Weekly Wrap

Markets pared back gains this week with the tech sector leading the downside following a chip focused sell-off in Asian markets. Canadian markets were flat on the week despite a big sell-off in materials (i.e. gold stocks) and energy stocks, as gold prices fell nearly 4% and oil prices plunged a further 8% as talk grows of an oil supply glut (how fickle the oil market can be). The Loonie fell again this week and now sits on a surprising year-to-date loss of over 3% versus the US Dollar (the USD has gained against most currencies). US stocks were down 2% with the tech sector falling 5% and the Emerging Markets are off 4%, also due to the tech sector. EU markets were benign, shedding just 0.5%. Interest rates drifted a touch lower as more tech companies came to the market issuing bonds; SpaceX issued $25 Billion in bonds just two weeks after their somewhat disappointing IPO. To be fair, SpaceX is merely refinancing as the bond proceeds are going to be used to repay more expensive debt SpaceX already has. But what is surprising is that the SPCX bonds hold a BBB rating (not bad for a company with no profits and negative cash flow!?)

Market Insights

What’s driving this market up you ask…it might be Zombies!! I continue to get asked why the market is going up in the face of so many negative headlines. While it’s never possible to precisely pinpoint the answer to this question, there is a continued, intensifying trend of investors indiscriminately buying index funds (let’s call them Zombie investors). While I believe that index funds are generally good for the long term, when they become too popular their appeal becomes less and less. A recent report from Citadel Securities highlighted various sources of demand supporting US equities as markets enter the second half of 2026. Retail investors, ETF buyers and corporations are all deploying capital at or near record rates. Retail participation has been particularly notable. Data shows that retail trading reached a new high in May, beating the previous record set during the speculative surge of early 2021. Activity accelerated further during the first half of June. At the same time, more than US$1 trillion has flowed into ETFs so far this year (see chart below). That is already more than twice the average for a full year. These flows do not all represent new purchases of US equities, but they illustrate the growing amount of capital moving through vehicles that invest systematically. The more investors blindly buy more of the same, the better the opportunities become buying less of the same.

Portfolio Update

No major changes were made on most portfolios this week. While we intend to keep our portfolio below risk targets, we continue to find one off opportunities in the individual stocks. The financial sector, which is a major overweight of ours, has been very kind to us and we are uncovering a handful of new ideas in this space which, if we decide to pursue them, will require a reduction in our existing financial sector positions. This is a tough decision for us as most of our financial stocks are built for strong long-term returns but, nevertheless, trade at plump multiples. In our fixed income holdings we continue to look to right size our government bond holdings for better yields; the two government bond ETF’s we hold were never really intended to be long-term holdings so, should we decide to keep this money in fixed income, we intend to seek out higher yields without taking on more risk.  

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

Planning On

BC Property Tax Deferral

We have been fielding a number of questions over the last few months about BC property taxes and the deferral system that has been in place for a while and utilized by many. I, myself, was looking forward to taking advantage of a generous system that allowed for a very low rate charged at simple interest. While still a viable option for those who are home equity rich but cash/liquid asset poor, the math has changed for those who have options.

What Changed?

Starting with the 2026 tax year, the province fundamentally restructured the program:

• Interest rate jumped: From prime minus 2% to prime plus 2% (currently ~6.45% effective annual rate)

• Compound interest introduced: Interest now compounds monthly, meaning you pay interest on previously accrued interest

• Existing balances grandfathered: Any taxes deferred through 2025 remain under the old, lower terms

Why This Matters Financially

Most clients have determined that it is not worth it to keep deferring and the math would align with that decision. Take this hypothetical: assume $7,500 in annual property taxes and that amount is constant over a 15-year period as is prime rate. The difference between the old system (lower rate and simple interest) vs. the new system (higher and compound interest) is just over $50,000 in accumulated interest that must eventually be paid to the BC government (note: that doesn’t include the deferred amount which must also be paid back).

What You Need to Do

If you're enrolled in automatic renewal, your 2026 taxes will defer under the expensive new terms unless you opt out which you can do by:

• Logging into eTaxBC and submit an opt-out message
• Calling 1-888-355-2700.

The Property Tax Deferment Program still exists and may help with short-term cash flow—but it's no longer a cost-effective, long-term borrowing strategy. Review your situation carefully, and don't let automatic renewal lock you into unfavorable terms.

Questions? We're here to help you model the numbers specific to your situation. 

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.

Charts of the Week

Feel free to share this newsletter with anyone who might benefit from it or find value in it. Thank you for reading our commentary. We welcome your feedback!

Return to homepage

RBC Dominion Securities Inc.* and Royal Bank of Canada are separate corporate entities which are affiliated. *Member-Canadian Investor Protection Fund. RBC Dominion Securities Inc. is a member company of RBC Wealth Management, a business segment of Royal Bank of Canada. â / ™ Trademark(s) of Royal Bank of Canada.  Used under license.  © RBC Dominion Securities Inc. 2026. All rights reserved. This information is not investment advice and should be used only in conjunction with a discussion with your RBC Dominion Securities Inc. Investment Advisor.  This will ensure that your own circumstances have been considered properly and that any action is taken based upon the latest available information. The strategies and advice in this report are provided for general guidance.  Readers should consult their own Investment Advisor when planning to implement a strategy. Interest rates, market conditions, special offers, tax rulings, and other investment factors are subject to change. The information contained herein has been obtained from sources believed to be reliable at the time obtained but neither RBC Dominion Securities Inc. nor its employees, agents, or information suppliers can guarantee its accuracy or completeness.  This report is not and under no circumstances is to be construed as an offer to sell or the solicitation of an offer to buy any securities.  This report is furnished on the basis and understanding that neither RBC Dominion Securities Inc. nor its employees, agents, or information suppliers is to be under any responsibility or liability whatsoever in respect thereof.   The inventories of RBC Dominion Securities Inc. may from time to time include securities mentioned herein. This publication is for information purposes only. Graphs and charts are used for illustrative purposes only and do not reflect future values or changes. Past performance is not indicative of future returns. This commentary is based on information that is believed to be accurate at the time of writing and is subject to change.  All opinions and estimates contained in this report constitute RBC Dominion Securities Inc.'s judgment as of the date of this report, are subject to change without notice and are provided in good faith but without legal responsibility. Interest rates, market conditions and other investment factors are subject to change. Past performance may not be repeated. The information provided is intended only to illustrate certain historical returns and is not intended to reflect future values or returns. This publication is not intended as nor does it constitute tax or legal advice. Readers should consult their own lawyer, accountant or other professional advisor when planning to implement a strategy. Insurance products are offered through RBC Wealth Management Financial Services Inc.("RBC WMFS"), a subsidiary of RBC Dominion Securities Inc.* RBC WMFS is licensed as a financial services firm in the province of Quebec. When providing insurance products in all provinces except Quebec, Investment Advisors are acting as Insurance Representatives of RBC WMFS.   In Quebec, Investment Advisors and Estate Planning Specialists are acting as Financial Security Advisors of RBC WMFS.  RBC Dominion Securities Inc., RBC WMFS and Royal Bank of Canada are separate corporate entities which are affiliated. *Member-Canadian Investor Protection Fund. RBC Dominion Securities Inc. and RBC WMFS are member companies of RBC Wealth Management, a business segment of Royal Bank of Canada. â / ™ Trademark(s) of Royal Bank of Canada.  Used under license.

RBC Dominion Securities Inc.