Welcome to Our Monthly Newsletter - Pharus Perspectives!

As we sprint toward year‑end and the holiday lights start to glow a little brighter, markets are doing what they do best—keeping everyone on their toes. With 2026 just around the corner, many investors are wondering what’s next: Is AI fueling real growth or inflating a bubble? Will volatility ease? How do we position ourselves for the year ahead?

This month, we cut through the noise. In a world buzzing with uncertainty—from shifting trade dynamics and political gridlock to interest‑rate whiplash and global tensions—clarity becomes a competitive advantage. And that’s exactly what we aim to deliver.

Stay Informed and empowered with our latest insights

• Market Trends: Will AI reshape inflation—or are we simply in a bubble?
• Year‑End Tax Strategies: Plus a first look at 2026 tax figures
• Best of 2025 CIBC Smart Advice: Our top insights of the year
• Private Equity & Credit Structures: What’s evolving and why it matters
• Holiday Highlights: A peek at how the Pharus team is celebrating

So grab a warm drink, settle in, and let’s navigate the final stretch of 2025 together. We’re here to help you move confidently into a prosperous new year—one smart decision at a time.

Monthly World Markets Report

December 2025 Market Snapshot

AI, Electricity Demand & Inflation Pressures

• Massive AI‑related data‑centre construction is driving unprecedented electricity demand in the U.S.
• Major tech firms (Oracle, Nvidia, AMD, Broadcom) have announced multi‑gigawatt data‑centre capacity commitments—10 GW alone can power 7.5 million homes.
• Electricity generation and grid expansion are lagging behind data‑centre buildouts, causing power shortages in regions like California and Oregon.
• U.S. electricity demand is projected to grow 2.4% annually through 2030, with AI responsible for roughly two‑thirds of the increase.
• Electricity prices have already risen sharply—up 35% since 2020, with some data‑hub regions seeing increases of up to 267%.
• Heavy reliance on natural gas (43% of U.S. electricity in 2023) means rising demand could push gas prices—and overall inflation—higher.
• Higher electricity costs may complicate the Federal Reserve’s ability to reach its 2% inflation target, potentially delaying rate cuts.

Key Takeaways

• If AI‑driven electricity inflation persists, utilities and power‑generation companies may benefit from long‑term demand growth.
• These sectors could also act as a hedge against inflation‑related market volatility.
• Investors should monitor how rising energy costs influence Fed policy and broader market sentiment.

Is the Market Overheating? Lessons from the Dot Com Era

• AI adoption is accelerating at historic speed—reaching near‑mass adoption in just two years, compared with nearly a decade for the early internet.
• Despite rapid growth, 95% of organizations report zero return on generative AI investments (MIT).
• U.S. GDP growth is heavily reliant on AI‑related data‑centre spending; without it, first‑half 2025 GDP growth would have been just 0.1%.
• Nvidia remains the standout beneficiary, rising from a USD $1T valuation in 2023 to over USD $5T by late 2025.
• Market sentiment shows early signs of bubble‑like behaviour—narrative‑driven enthusiasm, liquidity chasing tech, and herd‑style positioning.
• However, unlike the dot‑com era, today’s leaders are highly profitable mega‑caps, not unprofitable startups.
• Analysts note that while valuations are stretched, momentum could continue longer than expected before any correction.

Key Takeaways

• AI is reshaping energy markets, potentially becoming a major new driver of inflation.
• Electricity supply constraints could slow AI infrastructure growth and influence monetary policy.
• Market enthusiasm for AI resembles early bubble dynamics, but with stronger fundamentals than the dot‑com era.
• Utilities and energy infrastructure may offer strategic opportunities amid rising demand.
• Investors should stay alert: rapid growth phases often end abruptly, even when the underlying technology is transformative.

Monthly Performance Update

Source: Click Here for Monthly World Market Report.

Strategic Market Outlook for 2026

The 2026 landscape is shaping up to be defined by policy complexity, global rebalancing, and rapid technological investment. Policy uncertainty remains elevated, suggesting a potentially more volatile operating environment. Global markets—particularly outside the U.S.—may offer comparatively attractive conditions, creating opportunities for internationally oriented businesses.

Central banks face a challenging year as inflation, fiscal pressures, and political scrutiny complicate monetary policy. At the same time, AI‑driven capital spending continues to accelerate, reinforcing technology as a core driver of productivity and competitive advantage.

Consumer behavior may become more sensitive to shifts in household wealth, while geopolitical fragmentation continues to influence supply chains, currency dynamics, and market access.

Overall, 2026 calls for agile planning, diversified exposure, and a strategic focus on innovation and resilience.

The following points reflect general trends identified by our research models. These are intended for informational purposes only and do not constitute specific advice or recommendations.

Observed Strategic Trends

• Maintaining a modestly conservative equity stance, paired with a greater emphasis on fixed income to support overall portfolio stability.
• Increasing exposure to international equities, while moderating allocations to Canadian and U.S. equities to broaden opportunity and reduce regional concentration.
• Keeping a medium‑term duration profile within fixed income to balance income potential with interest‑rate sensitivity.
• Continuing to diversify across regions, sectors, and asset classes to help smooth performance and reduce concentration risk.
• Using selective USD/CAD hedging where appropriate to help manage currency‑driven volatility.
• Preserving a prudent cash buffer to maintain flexibility during market pullbacks or periods of dislocation.
• Closely monitoring central bank communications, inflation trends, and macroeconomic indicators to guide timely, thoughtful adjustments.

If you are interested in GIC rates, we have a collection of GICs that we could help you with.

Financial Planning Feature

Make the Most of Year-End Tax Planning for 2025

While the 2025 tax season officially starts in late February 2026, waiting until then means you’ll miss valuable opportunities to reduce your tax bill. December is a crucial time for proactive tax planning, offering a final chance to implement strategies that can make a meaningful difference. As the year draws to a close, consider these key actions to help maximize your tax savings for 2025.

Summary of Key Points

• Tax-Loss Selling
  • Final chance to realize losses to offset gains or carry back to 2022–2024.
  • Trades must settle by Dec. 31, meaning sales by Dec. 30.
  • Avoid superficial loss rules when repurchasing.
• In-Kind Charitable Donations
  • Donating appreciated securities eliminates capital gains tax and provides a full-value receipt.
  • Donor-advised funds allow immediate receipts with future grant flexibility.
• TFSA Withdrawals
  • Withdraw by Dec. 31, 2025 to restore contribution room on Jan. 1, 2026.
• RRSP-to-RRIF Conversion at Age 65
  • Converting $14,000 allows $2,000 annual withdrawals to fully use the pension income credit.
• First Home Savings Account
  • Opening an FHSA in 2025 creates $8,000 of contribution room for 2026—even with no deposit.
• Home Accessibility Tax Credit
  • Up to $20,000 of eligible expenses; 2025 is the last year expenses can qualify for both HATC and the medical expense credit.
• RESP Withdrawals
  • Students should consider taking EAPs before year end to use available personal credits.

Key Takeaways

• Loss harvesting, TFSA withdrawal timing, RRIF conversion strategies, and FHSA account openings all require action before Dec. 31.
• Charitable giving strategies are especially powerful this year due to strong market gains. 
• Clients withdrawing from TFSAs in December will have more room available immediately in January.
• FHSA contribution room may double for clients who open an account before year‑end.
• Higher OAS clawback thresholds and updated prescribed rates may influence income‑splitting, loan strategies, and retirement income planning.

The above commentary is intended to provide general information and should not be construed as tax or legal advice. Anyone wishing to act on the information presented should consult with their tax or legal advisor.

Source: Click Here for Full Details

CIBC Smart Advice Feature

A Season Defined by Growth, Resilience, and Opportunity

This season of the Smart Advice Podcast brought together some of Canada’s leading voices in economics, investing, entrepreneurship, and financial planning to explore how Canadians can build resilience, seize emerging opportunities, and create lasting wealth. From navigating market noise to planning across generations, each conversation revealed practical insights and forward‑looking strategies that reflect the realities—and ambitions—of Canadians today. We summarize some of the key topics that were covered in 2025 below.

Canada’s Economic Landscape: Strengths, Shifts & Opportunities

Natural Resources as a Competitive Advantage

Lisa Raitt, Vice Chair, CIBC Capital Markets, emphasized that Canada’s long‑standing strengths—forestry, mining, oil and gas, agriculture, and fisheries—remain foundational to economic resilience. As global dynamics shift, these sectors continue to offer Canada a comparative advantage.

Housing Market Realities Across Regions

Andrew Grantham, Senior Economist, CIBC, highlighted the stark differences across Canada’s housing markets.

• Ontario and B.C. remain in buyer’s‑market territory.
• High price‑to‑income ratios and large mortgage burdens continue to pressure affordability.
• Even with rate cuts, major urban centers like Toronto and Vancouver are seeing mild downward price pressure.

Entrepreneurship & Innovation: The Next Wave of Growth

AI‑Driven Business Models & Immigrant Entrepreneurship

Iain Gallagher, Managing Director, CIBC Mid‑Market Investment Banking, noted a surge in younger companies leveraging digital tools, data, and AI to build higher‑margin, more efficient businesses. He also underscored the powerful role of immigrant entrepreneurs, whose diverse perspectives and creativity are fueling growth across Canada’s mid‑market economy.

Investing Wisely: Discipline Over Noise

Staying the Course Through Volatility

David Wong, Chief Investment Officer, CIBC Asset Management, reminded investors that reacting to short‑term market swings can be costly.

• In April, the S&P 500 dipped sharply before rebounding 11% by month‑end.
• Investors who sold during peak pessimism missed the recovery. His message: trust your long‑term strategy, diversify, and avoid emotional decision‑making.

Fixed Income’s Golden Age

Aaron Young, Executive Director, CIBC, reinforced the renewed importance of fixed income:

• Provides diversification to potentially offset equity risk
• Offers attractive yields and ofton provides stable income
• Plays a critical role during periods of macroeconomic uncertainty Bond laddering and thoughtful allocation has the potential to strengthen overall portfolio resilience.

Alternative Investments Go Mainstream

Meric Koksal, Managing Director, CIBC Asset Management, explained why private equity, private credit, and real estate are increasingly relevant:

• Ideal for long‑term horizons and higher risk tolerance
• Valuable for intergenerational wealth planning
• Complement traditional portfolios in a world of declining IPO activity

Building Financial Literacy & Intergenerational Wealth

Giving Kids Financial Agency

Michael Keaveney, CIBC Asset Management, encouraged families to involve children in financial decisions early.

• Contributing a portion of earnings toward education savings builds responsibility.
• It helps kids understand intangible goals and long‑term planning.
• Early involvement fosters lifelong financial literacy.

Lifetime Gifting as a Strategic Tool

Richard Voss, Director of Wealth Strategies, CIBC Private Wealth, highlighted a growing trend:

• Canadians are living longer, meaning inheritances often arrive too late to be impactful.
• Lifetime gifting—supporting education, home purchases, or business ventures—creates meaningful value earlier.
• It strengthens family legacies while allowing givers to witness the impact.

Smart Year‑End Tax Planning

Jamie Golombek, Managing Director, CIBC Tax & Estate Planning, shared practical strategies:

• Maximize FHSA contributions before year‑end to avoid losing annual room.
• Make charitable donations by December 31 for tax credit eligibility.
• Consider donating appreciated securities in‑kind to eliminate capital gains tax while supporting causes you care about.

Health, Well Being & Financial Performance

Why Health Is a Financial Asset

Dr. Noah Levine, Corporate Medical Director, CIBC, emphasized that employee well‑being directly impacts organizational performance.

• Healthy employees are more productive, resilient, and engaged.
• Employers play a critical role in supporting mental and physical health.
• Investing in wellness protects a company’s most valuable resource—its people.

Motivation, Milestones & the Power of Small Wins

Celebrating Progress Drives Success

Sean Simpson, Senior VP, Ipsos, revealed that Canadians who regularly acknowledge their progress are more likely to achieve their goals.

• Celebrating small wins builds momentum.
• It reinforces positive habits and keeps people motivated.
• As a result, 61% of Canadians feel optimistic about their future ambitions, despite ongoing challenges.

The Season’s Final Message: Invest in Yourself

Positioning for Opportunity

Scott McGillivray closed the season with a powerful reminder:

• The best investment in 2025 is yourself.
• Learn new skills, build relationships, and work with trusted advisors.
• The next six months may present significant opportunities—especially in real estate.
• Preparation and education determine who is ready to capitalize.

Key Takeaways

• Resilience is the foundation of strong financial planning.
• Canada’s natural resource sectors remain core economic strengths.
• Housing markets are diverging, with major cities still favoring buyers.
• AI‑enabled and immigrant‑driven entrepreneurship is reshaping Canada’s business landscape.
• Long‑term investing discipline often outperforms short‑term reactions.
• Fixed income can be used as a potential stabilizing force in diversified portfolios.
• Alternative investments are increasingly important for long‑term wealth strategies.
• Financial literacy starts early—kids benefit from active participation.
• Lifetime gifting is rising as families seek to make earlier, more meaningful impact.
• Year‑end tax planning can significantly enhance financial outcomes.
• Employee well‑being is a strategic financial advantage.
• Celebrating small wins boosts motivation and long‑term success.
• Self‑investment is the most valuable investment Canadians can make today.
• Growth—personal, financial, and intergenerational—is the unifying theme of the season.

This episode is a must-listen for families navigating wealth transfer, young adults building financial resilience, and anyone seeking to align their financial legacy with their values.

Source: Listen to the full Podcast.

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.

Conclusion to Our Four‑Part Series on Alternative Investments

As we close out our four‑part series on alternative investments, this final installment brings together the major private‑market strategies shaping modern portfolio construction. Private equity, private credit, private real estate, and private infrastructure each offer distinct return drivers and risk profiles, while evergreen structures are transforming how investors access these opportunities. Together, they reflect a broader evolution: alternatives are no longer niche—they are becoming essential components of a resilient, diversified investment approach.

Key Private‑Market Strategies

Private Equity

• Focuses on acquiring ownership stakes in privately held companies
• Seeks value creation through operational improvements, strategic repositioning, and long‑term growth initiatives
• Offers potential for higher returns in exchange for longer investment horizons and reduced liquidity

Private Credit

• Provides loans or financing directly to businesses outside traditional banking channels
• Generates income through interest payments, often with attractive risk‑adjusted yields
• Typically features collateral or seniority in the capital structure, offering downside protection
• Less correlated with public markets, helping stabilize portfolio volatility

Private Real Estate

• Invests in income‑producing properties such as residential, industrial, office, and retail assets
• Returns come from rental income and property value appreciation
• Offers inflation‑hedging characteristics and stable cash‑flow potential
• Benefits from long‑term demographic and economic trends

Private Infrastructure

• Targets essential assets like transportation networks, utilities, renewable energy, and digital infrastructure
• Provides long‑duration, predictable cash flows tied to critical economic functions
• Often benefits from government partnerships, regulated revenue models, or contractual income
• Plays a growing role as economies modernize and transition toward sustainable energy systems

Evergreen Structures: A Modern Access Point

Evergreen funds are reshaping how investors participate in private markets:

• Open‑ended design allows ongoing subscriptions and periodic redemptions
• Continuous portfolio management replaces the fixed lifecycle of traditional closed‑end funds
• Semi‑liquid access offers more flexibility than classic private‑market lockups
• Simplified capital deployment eliminates capital calls, making the experience more intuitive for individual investors
• Broader accessibility brings institutional‑grade strategies to wealth‑management channels

Evergreen structures bridge the gap between the long‑term nature of private markets and the liquidity preferences of modern investors.

Key Takeaway

Alternative investments have moved from the periphery to the core of sophisticated portfolio design. By combining differentiated return sources, income generation, and diversification benefits, private‑market strategies—delivered through increasingly flexible evergreen vehicles—equip investors to navigate shifting economic cycles with greater resilience and opportunity.

Fun Stuff

Holiday Cheer From the Pharus Wealth Advisory Team!

As we wrap up another memorable year, we want to extend a heartfelt thank‑you to all our readers, clients, and prospective clients. Your trust, support, and partnership mean the world to us, and we’re truly grateful to be part of your financial journey.

The snow is falling, the coffee is stronger than ever, and the Pharus team is officially sliding into holiday mode. Before we head into what we know will be an exciting and successful 2026, we thought we’d share a peek at what everyone on our team will be up to—whether they’re jet‑setting across the globe, perfecting their holiday baking, or still trying to figure out last year’s overly complicated espresso machine.

Here’s a festive behind‑the‑scenes look at how the Pharus team is celebrating the season!

Kelvin

Kelvin is trading snow boots for sushi this year as he hops between Hong Kong and Japan for the holidays. With his wedding to Brittany coming up in April 2026, the two are making the rounds to visit extended family before the big day. If you hear him say “Happy Holidays” in Cantonese, don’t be surprised—he’s been practicing.

Bill

Bill is heading to Peterborough to celebrate with family—and to toast his wife Kathy on her recent retirement. Their daughter is home from her PhD program at McGill, and their son is deep in “off‑season strategy mode,” determined to solve the eternal mystery of how to get the Jays to win the 2026 World Series.

Shamin

Shamin is embracing peak holiday mode: family time, cozy evenings, and the one season where he fully surrenders to his sweet tooth. Rumour has it his kitchen will smell like gingerbread and cinnamon for at least two weeks straight.

Derek

While Kelvin is away, Derek will be holding down the fort—and continuing his year‑long quest to figure out the espresso machine he got last Christmas. (Progress remains… ongoing.) He’s officially given up on the Leafs, but he’s all‑in on cheering for Team Canada at the World Juniors.

Sagar

Sagar is taking a few well‑earned days off to spend time with his wife, squeeze in some FIFA 2025 training ahead of the 2026 World Cup, and visit extended family in Cambridge. Expect him to return refreshed and ready—unless his virtual team gets relegated.

Click here to visit Pharus Resources.

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