The key takeaway is that U.S. and European earnings came in well ahead of historical norms, led in part by strength in cyclical sectors, which should have a positive read through for Canadian Q1 earnings which begin this week with the banks. Canada’s April CPI was softer than expected; however, longer-term bond yields continue to move higher, with G7 rates at levels not seen since 2004, reinforcing a higher for longer backdrop. At the same time, geopolitical risks remain elevated, with ongoing disruption in the Strait of Hormuz.

We continue to focus on three core themes for 2026 and beyond: artificial intelligence as a durable growth driver, persistently sticky inflation supporting real assets, and rising importance of energy security, with conventional energy still playing a critical role. We highlighted several names aligned with these themes—which we own across client portfolios—including Amazon, where AWS growth has re-accelerated and free cash flow is expected to inflect higher; Canadian Natural Resources, a low-cost operator with strong reserves and a long dividend track record; and Brookfield Infrastructure Partners, which benefits from inflation-linked cash flows and consistent long-term growth.

While investor positioning recently shifted toward defensiveness during geopolitical stress, there are early signs of a gradual return in risk appetite, though rising long-term yields suggest markets are still adjusting.                                                                                                                                

If you would like to discuss how these themes apply to your portfolio, please do not hesitate to reach out.

Thank you, as always, for your continued trust.