Sunrun Inc (NASDAQ: RUN) has been a major disappointment for investors in recent weeks, but a senior analyst at UBS remains convinced that the ongoing sell-off in this solar stock has gone a bit too far.
According to Jon Windham, Sunrun’s stock price crash has created an opportunity to load up on a clean energy name that could weather the risks associated with President Trump’s new budget bill.
Note that Sunrun stock, despite the aforementioned hit, remains up some 30% versus its YTD low.
UBS sees upside in Sunrun stock to $12
Windham reiterated his “buy” rating on Sunrun shares this morning but lowered the price target to $12 to reflect a sector headwind linked to the House passing the “One Big Beautiful Bill Act” last week.
Investors have been bailing on clean energy stocks under the Trump administration this year as its new budget bill proposes removing significant tax credits for solar companies by the end of 2025.
These investment tax credits under the Biden-era Inflation Reduction Act (IRA) incentivized homeowners to install solar panels in pursuit of lower electricity costs.
That’s why the Invesco Solar ETF has lost a little under 15% year-to-date.
However, RUN shares could still navigate this storm and soar up to 75% from here, said the UBS analyst in his latest note to clients.
How may RUN shares navigate the new budget bill?
In his report, Jon Windham said his downwardly revised price target on Sunrun stock reflects the potential risk of the White House removing all federal tax credits for residential solar.
However, he maintained a positive view on the stock, noting that Sunrun could mitigate the impact of such regulatory headwinds through state-level incentives and expansion into other segments, including commercial, industrial, and community solar markets.
Additionally, Sunrun Inc could adjust its Power Purchase Agreements as well to better adapt to the regulatory shift, the UBS analyst argued in his research note.
Note that RUN shares do not pay a dividend at the time of writing.
Sunrun reported strong financials for its Q1
Windham also signalled the possibility of the US Senate reversing its stance on the aforementioned bill in his report as well.
He’s positive on RUN shares on the company’s “underlying $2.6 billion portfolio of contracted net earning assets.”
Moreover, the analyst also sees “potential upside scenarios beyond the US budget bill”.
Sunrun stock may be worth owning for continued strength in its financials.
Earlier in May, the Nasdaq-listed firm reported $504 million in revenue and earnings of 20 cents per share for its fiscal first quarter.
That handily beat analyst expectations, which had projected around $494 million in revenue and a loss of 22 cents per share for the clean energy firm.
That’s why the consensus rating on RUN remains an “overweight” at writing.
Intel has announced plans to lower its global headcount by more than 20% under the leadership of Lip-Bu Tan, who has been at the helm for a couple of months only.
In its latest reported quarter, the semiconductor giant came in ahead of Street estimates on both the top and bottom line as well. Still, Intel stock remains in shambles.
And it may continue to struggle until the company’s new chief executive announces a big change that markets have been anticipating for a while now, said Susquehanna analyst Christopher Rolland in a recent CNBC interview.
However, a potential split of its business – a strategic move that separates its manufacturing unit from production divisions could unlock significant value for shareholders, the analyst argued.
Rolland sees it as a “viable path forward” for Intel, particularly because the Trump administration has been fully committed to onshoring production this year.
Top it off with the firm’s 18A process node that’s gaining traction lately, and you have yourself a semiconductor stock that “may have a chance” in keeping relevant in an increasingly AI-centred global market, according to the Susquehanna analyst.
Note that Intel stock currently pays a dividend yield of 2.57%, which makes it a bit more attractive to own in 2025.
18A success could save INTC shares in 2025
Intel’s aforementioned manufacturing process is reportedly facing initial challenges but has started gaining interest from a number of tech companies.
There have been rumours of potential large-scale foundry deals with companies like Microsoft, and talks are also underway with Google.
Intel is aiming for high-volume production in the second half of 2025. Provided that it successfully delivers on that commitment, hyperscalers could increasingly turn to INTC, given the federal push to manufacturing in the US.
This may help remove a major overhang from Intel shares – the lack of a big customer. Note that the semiconductor stock is currently down some 30% versus its year-to-date high.
Is it worth investing in Intel this year?
Until Intel announces the separation of its two core businesses and ramps up its 18A process, however, INTC stock is much like “dead money”, as per the Susquehanna analyst.
Christopher Rolland currently has a “neutral” rating on Intel shares also because the likes of AMD are stealing its market share, and the signs of a pick-up in PC demand the company talked about on its Q1 earnings call may only have been a pull forward due to tariffs.
Other Wall Street analysts agree with Rolland’s neutral rating on Intel stock as well. However, the mean target of about $24 still indicates potential upside of more than 20% from here.
German stocks have been on a tear in 2025, vastly outperforming both their European peers and U.S. counterparts.
The DAX index, Germany’s flagship benchmark, is up over 20% year-to-date, outshining the broader Stoxx 600, which has posted a more modest 8% gain.
In stark contrast, the S&P 500 in the U.S. has been hovering just above flatline for the year, underlining the scale of outperformance coming out of Europe’s largest economy.
Leading the charge in Germany is defense company Rheinmetall, which has seen its stock soar more than 200% amid a spike in defense spending by the German government.
The rally is not isolated to defense: industrials, utilities, and even segments exposed to artificial intelligence have all contributed to the market’s strength.
Why are German stocks flying high in 2025?
According to Laura Cooper, Global Investment Strategist at Nuveen, a major catalyst has been Germany’s aggressive fiscal stimulus, announced in March.
Speaking with CNBC, she noted that investors have been pricing in both defense and infrastructure spending, which has fueled the DAX’s double-digit surge.
“It’s quite remarkable to see the significant double-digit gains in the German DAX,” Cooper said in the interview, adding “this is largely based on that game-changing fiscal stimulus … tilted more towards those defense stocks.”
The DAX’s sector composition has also helped it outperform. Its heavy allocation to industrials and utilities aligns well with the current macro backdrop, especially as infrastructure upgrades and AI applications gather momentum globally.
Cooper also pointed to artificial intelligence as a growing tailwind for these sectors, particularly as Europe ramps up digitization.
Is it time to take profit in German stocks?
With such sharp gains in a short span, investors are beginning to question whether now is the time to lock in profits.
While Cooper doesn’t advocate exiting the market entirely, she does warn of stretched valuations, especially in defense.
“I don’t think necessarily this is a time for profit-taking,” she told CNBC in an interview today. “But we are going to see valuations come back into focus. The German DAX is trading at about 15 or 16 times its earnings, and that is stretched on a historical basis,” Cooper added.
Rather than selling out, Cooper suggests broadening exposure within Europe and perhaps even revisiting US equities, where strong tech earnings are starting to reawaken investor interest. The European rally may continue, she said, but gains are likely to be “more tepid” from here.
Investors should remain cautious, balancing optimism with prudent risk management as market dynamics continue to evolve.
Staying diversified and closely monitoring valuation shifts will be key to navigating this evolving landscape successfully.
In short, German stocks may still have room to run—but the easy money might already be behind us.
Gap Inc (NYSE: GAP) shares plunged some 20% on Friday, rattled by concerns over tariffs and their potential impact on profit margins.
However, according to Matt Boss, a retail analyst at JPMorgan and an Extel Analyst Hall of Famer, the market is overreacting—and there’s a compelling case to buy the dip in Gap stock.
Why did Gap shares fall?
Today’s selloff in GAP shares was triggered by investor fears over an estimated $150 million in incremental tariffs hitting Gap and its brands like Old Navy.
This tariff burden has been factored into the stock price at a low double-digit multiple, equating to roughly $5 to $6 in equity value removed from the shares, Boss explained.
Despite these concerns, Gap reported solid fundamentals in its latest quarterly results, with same-store sales up mid-single digits at core Gap and low single digits at Old Navy.
The company also outlined an expected 8% to 10% multi-year bottom-line growth driven by steady sales gains.
Where the market is wrong
Matt Boss emphasized that tariffs are far from a new issue for Gap stock and its retail peers, many of whom have been aggressively reducing their exposure to China, traditionally a major source of tariff risk.
“Gap will exit this year with only 3% of its sourcing coming from China,” the JPM analyst revealed in a CNBC interview today, adding “on average, our group has a high single-digit China impact today, down from 20% in 2019.”
Retailers are mitigating tariff pressure through diversified sourcing, strategic pricing adjustments, and operational efficiencies.
Some companies are cautiously implementing low to mid-single-digit price increases, while others are waiting to see the final tariff rates before passing costs onto consumers.
JPMorgan sees opportunity
Despite recent volatility, Boss remains optimistic on Gap’s turnaround story and rates the stock as overweight.
He believes fair value lies in the mid-$30s for GAP shares, well above current prices, contingent on management’s execution of its plan.
Pullbacks like the recent selloff, he said, create compelling buying opportunities for investors willing to look beyond short-term tariff noise.
While tariffs have rattled the market, the fundamental outlook for Gap stock and other well-managed retailers remains intact.
As Matt Boss notes, investors should see the recent selloff in GAP not as a warning sign but as a buying opportunity in a sector undergoing selective, durable recovery.
Other Wall Street analysts agree with JPM’s view on GAP shares as well, given the consensus rating on the multinational clothing and accessories retailer currently sits at “overweight”.
Analysts have an average price target of a little over $27 on Gap Inc, which indicates potential for a more than 20% upside from current levels.
U.S. equities may be poised for a significant rally in the second half of 2025, according to Chris Harvey, head of equity strategy at Wells Fargo Securities.
Despite persistent trade tensions and policy uncertainty, Harvey believes that much of the tariff risk is already priced into the market – perhaps even overstated – and that economic fundamentals remain resilient.
Wells Fargo still sees S&P 500 surpassing 7,000 level by year end
Speaking with CNBC, Harvey reiterated his bold year-end S&P 500 target of 7,070, the highest on Wall Street. This implies an upside of nearly 20% from current levels.
The Wells Fargo analyst sees recent market volatility as part of a broader constructive trend.
“We’re making progress on trade and tariff. We’ll continue to make progress,” he noted in the said interview, adding “we’ll take a step back every once in a while, but Trump administration appears intent on pushing the ball forward.”
One of the key factors supporting Harvey’s optimism is the Federal Reserve’s stance on interest rates.
He pointed to recent comments by Fed Governor Christopher Waller, who suggested that if tariffs remain in the 10% range, the Fed could justify cutting interest rates to offset the drag on growth.
According to the Wells Fargo equity strategist, “that’s where we think tariffs end up, around 10-12%. We’re getting more comfortable with that belief.”
Tariff revenue could help the US narrow its fiscal deficit
Harvey sees modest tariffs in the aforementioned range distributing costs relatively evenly among importers, corporations, and consumers, with limited economic disruption.
Meanwhile, the revenue generated could help narrow the fiscal deficit. “That’s a real positive, a real constructive thing,” he said, underscoring the potential for increased government revenue to become a stabilizing force.
Beyond China, the Wells Fargo strategist believes trade deals with other key economies like India, Japan, and the European Union may carry even more strategic importance.
We’re in the process of disintermediating China. We’re telling our allies: if you want to benefit from this shift, play ball with us.
He pointed to earnings calls where companies are increasingly citing efforts to reduce exposure to China by relocating supply chains and diversifying manufacturing bases.
This, according to Chris Harvey, indicates that the US strategy is gaining traction and could support broader economic resilience.
What could offset Wells Fargo’s bullish view on US stocks?
On the flip side, Harvey warned that uncertainty remains the biggest risk to his forecast. If there is not enough clarity on trade by mid-summer, it could begin to weigh on corporate confidence and hiring.
If we’re here in June or July and still saying, ‘We’re not sure,’ then people may start resizing their workforce. That’s when things could start to fall apart.
Even so, the strategist remains bullish that by July, the market could shift its focus to pro-growth themes such as potential tax cuts and fiscal stimulus.
If significant trade progress is achieved, with deals involving India or Japan, for example, investors may begin to look past temporary economic softness and toward a more optimistic 2026.
Shares in M&G surged more than 6% Friday, reaching their highest level in over a year, after the British financial group announced a long-term partnership with Japanese insurer Dai-ichi Life.
As part of the deal, Dai-ichi Life will acquire a 15% stake in M&G, making it the company’s largest single shareholder.
The move allows the Japanese firm to appoint a director to M&G’s board as long as it retains that level of ownership.
The tie-up is expected to generate at least $6 billion in new business flows for M&G over the next five years.
Roughly half of that will come from Dai-ichi Life’s balance sheet, while the rest will arise from joint initiatives, including the distribution of M&G products in Japan and Asia.
In return, Dai-ichi Life expects to see at least $2 billion in new business from the partnership.
Strategic expansion amid industry-wide pressure to scale
M&G will become Dai-ichi Life’s preferred asset management partner in Europe, positioning the British group to expand its presence in European private markets while opening channels across Asia.
Both firms will also explore opportunities to co-develop products and co-invest in new asset management capabilities, reflecting the growing trend of strategic collaboration in the sector.
Asset management companies around the world have increasingly looked to consolidate or form alliances to scale up and compete more effectively against industry giants like BlackRock and Vanguard.
Active managers like M&G, in particular, have faced headwinds from inflation and the growing appeal of passive investment vehicles, which charge lower fees.
Andrea Rossi, M&G’s chief executive, said the partnership validates the firm’s strategic direction and reflects confidence in its long-term potential.
He added that the deal will support growth in core areas while granting M&G deeper access to Asian markets.
Japanese insurers increase global footprint
This deal continues a pattern of outbound investment by Japanese financial institutions seeking diversification and growth.
Earlier this year, Dai-ichi Life boosted its stake in UK-based Capula Investment Management and agreed to take a 15.1% interest in Australia’s Challenger.
Japanese peers have also pursued international collaborations, including Legal & General’s tie-up with Meiji Yasuda and DWS’s ongoing discussions with Nippon Life regarding a joint venture in India.
M&G was previously linked to a potential acquisition by Australia’s Macquarie, though it dismissed the speculation.
The firm reported a better-than-expected annual profit in March, supported by cost-cutting efforts and growth in asset management.
FTSE 100 inches toward record high
The news gave fresh momentum to the FTSE 100, which is now up 7.1% for the year, aided by a 3.4% average dividend yield.
According to Interactive Investor’s Richard Hunter, the index is just 1.4% below its record high, a level that could prompt further buying and sustain the rally.
India’s economic growth for the fiscal year 2024-25 decelerated to 6.5%, the slowest pace in four years, as weak private investment and rising global uncertainty weighed on overall momentum, despite a strong finish to the year with GDP growing 7.4% in the March quarter.
Data released by the Ministry of Statistics on Friday showed that the economy expanded faster than anticipated in the final quarter, outperforming the 6.7% median forecast from economists in a Reuters poll.
The March quarter marked the best three-month performance of the year, rising from 6.2% in the preceding quarter.
However, the annual figures showed the economy could not escape the broader slowdown that has emerged since the pandemic-era rebound, and represent a significant deceleration from the 8% average recorded in recent years.
The yield on the 10-year bond rose 2 basis points to 6.27% after the GDP numbers were declared.
The 6.5% full-year growth was in line with earlier government estimates, reflecting resilience in domestic consumption and services, even as private investment remained muted.
Economists attributed the subdued investment appetite to geopolitical tensions, Trump-era trade policy shifts, and a fragile security environment in South Asia.
Still, senior Indian officials maintain that India continues to be the fastest-growing major economy in the world, ahead of China and other large peers.
Growth was also buoyed by India’s limited dependence on exports, which shielded it from the full brunt of erratic global trade dynamics, particularly from the US.
Trump tariffs and rate cuts loom over outlook
India’s trade equation with the US came under pressure in recent weeks after President Donald Trump imposed 26% reciprocal tariffs on Indian goods.
While the tariff hike has been temporarily paused for 90 days, a 10% base duty still applies.
India, which runs a $46 billion surplus with the US, is currently negotiating a deal, and Trump has hinted at a possible zero-tariff arrangement.
To support growth, the Reserve Bank of India slashed interest rates for a second straight time in April, bringing the repo rate down to 6%.
Economists expect another cut in June, possibly lowering the rate to 5.5% by the end of the easing cycle.
Inflation remains manageable, giving the central bank room to act.
“Falling inflation, downside risks to growth to prompt another cut to repo rate next week,” said Shilan Shah, deputy chief emerging markets economist at Capital Economics.
Tensions with Pakistan and rural consumption in focus
Domestic headwinds also persist.
A fragile ceasefire in Kashmir threatens to dampen investor sentiment, following military exchanges between India and Pakistan earlier this month.
Analysts warn that renewed tensions could restrain both investment and household spending.
However, rural demand is showing signs of recovery.
According to NielsenIQ, rural areas accounted for nearly 40% of consumer goods sales in the March quarter, signaling a turnaround in countryside consumption which makes up a large part of the economy.
India set to overtake Japan in global GDP rankings
Despite the short-term slowdown, structural optimism remains.
The International Monetary Fund projects that India will surpass Japan in 2025 to become the world’s fourth-largest economy, with a projected GDP of $4.187 trillion.
“India was always going to overtake Japan—and also Germany—given its positive demographics and scope for continued productivity gains,” Shah noted.
Dr. Manoranjan Sharma, Chief Economist at Infomerics Valuations and Ratings, added:
“While external uncertainties—such as supply chain disruptions and energy market volatility—pose challenges, India continues to benefit from strong service sector performance, a stable banking system, and improving manufacturing output under schemes like PLI.”
Even amid volatility, India’s growth story appears intact, underscored by domestic resilience, rising consumption, and strategic positioning in the global economy.
Canada-based Brazil Potash is set to significantly impact the Brazilian fertiliser market with its plan to ramp up production, aiming to shield the country from geopolitical risks and fluctuating international prices.
The company’s Autazes project in Brazil, having received full permitting, seeks to address the country’s heavy reliance on imported potash, a critical nutrient for its massive agricultural sector.
Currently importing 98% of its potash, Brazil, a major agricultural exporter, faces vulnerability to supply chain disruptions and geopolitical tensions.
With an initial goal of covering 17% of Brazil’s import needs and plans to potentially reach 50% over the next decade, Brazil Potash intends to capitalise on its strategic location, which drastically reduces transportation costs compared to international competitors, according to Chief Executive Officer Matt Simpson.
In an interview with Invezz, Matt Simpson, the chief executive officer at Brazil Potash and Black Iron Inc, discussed the complexities of navigating leadership roles at both companies amidst geopolitical tensions and fluctuating market conditions.
Furthermore, the interview discusses the impact of the US.-Canada tariff situation on potash, highlighting the initial confusion and subsequent realisation that the USMCA effectively eliminates tariffs on Canadian potash.
As the global demand for potash continues to rise, Matt’s perspective sheds light on the future of the agricultural sector and the critical role that domestic production will play in ensuring food security.
Invezz: Recently, the Brazil Potash’s Autazes project has received full permitting. How does that development affect Brazil’s agricultural sector and the company’s overview?
Brazil, as you may know, is one of the world’s largest exporters of agriculture, generating about $167 billion a year. However, the Achilles’ heel for the country is that they import 98% of their potash, which is one of the three main nutrients used to grow food, even though potentially the second biggest basin in the world is being developed by Brazil Potash right in their backyard.
When we look at the current situation in the potash market, it is highly concentrated between Canada, Russia, and Belarus. If one day Russian President Vladimir Putin decided he didn’t want to supply the world with potash, we would face a major food security issue.
Brazil, in particular, is the world’s largest importer, growing at a rate of about four times that of the rest of the world. Having a domestic supply protects them from geopolitical risks, port strikes, and rail strikes that have all occurred in the past year.
Invezz: Can you provide an update on the company’s fundraising efforts since the $50 million round in 2020? Are there ongoing discussions with global producers for partnerships or further acquisitions?
Since the regulation, we have completed an initial public offering on the New York Stock Exchange American and raised a further $30 million. There are many discussions right now with different groups regarding funding the construction of the project.
Strategies and cost advantages
Invezz: With your extensive experience in mining, design, and operations, particularly from your time at Rio Tinto or Hatch, what key lessons are you applying in Brazil Potash’s development?
We’re trying to strike a balance between the rigor that larger companies have in terms of ensuring proper governance and making investment decisions while still being a bit entrepreneurial.
Companies like Rio Tinto are great organisations, but they may take bureaucracy too far, which can lead to additional costs and delays.
On the other hand, many junior companies lack any rigor because they don’t come from a structured environment. I’m trying to take the beneficial aspects of structure and apply them while still keeping the company entrepreneurial.
Invezz: You previously discussed the cost advantage of domestic potash production in Brazil. How will the company leverage this advantage to compete in the global market?
Our plan is to sell 100% into Brazil because it is the world’s largest importer, holding 22% of the global market share. Our cost of mining and processing will be very similar to our competitors.
What really sets us apart is our location in Brazil, while everyone else is 12,000 to 20,000 kilometers away.
Our all-in cost to extract, process, and deliver to a farmer is about $130, which is less than the over $200 spent on transportation by our competitors. In fact, our competitors spend about two and a half times as much on transportation compared to what they spend on mining and processing.
Invezz: How do you see Brazil’s potash production shaping the global fertiliser market in the coming years?
Initially, we’re going to produce 2.2 million metric tons in a 63 million ton a year market that is growing at 2 million tons. I don’t think our production will have any significant impact on global prices. However, it will change the makeup of pricing within Brazil.
Import dependency
Invezz: Brazil is currently importing a lot of potash and is heavily dependent on it. Can you provide the percentage of imports that the Autazes project will cover?
With phase one, we will cover about 17% of Brazil’s current imports, but we could look to double and triple our output over time. Realistically, we could reach about half of Brazil’s current consumption with the domestic supply. However, Brazil would never be self-sufficient.
Invezz: How long will it take to cover half of Brazil’s current consumption?
Our first phase is 2.2 million tons, which is only 17% of Brazil’s needs. It would realistically take another five years after that to double our production, and probably another five years after that to reach half. So, it will take quite a while.
Invezz: What economic advantages will Brazil gain from this level of domestic potash production?
It’s all about logistics. Being in Brazil allows us to largely eliminate transportation costs, which are about two and a half times the cost of mining and processing for imported material.
From a farmer’s standpoint, this means they can cut out the middlemen and buy directly, saving at least $50 a ton by not having to cover the working capital costs associated with over 100 days of imported material.
Tariff impact
Invezz: Looking at the current state of the tariff war between the U.S. and Canada, how have businesses been impacted? Can you give us a picture of what’s happening in Canada against the backdrop of this trade war?
It’s been, frankly, a little bit confusing in Canada.
With potash, when President Trump initially announced the tariffs, he stated it would be a 25% tariff on potash. The American agricultural lobby reacted strongly because that would have meant a 25% increase in their costs to grow food, at least for a portion of it. Just three days after announcing the 25% tariff, Trump reduced it to 10% on potash due to this significant pushback.
Then, shortly after that, he mentioned that the US-Mexico-Canada Free Trade Agreement (USMCA) applies, which means that the tariff on potash is actually 0%.
So, through all this confusion, he still claims it’s 10% for potash that isn’t covered under the USMCA. However, there is no potash imported from another country into Canada that would then flow into the U.S.; all the potash is produced in Canada and then sent to the U.S.
In a nutshell, all that confusion indicates that there has been no direct impact of tariffs on potash. However, globally, prices have risen quite a bit since the start of the year and since those tariffs were announced. This increase is partly due to fears surrounding the tariffs and also because of the production issues faced by Belarusian and Russian producers.
When you look at the war in Ukraine, for instance, when Putin first invaded Ukraine back in February 2022, the price of potash literally doubled within weeks of that invasion—it’s like a vertical spike. This is largely because Russia and Belarus supply about 42% of the world’s potash. Prices did come back down, mainly because potash was never sanctioned; we all need to eat, so it was never affected by those sanctions.
Invezz: How do you balance your leadership roles at Black Iron and Brazil Potash? Are there any synergies between both companies and their strategies?
Coincidentally, I was primarily focused on running Black Iron when Russia invaded the eastern part of Ukraine. Unfortunately, that situation put Black Iron on hold around 2014 due to the uncertainty regarding how far Russia would push into the country. At that time, an opportunity arose to start running Brazil Potash.
It was feasible to manage both projects because things were slowing down in Ukraine due to the uncertainty, while potash prices were heating up. Then, around 2017-2018, we saw a reversal, and potash prices started to decline, which reduced some of the workload on Brazil Potash.
Interestingly, the two projects have acted as a sort of arbitrage against each other over time, allowing me to switch back and forth between them.
I do expect that there will be peace in Ukraine at some point, hopefully in the near future. However, managing both projects will become much trickier once that happens. It’s still early to say when we might see peace.
The amount greatly exceeded the 1.5% consensus estimate forecast by experts and matched the revised rate of growth reported in the fourth quarter of 2024.
Along with the first-quarter figures, Statistics Canada reduced its fourth-quarter 2024 growth figure from 2.6% to 2.1%.
The strong first-quarter result exceeded the Bank of Canada’s expectation of 1.8% annualised growth, as detailed in the most recent Monetary Policy Report.
The stronger-than-expected results may impact monetary policy debates, particularly in light of persistent inflation and interest rate concerns.
In a note accompanying the data release, CIBC economist Andrew Grantham cautioned that while real GDP growth was “solid,” the figure was “flattered by a surge in exports as companies looked to front-run potential US tariffs.”
Exports lead growth amid tariff concerns
The headline growth rate was mostly driven by an increase in exports, which boosted total economic activity as Canadian businesses sought to avoid prospective trade barriers.
Companies boosted shipments to the United States in reaction to concerns about anticipated tariffs, resulting in a temporary increase in external demand.
This export-driven boost offered a cushion for the overall economy, allowing it to surpass expectations despite weak domestic indicators.
Real GDP grew 0.1% in March, as expected, providing a minor signal of stability after the quarter.
Domestic demand remains a weak spot
Despite the impressive headline figure, domestic economic fundamentals revealed signs of pressure.
Consumption and investment trends were sluggish, indicating a lack of underlying momentum.
Economists remarked that domestic demand remained “weak,” with little evidence of acceleration heading into the second quarter.
The dampened domestic outlook raises concerns about the sustainability of Canada’s present growth trajectory.
Without a recovery in consumer spending or business investment, the economy may struggle to maintain its current pace, particularly if external tailwinds such as the export rise begin to diminish.
The outlook is uncertain as Q2 begins
Looking ahead, the economy’s momentum appears to be shaky. While the export increase provided a short-term boost, it may not be sustainable, especially if trade policy risks materialise or foreign demand declines.
Meanwhile, the lack of strength in domestic activity raises concerns that growth will slow in the coming months.
The Bank of Canada will most certainly keep a close eye on these developments as it considers its next interest rate move.
With GDP exceeding expectations but underlying demand softening, the central bank may face a complicated policy landscape in the second half of the year.
In the near term, emphasis will shift to incoming data on employment, inflation, and consumer spending for more clues about the economy’s path.
While Q1 was a positive surprise, the balance of risks suggests a cautious perspective for the rest of 2025.
President Donald Trump will hold a press event Friday to mark the departure of Elon Musk, who is stepping down from his role at the Department of Government Efficiency (DOGE) after a four-month stint marked by internal turmoil and policy clashes.
Musk’s exit follows a wave of departures from DOGE, the White House’s controversial initiative aimed at reducing federal government spending.
Senior officials including Steve Davis, president of Musk’s Boring Company, and DOGE spokeswoman Katie Miller, are leaving or have recently left the agency, according to officials.
Attorney James Burnham is also expected to depart.
Musk joined the Trump administration as a “special government employee” after contributing over $250 million to the president’s re-election effort.
Though he held no formal Cabinet title, Musk’s role was high-profile and unusually influential for a temporary appointee.
All is okay between Musk and Trump?
President Trump has consistently praised Musk, posting on Truth Social Thursday that, “This will be his last day, but not really, because he will, always, be with us, helping all the way. Elon is terrific!”
However, Musk has not always reciprocated the admiration.
He publicly criticized the administration’s tariff strategy, calling White House trade advisor Peter Navarro “truly a moron” and “dumber than a sack of bricks.”
More recently, Musk broke with Trump over the president’s proposed omnibus spending package, calling it fiscally irresponsible.
“It undermines the work that the DOGE team is doing,” Musk said in an interview with CBS’ Sunday Morning.
DOGE falls short of lofty goals
The Department of Government Efficiency, which Musk once claimed could reduce federal spending by trillions, has not met that benchmark.
Even the agency’s self-reported savings figures have come under scrutiny, and the actual impact remains unclear.
Still, Musk struck an optimistic tone this week, writing on X that “The @DOGE mission will only strengthen over time as it becomes a way of life throughout the government.”
As my scheduled time as a Special Government Employee comes to an end, I would like to thank President @realDonaldTrump for the opportunity to reduce wasteful spending.
The @DOGE mission will only strengthen over time as it becomes a way of life throughout the government.
