Bloonser Macro Pulse – August 2025 – Edition 1

Bloonser Macro Pulse – August 2025 – Edition 1

🇨🇦📉 August 2025: A Crossroads for Canadian Investors — Trade Tensions, CAD Slides, Global AI Boom & Emerging Market Surprises

Welcome to the first edition of Bloonser Macro Pulse — your monthly roundup of global and Canadian market trends, currency moves, ETF flows, and what they really mean for your portfolio.

As we step into August 2025, Canada’s market sits at a fascinating crossroads:

• U.S.–Canada trade war is heating up

• The Canadian dollar is testing multi-month lows

• AI stocks keep driving the Nasdaq higher

• Emerging markets, led by India, are surprising on the upside

• And inflation, though slower, remains sticky.

Let’s break it all down.

🇨🇦 Trade Tensions Hit Canadian Stocks & Sentiment

After the U.S. imposed new tariffs on Canadian aluminum, softwood lumber and EV battery components in mid-July, the TSX reacted quickly:

• TSX Composite slipped ~2.8% over two weeks

• Materials and Industrials sectors bore the brunt

• Big banks like RBC and TD saw smaller dips, as they’re less directly tied to trade

Why this matters:
Tariffs don’t just hit exporters; they also raise costs for Canadian manufacturers importing parts. Over time, that could reduce corporate earnings and weigh on dividend growth — two pillars of Canadian portfolios.

(See: Why Canadians Should Revisit Their Portfolios in a Tariff War) — (internal link)

💵 CAD Weakness: Currency Hedge or Headache?

The Canadian dollar fell to ~0.72 USD last week, its lowest since January.

✅ Winners:

• Canadians holding U.S. stocks or USD-denominated ETFs (VFV, ZSP)

• Exporters selling abroad (more CAD revenue per USD sale)

❗ Losers:

• Anyone planning U.S. travel or tuition payments

• Higher cost of imported goods, keeping inflation sticky

Portfolio move:
Many advisors suggest keeping 25–35% of equity assets in USD or global ETFs as a long-term hedge against CAD volatility.

(Read: CAD vs USD: How Canadians Can Hedge Currency Risk) — (internal link)

📈 AI & Nasdaq Surge: FOMO vs Fundamentals

While Canada struggles with tariffs, the AI boom keeps pushing U.S. markets up:

• Nasdaq +6% in July alone

• AI chipmakers, data center REITs, and cloud software all surged

The market narrative: AI spending is still early, and profit forecasts keep rising.

⚠ Caution: Valuations on AI leaders are now higher than at any point since 2021. Volatility could return fast.

Smart move:
Instead of chasing top names blindly, look at:

• Broader AI ETFs (e.g., iShares Robotics & AI ETF (IRBO))

• Dividend growers funding AI capex

• Thematic ETFs with smaller, diversified AI exposure

(Explore: Should You Add AI ETFs?) — (internal link)

🌏 Surprise Outperformers: India & EM

While developed markets dominated headlines, emerging markets, led by India, surprised on the upside:

• MSCI India Index +4.5% in July

• Indian midcap & smallcap stocks hitting fresh highs

• Domestic demand & robust corporate earnings driving growth

Why it matters for Canadians:
Adding even 5–10% exposure to emerging markets can:
✅ Boost long-term growth
✅ Reduce overreliance on North America
✅ Hedge against a falling CAD, as EM currencies move differently

(Read: How Canadians Can Invest in India) — (internal link)

📦 Inflation: Down, but Not Out

Canada’s inflation rate eased to 3.1% in June (latest data), helped by lower fuel prices.

But:

• Grocery inflation remains high (~5.2%)

• Services inflation is sticky (healthcare, travel, rent)

The Bank of Canada kept rates steady at 4.25% in July, signaling caution.

Portfolio move:
✅ Keep short-term bond ladders (1–3 years)
✅ Consider real assets: REITs, infrastructure
✅ Dividend growers that can pass costs to customers

(Explore: Inflation-Proofing Your Portfolio) — (internal link)

🧠 ETF Flows: Canadians Shift to Global & Thematic

In July, Canadian investors:

• Pulled money from pure Canada ETFs

• Added flows into global ETFs, especially U.S. tech & India

• Renewed interest in covered call ETFs for monthly income

Why covered calls?
They trade upside for premium income — appealing if you expect sideways markets.

⚠ Tip: Covered call ETFs can underperform strongly rising markets; use them as part of income allocation, not the core growth engine.

📅 Looking Ahead: What Could Move Markets in August

✅ U.S.–Canada trade talks restart Aug 14
✅ New earnings from AI giants (Nvidia, Alphabet) mid-August
✅ Canada CPI data Aug 22
✅ Global macro: Watch China manufacturing and EM flows

Key risk:
If tariffs expand to autos, the TSX could take a bigger hit.

🛠 What Canadians Can Do Right Now

✅ Revisit allocations: Are you too Canada-heavy?
✅ Hedge CAD: Keep USD assets.
✅ Diversify globally: U.S., EM, India.
✅ Balance growth & income: Dividend growers + select thematic ETFs.
✅ Avoid panic moves: Volatility ≠ sell signal.
✅ Review goals: Retirement, education, or legacy?

(Read: How to Build a Balanced Portfolio for 2025+) — (internal link)

📚 External References & Deep Dives

• Bank of Canada: July Policy Announcement

• Statistics Canada: CPI

• World Bank: India Overview

• MSCI EM Index Performance

✅ Final Word: August 2025

Canada faces real trade and currency headwinds. But global innovation, AI growth, and EM opportunities remain strong.

Don’t cling to the old “TSX-only” playbook.
Diversify, hedge, and stay disciplined.

For more, visit our Investing Insights Hub:
🌱 https://bloonser.com/investing-insights

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