The U.S., China, Europe, and an assertive group of middle powers (Canada) are pursuing distinct models of economic security. Politics, geopolitics, and economic security policy now shape growth and inflation directly, increasing dispersion across countries, sectors, and firms while continuing to raise market and macro volatility. These forces are testing economic resilience, as economies cope with strained balance sheets. Governments are playing a more direct role in shaping economic outcomes toward the broader goals of economic security. Trade restrictions, export controls, subsidies, investment screening, and public procurement are now core tools of economic strategy.  In June we maintained our twelve-month forward outlook of three months of Stagnation (U.S. Real GDP growth less than 2.5%) followed by nine months of Recession (negative GDP growth) over the next twelve- month period.

China’s economy expanded 5.0% in Q1 2026. It marked the fastest annual growth in three quarters, supported largely by resilient export performance.¹ China’s annual inflation held steady at 1.2% in May² while surveyed urban unemployment edged lower to 5.1%.³ China’s trade surplus widened to USD 105.43 billion in May. Export growth accelerated to 19.4% year-on-year while imports jumped 27.4%. China’s trade surplus with the U.S. climbed to USD 26.02 billion in May from USD 23.07 billion in April.⁴ The Eurozone economy shrank by 0.2% in the first quarter of 2026.⁵ Eurozone consumer price inflation held at 3.2% in May⁶ while seasonally adjusted unemployment rose to 6.3%.⁷ 

The U.S. economy expanded an annualized 2.1% in Q1 2026, revised up from 1.6% in the second estimate, and above 0.5% in Q4 2025. The contribution from net trade was less negative, as imports growth was revised lower to 11.8% and exports rose 10.9%. Government spending was up 4.4%, recovering from a 5.6% contraction, as activity resumed following the end of the government shutdown.⁸ The annual inflation rate in the U.S. rose for the third consecutive month, to 4.2% in May 2026, marking its highest level since April 2023. Energy costs jumped 23.5% (vs 17.9% in April), due to the energy shock triggered by the conflict with Iran.⁹ The U.S. unemployment rate remained at 4.3% in May.¹⁰ The U.S. trade deficit narrowed to $55.9 billion in April. Exports rose 2.6%. Imports increased 2.0%.¹¹ The Canadian GDP stalled in the first quarter of 2026, holding the 0.2% contraction from the last quarter of 2025.¹² The headline inflation rate in Canada rose to 3.2% in May, from 2.8% in the previous month,¹³ while the unemployment rate in Canada fell to 6.6% from 6.9% in the previous month.¹⁴ Canada reported a trade surplus of C$2.7 billion in April 2026, up from C$1.8 billion in the prior month. Exports rose 1.6% month-on-month, while imports edged up 0.3%. The country’s trade surplus with the United States widened to C$9.5 billion in April from C$7.8 billion in March, the largest surplus since February 2025, driven largely by higher oil prices driven by the Iranian conflict.¹⁵

The rally in U.S. equities continued in May, as strong tech earnings and AI-related exuberance propelled the S&P 500 to eleven all-time closing highs, while declining oil prices and easing geopolitical concerns amplified the market’s positive sentiment. The 500 finished the month with a 5.3% gain. Mid-and small-cap equities lagged large caps, with the S&P Mid Cap 400 up 2.5% and the S&P Small Cap 600 up 1.04%. The S&P/TSX Composite increased 2.5%. The S&P Europe 350 climbed 3.1% in May. Asia Pacific equities advanced in May, as the spotlight turned from Middle East uncertainties to AI, driving a 7.3% gain in the S&P Pan Asia BMI (USD). Progress on a U.S.-Iran ceasefire and the reopening of the Strait of Hormuz contributed to a13.3% decline in the S&P GSCI Crude Oil.

In June we maintained exposure to U.S. and Canadian Equities. We continue to believe that Canada is managing the U.S. tariff uncertainty relatively well, replacing some U.S. exports with contracts in Europe and abroad. Central banks have much more room to cut rates in future economic downturns than in the decade before the pandemic and we expect that they will, to keep inflation expectations anchored over the next year.  Gold is held across all models as a geopolitical risk hedge. Gold’s historical performance during times of crisis, portfolio diversification, and inflation hedging are also key factors for central banks to hold and add to their gold reserves.

Artificial intelligence has crossed a threshold. AI investment is now large enough to drive macroeconomic activity. The AI investment boom, rising defense spending, and energy security investments will add to global capital spending over the next five years. AI’s potential to compress wages and raise productivity could become a powerful disinflationary force, but geopolitical shocks and supply chain reconfiguration will likely put upward pressure on prices. We see a range of outcomes (“fat tails”). Our approach to portfolio management is nimble, opportunistic, and deliberate in identifying asset classes that are best placed to generate returns in a new world order. Our focus is on protecting portfolios from downside risk, and we believe that our investment process is working to achieve that goal.

Deborah Frame, President and CIO

Drew Millard, Portfolio Manager

¹ Trading Economics. China GDP. April 16, 2026.

² Trading Economics. China Inflation. June 10, 2026.

³ Trading Economics. China Unemployment. June 16, 2026.

⁴ Trading Economics. China Trade. June 9, 2026.

⁵ Trading Economics. Eurozone GDP. June 5, 2026.

⁶ Trading Economics. Eurozone Inflation. June 17, 2026.

⁷ Trading Economics. Eurozone Unemployment. June 1, 2026.

⁸ Trading Economics. U.S. GDP. June 25, 2026.

⁹ Trading Economics. U.S. Inflation. June 10, 2026.

¹⁰ Trading Economics. U.S. Unemployment. June 5, 2026.

¹¹ Trading Economics. U.S. Trade. June 9, 2026.

¹² Trading Economics. Canada GDP. May 29, 2026.

¹³ Trading Economics. Canada Inflation. June 22, 2026.

¹⁴ Trading Economics. Canada Unemployment. June 5, 2026.

¹⁵ Trading Economics. Canada Trade. June 9, 2026.

Index return data from Bloomberg and S&P Dow Jones Indices Index Dashboard: U.S., Canada, Europe, Asia, Fixed Income. May 31, 2026. Index performance is based on total returns and expressed in the local currency of the index.

Events in the Middle East have materially changed the near-term economic and financial outlook. Economies’ sensitivities to the conflict and its knock-on effects differ. Many of the largest economies in Asia-Pacific are heavily reliant on energy supplies from the Middle East. The impact on an economy will also be determined by a range of factors, including its energy mix, strategic reserves, policy responses, and whether it is a net energy importer or exporter. As the U.S. and Canada are energy exporters, this mitigates the impact on their projected growth rates over the next twelve months. In April we maintained our twelve-month forward outlook of three months of Stagnation (U.S. Real GDP growth less than 2.5%) followed by nine months of Recession (negative GDP growth) over the next twelve- month period.

China’s economy expanded 5.0% in Q1 2026. The economy has managed to absorb the shock of the Iran conflict with limited disruption, supported by ample oil reserves, a diversified energy mix, and state controls that help contain price volatility.¹ China’s annual inflation eased to 1.0% in March,² while surveyed urban unemployment rate to 5.4% in March.³ China’s trade surplus narrowed to $51.13 billion in March 2026. Export growth slowed sharply to 2.5% while imports soared 27.8% year-on-year.⁴ The Euro Area’s annual inflation rate was revised higher to 2.6% in March. The increase was largely driven by energy, with prices rising 5.1%, as the conflict with Iran pushed oil prices sharply higher. Considering the bloc’s largest economies, inflation rose in Germany, France, Italy, Spain, and the Netherlands (2.6% vs 2.3%).⁵ Unemployment in the Euro Area increased to 6.20% in February.⁶

The U.S. economy expanded at an annualized rate of 0.5% in Q4 2025, revised down further from 0.7% in the second estimate and 1.4% in the preliminary reading.⁷ The annual inflation rate in the U.S. jumped to 3.3% in March, driven by higher energy costs (12.5%), due to the war with Iran.⁸ The U.S. unemployment rate fell to 4.3% in March.⁹ The trade deficit in the U.S. widened to $57.3 billion in February 2026 as exports increased 4.2%, led by nonmonetary gold and natural gas. Imports went up 4.3%. The largest deficits were recorded with Taiwan, followed by Mexico, Vietnam, and China. The gap with the EU decreased to $5.1 billion from $6.1 billion and the shortfall with Canada also narrowed to $0.74 billion from $2.7 billion.¹⁰ Headline inflation in Canada surged to 2.4% in March. The surge reflected the initial impact of war, as the disruption of tankers from the Persian Gulf triggered energy shortages worldwide.¹¹ The unemployment rate in Canada stood at 6.7% in March.¹² Canada’s trade deficit rose to C$5.7 billion in February 2026, as total imports surged 8.4% to a record high of C$72.1 billion, led by a 45.6% jump in purchases of metal and non-metallic mineral products, particularly gold in the United States. Exports rose 6.4% to C$66.3 billion.  Canada’s trade surplus with the U.S. shrank to C$1.7B, as imports surged 13.6% and exports rose 4.4%.¹³

Global financial conditions have tightened since late February, with equity prices declining and bond yields and spreads increasing. U.S. equities navigated a turbulent first quarter, buffeted by a trifecta of tariff -related anxiety, renewed AI concerns, and private credit worries. Jitters escalated in March as the conflict in the Middle East reignited stagflation fears, and hopes for Fed rate cuts dissipated. The S&P 500 closed March down 5.0%. The S&P Mid Cap 400 and S&P SmallCap 600 were down by 5.4% and 4.1%, respectively. The S&P/TSX Composite was down 4.3% in March.  The S&P Europe 350® was heavily impacted by the war with Iran, plunging 7.5% in March. Asia Pacific equities initially rose but reversed course in March, leaving the S&P Pan Asia BMI (USD) down 12.7% in March.

In April we maintained exposure to U.S. and Canadian Equities. We continue to believe that Canada is managing the U.S. tariff uncertainty relatively well, replacing some U.S. exports with contracts in Europe and abroad. Gold is held across all models as a long-term strategic asset, playing a role as an effective hedge against the heightened geopolitical uncertainty and market volatility. Gold has become more tightly linked to reserve accumulation by central banks while volatility has been triggered by liquidity-driven deleveraging, not by a change in fundamentals.

How the conflict and related disruptions evolve in the outlook period will determine the effects on commodity and financial markets and the economic implications. The global system is moving deeper into a regime defined by rising volatility across asset classes, energy scarcity, fiscal strain, and elevated inflation risk. For the U.S. economy, stagflation risk is higher because of limited policy flexibility from the Federal Reserve. Our approach to portfolio management is nimble, opportunistic, and deliberate in identifying asset classes that are best placed to generate returns in a new world order. Our focus is on protecting portfolios from downside risk, and we believe that our investment process is working to achieve that goal.

Deborah Frame, President and CIO

Drew Millard, Portfolio Manager

¹ Trading Economics. China GDP. April 16, 2026.

² Trading Economics. China Inflation. April 10, 2026.

³ Trading Economics. China Unemployment. April 16, 2026.

⁴ Trading Economics. China Trade. April 14, 2026.

⁵ Trading Economics. Europe Inflation. April 16, 2026.

⁶ Trading Economics. Europe Unemployment. April 1, 2026.

⁷ Trading Economics. U.S. GDP. April 9, 2026.

⁸ Trading Economics. U.S. Inflation. April 10, 2026.

⁹ Trading Economics. U.S. Unemployment. April 3, 2026.

¹⁰ Trading Economics. U.S. Trade. April 2, 2026.

¹¹ Trading Economics. Canada Inflation. April 20, 2026.

¹² Trading Economics. Canada Unemployment. April 10, 2026.

¹³ Trading Economics. Canada Trade. April 2, 2026.

Index return data from Bloomberg and S&P Dow Jones Indices Index Dashboard: U.S., Canada, Europe, Asia, Fixed Income. March 31, 2026. Index performance is based on total returns and expressed in the local currency of the index.

As the U.S. economy adjusts to global tariffs, disruption and uncertainty impact the entire globe. The U.S. attack on Iran on February 28th put 3.3 million barrels per day of Iranian oil at risk, amounting to 3.5% of global supply. A disruption to the Strait of Hormuz, which borders Iran and accounts for 20% of global oil and LNG transits, further heightens the global impact. Iran’s retaliation has rained missiles on Israel, its Arab neighbours and American bases in the region.  Iran’s leadership may see dragging its Gulf neighbours further into the crisis as one of its few means of forcing America back to the negotiating table. Market mayhem could just be the start of it if the war drags on and spreads farther into the Middle East. A protracted and messy conflict will push energy prices upward around the world, raising inflation and grinding growth to a halt, prolonging stagflation. In February we maintained our twelve-month forward outlook of three months of Stagnation (U.S. Real GDP growth less than 2.5%) followed by nine months of Recession (negative GDP growth) over the next twelve- month period.

China’s annual inflation eased to 0.2% in January 2026 from 0.8% a month earlier.¹ The Euro Area economy expanded by 1.3% year-on-year in the final quarter of 2025. Ireland posted the strongest growth at 6.7%, followed by Spain (2.6%), Lithuania (2.5%), Portugal (1.9%) and the Netherlands (1.8%).² Annual inflation in the Euro Area was confirmed at 1.7% in January,³ while the unemployment rate in the Euro Area decreased to 6.2% in December.⁴

The U.S. economy expanded an annualized 1.4% in Q4 2025. Exports fell 0.9% after surging 9.6% in Q3, and imports declined (-1.3% vs -4.4%). For 2025, the U.S. economy expanded 2.2%.⁵ The annual inflation rate in the U.S. slowed to 2.4% in January,⁶ while the U.S. unemployment rate ticked down to 4.3%.⁷ The U.S. trade deficit widened to $70.3 billion in December 2025. Exports were down 1.7%, led by a fall in nonmonetary gold. Imports were up 3.6%. For 2025, the U.S. recorded a $901.5 billion trade deficit. Deficits narrowed with the E.U. and China, but widened with Mexico, Vietnam, and Taiwan.⁸ Canadian GDP declined by 0.2% in the fourth quarter of 2025. The contraction was driven by a withdrawal of business inventories. Increased capital investment was driven by government investment in weapons systems. On an annual basis, the Canadian GDP grew by 1.7% in 2025.⁹ The headline inflation rate in Canada eased to 2.3% in January. Deflation picked up for transportation due to the 16.7% plunge in gasoline prices,¹⁰ while the unemployment rate in Canada fell to 6.5%.¹¹ Canada’s trade deficit narrowed to C$1.31 billion in December.  Exports rose 2.6% month over month. These gains were partly offset by a 1.0% decline in energy product exports. Canada’s surplus with the U.S. narrowed to C$5.7 billion, while the deficit with countries narrowed to C$7.0 billion.¹²

It was a rollercoaster start to the year for U.S. equities. The S&P 500 closed the month up 1.5%, despite a pullback during the final two trading days of the month. The S&P Mid Cap 400 and S&P Small Cap 600 advanced 4.1% and 5.6%, respectively. Major Canadian equity indices finished the month with mixed results. The S&P/TSX Composite increased 0.8%. Canadian sectors posted mixed performance for the month, with Energy leading, up 10.6%, while Information Technology fell 17.6%. The S&P Europe 350 rose 3.3% to start the year. Asia Pacific equities began the year on a strong footing, with the S&P Pan Asia BMI up 7.2% in January.

In February we reduced exposure to U.S. Equities in the Moderate Growth, Growth, and Aggressive Growth models and added that exposure to Canadian Equities. We continue to believe that Canada is managing the U.S. tariff uncertainty relatively well, replacing some U.S. exports with contracts in Europe and abroad. Gold is held across all models as a long-term strategic asset, playing a role as an effective hedge against the heightened geopolitical uncertainty and market volatility. Gold has historically been negatively correlated with the dollar. 

For the U.S. economy, stagflation risk is higher because of limited policy flexibility from the Federal Reserve. During an energy shock, the Fed may lower short-term interest rates to mitigate inflationary pressures. But significant rate cuts this year, as inflation has remained above the Fed’s preferred 2% target, remain unlikely.  We continue to monitor the global selloff of U.S. treasuries and the growing holdings of gold. Our approach to portfolio management is nimble, opportunistic, and deliberate in identifying asset classes that are best placed to generate returns in a new world order. Our focus is on protecting portfolios from downside risk, and we believe that our investment process is working to achieve that goal.

Deborah Frame, President and CIO

Drew Millard, Portfolio Manager

¹ Trading Economics. China Inflation. February 11, 2026.

² Trading Economics. EU GDP. February 13, 2026.

³ Trading Economics. EU Inflation. February 25, 2026.

⁴ Trading Economics. EU Unemployment. January 30, 2026.

⁵ Trading Economics. U.S. GDP. February 20, 2026.

⁶ Trading Economics. U.S. Inflation. February 13, 2026.

⁷ Trading Economics. U.S. Unemployment. February 11, 2026.

⁸ Trading Economics. U.S. Trade. February 17, 2026.

⁹ Trading Economics. Canada GDP. February 27, 2026.

¹⁰ Trading Economics. Canada Inflation. February 17, 2026.

¹¹ Trading Economics. Canada Unemployment. February 6, 2026.

¹² Trading Economics. Canada Trade. February 19, 2026.

Index return data from Bloomberg and S&P Dow Jones Indices Index Dashboard: U.S., Canada, Europe, Asia, Fixed Income. January 31, 2026. Index performance is based on total returns and expressed in the local currency of the index.

In December, the geopolitical and geoeconomic environment led to a weaker U.S. dollar and marginally lower interest rates. This environment has resulted in a broader push for portfolio diversification amid lacklustre bond returns and concerns of volatility in equity markets. Investment demand for gold has surged across all regions, while central banks continued their buying spree – with demand well above average, even if below the records seen in the previous three years. In December we maintained our twelve-month forward outlook of three months of Stagnation (U.S. Real GDP growth less than 2.5%) followed by nine months of Recession (negative GDP growth) over the next twelve- month period.

China’s annual inflation rate picked up to 0.7% in November 2025,¹ while surveyed urban unemployment stood at 5.1% in November.² China’s trade surplus topped a record $1 trillion in the first 11 months of the year despite a deepening slump in shipments to the U.S. with exports rising 5.4% while imports shrank 0.6%.³ Eurozone GDP growth for the third quarter of 2025 was revised slightly higher to 0.3%, up from the preliminary estimate of 0.2%.⁴ The annual inflation rate in the Eurozone was revised down to 2.1% in November.⁵ The Eurozone’s trade surplus widened sharply to €18.4 billion in October 2025 from €7.1 billion a year earlier, as exports increased while imports fell. By country, imports declined sharply from China (-34.1%) and India (-3.0%), while rising from the U.S. (+19.5%), the UK (+16.7%) and Switzerland (+2.3%).⁶

The GDP in the U.S. advanced an annualized 4.3% in Q3 2025.⁷ The annual inflation rate in the U.S. came in at 2.7% in December 2025. The energy index increased 4.2%.⁸ The U.S. unemployment rate increased to 4.6% in November from 4.4% in September.⁹ The U.S. recorded a trade deficit of $52.8 billion in September 2025, the lowest since June 2020. Exports jumped 3% to $289.3 billion, the second-highest level on record.¹⁰ Canadian GDP rose by 0.6% on quarter in the third quarter of 2025, following a revised 0.5% contraction in the previous period. The expansion was driven by a strengthening trade balance, as imports dropped (-2.2%) and exports edged up (+0.2%).¹¹ Headline inflation  in Canada held at 2.2% in November, unchanged from October,¹² while the unemployment rate fell to 6.5% in November from 6.9% in the previous month.¹³ Canada’s trade swung to a surplus of C$0.15 billion in September 2025 from a C$6.3 billion deficit the month before. Exports rose 6.3% month on month. Exports to the U.S. were up 4.6% in September. Meanwhile imports fell 4.1%. Those flows narrowed deficits with countries other than the U.S. and widened Canada’s surplus with the U.S. from C$6.0 billion in August to C$8.6 billion in September.¹⁴

A record-long government shutdown, concerns over elevated Big Tech valuations, and hawkish sentiment from the Fed initially rattled U.S. equity markets in November. A sharp rise in expectations for a December rate cut led to a strong turnaround for the S&P 500 in the last week of November. As a result, the index finished November up 0.3%. Smaller caps outperformed versus their large-cap peers, with the S&P Mid Cap 400 and S&P Small Cap 600 up 2.1% and 2.7%, respectively. Major Canadian equity indices finished the month on the upside with the S&P/TSX Composite up 3.9%. In Europe, the S&P Europe 350 gained 1%. These gains run counter to the performance of Global Equity indices. After seven consecutive months of increase, Pan Asia equities took a breather in November, The S&P Pan Asia BMI (USD) declined 1.7%, led down by emerging markets.

In December we reduced exposure to Mid Term Bonds and added that exposure to Canadian Equities. We continue to believe that Canada is managing the U.S. tariff uncertainty relatively well, replacing some U.S. exports with contracts in Europe and abroad. This is evidenced in the December Canadian economic data. Gold is held across all models as a long-term strategic asset, playing a role as an effective hedge against the heightened geopolitical uncertainty and market volatility. Gold has historically been negatively correlated with the dollar. The combined effect of heightened geopolitical risk and U.S. dollar weakness contributed to Gold’s December record high.

Concerns about a softening U.S. labour market and stubbornly high inflation are mounting. Geopolitical frictions continue to simmer but remain close to boiling. Our approach to portfolio management is nimble, opportunistic, and deliberate in identifying asset classes that are best placed to generate returns in a new world order. Our focus is on protecting portfolios from downside risk, and we believe that our investment process is working to achieve that goal.

Deborah Frame, President and CIO

Drew Millard, Portfolio Manager

¹ Trading Economics. China Inflation. December 10, 2025.

² Trading Economics. China Unemployment. December 15, 2025.

³ Trading Economics. China Trade. December 8, 2025.

⁴ Trading Economics. Europe GDP. December 5, 2025.

⁵ Trading Economics. Europe Inflation. December 7, 2025.

⁶ Trading Economics. Europe Trade. December 16, 2025.

⁷ Trading Economics. U.S. GDP. December 23, 2025.

⁸ Trading Economics. U.S. Inflation. December 18, 2025.

⁹ Trading Economics. U.S. Unemployment. December 16, 2025.

¹⁰ Trading Economics. U.S. Trade. December 18, 2025.

¹¹ Trading Economics. Canada GDP. November 28, 2025.

¹² Trading Economics. Canada Inflation. December 15, 2025.

¹³ Trading Economics. Canada Unemployment. December 5, 2025.

¹⁴ Trading Economics. Canada Trade. December 11, 2025.

Index return data from Bloomberg and S&P Dow Jones Indices Index Dashboard: U.S., Canada, Europe, Asia, Fixed Income. November 30, 2025. Index performance is based on total returns and expressed in the local currency of the index.

Sweeping tariffs across a wide-ranging group of trading partners threaten to hobble global growth and push up prices for consumers and businesses. The effective tariff rate in the United States has risen to its highest level in nearly a century. Households are reining in spending given the prospect for higher prices, while businesses are lowering investment and hiring plans. Renewed U.S.-China trade tensions underscore vulnerabilities in China’s export-driven economy, with President Trump threatening tariffs of up to 100% on Chinese goods. Central banks have been adding to their bullion reserves and investors have sought refuge in gold this year amid the expanding trade war, record U.S. debt levels, and growing encroachment on the independence of the Federal Reserve. In October we maintained our twelve-month forward outlook of three months of Stagnation (U.S. Real GDP growth less than 2.5%) followed by nine months of Recession (negative GDP growth) over the next twelve- month period.

China’s GDP grew 1.1% quarter-on-quarter in Q3 2025.¹ China’s surveyed unemployment rate fell to 5.2% in September 2025,² while China’s trade surplus came in at USD 90.45 billion in September, as Chinese producers continued to diversify into new markets beyond the U.S.³ The Eurozone economy expanded by 0.2% quarter-on-quarter in Q3 2025, up from 0.1% in Q2.⁴ Inflation in the Euro Area increased to 2.2% in September,⁵ while seasonally adjusted unemployment  edged up to 6.3% in August. Among the bloc’s largest economies, Spain (10.3%), France (7.5%), and Italy (6%) continued to see the highest jobless rates.⁶ The Euro Area trade surplus with the U.S. shrank to €5.8 billion from €14.2 billion, driven by a 22.3% drop in exports and a modest 0.6% decline in imports.⁷

U.S. GDP growth, unemployment, and trade statistics are unavailable due to the government shutdown. The annual core consumer price inflation rate in the United States ticked down to 3% in September 2025 from 3.1% in each of the previous two months.⁸ The annual inflation rate in Canada rose to 2.4% in September from 1.9% in the previous month,⁹ while unemployment held steady at 7.1%.¹⁰ Canada’s trade deficit widened to C$6.3 billion in August of 2025 from C$3.8 billion in the previous month. Imports from the U.S. fell by 1.4% and Canada’s surplus with the U.S. dropped from C$7.4 billion in July to C$6.4 billion in August.¹¹

While the U.S. equity markets closed amid government shutdown concerns, it was a stellar Q3 due to optimism surrounding Fed rate cuts, tech strength, and robust consumer spending, with the S&P 500 up 8.1%. The rally broadened to mid and small caps, with the S&P Mid Cap 400 up 5.6% and the S&P Small Cap 600 up 9.1%.  Major Canadian equity indices finished the quarter on the upside. The S&P/TSX Composite increased 12.5%. The S&P/TSX Global Gold Index increased 48.4%. The headline S&P Europe 350 continued its upward trend. The U.K. was Q3’s best-performing country, contributing more than a third of the index’s quarterly gain. The S&P Pan Asia BMI (USD) recorded a 9.4% quarterly gain. The S&P Asia 50, which comprises 50 leading blue-chip companies in Hong Kong, Korea, Singapore and Taiwan, soared 17.8% in Q3. Chinese equities rallied both onshore and offshore, with the S&P China 500 posting an impressive 22.1% gain in Q3.

In October we maintained all exposures held in September. The reduction in exposure to the S&P 500 and increase in exposure to the Canadian TSX equally across all models in August continues to pay off. We maintain our view that Canada is managing the U.S. tariff uncertainty relatively well, replacing some U.S. exports with contracts in Europe and abroad. Gold is held across all models as a long-term strategic asset, playing a role as an effective hedge against the heightened geopolitical uncertainty and market volatility. Gold has historically been negatively correlated with the dollar. The safe-haven status of gold has been elevated as Trump’s trade agenda and budget deficits shake trust in sovereign debt and currencies, particularly the US dollar. Because bullion is priced in dollars, when the greenback weakens, gold becomes cheaper for holders of other currencies. In mid-September, the dollar fell to its weakest level in more than three years against other major currencies. Central banks have become increasingly active in global gold markets.

The lack of transparency of U.S. economic data resulting from the U.S. government shutdown is cause for caution around the U.S. growth outlook. Though a weaker foreign exchange rate may be good for rebalancing the trade deficit—by making American exports cheaper and more competitive and deterring spending on costlier import, it is not good for household wealth.  Our approach to portfolio management is nimble, opportunistic, and deliberate in identifying asset classes that are best placed to generate returns in a new world order. Our focus is on protecting portfolios from downside risk, and we believe that our investment process is working to achieve that goal.

Deborah Frame, President and CIO

Drew Millard, Portfolio Manager

¹ Trading Economics. China GDP. October 20, 2025.

² Trading Economics. China Unemployment. October 20, 2025.

³ Trading Economics. China Trade. October 13, 2025.

⁴ Trading Economics. EU GDP. October 30, 2025.

⁵ Trading Economics. EU Inflation. October 17, 2025.

⁶ Trading Economics. EU Unemployment. October 2, 2025.

⁷ Trading Economics. EU Trade. October 16, 2025.

⁸ Trading Economics. U.S. Inflation. October 24, 2025.

⁹ Trading Economics. Canada Inflation. October 21, 2025.

¹⁰ Trading Economics. Canada Unemployment. October 10, 2025.

¹¹ Trading Economics. Canada Trade. October 7, 2025.

Index return data from Bloomberg and S&P Dow Jones Indices Index Dashboard: U.S., Canada, Europe, Asia, Fixed Income. September 30, 2025. Index performance is based on total returns and expressed in the local currency of the index.