Daily Commentary

MarketMinder’s View: This is an interesting look at US President Donald Trump’s announcement yesterday that he will seek to impose tariffs of either 25% or 50% on selected imports from Canada, citing unfair trade practices. Now, as ever, we think such a move would be a fundamental economic negative—chiefly for the US, because the imposing nation always pays tariffs. But the targeted products here amount to only about $20 billion in imports, a small fraction of US trade with Canada. Beyond this, it also may be a mere negotiating tool, as this highlights: “Monday's announcement comes as the U.S. pushes for significant changes to the Canada-U.S.-Mexico Agreement (CUSMA), changes that would lock any Canadian trade concessions into the text of a trade deal. The Trump administration wants to wipe out as much of Canada’s leverage in those CUSMA talks as possible. Some of that leverage comes from eight Canadian provinces banning the import and distribution of U.S. alcohol products — one of the trade irritants the White House said triggered the new 50 per cent tariff.” These factors make this talk more of the same tariff talk seen since last April’s “Liberation Day” announcement, likely why markets didn’t blink at the news.

MarketMinder’s View: The rationale behind the titular crisis? “A wave of baby boomer retirements will coincide with smaller cohorts of young people entering the labor market, resulting in a smaller overall workforce. That will lead to an ‘unprecedented situation’ where, for the first time in US economic history, more workers will leave the workforce than enter it, [University of Minnesota Professor Steven] Ruggles said.” The upshot: “With fewer people in the U.S. workforce, AI could end up as a necessary support for the economy. AI is likely to help ‘mitigate the impact of demographic changes on the labor market’ without harming workers, Ruggles said. AI may help firms boost productivity, allowing them to reap profits with which they'll be able to compensate the relatively few young workers they employ.” While we acknowledge this bullish outlook on AI is relatively rare in financial headlines these days and agree it could be a big help in fields with worker shortages, that doesn’t make the possibility actionable for investors today. Not only does the thesis rest on far-future demographic forecasts, which use straight-line math and are subject to major error, but like any other major technological shift, AI is likely to create winners and losers. Predicting which sectors, industries or groups of people will benefit down the line may be fine as a thought exercise for academics, but for investors, doing so can distract from what really matters: how economic reality aligns with expectations over the next 3 – 30 months. How AI will complement the labor force over the next few decades is beyond markets’ scope, and we think investors should couch that thinking accordingly.

MarketMinder’s View: While long-term investors’ specific investing goals and objectives differ, we do think a risk most face is the possibility of outliving your money. This piece offers some useful high-level perspective on that front: “Many people underestimate how long retirement can last. If you stop working in your mid-60s, you might need your retirement savings to last another 20 to 30 years — or even longer.” Correct. While many presume their time horizon ends at retirement, it actually represents how long you need your money to work for you, which can mean your lifetime or longer, depending on your goals, circumstances and bequests. And even if your portfolio just needs to provide for your existing cash flow needs, you may still need growth to mitigate the risk of depletion. “Although stock values can fluctuate from year to year, they’ve historically outperformed inflation over the long run. And you need that growth so you're able to take regular portfolio withdrawals and adjust them upward as living costs rise. If you don't have at least some of your assets in stocks, you may need to limit your spending, which could impact your quality of life. And if your withdrawals keep outpacing your portfolio's growth significantly, over time, you could risk whittling your savings down to nothing.” Don’t lose sight of the bigger picture.