U.S. markets are holding near record highs even as the government shutdown stretches into its third day. Solid earnings, consumer resilience and policy clarity have kept investors focused on fundamentals despite political risk.
BNN Bloomberg spoke with Carol Schleif, chief market strategist at BMO Private Wealth, who said equities are likely to climb further but volatility will be a feature for investors.
- Investors are looking past the U.S. government shutdown as earnings and consumer strength support markets.
- Valuations remain stretched, leaving little margin for disappointment.
- Market participation is broadening, but volatility is expected ahead.
- Global equities are outperforming U.S. stocks, highlighting diversification needs.
- Technology, communication services and industrials are favoured amid infrastructure and innovation trends.
- M&A activity is expected to increase as companies seek stronger positioning.
Read the full transcript below:
ANDREW: Equities are hitting new record highs today despite disruption from the U.S. government shutdown. We’re joined by Carol Schleif, chief market strategist at BMO Private Wealth. Carol, thank you very much for your time. Happy Friday. You say markets are likely to grind higher?
CAROL: Thanks for having me. Happy Friday to you as well. It has definitely been a not-very-loved bull market. There’s been a lot of scepticism around it. We hear pushback from clients about valuations, which is understandable because markets have been grinding higher. For sustainability, that’s actually good news. You start worrying when everyone wants in and there’s exuberance everywhere. The lack of exuberance is actually helpful.
ANDREW: The stock market’s correlation with the actual economy is notoriously unreliable. Looking at the economy, do you think the Trump administration wants good economic numbers for the 2026 elections?
CAROL: Yes, they do. Actually, both parties do. It benefits everyone to have people employed and the economy chugging along. There’s been a lot of focus from the Trump administration on policies supportive of growth. The tax law bill was favourable for businesses, hard-coding deductions for research and development and plant expansion. There’s also been an aura of loosening regulation, particularly in financial services. My note this week profiled several of these moves that have specifically aided capital markets.
But it’s also important to remember that equity markets are forward-looking. The best data we’ll see in the near term will be earnings season, which begins next week.
ANDREW: We’ve seen unusual ideas from the administration around Washington’s participation in the economy — for example, Nippon Steel’s bid for U.S. Steel, with the government receiving a golden share.
CAROL: Yes, there are a lot of unusual arrangements. There’s the deal with AMD and Nvidia, where 15 per cent of revenue from certain high-end chip sales to China must be remitted to the U.S. government. There’s also a stake in Intel, the Defence Department taking a stake in a rare earth miner, and the Genius Act setting a framework for cryptocurrency and stablecoins. We’ve had an executive order asking the Labour Department to revisit rules on retirement funds and alternatives. There’s a lot going on, with the government dabbling in different parts of the capital markets.
ANDREW: What about bonds? Are you attracted by current yields?
CAROL: Bonds offer stability in portfolios, especially for clients with a balanced view. They help level out stock market volatility. Balanced portfolios have done well cushioning volatility earlier this year. Bond investors also focus on government spending, particularly in the intermediate and long end of the curve. There are good reasons to hold bonds because they offset equity swings.
ANDREW: Final thought: is investment in AI-oriented data centres overdone?
CAROL: It’s important to note that much of the capital buildout so far has been funded by company cash flow, not debt or public money. Some new deals are debt-funded, but the new tax law allows chips to be expensed immediately, which helps. Yes, there’s heavy spending, but history shows that capacity — like railroads or fibre optic cables — eventually gets used. The companies may or may not benefit, but the broader economy does.
ANDREW: Carol, thank you very much for joining us. Have a great weekend.
CAROL: Thank you, you as well.
ANDREW: That was Carol Schleif, chief market strategist at BMO Private Wealth.
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This BNN Bloomberg summary and transcript of the Oct. 3, 2025 interview with Carol Schleif are published with the assistance of AI. Original research, interview questions and added context was created by BNN Bloomberg journalists. An editor also reviewed this material before it was published to ensure its accuracy and adherence with BNN Bloomberg editorial policies and standards.
