James Thai, co-founder and portfolio manager at Advantage Capital Strategies Group, a Toronto-based sustainable investing firm wrote an op-ed for the Globe and Mail stating in this trade war, pension funds should also buy Canadian:

Recently, during my visits to the local grocery store, I’ve observed a recurring trend: Shoppers picking up a product, peering closely at the label and then putting it back with a frown or wrinkled nose. I can tell what they’re thinking: That’s not made in Canada! I’ll exchange a knowing nod to acknowledge we’re doing our part as consumers to fight back against an economic attack on our country.

Now it’s time for our country’s world-class pension funds to do the same. It is the perfect time to put that American stock back on the shelf and buy Canadian.

This isn’t a new idea. At the beginning of March, 2024, an open letter by executives pushed for our pension funds to invest more in Canada. Across a wide range of industries, business leaders such as Darren Entwistle of Telus, Eric La Flèche of Metro, Laurent Ferreira of National Bank and Alex Pourbaix of Cenovus Energy agreed that the government should take action to encourage pension funds to make this change.

Now there is additional impetus for more domestic investment by pension funds. In essence, this mirrors the support we are providing to local businesses, artisans and farmers. When our pension funds invest in domestic equities, they’re investing in the very companies that employ people in the local economy. When those companies succeed, so does Canada. It’s a virtuous cycle – better stock market valuations allow companies to raise money and compete on the world stage, and success draws in further investment dollars and drives better returns.

Following last year’s open letter, the federal government announced some small steps in its Fall Economic Statement to encourage investment in Canada, including removing restrictions on holding more than 30 per cent of voting shares of Canadian companies, as well as relaxed rules for investing in airport infrastructure. While these policy changes were incrementally positive, the environment has changed dramatically since then and requires more broad and impactful policy action. This is the perfect time to make changes to ride the wave of patriotism sweeping across the country.

We can enable more of this activity by explicitly urging our pension funds to invest locally through a dual objective mandate. The Caisse de dépôt et placement du Québec is a great example of a fund that already does this. In 2004, Quebec passed a bill to amend the Caisse’s mandate to generate optimal returns while at the same time invest in Quebec’s economic development. This reinforces the idea that investment returns and local investment are not competing priorities but rather can support one another.

Many pension funds and observers are resistant to this. Last year, faced with pressure from business leaders for more domestic investment, the response from pension managers such as the Canada Pension Plan Investment Board and Ontario Municipal Employees Retirement System was to hide behind the curtain of fiduciary duty, arguing they need to place returns above all else.

There is merit to that idea, and it made sense at the time. But now we are in a trade war and facing an existential threat. I’d argue that, at its core, fiduciary duty means that Canadian fund managers must act with a duty of care and loyalty to all Canadians. I cannot see how making prudent investments in businesses at home is anything other than an act of loyalty.

Of course, a balanced approach is key. Just as a tasty and nutritious dinner plate needs some foreign spice along with Canadian ingredients, the recipe for long-term investing success is to have a mix of Canadian and international investments.

On average, the eight largest Canadian pension plans with more than $2.3-trillion in assets invest only 25 per cent of their assets in Canada. The largest of them, the Canada Pension Plan, invests only 11 per cent in Canada. This compares with an average of 41 per cent invested in the United States.

If we make just a small adjustment to bring this back in balance over a reasonable period, for example to 33 per cent in each country, that would be a massive investment of $184-billion back into Canada. This would greatly contribute to a stronger and more resilient domestic investment environment.

It’s not about blind patriotism; it’s about sound economic strategy. It’s about recognizing that strong homegrown companies are the best foundation of a robust and independent economy – and to strengthen that, we must buy local.

As I read this opinion piece which sounds very reasonable to informed readers of the Globe and Mail, I once again bow my head in frustration sighing.

I can sum it up like this: We have a crisis, we need to act now, our pension funds must invest more in Canada to save our economy from Trump's tariffs.

Let me let you in on a little secret, all of our large pension funds already invest a lot in Canada, more than they need to, across all asset classes but mostly fixed income, real estate and infrastructure. 

Mr. Thai states on average they invest 25% of their assets in Canada but notes our largest pension fund, CPP Investments, only invests 11% domestically. And this compares to an average 41% in the United States.

He wants our large Canadian pension funds to gradually increase their domestic investments to 33% that would translate to an additional massive investment of $184 billion back into Canada.

What else? He cites CDPQ's success with its dual mandate and an example of how investment returns and economic development can co-exist and thrive.

He admits many large pension funds are resistant to this idea and states the following:

Many pension funds and observers are resistant to this. Last year, faced with pressure from business leaders for more domestic investment, the response from pension managers such as the Canada Pension Plan Investment Board and Ontario Municipal Employees Retirement System was to hide behind the curtain of fiduciary duty, arguing they need to place returns above all else.

There is merit to that idea, and it made sense at the time. But now we are in a trade war and facing an existential threat. I’d argue that, at its core, fiduciary duty means that Canadian fund managers must act with a duty of care and loyalty to all Canadians. I cannot see how making prudent investments in businesses at home is anything other than an act of loyalty.

This really irked me because he obviously doesn't understand the mission and objective of a pension fund, nor does he understand what fiduciary duty is all about.

Again, our pension funds already invest in Canada across all asset classes, public and private.

It has nothing to do with loyalty or patriotism, when it makes sense they will jump on the opportunity to invest at home, foregoing currency and regulatory risk of investing abroad. 

Their fiduciary duty, however, is to make sure they are properly diversified all over the world to withstand a global shock which will knock the Canadian economy down.

Let me repeat that: when there's a global shock, the Canadian economy feels the brunt of it and our equity markets which have a lot of resources tend to go down a lot more than the US market.

And our Canadian loonie declines hard during a global downturn.

We also lack the mega cap tech names in Canada which is good during times when they sell off hard (like now) but bad over the long run because these are the companies of the future.

All this to say, it would be very unwise for our large Canadian pension funds to decrease their exposure to US stocks to invest more in Canadian equities over the long run, and I do stress over the long run.

What else? This isn't the governments' money, it belongs to members and we need to have their full support if governments want to tinker with the way they invest. 

Norway's mammoth sovereign wealth fund invests all of its trillion plus assets outside the country, precisely to diversify its investments over the long run.

True, it invests almost everything in global (and mostly US) equities but it's still diversifying outside its country.

What are the other issues I have with investing more domestically?

A ton. Let's take CDPQ's dual mandate, it's going well now because they got the governance right but some critics argue that "big daddy Caisse" is subsidizing Quebec companies and that leads to them being less productive and less competitive.

I'm not in agreement there but I get the criticism, sort of like Trump's tariffs, it's going to promote less innovation and competition in the US.

And there was a time when CDPQ's Quebec portfolio was in shambles, bribes were rampant, it was the Wild West.

Michael Sabia cleaned that all up and it's on solid footing now but this dual mandate isn't always easy and I can understand why most other large Canadian pension funds aren't on board to implement it.

Having said all this, there's an argument to be made that the success of our large Canadian pension funds can benefit the Canadian economy.

How? Well, take PSP Investments for example, our third largest pension fund which manages the assets of the public service, Canadian Forces, RCMP and the Reserve Force. 

Its former CEO, Neil Cunningham made a persuasive case that the $9-billion from surpluses in public-service pension fund should be invested in a new "Canada Fund" with a similar governance structure as the Canada Growth Fund Inc. (CGF) which PSP Investments manages:

As a follow up to our conversation yesterday it occurred to me that it might to useful for me to differentiate between the Canada Growth Fund (CGF) created a few years ago and my suggested Canada Fund (CF). 
CGF as you know was created by the federal government in 2023 with a mandate to make investments that take on higher risk than what the private sector will invest in to fill the funding gap on innovative investment in Canada that are expected to reduce emissions, preserve Canadian IP in Canada, create long-term employment in Canada and leverage our natural resource assets. It has a venture capital element to it, but the long-term target return of the fund is to break-even - which would be considered a success if the other objectives were achieved. It’s funded by a specific $15 billion commitment by the federal government, its mandate being in line with current federal government objectives, especially on climate. 
The CF in contrast would be funded by the excess returns generated by the PSPF (and potentially the other funds managed by PSP) and therefore would not have any impact on Canada’s annual deficit or national debt. Its mandate would be to invest exclusively in Canada - the mandate and target return to be established but could be similar to the CGF but with a broader range of industry sectors. I would suggest that it have a focus on early to mid-stage Canadian companies that often have to look to the US or elsewhere for the capital required for the development of their IP and to move their business to the next level. 
The similarity of the two funds would be the governance structure wherein the federal government sets the mandate but is NOT in any way involved in the actual investing decisions, both funds to be managed by an independent investment manager. 
By having a long-term funding source that is independent of future government finances, the CF would be a permanent source of capital to promote strategic Canadian private sector investment.

Neil is right that with PSP Investments, the federal government can do whatever it wants with the surpluses.

With our other large pension funds, it's trickier, members and provincial governments have to sign off on what to do with surpluses and they typically increase benefits and I doubt they will want to invest that money in a separate account to bolster the Canadian economy.

Also, I keep stating that all our governments need to create winning conditions to allow our large pension funds to invest large sums in our domestic infrastructure.

I sound like a broken record but that's where pension funds would get the biggest bang for their long duration buck but we are so far behind there compared to the UK, Australia and other countries, it's pathetic.

Lastly, read my last comment on how Canada's $2-trillion pension giants are struggling with Trump's policies.

The inclination is to divest out of the US into Canada but our large pension funds have to resist making impulsive decisions.  

Policy uncertainty isn't a good thing but making rash decisions now can lead to terrible long-term outcomes.

A lot to digest here but it's really important to look at things objectively and realize our large pension funds already invest a lot in Canada and shouldn't be forced to invest more domestically or do anything else that can jeopardize their long-term success.

Below, Mohamed El-Erian, Allianz chief economic advisor and president of Queens' College, Cambridge, joins 'Squawk Box' to discuss President Trump's tariff agenda, impact of reciprocal tariffs, state of the economy, inflation concerns, and more.

Next, Ron Temple, Lazard chief market strategist, joins 'Squawk Box' to discuss the latest market trends, impact of tariff uncertainty, where investors can find opportunities right now, and more.

Third, Mike Wilson, chief US equity strategist at Morgan Stanley, sees the possibility of reciprocal tariffs due this week from President Donald Trump pushing the S&P 500 below 5,500 in the short term, but is “not willing to throw in the towel yet on the full year” target.

Fourth, Julie Biel, Kayne Anderson Rudnick chief market strategist, joins 'The Exchange' to discuss market uncertainty and how to position from here and also mentions a Canadian company that will benefit from trade disruption.

Lastly, Oren Cass, chief economist at American Compass, who writes the “Understanding America” newsletter, sits down with Jon Stewart to discuss conservative economic policies of the New Right, which will be outlined in his forthcoming book, “The New Conservatives.” 

Cass describes a conservative shift from faith in markets, using tariffs as incentives to pursue profit that supports society, how livable wages are the key to a strong economy, and the US’s ideal economic and security alliance that includes balanced trade, owning defense burdens, and keeping China out.

Barbara Shecter of the National Post reports Trump's global shakeup is complicating life for Canada's $2-trillion pension giants:

Ontario Teachers’ Pension Plan Board chief executive Jo Taylor and his investing team usually rely on a lot of real-world data when determining where to allocate billions of dollars of investment money on behalf of retirees. But United States President Donald Trump’s flurry of edicts that threaten to upend global trade and geopolitical alliances makes it hard to know what data points they should even be looking at.

“The predictability of what we’re investing in is lower,” Taylor said as pension teams across the country dig into drafting and assessing potential scenarios for a year that, given the prospect of multiple pockets of economic and geopolitical unrest, could be very different from those that came before it. “Looking forward and trying to predict the future is more challenging.”

Globally invested pensions such as Teachers’, particularly those with large exposure to North America, are acknowledging that investment risks are rising as predictability falls, and the uncertainty is not simply tied to a particular region, sector or asset class like it sometimes is.

Trump exporting risk

The policies and rhetoric of the U.S. administration under Trump — including threats of escalating trade tariffs, threats to annex Greenland, the Panama Canal and Canada, and warnings about withdrawing traditional military support from European allies that don’t meet North Atlantic Treaty Organization (NATO) funding targets — are essentially exporting risk to governments and companies around the world.

This, combined with uncertainty of what he will say from day to day and his ever-changing tariff policies, complicates decision-making at globally invested pensions like the eight largest ones in Canada, which together manage nearly $2.4 trillion to fund the retirements of millions of Canadians.

“It’s hard to predict Mr. Trump,” is the blunt assessment of Charles Emond, chief executive of Caisse de dépôt et placement du Québec.

Pension managers typically assess risk and asset allocation by using models, underpinned by data, to test their portfolios and reveal what would happen against possible and plausible scenarios. Sebastien Betermier, an associate professor of finance at McGill University’s Desautels Faculty of Management, said they then assign probabilities to each outcome.

The problem now is that things are changing very fast — often from one day to the next — and the movements being contemplated by the models are far more extreme and wide-ranging than they have been in the past.

“These scenarios capture regime shifts that are complex and hard to model quantitatively,” Betermier said, adding that pension managers must rely on a certain amount of “narrative building” in the absence of hard facts and figures about how things will play out economically and geopolitically.

What pension professionals can see is that the U.S. equity markets that helped propel returns into the high-single and even low-double-digit returns over the past year or more may no longer reliably do so. Both the benchmark S&P 500 and the Nasdaq composite, often viewed as a stand-in for the tech sector, slid into correction territory in March.

Geopolitical risks rising

There are other less clear yet rising risks pointing to the potential for a global recession, Steven Riddiough, an associate professor of finance at the University of Toronto, said. The escalating trade wars already enveloping North America, Mexico, China, the United Kingdom and Europe threaten to slow growth across the board, he said.

But these conventional sources of risk in economic and market systems do not even paint the full picture for global investing entities, which are vulnerable to an often-overlooked source that can cause major disruptions: geopolitics.

“Countries and firms are seeing their exposure to geopolitical risk change in real time. Many countries — especially in Europe — now feel far more vulnerable as the U.S. creates uncertainty around its explicit and implicit international commitments,” Riddiough said. “In effect, the U.S. is exporting risk to foreign governments and firms through these policy shifts, rapidly altering the risk profile of investors’ portfolios.”

In Trump’s first term as president, he repeatedly said the U.S. might pull out of NATO. Since he took office again in January, he has wielded a different threat by targeting specific nations in the 32-country alliance that don’t pay what he thinks is their fair share of the costs to defend them.

This threat is being acutely felt in Europe, which has relied on the U.S. as the primary guarantor for security since shortly after the Second World War, as have many other countries. The position taken by Trump and the White House on NATO-hopeful Ukraine, including a public confrontation with President Volodymyr Zelenskyy that suggested the U.S. may no longer help push back on Russia’s invasion, sent fears through nearby NATO member countries such as Poland and raised questions about whether an attack on one NATO member will continue to be viewed by the U.S. as an attack on them all.

Such challenges to nearly 80-year-old international understandings — not to mention Canada suddenly being declared by Trump to be an enemy rather than a partner in trade — are forcing pension managers to undertake far more complex reviews than usual and face tough decisions across a number of portfolios.

The situation is also challenging a key element of what has made large, globally invested pensions such as Canada’s so-called Maple 8 group so successful: diversification. By spreading investments, from equities to infrastructure, across public and private assets and buying in a variety of countries, they reduce the downside risk of something going wrong with a particular asset class or in a particular country or region.

However, with geopolitical upheaval spreading across jurisdictions and threatening to penalize multiple sectors and asset classes, there could be widespread repricing of risk, which would send investors fleeing to safer assets in what’s known as a “risk-off” scenario.

“In extreme risk-off scenarios, it’s like everyone rushing for the exits in a burning theatre,” said Riddiough, whose resumé includes a consulting stint with the Canada Pension Plan Investment Board on global tactical asset allocation.

“In those moments, assets that normally move independently start selling off in unison. In the most extreme case, if everything sells off in exactly the same way, then it doesn’t really matter how many assets you hold; it’s as if you only own one.”

Canadian pension managers have increased investments in private assets over the past decade or more in part to avoid getting caught in such scenarios. Because assets such as real estate, private equity and infrastructure don’t trade frequently or in as volatile a manner as public markets, they can preserve value — and mask elevated risk — even when public markets plummet.

However, new approaches to valuing private assets are threatening to close this gap, which can also make these less liquid assets difficult to exit in times of crisis due to large gaps between what sellers and buyers think the assets are worth — as happened with commercial real estate after the COVID-19 pandemic spurred a surge in remote work and office building vacancies skyrocketed.

“It’s increasingly difficult to hide the elevated risk by overweighting private markets because many firms are building tools, using data and AI, to quantify private market risk in real time,” said Kenneth Kroner, an economist and finance professional who spent two decades at investment company BlackRock Inc., where he oversaw multi-asset strategies and systemic active equities as a senior managing director and member of the global executive committee.

“In a few years, the true risk of private investing will be quantified and well-understood. In the meantime, I think most sophisticated boards … aren’t fooled one bit,” he said. “If I were a portfolio manager (at one of Canada’s big pensions), I’d emphasize to my board (and) clients that risk is elevated even though the data might not currently say so.”

Still, the Edmonton-born Kroner, who was a director at Alberta Investment Management Corp. (AIMCo) for seven years until a government-led shakeup resulted in his departure along with the rest of the board last year, said he doesn’t think Canadian pensions should be making any sudden moves in the way they invest in response to Trump.

Pension managers should focus on their advantage, which is long-term investing. Today, that’s clearer than at any time in my career

Kenneth Kroner, economist and finance professional

Instead, he said, they should be scrutinizing everything that is happening and modelling what the consequences are likely to be in order to focus on what will survive in the years well beyond his presidency and invest based on that.

“I would study and understand those risks now,” he said. “But I wouldn’t invest for those risks until I believe that they’ll be a reality in 10 years’ time.”

Long-term view

For example, pension professionals should be asking themselves what trade policy will look like in a decade, rather than simply looking at what Trump is proposing now, Kroner said. Another key question is where innovation will be strongest at that point, if not the U.S. There is also the question of how shifting alliances today are likely to alter geopolitical order beyond the lifetimes of current country leaders.

Some will try to profit from the “noise” around Trump, including his shifting rhetoric on tariffs and threats to bring economic harm to Canada to get what he wants on issues including trade and NATO funding, but he said he would not advise pensions to try to pick short-term winners and losers.

“The noise level is just too high to make informed bets along these lines; leave those bets to naive investors,” he said, adding that the investment horizon of pension funds gives their managers the option to set a different course. “Pension managers should focus on their advantage, which is long-term investing. Today, that’s clearer than at any time in my career.”

This means closely scrutinizing the impact of the fast-shifting geopolitical order, which has the potential to crimp growth and long-term returns.

“The (traditional) U.S. axis has the potential to split into two further axes: those aligned with the U.S. and those not,” he said. 

The isolationist path of the U.S. is raising questions about whether economic growth can continue at the clip that has been helping pension returns over the last decade or more. Even the U.S. Federal Reserve reduced its outlook for gross domestic product (GDP) growth to 1.7 per cent from 2.1 per cent, while inflation is forecast to grow and interest rate cuts could be off the table this year.

After Teachers’ turned in an annual return of 9.4 per cent for 2024, Taylor said his team had begun to assess whether the U.S. can continue to provide the fund with the same level of risk-adjusted returns to justify adding to the $99 billion invested there.

“The question is, how much more do we want to build on top of that versus other parts of the world?” he said.

Kroner said portfolio managers considering how to play the evolving situation should move away from investing in traditional global indexes such as MSCI World and All Country World indexes, which provide exposure to a broad basket of large and mid-cap stocks in developed countries and emerging markets, and instead create new indexes that reflect the shifts and splintering of alliances and trade.

He said pensions should also focus on higher-growth segments of the market that prioritize innovation.

“To overcome the growth deficit, one should invest heavily in markets where innovation is best supported,” he said. “Arguably, that’s what we’ve done for decades, but that might no longer be the U.S., like it has been historically.”

Kroner said pension managers should be the repricing the risk of investing in Europe, particularly countries in the NATO alliance.

“No matter how you slice it, the risk of investing in NATO countries is elevated and will remain so for a few years,” he said.

In one scenario, pension managers could reprice the risk of NATO countries as a whole, taking the view that Trump’s stance will affect them all negatively. In another, the risk for investments in counties most likely to feel threats from Russia if U.S. support wanes, such as Poland, could be repriced.

In either scenario, Kroner said, assets should be reallocated to countries outside NATO based on the changing risk-reward calculus.

“The risk is a broad geopolitical risk,” he said, adding that he favours the first scenario. “The alternative is to go through all the NATO countries and come up with a personal view of the Trump impact on each individual country, and that’d be a challenging exercise to get right.”

Homegrown challenges

Some “homeshoring” — reallocating investment to a pension fund’s home market — is an obvious strategy, he said, though this is potentially a difficult one for large Canadian pension funds whose managers have complained for years that large, private infrastructure investments — from toll roads to airports — aren’t made available to them.

They have also pushed back on pressure to invest more in Canadian companies via stock markets due to concerns it would lead to overconcentration in their home market and a reduction in long-term returns generated through diversification.

After Teachers’ reported its latest annual results in March, Taylor reiterated the former.

“We’ve stated for a while that we have a strong desire to try to invest more in Canada in larger assets,” he said.

Another alternative would be for the pension giants to shift investments away from NATO countries to similar economies, such as Latin America and Asia, Kroner said.

“What I would do is move some percentage away from NATO (countries), say, five per cent,” he said. “Half of that would come home and half would go to a LatAm index and an Asia index.”

Within Asia, China presents its own risks for pension managers, though growth is not the primary concern.

“Investments in the China axis are extremely risky because of the very high risk that they become stranded assets,” Kroner said. “I’d recommend that institutional investors either avoid investing in this axis, or at least keep their allocations to something less than cap-weight” — a less risky way to invest in a basket of assets in an index.

The Canada Pension Plan Investment Board has significant investments in China, but its exposure, once representing more than 10 per cent of assets, has been declining since 2021 and the fund has committed resources and attention to other countries in the Asia-Pacific region.

Teachers’ and others in the Maple 8, including the Caisse and British Columbia Investment Management Corp., paused direct investments in China in 2023 and Teachers’ plans to close its Hong Kong office this year while targeting a doubling of investments in India over the next five years.

Concerns about China came to the fore a couple of years ago amid government and regulatory crackdowns on tech businesses, but the world was still more or less perceived to be under the steady hand of the U.S.

With that in the rearview mirror, Kroner said institutional investors should be preparing for some pretty bad outcomes, including wars.

“But,” he said, “nothing has changed on this front since Trump, in that investors should always prepare for bad outcomes” through good risk management and scenario analysis that look at what could happen to a portfolio in very bad scenarios.

“The only difference this time is that Trump has made some of these negative scenarios pretty easy to envision,” he said.

As Wall Street closes out its worst quarter since 2022, every large fund (not just pension funds) is trying the navigate the noise from Trump's tariffs.

It's a big problem and while the inclination is to shift away from the US to domestic or ex-US assets, I do agree with Kenneth Kroner, AIMCo's former Chair (featured above), it would be wise to resist making impulsive decisions based on the latest news.

The truth is nobody knows where Trump is headed with these tariffs.

Moreover, I have my doubts that his own administration knows. 

All I know is Trump 2.0 is off to a terrible start and if it's one thing you need to remember about Trump is he's incredible vain and will likely fold on tariffs when the going gets tough.

In that  regard, he's highly predictable.

In fact, last week, when he caught wind that Canada and the EU were coordinating a response, he showed his cards by panicking and stating the will significantly increase tariffs if that were the case.

That is telling but it shows you Trump doesn't really want to start a tariff war.

The good news is by the end of the week, we will know where his administration stands on tariffs.

The bad news is they might go through with these tariffs in the near term as a form of negotiation and that will wreak havoc on global markets and possibly send the global economy including the US into a recession.

More bad news might also come in the form of US economic data that confirms a recession has arrived.

This week we get the ISM tomorrow and then the big jobs report on Friday.

Thus far, the market is in RISK OFF mode and rates are creeping higher as investors price in stagflation.

I don't get carried away with short-term movements but it's clear growth and hyper growth stocks are bearing the brunt of this policy uncertainty.

Still, I noticed stocks came back strong today, especially growth stocks which were selling off hard at the open.

This tells me the market is sniffing out lenient tariffs but we are also closing out a bad quarter, portfolio rebalancing is helping cushion the blow and adds to volatility.

Whatever happens the rest of the year is anyone's guess.

Will stagflation prevail? Are we headed to a long tariff war which causes a global economic recession?

Again, nobody really knows, all long-term investors can do is diversify and be ready to seize opportunities as they present themselves. 

Below,Scott Wren, Wells Fargo Investment Institute Senior Global Market Strategist, and Victoria Greene, G Squared Private Wealth CIO, joins 'Closing Bell Overtime' to talk the impact of tariffs on the market.

Next, Doug Rediker, founder and managing partner of International Capital Strategies, says the Trump tariff plan is fraught with uncertainty and Wednesday's announcement likely will bring only some clarity.

Third, Chris Verrone, Strategas Research Partners chief market strategist, joins 'Closing Bell' to discuss markets, making sense of the sector rotation and more.

Lastly, Joseph LaVorgna, SMBC Nikko Securities America chief economist and former Trump Economic advisor, and Mark Zandi, Moody’s Analytics chief economist, joins 'Closing Bell Overtime' to talk the impact of tariffs on the economy.

Pia Signh and Sarah Min of CNBC report Wall Street sell-off deepens on inflation worries, Dow closes 700 points lower:

Stocks sold off sharply on Friday, pressured by growing uncertainty on U.S. trade policy as well as a more grim outlook on inflation.

The Dow Jones Industrial Average closed down 715.80 points, or 1.69%, at 41,583.90. The S&P 500 shed 1.97% to 5,580.94, ending the week down for the fifth time in the last six weeks. The Nasdaq Composite plunged 2.7% to settle at 17,322.99.

Shares of several technology giants dropped, putting pressure on the broader market. Google-parent Alphabet lost 4.9%, while Meta and Amazon each shed 4.3%.

This week, the S&P 500 lost 1.53%, while the 30-stock Dow shed 0.96%. The Nasdaq declined by 2.59%. With this latest losing week, Nasdaq is now on pace for a more than 8% monthly decline, which would be its worst monthly performance since December 2022.

Stocks took a leg lower on Friday after the University of Michigan’s final read on consumer sentiment for March reflected the highest long-term inflation expectations since 1993.

Friday’s core personal consumption expenditures price index also came out hotter-than-expected, rising 2.8% in February and reflecting a 0.4% increase for the month, stoking concerns about persistent inflation. Economists surveyed by Dow Jones had been looking for respective numbers of 2.7% and 0.3%. Consumer spending accelerated 0.4% for the month, below the 0.5% forecast, according to fresh data from the Bureau of Economic Analysis.

“The market is getting squeezed by both sides. There is uncertainty around next week’s reciprocal tariffs hitting the major exporting sectors like tech alongside concerns about a weakening consumer facing higher prices hitting areas like discretionary,” said Scott Helfstein, head of investment strategy at Global X.

Helfstein added, however, that the news on inflation and consumer spending “was not that bad” and could simply represent a hiccup in near-term sentiment as investors struggle to understand the Trump administration’s new policies.

“Despite today’s sell-off and broader market volatility of the past few weeks, there have not been big inflows into money markets. It seems like a lot of investors are trying to ride this out,” he said.

The latest inflation report comes amid a flurry of tariff announcements from the White House, which have roiled the market in recent weeks. Investors are looking ahead to April 2, when President Donald Trump is expected to announce further tariff plans, for further clarity.

On Friday, Canadian Prime Minister Mark Carney told Trump that the Canadian government will implement retaliatory tariffs following Wednesday’s announcements. Bloomberg earlier reported that the European Union is identifying concessions it could make to Trump’s administration to reduce the reciprocal tariffs from the U.S.

Trump earlier this week announced a 25% tariff on “all cars that are not made in the United States,” a decision that hurt auto stocks and raised concerns of an economic slowdown.

Jennifer Shonberger of Yahoo Finance also reports the Fed’s inflation dilemma just got more challenging as Trump's new tariffs loom:

The Federal Reserve’s preferred inflation gauge showed prices in February rose more than expected, re-intensifying the central bank’s inflation battle at a time when it expects new tariffs from the Trump administration to push prices higher.

The new reading makes it more likely that officials hold rates at current levels for longer as policymakers look for signs of how President Trump's policies will affect the US economy in the months ahead.

"It looks like a 'wait-and-see' Fed still has more waiting to do," said Ellen Zentner, chief economic strategist for Morgan Stanley Wealth Management.

"Today’s higher-than-expected inflation reading wasn’t exceptionally hot, but it isn’t going to speed up the Fed’s timeline for cutting interest rates, especially given the uncertainty surrounding tariffs."

Fed Chair Jerome Powell has said that his "base case" is that any extra inflation from Trump's slate of tariffs will be "transitory." But some of his colleagues worry the effects could be more persistent, adding to the uncertainties ahead for the central bank.

The Fed's goal is to get inflation down to its 2% target, but the key measure released Friday remains well above that marker. The "core" Personal Consumption Expenditures (PCE) Index, which excludes volatile food and energy prices, rose 2.8% year-over-year.

That reading was higher than economists' estimate of 2.7%, jumping from 2.6% in January. The month-over-month reading was also hotter, clocking in at 0.4%. That was higher than the 0.3% expected and up from that same level in the previous month.

Inflation now stands at the level the Fed predicted it would be at year's end — and that's before some of Trump's most aggressive tariff plans kick in. The president plans to announce a sweeping set of "reciprocal" country-by-country duties next week.

Fed officials raised their 2025 inflation forecast at a meeting last week, to 2.8% from 2.5% previously, due in large part to uncertainty surrounding the new tariffs. They also lowered their economic growth forecasts for the year.

But February’s inflation report now shows that even the Fed’s revised inflation forecast may prove to be too conservative.

'Transitory' — or not?

Traders are still pricing in an interest rate cut in June with the potential for another cut in the fall. And the two-cut prediction from Wall Street still matches what Fed officials estimated at their meeting last week where they held rates unchanged.

Some Fed watchers, however, argue that these rate cut predictions could be challenged, too.

The new PCE reading "reinforces our view that the Fed is unlikely to cut interest rates this year," said Stephen Brown, deputy chief North America economist for Capital Economics.

The critical question ahead for Fed policymakers is how much of any additional inflation they expect to see is a one-off effect that will prove to be temporary.

While Powell has argued in favor of a potential "transitory" effect, some of his colleagues have offered more caution.

Boston Fed president Susan Collins said Thursday while speaking in Boston that she believes it’s “inevitable that tariffs are going to increase inflation in the near term” and she expects the uptick in inflation could be short-lived.

But she added, “there are risks around that and depending on how that unfolds, it could be more persistent.”

Collins stressed that if there are additional rounds of tariffs, they are more broad-based, or if there are different levels of retaliation, then inflation could be more persistent than just a relatively fast adjustment to a higher level of prices.

In that context she said she would be looking more closely at inflation expectations because anchoring expectations is important for the Fed’s credibility to bring inflation back down.

St. Louis Fed president Alberto Musalem also said this week that he could be "wary of assuming that the impact of tariff increases on inflation will be entirely temporary, or that a full 'look-through' strategy will necessarily be appropriate."

He noted that tariffs could create a one-time increase in price-levels, but that so-called "indirect effects" where domestic producers raise prices as importers raise prices could cause inflation to be more long lasting.

Musalem offered the example of beer from Canada. If it is subject to a 25% tariff, US consumers could shift from Canadian beer to American-made Budweiser, and then Budweiser could increase its prices as people look for locally produced goods.

"Distinguishing, especially in real-time, between direct, indirect, and second-round effects entails considerable uncertainty," he added.

It's been a tough week for markets as tariffs and inflation fears loom large.

On inflation, tariffs or no tariffs, it remains the big wildcard for the second half of the year.

Obviously, I agree with those who think tariffs will not lead to "transitoty inflation," that's pure nonsense especially if a full-blown tariff war breaks out.

But I remain unconvinced that Trump really wants a tariff war and this week we got a sense of why when he threatened higher tariffs on Canada and the EU if they combine forces to slap tariffs on the US.

That just tells me that Trump is very worried about that possibility and he's just using tariffs to negotiate.

However, he made a huge mistake slapping a 25% tariff on all foreign cars, not realizing how intertwined the supply chains are between Canada and the US, not to mention many Japanese, German and Korean automakers have invested billions in US plants and make cars there.

It's a complete and utter mess and now that "Liberation Day" is right around the corner, many are bracing for chaos, including US ports.   

Again, I don't think Trump really wants a full-blown tariff war with other nations risking to plunge the US and world into a recession but I could be wrong.

A global recession will mean growth fears will dominate inflation fears, yields will plunge.

If however we manage to get past this tariff tantrum, growth moderates but inflation persists, then that will wreak havoc as rates will remain elevated, the Fed  will not cut and stagflation will develop.

Stagflation could develop with tariffs too but I see more of a growth risk there, meaning unemployment will soar and inflation will be capped.

Either way, the way stocks are trading, it's clear big investors are worried about persistent inflation and a recession.

Growth stocks are bearing the brunt of the selloff in Q1:

 As shown above, Energy stocks (+8%) lead the S&P year-to-date followed by Healthcare (+5%) and Utilities (+3%).

And if you look at the best and worst large cap stock year-to-date, you see a clearer picture of what is going on, especially looking at the worst performing large cap stocks so far this year:

 

But the focus remains on Mag-7 stocks, all of which are struggling.

Look at the charts below of Nvidia, Microsoft, Google and Meta for this month:

Nvidia shares are retesting their low from earlier this month, Microsoft shares are making a new 52-week low, Google and Meta shares are sliding lower.

I can tell you it's pretty much the same for Amazon and Apple and we all know what's going on in Tesla shares this year.

The way mega cap and hyper growth stocks are selling off this past quarter, it's a huge re-rating based on expectations of higher rates.

Is this another golden buying opportunity or the start of a long and painful bear market where big tech shares lead the market lower?

I can't answer that just yet, I need one more quarter to figure out if inflation expectations are picking up.

Below, Tom Lee, Fundstrat, joins 'Closing Bell Overtime' to talk the state of the markets and the impact of tariffs.

Also, Bob Elliott, Unlimited CEO, and Richard Bernstein, Richard Bernstein Advisors CEO, join 'Closing Bell Overtime' to talk the days market selloff.

Lastly, 'Fast Money' traders react to the day's market selloff. 

Next week is a big week, tariffs, ISM and jobs data all coming up.

Today, Ontario Teachers' Pension Plan announced it acquired 92,000 sqm prime logistics portfolio in Sweden and Denmark:

• Ontario Teachers’ has completed the acquisition of a 92,000 sqm logistics portfolio from funds managed by Blackstone. The portfolio comprises three assets in Sweden and two in Denmark.
• The transaction marks the second acquisition by Ontario Teachers’ in the Nordic region, following its initial acquisition of a 121,000 sqm portfolio in Sweden in late 2023, and further strengthens its pan-European logistics portfolio which now comprises over €1.8 bn of logistics assets across all of the core European markets.
• The acquisition is undertaken together with Fokus Nordic, Ontario Teachers’ local operating partner.

Stockholm, 27 March, 2025: Ontario Teachers’ Pension Plan Board (“Ontario Teachers’”) has completed the acquisition of a 92,000 sqm logistics portfolio from funds managed by Blackstone. The portfolio consists of three high-quality assets in Sweden (Stockholm and Gothenburg) and two in Denmark (Copenhagen), all fully leased to leading logistics and distribution tenants. The acquisition marks Ontario Teachers’ Real Estate’s entry into Denmark and strengthens its growing logistics platform in the Nordics. The acquisition is undertaken together with Fokus Nordic, Ontario Teachers’ local operating partner.

The transaction represents the second acquisition by Ontario Teachers’, following an initial investment in Sweden in 2023. The aim is to build a diversified, institutional-quality logistics portfolio across the region, focusing on well-located assets that benefit from strong fundamentals and long-term tenant demand. The newly acquired assets are fully occupied with key portfolio highlights below:

• Total size: 92,000 sqm across five fully leased logistics assets
• Locations: Stockholm and Gothenburg in Sweden; Copenhagen in Denmark
• Assets: Slipskivan 6, Lanna; Ostergarde 31:21, Sorred; Arendal 1:8, Arendal; Ventrupvej 27, Greve, Litauen Alle 6, Taastrup.
  

Jenny Hammarlund, Senior Managing Director, Real Estate at Ontario Teachers’, said:

“This is a significant step in expanding our logistics footprint in the Nordics and further strengthens our pan-European logistics portfolio. By entering Denmark and scaling our presence in Sweden, we are reinforcing our commitment to high-quality assets in key logistics hubs. We’re delighted to be growing our portfolio which aligns well with our long-term investment strategy and offers opportunities to create additional value through active management.”

Tonny Nielsen, CEO at Fokus Nordic, said:

“We are very pleased to have completed our second transaction with Ontario Teachers’, which represents a successful cross-border effort from our teams in Stockholm and Copenhagen.” 

Ontario Teachers’ was advised by Gernandt & Danielsson, Accura, EY, and WSP.

About Ontario Teachers’

Ontario Teachers' Pension Plan Board (Ontario Teachers') is a global investor with net assets of $266.3 billion as at December 31, 2024. Ontario Teachers' is a fully funded defined benefit pension plan, and it invests in a broad array of asset classes to deliver retirement security for 343,000 working members and pensioners. For more information, visit otpp.com and follow us on LinkedIn.

About Fokus Nordic

Fokus Nordic provides professional advisory services within real estate investments to both Nordic and international investors. As one of the leading asset and investment managers in the Nordics, Fokus Nordic optimises the process of investing in and managing properties, maximizing value for our clients.

Across the Nordics we have more than €9 bn assets under management (AuM). We are well positioned in both Core, Core+, value-add investment strategies and our scale and extensive real estate know-how allow us to provide end-to-end solutions. For further information, please visit fokusnordic.com

It is worth repeating what Jenny Hammarlund, Senior Managing Director, Real Estate at Ontario Teachers’, stated above:

“This is a significant step in expanding our logistics footprint in the Nordics and further strengthens our pan-European logistics portfolio. By entering Denmark and scaling our presence in Sweden, we are reinforcing our commitment to high-quality assets in key logistics hubs. We’re delighted to be growing our portfolio which aligns well with our long-term investment strategy and offers opportunities to create additional value through active management.”

Ms. Hammarlund featured above is a key investment person in charge of building out OTPP's international real estate portfolio. 

She reports to Pierre Cherki, Executive Managing Director of Real Estate.

This asset was owned by Blackstone so you know its a top logistics asset in the growing Nordic region. 

Now OTPP and its partner, Fokus Nordic, will be in charge of maintaining it and adding value.

In total, the portfolio comprises three assets in Sweden and two in Denmark spans 92,000 sqm across five fully leased logistics assets.

These are the types of assets that Teachers' needs to find and invest in and it's not easy because they're is intense competition to own them.  

In related news, OTPP announced yesterday it completed its fourth investment into National Highways Infra Trust:

Mumbai - Ontario Teachers’ Pension Plan Board (Ontario Teachers’) today announced its participation in the latest follow-on unit capital raise by National Highways Infra Trust (NHIT), maintaining its 25% stake. NHIT is an Infrastructure Investment Trust (InvIT) sponsored by the National Highways Authority of India (NHAI), the Government of India’s nodal agency for national highway development.

Ontario Teachers’ invested INR 20.8 billion / CAD 344 million in this round. Combined with its earlier investments in NHIT in 2021, 2022 and 2024, this brings Ontario Teachers’ total investment in NHIT to INR 57.6 billion / CAD 950 million.

Proceeds from the follow-on unit capital raise will be primarily used to acquire 11 additional road concessions across north, central, and south India and to pay a concession fee to NHAI to be utilized for further development of road infrastructure in India. Following this, NHIT will own, operate, and maintain 26 toll roads in the Indian states of Gujarat, Rajasthan, Telangana, Karnataka, Uttar Pradesh, Madhya Pradesh, Maharashtra, Assam, West Bengal, Andhra Pradesh, Uttarakhand, and Chhattisgarh, spanning a total length of over 2,300 kms with concession periods ranging between 20 to 30 years.

NHAI, as the sponsor, invested 15% in the follow-on raise. The remaining units were placed with a diversified set of foreign and domestic institutional investors, including pension funds, insurance companies, mutual funds, banks and financial institutions.

“Our continued investment in NHIT reflects our long-term commitment to India’s infrastructure growth story” said Deb Hajara, Managing Director, Infrastructure & Natural Resources, Asia Pacific, Ontario Teachers’. “We’re pleased to partner once again with NHAI to help expand and modernize the country’s road network, an essential enabler of economic development and regional connectivity.”

About Ontario Teachers'
Ontario Teachers' Pension Plan Board (Ontario Teachers') is a global investor with net assets of $266.3 billion as at December 31, 2024. Ontario Teachers' is a fully funded defined benefit pension plan, and it invests in a broad array of asset classes to deliver retirement security for 343,000 working members and pensioners. For more information, visit otpp.com and follow us on LinkedIn.

About National Highways Authority of India
NHAI is an autonomous authority of the Government of India (GoI) under the Ministry of Road Transport and Highways constituted on June 15, 1989 by an Act of the Indian Parliament titled - The National Highways Authority of India Act, 1988. It plays a strategic role in GoI initiatives for growth & development of the Indian highway sector, and acts as the nodal authority for implementation of National Highway projects developed through public or private agencies.

Deb Hajara, Managing Director, Infrastructure & Natural Resources, Asia Pacific, Ontario Teachers’ sums it up well:

“Our continued investment in NHIT reflects our long-term commitment to India’s infrastructure growth story. We’re pleased to partner once again with NHAI to help expand and modernize the country’s road network, an essential enabler of economic development and regional connectivity.”

Yesterday I discussed why CPP Investments did a third follow-on investment of INR 20.8 billion (C$346 million) in the units of National Highways Infra Trust.

OTPP and CPP Investments are part of this project working with the NHAI and they have both committed to follow-on investments to modernize India's infrastructure.

OTPP invested INR 20.8 billion / CAD 344 million in this round. Combined with its earlier investments in NHIT in 2021, 2022 and 2024, this brings its total investment in NHIT to INR 57.6 billion / CAD 950 million.

That's one billion dollars invested in modernizing India's toll roads, quite impressive.

Below, Melinda McLaughlin, global head of research at Prologis, Inc . (NYSE: PLD), was a guest on the latest episode of Nareit’s REIT Report podcast. She discussed broad trends impacting logistics today, including global trade, delivery speeds, new construction, e-commerce, rising barriers to supply, standout global markets, and more.

Also, a week ago, Willy Walker sat down with Jon Gray, President and Chief Operating Officer at Blackstone, the world’s largest alternative asset manager with more than $1 trillion in AUM. 

With over three decades at Blackstone, Jon brings unmatched expertise in commercial real estate, private equity, and global financial markets. 

Great discussion, take the time to listen to it.

Today, CPP Investments announced a third follow-on investment in India's National Highways Infra Trust:

Mumbai, INDIA (March 26, 2025) – Canada Pension Plan Investment Board (CPP Investments) today announced a follow-on investment of INR 20.8 billion (C$346 million) in the units of National Highways Infra Trust (NHIT), an Infrastructure Investment Trust (InvIT) sponsored by the National Highways Authority of India (NHAI). This marks the third follow-on investment by CPP Investments since its initial investment at the inception of NHIT in 2021.

The investment is part of NHIT’s capital raise by way of an institutional placement. The proceeds will be used by NHIT to partially fund the acquisition of eleven operating toll roads currently owned by NHAI. Following this investment, CPP Investments will continue to hold 25% of the units in NHIT, and CPP Investments’ total investment in NHIT will increase to INR 57.6 billion (C$960 million).

“India remains a strategic focus for CPP Investments, with infrastructure such as toll roads playing a key role in driving the country’s rapid economic growth. Our continued investment in NHIT since its founding is a testament to our commitment to this robust platform,” said James Bryce, Managing Director, Head of Infrastructure, CPP Investments. “We believe this follow-on investment is an excellent opportunity to generate attractive risk-adjusted returns for the CPP Fund.”

The acquisition will expand NHIT’s portfolio from 15 to 26 operating toll roads, all of which have been acquired from NHAI, a statutory authority established in 1988 by an act of the Indian Parliament, responsible for developing, maintaining, and managing national highways in India. Following the transaction, NHIT’s total portfolio will span over 2,300 kilometers across 12 Indian states: Andhra Pradesh, Assam, Chhattisgarh, Gujarat, Karnataka, Madhya Pradesh, Maharashtra, Rajasthan, Uttarakhand, Uttar Pradesh, Telangana, and West Bengal.

About CPP Investments

Canada Pension Plan Investment Board (CPP Investments™) is a professional investment management organization that manages the Fund in the best interest of the more than 22 million contributors and beneficiaries of the Canada Pension Plan. In order to build diversified portfolios of assets, investments are made around the world in public equities, private equities, real estate, infrastructure and fixed income. Headquartered in Toronto, with offices in Hong Kong, London, Mumbai, New York City, San Francisco, São Paulo and Sydney, CPP Investments is governed and managed independently of the Canada Pension Plan and at arm’s length from governments. At December 31, 2024, the Fund totalled C$699.6 billion. For more information, please visit www.cppinvestments.com or follow us on LinkedIn, Instagram or on X @CPPInvestments.

I'm going to keep my comments on this deal short.

No big surprise, James Bryce, Managing Director, Head of Infrastructure at CPP Investments sums it up well:

“India remains a strategic focus for CPP Investments, with infrastructure such as toll roads playing a key role in driving the country’s rapid economic growth. Our continued investment in NHIT since its founding is a testament to our commitment to this robust platform. We believe this follow-on investment is an excellent opportunity to generate attractive risk-adjusted returns for the CPP Fund.”

Funny how financial commentators are openly discussing the "end of American exceptionalism" and a bunch of nonsense I don't adhere to and the focus is now on Europe as they crank up fiscal spending there.

But India remains the big strategic investment over the long run because of its growing and young population and the best way for CPP Investments and others to play this theme is through infrastructure plays like toll roads.

It's a public-private partnership where CPP Investments invests in units of National Highways Infra Trust (NHIT).

Are there risks? Yes, a slowdown in India can impact these assets in the short run but over the long run, this is where CPP Investments and other large Canadian funds can best play the India theme, through investments in infrastructure.

There are plenty of other risks, currency, regulatory, reputation risks (CDPQ got hit with a bribing scandal there last year) but that doesn't change the immense opportunities that the country offers over the long run.

Speaking of long run,  CPP Investments CEO John Graham posted this on LinkedIn this week:

John is the Chair of FCLTGlobal, an organization committed to long-term investing.

Recall, Eduard van Gelderen, PSP's former CIO was appointed Head of Research at FCLTGlobal and I went over that when we caught up in November of last year (see my comment here),

I am having issues with their website lately, Norton antivirus keeps blocking it and I don't know why.

It's extremely annoying but I will end up fixing it.

Still, I want to thank Ashley Vogeli who works with John for sending me a summary of their summit that took place last month and I share these two pages with you:

I'm almost positive the guy on the second page sitting at table 7 is Derek Murphy, the former head of Private Equity at PSP when I was there (although I am wondering what the hell he's doing there).

Anyway, this is going to be a short comment, want to see the news and catch up on all the latest Trump tariff turbulence (so depressing, I can't believe a trade war is a real possibility).

Below, in this episode of Going Long, Sarah Williamson sits down with Thomas Buberl, CEO and Director of AXA, one of the world’s largest insurance companies, to discuss the future of insurance, risk management, and developing the next generation of leaders.

I also embedded a short clip on the future of India's highways.