Hello everyone,

How does the saying go… April showers bring May flowers? I sure hope so! Like the rain in the Amazon, showers have poured on markets for the month of April. However, the rain has abated and we're starting to see signs of some new life. The S&P 500 saw markets fall 13.8% in the first week of April and fluctuated up and down, but eventually gained back 11.50% by months' end. It was an absolute roller coaster ride, hence my "stay calm" email at the beginning of April. The TSX was no better. It mirrored the S&P 500 losing 10.8% but also regained 10.03%. As my friend Derrick proclaimed, I think I need a neck brace! Lol.

Is it over? Probably not. Although we've gotten some great days, I'm not sure we are out of the weeds yet. This recovery could have the same characteristics of a bear market bounce. A bear market bounce often refers to a temporary recovery or upward movement in stock prices within a longer-term downward trend, known as a bear market. During a bear market, which is characterized by prolonged periods of declining prices and negative investor sentiment, there may be short-lived rallies or bounces where stock prices increase temporarily before resuming their downward trajectory. The key word here is the adjective, prolonged. The downward trend has not been prolonged, but it's been long enough to give rise to waking Bears! Eeech!

Bear market bounces are often fueled by factors such as technical rebounds, short covering by traders who bet against the market, or speculative buying. While these bounces can be enticing to investors looking for signs of a reversal, they are typically viewed as counter-trend movements within the broader bearish market environment.

While I can't call this an official "Bear Market" (I'll get to that in a minute), the characteristics of such a market are most certainly prevalent: negative investor sentiment, economic uncertainty, and a weakening economy. The revised economic outlook for 2025 indicates a challenging global economic landscape with notable adjustments in growth forecasts and inflation expectations. According to the International Monetary Fund's World Economic Outlook from April 2025, global growth forecasts have been revised significantly downward compared to the January 2025 update (https://www.imf.org/en/Publications/WEO/Issues/2025/04/22/world-economic-outlook-april-2025).

This revision is attributed to effective tariff rates reaching unprecedented levels and an environment characterized by high unpredictability. It is anticipated that global headline inflation will decline slightly slower than initially expected in January. The United States saw an upward revision in growth rates, offsetting downward revisions observed in other major economies (https://www.imf.org/en/Publications/WEO/Issues/2025/04/22/world-economic-outlook-april-2025).

Furthermore, the OECD's Economic Outlook, Interim Report from March 2025, also signals shifts in global economic prospects. Despite resilient economic growth in 2024, there are indications of softening growth prospects, with escalating economic policy uncertainty due to the imposition of new trade barriers by several countries. The report suggests that global growth is likely to moderate over the next two years while remaining weaker than previously anticipated. Inflation is projected to sustain levels above expectations in the foreseeable future (https://www.oecd.org/en/publications/oecd-economic-outlook-interim-report-march-2025_89af4857-en.html).

It is worth noting that both reports highlight the challenges and uncertainties surrounding the economic outlook for 2025, underscoring the influence of trade barriers, geopolitical factors, and inflation pressures in shaping global economic trajectories.

Now, back to my earlier point of why I can't call this an official Bear market. The exception here is that the overall market isn't down 20% or more, which is a classic key criterion of a Bear Market.  Furthermore, Bear markets are observed during periods of extended downward trends and can last for several months or even years, as investors become more risk-averse and seek safe-haven assets during turbulent times (https://www.fisherinvestments.com/en-us/resource-library/market-cycles/bear-markets/four-rules).

So then, you might be asking, what kind of market is this? I'm going out on a limb to say it is a "hyper event-driven financial market", something that I'm coining. It's a market environment characterized by a high frequency of significant and impactful events that drive market movements. These events can include major economic announcements (check), geopolitical developments (check), corporate earnings reports (check), central bank actions (check) and geopolitical tensions (check). In a hyper event-driven financial market, these occurrences can swiftly and markedly affect asset prices, trading volumes, and investor sentiment. And in my most humble opinion, this is exactly what we are seeing.

This type of market environment often necessitates heightened vigilance and rapid responses from market participants, as the impact of these events can be immediate and substantial. Traders, investors, and financial institutions may employ strategies and technologies geared towards rapidly processing information, executing trades, and managing risks in response to the dynamic nature of the market. This environment may also present both opportunities and challenges for participants, as market events can create volatility that translates into potential profits or losses.

To summarize, a hyper event-driven financial market is characterized by a higher frequency and intensity of impactful events that influence market dynamics and requires adaptability. When I refer to adaptability, I refer to how we position ourselves in this market. We do what we've always been doing; staying connected with one another, rebalancing and staying diversified.  This is our recipe in tumultuous times and coincidently, in good times.

Above all, having a solid financial plan is essential. A good framework can withstand challenging financial market whether you're in retirement or not.  With a well-thought-out retirement plan, investors can increase the plan's resilience and capacity to withstand challenging financial markets. Planning ahead, diversifying investments, maintaining a long-term perspective, and seeking professional advice are essential components of a retirement strategy designed to weather market uncertainties and support a comfortable retirement lifestyle. Therefore, it really doesn't matter what happens next month, or the month after that… There is no need to divert your plan, stay the course and move forward.

I know it's hard, particularly because headlines are always in your face. No matter where you turn, social media or on TV, headlines steal the show. But aren't they supposed to do that, how else would they make money? You just need to turn it off sometimes and focus on the things that matter, like your family and friends. Spend time doing activities you enjoy, don't deny yourself the satisfaction of engagement in those things. The future will take care of itself, especially if you have a plan. Which, you ALL have a plan, as our team has insisted upon it! Rant done!

Finally, this brings me to my farewell and summary of the said above. While I remain constructive on financial markets, I am cautious as the investing landscape is hypersensitive to any data that rolls off the press. The market is sensitive, the economy is weakening, and global tensions are as tight as the rope line off a docked ship. Thus, maintain a long-term perspective, stay diversified, and focus on the solid financial plan our team has mapped out for you. Nothing changes. As always, we are here if you need to talk through the current landscape. I hope you voted, ELBOWS UP!