Thinking of Buying Foreign Stocks? Here’s How Canadians Can Do It

Last week I talked about Berkshire Hathaway’s (NYSE: BRK.B) investment in five big Japanese trading companies. Doing deep due diligence on them turned out to be too complicated for me – but that doesn’t mean you can’t explore investing in them yourself.

If you’re thinking about picking up shares of one of the Japanese companies Buffett invested in – nice! 😊 But you’ll quickly notice something odd: they’re listed on the Tokyo Stock Exchange (TSE), and also on something called the OTC Markets (OTCM) in the US. (For this section, TSE refers to the Tokyo Stock Exchange – not Toronto.)

So, what’s the difference? And what makes the most sense for investors like us in Canada (or the US)?

Let’s walk through the pros and cons of buying shares directly from a company’s home stock exchange vs. buying through the OTCM. I’ll use these Japanese firms as examples, but the setup is similar for many foreign companies also listed on the OTC Markets.

Option 1: Tokyo Stock Exchange (TSE)

This is where the actual, original shares are traded – in Japanese yen.

Pros:

• You’re getting the actual shares.
• Often better liquidity and tighter pricing.
• Full shareholder rights (voting, etc.).

Cons:

• Not all brokers let you trade on foreign exchanges.
• You’ll need to convert your CAD or USD to yen.
• Tokyo market hours are overnight for us in North America.

Unless you already have international trading access set up, this route can be a bit of a hassle. If you’re planning to go this way, you’ll need a broker that supports foreign exchange access. A lot of investors I follow use and recommend Interactive Brokers (NASD: IBKR). I recently became a (very small) shareholder myself 😊, and when I eventually buy a foreign-listed company, I plan to do it through IBKR.

Option 2: OTC Markets (OTCM)

This is where you’ll find ADRs – American Depositary Receipts – which are basically certificates that represent shares of foreign companies. They trade in US dollars and are available through most Canadian and US brokerages.

Think of them as a convenient way for North American investors to own international stocks without dealing with foreign exchanges or currencies. (For more info, check out my write up on ADRs.

For example:

• ITOCY = Itochu
• MSBHY = Mitsubishi
• MARUY = Marubeni

Pros:

• Easy to buy in registered accounts like RRSPs, TFSAs, or regular unregistered brokerage accounts.
• No need to convert currency – they trade in USD.
• Regular North American trading hours.

Cons:

• Sometimes lower trading volume.
• Slightly wider price spreads than on the Tokyo Exchange.
• These aren’t the “real” shares, just economic equivalents (but for most of us, that’s totally fine).

So, what’s the best option?

For most Canadian investors, and probably American investors, buying the OTC shares is the way to go. They’re simple to access, no currency conversion is needed, and they’re available through most online brokers like TD Direct Investing, Wealthsimple, or Questrade.

However, many serious retail investors prefer direct access to foreign exchanges like the Tokyo Stock Exchange – and use a platform like Interactive Brokers to do so. If you already use IBKR, you probably know about its global reach and low fees. But if you’re considering it, IBKR lets you buy the actual shares instead of ADRs – often with better pricing and lower currency conversion costs compared to big bank brokerages. Plus, it offers access to dozens of international markets, making it a great option if you’re planning to invest in foreign-listed companies more regularly.

With that foreign investing detour complete, 😊 let’s take a look at this past week’s market action and what moved the markets, and how it affected the portfolios.

Items that may only interest or educate me ….

The Bromance Is Over, Triple whammy, Canadian Economic news, US Economic news, ….

The Bromance Is Over

It was only a matter of time. The once-curious bromance between President Trump and his so-called “First Buddy” Elon Musk has spectacularly imploded, ending in a very public and very messy feud. Here’s a quick look at how it all went down.

A New Alliance

Though initially wary of Trump in 2016, Musk joined his economic advisory councils – only to walk away in 2017 after the US ditched the Paris climate agreement. But by the 2024 campaign, the two had reunited. Musk donated over US$200 million and became a key advisor after Trump’s re-election, landing a figurehead role as head of the Department of Government Efficiency (DOGE).

Trump Strikes Back

In 2025, cracks formed when Musk blasted Trump’s flagship spending bill – the so-called “Big Beautiful Bill” – as a “disgusting abomination,” distancing himself from its creation. Trump hit back with threats to cancel federal contracts with Tesla (NASD: TSLA) and SpaceX. Musk countered by threatening to decommission SpaceX’s Dragon spacecraft, jeopardizing NASA operations.

Things got uglier when Musk publicly accused Trump of showing up in Jeffrey Epstein’s files and called for his impeachment. Tesla shares tanked, wiping out $150 billion in value, and regulators began circling.

The Fallout Awakens

This once-unlikely alliance has now gone supernova. Musk is floating the idea of launching a new centrist political party and says he’ll scale back his political donations across the board. The clash has cast a shadow over US space ambitions and strained major public-private partnerships.

In the end, it’s a dramatic reminder of how quickly power alliances can shift – especially when billionaires and presidents mix politics with personal ego.

Triple Whammy

Once again, President Trump rattled his tariff sabre heading into the weekend. After markets had closed on May 30, he announced plans to double tariffs on imported steel and aluminum to 50%, effective June 4.

A move like that would send shockwaves through supply chains and pricing. With around 23% of steel used in the US coming from abroad, the impact would likely be felt across a wide range of goods – from cars and appliances to construction materials and heavy machinery. Higher input costs could squeeze manufacturers and ultimately hit consumers in the form of higher prices, adding more fuel to the inflation fire.

For foreign steel producers, the tariff hike would act like a wall – making their products far more expensive and less competitive in the US market. That could lead to lost sales, reduced production, and even layoffs in key exporting countries.

Canada, in particular, would feel the pinch. As the largest single supplier of steel to the US, Canada accounted for about 23% of total US steel imports in 2024. And with nearly 90% of Canadian steel exports heading south of the border, this trade link is critical for Canadian steelmakers.

So, while the goal of higher tariffs may be to boost domestic steel production, the ripple effects could be far-reaching. US manufacturers would face steeper costs, consumers would likely pay more, and key trading partners like Canada could take a major hit. A triple whammy: rising costs for American producers, pricier goods for American consumers, and economic pain for Canada.

Canadian Economic News

This past week’s key economic data that the Bank of Canada (BoC) considers when deciding whether to raise or lower the interest rate.

Bank of Canada interest rate decision

This week, the BoC held its key interest rate steady at 2.75%, keeping it unchanged for the second meeting in a row. Earlier this year, the Bank had made two quarter-point cuts (in January and March) to support the economy, but it’s now taking a more cautious approach as economic uncertainty grows.

The decision to pause further cuts comes as core inflation shows signs of picking back up, and trade tensions – especially with the US – create added risk. Governor Tiff Macklem highlighted that the outlook is still uncertain, with tariffs and shifting global trade patterns weighing on the Bank’s thinking.

While there are signs that the Canadian economy is feeling some strain – like slower job growth and weaker consumer spending – the Bank’s main focus remains on keeping inflation under control. More rate cuts later this year are still on the table, but only if inflation cools and the economy stays on track. For now, the message is one of patience and caution.

Labour Force Survey

Canada’s job market showed only a modest rebound in May, offering little relief for an economy feeling the strain of rising trade tensions. Statistics Canada’s latest Labour Force Survey (LFS) reported 8,800 new jobs last month – essentially flat, after an equally small gain of 7,400 in April. That leaves year-over-year job growth at just 1.4%.

Meanwhile, the unemployment rate inched up for the third straight month, reaching 7% – its highest level since September 2016 (setting aside the COVID-era spikes of 2020 and 2021). The steady climb reflects not just the impact of US tariffs and trade uncertainty on Canada’s export-driven economy, but also the effect of a growing population. More people are entering the labour force, but the pace of job creation isn’t keeping up.

Wage growth, meanwhile, is going nowhere fast. Average hourly earnings crept up just a penny to $36.14, keeping the annual growth rate at 3.4%.

This latest data suggests Canada’s labour market is holding up – but only just. With trade headwinds and softening demand hitting key industries like manufacturing, that rising unemployment rate is something us investors will want to keep an eye on. If job growth keeps stalling, it could start to weigh on consumer spending and the broader economy – and that’s something the BoC will be watching closely as it decides whether to cut, hold, or raise interest rates in the months ahead.

Canadian market volatility

Canada’s market mood ring – the S&P/TSX 60 Volatility Index (VIXC) – started the week at 10.72 and hovered mostly in the 10.00 to 10.50 range, helped by strength in oil and uranium prices boosting the TSX. Volatility briefly ticked higher, climbing above 11 late in the week after Canada’s trade deficit hit a record high due to new US tariffs on Canadian goods. (The US is Canada’s largest export market.) But investors remained calm, and the VIXC eased back down to 10.42 by Friday’s close.

For those unfamiliar with the VIXC, it’s essentially Canada’s version of a fear gauge. Readings under 10 show strong investor confidence, 10–20 is business as usual, and anything above 20 suggests investors are getting uneasy.

US Economic News

This past week’s key data points that the Federal Reserve (Fed) considers when deciding whether to raise or lower the interest rate.

Labour data

The latest updates from the Job Openings and Labor Turnover Survey (JOLTS), the ADP Employment Report, and the Employment Situation Summary (ESS) offer a snapshot of the US labour market –showing resilience, but with some stress cracks starting to appear.

JOLTS

The latest JOLTS report showed job openings rising to 7.4 million in April – up from 7.2 million in March and well above expectations. Even with all the economic uncertainty, employers are still hiring.

Professional and business services, along with healthcare, led the way. But more tariff-sensitive industries like manufacturing and construction saw a bit of a pullback. So, while the labour market is gradually cooling, it’s not breaking.

That’s good news for the Fed. The economy is slowing just enough to keep inflation in check, but not so much that the Fed needs to slam the brakes harder. For us investors, it helps keep the door open for possible rate cuts later this year – without stoking fresh inflation fears.

ADP

The ADP report for May showed US private-sector employers adding just 37,000 jobs – well below expectations and the weakest gain since March 2023. It’s not a full-on slump, but businesses clearly are growing more cautious.

Tariffs and high interest rates are likely slowing hiring, especially in sectors like manufacturing and construction. Companies aren’t laying people off en masse – but they’re definitely putting expansion plans on hold.

ESS

In May, the American economy added 139,000 jobs – slightly better than expected, but a slowdown from April’s 147,000. The unemployment rate held steady at 4.2% for the third straight month, still near historic lows.

Wages edged up again – with average hourly earnings rising 3.9% year-over-year, a touch higher than expected. So, while the labour market is cooling, inflation pressures haven’t fully gone away.

What this means for us investors

The US job market is holding up – but the cracks are starting to show. The ESS report showed steady job gains, but the ADP data pointed to a big slowdown in private hiring. Fewer people are looking for work, and workers seem less confident about switching jobs – both signs that the labour market is cooling.

For us investors, this matters. A weaker job market could weigh on consumer spending, which powers the US economy. But with wages still rising and unemployment low, the Fed may not be in a rush to cut rates just yet.

In short, the job market isn’t falling apart – but it is flashing some warning lights.

American market volatility

Wall Street’s “fear gauge,” the CBOE Volatility Index (VIX), kicked off the trading week near the top of its usual 12–20 range at 19.81. Early in the week, it briefly spiked to 20.45 after tensions flared between the US and China, with both sides accusing each other of violating terms of the trade war truce. Despite the headlines, markets quickly shook off the jitters. The VIX slid back below 20 and drifted lower as the week progressed, hitting a low of 16.58 before ticking back up slightly to close at 16.77. That’s the lowest the VIX has been since this past February.

The move suggests that while trade concerns raised the anxiety level, investors overall remained relatively calm – especially with US economic data pointing to softening inflation and a slightly cooling labour market, which could keep the Fed on track for potential rate cuts later this year.

For anyone new to the VIX: it’s basically Wall Street’s stress meter. When investors grow uneasy, they tend to pull back from riskier assets, such as technology stocks, which can lead to sharper price swings and more unpredictable markets. That’s when the VIX tends to rise – capturing the surge in volatility and fear. A reading between 12 and 20 signals business as usual, while anything above 20 suggests growing anxiety. The higher it climbs, the more turbulence investors are expecting.

Weekly Market and Portfolio Review

For the week, the TSX (SPTSX) grew 1.0%, the S&P 500 (SPX) rose 1.5%, the DJIA (INDU) added 1.2% and the Nasdaq (CCMP) advanced 2.2%.

Another solid week in the markets – but not without bumps along the way. While gains weren’t as strong as the previous week, the major North American indexes – the Toronto Stock Exchange Composite Index (TSX), the S&P 500 (S&P), the Dow Jones Industrial Average (DJIA), and the Nasdaq Composite (Nasdaq) – all posted a second straight week of gains. The Nasdaq clawed back into positive territory year-to-date for the first time since February, powered by gains in the Magnificent 7 companies. Nvidia had a standout week, overtaking Microsoft as the world’s most valuable company at US$3.45 trillion. Tesla tumbled 14% after CEO Elon Musk’s public feud with President Trump (see earlier in this post), only to recover some of the loss as ‘buy the dip’ investors swooped in to seize the opportunity.

After two positive weeks, the VIX dropped to its lowest level since February 2025, signaling reduced investor anxiety and improved market sentiment – helped by Friday’s solid US jobs report. A lower VIX often sets the stage for stronger equities, and that was on display late in the week as the S&P cracked 6,000 – its highest since February 2025.

Trade tensions once again stole the spotlight. The week opened with President Trump announcing that tariffs on all foreign steel and aluminum imports would double to 50% starting June 4. The US then accused China of violating the trade truce by “slow walking” rare earth mineral exports – a move seen as a threat to critical US industries. China fired back, accusing the US of breaking the truce by restricting sales of AI chips and advanced chip design software. The tit-for-tat accusations rattled investors and raised fears of a deeper trade conflict. After a direct call between the two leaders, Trump claimed the conversation “resulted in a positive conclusion for both countries.” By week’s end, Trump announced the US would begin high-level trade talks with China in London – giving investors a glimmer of hope.

On the economic front, US jobless claims rose to an eight-month high and hiring slowed, but the number of new jobs still came in better than expected. The weakness, partly driven by tariff-related uncertainty, is starting to weigh on the economy. However, the better-than-expected jobs data gives the Fed room to stay patient on rate cuts.

Meanwhile, the Organization for Economic Co-operation and Development (OECD) warned of a significant global slowdown, citing the surge in protectionism and its ripple effects on inflation and supply chains.

In Canada, the BoC held rates at 2.75%, citing uncertainty from new US tariffs. Ottawa is holding off on retaliating for now, but the impact is clear – Canada’s trade deficit jumped to a record C$7.1 billion in April as US demand for Canadian goods plunged. Even so, the TSX hit back-to-back record highs early in the week and closed the week with a new record high, boosted by strong energy (oil) and basic materials (gold and other metals) stocks.

Oil had its own rollercoaster. Prices spiked early on due to Alberta wildfires and a smaller-than-expected OPEC+ production boost, then dipped midweek on rising US gasoline and diesel inventories, before rebounding again as tensions with Iran raised fears of supply disruptions. The swings pushed energy stocks around but didn’t derail the broader market – just added more noise to an already eventful week.

After a second straight week of gains for the broader markets, it’s time to check in on how my three portfolios performed – and this week, there was plenty to smile about.

The three portfolios rode the tailwinds of another good week in the markets, with all ending higher than the Nasdaq, the best performing index, as you can see in the chart below. But it wasn’t until Friday that Portfolio 3 finally joined the other two in positive territory – better late than never. 😊

Portfolio 1 was the top performer this week, powered by the resurgence of the Magnificent 7 stocks in the broader market. The portfolio gained 2.7% on the week, with 77% of its holdings in the green. Leading the charge were Kraken Robotics (TSE: PNG), up 20%, Navitas Semiconductor (NASD: NVTS), up 17%, and Hammond Power Solutions (TSE: HPS.A), up 11%. CrowdStrike (NASD: CRWD) hit an all-time high during the week before pulling back after providing a softer-than-expected second quarter outlook, as it continues to manage the fallout from last summer’s software upgrade that caused a global network outage.

Portfolio 2 with its more conservative profile surprised with a 2.5% gain – second best among the three portfolios, just a hair ahead of Portfolio 3. This time, 81% of its holdings posted weekly gains. Standouts included MongoDB (NASD: MDB), up 16%, Guardant Health (NASD: GH), up 15%, and Hammond Power Solutions, again up 11%.

Portfolio 3 spent most of the week in the red but staged a strong comeback on Friday, finishing up 2.4%. Overall, 71% of its holdings ended the week higher, though this portfolio didn’t feature any big individual winners this time around.

I’ll gladly take another week of green across the board. With markets showing some upward momentum again, here’s hoping those gains continue and help me keep building my wealth through investing. 😊

Companies on the Radar

Last week, I had my eye on the five Japanese trading houses that Warren Buffett’s Berkshire Hathaway has invested in – Itochu, Marubeni, Mitsubishi, Mitsui, and Sumitomo. But this week, I decided to part ways with them. As interesting as they are, they fall outside my circle of competence, and digging into the details of foreign companies proved tougher than expected. With those five off the list, my radar now includes these four holdovers from last week:

• Unity Bancorp (NASD: UNTY) is a small-cap regional bank based in the US, serving parts of New Jersey and Pennsylvania. It’s showing strong fundamentals, including solid revenue growth, efficient capital use, and double-digit earnings expansion. Earnings per share is expected to climb nearly 13% this year – matching industry averages – and it has a steady history of dividend increases.
• TerraVest Industries (TSE: TVK) is a Canadian mid-cap industrial company that manufactures equipment for the energy, agriculture, and transportation sectors across North America. Its product lineup includes propane tanks, specialized tanks used to store and transport ammonia gas commonly used as fertilizer (anhydrous ammonia vessels), natural gas liquids transport vehicles, and a range of energy processing equipment.
• Amphenol Corporation (NYSE: APH), a global giant in the connector and cable business, supporting a wide range of industries with electrical, electronic, and fiber optic solutions.
• Secure Energy Services (TSE: SES) is a Canadian mid-cap industrial company focused on waste management and energy infrastructure. They serve clients across North America with recycling, disposal, and environmental solutions – a solid pick in the sustainability and infrastructure space.

As always, these are not buy recommendations. Make sure to do your own research and choose investments that fit your personal financial goals. That goes double when it comes to foreign-listed companies. 😊

The Radar Check was last updated June 6, 2025.

Portfolio Update

Portfolio 1

Sold: Andlauer Healthcare Group Company (TSE: AND) I added Andlauer to the portfolio back in February 2020 as part of a strategy to diversify with a stable Canadian company that offered both growth potential and a modest dividend. Fast forward to today: the stock has more than doubled in value – and it’s now being acquired by United Parcel Service (NYSE: UPS).

UPS is buying Andlauer in an all-cash deal worth around C$ 2.2 billion, offering shareholders $55.00 per share, which is a 31% premium to where the stock was trading before the news broke.

Rather than wait several months for the deal to close, I decided to sell the shares now and lock in the gain. The upside from here is minimal – it’s unlikely another buyer will outbid UPS – and the share price will probably hover near the $55 mark until the transaction is finalized. Selling now frees up cash I can put to work in other opportunities, where I might even outperform the last few cents I’d get by holding out.

All in all, Andlauer was a strong performer, more than doubling during its time in the portfolio. That’s a big win – and a great reminder of what can happen when you invest instead of leaving cash to sit in a savings account earning 1% or 2%. Now I get to redeploy that cash and continue building my wealth through investing. 😊

That’s a wrap for this week, thanks for reading – may your portfolio stay green and your dividends steady. See you next time!

Buffett Goes to Japan: Why Berkshire Bought Into 5 Giant Trading Companies

A few years back, Warren Buffett made headlines – not by adding more Apple (NASD: AAPL) or Coca-Cola (NYSE: KO) to Berkshire Hathaway’s (NYSE: BRK.B) portfolio, but by putting billions into five Japanese companies most people outside Japan had barely heard of. These weren’t flashy tech stocks or hot new startups. They were century-old industrial titans known in Japan as sōgō shōsha – general trading companies that do a little bit of everything.

From metals and energy to food, finance, and even convenience stores, these trading houses are quietly woven into the fabric of the global economy. And Buffett, always a fan of strong cash flow and solid management, saw something special in them.

Let’s take a closer look at the five companies Berkshire invested in – and what made them attractive to Buffet.

Heads up: When you see TSE in this article, we’re talking about the Tokyo Stock Exchange, not the Toronto Stock Exchange. Same abbreviation, different continent. Since this article is all about Japanese companies, TSE = Tokyo here.

The second ticker listed for each company, the ones starting with the OTCM prefix, refers to their American Depositary Receipts (ADRs). These are traded over-the-counter in the US, making them accessible to North American investors without having to buy directly on the Tokyo Stock Exchange. While ADRs often represent a fraction of a share and may have lower trading volume than local listings, they’re still a practical way to gain exposure to these Japanese conglomerates.

The Big Five: Japan’s Trading Giants

Itochu Corporation (TSE: 8001 | OTCM: ITOCY)

Itochu is the most consumer-focused of the bunch, with business lines in food, fashion, tech, and finance. It also owns a major stake in FamilyMart, one of Japan’s largest convenience store chains.

Why Itochu: Highly efficient, well-managed, and super friendly to shareholders. A steady cash generator with global reach.

Marubeni Corporation (TSE: 8002 | OTCM: MARUY)

Marubeni is involved in everything from power plants and food trading to infrastructure and chemicals. It’s less of a household name, but its global reach is impressive.

Why Marubeni: It was undervalued and improving its profitability – an under-the-radar value play.

Mitsubishi Corporation (TSE: 8058 | OTCM: MSBHF)

The biggest and best-known of the five. Mitsubishi handles liquid natural gas (LNG), metals, finance, real estate, and much more. Think of it as Japan’s mega-conglomerate.

Why Mitsubishi: Diversified, stable, and built for the long haul. A blue-chip within a blue-chip.

Mitsui & Co., Ltd. (TSE: 8031 | OTCM: MITSY)

Mitsui has a global footprint in energy, mining, and chemicals, with projects ranging from Australian LNG terminals to US healthcare services.

Why Mitsui: Consistent long-term growth, strong cash flow, and a firm grip on global operations.

Sumitomo Corporation (TSE: 8053 | OTCM: SSUMY)

Rooted in steel and machinery, Sumitomo has been expanding into renewables and real estate. It’s evolving while staying true to its industrial roots.

Why Sumitomo: Conservative, reliable, and positioned to deliver long-term returns.

Why Buffett Looked Beyond North America

Buffett usually sticks close to home, so this move to Japan raised eyebrows. But it followed his timeless strategy: find great businesses at fair prices, no matter where they are. Here’s what made these companies so appealing:

• Low valuations + solid dividends: These firms were trading at low price-to-earnings ratios and offering healthy dividend yields – classic Buffett bait.
• Global diversification: Each company operates worldwide, giving Berkshire exposure to commodities, infrastructure, and emerging markets.
• Strong leadership: Buffett praised their management teams for being smart with capital and running tight ships.
• Currency edge: Berkshire financed the purchases in yen, providing a natural hedge against the US dollar – and likely benefiting from Japan’s low interest rates.
• Shareholder-friendly reforms: Japanese companies have been shifting toward better returns for investors, including buybacks – something Buffett loves.
• Long-term play: Buffett has said he plans to hold these positions indefinitely and may even boost his stake.

The Big Picture

This wasn’t a pivot – it was Buffett doing what he’s always done: buying great businesses with solid fundamentals at reasonable prices. Only this time, he found them in Japan, not America.

For us everyday investors, it’s a great reminder that opportunity isn’t limited to North America. There’s a whole world of potential out there—and sometimes, the most dependable businesses are quietly thriving halfway around the globe.

Now that we’ve looked at potential investments halfway across the globe, let’s turn our attention back home to what moved the markets this past week.

Items that may only interest or educate me ….

Canadian Economic news, US Economic news

Canadian Economic news

This past week’s key economic data that the Bank of Canada (BoC) considers when deciding whether to raise or lower the interest rate.

Gross Domestic Product (GDP)

Canada’s economy returned to modest growth in March, expanding by 0.1% after slipping 0.2% in February, according to Statistics Canada. The bounce was supported by gains across both goods-producing and services-producing industries – an encouraging sign of broad-based resilience.

The biggest lift came from the mining, quarrying, and oil and gas sector, which jumped 2.2% on the month. On the flip side, the management of companies and enterprises category saw the steepest drop, falling 4.4%.

Over the past year, GDP grew 1.7% – a touch higher than the 1.6% year-over-year growth seen in February. The energy sector once again led the pack with a 4.4% annual increase, while the management sector plunged 30.3% compared to a year ago.

Looking ahead, early estimates suggest GDP grew another 0.1% in April, pointing to a slow but steady economic expansion heading into the second quarter.

On a quarterly basis, Canada’s economy grew at an annualized rate of 2.2% in the first quarter of 2025, beating expectations of 1.7%. Quarterly GDP rose 0.5%, matching the previous quarter’s pace.

Much of that growth came from a 1.6% jump in goods exports – especially in passenger vehicles and industrial machinery – as businesses rushed to ship products ahead of expected US tariffs. That urgency also drove up imports, creating a temporary surge in trade activity.

This “rush to ship” dynamic helped inflate GDP, but it wasn’t driven by long-term demand. Instead, it reflected timing shifts and inventory stockpiling that are unlikely to repeat in the second quarter.

With the tariff-related boost now fading, many analysts expect growth to cool, with forecasts for second-quarter GDP hovering around 0.5% annualized.

Canadian market volatility

Canada’s market mood ring – the S&P/TSX 60 Volatility Index (VIXC) – started the week at 14.73 and drifted lower as optimism grew. By week’s end, it had settled at 10.41. Hopes that key trade deals would come through, along with strong earnings from Canada’s big six banks, helped cool investor nerves and bring the VIXC down.

For those unfamiliar with the VIXC, it’s essentially Canada’s version of a fear gauge. Readings under 10 show strong investor confidence, 10–20 is business as usual, and anything above 20 suggests investors are getting uneasy.

US Economic news

This past week’s key data points that the Federal Reserve (Fed) considers when deciding whether to raise or lower the interest rate.

Federal Open Market Committee (FOMC) minutes

This week, the Fed released minutes from its May 6–7 FOMC meeting, providing a clearer look at how officials were thinking about interest rates and the broader economy.

As expected, the Fed held its key rate steady at 4.25%–4.50% while it continues to monitor inflation. What stood out, though, was the decision to slow the pace of balance sheet reduction. In simple terms, the Fed is easing up on how much money it’s pulling out of the financial system – something that could help stabilize markets and reduce the risk of sudden shocks. (Mind you, some of those shocks do present “buying the dip” opportunities. 😊)

The overall tone from Fed Chair Jerome Powell and others was cautious. Officials acknowledged they could face “difficult trade-offs” ahead if inflation stays high while unemployment rises. For now, they’re sticking to a “wait-and-see” strategy, holding off on any major policy changes. But with inflation still running above the Fed’s 2% target – and trade tariffs adding extra pressure – markets are already speculating about a potential rate cut later this year.

For us investors, the key takeaway is that Fed decisions ripple through the economy. If rates stay elevated, borrowing remains expensive and growth could slow. But if the Fed signals future cuts, it could encourage more investment and spending – potentially giving markets a lift. A cut sooner rather than later wouldn’t hurt. 😊

Consumer Confidence Index (CCI)

American consumers are feeling a lot better about where the economy is headed, and that positive vibe should give markets a lift. The Conference Board’s CCI bounced back in May, rising to 98.0 from 85.7 in April. That was more than a simple rebound, it’s the first increase in five months and the biggest monthly jump in four years. Analysts were expecting a more modest 86.5, so this beat was a pleasant surprise.

The Present Situation Index, which reflects how people feel about current business and job conditions, inched up to 135.9 from 131.1, a sign that many still see the economy as holding steady. But the biggest increase was in the Expectations Index, which measures how people feel about the next six months. It surged to 72.8 from 54.4, a massive 17.4-point leap, and the biggest monthly gain since 2011. While it’s still below the key 80 level that typically signals recession risk, it’s a big step in the right direction.

The increase in optimism was sparked by relief over easing trade tensions. The May 12 pause on the US-China trade dispute paused many of the tariffs each side had levied on the other, reducing global uncertainty and boosting confidence that a trade deal could get done. Encouragingly, this lift in confidence was broad-based – cutting across age groups and political lines.

Good news for us investors: 44% of consumers now expect stock prices to rise over the next 12 months. That growing confidence could lead to stronger spending and investing ahead – positive signs for both the economy and the markets.

Gross Domestic Product (GDP)

The Commerce Department’s Bureau of Economic Analysis released its second estimate of first-quarter GDP. The US economy shrank by 0.2% in the first quarter, and tariffs played a big role in that decline. Businesses rushed to import goods ahead of impending tariffs, causing a massive surge in imports – the biggest trade-related drag on GDP in history. Because imports are subtracted from growth, this made the economy look weaker than it actually was.

At the same time, companies stockpiled inventory to prepare for higher costs and possible supply chain disruptions, which boosted inventory accumulation in the GDP report. While that helped offset some of the decline, it also means future demand might slow as businesses work through excess inventory.

The White House has since delayed or canceled some of the planned tariffs, easing fears of an immediate recession. But economists are watching closely to see how these trade policies will affect inflation, consumer spending, and overall economic growth in the coming months.

Compared to the previous quarter, the drop in GDP in the first quarter primarily reflected an increase in imports, a deceleration in consumer spending, and a downturn in government spending that were partly offset by upturns in investment and exports.

Personal Consumption Expenditures (PCE)

Inflation showed more signs of cooling in April, offering some relief to both consumers and policymakers. According to the Commerce Department, headline PCE ticked up just 0.1% for the month, matching expectations after remaining flat in March. On a year-over-year basis, prices rose 2.1%, down from March’s 2.3% increase and marking the slowest annual pace since September 2021. Analysts had forecast a 2.2% rise, so this undershoot adds weight to the idea that price pressures are gradually easing.

Core PCE – which strips out food and energy and is considered the Fed’s preferred inflation gauge – also rose 0.1% in April. On an annual basis, core prices were up 2.5%, a slight step down from 2.6% in March and right in line with forecasts. The steady cooling in core inflation helps support the broader disinflation narrative the Fed has been watching closely.

With inflation still above the Fed’s 2% target but moving in the right direction, this report strengthens the case for interest rate cuts later this year. That said, the full impact of President Trump’s new tariffs has yet to show up in the data. Some analysts warn that these trade measures could reverse recent gains, potentially pushing inflation closer to 3% in the months ahead. For now, the Fed is likely to stay cautious, waiting for more evidence that inflation is sustainably on its way down before making any moves.

Consumer Sentiment Index (CSI)

Consumer sentiment showed signs of stabilizing in May. The University of Michigan’s final reading of the CSI came in at 52.2 – matching April’s figure and marking the first time in four months that sentiment hasn’t declined. That’s up from the mid-month preliminary reading of 50.8 and ahead of the expected 51.0. While the bounce is encouraging, sentiment is still far from strong – the current reading is well below the 69.1 recorded in May 2024 and remains one of the lowest levels on record since the index began in 1952.

Looking closer, the Current Conditions Index, which gauges how consumers feel about their personal finances today, slipped slightly to 58.9 from 59.8 – a 1.5% drop from last month and 15.4% lower than a year ago. Rising prices and stagnant wages continue to weigh on household confidence. On the flip side, the Expectations Index – which reflects how consumers view the economic outlook over the next six months – ticked up to 47.9 from 47.3, a modest 1.3% gain. Still, that’s 30.4% lower year over year.

Inflation worries remain top of mind. Year-ahead inflation expectations edged up from 6.5% to 6.6%, while long-run expectations eased to 4.2% from April’s 4.4%, breaking a four-month streak of increases.

The late-month pickup in sentiment likely reflects some relief over the pause in tariffs with China. While that helped lift spirits a bit, the overall reading remains historically low, and when consumer sentiment stays this weak, it often points to softer spending ahead. That’s a key concern, given how much the US economy relies on consumer activity.

American market volatility

Wall Street’s “fear gauge,” the CBOE Volatility Index (VIX), started the week at an elevated 20.63 – just above its usual 12–20 range and down slightly from last week’s close of 22.35. By midweek, the VIX had slipped back under 20, hovering around 19 before ending the week at 18.57.

The pullback was helped by President Trump walking back his threat of a 50% tariff on the European Union, along with signs of improving consumer confidence – both of which helped calm investor nerves. Still, concerns about his proposed spending bill, which could add trillions to the already ballooning US debt, kept the VIX near the top of its typical range.

For anyone new to the VIX: it’s basically Wall Street’s stress meter. When investors grow uneasy, they tend to pull back from riskier assets, such as technology stocks, which can lead to sharper price swings and more unpredictable markets. That’s when the VIX tends to rise – capturing the surge in volatility and fear. A reading between 12 and 20 signals business as usual, while anything above 20 suggests growing anxiety. The higher it climbs, the more turbulence investors are expecting.

Weekly Market and Portfolio Review

For the week, the TSX (SPTSX) advanced 1.1%, the S&P 500 (SPX) rose 1.9%, the DJIA (INDU) added 1.6% and the Nasdaq (CCMP) climbed 2.0%.

It’s always nice to see the indexes bounce back into the green. After the previous week’s slump, markets shook it off and rallied, with all four major indexes gaining at least 1%. The momentum came from a mix of factors: ongoing US tariff drama, Nvidia’s (NASD: NVDA) much-anticipated earnings release, and a wave of end-of-month economic data – including encouraging US inflation numbers.

With US markets closed for Memorial Day on Monday, the Toronto Stock Exchange Composite Index (TSX), got a head start. Before the long weekend, President Trump made headlines by threatening the European Union (EU) with 50% tariffs, only to hit pause during the break. That rollback helped the TSX open the week on a strong note. Once American traders returned on Tuesday, they joined the rally, pushing the S&P 500 Index (S&P), the Dow Jones Industrial Average (DJIA), and the Nasdaq Composite Index (Nasdaq) higher as hopes grew for a US – EU trade deal. If you’ve been following along, you’ll recognize the familiar playbook: Trump ramps up the tariff talk late in the week, then eases off by Monday. Markets are getting used to it – and this week, they responded accordingly.

Midweek, attention shifted to Nvidia. As the poster child of the artificial intelligence (AI) boom, Nvidia’s results are seen as a temperature check for the entire sector. The company didn’t disappoint – surpassing revenue expectations and showing that the AI spending spree is still going strong. That said, its guidance for next quarter was more cautious, with export restrictions to China expected to trim as much as US$8 billion from future revenue. CEO Jensen Huang struck an upbeat tone, highlighting strong demand for its new Blackwell AI chips and the long runway for AI infrastructure. Investors liked what they heard – Nvidia’s stock got a nice post-earnings boost.

While the spotlight was on Nvidia, trade tensions re-emerged that same day. The US Court of International Trade ruled that many of Trump’s global tariffs were illegal and must be halted within 10 days. Markets got a brief lift – until a federal appeals court allowed the tariffs to remain in place (for now), keeping trade tensions alive. The back-and-forth weighed on sentiment and reminded investors that tariff risks aren’t going away any time soon.

Heading into the weekend, Trump threw another wrench into the mix – this time accusing China of breaking its temporary trade truce with the US While he didn’t specify how China had violated the agreement, it’s believed to be related to delays in resuming exports of rare earth minerals – critical components for everything from semiconductors to electric vehicles. That rattled markets briefly, before he said he would speak directly with China’s President Xi to work out a deal – calming nerves a bit as the week wrapped up.

In Canada, the TSX got a boost from strong earnings by the Big Six banks. While results were solid, the banks are setting aside more cash for potential loan losses – a cautious signal about the economic outlook and the uncertainty surrounding US tariffs. Investors also welcomed signs of easing global trade tensions earlier in the week. Then on Friday, stronger-than-expected GDP data added a final touch of optimism. The Canadian economy grew at a 2.2% annualized pace in Q1, beating forecasts. But much of that came from a temporary surge in exports as companies rushed to beat new tariff deadlines – making it unlikely to be repeated in the second quarter

All in all, markets got the rebound they were hoping for, even if trade tensions continue to hover in the background.

While it was nice to see the indexes back in the green, it was even better watching all three of my portfolios bounce back with solid gains across the board. Two of them outpaced the major benchmarks, and the third kept pace with the week’s top performer – as shown in the weekly performance chart below.

Portfolio 1 had a strong week, posting a 2.0% gain with 79% of its holdings finishing higher. Outside of Navitas Semiconductor (NASD: NVTS), which popped 11%, there weren’t any standout surges – but the broad-based gains helped push the portfolio ahead of all the indexes. The largest holding, Nvidia, also chipped in with a decent move. 😊

Portfolio 2 came in third, with a 1.9% gain and 74% of holdings finishing the week higher. Highlights included Dollarama (TSE: DOL) hitting an all-time high and Guardant Health (NASD: GH) climbing 11%. Energy companies were the main drag here, as all of the oil and gas holdings ended in the red due to lower global oil prices.

Portfolio 3 had the best weekly performance of all the portfolios and all the indexes, posting a 2.2% gain, also with 74% of holdings in the green. No major standouts this week – just steady strength across the board.

All in all, a strong rebound week for my portfolios, and a great way to close out the month. 😊

Companies on the Radar

This week’s radar list got a bit of a shake-up. I dropped WisdomTree (NYSE: WT) from the list, and no new North American companies made the cut. Instead, I added the five Japanese trading giants Berkshire Hathaway invested in – mentioned earlier in this Weekly Update.

• Itochu Corporation
• Marubeni Corporation
• Mitsubishi Corporation
• Mitsui & Co., Ltd.
• Sumitomo Corporation

On the surface, these companies look like solid long-term bets: diversified, global reach, and Buffett-approved. But once I dug deeper, things got more complicated. Currency fluctuations can eat into returns, and Japan’s economy has its own challenges, including periods of slow growth. The ADRs make these stocks accessible in North America, but they can come with tax quirks and lower liquidity, which isn’t ideal for efficient trading. Plus, governance standards and disclosure norms in Japan differ from what we’re used to here, which adds another layer of complexity.

None of these are dealbreakers, but they are real risks that investors should consider. For me, the biggest challenge was the lack of reliable research. I used Finchat.io and Yahoo! Finance to dig up the basics, but I couldn’t access key metrics like Morningstar’s Fair Market Value or analysts’ ratings through TD Direct Investing, as you can see in the second part of the chart below. Without those tools, I couldn’t get a solid enough read to feel confident. So for now, these companies are a pass for me, not because they aren’t promising, but because they fall into my personal ‘too hard’ pile.

Joining the five Japanese companies on the list this week are these four holdover from last week:

• Unity Bancorp (NASD: UNTY) is a small-cap regional bank based in the US, serving parts of New Jersey and Pennsylvania. It’s showing strong fundamentals, including solid revenue growth, efficient capital use, and double-digit earnings expansion. Earnings per share is expected to climb nearly 13% this year – matching industry averages – and it has a steady history of dividend increases.
• TerraVest Industries (TSE: TVK) is a Canadian mid-cap industrial company that manufactures equipment for the energy, agriculture, and transportation sectors across North America. Its product lineup includes propane tanks, specialized tanks used to store and transport ammonia gas commonly used as fertilizer (anhydrous ammonia vessels), natural gas liquids transport vehicles, and a range of energy processing equipment.
• Amphenol Corporation (NYSE: APH), a global giant in the connector and cable business, supporting a wide range of industries with electrical, electronic, and fiber optic solutions.
• Secure Energy Services (TSE: SES) is a Canadian mid-cap industrial company focused on waste management and energy infrastructure. They serve clients across North America with recycling, disposal, and environmental solutions – a solid pick in the sustainability and infrastructure space.

As always, these are not buy recommendations. Make sure to do your own research and choose investments that fit your personal financial goals. That goes double when it comes to foreign-listed companies. 😊

The Radar Check was last updated May 30, 2025.

That’s a wrap for this week, thanks for reading – may your portfolio stay green and your dividends steady. See you next time!

Credit Ratings Explained: From the US Downgrade to Corporate Impact

Before the week even got started, markets got a bit of a jolt when credit ratings agency Moody’s downgraded the US credit rating from its highest level, Aaa, to one notch lower at Aa1 on Friday, May 16, 2025—after markets had already closed for the week. This was the first time in over a century the agency has lowered the US’s credit rating. Since the announcement came after the close, Monday was the first chance investors had to react.

This move also makes Moody’s the third and final major credit rating agency to downgrade the US from its top rating, following Fitch in 2023 and Standard & Poor’s back in 2011. It reflects growing concern over America’s rising government debt and the soaring cost of interest payments. According to Moody’s, the US now carries a much heavier debt load than countries still holding top-tier ratings. Only eleven nations currently retain Moody’s highest score – including Canada, Germany, and Australia. So this week, I thought we’d take a look at what credit ratings really mean – for countries, for companies, and for us as investors.

If you’re new to investing – or just not deep into high finance – credit ratings might sound like background noise. But they actually matter a lot. Moody’s is one of the world’s top credit rating agencies. Its job is to assess how financially healthy a country or company is—kind of like how a lender checks your credit score before offering a loan. A lower credit rating means higher borrowing costs – and more risk.

So how high is the US debt right now? As of April 2025, the federal budget deficit stands at US$1.05 trillion, and the national debt has reached $36.9 trillion—now slightly exceeding the country’s entire GDP. Interest payments on that debt have also ballooned, hitting $579 billion. When a country’s national debt exceeds its GDP, it means the government owes more than the total value of all goods and services the country produces in a year. In plain terms, the US has borrowed more than it earns.

So, what happens when the US gets downgraded? In short, borrowing gets more expensive. When a country’s credit rating drops, its cost of borrowing usually rises because it’s seen as a bigger risk. Creditors demand higher interest rates in return. We’re already seeing signs of this: American mortgage rates have ticked higher, and US Treasury yields briefly spiked. That could mean higher interest rates on everything from government debt to personal loans and credit cards. For American consumers, that means paying more to borrow. For us investors, it could slow the growth of the companies we own – especially if expansion becomes too costly.

While this sounds serious (and it is), investors didn’t panic. Stocks were shaky early Monday but bounced back by the end of the day. For now, markets seem to view Moody’s downgrade as confirmation of known issues – not a sudden shock.

Still, the downgrade could throw a wrench into President Trump’s economic plans, especially his efforts to extend tax cuts. Moody’s isn’t convinced those policies will meaningfully reduce the deficit. In fact, it projects US debt could rise even further – from just over 100% of GDP today to 134% by 2035 if current trends continue – raising the risk of more downgrades down the line.

While this week’s headlines were focused on the US government, credit ratings don’t stop at national borders. These same ratings also affect businesses – and that’s where the impact can start to show up in investor portfolios. Let’s take a closer look at how a company’s credit rating influences everything from borrowing costs to stock performance.

These same credit rating agencies also play a crucial role in the business world. Corporate credit ratings help investors, lenders, and the market understand how financially healthy a company is – and they can have a real impact on its ability to grow.

A company with a high credit rating (like Aaa or Aa1) is seen as stable and low risk, which means it can borrow money at lower interest rates. That makes it easier and cheaper to issue bonds or get loans to fund operations or expansion. On the flip side, a company with a lower rating – especially one below investment grade (Baa3 or lower) – is viewed as riskier. These companies often must pay much higher interest rates to borrow money, which can eat into profits or limit their strategic options.

Credit ratings also influence investor behaviour. Institutional investors like pension funds often stick to investment-grade bonds, so a strong rating can attract more capital. If a company gets downgraded to “junk” status, it can scare off some investors and force the company to offer higher yields to make their bonds attractive.

These ratings can even move stock prices. A downgrade might cause a company’s stock to drop as investors worry about rising borrowing costs or weaker financial footing. Meanwhile, an upgrade can do the opposite – boosting investor confidence and lifting share prices.

In short, strong credit ratings can open doors for companies to grow, invest, and compete. Weak ones can slam those doors shut.

Following Moody’s US downgrade, corporate bond markets saw slightly wider spreads – meaning investors asked for a bit more yield to take on the added risk. A few companies hit pause on issuing new bonds to see how things would settle. But overall, the response was pretty calm. Most investors seemed to have already priced in the risks.

So, with the Moody’s downgrade behind us and markets holding steady, let’s take a look at what else moved the needle this week.

Items that may only interest or educate me ….

Canadian Economic news, US Economic news, Buried in Debt, A nasty surprise ….

Canadian Economic news

This past week’s key economic data that the Bank of Canada (BoC) considers when deciding whether to raise or lower the interest rate.

Consumer Price Index (CPI)

Canada’s inflation rate cooled more than expected in April, giving consumers a bit of breathing room – and possibly giving the BoC something to think about ahead of its next rate decision. Statistics Canada reported that the CPI rose just 1.7% year-over-year, down from 2.3% in March and slightly above analysts’ forecasts of 1.6%. On a monthly basis, prices actually dipped by 0.1% in April, reversing a 0.3% increase the month before.

Much of that slowdown came from energy prices. Gasoline dropped a whopping 10.2% in April alone and was down 18.1% year-over-year. The removal of the consumer carbon tax helped push pump prices lower, while natural gas prices also slid 14.1%. On the other hand, the biggest monthly price gain came from the “household operations, furnishings and equipment” category, which rose 0.8%.

Despite the broad cooling, shelter is still the biggest inflation pressure. Prices related to housing – like rent and mortgage interest – climbed 3.8% over the past year, just slightly lower than March’s 3.9%.

Core inflation, which strips out more volatile items like food and energy to better reflect underlying price trends, rose 0.5% in April – up from 0.2% in March. On a yearly basis, the core rate ticked up to 2.6% from 2.4%. That increase was driven by higher grocery bills, more expensive travel tours, and rising vehicle prices.

April also marked the first month of US tariffs and Canada’s counter-tariffs, and some analysts suggest these trade measures may already be adding pressure to certain imported goods. The jump in core CPI could complicate the BoC’s next move. On one hand, the broader economy is clearly slowing, which opens the door for a rate cut. On the other, rising core inflation might give the BoC reason to hold off – at least for now.

Retail Sales

Canadian retail sales came in stronger than expected in March, with Statistics Canada reporting a 0.8% monthly increase – topping forecasts for a 0.7% gain and rebounding from February’s 0.4% drop. The uptick ends a two-month slide and points to resilience in consumer spending. On a yearly basis, sales were up 5.6%, an improvement from February’s 4.7% gain.

March’s growth was driven mostly by ‘Motor vehicle and parts dealers’, which jumped 4.8% – their first increase in three months. On the downside, ‘Gasoline stations and fuel vendors’ saw a steep 6.5% decline. Over the past year, the biggest gain came from ‘Miscellaneous store retailers,’ up 17.0%, while ‘Building material and garden equipment dealers’ posted the largest drop at 2.8%.

Core retail sales – which exclude vehicles, gas, and fuel – rose 0.2% in March. That’s slower than February’s 0.5% but better than the flat reading economists expected. Year-over-year, core sales surged 5.5%, beating the forecasted 3% gain.

Altogether, the March report shows consumer spending is holding up. Some of that strength likely came from Canadians rushing to buy vehicles before April tariffs hit, along with stockpiling of non-discretionary items. Still, outside those areas, the broader retail picture remains somewhat uncertain, especially with ongoing trade tensions clouding the outlook.

Looking ahead, Statistics Canada’s early estimate calls for a 0.5% gain in April retail sales, suggesting the momentum may continue. Whether it lasts will depend on wage growth, inflation trends, consumer confidence, and how tariffs affect prices.

Canadian market volatility

Canada’s market mood ring – the S&P/TSX 60 Volatility Index (VIXC) – kicked off the holiday shortened week at 14.73 and mostly stayed within a range of 11–15. Midweek, it briefly spiked to 17.49 as investors grew jittery over the potential for US debt to balloon even further. The surge didn’t last long though – calmer heads prevailed, and the VIXC drifted back down, ending Friday at 13.74. Still, some nerves lingered as investors weighed the chances of future rate hikes or unexpected policy moves.

For those unfamiliar with the VIXC, it’s essentially Canada’s version of a fear gauge. Readings under 10 show strong investor confidence, 10–20 is business as usual, and anything above 20 suggests investors are getting uneasy.

US Economic news

This past week’s key data points that the Federal Reserve (Fed) considers when deciding whether to raise or lower the interest rate.

American market volatility

Wall Street’s “fear gauge,” the CBOE Volatility Index (VIX), began the week on a calm note at 17.27 – comfortably within its typical 12–20 range and slightly lower than last week’s close. But the calm didn’t last. The VIX hovered near 18 midweek before spiking above 20 and finishing at 22.35.

The jump in volatility came as markets reacted to two major headlines: the House passed Trump’s new spending bill, and he threatened to impose 50% tariffs on the European Union. The combination of surging US debt – now at approximately US$37 trillion – and renewed trade tensions was enough to push the VIX above 20, as investors grappled with rising uncertainty on multiple fronts.

For anyone new to the VIX: it’s basically Wall Street’s stress meter. Below 12 signals calm waters, 12–20 is the normal range, and anything above 20 signals stormy seas.

Buried in Debt: What the $37T Debt Means for Investors

This past week, the US House of Representatives narrowly passed President Trump’s “big, beautiful bill,” which bundles many of his key policy goals. It now moves to the Senate, and if approved, heads to the President’s desk to be signed into law. While the bill promises major tax cuts, it could also add trillions to America’s already massive US$37 trillion national debt. And right now, that debt is what’s weighing on markets.

A $37 trillion debt load isn’t just a big number – it has real economic consequences. The government has to pay interest on all that debt, and those payments are climbing fast. Today, around 18% of federal revenue goes toward interest. If current trends hold, that could jump to nearly 30% by 2035 – leaving less room for spending on infrastructure, health care, or education.

That rising burden is setting off alarm bells. Moody’s recently downgraded the US credit outlook, following earlier moves by S&P and Fitch. And bond markets are reacting: Treasury yields are rising as investors demand higher returns for lending money to a more indebted government. That puts added pressure on the stock market – especially interest-rate-sensitive sectors like technology.

So what does all this mean for us investors? Higher debt levels can lead to more market volatility, elevated interest rates, and tighter government spending. It also reduces the government’s flexibility to support the economy during downturns. For long-term investors, it’s a reminder to keep an eye on the broader fiscal picture – not just company earnings or stock prices.

With the debt projected to exceed 107% of GDP by 2029, some economists worry it could eventually slow economic growth. And if the US ever resorts to printing more money to cover its obligations, that could trigger inflation and chip away at consumers buying power.

Bottom line: the US can still manage its debt for now, but the risks are rising – and they’re worth keeping on your investing radar.

A nasty surprise for Canadian Investors

Tucked inside the ‘big, beautiful’ US spending bill is a nasty surprise for Canadian investors: Section 899. This little-known provision could have a big impact on Canadians earning income from US investments. If enacted, it would override the Canada – US tax treaty and gradually ramp up withholding taxes on Canadian residents.

Right now, Canadian companies pay just 5% on dividends from US subsidiaries – but that would rise by five percentage points a year until it hits 50%. Individual investors wouldn’t be spared either: the current 15% tax on US dividends could also climb to 50%.

If this goes through, it could reshape cross-border investing and sharply raise the cost of owning US assets for Canadians.

Weekly Market and Portfolio Review

For the week, the TSX (SPTSX) slipped 0.4%, the S&P 500 (SPX) fell 2.6%, the DJIA (INDU) lost 2.5% and the Nasdaq (CCMP) dropped 2.5%.

After a strong showing the week before, I was hoping the four major North American indexes – the Toronto Stock Exchange Composite Index (TSX), the S&P 500 (S&P), the Dow Jones Industrial Average (DJIA), and the Nasdaq Composite – could keep the momentum going. But no such luck. All four slipped into the red by midweek and continued to drift lower (see the weekly progress chart above), with the three US indexes each falling more than 2.5%, while the TSX snapped its six-week winning streak.

The week began quietly, with Canadian markets closed for Victoria Day. US trading was flat on Monday as investors digested Friday’s downgrade of US creditworthiness by Moody’s – a headline that was largely brushed off at first.

But “flat” turned out to be the high point. By Tuesday, markets came under pressure, breaking the S&P’s six-day winning streak and pulling all four indexes into negative territory.

Right now, the biggest thing driving markets is uncertainty – specifically around tariffs and ballooning US government debt.

Investor sentiment soured as attention turned to President Trump’s proposed ‘big, beautiful’ spending bill, which includes tax cuts and spending that could add US$3–5 trillion to an already massive US$36.2 trillion federal debt. That triggered fresh concerns about deficits and rising interest rates, pushing up government bond yields and weighing on both US and Canadian markets. Higher bond yields are particularly tough on growth stocks, especially technology stocks, since future profits start to look less attractive compared to safer returns from bonds.

Trade tensions didn’t help either. The US warned companies against using Chinese artificial intelligence (AI) chips, reviving fears of a tech showdown with China. Then on Friday, just before the Memorial Day long weekend, Trump cranked things up again with a threat to slap 50% tariffs on the European Union, accusing them of dragging their feet on trade. He also floated a 25% tariff on Apple and other smartphone makers that don’t manufacture them in the US. The barrage of headlines rattled markets and snuffed out any hopes of a late-minute rebound.

One bright spot: President Trump signed executive orders directing the independent Nuclear Regulatory Commission to streamline regulations and fast-track approvals for new reactors and power plants. The move lit a fire under nuclear stocks, sending them sharply higher – including Portfolio 1’s Cameco (TSE: CCO), one of the largest uranium producers in North America and around the world.

Meanwhile in Canada, inflation data delivered mixed signals – headline inflation cooled, but core inflation ticked higher. That complicates things for the BoC. Slower economic growth might argue for a rate cut, but rising core inflation gives policymakers reason to hesitate. Even so, the TSX managed to notch a 10-day winning streak and hit a fresh record high – before slipping into the red.

Tariff uncertainty is also weighing on Canada’s economic outlook. BoC Governor Tiff Macklem warned that if trade tensions aren’t resolved soon, both consumer spending and business investment could slow. The bank now expects second-quarter growth to be “quite a bit weaker” than the first – and possibly worse in the months ahead if uncertainty drags on.

All in all, it was a choppy, headline-driven week, with debt, interest rates, and trade tensions all jostling for investor attention. It’s a clear reminder of just how sensitive markets still are to political noise and shifting policy winds.

Another rough week in the markets meant another rough ride for my three portfolios. The only question was just how rough. As you’ll see in the weekly performance chart below, two of the three portfolios ended up faring worse than the S&P 500 – which posted the steepest drop among the indexes.

Portfolio 1 dropped 3.2%, weighed down by a wave of red – only 38% of the holdings managed to post a gain (unfortunately this was the best percentage of the portfolios). There were a couple of bright spots: Navitas Semiconductor (NASD: NVTS) surged 21% after announcing a partnership with Nvidia (NASD: NVDA) to develop next-gen AI data centres using Navitas’s gallium-based power supply unit chips. Cameco also jumped 12%, lifted by President Trump’s push to fast-track nuclear energy development. But those wins weren’t enough to offset steep losses elsewhere, like indie Semiconductor (NASD: INDI) falling 11% and Shopify (TSE: SHOP) shedding 10%.

Portfolio 2 held up the best – relatively speaking – losing just 1.8%. There were no standout winners, but also no major collapses. Only about a third of the holdings finished in the green, making it more of a “least-bad” kind of week.

Portfolio 3 had the toughest time, tumbling 4.5% with just 28% of its holdings posting gains. Like Portfolio 1, it also took a hit from Shopify’s 10% slide – but unlike Portfolio 1, there wasn’t a breakout winner to help cushion the fall.

Looking ahead, Nvidia reports their first quarter earnings next week, and all eyes will be on how the AI powerhouse is performing. With so many companies (including a few in my portfolios) riding the AI wave, a strong showing from Nvidia could help shift investor sentiment and inject some much-needed energy back into the markets. Here’s hoping it’s the spark that kicks off a rebound. 😊

Companies on the Radar

There was a fair bit of turnover on my radar list this week. I’ve removed LPL Financial Holdings Inc. (NASD: LPLA) and Kinsale Capital Group (NYSE: KNSL). Both are solid US players in wealth management and insurance, but with Canadian equivalents available, I’d rather avoid the added currency risk.

Joining the list are three interesting names:

• Unity Bancorp (NASD: UNTY) is a small-cap regional bank based in the US, serving parts of New Jersey and Pennsylvania. It’s showing strong fundamentals, including solid revenue growth, efficient capital use, and double-digit earnings expansion. EPS is expected to climb nearly 13% this year – matching industry averages – and it has a steady history of dividend increases.
• WisdomTree (NYSE: WT) is another small-cap US financial company, known for its innovation in exchange-traded products, digital assets, and investment solutions. It’s a niche player with global reach in the evolving ETF and digital finance space.
• Secure Energy Services (TSE: SES) brings a Canadian flavour to the group. It’s a mid-cap industrial company focused on waste management and energy infrastructure. They serve clients across North America with recycling, disposal, and environmental solutions – a solid pick in the sustainability and infrastructure space.

Rounding out the radar list are two holdovers from the previous week:

• TerraVest Industries (TSE: TVK) is a Canadian mid-cap industrial company that manufactures equipment for the energy, agriculture, and transportation sectors across North America. Its product lineup includes propane tanks, specialized tanks used to store and transport ammonia gas commonly used as fertilizer (anhydrous ammonia vessels), natural gas liquids transport vehicles, and a range of energy processing equipment.
• Amphenol Corporation (NYSE: APH), a global giant in the connector and cable game, supporting a wide range of industries with electrical, electronic, and fiber optic solutions.

As always, these are not buy recommendations – be sure to do your own research and make decisions that align with your personal financial goals!

The Radar Check was last updated May 23, 2025.

That’s a wrap for this week, thanks for reading – may your portfolio stay green and your dividends steady. See you next time!