The Canadian Investor - Gold ETF Inflows Increase and Canada Makes Major Mortgage Changes

Episode Date: September 19, 2024

In this episode of The Canadian Investor Podcast, we dive into the latest Canadian CPI data as inflation finally hits the Bank of Canada’s 2% target for the first time in a while.  Plus, we discuss the federal government’s recent changes to mortgage policies, including raising the CMHC insured mortgage cap and extending amortization periods, and how these moves will likely negatively impact affordability for Canadian home buyers. We also take a closer look at Dollarama’s impressive Q2 2025 earnings, and finish off with a recap of August’s ETF fund flows, highlighting a record month for precious metal ETFs.  Tickers of Stocks & ETF discussed: DOL.TO, ZGLD.TO, XUS.TO, VFV.TO, ZSP.TO, XEQT.TO, ZEQT.TO, XIC.TO, ZCN.TO, HXT.TO, HSAV.TO, CSAV.TO Canadian Real Estate Investor - How 30-Year Amortizations Will Impact Canadians (Apple Podcast) Canadian Real Estate Investor - How 30-Year Amortizations Will Impact Canadians (Spotify) Canadian Real Estate Investor - How 30-Year Amortizations Will Impact Canadians (Web player) Check out our portfolio by going to Jointci.com Our Website Canadian Investor Podcast Network Twitter: @cdn_investing Simon’s twitter: @Fiat_Iceberg Braden’s twitter: @BradoCapital Dan’s Twitter: @stocktrades_ca Want to learn more about Real Estate Investing? Check out the Canadian Real Estate Investor Podcast! Apple Podcast - The Canadian Real Estate Investor  Spotify - The Canadian Real Estate Investor  Web player - The Canadian Real Estate Investor Sign up for Finchat.io for free to get easy access to global stock coverage and powerful AI investing tools. Register for EQ Bank, the seamless digital banking experience with better rates and no nonsense.See omnystudio.com/listener for privacy information.

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Definitely slower in the earnings season, which is good because, you know, the federal government came to the rescue with CPI and some housing announcement for mortgage rules changing. So at least we'll have some interesting news to talk about there. Yeah, definitely a lot on the slate. I think I'm pretty fired up, as you saw before we started recording. Yeah, it's some pretty crazy, probably, I would say, extremely short-sight, regulatory changes when it comes to mortgages. I mean, Canadian banks often kind of close down the earnings season, I would say, and those were what, last week? There's a few outliers, but they definitely left us with, there won't be,

you know, a shortfall of very interesting things to talk about this week. Yeah, definitely. So let's get started because we have a lot of this slate so you want to break down so uh canadian cpi for august came out and uh fresh off the press this morning so you uh you looked at that i did as well so i can give my take on it as well afterwards yeah it's kind of uh these cpi releases are becoming like more andesting, I guess, which is a good thing. They're getting back down to normalized levels. Inflation for August came in at 2%, which is down from the 2.5% gain in July. And that 2.5% or the 2% inflation was actually the first time the Bank of Canada has hit their 2% target in quite some time. When we look on a provincial

level, every single province hit the Bank of Canada's target in terms of inflation, except for British Columbia, which came in at 2.4% and Ontario, which marginally missed at 2.1%. And we're continuing to see levels of def of deflation across deflation across pretty much every single discretionary item imaginable i mean household furnishings are falling 0.8 percent year over year clothing and footwear fell 4.4 percent year over year which kind of like surprises me a bit because maybe it would be a little bit of it fueled by you know back to school type things but maybe i'm really overthinking that i'm not exactly sure have you noticed that on the kirkland hoodies or not yeah no they're still fairly no deflation yet okay okay it's the best priced hoodie in canada i think they're only

30 bucks and they haven't gone up that's pretty good yeah that's pretty good yeah yeah and um where was i at so yeah clothing and footwear, deflation, and then we're seeing education and recreational, which I'm not exactly sure what they would bundle into recreation and education, but that fell 0.2% year over year. The one thing that I didn't actually get to look over was the services, inflation, things like that. I primarily just looked at shelter and that's still increasing. I believe it was 5.7% year over year. So services, I have it here. So it's a negative month over month of 0.1% and still 4.3 over year. So still some pressure there. Pressure, but I mean, I think it's been somewhat coming down over the last while, but those

definitely make up the bulk of what we're seeing in terms of overall inflation. And I mean, if you take all these numbers at face value, which some people don't, they believe that the numbers are kind of skewed, they're not realistic. But if shelter can somewhat normalize, this would put inflation probably down. I predicted into the mid 1% range, but it's actually lower than that. So the Bank of Canada, when you isolate rent and mortgage costs from CPI, it stated it would be down to 1.2% in August. Now, obviously, it's not really all that fair to isolate these things out because they literally impact everybody. It's more so just to highlight the fact that it's accounting for 40% of inflation at this point.

And a lot of the total fuel that's being added to the fire in terms of shelter and rent is mortgage costs, which ultimately, when you decrease rates, that will probably provide some more pressure or some more relief in terms of the pressure in terms of renewals. or some more relief in terms of the pressure in, you know, in terms of renewals. So another biggest contributor to the drop, which you've stated numerous times, you know, it can get volatile month to month is gasoline prices. They fell 2.6% on a month over month basis in August. It's, you know, that's a big contributor, whether or not, you know, it remains to be seen moving forward. Obviously, you you know there's lower demand just because of a slow big slowdown in economic activity so you're seeing you know we've

seen it with Alamantash on Kustard's results really struggling in terms of that you know that element of things so yeah and one thing to add there so for people on Joint TCI they'll see I'm sharing a graphic and I'll explain it. Basically, it's the 12-month change in consumer and CPI and CPI excluding gasoline. And typically, CPI, when you excluded gasoline, like, you know, in the past five years, I would say it tended to be a bit lower when you excluded gasoline than the headline number for CPI. but now it's actually the opposite where cpi excluding gasoline is actually slightly higher than the normal cpi which kind of goes and shows how much it's been putting downward pressure on cpi itself yeah yeah and i mean we've seen well

i don't even know gas is down to like a low dollar 30 here in alberta whereas like i remember last year maybe it wasn I remember last year, maybe it wasn't directly last year, but I remember paying like close to a buck 70 a liter. It was- Similar for us. Yeah, I filled in not too long ago. We have to put like premium in for,

cause we have a turbo, but still I think the regular was maybe like a buck 40. I filled in on the Quebec side and typically it's a bit more expensive there. So yeah, definitely down. That's for sure. Definitely lower. Yeah. So mortgage costs, they do continue to slow. You're going to see numbers that are still outrageous. I mean, they grew 18.8% year over year, but when you consider it was 31% the year prior, I mean, they are continuing to slow, which does make sense because interest rates are coming down. I mean, they are continuing to slow, which does make sense because interest rates

are coming down. I mean, they're down, what, 75 basis points now, and they're probably going to start heading down even more. I don't know why. Are they down 50 basis points? Have we cut twice or three times? 75. 75 basis points. Yeah. So CPI median, which looks at essentially the middle levels across all particular segments that they track. It came in at 2.3%. CPI trim, which would cut out the most extreme price changes at both the top and bottom end. I mean, in this case, it's likely that shelter and clothing that came in at 2.4%. And, you know, the Bank of Canada took a lot of heat for dropping rates when they did. But by the looks of it, it looks like they timed it almost perfectly. On the contrary, a lot believed it took them way too long to start

raising rates, but that's another story. It seems like they've kind of hit the mark here and markets are now pricing in a 50% or greater chance that the Bank of Canada cuts rates by 50 basis points at the next meeting, which I believe is in late October. I would say if we get another inflation print like this, it would almost be a guarantee that they're going to come down by 50 basis points. But it'll be interesting to see what September looks like if they can keep up two months of this. Yeah. So I'm going to confirm by our finance minister, for those watching, you'll be able to see that, yes, the Bank of Canada was the first one to cut rates three times in the G7.

And I guess, yeah, it shows, I mean, I'll quote the tweet, this is welcome relief for so many Canadians and shows that our economic plan is working. So I can't still make up whether this is a joke or not but um it seems like a complete troll i mean unemployment's at what highest levels since 2017 like if they're cutting rates the economy is not in good shape but their economic plan is working yeah i mean to be fair

though like i don't know if it's just kind of playing politics, but the reality is, let's be honest, when you're cutting rates, it's usually not a great sign, especially cutting rates consecutively. And most likely, they will be continued to cut rates. I think there's even people speculating now that it could be a 50 basis point cut. But the next time the Bank of Canada makes announcement, just because the data has been lackluster, to say the least, and CPI that we just went over also has been trending down pretty significantly. Yeah, yeah, it's I mean, it's all in terms of the comments made. It is, I believe, just kind of lining yourselves up politically to kind of spin it in a positive way, regardless of what the numbers say, because the numbers ultimately aren't good. But I mean, there's going to be more than likely a lot of rate relief coming for a lot of Canadians who probably need it. Yeah, exactly. I think for those, obviously,

if you still have a job and you have a mortgage coming up for renewal, potentially, or if you have a variable mortgage, clearly that's been a big plus for you and just couple more comments here i think one of the things to keep in mind is that where it can be a bit tricky with the the cpi like you had mentioned is i think people will see that and say oh you know what like over the last year my my personal inflation rate maybe went up like 5, 7, 8, 10%. And you have to keep in mind, CPI is just aggregate prices. It's not perfect. But yes, inflation, it could be very well that for your personal consumption, it's much higher than it stated.

So keep that in mind. I know a lot of people will kind of say the governments are fudging it willingly. I mean, at the end of the day, I think whatever method they would use would be very difficult to reflect kind of the general population, right, depending on your income spectrum. So I think it is one thing to keep in mind here. The other thing too is inflation, CPI, let's just say CPI now, like, you know, it looks good right now. It looks like you said, it's within the Bank of Canada range, it's within the target. But the issue that I think we may start facing is, I think the last figures I've seen is the deficit is supposed to be on track to be about 50 billion for this year. And that's just following years of high deficits as well. So the government was spending beyond its means in the

last couple of years, still is right now. Our national debt has significantly increased over that time span. So there is a legitimate question to ask if we do go into a downturn. And I think all the signs are pointing to yes, whether we hit the traditional definition of a recession or not, I think is beside the point. I think we are heading towards a downturn. Well, typically governments tend to increase spending during those periods. So then you have to think about the ripple effects of such spending. So if they increase spending again, they will have to issue more government bonds. So they're going to offer more governments to the market. If demand doesn't

really increase for these bonds, there's a good chance that longer duration bonds may end up going up in yields. So the value of the actual bond would go down, but the yields would go up. And then obviously would cost more to the government when they refinance existing bond and issue new ones, which could then be inflationary, especially if the Bank of Canada steps in and starts quantitative easing, meaning simple terms that they essentially print money to buy bonds off of the market and increase the demand for these bonds and it puts it on their balance sheet. But all of these things can in fact have an inflationary effect. So I think we just have to wait and see. This could take a year or two, it could take some time, but we have to be really careful because

there's a lot of different directions this could go going forward. Yeah, definitely. That was well said. I mean, if we do end up, well, I mean, it's almost a guarantee now we're going to enter some sort of you know economic struggle and a lot of the times you know rates come down government spending does come up because it does stimulate the economy which eventually you know gets things rolling again but as you mentioned debt's gone through the roof uh massive deficits over the years which just makes it extremely tough to do what they probably have to do. And yeah, well explained though.

Yeah, exactly. So I just, I wanted to mention that because there are obviously sometimes some longer term consequences that unfortunately elected official, and I'm not targeting the feds specifically. I think most politicians are very kind of near term, you know, focused. They just, they just want to get reelected. You kind of have to be. Yeah, that's just kind of the way it rolls.

You have to be. Yeah, it's pretty rare to see a politician that actually has like a long term, like 10, 15, 20 year view, because oftentimes they won't be there to reap the fruits and the rewards from that and get the credit. So they tend to focus on the shorter term. rewards from that and get the credit. So they tend to focus on the shorter term. As do-it-yourself investors, we want to keep our fees low. That's why Simone and I have been using Questrade as our online broker for so many years now. Questrade is Canada's number one rated online broker by MoneySense. And with them, you can buy all North American ETFs, not just a few select ones, all commission-free,

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are an index investor and haven't checked out their listings, I highly recommend it. I bet you'll be as pleasantly surprised as I was that BMO, the Canadian bank is delivering these amazing ETF products. Please check out the link in the description of today's episode for full disclaimers and more information. Calling all DIY do-it-yourself investors, Blossom is an essential app for you. It has been blowing up with now more than 50,000 Canadians plus and growing who are using the app. Every time I go on there, I am shocked. The engagement is amazing. This is a really vibrant community that they're building and people share their portfolios, their trades or investment ideas in real time. And it's all built on the concept of

transparency because brokerage accounts are linked. And then once you link your brokerage account, you can get in-depth portfolio insights, track your dividends, and there's other stuff like learning Duolingo style education lessons that are completely free. You can search up Blossom Social in the app store and join the community today. I'm on there. I encourage you go on there and follow me. Search me up. Some of the YouTubers and influencers and podcasters that you might know, I bet you they're already on there. People are just on there talking, sharing their investment ideas and using the analytics tools. So go ahead, blossom social in the app store and I'll see you there. Now, moving on again to the Canadian government, they announced changes to mortgages. I'll be very blunt. I think these changes are pretty reckless. Unfortunately, I think it is an attempt for

to get some votes in the next election, which I think it's terrible. I think, you know, having a young daughter in a second on the way, I do feel like these changes will impact negatively, you know, the younger generation, the kids right now that will be adults in the future, taking care of, you know, Dan and I were when we're in our old age and not working anymore. But so there's two main things here. So first, they're raising the CMHC, so the Canada Mortgage Housing Corporation insured mortgage cap.

So the cap on insured mortgage was increased from $1 million to $1.5 million. This move will allow homebuyers, especially in expensive markets like Toronto and Vancouver, to access higher value properties with potentially lower down payment. I say potentially because it still hasn't been announced what the minimum down payment requirement will be. Because right now, for those not aware, if you're buying a home, Now, for those not aware, if you're buying a home, essentially you have to put minimum 5% for the first $500,000, 10% for the second $500,000. And that's it if you want it to be insured because the max is like $999,999, so it's under a million. Now, if you buy a home currently for $999,999, you currently need $75,000 down payment. But if you buy a home at $1 million, you need to have $200,000 as down payment because the requirement for $1 million plus is 20% down.

So it is a pretty big change because what they may end up doing is the portion between 1 and 1.5. They may require 15% for that, but it would lower the overall required down payment to 10% up to 1.5 million, which is just completely insane. It's ridiculous. Yeah, it's completely ridiculous if you ask me. But anyway, that's not the only thing here. They're extending 30-year amortization. So the government will now allow 30-year amortization periods for all first-time buyers, homebuyers, regardless of whether they are purchasing a new built or an existing home. The change will also allow homebuyers to increase their purchase price since they will have lower payments. It will allow 30-year amortization for all new built homes, regardless of it being

for a new home buyer or not. So what this leads me to believe is they're probably getting a lot of pressure from developers because it does look like they're trying to incentivize either developers to build more homes or there's, I don't know, sitting inventory. I'm thinking condos in Toronto. There's been a lot of people doing some good research on that, that condos are sitting, they're not selling, it's flooded the market. I feel like there's a lot of pressure potentially from the banks as well. Now, the issue is the same as the previous one in my mind, because it will encourage people to get into more debt and will likely put upwards pressure on prices unless the supply of all marginally increases that's because if you're looking at 25 years amortization versus 30 and amortization is just the duration of the

total mortgage so yes you have to refinance like typically people will take five years terms but within let's say you take a five-year terms, it's still going to be amortized over 25 or 30, or you could choose 20 if you wish. The issue with that is that if you extend to 30 years, is that the monthly payment or biweekly, whichever one you choose, is actually lower. But at the end of the day, you end up paying more in interest payments. So the home ends up costing more, but it allows people to qualify for bigger amounts because the qualifications are based on the payments, not the value of the home. So, you know, what will likely happen is people will, you know, they were going, let's say their max budget under a 25 year amortization is 700k.

Now with the 30, their max budget is 750k. I've talked to a lot of people that bought homes and very few have the discipline to not go to their max budget. That's, I mean, it reminds me a ton of, you know, when they started with auto loans that, you know, you typically, you could only get a three or four-year auto loan, then they would go to five years, six years, seven years. And then all these dealerships, they get you in there with the enticement of the monthly payment. And unfortunately, a lot of Canadians do not even consider, all they want is that monthly payment, right? Some people buy a vehicle not even knowing that it's going to be that long a term because they got in their mind the monthly payment

when in reality you should just be asking yourself you know what's the total cost to own it's yeah and it probably for cars outlives the warranty too right so you're kind of paying the payment and then the starts you know towards the end the car starts breaking down. So you lose all the advantages of a newer vehicle when it comes to that. But I think a lot of people, unfortunately, the financial literacy aspect is just not there and people will look at payments. And let's take an example here. And say you start with a $600,000 mortgage? And obviously, this will vary where you're listening from in Canada. If you're in Toronto, you probably will only be able to get a shoebox condo for that amount. But if you're in different places, you may be able to get quite a nice family home for

a $600,000 mortgage. So let's say $700,000 home or so, maybe a bit more. And $600,000, and throughout the life of your mortgage, you always have an interest rate of 4%. I know that's not going to happen, but just for this example. So for a 25-year mortgage, you end up paying $347,000 in interest. On a 30-year, it's going to be $427,000 in interest. That's because the front end, you always pay a whole lot of interest and less and definitely less in terms of the principal. And that's going to be upwards of 23% in increased interest that you'll pay over the lifetime of the mortgage. Sure, the payments will be lower on a 30 year amortization. So I used a calculator from the Government of Canada website. The 25-year will be $28.53 versus $31.56 for the same amount here.

That's an approximate 8% to 10% decline in payments depending on the size of the mortgage. Also, the interest rates that you'll have for the life of the mortgage, clearly. So it will vary a little bit. And that's really a big issue because, you know, people are qualified based on the payment. And if you and we've said it before. So if you qualify for a higher mortgage amount with all other things being equal, I mean, you're likely going to go for that. And if the supply doesn't go up, so if there's not more new homes in the market and demand increases because of these measures, I mean, it does not take a genius to figure out that unless we get a severe economic downturn and people start losing their jobs and it kind of outweighs all of these measures,

I mean, prices will likely see, we'll see prices going up at least maybe, maybe not. There might be some pockets in Canada where it won't, but these are all measures that will probably not help a whole lot with the supply, but will only encourage people to get into more debt. And let me remind you that Canada has, I know, you know, our government likes to talk about the G7, but I haven't looked at all the stats, but I can tell you that we're part of the, probably one of the most, if not the most indebted country in the G7 in terms of household debt. The household debt to disposable income ratio is still above 175 in Canada. So that essentially compares a total

debt to the amount of disposable income that household has in a year. And it's still incredibly high. So I just, it just does not make, I really like, I know I'm a bit fired up here, but it's just not, does not make any sense. It's so, it's so focused on the short term and maybe a bit the medium term. And there's like complete disregard for the long term. I mean, I was listening to a couple of experts that were talking on the subject, including Dan and Nick of the Canadian Real Estate Podcast. And I will put a link to their episode. They do a deep dive into this as well. Listen to a couple of other ones with commentary on this. And from what I gathered is that most people in the industry that wanted to increase the CMHC cap were hoping to get a $1.25 million cap. Not $1.5.

$1.5? million cap not 1.5 1.5 every single person that i've seen that is well connected is said they were completely surprised to see that 1.5 number and then obviously you had the 30-year amortization which just encourages people to get into more debt i mean yeah i think uh i said it best with a tweet i mean i feel like they just stole the slogan from Scotiabank. You're richer than you think. I think they're basically doing that. Yeah. It just doesn't make any sense. Like if you have a housing affordability crisis, you have houses are too expensive and you create policies that boost the demand side of things, but don't touch the supply side of things.

Like, what do you think is going to happen? Prices are going to go up. Like, the main element for the housing crisis is they don't, first off, there's a large population growth, which puts even more demand on there. Yeah. But you just don't build enough houses. demand on there yeah but you just don't build enough houses so if you don't change any of that and all you do is make make it so that people can leverage themselves even more to spend more money on unaffordable houses like what do you think is gonna happen and i mean to me this seems to me just like a perceived band-aid to just grab votes over the short term.

I mean, on this side of things, they don't piss off any of the current older generations who own their homes with significant equity as they haven't really put in any steps to mitigate the pricing environment. So, I mean, those people who own their homes are probably still going to see them soar in value over the last while. probably still going to see them soar in value over the last while yeah and they grab votes from the younger generation who maybe just doesn't understand that this will ultimately just put them in a worse position over the long run like if you if you assume that they make the next 500k at 15 like that one mil to 1.5 yeah like you said it would make it so you have to put $150,000 down on a $1.5 million home, 90% loan to value, which would result in 3.1% of that total mortgage insurance. So that's $42,000 you're paying just in mortgage insurance. So literally you have 7% equity. That's it. Well, yeah. They take almost a third of your down payment. that's almost literally you have set you have seven percent equity that's it well that yeah

they take almost a third of your down payment and then like if you think about land transfer taxes realtors lawyers like how much money are you just giving away just to desperately get into a home that's just crazy overpriced likely i mean you could get into a very nice home for 1.5 million dollars but you're still yeah throwing away you know so much money but yeah and i think i mean at the end of the day i think the reason is probably the simplest and like the simplest answer is probably the correct one is they probably do not want to lose the votes of baby boomers that have homes that don't want to see them go down in value. And they want to gain the votes of those who can't afford a home right now. And they're trying.

This is kind of their way to having their cake and eating it, too. And, you know, and whatever people's thoughts are on the liberals and Trudeau and all that stuff doesn't matter. I mean, he did an interview with CBC. I think it was like three months ago where he said it out loud. He said, yeah, like for a lot of people, their retirement fund is their home. Yeah. And they also want to make affordability, you know, homes more affordable for younger people. So I think it was probably their solution to try and tackle these two things.

And I mean, I'm just saying the things like you literally said it word for word. And I think it was a CBC. I think it may have been Front Burner or the one of those podcasts. But I encourage people to kind of look back and go listen to it. It's just unfortunately, I see it the way where I'm thinking about my young, you know, daughter and my soon to be young daughters. And I think it's going to pass on the cost to them because at the end of the day, this increased to $1.5 million.

It's backed by Canadian mortgage bonds. And ultimately, if something goes AWIRE, there's a massive correction. We see the same kind of thing that happened in 2008, 2009, 2010 in the US. It's going to be the taxpayer that's on the hook for that. Ultimately, that's how it is. So enough of a rant here. Anything else you want to add before we move on? No, I mean, I guess the last thing I'll say is one of the best comments I've seen on it was from Ron Butler, who is a Twitter or X account, I guess that he's a mortgage housing information he called

it a safe injection site for mortgage debt that's what he told and he said it's going to be an absolute road to hell those were his comments on it which i mean is it you know it's a bit extreme but like he's it is it does incentivize people to just more debt, more debt just to get into a home ownership. Yeah, and I'm pretty familiar with Ron. And Ron has been on, I think, panels where I think MPs, housing panels and stuff like that. They've asked him to come as an expert. So even though he's pretty colorful, he knows what he's talking about too. So I'll give him for that.

He knows what he's talking about too. So I'll give him, you know, for that. As do-it-yourself investors, we want to keep our fees low. That's why Simone and I have been using Questrade as our online broker for so many years now. Questrade is Canada's number one rated online broker by MoneySense. And with them, you can buy all North American ETFs, not just a few select ones, all commission-free, so that you can choose the ETFs that you want. And they charge no annual RRSP or TFSA account fees.

They have an award-winning customer service team with real people that are ready to help if you have questions along the way. As a customer myself, I've been impressed with Questrade's customer service. Whenever I call or email, every support rep is very knowledgeable and they get exactly what I need done quickly. Switch for free today and keep more of your money. Visit questrade.com for details. That is questrade.com. So not so long ago, self-directed investors caught wind of the power of low-cost index

investing. Once just a secret for the personal finance gurus is now common knowledge for Canadians, and we are better for it. When BMO ETFs reached out to work with the podcast, I honestly was not prepared for what I was about to see because the lineup of ETFs has everything I was looking for. Low fees, an incredibly robust suite, and truly something for every investor. And here we are with this iconic Canadian brand in the asset management world, while folks online are regularly discussing and buying ETF tickers from asset managers in the US. Let's just look at ZEQT,

for example, the BMO All Equity ETF. One single ETF, you get globally diversified equities. So easy way for Canadians to get global stock exposure with one ticker. Keeps it simple yet incredibly low cost and effective. Very impressed with what BMO has built in their ETF business. And if you are an index investor and haven't checked out their listings, I highly recommend it. I bet you'll be as pleasantly surprised as I was that BMO, the Canadian bank is delivering these amazing ETF products. Please check out the link in the description of today's episode for full disclaimers and more information. Calling all DIY do-it-yourself investors, Blossom is an essential app for you. It has been blowing up with now more than 50,000 Canadians plus and growing who are using the app. Every time I go on

there, I am shocked. The engagement is amazing. This is a really vibrant community that they're building and people share their portfolios, their trades or investment ideas in real time. And it's all built on the concept of transparency because brokerage accounts are linked. And then once you link your brokerage account, you can get in-depth portfolio insights, track your dividends, and there's other stuff like learning Duolingo style education lessons that are completely free. You can search up Blossom Social in the app store and join the community today. I'm on there. I encourage you go on there and follow me, search me up. Some of the YouTubers and influencers and podcasters that you might know, I bet you they're already on there. People are just on there talking, sharing their investment ideas and using the analytics tools.

So go ahead, blossom social in the app store and I'll see you there. Now, let's move on. I think we've talked enough and I do apologize because, you know, there was a little bit of politics. We try to stay away from it. But at the end of the day, I mean, you know, these decisions are taken by politicians and you got to say it how it is. Right. So let's move on to the next one here. I guess I'll go with it. Dollarama earnings. So one of the few companies currently reporting sales increased by 7.4 percent to 1.5 billion. Comparable store sales were 4.7%. Now, it's really interesting when you compare it to Alimentation Cousteau, which had 3.9 same store sales decline in Canada. So what that tells me is that consumers are being more and more conscious of where they spend the money, realizing that,

you know, a convenience store like Animal Station Cousteau owns is probably not the best value for them. You know, when you're buying overpriced bags of chips or drinks or whatever it is, whereas Dollarama is probably the opposite of that. And of course, they're both small format, but Dollarama definitely offers a better value proposition. And I think you're probably, I think that's the best explanation here.

Do you agree with that before I go on with the rest of the earnings? Yeah, and I mean, we're seeing it with, I didn't end up doing any coverage on it, but Empire reported earnings like Sobeys and they reported even just same store sales growth of I think it was just under 1%. So I mean, they're not growing at all and their prices are crazy high too. reported even just same store sales growth of i think it was just under one percent so i mean they're not growing at all and they're like their prices are crazy high too so like there's a there's

a huge shift here you had mentioned um the 15.5 percent same store sales growth from the previous year that dollarama reported like 2023 to 2022 the fact they're still able to grow 4.7 on top of that crazy comparable is nuts i would have expected the company to slow down but they're not slowing down at all no i mean they're doing pretty well like i mean i'll hand it to them and look i mean they're not shy of mentioning it on their earnings reports so So that was something I found pretty funny because I'm like, okay, if you don't know that and you own the stock, you probably shouldn't be owning this stock.

But to Dan's point, I'm just sharing here, like they had impressive same source sales growth over the last, since 2019. I mean, the only time that it really wasn't great was the quarter ending in August of 2021. Not quite sure there what happened, but I'd have to go back. But aside from that, I mean, they were looking for, they had like a better part of a year that was in double digits, same store sales grow, which is very impressive to say the least. Yeah, I bet you if you included, you know, the Bank of Canada policy rates here, like you would see as rates go up, their same store sales just continue to grow.

And like all they're saying in the quarterly report is they're kind of like, hey, we grew same store sales by 15.5% last year and we're still able to grow them by 4.7%. Because like if you're like an outlier just looking at this chart, you might be like, oh man, sales are slowing. But realistically, the fact they're still able to grow off what they grew on last year, I find it pretty impressive. And I mean, it's going to be interesting to see if rates start to come down a lot. If people do venture back to, say, the empires or those more expensive stores. I'm not sure it's going to be really interesting if this is permanent or not well it's going to be hard with those longer mortgages but we'll see yeah well you've reduced your payments you can afford it

that's right no i forgot about that yeah as long as the house price is not too high i mean you're reducing your payments so now obviously uh they had a good quarter EBITDA. So earnings before interest taxes and depreciation amortization increased by 14.7% to 524 million. So very impressive. Operating margins increased 180 basis point to 27%. Again, very impressive considering the environment here net income was up 16 to 286 million they repurchase a total of 263 million worth of shares during the quarter they open a total of 14 net new stores during the quarter and dollar city which is the chain that they own a majority stake in in Latin America, is also doing quite well. Their net income doubled to $22.7 million. They opened 23 new at net new stores.

They now have a total of $570 city stores. They are working towards opening stores in Mexico in 2026 as part of their growth plans. Not sure if it will be part of the Dollar City brand. I would assume so, but it might just be another brand that they'll start for Mexico. And the overall guidance remained unchanged. So pretty impressive that guidance is staying the same for the full year. No changes there. And these results, I i mean i know sales growth is slowing on a same store basis but still like you we just talked about the fact that they're still posting this impressive growth despite having the massive growth that they had a year ago not too much shells to say aside from

i wish i bought it like four or five years ago yeah they well they were they went through a bit of struggles for a while too. I think like pre-pandemic, they weren't doing very well. But yeah, like you look at, I don't know what they do so well. But when you look at a company like Dollar Tree, they have like a third of the free cash flow on like six times the revenue generation. I mean, their operating margins are nowhere even close to Dollarama's. Same with like Dollar, what is that? Dollar General. Although I think Dollar General is not like the same model as Dollarama. I think they sell a bit different product lines. But

yeah, I mean, the company just it's killing it. Yeah, it could be the way they operate. I remember I was listening or reading something that Sylvain Charlebois which is he's a professor i think at dalhousie university that specializes in kind of grocers and stuff like that food i say he calls himself the food professor and i remember him yeah talking about how dollarama tends to only have like one product for each thing. So they'll have like one peanut butter, they'll have one, you know, one type of, I think they have different kinds of chips, but for the most categories, they'll just have one, which makes the model much easier to manage and much easier to manage inventory in general as well. So it could be that that gives them an edge where it's kind of simplicity is king for them versus maybe potentially in the u.s where it's not the

same kind of model so i i don't know i'm just speculating but that could be it i could see that because we do have a dollar tree and a dollarama around here and uh the dollar tree is quite a more uh there's a ton more stuff in there. So I could see that. I mean, I really shop at Dollarama too much because like the quality is just, I mean, on non like food items, it is absolute. Yeah. It's bad. I mean, you buy, I bought like,

it was like a brush for the dishes and the head snapped off of it in like three days. I was like, okay. But it was only $1.25. That was the thing. So I mean mean a lot of people yeah it's there is some risk here in terms of you know tariffs and regulations because they do get a ton of stuff from china so i mean there's that element there but for now i mean they're killing it yeah no i definitely so now let's So now let's move on here to the August 2024 National Bank ETF fund flows. And Dan, by all means, feel free to interject here. I know you love talking about ETFs in general. So I'm going to read some notes, but feel free to interject a little bit. August 2024, so the first thing here that caught my eye was definitely the headline, which read, August 2024, a record month for precious metal ETFs.

Do you think they're listening to the Canadian Investor Podcast, these investors? Because I think since the beginning of the year close to it, I've been pretty vocal about owning some gold. And I've been talking about it for, yeah, at least a good, I would say pretty close to six months now. Yeah, they must be. I mean, gold is, what is it? It's like $2,600 an ounce now. It's like ripped through all-time highs. It's crazy.

And I mean, most people, let's be honest like nobody would even think of owning gold like most investors would not consider it but you know now that it's ripping through all-time highs it's you know people are looking as to how to buy it and an etf is the easiest way for sure i mean it's kind of a pain to do it any other way other than just you know buying an etf so i'm not really all that surprised would it is it fomo is a powerful drug oh yeah exactly fly uh buy high sell low exactly i mean the one the one thing is is it precious metals or is it just gold it's probably just gold uh they said precious metals but it's mainly gold because commodities etf saw an increase of 576

million in inflows out of 4.2 billion in net inflows for all canadian etf so pretty big and for that 576 445 million came from a new bmo etf called z g l d and it was related for a lot of institutional demands so yeah definitely I think it's mostly gold just based on those numbers there. Yeah, it looks like that fund started in April of 2024, and it's already got nearly 600 million in assets. So that's pretty impressive. But what do you expect when gold is doing what it's doing now yeah exactly and at the end of the day i think i can probably do another episode on gold as a whole whether you know why you'd want old some gold uh the advantage of benefits from it at the end of the day i think a lot of it is what we

you know what at least what i talked about earlier in the us too is ever expanding government deficits i think more and more people are trying to hedge that, whether it's gold or Bitcoin. And obviously, you know, there's a whole debate between gold and Bitcoin when it comes to that. Bitcoin is a lot more volatile, but gold has a strong history of being good inflation hedge over long periods of time. Yes, it can be volatile shorter term. I think it could definitely there could be some of that. Now, if we go past gold, market cap weighted ETFs, especially large caps, were the ones that saw the most flows in terms of equities, the most inflows. Some examples would be XUS in terms of ticker, VFV, which is an S&P 500, ZSP as well.

I believe ZSP is BMO, right? Okay. ZSP as well. I believe ZSP is BMO, right? Yeah. Okay. Now, one thing of note is that the inflow in US equities were at their highest in early August. So if we remember early August, that's when the yen carry trade was kind of blowing up. So I think what that means is a lot of people started buying the dip during that time. So I think that's good, which, you know, has worked pretty well, I would say, since then. Now, and other types of ETF that saw strong months are these all equity ETFs that don't have any fixed income. So XEQT, ZEQT, those saw inflows of 465 millions for the month and continued a strong year. One that really surprised me was

crypto ETFs and led by Bitcoin and Ethereum. So these are the Canadian listed one, which are much higher in fees than the US one. I looked at a few and I think they're all like in pretty, they're all pretty much 1% or more, although the CI Galaxy Bitcoin ETF seems to have dropped its fees to 0.76% in terms of management expense ratio, but still much higher than the US one. So I was surprised to see some inflows because we've been seeing some outflows in those ETFs since the Bitcoin ETFs launch in the US. I mean, I would imagine it's just people maybe don't want to exchange their Canadian to US because the Canadian dollar, although the Canadian dollar is getting a bit better now, I'm pretty sure. Yeah, it's back up, but, you know, it wasn't very good in August, started rising. But I mean, a lot of people are also worried about, say, if you're at a brokerage like Wealthsimple Trade, you're going to pay the currency conversion fee.

Which, I mean, if you think of the difference in fees, it does not take very long whatsoever to recover that fee. I did it almost immediately. I owned, what was it, BTCC? I can't remember who even runs that fund, but it was like 1.25%. I think that's a purpose one. Yeah. As soon as iShares came out with theirs, I sold it, converted everything to US and bought it. So yeah, that's the only thing I could see really is kind of a weak Canadian dollar and people who just don't want to convert, but want exposure. Yeah. yeah, I think that's probably a good assumption here. In terms

of Canadian equities that struggle during the months, outflows were led by the broad market ETFs, such as Canadian broad market ETFs, such as XIC, ZCN, HXT. Canadian ETFs in financials and energy also struggled. Fixed income had inflows of $1.1 billion, actually continue a very strong year for fixed income. So far, a fixed income had $15 billion in inflows year to date. That's about a third of all inflows for the year. So definitely a strong year. But one that saw that I guess would fall into that fixed income category is the cash deposit ETF like HSAV, CSAV. They were both in the outflows categories, likely reflecting the Bank of Canada cutting its overnight rate for a third time. I think at that point it was only two times for August. I can't remember exactly when

the announcement was. I think it was just two times, but still they said that it benefited from money market funds that have slightly higher yields. So a lot of that money went over to money market fund and they saw strong inflows for the month. And I'll share what the top performing ETFs and the ones that saw the most outflows for the month for people on joint tcis anything that kind of jumps to mind dan when you're looking at that which the like the uh outflows and inflows or the or the top performance yeah outflows and inflow and can i get i can also give the top five here to give people a bit more context that are just on audio so top five inflows was the iShare S&P TSX index ETF, which saw 580 million. ZGLD, the BMO gold bullion ETF, saw 545 million. The XUS iShares Core S&P 500 Index ETF VFV that saw 424.

And then in the outflows, there's XIC number one, TCLB at number two, ZEB, HSAB and ZCN just because I didn't want to name all of them. The top two are pretty sick. Actually, I would say the top four have pretty significant outflows here. And the trend I would say is a lot of Canadian kind of Canadian equities, bonds, as well as cash in terms of outflows here. Yeah. The one thing I'll say about the um the outflows xic is is kind of interesting i mean that's the technology etf so it's you own a lot no that's a capped oh that's oh yeah i'm thinking xit that's xic yeah yeah yeah which is funny because xic is at the top of outflows but xiuIU is in flows.

Could be a fee thing. Yeah, it could be a fee thing. I mean, it could be just institutional investors. I mean, you're seeing so. That's why when they were saying there was some outflows for Canadian equities ETFs, these are at the top of both respective categories. ETFs. These are at the top of both respective categories, just that XIC saw $705 million in outflows where XIU saw $580 million. So you have to think that some of the outflows went to XIU. Yeah. And when we did this last month, I can't remember the exact situation, but we had

the BMO fund that saw a huge amount of outflows and it was just like a institutional investor that was like shifting funds. So it's not like anything alarming or anything. It's just, you know, sometimes this kind of stuff happens. I mean, yeah, I would wonder,

uh, the one thing about HSAV, which is that, um, it's global X's, you know, that's that cash ETF that never paid a distribution. Yeah.

It just, you know, continue to accumulate in value. They suspended units on that because of just the demand during the... Well, not during the pandemic, but kind of post-pandemic when rates were much higher. And as a result, the ETF was trading at a premium because obviously, if you suspend units, you don't have... The authorized participants aren't really allowed to create new units. So you're pretty much buying it based off demand so it ended up trading at a premium and a situation like this where you know outflows are large this is kind of when you see

that premium go away and it has for the most part so it's trading at what looks like 113 dollars whereas the net asset value is about 112 8512.85. This fund typically, sometimes you would see a 1% or a 1.5% premium it was trading at relative to its net asset value, which you would think wouldn't be much, but for an ETF that pays you 4.5% a year, that's one third of your returns gone if that premium drops back down to net asset value that's a good point which is like it's what you know global x they had been warning about this for a long time they're like you know this fund there's no new units it'll trade at a premium to nav like in a sell-off situation it might fall back down to nav which you know if you think about

it if it's paying 4.5 a year, you hold it for four months, you've earned a percent and a half. You could see that all wiped out if it falls back to NAV, right? You've earned nothing. So, I mean, that's pretty much the situation we're in right now. And it is falling back down because there's obviously going to be lower demand here. Yeah. Yeah. I think that's a great point great point i mean we saw that two different kind of fund it wasn't an etf but with gbtc right the the grayscale bitcoin uh trust before there was a bitcoin listed for a long while i think it was probably pre it must have been like pre-2022 before the whole like ftx thing. But for a long time,

there was a massive premium on that fund. So compared to the actual value of the underlying Bitcoin. And then there was a massive discount. So you had people that would potentially bought premium, bought the fund at a massive premium. And then at some point, they must have been down massively because it was trading at the discount, obviously ended up leveling out and traded close to the NAV,

which is the net asset value close to the launch of the ETFs because they converted it to an ETF. So that wasn't an issue from that point on. But it's just a good, it's just important for people to understand that is that sometimes you know if there's yeah there's no creation of new units you can get these funky kind of situation where it's trading at discount or premium to its net asset value yeah and i mean hsav never really would have traded at a discount because there's still you know unit redemptions and things like that. And the assets were completely liquid. It was pretty much just cash in a savings account. But yeah, when they suspended units, I mean, you start trading on investor demand and that investor demand can go away quite quickly. And we've seen it go away. And people who bought this fund

recently, they might actually be down considering that gap that closed. On funds, you would generally consider not zero risk, but like practically no risk. So they might have to hold them for a while now just to get back to even. No, exactly. So I think we'll keep, so we wanted to do also the natural bank natural bank etf fund flows for the u.s but i think we're running a bit long here so since it's in between earnings season i think we'll keep that one for next week uh you can leave that one because you did some really great notes and it'll be kind of interested we can just reference back the canadian report well, just to see some of the differences in the US. Clearly,

the US dwarfs Canadian ETFs in terms of size, but Canadian ETFs, I think, are big enough in terms of size just to see if there are some kind of different trends that we're seeing both south of the border and here. So it's always interesting to see where that goes. we're seeing both south of the border and here. So it's always interesting to see where that goes. Yeah. These fund flow reports, they're really interesting to read. And I mean, I guess in the, so we won't talk about the US ones and this would probably be big enough for its own podcast entirely, but they did, if you ever want to read it, anybody listening, if you look at the National Bank US fund flow report, they discussed the impact of passive investing on the value of major corporations because of it. So it just goes over how a lot of people believe that index funds create higher valued stocks just because of that passive element

of it. But they actually kind of debunked that. And it's a pretty interesting read in that Funflow report if you want to read it, because I imagine it's a bit too much to talk about on the podcast. Well, maybe we'll touch it a little bit because I have my thoughts too about that. Now that we have a bigger portion to talk about it on instead of just a small segment, I think we could discuss it

because it's a pretty interesting study they did. No, it'll be interesting. So make sure you tune in next thursday to to catch that i'm sure there's gonna there's probably gonna be a few canadian companies reporting in of note in between there's always a few outliers in between earnings season if not we can go back to winnebago i think i did the last time in between see then see how they're doing but um yeah if or if there's a company that we missed, you're listening to this and a company that ideally a Canadian company that we didn't talk about during earnings season that you'd like us to review again if they reported a few weeks ago, a month ago. We can certainly do that in between season.

I think unless there's some breaking news that really takes precedent, like 30-year mortgages or 1.5 million CMHC insurance. But aside from that, I mean, it's always fun to kind of look back at earnings season. So I appreciate everyone listening to the show. We really appreciate it. It encourages us, obviously makes it worth our while. And it's always encouraging to hear that. If you haven't done so already, you can follow me at fiat underscore iceberg. Dan at stocktrades underscore CA.

Yep, nailed it. Yeah, it's been a while, I feel like. Yeah, I nailed it. Although it's going to be like brain memory soon. So yeah, give us a follow on Twitter if you haven't done so already. If you can give us a great review, it's always appreciated on Spotify, Apple Podcasts. And talk to a friend or family member that's interested in investing and want to be entertained at the same time.

You know, we're always looking to get some new listeners and grow the show. So thanks a lot for listening. The Canadian Investor Podcast should not be construed as investment or financial advice. The hosts and guests featured may own securities or assets discussed on this podcast. Always do your own due diligence or consult with a financial professional before making any financial or investment decisions.