Part 5 Markets and Moves

Hi everyone,

It's been exactly one month since I sent out part 4, and given how fast things have moved, it feels more like a whole year has passed! I thought this would make for great weekend reading as I update you on the latest.

In that last email, I suggested that we had likely hit bottom around April 9, and I started looking for opportunities at that time. So far, we've seen a strong recovery from that period of extreme volatility just as I anticipated would be necessary for the narrative to continue to lead up to the mid-term elections next year.

That said, I expect more volatility ahead as we navigate ongoing challenges with tariffs and the slowdown in trade activity. Historically, market recoveries tend to retest previous lows, forming a "W" pattern. Right now, however, we're seeing more of a "V" shape, having fully rebounded from the April 3 sell-off and sitting just a few points away from our February peak. As I mentioned to many of you, technology was too far sold off and it has since led the charge back upward:

Wall Street Roars Back From April Tariff Sell-Off: Which Sectors Are Still Underwater?

While I'd love to say that everything is smooth sailing, I must talk out of both sides of my mouth (like a politician) and say it might be... or might not be. A great deal hinges on the two big players China and the U.S. reaching an agreement to ease the excessively high tariffs they’ve imposed on one another. They'll be meeting in Switzerland (cool country name) this weekend, which may explain the recent market rally. This could turn into a "buy the rally, sell the news" event, or it could spark a fantastic Monday. It's hard to say for certain.

What I do know is that this situation is entirely unsustainable. All countries, not just China, need to have a clear understanding on trade relations (and costs) and then we can all get back to business as semi-usual. We can all debate the tactics used for this but that is redundant. We are in it now and it needs to end, period. Businesses like Walmart, Home Depot, Apple, and Best Buy, along with thousands of others, will soon feel the strain of empty shelves. They won’t tolerate prolonged disruptions, nor will everyday consumers who are growing increasingly frustrated as time goes on.

Uncertainty has been the biggest driver of volatility, but with every deal announcement, we take a step forward. I anticipate we’ll see tax cuts designed to incentivize both voters and the market leading up to the mid-term election in late 2026.

The bottom line is that I believe the worst is behind us, but challenges remain over the next few weeks. The markets are set in a trading range, and breaking out will require strong positive news. In the meantime, retirees will continue receiving their monthly incomes, and those of us focused on growth are accumulating more shares and dividends while we wait.

Stay patient, enjoy the spring and summer, and remember: things don't always need fixing when they really aren't broken.

Cheers,

Steve

This information has been prepared by Steve Switzer who is a Portfolio Manager for iA Private Wealth Inc. and does not necessarily reflect the opinion of iA Private Wealth. The information contained in this newsletter comes from sources we believe reliable, but we cannot guarantee its accuracy or reliability. The opinions expressed are based on an analysis and interpretation dating from the date of publication and are subject to change without notice. Furthermore, they do not constitute an offer or solicitation to buy or sell any of the securities mentioned. The information contained herein may not apply to all types of investors. The Portfolio Manager can open accounts only in the provinces in which they are registered. iA Private Wealth Inc. is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada. iA Private Wealth is a trademark and business name under which iA Private Wealth Inc. operates. This content was fully or partially generated by artificial intelligence. The advisor reviewed the critical information independently.