Colin CieszynskiA Comment -- General Comments From an ExpertA CommentaryCOMMENTMar 24, 2025

If you look at the World Cup since 1930, stock markets tend to do a little less well than average. If you look at the down markets we've had in the last decade (2018 and 2022), both were World Cup years. Based on the data, we might have a bad second half of the year ;)

You have to be aware of them, but certainly don't try to predict them. It's incredibly to think that if we went back a year ago and he told you that we'd see the Canadian economy flatline, CUSMA not be renewed, lingering conflict in the Middle East, affordability pressures, high unemployment, and yet the TSX would be up 30%.

The stock market's much better at telling you where the economy is heading, than the other way around. Strength in corporate profits is a much bigger driver of stock markets than the economy is.

Every day it seems as though it's semiconductors and the AI buildout, while the narrative on software has moved things in the other direction. Underneath that, financials have done very well around the world. Other parts of the market are starting to perk up.

Finding good stocks is becoming much more idiosyncratic. It's harder work, as it's not obvious where the pockets of pessimism are. But with 10k stocks around the world, there's always something to uncover.

Stocks showing up on his radar are those whose price is depressed in the short term for whatever reason, but the long-term business is attractive.

A year ago, he struggled to find value. Ended up buying SVNLY, which had an attractive valuation. Everything else was expensive, and even more so today. Don't forget that banks are cyclical. The good times are here, and it doesn't get much better than this. Be mindful, risk/reward isn't attractive.

Similar argument for US banks on valuation, though he's slightly less concerned about them.

Be mindful of your overall bank exposure.

It's a decision to stay the course, steady as she goes. Seems appropriate for the current environment. They highlighted that there were signs of improvement in the Canadian economy, despite some one-time disruptions and some ongoing risk. Hard to predict what the outcomes will be from tariff talks and the Middle East situation.

It's something we've needed for quite some time. You want broad economic growth, not concentrated in one or two sectors (as that brings risk). Broadening is a good thing.

The volatility/uncertainty could continue for quite some time. What was really interesting was that as ceasefires were announced, the price of oil went down a lot more than the price of gasoline. Seems to indicate that the market was pricing in a certain amount of risk at the downstream end -- despite any movements in crude oil, the gasoline that is traded for use was indicating that it's not all sunshine and rainbows.

Crude oil probably overshot too much to the downside, now it's come back around $80, and we'll see where it goes from here.

His firm doesn't use seasonality in investing, as it's too granular. They use changes in RSI and capital flows instead. He's done a lot of work on it over the years -- it helps somewhat with bigger trends, but he's always struggled with how it helps in the shorter term.

We've seen some improvement in healthcare and some of the healthcare ETFs.

There's been a lack of market breadth. Until the last quarter of 2025, it's been all tech. But now tech has been weaker than other sectors. Eventually, the semis will be weak. Nearly every other sector has gained strength, which makes him bullish. This rotation is healthy. In the past month or so, tech has been underperforming other sectors. Value is returning to the market and diversification has returned. The market is healthier than 6 months ago.

The U.S. banks report tomorrow. He expects earnings to be the same as Q1's. Unless something bad happened in the economy in Q1, then the earnings follow trend. Overall, the US economy is strong with AI spending while poorer Americans have seen wage gains. Expectations are high though. If the oil price spikes again, it won't effect US companies that much, because the US market is largely tech driven. US small caps have seen a huge rally as money flows out of semis. We might be in an extended cycle for semis.

What's in the rearview mirror and what we expect going forward are two different things. Numbers are expected to be excellent. We've seen a broad-based lift in earnings across many sectors. Question is, can it continue? 

If nominal GDP is firing, earnings are really good. When the economy grows, so do revenues.

Anything they have to say regarding sensitivity to the consumer, such as credit card delinquencies, will be important. Loan losses are something we have to think about. Doesn't think the huge stress on the consumer from inflation is behind us. As we get into midterm elections that's what matters to voters, though it may not matter to where the S&P 500 goes from here.

The headlines are groceries and gas pumps because that's what touches the average person every day. We have to look deeper than that. When earnings are being reported, what are they saying about cost pass-throughs? If it's airlines, higher fuel costs will show up in ticket prices. In terms of banks, it's really on credit card sensitivity and spending patterns.

See today's Educational Segment.