The Canadian economy, in contrast to the U.S., appears significantly more vulnerable. The heavy monetary tightening, unparalleled in recent history, suggests a looming hard landing scenario that the equity markets have yet to factor in. The unique nature of the COVID-19 pandemic and subsequent government interventions further complicates the economic landscape, potentially delaying the effects of policy changes.
Aitken maintains, “While better-than-expected GDP growth has caused the soft landing chorus to grow louder in the U.S., the Canadian economy is in a meaningfully weaker position. We remain of the view that a hard landing is a likely scenario, given the magnitude of monetary tightening over the past year and a half, a stance yet to be discounted by Canadian equity markets.”
Defensive sectors: A new constructive outlook
Defensive sectors such as communication services, utilities, and…
