The Week in Review

Weekly Market Recap: U.S. and Canada

Definitely a skittish week in the markets, with a decent four-day rally giving way to a Friday slide. Tech showed the most resilience, posting a slight gain, the S&P 500 and TSX struggled, and the Dow ended the week with the sharpest decline.

In terms of numbers, the Nasdaq managed an ever-so-small 0.06% gain. The S&P 500 slipped 0.30%, the TSX fell 0.37%, and the Dow Jones saw the biggest drop, falling 0.54%.

Major Economic Stories

Labour data dominated the week, with both Canada and the U.S. reporting stronger-than-expected job growth. Canada’s unemployment rate surprised and showed some resilience in hiring, while the U.S. job market cooled but remained steady.

Here’s how the jobs numbers played out:

Canada’s Unemployment Rate Drops

Canada’s labour market came in surprisingly strong in January, with unemployment ticking lower to 6.6%.

Prior to the report, the consensus was 6.8%, so the 6.6% can only be said to be a solid showing. What does this tell us? Even though we’re still seeing fairly broad concerns about a slowing economy, hiring is still strong.

• Unemployment rate declined from 6.7% to 6.6%, the lowest in three months.

• Job gains exceeded expectations, totaling 76,000, compared to a forecasted 25,000.

• Wage growth slowed to 3.7%, signaling potential easing of inflationary pressure.

• Labour market strength may delay Bank of Canada interest rate cuts.

• Read the Full Release

Canada’s Job Gains Continue for Sixth Straight Month

Canada’s employment streak remains intact, with hiring momentum carrying over from late 2024.

January saw 76,000 jobs added, now the six consecutive months with employment gains. We also saw a mix of full-time and part-time growth, so that points to broad-based hiring across sectors.

• January marked the sixth consecutive month of net job growth in Canada.

• Full-time employment grew by 35,000, continuing a three-month rise.

• Ontario (+39K) and British Columbia (+23K) saw the highest job increases.

• Part-time employment rebounded by 41,000, ending a three-month decline.

• Read more here.

U.S. Unemployment Rate Dips

The U.S. job market showed resilience, even as hiring slowed.

January’s unemployment rate fell to 4.0%, slightly better than expectations. Even though there was a slowdown in job creation, the labour force participation rate increased.

• 143,000 jobs were added, below the forecasted 170,000.

• Labour force participation edged up to 62.6%, a positive sign.

• Job gains concentrated in healthcare (+44K), retail (+34K), and government (+32K).

• The broader U-6 unemployment rate held steady at 7.5%.

• Read the Full Report

U.S. Payroll Data Revised Upward

A look back at 2024’s job market shows stronger-than-reported employment.

The Bureau of Labour Statistics revised previous employment figures higher, suggesting job growth was underestimated last year.

• November’s job gains were revised up by 49K, bringing the total to 261K.

• December’s job gains were revised up by 51K, reaching 307K.

• 2024’s total payroll growth was adjusted to 1.99 million, or 166K per month.

• The revisions suggest that employment remained more resilient than initially thought.

• Full U.S. Bureau of Labor Statistics Release

Key Takeaways From this Week’s Economic News

Canada’s Job Market Defies Expectations - But Can It Last?

Canada’s labour market is proving far more resilient than many expected. We saw 76,000 new jobs in January, and the economy continues to shrug off concerns of a slowdown. This is the second month in a row that employment gains have far exceeded population growth, and it looks like businesses are still eager to hire despite high interest rates.

But the big question is: how long can this last? The Bank of Canada has been warning about softening labour conditions, and while January’s report does look strong, we’re seeing other indicators that hint some slack still remains. The unemployment rate is still well above its 2022 lows, and wage growth for permanent employees slowed to 3.7%, which could be a sign of a cooling trend. If hiring slows in the coming months, it could reinforce the case for further rate cuts later this year.

For now, I like that the strong job market is good news for workers. It’s a bit of a relief. But if we start to see businesses scaling back hiring for whatever reason (think tariffs?), we may see a very different labour market story by mid-2025.

U.S. Jobs Report Signals a Gradual Slowdown

It’s been a while in the making, but the U.S. labour market is starting to show some signs of slowing, although nothing that screams immediate trouble. January’s 143,000 job additions were below expectations, but still positive. The real story, though, is in the upward revisions to November and December - a combined 100,000 more jobs than previously reported. Hiring is slowing, yes, but it’s happening gradually rather than suddenly, and that’s a good thing.

As I noted above, the unemployment rate also dipped to 4.0%, and if we use history as a guide that’s still relatively low. And, the cooling job market does align with the Federal Reserve’s goal of slowing the economy without triggering a full-blown recession. If hiring continues to moderate, it could give the Fed more confidence to cut interest rates later this year.

For markets, this means rate cuts are still on the table, but not imminent. If job growth keeps slowing while inflation remains in check, the Fed could start easing by mid-year. The current odds are 92% that the Fed will leave rates at 4.25%-4.50% when it announces on March 19, but when we look out further, the July odds are in favour (63%) of another cut.

Is Wage Growth Telling Us Something About Inflation?

Amid all the focus on job numbers, one detail that might be slipping under the radar is wage growth slowing in both Canada and the U.S.. In Canada, wage growth for permanent employees dipped to 3.7%, down from 3.8% in December. In the U.S., wage pressures have flattened, and this supports the idea that inflation could continue easing.

This is important because central banks - the Bank of Canada and the Federal Reserve - watch wage growth closely when making interest rate decisions. If wages rise too quickly, inflation tends to follow, making it harder for policymakers to justify rate cuts. But with wage growth slowing, the case for easing monetary policy later this year strengthens.

For markets, this means we could see a shift in central bank messaging over the next few months. If wage growth continues to decelerate, expect more talk about rate cuts from both the BoC and the Fed. That’s good news for borrowers, but it also raises the question: Are we at the peak of the labor market, with wage growth now rolling over? If so, rate cuts could come sooner rather than later.

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

Every store you go into these days seems to have made it easier for us to buy Canadian. We see “Made in Canada” signs, sections set aside to highlight Canadian goods, and even the removal of some U.S. products altogether.
What do you think? Is this a response to the events of the day, or are we seeing a sea-change in the way we shop?

Share your thoughts by voting this week!

LAST WEEK’S POLL RESULTS

Me, last week: “I love a close call!”

Well, so much for that. I think last week’s poll results may be the most lopsided in the history of this publication.

I asked whether you’re concerned about the impact of the potential U.S. tariffs, and it wasn’t even close. The number of people who voted and left comments were also a new record, and I thank you all for that.

Even though I don’t have space to show all the responses, I do say thanks to everyone who shared their thoughts.

Comments of the Week

🥱 Not Concerned

“Trump talks a big game, but the man always folds faster than Superman on laundry day.” - philip.swan

“Canada has a strong economic relationships with China, Europe, and other international markets, which could help mitigate the effects of U.S. trade actions.
Trump tried this stunt in 2018 and reversed it in mid 2019.
A U.S.-Canada trade war would hit key U.S. industries, especially those heavily dependent on exports to Canada. Agriculture, automotive, pharmaceuticals, electronics, and aerospace would be among the hardest hit, particularly in states like Michigan, Iowa, Pennsylvania, and California. The interconnectedness of the two countries’ economies means that retaliatory tariffs would cause widespread damage to sectors across the U.S., especially in manufacturing, farming, and technology.” - jprshinn

😟 Very Concerned

“I am very worried about inflation, recession, lower Canadian currency, and stock market crash.” - cheryl

“It is obvious that Trump is attempting to 'annex' Canada for exploitation of our water and mineral resources. I am however proud of the fightback Canadians are making even to buy Canadian. His threats to take over our banking system are ominous.” - janisgotbass

“Trump is in love with the word "Tariffs" while not truly understanding how that will impact all the countries he places them on and especially his own citizens. It's unfortunate no one in his ear shot is willing to tell him it is an unwise thing to do and actually stand on it regardless of what backlash they get from him. Unfortunately he will do as he wants and all we can do is wait and see how this impacts us all. “ - edwardmawusi

EMPLOYMENT
Canada’s Job Market Surprises with Strong Gains

• Major hiring growth in manufacturing (+33K), professional services (+22K), and construction (+19K).

• Youth unemployment fell from 14.2% to 13.6%, reversing an elevated trend from 2024.

• Employment growth outpaced population growth, showing unexpected labour market strength.

• Bank of Canada faces a policy dilemma - strong hiring versus slowing wage growth.

Canada’s labour market defied expectations in January, with 76,000 jobs added, now the sixth consecutive month of gains. The unemployment rate dipped to 6.6%, flying in the face of concerns that Canada’s labour market was softening. Notably, job growth outpaced population growth, reinforcing confidence that hiring remains strong.

Stronger Hiring, But Rate Cut Timing Uncertain 

On a positive note, we saw employment rise across multiple sectors, with manufacturing (+33K), professional services (+22K), and construction (+19K) seeing the largest gains. Ontario and British Columbia led provincial job growth. I’m thrilled to finally see that youth unemployment, which had been stubbornly high in 2024, fell from 14.2% to 13.6%. This is truly a breath of fresh air in this cohort.

What It Means for Policy and Inflation

It’s great to see strong hiring, but before we all get too excited, we need to take note that wage growth slowed to 3.7%, and that’s a sign that inflationary pressure from wages may be easing. This all adds up to a mixed outlook for the Bank of Canada’s interest rate path; strong job growth might delay cuts, but moderating wages could still support an eventual easing. As always, the BoC policymakers will be watching for additional data as they formulate their upcoming decisions.

Read the Full Story here.

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HOUSING
Canadian Housing’s Uncertain Future

• Home sales and prices expected to rebound in 2025.

• New home construction set to decline, below 250,000 units this year.

• Labour shortages and supply chain issues are slowing development.

• Higher mortgage rates remain a key affordability challenge.

The good news? Canada’s housing market is set for a rebound in demand. The ‘just ok” news? Supply constraints could keep prices elevated. The Canada Mortgage and Housing Corporation (CMHC) now projects fewer than 250,000 new homes will be built in 2025, coming in short of previous government targets. Rising construction costs and a labour shortage have slowed the pace of new projects, limiting future supply.

Supply Challenges May Push Prices Higher

While home sales are expected to recover, housing affordability remains a concern. CMHC reports that detached and semi-detached homes are still being built at a relatively high rate, but high costs are making some developments financially unviable. Developers say that government incentives, such as the GST/HST holiday on rental construction, have helped but aren’t enough to fully offset rising costs.

The Long-Term Outlook

So where does this all take us? Well, even if demand improves, affordability will most likely continue to be a major issue.

Current mortgage rates have kept a lot of buyers on the sidelines, and rate cuts from the Bank of Canada are unlikely to provide immediate relief. If homebuilding activity continues to slow, Canada’s housing shortage isn’t going anywhere, and this will keep pressure on prices.

Read the Full Story here.

TRADE & SOVEREIGNTY

Trudeau Calls Trump's Annexation Comments a Threat

• Trudeau warned that Trump’s 51st state comments are serious.

• Trump sees Canada’s critical minerals as a key U.S. interest.

• Canada is preparing trade defenses against possible U.S. tariffs.

• Trudeau pushes for internal trade reforms to strengthen Canada’s economy.

Prime Minister Justin Trudeau warned business leaders this week that U.S. President Trump’s comments about absorbing Canada should not be dismissed as a joke. Speaking at the Canada-U.S. Economic Summit, he said that Trump’s focus on Canada’s critical mineral resources is a key factor behind his aggressive rhetoric. He says that while an actual annexation is highly unlikely, Canada has to prepare for potential economic disruptions from U.S. policy changes.

Trump’s Tariff Threats and Canadian Response

As I’m sure you’ve all heard by now, Trump has repeatedly suggested that Canada could avoid tariffs by becoming the 51st U.S. state, a move that Canadian officials strongly oppose.

Anita Anand, Canada’s Minister of Transport and Internal Trade, reflective of many other leaders, pushed back again this notion.

The government is now looking at strengthening trade relationships with other countries to reduce economic reliance on the U.S.

Economic Strategy and Next Steps

Trudeau also emphasized the need to reduce internal, provincial trade barriers to create a stronger domestic market. The government is also considering tactical trade responses to counter potential U.S. tariffs. Last week I covered this topic in more detail on my YouTube channel. You can watch YouTube Report here.

Read the Full Story here.

OUR COUNTRY
‘I Am Canadian’ Ad Shows Patriotism Surge

• The famous Molson "I Am Canadian" ad is going viral again.

• National pride has increased due to U.S. trade tensions.

• The ad’s original actor, Jeff Douglas, has mixed feelings about its return.

• The revival is influencing consumer behavior toward Canadian products.

Let’s stay on the ‘Canada 51st State’ theme.

Getting older isn’t always the great thing, but one advantage is that you have memories that some of our younger population doesn’t. For me, (in that ‘older’ demographic) the “I Am Canadian” ads from a couple of decades ago brings back a big smile and some strong memories.

Watch the original ad !

As we’ve seen Canada-U.S. trade tensions rise in recent weeks, an old commercial has re-emerged as a symbol of national pride. Now, the Molson "I Am Canadian" ad from 2000 has gone viral on TikTok and social media, and a new crop of younger Canadians are embracing its patriotic message. The ad originally became popular during a time of strong national identity, and its resurgence now reflects growing concerns over economic sovereignty and trade relations.

A Shift in Consumer Behavior

And this renewed wave of patriotism isn’t just cultural - it’s actually changing spending habits. A lot of Canadian consumers are actively choosing homegrown products over American brands, and this shift could have long-term effects on retail and manufacturing. Some suggest that this trend may boost demand for Canadian-made goods, particularly in industries vulnerable to U.S. tariffs. (If you haven’t voted in this week’s poll question, scroll back a bit and weigh in with your thoughts!)

Blind Patriotism or Justified Loyalty?

What does the “I Am Canadian” guy himself think? Jeff Douglas, the actor from the original ad, says he has mixed feelings about the commercial’s revival. He says he appreciates the sentiment but worries that "blind patriotism" could overshadow important economic and social issues. Supporting Canadian businesses is important, but as Canadians we have to be careful that we don’t lose sight of the big picture, which will always include global trade. We can all decide for ourselves where our ‘line in the sand’ is drawn.

Read the Full Story Here.

OTHER NEWS FROM THE PAST WEEK

Canadian Fixed-Rate Mortgages Falling on Lower Bond Yields
Falling bond yields are bringing down Canadian fixed-rate mortgages, offering relief to homeowners and buyers.

Experts Say Canada Can Counter Trump’s Trade Threats During Prorogation
Even with Parliament prorogued, experts argue that Canada has tools to push back against Trump’s aggressive trade threats. Strategic trade alliances and proactive economic measures could help mitigate potential U.S. tariffs.

Tech Giants to Spend Over $300 Billion on AI in 2025
The AI race is heating up, with major tech firms committing record investments in artificial intelligence. Companies like Google, Microsoft, and Amazon are ramping up spending to stay ahead, with a focus on infrastructure and generative AI.

Old Navy and Canadian Tire Deals Under Marketplace Investigation
A Marketplace investigation reveals hidden costs in major retailer discounts, with customers often paying more than advertised. Experts warn consumers to be cautious of deceptive pricing tactics, especially on online platforms.

Interest Rates Without the Fed? Hedge Fund Manager Warns of New Risks
A prominent hedge fund manager warns that global markets are increasingly dictating interest rates, reducing central banks’ influence. With bond markets pricing in rate cuts before the Fed acts, investors face new volatility risks.

Eagles’ Super Bowl Hopes Rest on Offensive Line
The Philadelphia Eagles’ chances in the Super Bowl depend on their offensive line’s performance. With key injuries affecting the team, analysts debate whether they can withstand the pressure against a dominant defensive front.

Time Magazine Features Elon Musk on Cover
Elon Musk lands on the cover of Time Magazine, sparking debate over his influence on AI, politics, and business. Some hail him as a visionary, while others criticize his growing control over multiple industries.

In 1996, Walmart tried to expand into Germany, thinking its famous low prices and customer service would win over shoppers. But there was just one problem - Germans found Walmart’s ultra-friendly approach deeply weird.

Employees were forced to start the day with group chants (which freaked people out), and mandatory smiling made customers uncomfortable. To make things worse, Walmart didn’t understand local shopping habits and lost millions trying to force American-style retail on German consumers.

After struggling for nearly a decade, they admitted defeat and pulled out in 2006 - one of the biggest flops in the company’s history!

Market Movers

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

TSX Returns | Week At-a-Glance

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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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