Friends & Partners,

August was a month of two stories running side by side. On the surface, markets were calm and constructive, with the S&P 500, NASDAQ 100, and TSX all comfortably positive. Underneath, the conversation shifted meaningfully. Federal Reserve Chair Kevin Warsh used his Jackson Hole speech to warn that inflation remains well above target and that the Fed may need to raise rates in the months ahead, and a new round of tariffs between the United States and Canada moved from threat to reality. Neither of those developments has derailed the market so far, but both are worth understanding, because they shape decisions we made in the portfolio this month.

We made several changes today, and we want to walk you through the thinking behind each one before we get into performance

What Is Driving the Conversation This Month

The Fed and Inflation. Chair Warsh's Jackson Hole remarks were the most direct inflation warning we have heard from the Fed in some time. Headline CPI is running at 3.4% and the Fed's preferred inflation gauge is at 3.7%, both well above the 2% target, and Warsh said plainly that the central bank needs to see inflation moving toward that target with more speed and confidence before it can relax. The market reaction was immediate: the odds of a September rate hike jumped from roughly one in three to just above fifty percent in the span of a single speech. This matters for portfolio construction because higher for longer rate expectations tend to pressure the most richly valued growth names first, and reward businesses with pricing power and hard assets.

Tariffs. The trade relationship between the United States and Canada has moved from rhetoric to real policy this month. The U.S. imposed a 50% tariff on roughly $20 billion of Canadian goods in late August, and Canada is set to respond in kind with tariffs of 15% to 50% on more than 700 American goods, hitting alcohol, dairy, furniture, autos, and appliances hardest. So far, broad equity markets have largely shrugged this off, the S&P 500, NASDAQ, and TSX all finished the month higher. But tariffs are a tax that shows up somewhere, and in this case it shows up in the cost structure of businesses and the grocery and appliance bills of households on both sides of the border, not necessarily in the index level. We think this distinction matters for how you think about inflation, your own household budget, and any business exposure you may have, even if it has not yet shown up as a market event.

Growth Beneath the Surface. Several of the momentum and AI adjacent names that corrected hard in July bounced back sharply in August, Tempus AI, ServiceNow, and Tesla among them. That is encouraging, but it is also exactly the kind of choppy, two sided action that tells us conviction still matters more than momentum right now. A handful of quality names, Alphabet and Amazon among them, are still digesting the same capex scrutiny we discussed last month, and Rockwell Automation gave back over 11% on softer industrial demand signals. We used this uneven recovery, not a fresh selloff, to make several deliberate moves.

Portfolio Changes: What We Did This Month and Why

Added gold exposure in Canada. We sold our position in JEPI and used the full proceeds to add XGD, a Canadian gold miners ETF, at the same portfolio weighting. Gold has strong fundamentals on its own right now, but our real motivation is insurance. Between a re-escalating war backdrop, a Fed that may need to raise rates into an inflation problem, and government debt levels that continue to climb across most developed economies, we wanted more exposure to hard assets that do not depend on any single government's balance sheet. This is a ballast position, not a trade.

Exited Intuitive Surgical and Cintas. Both were sold outright on the U.S. side. Neither name was down meaningfully this month, Intuitive Surgical was actually up nearly 4%, and Cintas was roughly flat, so this was a clean, unemotional exit into strength rather than a panic sale into weakness. We used the proceeds, along with the trims below, to fund new positions we have higher conviction in today.

Trimmed RTX, Emerson, and Lockheed Martin. All three remain good businesses and core holdings, but we reduced position sizes modestly to free up room for the additions below without meaningfully changing the overall risk profile of the portfolio.

Added Broadcom and SpaceX, and bumped up SPY and QQQ. Broadcom and SpaceX were added to capture growth at attractive prices. Both are precisely the kind of businesses at the center of the AI infrastructure and space economy themes we have discussed all year, and August's volatility gave us an entry point we liked. We want to be clear about the message here: this is a bump in the road, not a change in our themes, and we are using price weakness to lean in, not pull back. The modest increase in SPY and QQQ simply adds a bit more broad market ballast alongside the gold position while individual names remain choppy. Because Broadcom, SpaceX, and XGD were all purchased at the end of the month, they do not yet have a meaningful performance history and are excluded from the standout tables below.

Tempus AI and ServiceNow led the portfolio this month, both rebounding sharply after a difficult stretch. Microsoft continued to climb as investors gained confidence that AI infrastructure spending is translating into cloud revenue. Rockwell Automation was the clearest laggard, down over 11% on softer industrial demand commentary, while Alphabet and Amazon remain range bound as the market continues to scrutinize hyperscaler capex guidance. We trimmed rather than exited our positions in the names that are down modestly, RTX, Emerson, and Lockheed Martin, viewing the weakness as sizing discipline rather than a reason to leave good businesses.

Shopify led the Canadian book with a strong rebound, and Franco-Nevada's 22% gain is a timely reminder of exactly why we added more gold exposure this month, the same forces driving Franco-Nevada higher, war risk, rate uncertainty, and demand for hard assets, are the reasons behind the XGD addition. Cameco and Teck Resources also had strong months on commodity strength. On the other side, Dollarama's pullback is worth watching given its exposure to imported goods just as new tariffs take effect, and Celestica gave back some of an extraordinary multi year run. Enbridge and Loblaw softened modestly but remain core, defensive holdings.

The Broader Picture

Rates. A Fed chair openly discussing rate hikes is a meaningful shift in tone from earlier this year. We do not think a hike is a foregone conclusion, but we are positioning for more uncertainty than the market had priced a few months ago, which is part of why the gold and index additions make sense right now.

Tariffs. We will be watching how the new U.S. and Canadian tariffs affect input costs for the businesses we own on both sides of the border. So far the impact has been more visible at the household and small business level than in aggregate index performance, and we do not expect that to change quickly, but we are watching our consumer facing and import reliant names, like Dollarama, closely.

Growth and AI Infrastructure. Our conviction here has not changed. Broadcom and SpaceX are two of the highest quality ways we know to express this theme, and we used August's volatility to add to both at attractive prices rather than wait for a calmer entry point that may not come.

September Planning Focus: Set the Fall Calendar Now

On a lighter note, September has a way of filling up fast, school schedules, year end tax planning, portfolio reviews, and before you know it the year is gone. Rather than let that happen by default this year, we would love to sit down with you early and put a shape to the fall, what you want to accomplish, what questions you want answered, and when. Clients who book this conversation in September, rather than November, tend to walk into year end with a plan instead of a scramble. If you have something on your mind for the months ahead, a goal, a life change, a project you are excited about, let us know and we will build the year end review around it.

Closing Thoughts

August reminded us that a calm looking index can still sit on top of a lot of underlying movement, in individual stocks, in Fed policy, and now in trade policy between our two countries. Our response to that kind of environment is always the same: trim what has become oversized, exit cleanly when conviction fades, add hard assets when the world gets more uncertain, and buy quality growth when the market hands us a better price, which is exactly what today's changes reflect.

As always, if any of this raises questions about your specific accounts or your broader plan, please do not hesitate to reach out.

That conversation is always welcome, and it is always about you first.