This week's interesting finds

This week in charts

Corporate bond ownership

Global Corporate Bond market, by issuance currency

Sector inflows and outflows

Large cap inflows

Europe-focused equity fund flows

Europe-focused equity fund inflows by year

Growth expectations - S&P 500 Index vs. S&P/TSX Composite Index

FTSE250 Index vs. MSCI World Index

Dividend yield by region

U.K. mergers & acquisitions

Private equity sits on US$1 trillion amid uncertainties, M&A stalls, PwC says

Private equity firms are holding about US$1 trillion in unsold assets, PricewaterhouseCoopers (PwC) said on Wednesday — capital that, in a typical market environment, would have been returned to investors.

High interest rates in the United States, President Donald Trump’s on-again, off-again approach to tariff policy, and geopolitical uncertainties have eroded company valuations and contributed to firms holding onto portfolio firms far longer than expected.

The capital tie-up is playing a role in the slowdown in dealmaking. Mergers and acquisitions, a key barometer of global economic health, have stalled this year.

Despite entering 2025 with high hopes for an M&A rally under Trump, deal volume and value have remained largely flat year-over-year, with 4,535 deals totaling $567 billion through May, PwC said. 

Private equity firms, which deploy LP capital into businesses across industries, currently have $3 trillion invested in 30,000 companies, according to PwC, with 30% held for longer than five years.

That is above the traditional timeline by which funds expect to have a profit on their investments.

So, now, PE firms need to be creative to squeeze profit from assets - often bought at peak prices, said Liz Crego, PwC’s industry markets leader. That includes selling a small portion of a business that can be more valuable as a separate entity, she said.

A more uncertain market has also led to a decline in cross-border deals to 16.9% of total activity, down from 18.7% in 2021. China-related deals, in particular, face heightened scrutiny and strategic reevaluation, PwC said.

Cautiously optimistic

The initial public offering (IPO) market has shown signs of life, with 31 traditional IPOs raising $11 billion through May. While April saw a pause due to tariff shocks, activity resumed in May and June, with fintechs like Chime, valued at $18.4 billion at its Nasdaq debut, leading the charge. 

Special purpose acquisition companies (SPACs) are also making a modest comeback, with over 50 of those publicly traded shell companies created to raise capital through IPOs.

To unlock the $1 trillion held by PEs, the recession cloud over the U.S. would have to recede, Washington would need to provide clarity over tariffs and interest rates must decline, Smigel said.

Nevertheless, PwC expects M&A activity to improve in the coming quarters, with pressure from the LP funds looking for returns and as assets are repriced.

This week’s fun finds

Several EdgePoint partners from Québec came to visit and brought presents – locally made hot sauces from Britannia Mills. They were très épicées, but more importantly they were also délicieuses.

• Chaude Boucane (Hot Smoke) – a smoky sauce

• La Déraillée (The Derailed) – flavourful and creamy, with a hint of mustard

• La Grande Faucheuse (The Grim Reaper) – featured on Hot Ones, it’s Britannia Mills’ hottest sauce. The main ingredient are the Carolina reapers that give it its name. Not the hottest we tasted, but the hint of maple syrup saves us from the heat

How to Get Rid of Sunburn Fast, According to Dermatologists

So you got too much sun and didn’t apply (or reapply) your SPF. Now you’re wondering how to get rid of sunburn fast so you can get some relief for the lobster red, irritated skin. As diligent as we all are about wearing sunscreen, sunburns do happen, even to the best of us. Though you can’t get instant relief from a sunburn, there are plenty of ways to help your skin heal as painlessly and quickly as possible, according to our experts, board-certified dermatologists Flora Kim, MD, and Amy Ross, MD, and honestly, that counts for something.

This week's interesting finds

This week in charts

S&P 500 Index valuations vs. their historical average

U.S. vs. global equity price returns

U.S. stock market value relative to GDP

U.S. value stocks vs. growth stocks

Japanese share buybacks

EV/EBITDA since 2005

European equities cash deployment

Corporate bond spreads

U.S. bond and equity correlation

U.S. Aggregate bond index duration vs. High Yield corporate bond duration

Automotive sales by region

As Companies Abandon Climate Pledges, Is There a Silver Lining?

Peter Ford has seen the promise—and the pitfalls—of corporate climate pledges up close. The 40-year-old Briton recently spent five years at Hennes & Mauritz AB trying to cut emissions from the Swedish fashion giant’s vast supply chain, from Cambodian sewing lines to Vietnamese dye houses. He met with hundreds of suppliers, pushed for energy efficiency upgrades and urged the elimination of coal boilers. And to its credit, H&M invested about $200 million a year in these efforts and recently reported a 24% cut in its supply chain emissions.

But Ford isn’t celebrating. “As an industry, it’s not working out yet,” he says bluntly. Apparel emissions are still growing—and could expand an additional 30% this decade, according to McKinsey & Co. While a few brands are doing a lot of work, Ford says, most of the industry “would much rather sit there and wait for things to happen.” That mismatch isn’t unique to fashion. From airlines to banks to retailers, the story is the same: Over the past few decades, more than 4,000 companies have made big climate pledges, but results are scant, and emissions continue to rise.

Worse, we’re now seeing a retreat. In the past year companies around the world have been canceling their climate commitments, some only a few years old. BP Plc is pulling back on renewables and drilling more oil. Coca-Cola Co. and PepsiCo Inc. abandoned or weakened promises they made in 2021 to slash their use of new plastics. Big banks such as Wells Fargo & Co. and HSBC Holdings Plc walked back various plans to reduce their emissions. Walmart Inc. admits it’s behind on its climate targets, while FedEx Corp. says it will likely miss its goal to go electric on half of its delivery truck purchases by 2025. This corporate retrenchment has been particularly acute in the US, where the Trump administration has been busy rolling back climate regulations and withdrawing from international treaties such as the Paris Agreement.

It’s a troubling trend for anyone who prefers life on a hospitable planet. We’re currently on pace to add about 3C (5.5F) of warming this century, which is expected to throw the planet into turmoil with diminished food supplies, wiped-out marine life, brutal heat waves and crippling droughts. But even with those grim prospects, some experts argue that this corporate backpedaling might come with a silver lining. That’s because it could force investors, lawmakers, academics and the broader public to reckon with the fact that voluntary corporate action was never going to stave off climate disaster. This could bring sharper attention to corporate political activities, where even self-proclaimed responsible businesses obstruct regulations needed to phase out fossil fuels and boost clean alternatives.

For years companies have suggested their pursuit of sustainability would naturally follow their quest for profits. Walmart framed its eco-pivot in 2005 as a way to reduce waste, cut costs and promote goodwill. PepsiCo’s then-chief executive officer, Indra Nooyi, put it more elegantly a few years later, when she said using less water and energy isn’t corporate benevolence but rather a way to lower your bills and fatten your margins.

There’s an element of truth to this: Some climate-friendly endeavors, including swapping out lightbulbs and putting up solar panels, quickly pay for themselves and enhance the bottom line. But most projects required to achieve deep decarbonization, such as decommissioning coal boilers or using cleaner fuels, cost gobs of money, and no one knows when or if they’ll ever be cheaper than their dirtier alternatives. As long as these measures remain voluntary, they won’t happen at anywhere near the scale or pace that’s needed. And companies will be free to renege on their promises.

Unfortunately, most companies have talked a big game on climate while working to block or water down the very policies that could drive real progress. Take the US airline industry. Despite skyrocketing emissions, most carriers have vowed to eliminate their planet-warming pollution by 2050. A key part of the plan is to use vastly more sustainable aviation fuel. But this currently accounts for about 0.3% of their total fuel use. Airlines are quick to point out that cleaner fuels cost about two or three times more than conventional jet fuel, and they can’t boost these purchases without putting themselves at a disadvantage to others that keep using cheaper, dirtier fuels.

This, of course, highlights the need for regulation to make sure first movers aren’t punished in the market. In Europe, regulators have stepped in, mandating 2% cleaner fuel now and 6% by 2030. But US carriers vigorously oppose rules like these, including a recent California proposal that would have regulated jet fuel for flights in the state. After airlines questioned the state’s authority to set such rules, California backed off and instead joined the companies to cheer a toothless “voluntary and nonbinding” agreement to increase the use of cleaner fuels.

When asked about these glaring misalignments, companies frequently argue that they rely on trade groups to advocate on a wide range of issues, such as taxation and trade, and that they don’t always agree on every position. This claim doesn’t pass muster with Bill Weihl, who says he used to make the same argument back when he ran sustainability efforts for Facebook. “It’s a weak excuse,” says Weihl, who has since launched ClimateVoice, a nonprofit that pushes companies to support climate policies. “They’re choosing to kick the can down the road so they can get lower taxes and deregulation.”

When it comes to policy positions, who’s putting their money where their mouth is? Advocates point to packaged-goods maker Unilever Plc as one of the rare companies moving in the right direction by regularly examining the climate work of trade groups to which it belongs. In its most recent review, from April, Unilever found that eight of 26 groups were misaligned with its views on climate policy—including the Confederation of Indian Industry, which has pushed for lower petrol taxes and more energy from gasified coal. Importantly, the report also spells out the steps Unilever plans to take to address this misalignment, including potentially leaving groups that continue to obstruct climate action. Any company claiming to be serious about climate should follow Unilever’s lead with this kind of rigorous examination and public reporting.

Clearly regulations are the most effective way to shift this mindset and force companies to pour money into much-needed climate projects. Businesses, however, have gone mute as President Donald Trump wades into their industries to annihilate various climate rules, which will pour billions of extra tons of planet-warming gases into the atmosphere. But there are other ways to pressure a company into speaking up and doing the right thing, including rallying its often large numbers of employees who feel strongly about leaving a livable planet for their children.

This week’s fun find

Mysteriously Perfect Sphere Spotted in Space by Astronomers

Our Milky Way galaxy is home to some extremely weird things, but a new discovery has astronomers truly baffled.

In data collected by a powerful radio telescope, astronomers have found what appears to be a perfectly spherical bubble. We know more or less what it is – it's the ball of expanding material ejected by an exploding star, a supernova remnant – but how it came to be is more of a puzzle.

This week's interesting finds

This week in charts

Foreign investment in U.S. fixed income assets

Momentum crowding still at extremes

Sector contribution to 2025 EPS growth estimates

Forward price-to-earnings ratios by geography

MSCI U.S. price-to-earnings decline during past recessions

MSCI Japan Index price-to-book relative to MSCI World Index

Share of domestic equity ownership and valuations

Share of U.S. firms using AI by sector

Housing vs. rental affordability

Big investors shift away from US markets

The US president’s erratic trade policy has shaken global markets in recent months, sparking a sharp sell-off in the US dollar and leaving Wall Street stocks lagging far behind European rivals this year.

Trump’s landmark tax bill, which is forecast to add $2.4tn to Washington’s debt over the next decade, has also increased pressure on US Treasuries.

The move away from US assets has pushed up European markets at the expense of their US counterparts and has been signalled by surveys of big institutional investors’ allocation decisions. A poll of fund managers published by Bank of America last month showed the biggest underweight in the US dollar in nearly two decades.

As institutional investors review the extent of their holdings in the US, Caisse de dépôt et placement du Québec, Canada’s second-largest pension fund, said recently it would reduce its exposure to the country — currently 40 per cent of its portfolio. It plans to increase investment in the UK, France and Germany. 

US stocks have recouped the losses that followed Trump’s announcement of the duties on April 2. But the S&P 500 remains less than 2 per cent up this year, compared with 9 per cent for the Stoxx Europe 600 index.

The dollar is close to a three-year low — down 9 per cent this year — even though Trump has retreated on many of the tariffs he initially announced.

Investors say that the global dominance of the US economy and the depth of its capital markets mean it will remain the premier destination for global investment.

However, many are questioning whether more than a decade and a half of inflows and outperformance — which pushed the US share of global equity market value to around two-thirds by the start of this year — is headed into reverse.

Some investors question whether smaller, more fragmented markets in Europe and Asia offer a meaningful alternative.

This week’s fun find

World’s First Mass-Produced Flying Car Prototype Unveiled

Eager teens reaching driving age in the next few years may be able to take their inaugural spin in a car … in the sky. The world’s first mass-produced flying automobile prototype has been unveiled, and we’re ready for a ride.

Created by Slovakia-based company Klein Vision, the AirCar production prototype made its public debut May 8, after making its insider debut at the 2025 Living Legends of Aviation Awards Ceremony in Beverly Hills late last month. At the event, Morgan Freeman and John Travolta presented the car’s inventor, Stefan Klein, with a Special Recognition Award for Engineering Excellence.