February 2025

In Section I, Doug highlights that recent trade developments and news from the AI space are both consistent with a conservative investment stance. US final demand was robust in Q4, but the economy is still walking a tightrope as cracks in the labor market emerge. It is possible that an unorthodox set of policy prescriptions will cause US growth to inflect higher, but that is not yet our base case view. We recommend downgrading global growth stocks to underweight versus value. In Section II, Jonathan provides an update on Canada following strong performance from Canadian stocks last year. On a tactical basis, underweight Canada versus global ex-US on the expectation of tariffs targeting Canada and Mexico. Following a sell off, or if a trade war is avoided, investors should place Canadian stocks on upgrade watch with the goal of moving to a modest overweight versus global ex-US.