The Certainty of Uncertainty: Finding Clarity in the Chaos
In today’s volatile economic landscape, uncertainty has become the only certainty.At Marnoa Private Wealth Counsel, we provide private wealth management in Kitchener, Waterloo, and Cambridge. Our cross-border financial planning team specializes in helping professionals and families manage their wealth on both sides of the border.
- By Nadeem Kassam, CFA®, MBA | Chief Investment Strategist & Chief Operating Officer
- 7 Min Read
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The Certainty of Uncertainty: Finding Clarity in the Chaos
Investor sentiment has surged in 2025—but not in the way one might expect. Global equity markets have rallied despite a slew of economic and geopolitical uncertainties, leaving many to question whether the optimism is sustainable, or if it’s the calm before the storm.
Much of this volatility, however, stems from the newly elected Republican administration in the U.S., which has taken an aggressive and unpredictable approach to diplomacy. Policy shifts, executive orders, and aggressive rhetoric from President Donald J. Trump have injected fresh instability into global markets. Friday’s Oval Office confrontation with Ukrainian President Volodymyr Zelensky was no exception. Meanwhile, asset valuations remain at extremes—some markets remain elevated, while others are trading at deep discounts.
At the same time, the global economic picture continues to normalize (current expectations for 2025 GDP growth are ~3.0% year-over-year (YoY), vs. the long-term rate of 3.5% YoY), with inflationary pressures stabilizing towards historical norms, and central banks adjusting interest rates to reflect the changing economic landscape.
While lower policy rates were intended to fuel a recovery, in some cases, economic slowdowns have outpaced policy responses, leading to rising unemployment and increasing monetary intervention. Trade tensions, tariff threats, and shifting policy stances continue to weigh on investors, businesses, and governments alike.
Exhibit 1: Across Asset Classes & Time—The Only Constant is Uncertainty
Source: FactSet; As of February 28, 2025; Index set to 100 at the start. Subsequent values reflect percentage changes from the initial point.
The Art of the Deal: Trump’s High-Stakes Negotiation Strategy In Play
President Trump’s second-term approach to trade and diplomacy has followed a familiar pattern: making extreme initial demands, walking them back, and ultimately reshaping expectations to his advantage. This strategy has been on full display in recent weeks and will likely be his go-to strategy for the next four years.
“Aim high… and then I keep pushing and pushing… to get what I’m after.”
—Donald J. Trump, The Art of the Deal (1987)
For example, on February 1st, Trump signed three executive orders imposing sweeping tariffs:
25% on Canadian imports (10% on oil)
25% on Mexican goods
10% on Chinese imports
Canada responded swiftly with $155 billion in counter-tariffs, while Mexico and China signaled reciprocal measures. Within 48 hours, Trump agreed to a 30-day pause, only to impose a 25% tariff on steel and aluminum days later—without exemptions.
However, in an effort to mitigate the impact of tariffs and avoid escalating retaliatory measures, Canada supplemented its tariff response with actionable commitments. Addressing U.S. concerns over illegal immigration and drug smuggling, the federal government appointed Kevin Brosseau as Canada’s new Fentanyl Czar and announced plans to expand the $1.3 billion Border Plan Canada unveiled in December 2024, among other measures. While these steps align with key priorities of the new U.S. administration, tariffs could still proceed as planned on March 4th.
Why, you ask? As the saying goes, it’s difficult to teach a 78-year-old dog new tricks. Trump is likely to continue leveraging the hardball negotiation tactics he honed in business during his second term in the White House.
“The worst thing you can possibly do in a deal is seem desperate to make it. That makes the other guy smell blood, and then you’re dead… Leverage is having something the other guy wants. Or better yet, needs. In other words, you have to convince the other guy it’s in his interest to make the deal.”
—Donald J. Trump, The Art of the Deal (1987)
As if the trade war rhetoric weren’t enough, Trump has repeatedly suggested that Canada should become the 51st state of the U.S.—perhaps an example of his tendency to think unrealistically big. This has added another layer of unpredictability to an already fragile economic relationship, fueling policy uncertainty not just in North America, but globally.
“I like thinking big. I always have. To me it’s very simple: if you’re going to be thinking anyway, you might as well think big.”
—Donald J. Trump, The Art of the Deal (1987)
Exhibit 2: US Trade & Global Policy Uncertainty Remains High
Source: Bank of Canada; As of December 2024; Index: 2025 = 100, monthly data
Political Turmoil in Canada: Federal Gridlock & Ontario’s Election Add to Market Uncertainty
Just as trade tensions mount, domestic politics have thrown another wrench into Canada’s economic outlook. On January 6th, Prime Minister Justin Trudeau resigned, suspending all parliamentary activity until March 24, 2025. This decision coupled with an already challenging economic and geopolitical backdrop sent Canada’s economic uncertainty index soaring to its highest level on record, even surpassing levels seen in the early days of COVID-19.
Exhibit 3: Canada's Economic Policy Uncertainty Soars to New Highs
Source: Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; As of January 1, 2025;
Ontario’s Premier Doug Ford took a calculated risk by calling a snap election, aiming to secure his position ahead of what is expected to be a challenging four-year period negotiating with Donald Trump and his team.
The gamble paid off, as Ford was re-elected, becoming the first Ontario premier since the 1950s to win three successive majorities. While his victory ensures policy continuity, uncertainty persists around regulatory changes, infrastructure projects, and fiscal management. Businesses, investors, and consumers will closely monitor how his government steers the province through ongoing economic challenges.
At the same time, the Bank of Canada’s anticipated rate cuts were expected to drive economic recovery in 2025, but continued political and economic uncertainties could slow that momentum.
With external pressures from U.S. tariffs and shifting global trade dynamics, market volatility is unlikely to ease in the near term.
A Fragile Yet Improving Economic Backdrop
Despite the uncertainty, the Canadian economy entered 2025 on a gradually improving trajectory. Lower policy rates by the Bank of Canada (BoC) were beginning to flow through to the real economy, and consumption was getting a modest boost from strong real income growth.
On the employment front, early signs suggested the worst may be over. Hiring intentions have improved, and unemployment appears to have peaked as immigration levels normalize. Housing activity, previously buoyed by falling rates, has slowed somewhat amid rising trade tensions.
While Canadian equity markets have remained relatively resilient—supported by solid earnings—the Canadian dollar has not fared as well. The loonie continued on its weakening path, falling to US$0.68 following Trump’s tariff announcements but has since stabilized around US$0.69.
Exhibit 4: Complacency in Canadian Equities, But CAD Feeling the Pain
Source: FactSet; As of February 28, 2025; Index set to 100 at the start. Subsequent values reflect percentage changes from the initial point.
Looking ahead, we remain cautiously optimistic that Canada’s economic recovery will continue, assuming tariff threats remain a short-term negotiation tactic rather than a long-term policy shift. However, should 25% tariffs remain in place for an extended period, we expect the Bank of Canada to cut rates more aggressively to cushion the economic impact.
Final Thoughts: Embracing Opportunity in Uncertainty
While market conditions may shift from time to time, the principles of sound investing remain unchanged.
This includes:
- Embracing uncertainty as a core part of investing.
- Investing with conviction, backed by data and research.
- Letting patience, a long-term view, and discipline do the heavy lifting.
We at Marnoa follow a disciplined, long-term, and high-conviction approach to investing and portfolio construction for our clients. Outside of conducting extensive due diligence, we aim to diversify across asset classes within both the public and private markets.
We approach stock ownership as business owners and prefer to invest in high-quality businesses at reasonable prices.
We aim to seek out businesses with a strong and defensible competitive advantage, led by a team of seasoned managers who have a strong track record of execution and the proven ability to navigate through periods of uncertainty, along with the experience of making strong capital allocation decisions that are value-enhancing for shareholders.
Likewise, we aim to lend money through the purchase of publicly traded bonds with the same approach.
Across our private and alternative investments, we follow a similar approach to our public investments. The only difference is that we select managers who have a strong track record of allocating capital across all corners of the private markets toward high-quality assets.
We believe that following these rather simple principles of investing will enable us and our clients to navigate smoothly through periods of extreme uncertainty and come out even stronger on the other end.
Sincerely,
Nadeem Kassam, CFA, MBA
Chief Investment Strategist & Chief Operating Officer
Marnoa Private Wealth Counsel
Phone: 519-707-0048
Email: nadeem@marnoa.ca
Website: marnoa.ca