0.30% in the month of April, up 0.46% YTD and 14.40% over the past year. Canadian GDP was up 0.6% in the fourth quarter of 2025 and 2.40% for the full year; in the USA the GDP was up 2.4% for the fourth quarter and 2.50% for the full year. Canadian inflation rate was 2.30% annually in April 2025 and the US annual rate was 2.40% in April 2025.
The best performer of April was Galaxy Digital Holdings Ltd (GLXY) whose stock price was up 44.5% on the month, down -12.3% year-to-date, and up 81.2% over the past year.
The second best performer of April was Andlauer Healthcare Group Inc (AND) whose stock price was up 37.2% on the month, up 26.8% year-to-date, and up 28.3% over the past year.
The third best performer of April was Kinaxis Inc (KXS) whose stock price was up 17.3% on the month, up 7.5% year-to-date, and up 27.0% over the past year.
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Tech Themes That Created Investing Opportunities:
Smartphones
You probably have realized by now how hard life would be if you didn’t have a smartphone. Boarding a plane? Reading a menu? Ordering a taxi or Uber? Looking for directions? Reading the newspaper? Signing forms? Good luck with that. Essentially, smartphones combined the power of processors and the internet and turned your phone into your own personal assistant, mobile encyclopedia and best friend. The smart phone set off entire industries of companies serving the sector, from app developers to all those kiosks in the mall selling phone covers. You know the company we are going to mention here, of course: Apple Inc. After the recession in 2002, Apple shares went on a 12-year tear, only declining once (46 per cent in 2008) and the company saw its stock rise from 25 cents (split adjusted) to $28 in 2014. It has, of course, increased nearly 10-fold from that level as well to today’s price.
Google
Yes, we are going to single out a specific company here as a tech development. Tied of course to the internet, Google (now a division of holding company Alphabet Inc.) simply made the internet more usable for the world. I remember being frustrated by internet searches back in the day, and a co-worker urged me to use Google. I had never heard of it before, but suddenly the internet was there in all its glory, ready to be discovered. Google searches became so useful and pervasive that the company itself became a verb: “Just Google it,” your friends would say. Since its early days, of course, Google (I don’t think I will ever call it Alphabet) has transformed into a corporate behemoth. It has used its massive cash flow (US$105 billion annually now) to develop new products and services and/or buy all sorts of companies and products and services. It is now about a US$2.4 trillion company. It’s hard to believe that Alphabet has only been public for less than 21 years. Shares have gone from US$4.80 to about US$195 since their debut in 2004.
Artificial Intelligence
AI went mainstream in 2022 with the launch of ChatGPT. Suddenly, AI assistants could churn out entire reports on topics, write essays for students, set up vacation plans, write software code and create videos and graphics. AI usage has started to creep into everyday life, from call centres to drive-through restaurants, internet searches and data analysis. We are not quite at the home-robot stage, but we are certainly getting closer. The dawn of AI is probably a bigger technological advancement than the internet. Of course, it can’t happen without the internet, where AI gets all of its data. Again, you know the poster child of this development. Nvidia Corp., which produces the GPU chips that run AI programs, has seen its shares go from less than US10 cents in 1999, to hitting about US$129 this week. Will DeepSeek change its direction? Only time will tell, but it certainly took a big hit when the DeepSeek news came out.
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