Name: CAN 26001 CG Canada 2026 Outlook Sightlines Webinar V2 HQHD MED
Uploaded: 2026-02-04T17:36:12.936Z
Duration: 51 min 25 s
Description: CAN 26001 CG Canada 2026 Outlook Sightlines Webinar V2 HQHD MED

Transcript for "CAN 26001 CG Canada 2026 Outlook Sightlines Webinar V2 HQHD MED": Hello and welcome. My name is Sri Vemuri and I'm the national sales manager for Capital Group in Canada. On behalf of all my colleagues at Capital, thank you so much for taking the time to join us today for our 2026 outlook webinar titled Sidelines. Let me introduce our speakers today. And today we have an investment director and two portfolio managers joining us to help us in the conversation. And I mentioned earlier, we're a global asset manager that manages 4,000,000,000,000 Canadian. And today we have folks all over the world joining us. So we really have that in action. So first, Katherine Forrest. Katherine Forrest will be the moderator for today's discussion. She's an investment director with Capital Group. She's got twenty years of experience, four years with us. Many of you know Catherine as she works with many of you and has been in your offices and so does a great job for us. So thank you Catherine for moderating. Joining Catherine is Emme Kozlov. Emme is an equity portfolio manager on a number of different strategies. The strategy most of you will be familiar with is our global equity fund. And Emme has been in the industry for twenty seven years with Capital for sixteen. She's joining us from Los Angeles. I mentioned Catherine that she's joining us in Toronto. And finally, Weitinger. Tom is an equity fixed income portfolio manager. Tom has been in the industry fourteen years, eleven years with Capital Group. He's got Canadian roots and he's on a number of funds as well. The one that you'd be most familiar with is World Bond Fund. So with that, Kathrin, I'll turn it over to you. Welcome. It's a pleasure to have you all here with us. We are, as Sri mentioned, joined by Tom and Emme to share their perspectives on bonds and equities. Tom, before we jump into fixed income, let's level set. It's been a remarkable start to the year. Navigate the noise is how Sri opened this conversation. Could you take us on a quick tour across the globe and frame the broader macro landscape for us in terms of growth rates and inflation? Of course. Thank you, Catherine. Thank you for having me. Yeah, I would say generally, I would say the starting point for 2026 is that global growth is pretty acceptable on the surface. But I think what's interesting is, to some extent, the distribution underneath varies a bit when you look at the global growth picture. I like to think of it kind of as a relay race analogy. If you think about a relay race, you have The US kind of the star sprinter for the first few years post COVID, It kind of carried the global growth engine, I would say almost single handedly, but we're now witnessing that baton pass. And most of the time, this handoff is pretty clean, but it still creates that moment that everyone holds their breath while the handoff happens, and so I would say markets tend to hold their breath during these leadership changes and tend to be okay, just it's always a bit rocky when that happens. So let me talk about The US first. I would say in general, The US engine is finally cooling just a little bit. If you look at it, real incomes in The US are fading, the labor market is softening a bit, housing has become a drag on the economy, mainly because of affordability and some of these high mortgage rates that exist The US, and that's one of the reasons why the administration in The US is starting to tweak some of the housing policies. And I would say the fiscal space is narrowing, which kind of limits how much the government can do to boost growth without upsetting the bond market. What's interesting is, elsewhere you look, Europe and Canada are kind of grabbing the baton and picking up pace. These regions are recovering from somewhat depressed levels. Europe is benefiting from really high savings rate during COVID and recovery in confidence and real wages, and China, which has also been pretty depressed for the last few years, is also starting to stimulate the economy. On inflation, I think the headline there is pretty simple. Inflation is cooling in the short term, and so the numbers look pretty good at first glance, but again, the composition is what matters. Most of the parts of inflation that have fallen the past few years have fallen pretty easily. This is goods inflation, it's part of the supply chains, they healed and demand normalized. That's the straightforward part. Now we're getting towards the last leg of this and that's inflation in services and that's tied more to what's happening in the real economy. And then the last one that I don't think we can avoid is tariffs. Tariffs are a very slow moving process. We take a very long term view on this. They don't really hit all at once and they're often shown up quite gradually as companies adjust their pricing. But overall, I would say inflation is falling, but it's not falling in a clean straight line. The last leg matters, the last mile, if you will, and so what we're looking at the moment is sticky service inflation and some of the tariff pass through. So hopefully that gives a broad picture. I think generally the way I describe it is kind of this two speed world. On one side you had The US growing very, very strongly and now that's heading more over towards other parts of the globe, and that creates kind of this fragmented picture, even though I would say global growth generally looks pretty good. And so that divergence is one of those things that really creates specific opportunities, especially for us as active managers, rather than just the whole buying everything environment that we had to some extent right post the COVID period. Really helpful, thank you Tom, you covered a lot of ground there. Let me ask you one quick follow-up though before I turn over to Amy. One thing you haven't touched on is interest rates and your outlook for interest rates over the next year. Maybe you can share some of your thoughts on that, particularly in Canada, The US, Europe, and as headlines are suggesting, maybe Japan as well. Yeah, of course. Yeah, it's a pretty similar picture. Would say the markets in general have priced a pretty smooth synchronized cutting cycle across the globe, but I think those central banks, at least the ones that you mentioned, are facing very different challenges. So I would say in The US, the Fed is kind of a bit constrained. If you look at the economy softening, which would argue for rate cuts to some extent, but inflation on the other side is maybe a bit sticky, you know, due to the services and the tariffs that I've mentioned. The Fed cannot really cut rates more aggressively as the market expects without risking its credibility, And so that's why I think we're kind of expecting US rates to stay slightly more elevated than, for example, Canadian interest rates. In Canada, it's basically a very different story. Its interest rates are stabilizing. The Bank of Canada has acted very early and practically, they cut from five to basically now at two and a quarter. So the heavy lifting is done, and now the Bank of Canada is kind of in this weird position where they're effectively on hold until kind of the smoke clears from the KUSMA trade negotiations that will happen this summer. And so they can't really cut rates too aggressively, but they also can't really hike at the same time. And so we kind of expect it to stabilize. I think where we're the most out of consensus is really what's happening in Europe. It's the unlocking of the debt break in Germany is really a silent revolution that a lot of market participants are not really trusting yet, and we think Europe holds quite a potential big upside in rates potentially. And then if the fiscal policy kind of stimulates growth, that kind of shows the ECB may need to hike to manage inflation. This is quite a big contrast with the Fed, for example. And Japan is a very weird case, it's a country that hasn't had inflation for thirty years and all of a sudden has a lot of inflation, and so the central bank is really far behind there and the market is kind of adjusting to that fact and it's happening quite, at least in the interest rate space, in quite a violent way. Great, thank you so much, Tom. Emme, let me bring you into the conversation. One of the things that we saw in the fine print on Tom's slide just a moment ago was AI spending. It's really hard to talk about equities these days without talking about AI. What is your take here in terms of where we are, and then, of course, probably more importantly, we might be going from here? Sure. Think one of the interesting elements about The US stock market is that it's really separated itself from the real economy. So back to Tom's point, while two thirds of the economy is driven by consumer spending, when you really look at the percentage of the stock market that is consumer staples and cyclicals, it's an incredibly small amount and tech has started to dominate, you know, is completely dominating at this point. So I think it's sort of important to remember that in the context we have this, this strange bifurcation of the real economy and the stock market. But as for artificial intelligence, you're right. We are talking super intelligence at a massive scale. I mean, that's really what artificial intelligence is about. And you've got revenue growth that is faster than any other tech cycle. You've got profitability that is better than any other tech cycle. And so impossible to ignore. My view, as this slide show, we are in a very different situation from the .com era for a lot of reasons, whether it's balance sheet, whether it's building dark cable that never gets used, etcetera, etcetera. I'm a realist, and in terms of risk management, of course, are going to be bubbles in this. You'd be insane not to acknowledge that there will be bubbles, whether it's in the neo clouds or I'm not sure. We're going to see some blowups. So I think one of the benefits, of the research that we do is we are constantly trying to find durable business models. We're trying to take a long term view, and this is obviously an incredibly long term to me and durable investment thesis. So I feel that we have to be selective, but we also have to be committed, And it's going to be incredibly volatile. I mean, even if you look just at the market today, you have situations where, the market structure is filled with so much systematic trading that reactions to earnings, reactions to different changes in businesses have very outsized movements. To me, this is an incredibly powerful, long term, durable theme. But within it, there's going to be a lot of schizophrenia. There are going to be some bubbles bursting. And as long as we feel we are doing our research and taking the long term view, we feel very confident. And we are investing in that capacity, which would specifically mean currently more skewed towards the infrastructure build out rather than trying to pick winners at the application layer. Really helpful. And maybe we can double click on that, the infrastructure layer and then things around that, whether it's underneath or on top or off to the side. Can you tell us a little bit more about how what you described shapes your investment decisions and where you're seeing the best opportunities across this AI ecosystem that goes far beyond just maybe the standard five, ten, or maybe seven companies that come to mind first and foremost? Right. Well, first, like I said, I have a lot of confidence in the picks and shovels at this point, whether that is the Broadcoms, the Nvidias of the world, which are sort of the poster children in terms of the chips. Obviously, adjacencies in areas like memory and storage. Again, these are the raw ingredients that everybody is buying. I prefer to be involved heavily in the area where I know somebody's going to get paid and demand is very visible multi years out. I think there are other areas, to your point. I mean, this ecosystem is quite wide. I would point to other companies like Quanta Services. And when you think of Quanta Services, you might go like, wait, well, maybe some people haven't heard of it. Basically, it's essentially an outsourced engineering and maintenance arm to the North American electrical grid. Now, as we know, what is going to be powering AI with electricity is critical. And across the continent, there are a tremendous amount of degraded utility grids. And companies like that basically are in constant demand and have backlogs once again multi years out. So I'm trying to frame it in terms of where there is durable demand, something like quanta, something like the chip, something like memory. And then I am trying to be, invested, but much more conscious, much more sensitive to the risks inherent in things like the application layers of AI. Great, thank you. The two words I scribbled down were visibility and durability, and it reminded me of the conversation with one of our colleagues, one way he framed it was, you know, there are really no extra points for level of difficulty, and that durability and visibility is really, really important. Before I ask more questions of you, I certainly have lots, but Sri, let me check-in with you to see if we have any questions or comments from the audience at this point. I do have one. And just as a reminder to everybody, feel free to go to the player page and on the Q and A portion, put in any questions you like and we'll have more opportunities throughout. One question is something that's always of interest to this audience is just banks and bank stocks. And the question is banks had a really great run last year, not only in Canada, but Europe, other places broadly. Emme or Tom or both, just general thoughts, sentiment on banks, what you see moving forward, I think would be appreciated. Tom, you want to go up first? Sure. I don't have a huge amount to say. Can talk about the banks, at least in Europe, they've been quite attractive for a number of years. What's interesting about that story is just basically what I said before, the drastic shift that we've seen in Europe is because a lot of people have basically saved post COVID, they put all their cash into savings, rather than The US where it was spent, right? And so some of the banks have been just getting much, much, much higher quality, We're talking about all over Europe and I think that's been a theme now for a couple years, where we've seen, for example, Italian banks which got into trouble during the Euro crisis, Spanish banks looking very, very solid, mainly because of all this flood of deposits coming in. And so from the fixed income side, we definitely think that banks today are much stronger in Europe, for example, than they were several years ago. It's the same story in The US, although in The US it's already farther ahead, at least on the fixed income side, and in Canada it's kind of the same as in The US. But that's been a big thing to keep a focus on, just how the credit markets have gotten stronger in certain parts of the world. From the equity point of view, I couldn't agree more. When we look at the European banks, we are very positive. The macro backdrop remains resilient. In fact, our analysts are saying that 2026 should be the inflection year for most European banks, and that's even though we've seen outsized returns on a lot of these already. When you look at valuations, they still have room to re rate on a fundamental and a relative basis. If you look at PEs, the sector trades at about a 30% discount, the stocks Europe, versus a historical average that's around 20%. And earnings revisions have been much, continue to be much better than the market. So, you know, we are committed and invested in European banks and, you know, of course, having to look at the risks. What what are those key risks? That would be, you know, macro, asset quality. I think there's a lot of discussion about private credit exposure, rising SME bankruptcies in France. So we're cognizant of these risks, but I would say our analysts' work has kept us in these stocks and in size. Anything else from you, Sri, before I take back over here? That's it for now. Thanks. Okay, excellent. Tom, let me come back to our conversation on fixed income. Given your experience and your involvement with both Canadian and Global Strategies, what would you say distinguishes the process of building a global bond portfolio from constructing a Canadian one? Sure. I would kind of put it into both camps. I think that global strategies at the moment, the big theme is this macro divergence. The primary lever that portfolio managers have in global fixed income portfolios is the differences between countries, that's credit quality, if that's economics, things like that, And so, you're kind of valuing the economic cycle of one country to another one. So, I'll give you an example: at the moment, we might be short duration in Japan, which they're kind of trying to fight inflation, while being long duration in UK gilts, which means in The UK the economy is slowing. So it's kind of this perfect dichotomy of one where inflation is a problem and one where the economy is slowing down. And so I think in a two speed world, as I mentioned before, this flexibility matters a lot. A global portfolio can express views through regional rates, through regional credits, and a lot of relative value, rather than relying on that single domestic cycle. And on the Canadian strategies, I think it's all about sector allocation, because the macro environment really in Canada is pretty uniform across the portfolio. The primary lever there is choosing price factors, and so in Canada we focus on the relative value between provincial bonds, corporate bonds, and government bonds, and the goal is really to play the best possible game on a single field rather than in the global strategies where you're playing different games in different fields. And so I would say generally the global strategies let us diversify much more across cycles and the Canadian strategies let us be pretty deliberate about the risks that we're taking through the cycle that's currently happening. Let me check-in with you on this last point, being deliberate about Canada. Can you tell us a little bit more about how you think about the return opportunities in different sectors, specifically in Canada, and maybe the ones that you're leaning into for the year? Yeah, sure. I think, I mean, in the Canadian strategies at the moment, if you take a look at pretty much any fixed income sector in Canada, in The US and actually in Europe, a lot of them are at multi year tights, some of them are at multi decade tights, meaning credit is very, very richly priced, and so what we're doing at the moment in our Canadian strategies is focusing on ballast, on defensiveness, and on liquidity. You kind of want to have the opportunity to move around when things get more attractive, when things are generally indiscriminately richly valued. What we're focusing on in Canada is at the moment looking at a lot more government bonds and provincial bonds than we have in the past. On the corporate side, looking at the very defensive sectors, ones potentially that are important for governments. The one that obviously is pretty obvious is the defence industry. Canada actually has quite a bit of things that go into that supply chain, so there are opportunities there. And then the provincial and government bonds is just to have that ballast in the portfolio things if things do go awry. Looking perhaps at very, very high convictions potentially that are part in The US or even in Europe that would fit into a portfolio that have large operations in Canada. And so that's what we're focusing on right now, is basically the defensive part of the sectors, taking the money the liquidity, if things do get shaken up a bit, take advantage of it, but also realizing that this cycle could go on for quite a bit, especially when Canada is improving from the depressed levels that we've seen recently. Great, thank you. And of course, some of the defense companies in Canada have also seen an increase in quality for their balance sheets, so that can be helpful as well. Emme, we've talked about AI. I think we've probably exhausted that topic for now, at least in my mind. There are lots of other ways to make money in equities, of course. Can you give us a couple of examples of opportunities that strike you right now? Sure. I think one of the themes that is very powerful, unrelated to AI, is de globalization. And that feeds into some of what you two were just talking about, like European defense. We've been invested in that, and we continue to be invested in that. It's crystal clear that deglobalization is forcing, regions like Europe to grow their defense capabilities, raise as a percentage of GDP what their spending is going to be. While there may be short term issues related to it's a war in Ukraine is settled and then the stocks all sell off, the reality is these different regions are recognizing that they have to have their independence. So we continue to really like that area. Whether it's a Leonardo or BAE or those types of companies, we think that's a very durable, powerful trend. So another one in my view is healthcare. Healthcare was really left behind last year and the theme of aging in longevity, those are not changing. And when you look at that, whether it's the GLP-1s, and again, we saw Novo sort of starting to come back from the dead, but with the power of these GLP-1s with Lilly, companies in Japan like Chugai that are part of that entire drug formulation chain, assisted living facilities. These types of things are very disparate, but all of them together combined, to me, are very interesting, uncorrelated to the AI theme, and once again, our long term durable, and in my view, provide visible trends when it comes to revenue. So those are a few examples of things that I am excited about and I think are nice differentiators to portfolios. Great, thank you. Tom, we've talked a lot about rates. Can we talk a little bit about yields in general? I mean, these two things are certainly related, but they're not the same, so I'd love to hear you maybe speak to that a little bit, and then, of course, how yields may serve as an indicator for long term returns in your view. Yep, well I think the good news is that yield is finally back. Say fixed income offers yield again, which is not up until recently hasn't really been the case, right? If you think about the days of 2% yields and returns, they're really behind us. And that was really the last ten years before COVID, that was really fixed income was all about. Can now really build a high quality Canadian and global portfolio yielding, let's say, 3.5% to 4% without really taking that much excessive risk. And so it's what I call the shock absorber, right? So for years we kind of drove this car that had no shock absorber. You hit a pothole in the economy and you felt every bit of it in your fixed income portfolio returns because yields were one to 2%. Today, you can build a pretty high quality Canadian and global portfolio yielding that without taking that excessive risk, and even if things get a bit rocky, you hit that pothole, you're not going to see massively negative returns. So the math there makes sense, the yield acts as this kind of thick cushion that potentially if prices drop significantly, that 4% coupon works kind of night and day to offset that capital loss. And so with the yields at these levels, the forward looking returns are pretty robust, even in volatile scenarios. So I would say the opportunity is pretty clear in fixed income at the moment. You kind of have to lock in these yields, the cost of waiting is high. I would say cash is comfortable, but it doesn't provide that duration protection, that shock absorber, right? That's what the high quality bond portfolio would offer when the road gets a bit bumpy. And so I would say the 4% is just the shock absorber, but really when things get rocky, you want the duration to help you out. But while you wait around for that to happen, you clip a 4% coupon, which is pretty attractive and wasn't really the case many years ago. So from an asset allocation standpoint, it definitely makes sense to have some fixed income with that duration and wait around for potentially the storm to roll over. If there's a storm. If love there's a storm, of course. But that was helpful, Tom. And in a way, if you think back, it's really about a broadening spectrum of roles for fixed income that takes us back to maybe where we were twenty years ago or so, rather than where we were ten years ago. I'm going to turn it back to Emme in a moment, but before I do so, we have covered some ground. I'm sure there are lots of other thoughts on your mind. I'd be curious to see, and maybe just check-in with you, to see if there's anything that we missed that you would highlight for our audience today. On fixed income specifically? Anything. Yeah, I mean, I think the interesting thing to me is what I said in the beginning, it's not just buy everything anymore. It's unusual, the post QE world, post quantitative easing world correlations are coming down. The opportunity of diversification matters again, relative value is back, which is, I think, kind of speaks itself a bit for, to some extent, having some active lean managed fixed income and equities in portfolios. It's not just buy everything anymore. Even in a period like today when we've seen markets go up, they've gone down, The differences between regions are vast and even differences in, let's just say, a Canadian bond portfolio between sectors are vast in this new political, geopolitical system that we've built. And the way I just want to end is, what's interesting to me is, I would say the last fifteen, twenty years have all been about monetary policy. I feel like we're heading into a place where monetary policy is kind of on the back burner. It's now fiscal policy, which is much more geopolitically driven, much more politically driven in general, and I think that'll get really interesting. If you look at what happened in The US with the one beautiful bill last July, that fundamentally changed the math for the US government and now the US government is kind of walking this thin line between fiscal stimulus and upsetting the bond markets, which by the way happened in The UK where I'm based. So it kind of shows you what happens when the bond market gets upset. And what's interesting is the places that have been way more fiscally conservative, like Europe, like Canada, have started to spend more and they've done so because of geopolitical reasons. And so I think that's where we're heading to, is the next five, maybe ten years are a period where monetary policy won't be what matters, the main thing that matters for markets anymore, it'll also be fiscal policy and fiscal policy requires a lot more nuance when it comes to geopolitics and politics in general, and so that creates volatility, that creates opportunity, and I think that helps us pick the best opportunities that we see when it comes to that. Thank you, Tom. Volatility and opportunity, I like how you put those two words together in the same sentence, and I think it wraps up one point you made early on macro divergence, and how that really creates, certainly volatility, but opportunities around that as well. I have lots more questions that I could ask both of you, but let me just ask one final one for now of Emme before we turn to audience questions. If we have time, I would love to add some more of the things that are in my mind into the conversation. Before we do any and all of those, Amy, you get the final word for this segment of our conversation. Based on everything we've heard and discussed, what would you leave us with today? Well, I swear Tom and I did not plan this, but I totally agree with so many of the things that he said. And from an equity point of view, I think it's important to remember that, up through COVID in the equity world, really the asset light long term compounder companies were the golden ticket to riches and equities, and that is what the market rewarded. That was really the sweet spot of equity investing. Then, as Tom pointed out, with all of the things that have happened with fiscal monetary policy and geopolitics, this trend that I mentioned before about deglobalization is really sort of shifting and pivoting interest. And then in conjunction with higher rates, we start seeing more of a depreciation for capital intensive businesses for hard assets. And what that says to me generally is this is underpinning the broadening of the market. This makes for a much healthier ecosystem in equities. So from an investor point of view, I like that. I think it's a very big shift in the paradigm of what used to win and what was very easy, I think, for investors to understand, but it leads to a much richer opportunity set for us to invest in. And then from a technical point of view, when I started to mention it in the beginning, back in the eighteenth century when I was an analyst, I covered the asset management industry and a lot of market structure companies, whether it was exchanges, trading platforms. And I think what is fascinating now is that, 60% of equity market trading is now in the hands of systematic and algorithmic trading on a daily basis. Okay? That has grown from 15% in 2,010. Right? So just imagine how that creates volatility on a day to day basis with with equities. It's a very, very different game. So my message is fasten your seat belt, maintain your long term perspective, and as long as you have confidence in these durable themes that have visible progression points, you can stay firmly invested. Do not let the short term volatility start weakening your resolve. That is a structural change in the markets that is going to be here to stay, and it is a psychological torment of sorts. But recognizing it, I think it's half the battle and understanding that buckle up, stay calm, and keep your focus on the long term. Great, thank you so much, Emme. Price discovery still matters is one of the takeaways that I scribbled down here. Sri, I have lots more questions I could ask, but let me see if you have any that come to mind for our audience today. We do, and what stuck for me there was the term psychological torment. But two, one for Emme and then one for Tom, might be for both. But the first question is specific to Global Equity Fund. And it actually does sort of tie into what you just mentioned in terms of sort of a new paradigm and looking at equities. The question from the audience is specific to, I mean, I know it's probably just for your sleeve, any overweight or underweight that you have right now with geography and sectors you touched on in a little bit. But the question I think really ties into is there particular areas that you're overweighting or underweighting based upon these long term opportunities in global equity? Yeah, am diversifying my AI holdings to the point that we were discussing. I am trying to focus further out on the value chain. I am building up my weighting in healthcare. Again, like I said, it had been left behind. I think that there is no way that, the combination of the aging population, longevity, AI, medical discoveries, etcetera, etcetera, aren't powerful trends that are going to be captured by certain equities. So I'm actually more excited about healthcare than I have been in a long time. And selective non US financials. We talked about European banks. There financial institutions in Asia, in India in particular. These are areas that I am slowly starting to build. So I think, as we talked about at the very beginning, The US led in this humongous AI build out. It was dominating the market cap of these indexes. And now we've got a real chance, and I'm trying to take advantage of it, to broaden globally and across sectors like health care, defense, and financials. That's great. We actually have two more. So the next one is for Tom. You touched a little bit on it, but the question is specific to the relationship between the USD and the CAD. And just your thoughts before obviously we've seen a lot of movement with USD recently and I think that's where the question is coming from. Yeah, thank you. I would say we have a pretty bearish view on the US dollar. If you just think about what I said in the beginning about the growth differentials, if The US economy slows relative to the rest of the world, the US dollar kind of loses some of its primary support. The real rate advantage that The US had has gone away to some extent. The Fed cutting has done a lot to kind of get rid of that. But if you think about kind of the 2025 view, if you wanted to invest in the world, the best equity market which had the AI view, you have to invest in The US. The biggest bond market with the most investment grade and high yield bonds, you have to invest in The US. And in general, the most liquid market in general, but that kind of got questioned a little bit during the whole tariff debate, and so I think we saw kind of the first 10% of that, but when the dollar moves, and by the way in both directions, up and down, it moves a lot and consistently and for a long time. And so we're generally pretty constructive on the Canadian dollar at the moment, again, Canada's kind of turned the corner economically, growth is looking better with this monetary stimulus that the Bank of Canada has provided, and valuations are cheap. The problem is that there's a lot of risks too, I go back to the geopolitics, that's really the main wild card. The renegotiation of Kuzma is a very specific Canadian volatility that will play out and so that's one that we're watching quite closely. But bearing that, I think, you know, the fundamentals favor a much stronger Canadian dollar, and we think even in the global space, the Euro looks very attractive at the moment, again, the central bank that's cut rates a lot and is now potentially becoming more hawkish in a better growing economy. The one wild card I would say that's also there is Japan, and if you ask me, I don't have any strong views, I don't think internally we have any strong views on which way the Yen would move. There's a lot of specifics in Japan, but that's why I don't think we have a very view on that. But overall, bearish the US dollar, these things are long term, so it's not just about the quick, you know, 8%, 10% depreciation net like we saw last year. These things can be consistent for 40% over multi years, so that's what we're looking for. Thank you. And there's one more question, Tom, I mean, either one of you can tackle this, because I think it's probably more just conversations happening with the investment group in the halls of capital. But it is around tariffs and potentially pressures from midterm elections, depending on those results this year. Could that have any impact directionally, obviously? Then Supreme Court, could there be any decisions there? If there was change, think where the question is coming from in the audience is like what potential implications could that mean for markets? I'm not going to have if you give me a crystal ball and ask me what the tariff situation will be like in '30 well, let's say at the end of this year, I would have absolutely no idea, and in fact I don't think the administration has any idea either, but that's not the point. I think what the point is, if you take a long term view, is that this is something that's here to stay. What's interesting, even if you look it through what's happened through the first Trump administration, if you recall back from 'sixteen to 'twenty, Trump put in place some tariffs on China. What was interesting is Biden came in and did not get rid of those. And so maybe the shock and awe of Liberation Day that happened in April was pretty drastic, but I think what is here to stay is some level of tariffs, some level of protectionism by The US, and that changes the calculus for a lot of other countries, and we're kind of seeing Europe wake up to that, Japan wake up to that, even Canada was probably the first one, right? And so I think that's taking it into their own hands to kind of maybe go at it alone without The US umbrella. And so I think that's something that will continue, this is a long term trend. Like Emme said, the asset light business model, now maybe we have to have a few more supply chains in each of these countries. We just had a discussion with a defense corporate in Germany saying that they're trying to build as fast as they can, they just can't build faster. It's pretty clear that supply chains will have to get built out domestically. So again, I would say ignore the noise from day to day. Think the headlines are strong, they're very easy to distract. What we've learned is that tariffs are probably, well, definitely going to be higher than what we thought five years ago, even a year ago, I would say, but they're not going to be as high as what was announced initially. So I think there's always an in between. I would add to that, that tariffs are for sure impossible to predict. The most important thing is to follow what the companies are doing in terms of reinvestment. And we have many conversations with companies that will either reference tariffs or the new big beautiful bill and say that those are not dictating, an aggressive CapEx reinvestment plan for us. We need to understand true structural demand. So there is plenty of noise. And like I said, from a market structure point of view, these will move the stocks, but we watch what the companies do and where they're putting their money and I think that dictates how we want to invest in the long term. That's great. Thank you. Kathrin, do you have any final questions? I'd love to circle back, Emme, with you on our earlier conversation around AI, and we talked about three different segments when we look across AI, but if you really take a step back and you take that long term view, you could probably make the case that it's going to be everything everywhere, right? It's something that is a general purpose technology that will permeate through the economy, and with that across sectors and industries. From your work and your conversations with companies, you know, to day, are there one or two examples of non tech companies that come to mind for you that are utilizing AI in interesting or creative ways that are either improving their productivity, or maybe they're extending products and services into some advanced technologies. I'd be curious to get your thoughts on that. Yeah, It's slow, but it's happening. And I think very relatable examples would be in industrials and in health care. So for example, Siemens, they're using AI for predictive maintenance. And as we all know in industrials, if something breaks, that stops the entire production line. Having the monitoring system and the preventative maintenance set up in a low cost efficient 20 fourseven manner can be hugely valuable over the long term. So that to me is a really good real life example that I think we can all understand. There's so many examples of AI where I feel like it gets a little, suddenly it's your psychiatrist, etcetera, etcetera. I'm not sure how we monetize that. Another example would be with AstraZeneca. We had a conversation with them the other day when there was the big healthcare conference in San Francisco, they were talking about the electronification of lab notebooks. And I know this may sound silly, but the scientists have so much administrative documentation that they have to do when it comes to all of the testing and all of the R and D that they are doing and using AI to be able to draft all of these summaries, record these summaries and share all of these summaries that eventually get fed into larger databases. These sounds like they're small, but these are incredibly efficient time savers. And I actually pay more attention to those than the big grandiose plans because I think that sort of slow compounding efficiency, which is both cost and revenue enhancing, those are sort of examples that are a bit off the beaten path. You've all read the Wall Street Journal or Barron's or whatever about all of the different agents, and I can get on Amazon and the agent's going to tell me what to buy and what to do, etcetera, etcetera. But I think it gets down to this granular area. And I do think industrials is one of those sleeper industries where we're going to hear more and more and more. I mean, even John Deere, what they're doing in terms of ag and how we need to optimize crops, etcetera. So much of that may sound like small details, but I think in aggregate those will be profound movements over the next decade. Amazing. Emme, Tom, you as well. Thank you so much for sharing your insights with us. Sri, with that, let me turn it back to you for any closing remarks that you have. For sure, and thanks. I'll echo those sentiments, to you as well, Catherine. Kathrin, Tom, Emme, thank you so very much. And I really hope the audience got a real sense that from a global perspective, as an active manager, what you heard today was the capital advantage. All these insights are not just Emme and Tom staring at data balance sheets. They do a lot of that. But it's us doing fundamental on the ground research, meeting with these companies and getting those insights and taking the art and science of putting those two things together. So with that, thank you guys so very, very much. Respective sales teams will be out to answer additional questions that you have, provide more insights. You heard a lot today. And in terms of putting those into action, as I mentioned on the front end, you can take a look at our outlook. And on the very back page of our outlook, you will see the various themes and how those themes align with our various investments. So, you can take a look at the themes that both Emme and Tom talked about and how to best access those through our Canadian lineup. And as mentioned, thank you whether it's through mutual fund, ETF or SMA we excited to be able to offer these to you