Stan Wong A Comment -- General Comments From an Expert A Commentary COMMENT May 07, 2025

It'll definitely help, and we're already seeing some stability in the markets. February/March was a pretty rough go for investors. He's seeing fundamental buyers stepping in. Valuations are still really attractive. As long as we can solve this tariff issue relatively quickly, the setup for investors is very good from here.

When all this started, his team did a position-by-position review. They were looking for 2 things: direct exposure to tariffs (such as producing a product and selling to the US), and indirect exposure (such as a spike in unemployment leading to decreased credit performance). So go through your portfolio and critically analyze both of these impacts. 

Right now, given that there are so many good opportunities in the market, you don't really need to hold a stock where you're unsure what the impact will be or where you think there will be significant impact to margins. 

Investors really need to look at things from a bottom-up perspective, company by company. He's not a macro investor, so he's not going to try to predict what's going to happen with tariffs or rates. Instead, he looks at a company's fundamentals and picks his spots.

The recovery we've seen typically comes in bursts over a small number of trading days. Worst thing you can do in times like this is to be out of the market completely. Some investors can't stomach downturns and just panic-sell. Don't do that.

Very different market than last year, where you could have owned anything and done well. Now it's a market where you really have to pick your spots. If you don't have the skill to do it on your own, work with a qualified adviser or firm because this is a much more difficult market. But tons of opportunity, so you need to take advantage of that.

Don't expect much from PM Carney meeting Trump today, but it's interesting Trump's change in tone after the Canadian election with the 51st state talk dying down. Will the tone between the two leaders be more cordial? Meanwhile, the US is losing its dominance--the US has had decades of trade deficits building that has been putting dollars into the hands of foreign entities which have bough US assets hand over fist. This has culminated in the greatest run in the S&P, from 2010-present. But this is starting to fray and unwind. Canada has poor energy prices, under tariff threats and high housing prices (though gold is hitting highs), but still, Canadian stocks are more in demand that US ones. The US stance on tariffs will lead to stagflation, which is a tough time to make money in markets. He likes utilities and infrastructure, which are export opportunities for Canada, and backed by federal leadership. LNG should be Ottawa's focus; the first phase of LNG Canada should happen later this year that he hopes leads to a decision on phase 2. He likes the nat gas space.

Difficult to manage what's happening because there's lots of uncertainty out there. He feels that a lot of businesses are holding off on certain capex spending, front-running some things to get ahead of tariffs. 

Still, markets have been pretty healthy. Since the April 8 lows, we're up about 13-14%. Generally, investor sentiment has been improving. Tariff tension is de-escalating somewhat. Seeing positive economic data and a pause on new tariffs. Steady job growth in the US is restoring confidence in the overall market.

US and China are going to start talks this week. While that's big news, he's not sure if it's more about de-escalation or about a deal. We'll see. In any light, it's positive.

Looking ahead, we have US mid-term elections coming up. The administration is going to need to get supporters back onside. Need to get the economy relatively strong, and get those votes; otherwise, they'll lose the House.

Expects choppiness to continue. Out of the woodwork, we just saw tariffs on movies that are filmed outside the US. Geopolitical tensions around the world, political uncertainty. But when do we ever have blue skies and clear sailing?

He is constructively optimistic that, as trade tensions come down, we'll see markets slowly melt upwards.

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