Launch Pad

Despite stocks rebounding on hopes of easing U.S.–Iran tensions yesterday, the VIX stayed elevated above 26, signaling traders may not be convinced it’s safe to buy the dip just yet. This reflects concern about further volatility and unresolved geopolitical risks. While the S&P 500 saw its best day in over a month (welcome news after weeks of red), participation was muted, technicals remain fragile, and investors are hesitant to fully re-risk portfolios given uncertainty around the duration and economic impact of the conflict. Market positioning suggests potential for a short-covering rally if tensions ease, but demand for broad upside exposure remains weak, with investors instead selectively targeting sectors while staying cautious on the overall index. This comes as ongoing macro risks (including energy-driven inflation, growth concerns, and financial stability issues) continue to cloud confidence in a sustained rebound. 

China’s long-running property downturn may be nearing its end, with some economists estimating the sector could stabilize by 2027 after a massive correction that has already seen investment fall about 40% from its 2021 peak. Early signs of stabilization are beginning to emerge, including moderating price declines and gains in some cities, which is crucial given real estate accounts for 60–70% of household wealth and heavily influences consumer confidence. Still, even as the downturn bottoms, a strong rebound is unlikely, as policymakers have deliberately managed the slowdown while leaning on exports to sustain growth, and may avoid large-scale stimulus unless conditions get worse. Structurally, China’s economy is shifting away from property (which once contributed up to 25% of GDP) and towards high-tech and green industries, which are expected to surpass housing in economic importance. 

Businesses in the U.S. are facing overlapping shocks from trade policy uncertainty and rising energy costs tied to the Iran war, creating a volatile backdrop for the economy. The U.S. continues to navigate the fallout from the Supreme Court overturning broad tariffs, including a potential $130 billion in refunds to companies and ongoing investigations into global trade practices, while  maintaining temporary tariffs of 10% (that could rise further). At the same time, the EU is moving towards a key vote on a U.S.-EU trade deal that would cap tariffs at 15%, with U.S. officials warning of higher tariffs if it fails, underscoring fragile relations between the trading partners. Still, the U.S. is looking to make some concessions like waiving shipping restrictions to ease energy costs, although that is expected to do very little as companies face a complex mix of policy shifts, legal challenges, and geopolitical risks. 

Brush off your resume, the Bank of Canada is hiring. Deputy governors Sharon Kozicki and Rhys Mendes are departing, with Kozicki set to retire, and Mendes leaving to move to Toronto in the coming months, prompting an internal search to fill both roles. The timing is interesting as inflation risks re-emerge alongside oil-driven volatility. The departures also follow last week’s BoC decision to hold policy rates steady at 2.25%. While the internal hiring process signals continuity under Tiff Macklem, it could leave a gap in institutional experience at a more complex point in the cycle. The base case remains steady policy direction, but with a higher likelihood of variability as new voices are integrated, reinforcing a data-dependent approach and a measured stance on duration. 

Another large alternative manager has capped redemptions in private credit, with Apollo Global Management limiting withdrawals on its $25 bln Apollo Debt Solutions fund to 5% after investors requested 11.2% of outstanding shares. The cap is consistent with standard liquidity limits in non-traded private credit vehicles and aligns with similar recent actions by peers including BlackRock and Morgan Stanley. According to Apollo, the fund’s net asset value declined modestly over the past quarter while returns remained slightly positive. The firm expects permitted redemptions to roughly offset inflows for the first quarter and has increased liquidity through expanded credit facilities. Apollo also indicated it intends to maintain the same cap next quarter as it balances the needs of investors seeking liquidity with those remaining invested. 

From coast to coast. A slowdown in U.S. tourism extends beyond Canadians, with international visitors also pulling back according to the Globe and Mail, creating an opening for Canada to attract more global travellers. Canada has an opportunity to draw visitors across a wide range of experiences from coast to coast and contribute to economic growth, and why not… there is no shortage of beautiful options to consider! In BC, the Grouse Grind offers a steep climb overlooking Vancouver, while in Alberta, Lake Louise delivers postcard views of turquoise water set against the Rockies. For a “livelier” atmosphere, the Calgary Stampede brings a rodeo and summer festival experience to the city. In Ontario, Niagara Falls remains a classic draw, complemented by Muskoka’s lakeside cottages that range from rustic to more refined stays. In Quebec, Old Québec and Montreal offer a step back in time, combining a strong food scene with cobblestone streets, while PEI rounds it out with coastal landscapes, beaches, and lobster. The Canada tourism appeal is clear but translating that into sustained economic growth will require more coordinated investment from both government and industry. If you have a favourite local spot or hidden gem, please share them as we’re always looking to add to the list. 

Copper is continuing its downward trajectory after a brief bounce in the previous session, as global inflation and growth concerns triggered by the Middle East war weighed on the metals complex. Most industrial metals fell, following a jump on Monday. Hopes of a de-escalation were fading on Tuesday after the Wall Street Journal reported that U.S. allies in the Persian Gulf are inching toward joining the fray. War-driven disruptions to the region’s energy production and trade have pushed oil prices higher, threatening to hurt economic activity worldwide while fueling inflation that could force central banks to take a more hawkish stance on interest rates. Copper has fallen -10% on the LME this month, and Chinese inventories in have declined sharply over the past week. However, downside in prices will be limited by copper’s importance in the global energy transition and higher demand from Chinese fabricators, said Fan Rui, an analyst with Guoyuan Futures Co.