Good afternoon. In today’s letter we’re covering:
Rollercoaster in the markets
Rate hikes are back on the table
Rising streaming prices
Today’s reading time is 3 minutes.
Markets are on a wild ride
Markets are on a wild ride as traders try to figure out what’s going to happen next in the Middle East. Donald Trump claimed earlier today that the U.S. and Iran had held "very good and productive" talks toward ending hostilities, sending stocks surging and pushing down oil prices. Tehran promptly denied any negotiations took place, but so far stocks are hanging on to their gains. Hopes for a peace deal have been raised and dashed repeatedly over the past four weeks, and it’s probably wise to expect elevated energy costs to stick around for a while, even if a ceasefire materializes. In terms of your portfolio, trying to time and trade these swings is (at least in our view) best left to the professionals. Our advice: stop checking your portfolio every hour, stick to your plan and contribution schedule, and tune out the noise.
Rate hike talk is back on the table
Markets are now pricing in a more than 20% chance the Bank of Canada raises rates next month, up from just 4% before the Iran conflict escalated. Traders are now expecting 75 basis points of hikes by year-end, a dramatic shift from mid-year cut expectations that prevailed before U.S.-Israeli strikes against Iran began that disrupted energy supply chains. After keeping the central bank’s policy rate steady at 2.25% last week, Governor Tiff Macklem said the BoC has some time to assess the fallout but won't let high energy prices feed into persistent inflation. At the same time, growth has been anemic and the labour market is cooling, so rate hikes could be the factor that officially tips us into a recession.
Streaming is getting more expensive
Canadian streaming prices climbed an average of 7% last year, following an 8% jump in 2024, according to the annual Couch Potato Report from Convergence Research. Netflix's ad-free plan now runs $18.99/month, Disney Plus up to $16.99, and Crave's premium tier sits at $22. The average household subscribes to nearly three services, which adds up fast. Ad-supported tiers, which cost on average 42% less, are becoming more popular as a result. Meanwhile, cord-cutting keeps accelerating — nearly half of Canadian households had no traditional TV subscription by year-end, up from 46% in 2024, and streaming subscription revenue is on track to surpass traditional TV revenue by 2027.
Has your portfolio drifted off target?
Quick check:
Do you know your target asset allocation (stocks vs bonds)?
Has your portfolio shifted more than 5% from that target?
When was the last time you rebalanced?
Why it matters: Markets have moved a lot lately. If you started with 60% stocks and 40% bonds, strong equity markets might have pushed you to 70% stocks without you noticing. If you’re invested in oil, there’s a good chance that weight has changed in the past two weeks. That could mean more risk than you intended, or a good opportunity to take profits. Rebalancing once or twice a year keeps your portfolio aligned with your goals and forces you to sell high and buy low.
If this is you: Log into your investment account and check your current asset mix. If your portfolio has moved off your targets by more than 5%, make some transactions to bring things back in line. If you're in a taxable account, be mindful of triggering capital gains. In an RRSP or TFSA, there's no tax consequence to rebalancing, though your brokerage may charge transaction fees.
