Welcome to Our Monthly Pharus Perspectives Newsletter!

Last month was one for the history books. With the buzz of Trump’s Liberation Day making headlines, tariffs shaking up expectations, and markets oscillating dramatically between one-year lows and near all-time highs, it felt like the financial world put on its own roller coaster ride. Now, as May unfolds, market volatility has eased, Canada welcomes a new Federal Government, and the promise of summer is just around the corner. In this month’s edition, we’ll explore the following topics.

What's On the Menu?

• Market Trends: Stay updated on the latest financial shifts and navigate the ever-evolving landscape with confidence.
• Smart Wealth Transfer Strategies: Explore creative ways to pass down your wealth, ensuring your legacy remains as impactful as the market itself.
• Riding the Market Volatility Wave: Learn from past swings with a fresh perspective—turning turbulence into valuable lessons and potential wins.
• Summer Travel in Canada: Discover must-visit destinations to make the most of the season while exploring new adventures.

So, buckle up and join us as we dive headfirst into another month of exciting challenges and fresh opportunities.

 

Monthly Markets Report

Trump’s Evolving Tariff Strategy: A Shifting Global Trade Landscape

President Trump is boldly departing from traditional U.S. economic policy by imposing some of the largest tariffs in nearly a century. This aggressive approach aims to correct long-standing trade imbalances, reduce fiscal deficits, and stimulate domestic corporate investments to boost employment. In doing so, Trump challenges decades of practices that relied heavily on outsourcing manufacturing to low-cost regions, unsettling established market dynamics.

The tariff regime has been marked by constant flux. Initial tariff announcements exceeded expectations, only to be followed by sudden postponements and further adjustments. A notable pivot is the 90-day postponement of reciprocal tariffs for over 50 countries willing to negotiate trade deals. While this offers these nations an opportunity to capture some of what was once China’s market share, it also fuels uncertainty—especially as the U.S. ramps Chinese tariffs to 145% and Chinese retaliatory measures hit as high as 125%.

For Canada, the situation remains precarious. Current U.S. tariffs on Canadian imports continue to affect steel, aluminum, and non-U.S. content in vehicles, with further differentiated rates applied to goods such as critical minerals, energy, and potash under trade agreement terms.

This ever-changing environment makes it challenging for CEOs and investors to forecast market trends accurately. As global trade partners scramble to realign their strategies, businesses must remain agile to navigate these turbulent times and seize new opportunities as they arise.

Market Volatility and Trade Negotiations: What Investors Need to Know

Recent market movements have sent a clear signal—uncertainty is shaping global investment strategies. The biggest surprise has been the U.S. administration’s 90-day pivot on trade policy, influenced by the ongoing equity market selloff, Treasury Secretary Bessent’s stance, and the willingness of international counterparts to negotiate rather than retaliate. However, the most pressing concern appears to be the extreme volatility in the U.S. Treasury market. With bond yields shifting dramatically and a national debt exceeding $37 trillion, the rising cost of refinancing government debt is drawing attention. Even President Trump acknowledged the growing unease surrounding bond markets.

The Road Ahead for Trade Deals and Supply Chains

A successful negotiation of over 50 trade agreements by the U.S. would mark a significant shift in global trade dynamics. Companies seeking stability may look to relocate supply chains away from China toward nations securing favorable tariff arrangements, though such transitions could take years. Meanwhile, China has signaled its intent to maintain a confrontational stance, warning of prolonged economic disruptions. Signs of strain are already visible—some Chinese sellers on Amazon are either increasing prices or exiting the U.S. market altogether due to tariffs. With inflationary pressures mounting, the near-term economic impact of trade negotiations remains uncertain.

Investment Considerations Amidst Turbulence

As of this writing, the S&P 500 and the S&P/TSX Composite Index are down 8.6% and 1.0% year to date, respectively. Investors may wonder whether markets have fully priced in these risks or if further downside awaits. The Federal Reserve’s primary focus remains inflation control, suggesting that lower interest rates—and a corresponding boost to financial markets—are unlikely in the short term.

With visibility into future economic conditions still murky, dividend-yielding stocks present a more stable opportunity for investors seeking to hedge risk. Additionally, a reshuffling of trade alliances could trigger fluctuations in currency values, with significant consequences for corporate earnings. Companies generating most of their revenue domestically are positioned to navigate these changes more effectively, facing fewer currency-related uncertainties and reduced exposure to tariffs.

As negotiations unfold, global markets will react accordingly, and investors must remain agile. While short-term uncertainties may persist, strategic positioning in sectors resilient to trade disruptions and inflationary pressures could prove beneficial in navigating today’s volatile environment.

Market Overview – Canada

Canada’s economic outlook is facing significant headwinds as concerns mount over the impact of U.S. tariffs and recession risks. Leading economists at Goldman Sachs and JP Morgan have revised their recession probabilities upward, warning that any downturn in the U.S.—Canada’s largest trading partner—could quickly spill over into the Canadian market.

Despite recently defusing recession fears by avoiding a direct tariff confrontation linked to President Trump’s measures, Canada remains burdened by a pre-existing 25% tariff on steel, aluminum, and automobiles (unless compliant with CUSMA), as well as a 10% levy on non-compliant energy exports and potash. Moreover, there is rising pressure from U.S. trade policies, with moves to potentially increase duties on Canadian softwood lumber to over 34%, intensifying the trade friction.

Consumer sentiment is notably cautious, with 90% of Canadians expressing concerns over a looming recession. Uncertainty has led many households to cut back on spending and postpone major purchases amid fears of job losses and mounting inflation. On a hopeful note, several financial institutions anticipate that rate cuts from the Bank of Canada—expected in June and by the end of 2025—along with similar moves by the U.S. Federal Reserve, could offer some economic relief.

For businesses, the key takeaway is to remain agile and monitor both domestic and cross-border developments closely, ensuring strategies are in place to mitigate potential economic slowdowns and capitalize on any stabilizing policy actions.

The Bottom Line

Investors should consult with their financial advisor if they have any concerns about their investment portfolio and when making any investment decisions. It's important to remember that theoretically no investment is “recession-proof”, and no investment can guarantee a positive return. However, many investments are “recession-resistant” in that they may not suffer as severely as other investments when the economy slows down. When it comes to recessions, it's not just about one's investment positions at the beginning, it's also about where and how one invests during the recession.

Portfolio Strategy: Potential Optimizations to Navigate Shifts in Global Trade and Current Market Conditions

Following Liberation Day last month, equity markets have experienced a robust recovery, driven largely by tariff renegotiations and temporary suspensions on select goods and countries. This positive momentum has prompted many portfolio managers, including us, to rebalance portfolios, take profits and reassess investment strategies going forward.

• Fixed Income: A focus on Fixed Income could help mitigate market risks and volatility. In Canada, we have a bit clearer picture - maintaining a medium to long duration could help with positive returns with a potentially declining rate of interest. In US, it is a bit trickier, as the Fed is worried about increased pressure on inflation with tariffs amid a slowing economy.
• Canadian Equities: Focusing on quality businesses with long-term potential growth, as well as service-oriented businesses and non-cyclical and defensive industries may help maintain stability amid economic concerns.
• U.S. Equities: To mitigate the risk of a trade war with multiple countries and regions at the same time, maintaining underweight exposure to US Equities can be prudent. However, it is still important to have meaningful exposure to US Equities and choosing the right sectors and equities is more crucial than ever.
• International Equities: Valuations of International Equities continue to be interesting, especially developed Europe and Far-East. Emerging Markets valuations are also quite interesting now and they may see good prospects in the face potential positive outcomes in trade negotiations between US-China and US-India.
• Sector Positioning: During times of uncertainty, it is generally prudent to strategically target sectors and companies that have wide Economic moats as well as wide geographical exposures. These sectors and companies will likely be protected by government policies and will also enjoy exceptions and support from all levels of government and society.
• Alternative Strategies and Assets: Alternative assets can enhance portfolio diversification by offering return streams that are less correlated to traditional markets. Their unique risk and return characteristics can help reduce volatility and provide greater stability during periods of economic stress, which can make them a valuable tool for building more resilient portfolios.

Tactical adjustments could be designed to optimize portfolio performance amidst economic uncertainty. Our focus remains on delivering stability and growth for our clients.

Please speak to your advisor about your risk tolerance, time horizon and investment strategy. Regular reviews of your investments is important.

Stay tuned for further updates as we continue to assess the challenges of the current market landscape and provide commentary.

Market Performance – April 30^th, 2025

Index	1 Month	3 Months	YTD	1 year	3 Years	5 years
S&P TSX	-0.1%	-2.0%	1.4%	17.8%	9.6%	14.4%
S&P 500	-0.7%	-7.5%	-4.9%	12.1%	12.2%	15.6%
NASDAQ	0.9%	-11.1%	-9.7%	11.4%	12.3%	14.4%
MSCI EAFE	4.7%	6.4%	12.0%	13.1%	10.6%	11.9%
MSCI Emerging Markets	1.3%	2.5%	4.4%	9.6%	4.3%	6.8%
MSCI World	-4.6%	-2.1%	-2.1%	5.6%	5.9%	14.4%
FTSE Canada Bond Univ.	-0.6%	0.2%	1.4%	9.1%	3.10%	-0.19%

Source: Click here to access all market returns.

 

Financial Planning Feature

When planning to pass down your wealth, the first question to ask is, when?

With changing demographics and economic uncertainty, planning wealth transfers effectively is more crucial than ever. Jamie Golombek, managing director of tax and estate planning at CIBC, emphasizes that passing down wealth isn't just about wills—it's about timing and ensuring financial stability for both donors and recipients.

Key Considerations for Wealth Transfer

1. Timing Matters: Individuals are living longer, often into their 80s and 90s, making it important to assess when wealth should be transferred. Early transfers can help beneficiaries make strategic investments, such as buying a home or funding education.
2. Involving Family: Traditionally, financial planning was private, but there’s a growing trend of parents discussing legacy plans with their adult children. Transparency helps heirs prepare for future financial responsibilities and prevents poor money management after inheritance.
3. Structured Distributions: Setting up trusts ensures that inherited wealth is used wisely, allocating funds for essential expenses like housing and education rather than giving full access immediately.

Optimizing Wealth Transfer Strategies

• Planned Gifting: Parents can contribute annually to children's tax-free savings accounts (TFSAs), education savings plans (RESPs), or First Home Savings Accounts (FHSAs).
• Insurance Solutions: Permanent life insurance allows tax-free investment growth, with the death benefit paid out tax-free.
• Prescribed Life Annuities: These provide lifelong income while reducing taxable amounts.

Philanthropic Wealth Transfers

For those looking to make charitable contributions, Donor Advised Funds (DAFs) offer a tax-efficient way to gift appreciated securities, avoiding capital gains tax while securing federal and provincial donation tax credits.

The Importance of Financial Planning

Comprehensive planning helps individuals assess lifestyle needs in retirement, ensuring they maintain financial stability while passing down wealth effectively. Consulting financial advisors and using structured tools like trusts and insurance policies can provide peace of mind.

By planning early and discussing financial strategies openly, families can secure their financial legacy while maximizing benefits for themselves and future generations.

Source: Click here to read the article.

 

CIBC Smart Advice Feature

Why it’s never too late to get started on your retirement savings

Featured in the Globe and Mail: Rory Mitz shares how a clear plan and an advisor by your side can bring your retirement vision to life.

No Magic Retirement Number: Rory Mitz, Senior Vice-President and Head of CIBC Imperial Service, emphasizes that retirement planning isn’t about chasing a predetermined “big number” but about aligning your savings strategy with your personal priorities. Whether your focus is on home ownership, funding your children’s education, or other financial goals, the key lies in defining what your retirement should look like.

Personalized Planning Reduces Financial Stress: A recent CIBC poll by Ipsos reveals that 65% of non-retired Canadians worry they haven’t contributed enough for retirement. However, those who work with financial planners not only feel more secure, with 68% reporting financial security, but also experience less stress overall. Advisors tailor strategies to individual needs, combining short-term actions (like debt management and cash flow adjustments) with long-term savings goals.

Advisors as Accountability Partners: Mitz likens financial advisors to quarterbacks who help balance competing goals. By creating and regularly updating a personalized action plan, advisors help clients navigate life’s evolving challenges—whether it’s shifting from debt reduction to saving for retirement or adjusting plans due to unexpected events like job loss or health issues.

The Power of a Shared Vision: A compelling example shared by Mitz recounts a couple in their 50s whose contrasting visions for retirement (an adventurous RV lifestyle versus quality time with grandchildren) ultimately led to a deeper conversation about values and priorities. This dialogue not only bridged the gap between their differing dreams but also laid the groundwork for a mutually satisfying financial plan.

Key Takeaways:

• Tailor Your Strategy: No one-size-fits-all "magic number"—focus on what retirement means to you.
• Professional Guidance: Collaborating with an advisor can significantly reduce stress and improve financial outcomes.
• Progress Over Perfection: Even modest contributions, when consistent, can build up over time.
• Evolve with Life: Regularly update your plan to reflect changes in priorities and circumstances.

Taking that first step in planning, with the right trusted partner by your side, can transform retirement from a source of worry into a roadmap for a fulfilling future.

Source: Click here to read the article.

 

Financial Solution Feature

In this section, we educate the reader on different financial solutions. We discuss and elaborate each idea over a couple monthly editions. This section is not to be taken as specific advice.

Investing in Volatile Markets: Look-Back Structured Notes

Recent market swings have left many investors wondering when to deploy idle cash and seize buying opportunities. Look-Back structured notes offer a strategic approach by reducing timing risk—setting the investment’s initial level at the lowest observed price within a predefined period. This mechanism allows investors to enter the market at a favorable point, optimizing return potential.

Key Benefits of Look-Back Structured Notes

• Minimized Timing Risk – No need to pinpoint the market bottom; the note automatically selects the lowest price during the Look-Back Period.
• Accelerated Upside Potential – Returns are calculated from a lower starting point, enhancing growth opportunities.
• Diversification & Flexibility – Linked to indices, ETFs, or a curated basket of securities, allowing for tailored investment exposure.
• Optimized Growth Window – Ideal for short to medium-term investors looking to amplify returns in a structured manner.
• Risk Mitigation – Helps reduce downside exposure compared to investing at market peaks.

Leveraging Market Volatility for Strategic Buying

Look-Back structured notes are particularly effective in volatile environments, enabling investors to take advantage of market dips without constantly monitoring fluctuations. By systematically locking in a lower price point, this approach suits those seeking a disciplined, methodical investment strategy.

Fun Idea

10 TRAVEL DESTINATIONS IN CANADA THIS YEAR TO START SUMMER AND NOT HAVE TO DEAL WITH TARRIFS IN THE U.S.

To start summer without facing US tariffs, consider these 10 Canadian destinations:

1. Vancouver, British Columbia:

Enjoy the vibrant city, stunning landscapes, and access to nearby outdoor activities like hiking and skiing.

2. Quebec City, Quebec:

Explore the historic European-style streets, enjoy the charming ambiance, and visit nearby attractions like Montmorency Falls.

3. Banff National Park, Alberta:

Witness the breathtaking beauty of the Rocky Mountains, with options for hiking, wildlife viewing, and exploring the historic town of Banff.

4. Jasper National Park, Alberta:

Experience the untouched wilderness, with attractions like the Maligne Lake, Pyramid Mountain, and the stunning Athabasca Falls.

5. Nova Scotia:

Discover the charming coastal towns, scenic drives like the Cabot Trail, and enjoy whale watching opportunities.

6. Halifax, Nova Scotia:

Explore the historic city, visit the Citadel Hill, and enjoy the vibrant arts and culture scene.

7. Niagara Falls, Ontario:

Witness the majestic waterfalls, visit the nearby wineries, and explore the vibrant attractions.

8. Whitehorse, Yukon:

Explore the Yukon Territory, visit the Klondike Gold Rush National Historical Site, and experience the rugged wilderness.

9. Churchill, Manitoba:

Experience the unique wildlife viewing opportunities, especially polar bears, and enjoy the arctic environment.

10. Victoria, British Columbia:

Visit the charming capital city, explore the Butchart Gardens, and enjoy the waterfront views.

These destinations offer diverse experiences, from city explorations to outdoor adventures, ensuring a memorable summer vacation within Canada, away from potential US tariffs.

 

 

 

To stay up to date on market events, news and reports, follow Pharus Wealth Advisory Group on our Social Media Pages. For Financial Literacy and Planning, visit Pharus Resources, where we upload timely articles on Financial Planning and Financial Literacy Resources.

 

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Pharus Wealth Advisory Group

The Beacon to your Financial Journey

1623 Avenue Road, Toronto ON M5M 3X8

Phone: 416 861-2460

Email: mailbox.pharuswealth@cibc.com

Website: www.pharuswealth.ca