Market Update May 2025
We typically send market updates quarterly, but given the pace of change and Prime Minister Carney’s first formal meeting with President Trump, this felt like the right moment to reconnect and share how we’re positioning your portfolio in response.
Despite the headlines, your portfolio remains steady. Many investors are down this year, but ours have held positive, and that’s no accident. It’s the result of sticking to the principles that guide everything we do: risk management, capital preservation, and income generation.
That approach was recently recognized at the national level. SilverBirch’s positive performance ranked me among the top 5 portfolio managers in the firm across Canada this quarter, a reflection of the discipline and care we bring to your portfolio every day.
Why the Markets Feel Shaky - and What We’re Watching
2025 began with headwinds: rising interest rates, geopolitical instability, and now a new wave of uncertainty following the U.S. government’s decision to impose 25% tariffs on Canadian autos, aluminum, and other key exports. With nearly 75% of our exports tied to the U.S., this has real implications for the Canadian economy.
Prime Minister Carney’s recent meeting with President Trump marked, in many ways, a diplomatic reset, calm in tone but firm in message. Both sides hinted at a potential renegotiation of the USMCA, but timelines remain unclear, and the tariffs are still in place. For now, Carney’s focus appears to be on stability: protecting Canadian industries while signalling a path forward for business and trade.
We're watching closely — not just the markets, but the broader forces shaping the economy. What Carney is prioritizing now will help shape the environment we’re investing in over the months ahead.
What Carney’s Focus Tells Us About the Economic Road Ahead
Beyond the immediate trade concerns, Carney has named three core challenges that will shape Canada’s path forward and, by extension, the environment your portfolio lives in:
Productivity is shrinking.
Canada’s GDP per capita has grown just 0.8% over the past decade, the weakest stretch since the 1930s. Carney aims to attract more local investment by easing regulatory gridlock and keeping capital in Canada.
Housing supply is lagging.
A $25 billion fund has been proposed to help double new home construction using Canadian materials. It’s a bold target, and it reflects the scale of what’s needed to meet rapid population growth.
Trade tension is already showing its impact.
With U.S. tariffs in place and Canada’s response taking shape, core sectors are under pressure. April’s unemployment rate rose to 6.9%, signalling that the strain is real.
There are some upsides: Carney’s upcoming legislation to remove interprovincial trade barriers could boost national GDP by an estimated 4%. If implemented, it may mark a meaningful shift in Canadian business competitiveness.
What We’re Doing in Your Portfolio
We’ve made several adjustments to ensure your portfolio stays resilient and ready to respond as the environment evolves, as follows:
Continue to hold Gold
Gold remains a defensive anchor during periods of geopolitical tension and economic uncertainty. This modest increase helps offset market volatility.
Broadened international equity exposure (+3%)
To reduce reliance on North American markets, we’ve added high-quality, dividend-paying companies based overseas, balancing income with global diversification.
Continued focus on Canadian dividend leaders
These are stable, well-capitalized companies that generate consistent income and tend to weather uncertainty better than most.
Minimal U.S. equity exposure - for now
Given the unpredictability of U.S. policy, we’re keeping this exposure low until the picture becomes clearer. This helps us avoid unnecessary risk while maintaining flexibility.
Raised cash position to 10%
A healthy cash buffer gives us room to act on new opportunities, without disturbing long-term holdings at the wrong time.
Why This Matters
Your portfolio isn’t built on predictions; it’s built to hold steady when things shift.
Whether Canada emerges stronger from this moment depends on how effectively Carney’s government can follow through on reforms, from trade stability to productivity and housing.
We’re watching that closely, but we’re not waiting around for clarity. We’ve already positioned your portfolio to stay strong, stay liquid, and stay ready.
In Summary:
What We’re Watching
Trade tensions and U.S. tariffs
Increased gold and international equity
Reduce risk and broaden diversification
Economic fragility in Canada
What We’ve Done
Held Canadian dividend leaders
Focus on quality, income, and capital safety
U.S. policy volatility
Kept U.S. equity exposure minimal
Why It Matters
Avoid reactive moves amidst uncertainty
Market volatility and opportunity gaps
Raised cash to 10%
Stay ready for opportunity and liquidity
Thank you, as always, for your trust.
From trade tensions to economic reform, the headlines are noisy and often bewildering, but rest assured, your strategy isn’t on autopilot.
It’s being managed thoughtfully, actively, and with your long-term goals in mind.