Welcome to July 2025
North Coast of Italy
Welcome to July!
I just returned from our June Europe and Mediterranean trip. The above picture I took from the balcony of our cruise ship off the coast of Italy near Tuscany region. It was nice to get away to an area of the world without constant commentary of the Canada US tariff and trade negotiations. So, what did I miss in June? The US walking away from negotiations until Canada agreed not to implement the new digital tax. New threat of 35% tariff in August and an extension of the talks to the same date. More importantly, what does this mean and where is the economy going?
Current Economic Landscape
The short answer is the economy is in the doldrums. The housing market has been slowing down in terms of sales for a year and is probably at the bottom in Western Canada. Ontario is getting hit hard in the condo market and even single-family sales are at near term lows. Don’t expect any significant uptick in real estate for six months to a year. The tariffs will have to be worked out so companies can determine if they are still competitive under the new US trade rules. Once they determine that, there will be some winners and some losers. Some companies will close, others will prosper and some will move to the US.
Forward Looking
I believe Canada will come out stronger and more diversified. Inter-provincial trade will open up; new international markets will open creating more opportunities. The US market will shrink but become more profitable for Canadian companies and our governments will fast track new infrastructure projects getting our resources to new markets. There will be short term paid for a year or so and then steady growth.
More economic trends
The stock market is hitting record highs and the bond market is going south. The traditional reason for this is a risk on environment in the financial markets. Move out of bonds and into higher risk of stocks. The US big beautiful bill just passed and it has many treats for US companies. They are expected to pump money into the economy and encourage corporate spending – trickling down to higher consumer spending. The optimism in the equity markets is based on fundamentals and should continue. But the real estate market in both Canada and the US is low in sales and there will be price reductions until the market is more balanced. That will take a year.
Investment Advice
So, what does this mean for investing? Not much has changed. We still like mortgages and real estate-based investments because you have security for your investments. Stocks are for gambler and trades – not investors and we always recommend investing for the medium to long term – not high-risk short-term trading. Our MICs have a consistently better long-term return than the stock markets.
July Quiz
This month is a short quiz – only 3 questions. It is from Stanford University and the three questions are designed to determine whether you have the financial aptitude to handle your own financial investment decisions. If you want to talk about it let me know.
The Big Three Questions | Initiative for Financial Decision-Making
Financial Literacy Segment
Creating Margin in Your Finances
Living in the lower mainland I am sure you have all had the experience of driving on the freeway and despite paying attention, traffic stops on a dime in front of you and you have little time to react. That is when we may quickly move into the shoulder to avoid hitting the car in front of us. The highway shoulders are made for unplanned emergencies where a car may need more space than planned to navigate safely and in a similar way we need a safety margin in our finances.
In our personal finances, despite budgeting, investing and paying off debt, an unexpected job loss or financial loss can affect our budget and that is when we need a margin in our finances. In your financial plan I encourage you to budget for savings for your goals, investing and your monthly expense budget. Typically, you should allow 20% of your annual after-tax income to be for a safety margin. This can be part of your investment portfolio provided that it is considered separately from any time sensitive goals like buying real estate, a car or taking a vacation. The place to put your margin money a cashable GIC – we offer the best rates on cashable GICs and they are all government guaranteed.
Canadian Real Estate Most Affordable In Years, Still Near 90s Bubble Peak: RBC - Better Dwelling
Canadian-Economy | Financial Post
Canadian Economic News, June 2025 Edition
Trump intensifies trade war with threat of 30% tariffs on EU, Mexico | Reuters