EWC Overview

Mark Carney's Influence: Mark Carney is demonstrating significant influence and confidence in his current role, suggesting he has strategic advantages.

Market Perception: His actions and demeanor indicate that he is not perceived as lacking power or resources in the financial landscape.

Bank of Canada's Policy Rate: The Bank of Canada maintained its policy rate at 2.25%, citing high uncertainty in the economy that complicates predictions for future rate changes.

Impact of CUSMA Negotiations: The uncertainty largely stems from the upcoming review of the Canada-United States-Mexico Agreement (CUSMA), with potential outcomes ranging from damaging tariff increases to beneficial stability in trade policy.

Economic Assessment Commitment: Policymakers expressed a commitment to closely monitor economic data and remain flexible in their response to significant changes in economic activity or inflation.

Recent Economic Indicators: Additional economic indicators include a 0.3% decline in Canada's monthly GDP for October and an unchanged inflation rate of 2.2% in November.

U.S. Market Performance: The S&P 500 has gained 15% year-to-date, primarily driven by large-cap technology stocks, but U.S. equities have underperformed compared to several international markets.

International Market Gains: Countries like South Korea and Peru have seen equity returns exceeding 80%, with strong performances in Southern Europe and resource-rich economies due to rising commodity prices and improved growth expectations.

Investment Outlook: J.P. Morgan Asset Management suggests that investors should diversify away from U.S. tech stocks, as future global equity performance may favor markets with strong earnings growth and attractive valuations.

Regional Diversification Benefits: The report emphasizes that diversifying investments can mitigate risk and enhance returns, particularly if enthusiasm for U.S. artificial intelligence themes diminishes.

Investment Performance: In 2025, international stocks significantly outperformed U.S. equities, with South Korea's market rising 65% and Spain's by 40%, while the S&P 500 increased by about 15%.

Top International ETFs: Recommended ETFs for gaining exposure to international markets include the Franklin FTSE South Korea ETF, iShares MSCI Spain ETF, Franklin FTSE Latin America ETF, Vanguard FTSE Europe ETF, and iShares MSCI Canada Index Fund ETF, each with unique advantages and low expense ratios.

Market Drivers: The strong performance of international markets is attributed to factors such as favorable domestic policies, a decline in the U.S. dollar, and increased spending in Europe, particularly in Spain's banking sector and South Korea's tech industry.

Future Outlook: The trend of international stocks outperforming U.S. equities is expected to continue into 2026, making diversification through international ETFs a strategic investment approach.