The Week in Review

Weekly Market Recap: U.S. and Canada

It was a mixed week in the markets, and with everything the way it’s been recently, that’s not a bad thing. We did see the usual ups and downs, but at the end of the week the TSX emerged as the clear winner, while the U.S. indices ended up down just slightly.

Performance-wise, the TSX led the way with a solid gain of 1.35%. The Dow Jones slipped slightly, finishing down 0.17%, while the Nasdaq 100 declined 0.20%. The S&P 500 saw the largest drop among the U.S. majors, losing 0.47% over the week.

Major Economic Stories

The economic data out this week shows a few signs of stress starting to take hold. We saw employment data weaken and trade tensions deepen. Central banks remain cautious, showing patience in the face of rising uncertainty.

Here’s how it all played out this week.

Canada Unemployment Ticks Up

Unemployment in Canada ticked up to in April, matching a recent three-year high.

The jobless rate rose to 6.9%, a sign of further weakness in the labour market. We saw a small increase in employment, but the number of unemployed spiked. Businesses may be feeling early tariff effects, which could signal deeper strain in the coming months.

• Unemployment rate increased to 6.9% in April.

• Total unemployed rose by 39,300 people.

• Net employment rose by just 7,500 jobs.

• Job market strain linked to new U.S. tariffs.

• Full Release Here

Canada’s Trade Deficit Narrows on Tariff Fallout

March’s trade deficit shrank, but only due to a steeper drop in imports.

Both exports and imports fell sharply amid the reciprocal tariffs with the U.S. The declines reflect economic pressure from both government actions and shifting consumer behavior, including a boycott of U.S. goods.

• Trade deficit shrank to C$0.51 billion in March.

• Imports fell by 1.5%, largest since September.

• U.S. imports dropped 2.9% after Canadian tariffs.

• Exports to U.S. fell 6.6%, but non-U.S. exports rose 24.8%.

• Read the Full Release

• Watch my YouTube coverage in this video.

Fed Holds Rates Steady, Tariff Uncertainty Cited

The Fed kept rates unchanged as it weighs economic risks.

Chair Powell emphasized caution, saying it's too early to pick a side between inflation and recession. The central bank is watching data closely, hinting that policy shifts may take time.

• Fed funds rate held at 4.25%–4.50%.

• Tariffs seen as risk to growth and inflation.

• Powell stresses need for patience and data monitoring.

• Recent data shows solid but uncertain economic activity.

• Read the Full Report here.

Key Takeaways From this Week’s Economic News

Tariff Trouble Hits Canada’s Job Market

Canada’s rising unemployment rate doesn’t look like a coincidence; it’s likely the first tangible impact of escalating U.S. tariffs. A modest gain in net jobs suggests the market isn't collapsing, but the surge in unemployed people does paint a troubling picture. It signals that businesses may be starting to cut back on labour in anticipation of tougher trade conditions.

What stands out here is how quickly these trade dynamics are seeping into labour data. If businesses pull back further or hiring freezes set in, we could see the unemployment rate rise even faster. For the Bank of Canada, this adds pressure to tread carefully on future policy moves.

Canada’s Trade Shift: Short-Term Gain, Long-Term Strain

Canada’s narrowing trade deficit might look like a win at first glance, but it’s not really cause for celebration. The improvement came from a bigger drop in imports than exports, which isn’t a healthy sign. The more telling story is in the collapse of trade with the U.S., Canada’s biggest partner, and the spike in non-U.S. exports, which feels more reactive and somewhat of a scramble rather than a solid strategy.

The numbers show that Canadian exporters are adapting fast, but let’s be honest, it’s not sustainable long-term to simply reroute trade. If the U.S. tariffs stick around, Canadian producers might have to make permanent adjustments, and not all sectors will find new markets easily. For now, this is damage control, not a solution.

Fed’s Patience a Signal of Caution, Not Confidence

The Fed’s decision to hold rates steady wasn’t a surprise, but the tone is what caught my attention. Chair Powell’s emphasis on uncertainty, especially around tariffs and inflation, says to me that the central bank is preparing for turbulence. This isn’t just a pause to wait for better data; it’s a recognition that they don’t have a clear read on where the economy’s headed.

What I find important here is that the Fed is explicitly acknowledging a two-sided risk: inflation and unemployment. That’s not common. Usually, it’s one or the other. The wait-and-see stance feels more like a hedge against political and economic unknowns, especially with the Trump tariffs throwing off forecasting models. For markets, this means volatility could remain elevated while we wait for clarity.

THIS WEEK’S POLL QUESTION
(Results in Next Week’s Newsletter)

Time to take the temperature of you all, our readers. We’re hearing more and more about the possibility of a recession and even worse, stagflation. When you factor in everything that’s going on out there, do you think we could possibly see a 2008-like financial meltdown, or is that just the media hyping things up, and that scenario is unlikely.

Weigh in with your votes, and don’t forget to share your thoughts by leaving a comment.

LAST WEEK’S POLL RESULTS

I’m joining the majority this week in saying that Warren Buffett’s retirement won’t have any significant impact on the share price of Berkshire, at least not anytime soon. Greg Abel has been working right alongside him long enough now, and has shown his stripes, so I think Berkshire will just keep doing what Berkshire does.

THE BANK OF CANADA
Bank of Canada Flags Trade War as Top Risk

• Financial stability improved before new U.S. tariffs hit

• Trade war now seen as biggest threat to Canada’s economy

• Mortgage defaults could surpass 2008 levels if conflict drags on

• IMF warns of deeper risks in extreme recession scenario

The Bank of Canada’s latest Financial Stability Report was published this week, and I must say, it starts on a surprisingly optimistic note: households and businesses were in better shape entering 2025 than a year ago. Debt levels were lower, insolvencies were down, and interest rates have dropped significantly. But there’s a big, dark cloud looming over all that resilience; the major shift in U.S. trade policy. According to Governor Tiff Macklem, an escalating trade war sparked by American tariffs and protectionist rhetoric now poses the greatest threat to Canada’s financial health, potentially triggering a wave of economic and credit stress.

Trade Tensions and Economic Fallout

Macklem didn’t mince words: the shift in U.S. trade policy is a big deal.

The Bank’s base-case risk scenario now includes a potential spike in mortgage arrears beyond 0.5%, worse than the 2008–09 crisis. And the fear isn’t just about direct trade exposure. It also includes the broader financial effects. A drawn-out tariff war could lead to prolonged volatility, weaker GDP, and higher unemployment. In its own stress test, the IMF paints a more dire picture: a seven-quarter recession, a 5.1% GDP decline, and a 36% drop in equities. These are troubling projections.

Households Diverge, Banks Brace

The report says that while mortgage holders are benefiting from falling rates and income gains, households without mortgages are showing growing signs of strain. Credit card and auto loan delinquencies are already above pre-pandemic levels and this says we need to be concerned about consumer resilience. On the business side, sectors tied to trade are dealing with heightened vulnerability, although the broader system remains sound thanks to higher bank capital buffers and proactive financial behaviour. That said, the central bank’s message is clear: uncertainty around tariffs makes risk prediction difficult, and the margin for error is thin.

This is an excellent, comprehensive report, and if you can spare the time I’d encourage you to have a read.

Read More Here

THE FEDERAL RESERVE

Fed Flags Stagflation Risks as Tariffs Raise Uncertainty

• Fed keeps rates at 4.25%–4.5%

• Powell says both inflation and unemployment risks are rising

• Trump signals no plans to ease China tariffs

• Investors expect possible rate cut in July

On Wednesday this week, the Federal Reserve held interest rates steady (that was pretty much a sure thing) but I sensed a notable change in the tone of the statement. Fed Chair Jerome Powell pointed to a growing risk that both inflation and unemployment could rise, and that combination raises the specter of stagflation, especially with tariffs from the Trump administration adding pressure.

Policy on Pause, but Tensions Rising

Powell said the economy is still holding up but acknowledged that inflation remains “somewhat elevated” and that trade uncertainty is clouding the outlook. He emphasized patience, saying the Fed doesn’t need to rush into decisions right now. That seems to align with most officials’ views, monitor the data and hold steady unless labour markets take a clear turn.

Markets Holding, But Fragile

The bigger concern may be political. Trump is doubling down on tariffs, and that could complicate the Fed’s job, especially if higher prices start sticking. Analysts like Ed Yardeni suggest the current path could spook voters if prices stay high into 2026.

For now, investors are betting on the Fed staying on pause through June, with a potential rate cut in July if conditions weaken.

Read More Here

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TAXATION
Cancelled Capital Gains Hike Puts Spotlight Back on AMT

• AMT revised to 20.5% under new 2024 rules

• More high earners facing surprise tax bills

• Cancelled capital gains hike increases AMT exposure

• Donation tax strategies also affected

The good news, sort of, is that the federal government scrapped plans to raise the capital gains tax rate this year. The not-so-good news is that it’s brought the alternative minimum tax (AMT) back into focus for high-income Canadians. Tax advisors say more people than ever are being caught off guard, especially those who sold assets or donated shares in 2024.

AMT Now a Bigger Risk

Under the revised rules, the AMT rate jumped to 20.5%, and fewer deductions are allowed. Without the higher capital gains inclusion rate that was expected, many taxpayers now find their AMT calculation exceeds what they’d owe under the regular system, and that means writing a bigger cheque.

Planning Becomes Critical

Even donors are feeling the impact. The AMT now limits how much of the donation credit can be applied, and adds back more of the capital gain to income. While AMT can be recovered over seven years, there’s no guarantee of that, and any unrecovered amount becomes a permanent cost. For high earners, proactive tax planning is no longer optional.

This whole issue has been a debacle from the start, and it looks like the dust has yet to settle.

Read the full story here.

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LABOUR TROUBLES

Canada Post Workers Edge Closer to Another Strike

• Union contract expires May 22

• Mediated talks are ongoing

• Major issues include pay, job security, and weekend delivery

• Financial inquiry report due May 15 could influence outcome

Believe it or not, Canada Post and its workers are back in talks trying to avoid a repeat of last year’s strike that left millions of packages delayed. With their current agreement expiring May 22, the clock is ticking and tensions remain over wages, job security, and future delivery models.

Negotiations at a Crossroads

The last strike ended when the government ordered both sides back to work and launched an inquiry into Canada Post’s finances. That report is expected next week and could shape the tone of these talks. In the meantime, both the union and the company are working with a mediator, which is at least a sign that dialogue hasn’t broken down.

Strike Still on the Table

The real challenge though, is Canada Post’s long-term financial health. The agency has lost billions since 2018 and says it can’t meet all the union’s demands. If a strike does happen, it would hit small businesses and public confidence hard, and possibly drive more users toward private couriers permanently.

Full Story Here

OTHER NEWS FROM THE PAST WEEK

WeightWatchers Files for Bankruptcy Amid Ozempic Craze
The rise of GLP-1 weight-loss drugs like Ozempic and Mounjaro has reshaped the weight management industry, pushing WeightWatchers into Chapter 11 bankruptcy protection amid declining relevance and rising debt.

Disney to Launch First Middle East Theme Park
Disney is expanding into the Middle East, with plans to open a major theme park in Abu Dhabi — its first in the region , in partnership with local developers.

Gas Prices in Canada Drop Nearly 20%
Canadian drivers are catching a break at the pump, with gas prices now nearly 20% lower than this time last year thanks to softer global oil demand and rising inventories.

The People Who Refuse to Use AI
Despite the AI boom, a growing group of skeptics, from creatives to coders, are opting out of the trend, raising questions about ethics, trust, and long-term dependence.

Ontario Couple Charged for Seats That Didn’t Exist
An Ontario couple paid extra for premium airline seats that weren’t available when they boarded. Their experience is another example of ongoing frustrations with seat selection practices and refund policies in air travel.

RioCan REIT has had its fair share of twists and turns, but one of the quirkiest moments came in 2015 when Target's ambitious foray into Canada flopped spectacularly. RioCan, being Target Canada's largest landlord, suddenly found itself with a lot of empty big-box spaces. But instead of panicking, they turned lemons into lemonade. They managed to extract a hefty $132 million settlement from Target to exit their leases and swiftly re-leased the spaces to more stable tenants, often at higher rents. Talk about turning a retail disaster into a strategic win!

Market Movers

S&P 500 Returns | Week At-a-Glance

TSX Returns | Week At-a-Glance

Top 10 Weekly Gainers

Top 10 Weekly Losers

10 Most Overbought Stocks

10 Most Oversold Stocks

The Relative Strength Indicator (RSI) can provide a signal that suggest a stock is either overbought or oversold.
📈A stock that has an RSI over 70 is considered to be in “overbought” territory. This might suggest that the stock is due for a pullback, however it is not a recommendation to sell.
📉A stock that is trading with an RSI below 30 is considered to be in “oversold” territory. This might suggest that the stock is due for a recovery, however it is not a recommendation to buy. Always perform your own due diligence.

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