Opinions
Ryan Bushell A Comment -- General Comments From an Expert A Commentary COMMENT Aug 15, 2025
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Premium contentWe've had a fantastic run since the tariff tantrum back in March/April. Conditions still support further upside.
One of those is that we're expecting further rate cuts in the US, and likely one in Canada this month. As well, AI is still leading the group, but you have to be selective because things are getting a bit pricey.
And then we have very strong seasonality tailwinds behind us at this point. Q4 for the last 10 years has averaged about a 5.3% return, and it's been positive 9 of those 10 years. Finally, look at all the cash on the sidelines in the US -- about $7.3T. With interest rates coming down, some of that cash might move into equities and other risk assets including bonds.
Financials and technology. Likes healthcare for its combination of defense and growth. Some areas of healthcare have not performed well, such as big pharma. Whereas names in logistics and distribution have done well. So you need to be selective.
Pharma at this point is a bit of a value play. But with rates coming down, growth continues to be more of a favourite area. In a falling interest rate environment, growth tends to outperform.
As a technician he expected this, but you never know what's going to trigger it. It was sort of pre-ordained with the setup through August and September, and then we usually get a low in early October and one late October. Today, the driver is an announcement from a politician.
Thinks this correction will be well bid. So on any weakness, whatever the source (an announcement, bad economic news, geopolitical event), investors are probably going to step back in. Just as in April, the market will probably absorb this and move on, knowing that we're in a period of expected weakness anyway.
We'll need to wait a few more weeks, but we'll probably go through this quickly.
Technicals are very binary and clinical. So the setup is always there, but you don't know what the story is behind them. Trump is a bit of a wild card. But the underlying strength in the market (such as shown by the jobs numbers) means that investors are ready to buy on any weakness.
We've seen this a lot more with the Fed, where they're between a rock and a hard place. It was the last central bank to cut rates. The reason they dragged their feet, unlike Canada (which was on of the first of the G7 to lower rates), was concern that underlying strength of the US economy could come back to bite them.
In Canada, we may be less apt to lower if we see jobs continue to do well and GDP pick back up. If GDP starts to have some upward momentum, it'll put both central banks in a bit of a fix and we may not get those lower rates.
Looks good as a longer-term play, but it can be quite volatile. His team is now looking at positions and, for those that have done really well, deciding which ones to clip a bit to bring the position size back in line. Yesterday's pattern suggests further weakness to come, but it's not guaranteed.
Seeing a shorter-term reversal, where all the action of one day is encompassed by the next day's action. Yesterday it moved higher, but closed lower. Gold's up today because of the down market. No connection between safety and gold; biggest connection to gold is the USD.
While he may lighten up on the US dollar, he's not going to the ruble or the yuan. Chart on the USD starting to move up, and that's going to put some pressure on gold. Might see some people selling their gold and going back to the USD.
If you're gold's done well, maybe you clip some profits. But thematically, looks good long term. It's a balance of short term vs. long term.
What's interesting about the negative reactions in April, and earlier this year when the tariff news first hit, is that it wasn't the general economy stocks that were impacted. It was the tech stocks. So he hesitates to say where the market's going to go based on the general economy.
He's not too concerned with trying to figure out where we are in the cycle. It's really driven by policy. Right now, policy is saying we're going to cut rates. The US President is saying we're going to cut rates. So the market has given an almost-Pavlovian response by pushing up valuations.
On the overall economy, real-time data doesn't look very good. Port landings, freight traffic, trucking company and courier results all show problems. Consumers aren't necessarily getting stuck with tariffs. It's the retailers, importers, and manufacturers that are swallowing the extra costs for now. Once those start to get passed through, it will start to hurt the consumer.
Consumer discretionary is the worst-performing sector in the S&P this year, and that shows you where the limited impact is. But the market as a whole has been able to power through that.
Fall is the weaker period for equities, so he's hoping to see some opportunities. But he's not super-optimistic.