1. The Canadian Economy — Slow and Steady, but Feeling the Trade War Headwinds

Canada continues to move along at a slow but steady pace. Inflation is easing, rates are drifting lower, and the economy has avoided recession — the classic soft landing.

The “slow and steady” foundation:

• Inflation is near the Bank of Canada’s 2% target, with core inflation around 2.5%.
• The Bank of Canada cut rates twice this fall — to 2.50% on September 17, and again to 2.25% on October 29, 2025.
• Policymakers have signaled they’re willing to “look through” short-term inflation bumps to support growth.
• Canada’s 2025 GDP is expected to grow around 1–1.5%, which is modest but reassuringly stable.

But trade-war pressures are slowing things down:

Canada remains heavily integrated with the U.S., and the ongoing trade conflict is creating real economic friction.

• About 75% of Canadian exports go to the U.S., representing almost one-quarter of our total GDP.
• Tariffs and policy uncertainty have led companies to report:
  • higher costs,
  • lower profits,
  • supply-chain disruptions, and
  • delayed investment.
• Long-term estimates suggest the trade war could reduce Canada’s GDP by 1.25%–2% if conditions persist.
• The Bank of Canada has noted that weaker exports and softer labour-market conditions are already contributing to slower economic momentum.

What this means for you:

• Canada is still stable, but we are growing more slowly than we otherwise would.
• Export-linked sectors (autos, manufacturing, agriculture, energy) may feel pressure.
• This is a strong reminder of the importance of global diversification — not being overly tied to an economy that is facing external headwinds.

2. Ottawa’s 2025 Federal Budget — “Building Canada Strong”

The November 4 federal budget emphasizes long-term stability over short-term stimulus.

Highlights:

• A new capital-budgeting framework separating long-term infrastructure investments from operating spending.
• Additional spending on housing, transportation, productivity, and defense.
• A focus on innovation, efficiency gains, and trade resilience.

For investors, this means fewer surprises — Canada remains on a predictable fiscal path without major tax disruptions.

3. Stocks — A Tug of War Between Optimism and Caution

This fall, the stock market is being pulled between two compelling but opposing forces:

On the optimistic side:

• Corporate earnings have been stronger than expected.
• AI innovation continues to boost confidence around long-term productivity gains.
• Lower interest rates give valuations some support.

On the cautious side:

• Stock markets are near record highs.
• Economic growth — in Canada and globally — is slowing.
• High valuations leave less room for disappointment if earnings soften.

What this means for your investing strategy:

• Stay invested for long-term growth, but stay quality-focused: companies with strong balance sheets, real earnings, and reliable dividends.
• Diversify globally to limit reliance on any one sector or region.
• Expect volatility — and use it as a chance to rebalance, not react emotionally.
  

 4. Bonds — Quietly Becoming Attractive Again

After years of uncertainty, bonds are finally offering value again:

• The 10-year Government of Canada yield is near 3%.
• Falling policy rates are improving bond price stability.
• Bonds once again contribute income + stability — particularly helpful for retirees or those close to retirement.

We continue to use fixed income as well as alternative investments to balance opportunity and risk.

5. What We’re Watching into 2026

• Inflation: Any sustained move above 3% could slow or reverse rate cuts.
• Global growth: Slower demand abroad affects Canadian exports.
• Valuations: Certain sectors, especially tech, remain expensive.
• Currency: A softer Canadian dollar boosts global investment returns.

6. The Right Direction Approach

Our guidance remains consistent:

• Diversify intelligently — Canada + global + fixed income + alternatives where appropriate.
• Rebalance regularly — lock in gains and manage risk.
• Plan around life events: retirement income, downsizing, supporting parents and adult children, estate planning.
• Avoid knee-jerk decisions — markets reward discipline, not emotion.
  

In Summary

Markets today sit at a delicate balance:

• Optimism from strong earnings and long-term AI potential,
• Caution from slowing economies and record-high valuations,
• Stability from lower inflation and falling interest rates,
• But pressure from the ongoing trade war with the U.S.

For thoughtful investors, this is a time to stay steady, diversified, and goal-focused — not too cautious, not too aggressive.

Here’s how the numbers look at Nov 12, 2025: