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Resilient Markets: Insights from Desjardins Group's Chief Economist

Strategic Insights

— 2 min read

Equity markets have defied headwinds, posting record highs 52 times this year. Despite concerns about macroeconomic conditions, the resilience of markets has provided buying opportunities for investors. Jimmy Jean, chief economist and strategist at Desjardins Group, shares his views on where markets are headed, what to watch for this earnings season, and his thoughts on the AI bubble debate.

Key Takeaways:

  • The current bull market would be the shortest since 1958 if it ended today, but Jean believes it can run for many more years if it's a bubble.
  • The main areas of focus for this earnings season will be the impact of tariffs on margins, particularly in the manufacturing and industrials sectors.
  • The consumer and consumer-related sectors will be a gauge of consumer appetite, including their willingness to handle price increases.
  • AI spending has been high, but the payoff from those investments is still an open question, and companies are still in the early stages of AI adoption.
  • The U.S. market may be more vulnerable to a correction due to its high valuations, but Jean is still constructive on the market and expects the current trend to continue.
  • The TSX is expected to outperform the S&P 500 in 2026 due to its lower valuations, increased gold demand, and Canada's stability on the social and political fronts.
  • The price of gold may decline in the short term, but Jean believes the fundamentals will favor price appreciation in the long term due to the lack of supply and increasing demand.
  • A key takeaway from this conversation is that markets are discounting good news and are more resilient to negative news or shocks than expected, and investors should still be cautious and consider gold as a protection conduit.

Statistics:

  • The current bull market has lasted 35 months, with no historical indication that a bear market is imminent.
  • The S&P 500 rallied for 152 months before the dot-com bubble burst.
  • The S&P/TSX Composite Index has closed at a record high 52 times this year.
  • The U.S. Federal Reserve has anticipated many rate cuts.
  • Desjardins Group's 2025 year-end targets for the S&P/TSX Composite Index and the S&P 500 are 30,250 and 6,800 respectively.
  • The expected returns for the TSX in 2026 are 11 per cent, while the expected return for the S&P 500 is 9 per cent.
  • The year-end target for the price of gold is US$3,700.
  • Gold stocks have benefited from central bank buying and all the uncertainty.

Sources:

  • Jimmy Jean, chief economist and strategist at Desjardins Group.
  • Desjardins Group's 2025 year-end targets for the S&P/TSX Composite Index and the S&P 500.
  • The S&P/TSX Composite Index and the S&P 500.

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