We continue to see a constructive long-term market backdrop, and the evidence continues to support the view that this structural bull market remains intact. Canadian breadth has been encouraging, short-term U.S. breadth remains supportive, credit spreads continue to reflect a healthy environment, and we are still finding attractive opportunities across the market. As a result, we remain focused on high-quality ideas and on putting capital to work where the trends and fundamentals continue to improve.
We are also watching the upcoming U.S. IPO calendar with interest, as it has the potential to become an important market catalyst in the second half of the year. Many of the expected deals are tied to AI-related themes, and SpaceX stands out because of its potential size, valuation, and likely market impact. More broadly, this speaks to the depth of innovation still coming to market and the range of new opportunities that could emerge for investors. On the Canadian bank side, we continue to like the setup for Q2 earnings, supported by capital markets activity and solid year-over-year growth. We remain encouraged by the opportunities we are seeing across the group.
Key Takeaways:
We remain in a structural bull market
- The bull market is mature, but we continue to take our cues from the market, and the data is not yet signaling a major change in trend.
We will stay disciplined while breadth remains mixed
- Canadian breadth and short-term U.S. breadth are positive, while longer-term U.S. and global breadth are less clear. As a result, we will continue to raise the bar for new securities and be more critical of existing positions.
Credit markets remain healthy
- Credit spreads are at low levels, and both investment-grade and high-yield companies continue to have access to capital. We are not seeing signs of stress in credit.
We will watch the Fed transition closely
- Kevin Warsh’s approach as Fed chair could matter for markets, particularly around policy language, inflation expectations, and how the Fed frames the potential disinflationary impact of AI-driven productivity.
The U.S. IPO calendar could be an important market factor through the second half of the year
- A large slate of expected IPOs, many of them AI-adjacent, could influence liquidity, index flows, and volatility. We will be watching SpaceX closely given its expected valuation, limited initial float, and accelerated index inclusion schedule.
Canadian bank earnings will be a key near-term focus
- We expect another capital markets-driven quarter, while domestic loan growth remains muted and U.S. loan growth shows signs of improvement for banks with greater U.S. exposure, including BMO and TD. We will be focused on credit quality, management commentary, margins, and valuations across the group, with continued preference toward Royal Bank, National Bank, BMO, and CIBC.