Financials remain a pillar of strength, with capital markets banks like JPMorgan and Morgan Stanley making new highs. At the same time, commodities and energy are breaking out, reinforcing the need for inflation hedges and broadening global market leadership.
Key Points:
- Global Breadth Expanding Beyond the U.S.
For the first time in years, equity strength is broadening globally. The MSCI All World Index is up 13% over the last five months and has made new highs for the first time since 2007, marking the start of a new bull market. Europe, Japan, South Korea, and Latin America (notably Peru, up 35% in five months) are contributing meaningfully. This diversification is a positive shift after years of U.S. dominance. - U.S. Equity Leadership Remains but is Narrow
The S&P 500 continues to trend higher above all major moving averages. However, performance has been concentrated in fewer names. The equally weighted S&P 500 is only about 4% higher than where it was when tariff discussions began, showing that the average stock has lagged. For Canadian investors measuring in CAD, returns have been flat due to currency strength. - Precious Metals and Commodities in Early-Stage Bull Markets
Gold is up 82% since early 2024 and remains only 68% above its 200-day moving average — still muted compared to past bull market surges. Silver is up 60%, uranium producers (led by Cameco) are up 27% in September, and copper producers are making new highs for the first time in 13 years. The XME ETF (steel, metals, miners) is up 14% this month. These moves highlight commodities as a structural inflation hedge. - Energy Sector Breakout
After consolidating for nearly two years, energy appears ready to break higher. Positions have been added in Tamarack Valley, Suncor, and Headwater, alongside leaders like Imperial Oil. Strong cash flows and management commitments to dividend growth are providing compelling opportunities. Barometer has nearly doubled its energy weighting this month. - Financials Continue to Lead
Capital markets banks remain a pillar of leadership. Morgan Stanley and JPMorgan both made new highs and are among Barometer’s top 10 holdings. Canadian banks have also improved relative to U.S. peers, and global banks are trending higher. The Eurozone financials rally still looks early, and the group is expected to provide ongoing leadership.
- Inflation Pressures Persist; Bonds Weak
More than 70% of CPI components are rising above the Fed’s 2% target. Long-term bond yields remain sticky, and U.S. Treasuries have been in a five-year downtrend. This environment supports Barometer’s positioning away from the traditional 60/40 model. Inflation hedges like gold and dividend-growth equities are favored over bonds and bond-proxies such as utilities, pipelines, and REITs.