Weekly Wrap

After a tough few weeks for North American stocks where indices were dragged down by tech shares, equity markets staged a little rebound this week as they look to be headed to a flat to positive finish on the month. Canadian stocks are up 3% this week with gold prices propelling the materials sector higher. US stocks are also up about 3% this week as optimism grows around a potential Fed rate cut, although US indices look headed for a flat finish on the month due to a tough month for AI related stocks resulting from growing concerns of an AI bubble. Interest rates fell about 0.05% in the bond market as investors position themselves for said Fed cut. EU stocks are up 1.75% partially on hopes for a potential end to the war in Ukraine. Emerging Markets are up 1% this week while the Loonie nudged up 1% versus the US Dollar as there is growing talk amongst economists that the USD may be overvalued.

Market Insights

Ottawa, Alberta sign energy deal that could pave the way to a new pipeline.

Prime Minister Mark Carney on Thursday signed an agreement with Alberta Premier Danielle Smith under which the federal government will drop the planned emissions cap on the oil and gas sector and scrap certain clean-electricity rules. In exchange, Alberta commits to strengthening its industrial carbon-pricing framework and backing the large-scale carbon capture Pathways Plus project (expected to be the world's largest) as part of a broader bid to meet climate-neutrality goals by 2050. The deal also paves the way for a potential new crude-oil pipeline to the BC coast, opening the door to Asian markets; a strategic move as the government seeks to diversify away from heavy reliance on US exports amid trade tensions. Ottawa will also support Alberta with nuclear-power development, electricity grid upgrades, and transmission line expansion.

Overall, the agreement signals a meaningful shift in federal-provincial energy climate policy, dialing back certain environment regulations to foster investment and energy exports, while doubling down on carbon pricing and capture as the preferred route to long-term decarbonization. Key risks to monitor are potential opposition from British Columbia and/or indigenous groups that could lead to legal, regulatory, or social challenges. Such challenges risk delaying or blocking the pipeline which could undermine the expected boost to investment and export growth.

Steady jobless claims temper expectations for a December Fed cut.

The US economic situation makes it hard for journalists to write a convincing narrative…it is neither booming nor busting. Tariff related uncertainty, stubborn inflation and a softening jobs market have merely dented optimism, but certainly not destroyed it. And as I write this on Black Friday, where expectations are for solid yet thrifty shopping, the largest economy on earth is holding up…just. There was a dearth of economic data to gauge during the government shutdown and thus it's hard to guess just what the Fed might do in December. US weekly jobless claims fell by 6,000 to 216,000 for the week ended November 22nd, marking the lowest level since April and reinforcing the picture of a labour market that remains stable despite broader mixed economic signals. Continuing claims rose slightly to 1.96 million, suggesting some modest challenges for those seeking new positions but not enough to indicate a material weakening in labour demand. Overall, the data points to a market characterized by slower hiring rather than rising layoffs, with many firms reportedly operating under "no-hire, no-fire" policies as they manage uncertainty around growth, costs, and future demand. While softer activity indicators elsewhere have raised speculation about a potential December rate cut, the resilience in jobless claims offers the Fed less urgency to act. Policymakers are likely to view the latest figures as evidence that labour conditions are cooling gradually rather than deteriorating sharply, tilting the balance toward a more patient stance unless upcoming inflation data provides a stronger rationale for easing. Still, futures markets are currently pricing in an 80% probability that the Fed will ease interest rates when they next meet in December.

Portfolio Update

Over the past couple of weeks we have continued to trim exposure to some of our more 'fully valued' holdings. We trimmed 50% of our CHRW position following a big jump in their share price resulting from a strong earnings report where investors were enthused by CHRW's ability to buck the trend of slowing logistics revenue and, more particularly, optimism about the company's efforts to incorporate AI tools to grow their margins in the future. While we like CHRW's results we feel that the outlook is not quite as rosy as the analyst community feels. The other profit taking we have done was in our preferred share holdings. We've continued to trim our pref share ETF's due to their full valuation and diluted quality of the overall pref share market. Our preference is to be much more selective going forward and thus, we continue to hold preferred shares. But our take on the overall pref market is best described as lukewarm as prices have risen and we are even beginning to see some new pref shares being issued (which is often a sign that there are better opportunities elsewhere). Further, TC Energy will be redeeming one of our pref share positions with the proceeds expected to arrive this morning. The proceeds from all three of these transactions are going into short-term government bonds for the time being as we continue to search for better long-term opportunities.

Please note any changes apply to our PIM Portfolios Only, subject to restrictions. Please call to clarify if you have any questions.

Planning On

Year-end Planning FHSA

The tax-free First Home Savings Account (FHSA) is a new(ish) registered account designed to help individuals save up to $40,000 on a tax-free basis for the purchase of their first home. It combines features of both an RRSP and a TFSA. Like an RRSP, contributions to an FHSA are tax-deductible, and like a TFSA, withdrawals for purchasing a first home (including investment income earned) are not taxable. To open an FHSA, individuals must be Canadian residents, at least 18 years old, and not turning 72 or older in the year. They must also be first-time home buyers, meaning they and their spouse must not have owned a home as a principal residence in the calendar year before opening the account or in the preceding four calendar years.

The FHSA allows for a lifetime contribution limit of $40,000 with an annual limit of $8,000. Unused annual contributions can be carried forward, and over-contributions are subject to a 1% tax. Qualifying withdrawals must meet specific conditions, including being a first-time home buyer at the time of withdrawal and having a written agreement to buy or build a qualifying home in Canada.

The FHSA offers flexibility in transferring funds to other accounts like RRSPs or RRIFs and provides spousal contribution options. It also includes provisions for relationship breakdowns, over-contributions, and treatment upon death.

Overall, the FHSA is a valuable tool for first-time home buyers to save tax-efficiently for their first home purchase, with the added benefit of transferring unused funds to retirement accounts if homeownership plans change.

Given that we are nearing the end of the year, let's reflect on a strategy to ensure you are maximizing the opportunity (or helping family members with their home savings goal). You are allowed to carry forward your unused annual contribution limit by up to a maximum of $8,000. This means that if you contribute less than $8,000 in any given year, you can contribute the unused amount in a subsequent year on top of your annual contribution limit of $8,000. For example, if you contributed $5,000 to your FHSA in 2024, you would be allowed to contribute $11,000 this year (i.e. $8,000 for 2025, plus the remaining $3,000 from 2024).

For an FHSA refresher feel free to give us a call.

This information is not intended to provide legal, tax, or insurance advice. To ensure that your own circumstances have been properly considered and that action is taken based on the latest information available, you should obtain professional advice from a qualified lawyer or accountant, as applicable, before acting on any of the information.

Updates from the Admin Team

In-Kind Charitable Donation Deadline

If you wish to make a charitable donation out of your investment account and receive a donation receipt for the 2025 Tax Year, please reach out to us by December 24th.

Charts of the Week Spare Time Updates

Can one big meal really make you gain weight?

The post-holiday scale spike is temporary – unless the leftovers get involved.

Moss Can Survive the Harsh Conditions of Space

It was not as whimsical an experiment as you might think. As researchers contemplate how humans might someday feed ourselves beyond Earth, it's anyone's guess how plants that evolved on Earth, with Earth's gravity and atmosphere and protection from the radiation of outer space, will handle such strange habitats.

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Thank you very much for reading through our commentary. Feedback is welcome!