There’s something about stepping away from the noise that sharpens clarity. During my recent holiday in southern Italy — between long walks through sun-drenched villages, generous pours of local wine, and more pasta than I care to admit — I found myself reflecting not just on the beauty of the Amalfi Coast, but on my own internal dialogue.

Somewhere between plates of Caprese salad, Gnocchi alla Sorrentina and glasses of chilled Aperol Spritz I realized how much of my worldview has been shaded by a jaded lens. The constant stream of negative headlines, geopolitical flashpoints and what I view as economically misguided policy decisions have undoubtedly shaped my perception of reality. Fortunately, they haven’t shaped my investment decisions.

This distinction between perception and portfolio is more important than ever.

Despite a backdrop of moderating global growth, escalating trade tensions and geopolitical instability equity markets have once again defied gravity. This resilience is striking when you consider the developments of the past few weeks.

Economically, the World Bank’s June 2025 outlook painted a sobering picture: Global growth is expected to slow to just 2.3 per cent, the weakest pace since 2008 outside of

recessions . Emerging markets continue to struggle to attract capital and policy uncertainty remains a major drag on investment and productivity. Yet,

equity markets remain buoyed by liquidity, earnings resilience in key sectors and a belief that central banks will continue to provide support.

Then there’s the unresolved trade war risk. U.S. tariffs on steel and aluminum imports remain at 50 per cent, with a July 9 deadline looming for trading partners to submit their “best offers” to avoid a broader wave of reciprocal tariffs. These could extend well beyond metals, potentially escalating into a full-blown trade war. Canada and Mexico, two of the U.S.’s largest trading partners, are particularly exposed, with Canada supplying nearly half of all U.S. aluminum imports. The U.K., for now, is the only country with a temporary exemption, maintaining the previous 25 percent rate while negotiating a broader trade agreement under the so-called Economic Prosperity Deal.

And yet, despite this backdrop of rising protectionism and geopolitical brinkmanship, equity markets have remained buoyant. This disconnect between policy turbulence and market performance underscores the complexity of today’s investment landscape. It also reinforces the importance of maintaining a disciplined, long-term perspective, especially when the headlines tempt us to do otherwise.

Consider also the ongoing conflict in the Middle East, centered around Israel and Iran. Despite the gravity of the situation,

oil prices are near where they were before the conflict. This suggests that energy market dynamics are keeping prices in check and the associated inflation risks contained.

This divergence between economic fundamentals and market performance is not new, but it’s particularly stark today. It’s a powerful reminder that markets are not always mirrors of macroeconomic or geopolitical stress.

As investors, we must resist the temptation to let personal biases or emotional reactions to world events cloud our judgment. My time away helped me recognize how easy it is to internalize pessimism, especially when the headlines are relentless. But stepping back reminded me that markets are forward-looking and often more rational than we give them credit for. That said, it doesn’t mean they will necessarily get it right, as often they don’t, in the near term.

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The world may feel chaotic but eventually markets have a way of bringing balance. So, while I may remain skeptical of certain policy paths and concerned about the broader geopolitical trajectory, I continue to follow my own advice: Stay diversified, stay disciplined, and always make sure to put some insurance in place, whether navigating those tight roads on the Italian coastline or the ups and downs of the markets.

Martin Pelletier, CFA, is a senior portfolio manager at Wellington-Altus Private Counsel Inc., operating as TriVest Wealth Counsel, a private client and institutional investment firm specializing in discretionary risk-managed portfolios, investment audit/oversight and advanced tax, estate and wealth planning. The opinions expressed are not necessarily those of Wellington-Altus.

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