Happy Thanksgiving,

As we wrap up the Q3, it’s clear that 2025 hasn’t been short on headlines or plot twists. From tariffs and interest rate cuts, to AI-driven market momentum and now a U.S. government shutdown thrown into the mix, the market continues to push forward, even if the road has been bumpier than we’d all prefer.

We seem to have entered a new phase of the economic cycle (at least for now), with both the Federal Reserve and the Bank of Canada cutting interest rates this quarter. The primary driver? A cooling labor market. The numbers don't lie, and the underlying trends are clear: hiring is slowing, wage growth is softening, and policymakers have had little choice but to shift gears in an effort to support economic growth. For investors, there’s a silver lining: as lower rates often provide a tailwind for corporate earnings.

The most recent headline risk has been the U.S. government shutdown. It’s come at a delicate moment, with the U.S. economy already showing signs of deceleration due to the impact of tariffs. Political gridlock adds another layer of uncertainty. While we expect the shutdown to be temporary, it’s exactly the kind of noise that can shake confidence, delay business decisions, and weigh on investment in the short-term.

Unfortunately, the tariff conversation is far from over. In fact, it’s likely to heat up in the coming months as inflation data tied to tariffs begins to show up more clearly in the numbers. This will present yet another challenge for central banks already trying to walk the line between supporting growth and maintaining stability. So far, markets have shown a remarkable ability to look past the political turbulence and keep moving forward.

One theme that’s not being ignored? AI.

AI has been the most dominant driver of equity gains this year. We’re now seeing real-world adoption, with companies starting to use AI to improve productivity. It’s no longer just a concept or a headline; it’s becoming part of how businesses operate. That said, this doesn’t change our core investment philosophy. We remain focused on owning high-quality, well-capitalized businesses that provide essential goods and services to the masses; however we know the best of these businesses will adapt and evolve and we believe they’ll benefit from technological advancements over time.

I’ll leave you with this: despite all the noise, markets are still pressing ahead powered by innovation and, for now, supported by accommodative monetary policy. The risks we identified earlier in the year haven’t gone away, but there are still real reasons for optimism as we look toward the future.

As the seasons change and we reflect back on the challenges of this year, we never lose sight of the importance of what you have entrusted to us. We appreciate your confidence and are wishing you a happy, healthy Thanksgiving with those you care about most.

As always, thank you for placing your trust in our team. We’re here to discuss your portfolio and answer any questions or concerns you may have.

Phil