Investment opportunities in a changing environment

The Bank of Canada’s decision to cut rates in September was overdue, according to both Tal and Keaveney. Slower consumer spending, higher youth unemployment, and weaker housing markets in Ontario and B.C. signalled the need for action.

“We needed this cut a month ago, two months ago, so we’ll take it,” said Tal, who expects the central bank to move faster than markets anticipate. Keaveney agreed: “We think there will be more of that with a weakening economy and less upside risk to inflation.”

Lower rates, they noted, should give a boost to interest-sensitive sectors like housing, financials and utilities.

Global trade disputes continue to weigh on the economy. “Tariffs are here to stay,” said Tal, noting they act more as government revenue tools than true job protection. He also pointed out that China is “not blinking” in its standoff with the U.S., meaning uncertainty will linger.

For Canada, protections under the USMCA soften some of the impact, but key industries such as steel, autos, dairy and lumber remain vulnerable to targeted tariffs. Even so, Tal stressed these challenges aren’t enough to derail the Canadian economy.

“There is no such thing as the housing market in Canada. [It] depends where you live,” said Tal. Alberta and Eastern Canada are relatively strong, while Ontario and B.C. are under pressure.

Condo markets in particular are struggling. Pre-construction prices are down about 20% and new projects have largely stalled. But Tal expects this slowdown could set up a rebound. “Two years from now…there is no supply, the demand is there, [and] prices will go up significantly. If you are in the market for a condo, the next two years is your time,” he said.

In today’s environment of lower rates, uneven growth and shifting global dynamics, Keaveney emphasized that building a resilient portfolio means blending stability, selectivity and smart diversification. He offered specific insights on a few key asset classes.

With government bonds now offering yields between 2.5% and 3.5% across different maturities, fixed income can once again play a strong role as both portfolio stability and a source of returns. For investors used to ultra-low yields in recent years, this shift creates a meaningful opportunity.

Canadian markets have seen strength in materials, financials, and technology. In the U.S., however, some high-profile companies are “priced for perfection,” raising the risk of disappointment. Keaveney stressed the importance of diversification: spreading exposure across sectors, geographies and market caps rather than chasing a handful of winners.

Private debt has emerged as a viable option for investors looking for returns outside public markets. But Keaveney cautioned that illiquidity risks mean it should be a small slice of a well-diversified portfolio, and manager selection is key.

Tal pointed to Canada’s lagging productivity as a major concern. “The U.S. has the same issue, but their productivity is rising, ours falling, and the gap is widening,” he said. Investment in AI and software is growing rapidly in the U.S., but “in Canada, it’s basically zero.”

Keaveney added that AI will create winners and losers. “The companies and sectors that innovate better and execute better will be the winners,” he said. He also noted AI is well positioned to support a world focused on supply chain resilience and de-globalization.

Tal and Keaveney painted a picture of an economy under pressure but not without opportunity. Rate cuts should offer some relief to households and businesses, while trade disputes and regional housing differences will continue to shape Canada’s economic story.

For investors, balance across asset classes can help weather near-term uncertainty, while keeping an eye on long-term growth drivers like technology and innovation. As Keaveney reminded, “Diversification in an uncertain environment remains the key.”