We’re just 3 months past the “Liberation Day” Tariffs and despite initial concerns, the S&P 500 is up 6% and the TSX has gained 10% YTD.

To move beyond the headlines we look at specific economic indicators: US Manufacturing (one of our go-to indicators) is up. But while that is green, other indicators are flashing red, indicating a cautious yet optimistic market sentiment. It’s a nuanced scenario we’re navigating.

We also discuss interesting insights from a recent article on Canada’s financial industry (link below): bank-employed investment reps face significant pressure to sell products often not in the best interest of clients.

At Tower, we’re independent, our duty is first and foremost our clients. Your success is our success, and we strive to build trust through direct, transparent relationships.

Bank reps under pressure to sell: https://www.investmentexecutive.com/news/from-the-regulators/bank-reps-under-pressure-to-sell-osc-and-ciro/

If you have questions, topic ideas or want to discuss your own investments please reach out, we’d love to hear from you.

Email us at info@towerasset.ca.

Full Transcript

Tarek 00:00:00 Hi Tower Talk listeners, thanks for tuning in to another episode. Mark and Tarek here. We’re going to jump right in this month because we got a lot of stuff to cover. Firstly, we’re halfway through 2025. It’s gone by in a blur, so I just want to do a bit of a recap. You know, just three months ago, the world was kind of reeling from the Liberation Day tariffs imposed by President Trump in the states. Markets were down and things were looking you know, people were scared. Things were looking not so good. Three months later, though, up to the end of June, TSX is up 10% on the year. S&P 500 in the states is up 6.2% in the year. Now, you know, if you watch the news, particularly the financial press, it’s really hard to get an idea of, okay, is this a good thing? Are we, you know, in the calm before the storm or market’s going to drop. So I just want to touch a little bit on what we are seeing in the market.

Tarek 00:00:53 Look at some specific indicators and what we expect going forward. So it’s kind of a mixed bag. Right. So we want to bust through that financial press and tell you what, what is actually going on? in the United States, we’re seeing manufacturing new orders up significantly month over month, 8%. I think this is up to April or May, which is one of my favorite indicators, because it just, you know, indicates, you know, that forward looking like, let’s ramp up production because we have a positive outlook. jobless claims are down in the States. Credit spreads are moving in the right direction. The yield curve is positive. There are some negatives, for sure. and, you know, the big one is inflation came up higher just a couple of days ago. which means the fed might not be willing to cut rates as soon as we thought in Canada. A little less rosy. You know, housing starts and building permits aren’t up as much as we should have them. the yield curve is positive, so that’s good.

Tarek 00:01:51 The other indicator I really like to look at is is gold. you know, we don’t love gold as a an asset class, but we do love it in terms of it’s a safety asset. And so gold is through the roof. So it indicates that people are a little bit scared. because that’s where they put their money when they’re a little bit worried about things. But you know, so it’s kind of a mixed bag, but it’s not all one way or another way, as you often hear or have you often read. And so just wanted to give you a picture of what we’re expecting going forward. It’s it’s looking okay.

Mark 00:02:21 Can I recap a little bit of that? I would say what I think we’ve seen is a rotation from those Fantastic Seven or magnificent whatever they were, or the IT two grassroots ground level industrial companies that I think is what’s happening right now. And therefore the market is actually continuing to do okay, but it’s not in the same areas as last year. Okay. Move on to that article that you read about investment executive.

Tarek 00:02:47 That’s right. I’m going to put a link to the article in the show notes or in the email you received. It’s an investment executive article. The Ontario Securities Commission in partnership with a regulatory organization, did an anonymous survey of 2900 bank employees regarding independence like and their sales targets and their sales pressure and what they required. Big surprise. but it turned out that the sales targets, the sales pressure and the tactics imposed on these bank reps is leading to them feeling significant pressure. Wording of the article to move products and services that are not necessarily in the best interests of their clients. And this was regarding, basically independence Bank, independence a tower. We’re bringing this up because we are truly independent. We have no, bank that’s saying, hey, if you sell this fund, you’ll get a little bit more. We require you to move this product or that product. We just do what’s best for our clients. So it’s a very interesting article. I recommend you read it.

Mark 00:03:46 So let me jump in there to say that got me on my self-righteous high horse to, want to say, well, you know, at tower we are different and we are better, and we are all of those kind of things.

Mark 00:03:58 But it’s not completely true, especially in the words of our compliance officer, chief compliance officer who’s saying, don’t overstate, and I’ll try not to do that. But when we built tower, I thought, well, let’s spend a few minutes talking about what we did when we built tower Tarek and I, we built tower with separately managed accounts. Okay. Separately managed accounts means your securities, your investments are in your name, in your account. It’s really important. not everybody does that. In fact, to get that kind of service is difficult. Number two, it means that when you have securities in your account, you can transfer them out. Not what we want to do. Don’t go there. But when you want to transfer them out, it doesn’t trigger a tax event. You can transfer them in kind and your gain in the securities goes with you. You don’t go to cash, pay taxes and transfer out the cash. So number three, you can look and see what is in your account directly at any time.

Mark 00:05:03 Then we set up a back office with index and CI funds so that you can sign in anytime, any day, any through the year and see where your investments are. One what do you own? Two what do they value that three. What’s the book value in it? You can actually go and look at a page called Performance and Analytics and figure out how am I doing relative to the markets and all that kind of stuff. So that’s the reason that we went there first. We’ve got some other things that we did. What were you going to talk about Derek?

Tarek 00:05:32 I was going to talk about, co-investment. This is a really important concept for us. Mark and I and our spouses invest in exactly the same strategies that we were recommending for our clients. We pay exactly the same fees. There’s no employee pricing or principal pricing. We pay the same fees. We invest in the same things we would never recommend something to you that we are not invested in. We think that’s really important because we believe in what we’re doing.

Tarek 00:05:59 yeah. Go ahead.

Mark 00:06:00 Go. No, no. Where are you going?

Tarek 00:06:01 I was going to switch on to two fees.

Mark 00:06:04 No, hang on a second. In fact, Derek is testing a new strategy right now with his own money. Because we have to prove that the theory works. We’ve got a great theory. We just don’t know exactly that. It’ll work in cash. And we’re using his money to run that risk, and he’s even paying fees on it. Are you. Are you paying fees?

Tarek 00:06:24 No, no special pricing.

Mark 00:06:26 Okay. What this also allows you to do. And then we’re going to come back to your fees in a minute. is a relationship with us personally? and that’s what we wanted to do. We’re trying to maintain that with podcasts. We are certainly available to you, but this is different than you going into a bank or a broker and talking to them about your investments. Do they manage your money? Not usually. Usually the portfolio manager is off in Boston or Vancouver or Toronto or San Francisco or wherever they are.

Mark 00:07:00 They are many iterations away from you, the investor. We are the ones who are doing the cooking in the kitchen and we eat the cooking. Okay, back to fees for you. I think we’re wrapping up.

Tarek 00:07:13 Yes, we’re getting close to the end. so think about fees. We ensure our fees are competitive. They tear down pretty significantly. So the more you have with us, the less you pay per dollar. If you want to think of it that way. And that’s important. If you want specific, a specific fee schedule, I can absolutely send that to you. Send me an email that’ll do that. additionally, we have no additional commissions or anything that’s charged us. We get paid for investment management by fees charged on your account. We don’t get paid by a product or service that’s sold. We don’t get paid, from, you know, soft dollars, they call it from from a brokerage or something like that. And the only cost to your account that isn’t coming to tower is trading fees.

Tarek 00:07:57 And those are relatively cheap. We’ve negotiated a very competitive trading fee at, you know, a penny a share or something like that. And that goes straight to our broker. It doesn’t go to us at all. And so we have no incentive to do.

Mark 00:08:07 That by account. So when you trade in that account, the fees for that are only related to that one account not shared by anybody else. Yes, exactly. Our client is not picking up costs from other people. Okay.

Tarek 00:08:21 And then no penalties. No. Yeah. If you need to redeem, if you need to pull out some cash from time to time we invest in very liquid securities t plus one day to get cash and then you know 3 or 4 days to, to transfer it to your bank account. No problem. No penalty for that. Just the trading cost which I mentioned does not come to the tower and that’s important.

Mark 00:08:38 Happy happy redemptions. No pain, no penalty. and then and then we do this podcast, which nobody does.

Tarek 00:08:47 We’re the only ones.

Mark 00:08:47 Know. Everybody does a podcast. Maybe we should stop doing these podcasts just so we’re different. Yeah, or maybe we have to do the podcast just so that we’re in the game anyway. As long as we’ve got information for you, we will keep doing podcasts. Which leads me to the next podcast. You will want to see it because, we’re going to tell you about a new product that we’re going to offer to you, and we think you’ll like it. We think we’re having fun. We thank you for your business. We wrap it up. Is your email going to be on? This is,

Tarek 00:09:21 Absolutely. My email or info at to that comes to me as well. But yeah, absolutely.

Mark 00:09:27 Okay. Wrap it up.

Tarek 00:09:28 That’s it. Thanks for tuning into this episode. As always. Give me a shout if you have any questions, concerns or if you want to have a topic idea. We can we can discuss for you.

Mark 00:09:36 Good idea. Bye bye.

Tarek 00:09:38 Talk to you later.