The Canadian Investor - The Canada-U.S. Trade War Fallout with Ben Rabidoux and Ron Butler

Episode Date: August 29, 2026

In this episode of Canadian Macro, Simon and Dan are joined by Ben Rabidoux and Ron Butler for a wide-ranging discussion on the renewed U.S.-Canada trade tensions and what they could mean for the Canadian economy. They discuss why the trade war could weigh on consumer confidence, business investment, housing activity and key sectors like autos, agriculture, energy and manufacturing. The conversation also covers how political rhetoric, counter-tariffs and uncertainty around future U.S. policy could keep buyers and businesses on the sidelines. Ben breaks down what he is seeing in the Canadian housing market, including why parts of Ontario may be moving closer to a bottom, why housing bottoms tend to be a multi-year process, and how weak consumer confidence, affordability challenges and falling new supply are shaping the outlook. Ron joins the discussion to explain what is happening on the mortgage front, including why more borrowers are moving toward variable rates, how household stress is showing up in refinancing and debt consolidation, and why power-of-sale activity could continue rising into 2027. The episode also covers the K-shaped economy, weakening consumer spending, Canadian bank risks, mortgage fraud, potential U.S. pressure on Canadian financial institutions, and why the next phase of the trade war could have major implications for markets, housing and the broader economy. Watch the full video on Our New Youtube Channel! 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 Asset Allocation ETFs | BMO Global Asset Management Sign up for Fiscal.ai 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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All right. Stackcast today. We got Ben Rabidoo joining as well as Ron's coming on at noon. It's funny, Simone, you and I were talking about getting guests on the show. And then when we switched to Thursdays, like Ben, I know originally we were on Fridays, it didn't work for you. As soon as we switched to Thursdays, everything just became infinitely more possible. So I guess I think we might have to stick with that. And now we have too many good guests on one show.

But really excited. I mean, I think generally probably just for the clickbait headline, we're going to be talking about the trade war today. Impact on, obviously, on Simone's expertise, which is sort of the public markets, mine, which is sort of how this is, I think, it impact consumer sentiment in real estate a lot. And I think we'll just spiral out of control from there. Like, Ben, you were talking a little bit about credit trends. And, you know, I want to pull up your edge report and a couple of the other things there. But, Ben, do you want to do a quick intro? And then I'll let Simone kind of jump in here with what he wants to chat about too.

Yeah, sure. Ben Rabidoo. I'm on Twitter or X at Ben Rabidoo. I do got a couple of research services that track Canadian housing credit, just broad macro trends. One is sort of institutionally focused. And the other is more kind of retail or real estate professional focus, which is IG Analytics, which is kind of what I'm representing here today. Yeah. Yeah. And I mean, how many like you, like realtors, you get like, 100, 200 realtors a month on, on your call to kind of just like A number of, yeah, yeah, exactly. So we try to specialize the research for real estate and mortgage professionals. We take that institutional quality research, try to make it really applicable and stuff that can kind of help you be informed with your clients, etc.

So, yeah, there it is. I mean, Lord knows realtors need the help where they can get it. And no offense to the trade. I am one, so I'm allowed to say this stuff. But, Simone, what did you want to talk about specifically today? Yeah, I mean, obviously Ben's expertise is pretty great. And the couple reports you sent us was really good. So we'll want to talk about that a little bit. But also what I'm seeing, right? So I looked at earnings pretty regularly and some of the trends that we're seeing with the consumer. Not only Canada, I think there's a little bit of a myth, I think, right now that the U.S. consumer is very strong. Yet you're starting to see Walmart, Home Depot, Lowe's saying otherwise on their conference call, basically saying that, yeah, it's not as good.

And last week we talked about it then. and maybe I'll leave it to Ben to elaborate, but Walmart posted the lowest comparable sales they had since January of 2020. So it hit 2.6% and the prior low was January of 2020. So just to give an idea that it's not all that great for the U.S. consumer and where do you trade down from Walmart at that point, right? Yeah. Yeah.

Yeah, I'm obviously like we've talking about it a lot. And I always feel too bearish when I'm like, this has got to impact the consumer at some point. You see it in housing. Like, that's not, I mean, consumers are scared. Their affordability is stretched. It's tough. It's improving, but not fast enough to balance the market in favor of sellers yet.

But, you know, when does this trickle into the consumer? And Ben, you were the one who really pointed me to that originally, like, you know, Canadian tire when I was out with all your hedge fund guys, what do we watch to see whether or not the Canadian consumer is tapped out? Do you think that we're seeing something similar here with, because like, you know, we had a couple of good readings. CPI, you know, softening a little bit. GDP looked good.

jobs looked good, although I think, you know, based on the Ontario concentration, that felt kind of like a FIFA bump to me. Yeah, there's definitely some of that. Well, let me just jump in. I would say, I really appreciate Simone's perspective where you take kind of the macro data as it's being reported and then you kind of triangulated with public companies and what they're seeing. And that's one of my big approaches because, you know, oftentimes the practitioners on the front

lines have a better feel for what's really happening with consumers than maybe Stats Canada data with some of the kind of quirks. involved. So to that end, I think one of the interesting trends, there's not like a new theme, but you've probably heard this concept of like a K-shaped economy where the wealthy would seem to be doing very well and kind of the lower end of the income spectrum would seem to be increasingly struggling. And we can actually see that in some of the company reports. So to get back to what you guys are talking about, like retail sales look pretty good, I would say better than expected over the last number of months. But then when you look at some of the company specific data,

You've got like, here's a good example, like Tim Hortons, right? Same store sales up 0.1% right in Canada. It's like that's a great signal for kind of low end, you know, consumption. We see it as well like pizza, their same store sales are falling 5%. You got like Leon's furniture, same store sales. So getting the kind of skews like, you know, to that kind of lower income cohort would seem to be kind of struggling. But then you look at like luxury retailers like Canada Goose. You got like store sales up 11% year over year.

Oryzia would be a good example, but they're not like super high end, but kind of skew. That's the Becky trade. Yeah, yeah, the Becky trade. Yeah, yeah, exactly. And so there are signs, like not to get too cute with the anecdotes and the stories there, but it does seem that there's some validity to this idea that there is kind of a K-shaped dynamic within the economy. Oh, and by the way, I should point out, like when you look at, so Canadian Tire, because I've always viewed Canadian Tire is a really good proxy for kind of, you know, discretionary spending.

And they even commented on how they're seeing a real push towards like value and any sort of like, you know, value focused, less discretionary type stuff is with value and, you know, less discretionary. So all of that would seem to point to consumers at the low end kind of hurting a little. Yeah. And I'm just sharing the comparable sales like you were saying, Tim Orton's. Yeah. So, yeah, not good at all. Yeah. Basically flat.

And I think if we go back. doing my part too, man. I'm a huge friend's guy. Like, I just crush double-dough. They got protein coffees now, like protein lattes, absolutely insanely good. Anyway, so. So, Lowe's since essentially the pandemic. So, um, and for obvious

reasons. So no, I completely agree with you. One thing that you both will probably like is, I don't know, Ben, if you had the chance to look at Home Depot and Lowe's, but they were both saying essentially that specifically to the U.S., because Lowe's is just there now, but they were saying that households are just

not spending on large projects. Under 1,000, they are spending. Over 1,000, they're postponing large discretionary project was what they said on the call. So I thought that was interesting. But also, and I think you had that in your report where I think Canadians are starting to, or homeowners starting to tap into their E-Lox one more, once more. But Home Depot has about 15% of their revenues or sales that come from Canada and Mexico combined.

Canada is a slightly larger part than that. So they don't break it down Canada. in Mexico, but you can kind of deduct it's coming from there. And they actually saw more strength from Canada and Mexico than they did from the U.S. I thought that was interesting on their policy. That is interesting. Do we want to talk a little bit about the, like, you know, the elephant in the room, which is, and Ben, I think you're kind of the opinion that it ends with, with the taco sort of thing, you know. But you were the way to put.

Yeah, yeah, exactly. I mean, well, the problem is the theatrics escalate it, right? Like, do you see the Lake America thing this morning? Yeah, it's just getting stupid. And I don't think it's helpful. Like, we need to dial down the rhetoric. I understand Canadians are best. Doug, Doug Ford's got to chill out.

He's got to chill out. Like, when you start talking. I thought Carney walked him back with the Super Bowl and the last time that he did this with the electricity, you know, like, it's just like getting crazy. Well, Olivia Chow on CNN is not helping things either talking about all. We support, you know, curtailing U.S. electricity exports. It's like that's an enormous escalation that risks putting U.S. lives at risk. Yeah.

Like you just don't want to do that. Like they're not going to. I don't see them joking about that. And like playing with that. Like I understand theatrics to a point where you like where these politicians want to pander to their base and get reelected and whatever. But there's a point at which it becomes reckless. And I think that this we are very much at that point right now.

Yeah. And I think Canadians need to be mindful of the fact that that most Americans are not in favor these tariffs. They're not happy with how this is progressing. So we have a lot of support stateside for a more progressive deal. And we risk that as we send our politicians in front of CNN to be like, hey, let's, you know, eliminate energy or electricity experts. Like, that's a crazy thing to say. Yeah.

So, like, my opinion on the matter, like, I think that it was an appropriate move for Carney to maybe walk away from the table. But I don't know if I like the, like, counterteriffs just doesn't, like, you don't fight fire with fire. And everybody wants to kind of be like, you know, tough. deal making and whatever. But I mean, you get tougher and you win the next fight by going back to the gym. Like, why don't we focus on making our economy, you know, strong so that we, so that this isn't as, we're not as exposed and this isn't as big of an issue. That's my take on the matter.

Like, I think our energy would be far better focused on that than trying to play this game personally. Well, I think you can do both. I do, I do think you have to, you have to respond, right? And I do think you can do it. And I think Canada has done it in a way where we're very selective. and we target some of those swing states in particular industries that will hurt him at the midterms. And I think that's the way that you get really targeted on this.

And Canada, I think it's been pretty thoughtful. And Carney, to his credit, I think's been fairly thoughtful on a lot of this stuff. Yeah, like, I'm, I get maybe I'm too much of a pacifist, which is funny because most people wouldn't interpret me that way, but I'm still just of the opinion that like, if somebody, like, I've just always thought, like the best way, you know, like bullies or, what, you know, like typically narcissistic, want attention. Usually the best way to deal with them in my experience is just to ignore them. And it's like, then it's like, what? Right. So, like, I actually feel that way. And, and I think that I, I would be curious to see how that,

I mean, it's too late, or too late for that to take place. But I, I'm just of the, the opinion. And maybe it's easy because it's not the thing that they did. And I'm just like picking the, you know, oh, I have a better solution. But I don't know. What's your take similar, like on the, on the theatrics around it and how this is going to progress us into further escalation, things like that. I mean, it's really interesting from the U.S. perspective, too, because I thought a deal would get done mostly because I thought Trump needed a win somehow before the midterm. That's what I thought would happen, because Iran war is a disaster. Let's be honest. Like, remember when it started? It was like, oh, it'll be done in a week. Like, they thought it would be Venezuela.

How many one, it's done next week, quees have we seen so far? Yeah, which at some point, you just stopped believing it until you actually see some. something concrete. Right. Yeah, for sure. So, yeah, I honestly thought there'd be a deal done because I thought he needed some kind of win, especially for those swing states. And I think there's still probably some willingness from the U.S.,

even though I'm sure you guys watched a CBC interview with Greer. Just to, yeah. And I mean, I think everyone should watch it. I think what we're probably seeing right now is I think both Canada and the U.S. is using the media to push their narrative. And I think just the truth is probably in the middle on what fell. through and that's usually the case. So that's really what I thought what happened. I thought the deal would get done because I thought the incentive were, especially on the U.S. side,

were aligned for some kind of a deal and a win for Trump. Yeah, I agree with that. Simone, that's exactly what I was expecting to. It's not too late for that to take place though, right? Like, Ben, you sort of highlighted the dates, like, you know, Carney went with, it was September 8th. And then Trump's like sort of looming threat of tariffs is like actually like the escalation is in like January. Right. So I think that the idea. that we'll probably still reach a deal could be on the table. My concern is most consumers aren't as familiar with the nuance. And like when I talk about consumers, I'm just talking about people buying houses because

that's really like the industry that I care about. And this is like that right another wrench that gets thrown in like that keeps people on the sidelines. Like why am I going to go lever up and bro down on on some single family housing in Canadian and the Canadian real estate market when, you know, I mean, we saw it with the first U.S. election. That was kind of the first really. a big hit to volume in Canadian real estate. Like, you know, we were, the rate hiking cycle did quite a bit,

and it brought price down and volume down a bit. But once we got, okay, well, Trump 2.0 actually seems like potential that, you know, that November is sort of like our first really big year over year volume drop. Then we go into January or sorry, April where, well, now we have to figure out who's going to get elected to deal with this new issue that's been introduced. And April was like the slowest April that we'd seen in ages since COVID, I think. and like you go back to the 90s. So and then you get, you know, prior to that war in the Ukraine and then now you're adding in war in the Middle East and potential cost push inflation from diesel and fuel prices,

which I think is actually a pretty big looming threat that nobody is really paying enough attention to. But all of these things, now you have trade war back on the table and it's just a switch that keeps getting flipped on and off. And people are like, well, I was just like, why would I go make the largest financial decision of my life? And so I think my market is respond, you know, your market seems to be responding, God knows how, with the stocks, and I think you, you know, I always like hearing your take on it. But my market seems to be we're not buying houses, right? And we're not buying houses until we have some certainty. And, and I can totally empathize with buyers for that. I don't know if they're like, is there, like, do we have to get a, like, be confident that there's a long term trade deal before we see consumers comfortable entering the market even amid, even amid, you know, a lot of the metrics that you've been highlighting in your report indicating that

buyers could start affording to be coming back into the market. But why, so why aren't they, right? You're muted, Ben. I think you got a, you have a button on the front of your mic that if you tap it. Yeah, I have the mic too. Am I good? My lead. Yeah, yeah, you're good.

Yeah, this is my least favorite feature with that. I hate that. Yeah. So what I was going to say is if you look at the consumer confidence data, right, we've been kind of plumbing along recession lows for really the last couple years. What's interesting, though, is if you look at the July reading, registered the strongest increase in three years, just ahead of the announcement of the new tariffs.

And then you saw it pull back a little bit in August. So, you know, it looked to me like consumer confidence was starting to put in the bottom and starting to recover. Like consumers want to be a little more optimistic. Like, you know, you get to the point where you sort of, you get immune to the noise. There's so much trade talk for so long that people just kind of get used to it and they go on with life, right? And I feel like we're kind of getting there. It's almost like normal, right? It's almost like this is what it is now.

Right, right, exactly. And so I feel like we were kind of getting to that place. I still think we've probably seen the lowest for confidence. I mean, barring like a really catastrophic outcome here. I think there's probably the lowest. And I still am optimistic, believe it or not, that I think home sales are probably going to grind a little bit higher from here, not dramatically by any means, but we're still sitting at, you know, early 90s recession levels of demand.

we've been there for three years. You really can't stay at these levels indefinitely. There is clearly pent up demand building, especially among first-time buyers. It's very quantifiable. The affordability still sucks, but we're at a point where you're going to start seeing some people re-engage. I think probably sales, even with all this, we'll grind a little bit higher from here. You think so, yeah? I don't know if I'm, I mean, I think I agree simply because of base effect.

Like, I don't know how hard, how we could possibly have. But I did say that for Q1. I think year-to-date sales are still below last year, right? So, you know, like, and I thought like, okay, prices come down. I mean, it's just basic economics, right? Like the price of a good comes down. More people are able to buy at that price. And the interesting thing that I'm seeing in Canadian real estate right now is fewer sellers are

willing to sell at that price. So I think we're burning through a lot of those people who need to sell. And now you're getting to the phase of this where you have the sellers who don't need to sell. You take your average Canadian homeowner and seller right now. they have equity, right? They can probably afford their mortgage payment. And if, if they're not happy with the prices in the market that they're trying to sell their product in, they just exit. And so we're seeing, you know, your, your market's actually balancing from the supply side constricting rather than the buy side or the demand side increasing. You know, I think you're right,

it'll grind up, but I don't think it's going to be like this. I don't think it's going to be this pent up demand that gets loaded into a slingshot and fired on the, no, not at all. No, no, not at all. And I'm not advocating for that. No, yeah. But could you see sales up five or 10% from here and we're still at shitty levels? Like, absolutely. On a year-over-year basis from- But here's something to think about.

So I flagged the second half of 2026 as being kind of the pivot point for the market like two years ago. And the reason you could see that is if you look at what was happening with permitting activity, we kind of knew that looking ahead, developer activity would pull back dramatically. So we're now to the point where that's kind of worked its way through housing starts, through units under construction, and now into completions. And now we have the lowest level of completions for homeowners that we've had since the 90s, especially in Ontario. So there's no new supply coming onto the market. And what people often miss is like when developers complete new inventory, it adds resale inventory to the market because oftentimes the people who have bought a new home have to sell their existing home.

And that introduced some churn. So it's not surprising that we're sitting here with new listings down almost 20% year every year in Toronto. And most of the big metros in Ontario, new listings are coming off. And so active inventory is now falling, right? And right at the same time where demand is starting to, I believe, stabilize. So I think what you're going to see, and Dan, you could correct me if I'm wrong, but what I'm hearing in the industry is there are interested buyers. There are first-time buyers who want to get into the market.

But nobody wants to catch a falling knife. Nobody wants to buy and feel like a year from now, they're going to be down 10, 20%. And so I think once we get into the realization that things are, in fact, stabilizing, And I'll point out that with Toronto, we've seen three months now where the seasonally adjusted house price index has been trending higher. We haven't seen that in four years. So, you know, you are seeing signs that the prices are stabilizing. Once I think that becomes narrative, some of those prospective first-time buyers will begin to re-engage simply because you've lost that fear of catching a falling knife. I think people could be surprised that demand comes back a little bit stronger.

And I'm not advocating for a V-shaped bottom. I've said all along. I think we're at the point in the cycle where this is going to frustrate bulls and bears. I think we're going to be here three or four years from now and crisis are basically where they are now. And a lot of the heavy lifting on affordability is now just through time. Yeah. I agree with that. And I think my concern with that, if you go back, use the 90s as a comp.

And I was always saying, I think you and I maybe had an argument about this or like, or there's some other people who kind of said that the setup wasn't as similar. But I think the 90s is a very good comp to what we're seeing today. Trade War obviously amplified that a little bit with some. of the changes that we're seeing with CAD and, you know, U.S. Canada trade relations, and its impact on the job market in our economy. But so that's kind of helped me out some of the things that have happened. But, you know, you saw a long flat bottom during that period of time.

But what ended up happening is you, your, you know, central banks right now, I think, are a little bit comfortable. They seem almost too comfortable letting inflation run a bit hot for a bit. And now your nominal house price, yeah, even if you see recovery at 1%, or 2% or whatever, but your inflation is sitting at three. Or your real house price recovery from 1989 took till 2012. Nominal was 2002. And so I think, in this kind of to your case-shaped recovery point, you start to see

a lot of that middle class wealth get inflated away. And people think that they're okay because they're owning houses or buying houses or whatever. But inflation actually ends up being the real threat to the housing market because people think that, again, oh, my house is going up in value, but it's actually not really relative to the rest of the economy. This is a concern of mine. It really is because that's been a big wealth creation vehicle. Having cash on hand is essential for any business. Traditional business accounts hit you with high

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more than you think. Find out how much at Airbnb.ca slash host. Yeah, I'm just wondering for YouTube because obviously you're really plugged in on the real estate side. Like, have you ever put some thought on like markets, equity markets are all-time highs right now? What would happen for a correction because to me a lot of people that might be sitting on the sidelines do have some money in those markets right not everyone's sitting in cash so could not even dampen further demand for housing going forward on the investment side oh yeah on the investment side like infinitely dude like like like even the even the households even the the first time homebuyers like do you think like that's a variable to not completely push aside and keep an eye on those markets yeah yeah

I mean, like you have to assume that your average Canadian consumer isn't really like running a cost benefit and a discount rate and all of these things, right? But if they've done some rough math or, you know, maybe let's say 10% of your like relatively sophisticated consumers, right now, if you look at like Toronto, Vancouver, the spread between the cost of renting versus buying a two bedroom condo, which is what National Bank puts on their housing affordability monitor, and I'll put it in the, I'll put the chart up in a second, is like is high enough that if you took the difference and dollar cost average, into the things that you're saying, right?

ETS, you know, responsible investments, you would, it's not that hard to outperform the housing asset, right? Like, it's not that hard for, to outperform the primary residence. However, most Canadians suck at saving money and suck at investing money. And so real estate has,

owning your house has always done a good job at that for them. And so they're going to keep doing it. That's my opinion. I don't know what you think, Ben. Yeah, no, I think you're bang on there. Yep, I don't have too much to add on that one. Cool. You were going to say something before, like, Simone and I got excited there.

Do you remember what it was? No, I was just going to reiterate. I think you're exactly right with regards to real prices. That we're going to have a long grinding. People need to remember that when we talk about a housing bottom, it's a process. It's not an event. It's not like typically stock market bottoms are very sudden and you get a very strong V-shaped bounce. Major housing cycles, the bottoming is a process and it's years long.

So we're probably in the beginning. of, I believe, like a multi-year bottoming process. And I should say that's specific to Ontario. Like I think Ontario is probably getting close to a bottom. I'm less optimistic on BC for different reasons. But people just need to remember when we talk about a bottom, that's not a V shape, right? I don't think we're going to be here a year from now

and prices are up 10% or something like that. I just don't see it. Yeah. I still don't think we're at the bottom, but I agree. Like people talk about it's like it's binary, right? It's like it either has to be going down or it has to be going up. It's like no, like housing can go sideways for very long time.

Yeah. And actually, let me let me clarify. because I'm not saying that, like, there's a lot of risks out there, right? Like if we get 6% mortgage rates, yeah, we're not at the bottom. Prices go considerably lower, right? If we get, like, if we don't get a resolution, we get an amplification of this trade war, yeah, prices can probably go lower. What I would say is we've transitioned.

Like, once the market peaked in 2022, every month we had falling sales, rising inventory, right? And so the natural direction for the market was down. Now you're at a point where because the market is tightening, and it's quantifiably, It is tightening. The natural direction is kind of towards stability. And so that's not to say that prices can't go down, but you need an external shock now to push them lower. And that's fundamentally a different setup than it was even a year ago.

Yeah, I know 100%. I still think like, I don't even know if it needs to materialize an actual, well, it depends how quickly sellers can continue leaving the market. But at a certain point, like life event, you know, you've got boomers maybe starting to think about downsizing. you've got a lot of your, your cohort of maybe your late Gen X, you know, elder millennials who are thinking about stepping up. Like those things should create transactions and they're not right now.

And I think that actually in large part is already because of constrictive monetary policy. Like a lot of people, you know, look at the U.S., right? Like anybody who locked in a 3% 30 year is not moving, right? Like they're not moving for 30 years. Unless they're forced. Yeah, exactly. Yeah. And so I think you just end up, like to me with a muted housing market, like a muted housing

market activity for a lot longer than people expect, which real estate professionals really need to be like observed because like realtors love to cheer on house price growth. It's like we don't make money on house prices. Like yeah, okay, house prices go up 10%. My 5% commission goes up 10%. If I don't do any deals, it doesn't matter what the price is. And so this part is I've always found funny, right? And I think that I've been really bracing our industry.

I've been pushing a lot of professionals to push towards rental transactions. Two, three years ago, we made this call at our brokerage because it helped, number one, it helped us develop our technology faster, shorter sales cycle, you know, et cetera. But number two, that's where the money was. And it's proven to be the correct thing. So I think, like, volume will probably take a while. I think, like, we're in sort of like this new normal. And you go back to like 20, you know, 15, 16, whatever.

You see like, you know, you're kind of. seasonal cycles, but you're right along that kind of 10-year trend line. I think that's like where we're going to, we'll fall right back into that, that slot. And people just have this, they want to benchmark to 2016, 2017, like those insane foreign buyer markets or they're benchmarking to COVID. That's never, never, I mean, we have way bigger problems if that type of activity ever comes back in our market, I think. So I think this is a very good healing process for, for Canada's housing market personally. Yeah, totally agree. Totally. And I guess a couple points I wanted to make. So just to get back to the trade war and not a lot of people talk about this,

but in all honestly, I think a deal has to be done in two weeks. If not, it's going to be after the midterms, because we tend to forget, but about 30% of votes are mail-in ballots. And they're starting, I think the mail-in ballots, depending on which state, I think it started in a few weeks, usually. The earliest one started about 60 days before the election. So if the Trump administration wants to show something for the election, they should try and capture that. as soon as possible. That's a really interesting point, Simone. I hadn't thought about that.

Yeah, that's, yeah, great context. On the trade war note, Ben, you, you ripped this awesome clickbait headline. Yeah, it was good. Talk to me about this. What this report? I love conspiracies, Ben. I just need to know whether or not the answer to the question is yes or no, because I certainly hope not.

Yeah, yeah. I think Mo is more exposed to these guys than I am. Just to be fair, the piece opens up with we're putting on our tinful of hats. So this is meant as a thought piece. And all we're trying to do is connect some dots. the main kind of gist of the piece is if we see some of the announcements that have just come out of the U.S., they would appear to be a little bit ominous as it relates to Canadian financials. So, for example, just last week we had the U.S. administration announced the largest kind of sanctions package against any entity associated with Iran.

And not only that, they would seem to be taking aim at financials specifically because there was a threat within that that they would remove entities from accessing any U.S. dollar clearing capabilities. And you had them announced, but in Besson explicitly announced that there's probably going to be a major financial institution that's going to be sanctioned within a week. Well, you walk back from you go, well, what financial entities globally have gotten in trouble from, you know, facilitating money laundering? And we know Canadian banks have a bit of a history. This is a good theory. Right. And so you think about it for a moment. what banks internationally have huge U.S. exposure that would really stand to get pain from being cut off from U.S. dollar clearing, it's the Canadian banks.

So, you know, if you scroll down actually, Dan, this is not totally hypothetical. You had Fintrack come out and explicitly warn against some of these, right there, like the Iranian, if you scroll up, the Iranian, they actually laid out the mechanism by which Iran is moving money through Canadian currency exchanges into our banks. And that's the exact mechanism that Besson was warning about. So if you just put a new tinfall hat free moment, you think, okay, let's say the Canadians and the Americans go back for another round of trade negotiations. And at the same time, the US administration is like, oh, by the way, we're investigating, I don't know, TD, like pick your Royal, like pick your big Canadian bank with US exposure for potential violations.

And we're going to put them on watch that if we feel they've screwed around, we're going to cut them off from US dollar clearing up capability. Well, now of a sudden you have a whole significant. a part of their enterprise and their franchise that's at risk. And the point here is not that they're going to do it, but that it's a threat. It's a leverage piece in a future round in negotiations. Why wouldn't they lean on Canada in that way in a trade war? So it's the timing is curious as they always with these conspiracy theories. It's like it's probably nothing, but it's like it's fun, it's just fun to kind of banter about this stuff. I think we talked about this a little bit.

I mean, like early on when, I mean, the the trade war really was focused around like fentanyl for a period of time. Yeah, I forgot about that. I mean, it really was. And Ben, I think you and I talked about this. I don't know if it was on a space or I don't know. I don't know. We talk a lot.

But I really felt like that could end up in the crosshairs of the, of kind of national security and like a lot of the research that Sam Cooper's been doing. And, you know, a lot of the, I mean, like, I don't even say this like to be dramatic. But like Canada is probably Canadian real estate and mortgages probably like top five place on earth to launder money. Of course. And you mentioned like, yeah, like a couple of those,

Ron's hopping on here. So let's get him in here. You know, you mentioned how those Canadian banks are like could end up in the crosshairs. We, TD, who is it? TD got hit. They got a big trouble. Like the biggest fine or was it, did it end up in the biggest fine?

No, the US. The US assets are still capped. So they still, they've been rejigging it. But I think it was capped at four, 450 or 500 billion. Basically, they capped it. And if you're not allowed to grow your assets, you're essentially not growing as a bank.

So there's still a capped. And who knows how long it'll be because of all Fargoes had the same kind of cap put in place for years. And it took like six or seven years, if not more to get lifted. So yeah, it's still so on. Yeah.

Yeah. And then, yeah. And then we've seen it within Canada, like you said, CIBC, I think got hit with FinTrack. I mean,

a couple of them. Like I think our regulators started responding. saying, hey, guys, like maybe we should, you know, if we're going to play in the space where they take the law mortgage line, and we got the perfect guest here to talk about this now, but where they start taking mortgage laws seriously, you know, Ron even mentioned a bunch of times, you do this type of mortgage fraud that we, that we have made our national sport here, you know, in Canada. You do that in the U.S., you go to jail, right? There was a mortgage broker in New York. And so it is interesting just seeing that, that dichotomy between Canada's economy and the

US on that. For sure. Hey, boys, I'm good, I see Ron's on. Ron's the man. Good to see you, Ron. I'm going to hop. I got a 12.15. I got to jump on. But good to see you guys. Perfect handoff. Thanks, Ben. Thanks, Ben. Appreciate it. Good guy. Ron.

Perfect timing, man. I don't know how we line that up, but we're on mortgage fraud. U.S. banks. I mean, talk to me a little bit. Let's just start with the trade war. Rumblings in your industry, volume down. People getting scared, wait until maybe wait this one out on mortgage applications or things pretty chill? Listen, too soon for volume down.

We'll see it first in the real estate market. Too soon for volume down in mortgages. There's volume down and mortgages for other reasons in the mortgage industry. But yeah, listen, I mean, trade war, what you guys know as well as I do? You're in the business. You're doing this every day. Maybe the worst part of 2025 in terms of new buyers was when people said, well, I don't know what's going to happen. I don't know. I'm worried. I don't know. trade war, blah, blah, blah. And then it kind of petered out. So things started to pick up a little bit in this year, at the beginning of the year,

a little bit of positivity. And boom, positivity gone. Okay, like this is like a missiles flying, bombs blowing up, hell breaking loose, trade war now. Okay. We're going to find out, but I've got to believe that it's going to pull some people back onto the sidelines in terms of home buyers. I just got to believe it. Because it's going to, like, so we think there's a delay.

There's a gap here between our counter tariffs going into effect, and they're very targeted, very political counter tariffs, which naturally are designed to piss off Donald Trump in this administration, which always works well, right? I mean, yeah, like, let's piss him off. Let's make him mad. Yeah, we're going to fuck with Donald Trump. Okay, somebody needs to explain to Canadians that the U.S. is 13 times the size of our economy.

Yeah, yeah. You're not going to piss him off that much. Or you may piss him off, but you may not like the reactions. He's not going to get pissed off and say, you know what? You're right. I fucked up. You guys are very powerful, very dangerous, and that attitude. Like, whoever the fuck dreamt that up, let's just take that one out, that guy out, and get rid of him from the process.

So could we imagine that this could, as it gets worse, like, what if Donald Trump keeps repeating the idea that unless the Canadian government folds and comes around, that he will indeed increase the tariffs on automotive by another 50% on January 1st. What if that just keeps going? Yeah. The explosive nature of that idea in Ontario is off the hook. Yeah. Like it's literally every automotive supplier leaves Ontario. the manufacturers, the OEMs, the parts people, everybody's gone by 2029. Literally everybody. That's a quarter million jobs.

Okay. It's as easy as that. So everybody stops and says, well, wait a minute, midterms this. Trump's gone eventually that. Okay. But wouldn't it make more sense just to try to buy time until he's gone sooner than really piss him off? That's what I thought like, yeah. I thought like we should try and maintain.

the status quo like why escalate this especially ford right like you know like Ontario is not in an exceptional economic position you know other places in Canada are doing okay and we have there are goods that is hard for the US to stop buying from us oil being you know you know a lot I mean all the natural resources prairies etc i mean i guess Ontario has the electricity stuff but i mean i think Doug for jumping into this ring kind of made me feel like this is getting this is getting a little jumping back in because I thought he learned his lesson the first time, but jumping back in and I'm kind of like this is getting a little weird and we're going to get a target on our back and it seems like that that is the case. I'll pull up a cool graphic from Oxford Economics

that shows it tariff exposure by city when you're talking again, Ron. But like even if the rest of the Canada or the rest of Canada ends up being fine, this could probably be another downleg if it's auto. What do we see Stalantis already left? 3,000 jobs from Brampton, Oshawa. They're retooling to only sell vehicles now to the Canadian. market. So, and there's some potential big problems here. And it's, and it feels like if I'm analyzing the way that Besson and Trump talk about tariffs, they are taking a mercantile approach and they want to onshore those jobs and they want to use it as a as a revenue stream for business for other countries that want to do business in the U.S. market. Like, I think what you're saying is a,

is a very likely potential outcome just based on the way that they talk about this stuff and their approach towards it. I don't know your thoughts there, Samo. Yeah, sorry, I was on mute. My daughter got home, so a little bit of screaming. But, But, yeah, I mean, it's, I honestly think right now you have politicians trying to score points. If I'm being perfectly honest, you have that in Canada. And we talked about the midterms earlier. You have the same thing happening in the U.S. You have politicians trying to score points.

Listening to the interview from CBC Whit Greer, I don't know if you listened to it, Ron. The CBC, yeah, 14, 15 minutes. I mean, it was interesting just to get the other perspective, the U.S. side of things. So they were disputing a whole lot of reporting that had come out that they essentially didn't really make any major changes. And some of the French language issues for them was just minor, things like that. I think for me it just, yeah, right now I think they're just trying to score points. Maybe cooler heads will prevail in next couple weeks. Hopefully it will.

But yeah, if they like just like Ron said, it doesn't even have to be like higher tariffs imposed. it's almost like just a threat of imposing them. At some point, you'll have manufacturers that just say, you know what? We'll get more certainty. We'll just move to the U.S. Why the hell would we have to deal with this when Canada's not a big market for us anyways? Yeah, to be clear, the tariffs are on. The Trump terror, the more wide range of tariffs for different industries, they're on right now.

No, no, I mean like further, like you were saying, further terrorists in the future. Or like if we reach a deal, like even if we reach a deal, what's to stop him from really, you know, selectively target? getting, I mean, he does seem pretty obsessed with auto. I think everything else is sort of out of scope, but like it sounds like he really wants US auto manufacturers operating in the US. Well, sure, everybody should be aware there's plants closing in Mexico. Plant has closed in Mexico. More plants will close in Mexico. This is the, you know, we can be very, very provincial in Canada. We just think, oh, yeah, everything in the world revolves around us. And yeah, it's all just Trump against us. Trump is a worldwide actor. So 29.

countries have signed a tariff agreement with Trump. That's reality. 29 countries, 29. There's, there's, Trump is imposing tariffs on multiple countries in the world today. And the idea that Canada will be exempt to that is completely fucking crazy. It doesn't make any sense. So it, but here's the real thing, guys. It's, and the audience should know this. The politicians in our country are making it very, very problematic for anybody to talk about this, for anybody to say, well, maybe we should think about other possibilities. So they want to drape the country in patriotism. If you don't, if you don't hate Trump, if you don't, if you're not like Doug Ford and you're telling Trump to kiss your fat

ass, then you're not patriotic and you're a traitor. This is a very common technique in politics to what's what we call manufacture consent. So if some people are actually worried and concerned and unsure what to do. Let's just put a big Canadian flag on everything and say if you question the status quo of our government, you are a bad person. This is a long-standing propaganda technique. And it will work. Just for some context, Doug Ford's, the guy who actually runs Doug Ford, the guy named Corey Tonight, that's who is his brain trust because Doug's not that smart. So Corey's really smart. So Corey gets. paid millions to go to British Columbia to try to get Christine Elliott elected to be the leader of the

conservative party. Somebody ponied up big money because Corey only works for big money. So he went out there and he failed. Failed by like one half of one percent to get his person. But he was fully involved in it. And it's interesting during that period he was away in British Columbia. We had the gravy plane. We had all kinds of real bullshit stupid things that Ford was doing and saying and all kinds of calamities and Ford's popularity dropped significantly in Ontario, like really significantly. Like the Liberal Party, which has no leader in Ontario, like the Liberal Party of Ontario is no leader, was actually a head of Ford, the leader of the Ontario Liberal Party? That's a, his version of a liberal party, yes, it's his version of a liberal party, you're correct.

But Corey comes back, sees what's going on, because he lost that election, comes back, sees what's happening, he says, oh shit, we got to cover this up, we got to change. that whole approach here, and you need to go back to screaming curses at President Trump again. That's your move here. Because it's kind of interesting that in some LCBOs, when it looked like it was going to be a deal, they were rearranging space to put the California wine

and the bourbon back in place. So you've got to take some of the stuff, Gordon says, with the greatest assault. Anyway, Corey comes back, says, start swearing at Trump. Boom. Doug's approval rating goes, force approval rating goes back way back up.

So listen, look, if you're a lot, here's sometimes the difference between people in business like us, like people who have to think about making money every day. We don't draw a salary. I mean, we have companies that we have responsibilities to employees. We have companies. We have our own work we have to do. And we understand that like if you want to put on an act, that's fine. But we all have to live with the real economy.

And if there's going to be some more people out of jobs and that, Because there will be, I mean, if you're selling honey to the United States right now, I know that seems like who gives a shit, Ron, about who's selling honey? But if you are that human being who's selling honey, you are screwed blue. Like, half your market just disappeared. Canadian beekeepers were selling 52% of all their honey to the United States. That's the way it goes. There's many, many other examples of that.

So all of a sudden, we've got economic pressure on us, and we have worry. We have worry about the future. and we all know, all three of us know, that if you create concern about the future, you're going to have a few less houses sold. That's just reality. Yeah. Having cash on hand is essential for any business. Traditional business accounts hit you with high fees while paying little to no interest on the cash you need for day-to-day operations. That was our experience, too, until we switch to the new EQBank business account.

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When you originally came on here, we were going through Ben's report from Edge Analytics on, you know, that special one he released that said something like our Canadian banks the next target of the trade war. And that's kind of how we digressed in the mortgage fraud stuff, et cetera. Simone, do you, like, I don't know if we really completed the thought. And then I'm curious to get Ron's take on this after. But like, does this feel like something that, I mean, if you're really going to want

to hit Canada where it hurts, like that would be a big one. I don't know. I didn't really put enough time into thinking about it. But I'll let you run into it. And then Ron, I know places a ton of mortgages at these institutions as well. And it's very well connected in the space. So I'm curious to hear industry. I mean, I think Ben's piece was definitely thought provoking.

And he did point it as, you know, put your tinfoil hat on. But I think he had a good point, right? The U.S. would not even need to do much. It would just have to say, well, we're opening an investigation. Just the threat of that. And the TSX being so heavily into financials, obviously knowing financials include the insurance companies, but the big banks are just the majority of that anyways.

It would be a tough blow to probably can. Canada's stock market, at least in the short term until it's resolved. So it could be very easy for the U.S. to put a big blow onto Canada by just saying, you know what, we're suspecting some of the Canadian banks with some past dealings and we're doing an investigation, even if they know they won't find anything or they don't have any interest in finding anything. Just a thought of saying it could be a big, big hit. And that's just like completely outside of the trade war theatrics and whatever. But if we start seeing regulatory pressure applied on Canadian banks, I mean, like RBC's making a big push into the U.S.

TD is what the 10th largest bank in the U.S. But now capped on assets like you mentioned. I mean, could be problematic. It could be for sure. RBC and TDR are the two G-SIDS in Canada. So I would think they probably would target those to begin with. Those are the two largest banks. But you have to think of the ripple effects too, right?

So Canadians, I know they don't invest all that much. But when they do invest in the stock market, Canadians are very heavily domestically biased in their investment. So it would hurt and the banks are very popular investments. They're always in the top 10 in terms of investment portfolios. So think about the ripple effect that it would have also on Canadian consumers that would have equity investments, the wealth effect that they might feel, potentially having money in the market for a purchase of a home or investing in a property investment. So there are some ripple effects if something like that would happen. Of course, who knows if it will, but it could be an easy car for the U.S. to play if they really wanted to hit Canada hard.

Ron thoughts? Does the industry seem like they are remotely concerned about this? So it's important to understand the base principles here. Scott Besson's economic D-Day was all about saying to actors throughout the world, if you are supporting Iran through the transit of money, which is mainly allowing Iran to recoup cap money from their oil sales, their black market oil sales, which is chiefly China, to a lesser extent, India and some African countries,

that he's going to fry your financial institutions. And that's the threat he's using. That's what the phrase economic D-D-A is all about. I spent a lot of time researching this and how it applies to Canada in the last day and a half. So it's really important to understand that we have a very much real cash transfer system to get money out of Iran.

We've had it in Canada for years. You just have to take a drive along some streets in Richmond Hill and particularly one street in West Vancouver called Marine Drive, and you will see strings of money changing, currency changing shops, which have virtually no one in them any time at all, and yet they're paying high expensive rents. This is all a function of money transfer from Iran to members of a tiny, tiny number, a microscopic number of the Iranian community who is here in Kansas.

Canada. And it's designed to get money out of Iran, get money into the hands of their relatives who've been planted here years ago to create a situation where if the government does fall in Iran, that these people who have been smuggling money out, because the Iranian government could fall. It's not impossible. They're running 50% inflation. It takes now two million real to buy one U.S. dollar as of yesterday. So there you have tremendous economic problems. This could exacerbate it. But money has been pushed out, has been pushed out for nearly 15 years for colonels, generals and clerics who are in the government, stealing money from the Iranian people and pushing it out to locations around the world where they can store the money

in case they have to run away someday. All of them are conscious of the examples of Gaddafi and Libya who got found in a raffle and shot the next day. And of course, Saddam Hussein, who ends up being hanged. Everybody who is a bad actor keeps in mind that they may want to run away someday and be safe instead of being murdered and executed. So that is real. All of this money transactions coming into Canada from Iran is real. If everybody takes a minute to look, they'll find it.

Now, is it being operated through Canadian banks? at all. Every Canadian bank has enormously learnt the lesson of fooling around with this kind of money laundering. They really never did it. And since the TD incident in the United States, they have rapidly upgraded their facilities to make sure they're never involved. So the answer is, you know, banks... Maybe that's why the real estate market's not doing any deals are on. We lost our best buyers. We lost a few of the best buyers. They really lost their best buyers. They really lost their best buyers in Vancouver when the Chinese state market went sour, and all those people who were investing in Vancouver are half broke down in China. So yes, of course, it's a major

part of our real estate business. But to go back to Basant's approach, he's really only interested in big players, like who is a bank that's clearing billions of dollars in oil sales money. Okay, that's who they're really after. But to come back to the whole Trump versus Carney trade fiasco, why wouldn't a guy like Howard Nutlick not want, I said that purpose, why wouldn't a guy like Howard Nutlick not want to bring that whole thing to bear? Oh, look, there's all these Iranian money transfer bullshit in Canada. We better like, we better go after their banks. And so there is a connection.

There is only a political connection. I can tell you absolutely that the Canadian banks are, they don't want anything to do with money laundering in any way, shape, or form. And remember, it's not because they're great people. Some of them are. I've met them. But the reality is that every Canadian top bank executive knows this. We can make a fortune without the money laundering.

We are rich as fuck. And we will continue to be rich as fuck. And we're doing so well, we don't need money laundering. We don't need that few extra pennies. So they are dead set against it. But yeah, it could, because it's happened in the past, because it's still going on today with these currency exchanges, yeah, a guy like Howard Nutlick could try to bring it into effect and make it part of this thing. Because even if it has nothing to stand on, they could still say we're launching an investigation, right? So that's, it's always the perception.

And I think it's outside of the trade war stuff. Like it's like, I mean, it is scary now that you're describing it to me because strategically it's such an easy move for these guys to do. do. Like, what is Canada going to do? You can't really say, hey, we're going to push back on this, this move that you're making as a trade war. We're going to put tariffs on you because you're checking if our banks are doing things properly, right? Like, it's actually like, I mean, I've floated one idea. It doesn't make sense. I floated one idea that would be, I mean, way worse for Canada in the long hand, but Canada

is the fifth largest holder of U.S. Treasury bonds. And the message it would sense if Canada started selling those for gold, for example. I'm not saying they would. I don't think they would ever do that. You're trying to get somebody to sell your gold bags too again. Yeah, yeah, exactly. But no, but it's true. That is one move where can you imagine

they're already struggling with the treasury market, what kind of message it would send? People say, oh, like Canada is like small potatoes. It's still the fifth largest holder in front of the Cayman Islands. I mean it would move the market. Yeah, I think it would just be the sentiment saying like, okay, I guess Canada's doing it. So if we wanted to do it,

it, why not, right? Just a message it would say. I don't think Canada would ever go there because the U.S. would clearly retar, like, come back at Canada with something way worse, but that would be basically the nuclear option for Canada. There's many better nuclear, there's so many better nuclear option. I mean, selling treasuries, a very wise man once said to me, you got to remember, Ron, when we sell treasuries, somebody buys them, they get bought. It's not as big a deal as you think it is. But the real nuclear option is oil and potash, and that's the nuclear option. If you say, well, we're going to put an export tax on potash of 400 percent,

that's a stake through the heart of U.S. farmers. It's a really severe issue. And that would bring massive, massive retaliation. So there are many, many bigger, better options to blow up, escalate through the roof, a trade war with the U.S. than the selling treasuries. You sold treasuries, it would be a big deal for four days and then nobody would talk about it again. Because let's face it, Japan and China have been selling treasuries, the world didn't come to an end. So, you know, but this is, and this is a real thing, though.

Like the Scott Passant thing is a worrisome item in the background, but there's plenty more worrisome items in the foreground. There's just a lot more. One of the things that Donald Trump said when he first started his tariff exercise a year and a half ago is that anyone who brings and counter tariffs, I will put on more tariffs. It will be an endless escalation if you think you can fight with me. He said that to the... So, yeah, it's a worrisome thing. A couple questions from the chat and for anybody who's watching this live on...

I mean, our chat just keep getting better and better and better. And the live stream views, even though it being the last week of summer, I guess the weather's kind of crap today. So everybody's in the house. But last week of summer... Yeah. Yeah, yeah. I noticed your lighting was really good when we came on here. Simone, and I'm like, it must be, it must be overcast. Yeah, it is overcast. Yeah. So number one was from Mr. What to Do Today. Do you think that Carney will pause the purge in public office. I don't. I think like, I mean, he hasn't like, I actually think like when I look at the what's happening in Canada, these guys are grateful that the condo bailout was like the one scandal that they've, that they've landed with so far. I think that they'll, they'll, keep, I mean, it's not to say they're going to spend less money, by the way, because they are continuing to spend more money. They're just moving all of, and it's working on, on Canada jobs numbers. Like, stop, lay off public sector, scale back the blow to bureaucracy, super in favor

of that personally. And then push all that capital to your nation building, CapEx projects, which show up as private sector jobs, right? Because they go RFP it, they write a bit, you know, they allocate some capital for a subway station or whatever they're building. And, you know, your Essency Lavlin bids and gets the jobs and they hire private sector wages. So, I mean, their incentives, I think, for job creation numbers. What is it? Ben has a chart. I'll put it up, but this is from one of his edge reports as well. But public sector job growth is negative for the first time since the year 2000 or 2002. I don't know. Why stop if it's not, if it's not killing anything? It could suck for the Ottawa real estate market a bit, but I don't know what you guys

think. You think he's going to pause that? And I'll get to a couple other questions here as well. Well, the interesting part about it is, well, there are public, pure public sector unionized jobs are down. We hear about layoffs at CRA. We hear about when people retire from the federal bureaucracy, they are not replaced. There is that kind of a thing that's going on right now, without a doubt. But the money spent on consultants is actually up. It's getting close to a billion dollars. We spend on consultants.

Now, they're technically private sector, right? Well, you hire a consultant who's in the private sector. They are a private sector jobs. But that is up. When you set up a, I don't know how the treatment of this is, but when you set up a Crown Corporation, I don't know if they treat that as public money, but Carney set up a couple of crown corporations just out of thin air.

I think, I would suspect they're public still. Yeah. Okay. But at the end of the day, yeah, we would like to see the money redirected from civil servants into the public sphere. It's necessary, the private sphere. It's necessary.

But I don't know how quickly it's going to have. happen. And even though I do know their layoffs in Ottawa, if you just replace every civil servant with a consultant in the private sector who's getting paid through the government, I noticed Radawa real estate is not off. It's not very much off. It's only a little bit off. So not very much. Next question we had from the thread here. Are we overly focused on interest rates as opposed to the delta between real inflation and nominal interest rates? I feel like we're still in inflationary territory in real terms. You know who does a lot of really good work on this? is Rich Diaz.

I mean, he has always talked about, I mean, it was a couple of months ago. We entered into that sort of net, a net negative interest rate territory. I mean, not really for the consumer, right? Like, if your inflation's at 3%, I can go get a mortgage rate at 4.

But that's still a freaking cheap cost of borrowing in real terms. And, but I mean, we're not at the point. Like, I would be worried about this if we're in inflationary territory. If we're like COVID, where we had our transitory 7.4%. And a consumer could borrow at 2.5 or 3. and now all of a sudden, I mean, the economic incentive for me to literally take on leverage and buy absolutely anything, like anything, which is what happened, is actually like the right economic move for me as a market participant. Jet skis, which was like, you know, a huge one, boats, cottages, whatever, right?

I don't know if we're there. It doesn't feel like we're actually there with, I think like the lending rate environment is, and it seems like TIF is sort of in the same, you know, we're in that neutral range. they're kind of comfortable staying here. I can't see them really making any policy moves in either direction unless something breaks in either direction. I don't know what your thoughts are on that, Ron. Well, I've already called the September 2nd, no change, guaranteed it. Everybody wants to bet me money. I'll even give rational odds, but I will win.

So there's no change. You got to go on Polly Market. Well, I should go on Polly Market. It agrees with Ron. I don't believe there is any, like there may not even be a market for it because of such a dumb bet. However, that said, you know, it's important to remember about when inflation did take off in Canada, Bank of Canada lagged, but eventually everybody was paying 7% interest. Eventually they were.

I mean, it took months, but eventually everybody paid 7% interest. So, yeah, I would say that there, I don't believe there's going to be any increase at the Bank of Canada for the rest of this year. but in 2027 all bets are off because it's a unknown balance between the destruction of the Canadian economy as the trade war escalates if the trade war continues to escalate and escalate. That's destructive to the economy and that is supportive of lower inflation, but by the same token, continued tariff escalation increases prices on everything. And that is inflationary. So we're going to have a bit of a battle on our hands by 2027.

Anything you want to add this more? Well, I'm just pulling up from Polly Market, and they agree with you, Ron. 21% chance of a rate hike in 2026. So pretty low. And do you think there is a remote chance for a cut or they'll just stand path and see where things goes? There's no cut.

No cut. The Bank of Canada's as declared neutral range is 225 to 275, so we're at the bottom of the neutral range. If you make any cut, you're agreeing that there is some sort of economic emergency going on. That's just the nature of their policy doctrine. So, yeah, there's no cut. It will be no cut. Now, I'm talking about this year.

I mean, this trade stuff is so off the hook wild that I can't make any predictions in 27. I can only look about three months in advance. Yeah. Yeah, I mean, my thought was like exactly. the same for both Canada and the U.S. And we've talked about this a couple of times. It's like, you know, and this is why bond markets are always wrong, right? Because they're trying to price in five years of rates or 10 years or whatever the curve is. But the reality is,

you know, within that timeframe, that the variables change. The variables right now would tell me, yeah, why would either Canada or the U.S. make any changes to rates? But then, you know, Simone and I were sort of talking about and at the top of the episode, we were talking about like Walmart as an example. You know, the, you know, consumption does seem to be breaking a little bit, not to the point where I think central banks are right to be concerned about it, but they're always too late. And when things, I do think we'll get to the point where we will start to see more negative economic data. And that'll start presenting a bit of a case that I think personally that you're any economic data that we're going to get, especially with trade war ongoing, with cost

push inflation from diesel and gas, potentially leading to demand destruction, any economic data that we're going to get from here for the next 24 months is probably going to lean us more towards a cut than a hike personally. I don't know. Yeah, and I mean, I think I'm just pulling the CM Fed watch tool. And I think even that has changed quite a bit, right? They were pricing a rate hike now. It's more undecided for the rest of the year. But what to you were saying is pretty, when you start listening to conference call from big retailers, I know I talked about Walmart a little bit, but they set it on their call that they can see when gas prices in the U.S. hit $4 a gallon because they can tell when consumers are actually cutting back doing some tradeoffs.

And one bright spot for their sales and comparable sales was actually food and groceries. Same thing for Target. So it just goes to show that general merchandise, people are just pulling back on it. They do not have money to spend there. And I suspect obviously they don't narrow down Canada as much. And you can look to Canadian Tire a little more if you want a better idea there. But for the most part, Canadian dollar is doing okay. they've seen a bit of an increase, but again, it was from a low base.

They had several years of declining sales. So it's not like it's looking all that good either. And you just listen to conference call and you can hear it. I like to do that just because they see what's happening. They have the data. And there's a reason why they're cutting back prices in the U.S. at least. Anything you want to add there, Ron? The only thing I would add on the Walmart stuff or like any of these producers is that, like, to date,

they haven't really capitalized. They've even publicly said, we're not going to be capitalizing our increasing fuel costs into our cost structure. At a certain point, they have to, right? They're not just going to give away. They're not in the business of losing money. And I think if you start to see goods start to escalate, then, I mean, again, the demand destruction path does enter the discussion.

That's my opinion. And then you see contraction. I think you've got, we talked about this at kind of the top end of the episode, but the K-shaped economy, how much more can your rich people really pull up consumption in Canada in the U.S.? maybe in Canada quite a bit because we're progressing towards, but they're not going to go and start buying, you know,

I mean, like craft dinner and like, you know, great value pickles, which are amazing, by the way, like best pickles on the market is great value. A huge great value guy.

Well, love Walmart. But they're not, they're not going to just go, you know, so there's a, I think there's a limit to how much, even if you continue accumulating tons of wealth upward,

the top 10% is not just going to magically become 60 or 70 or 80% of consumption. I think it kind of seems to have hit a cap at where, where we're at right now. So I don't know what the bull case is for economic recovery. I'd have to agree with that. I mean, I think the top 5% of earners have just about maxed out all they can possibly

piss their money away on. Yeah, I'm with you on that. And everybody else who is not experiencing that, and experiencing something completely the opposite, is obviously going to have to keep cutting back at a certain point. Like, I don't know if you covered these charts previously, but two of my favorite charts from Ben,

Rabidoo out of this last edition was the two opposite charts, which is Canadian deposits, bank deposits, cratering and credit card utilization and consumer credit facilities straight up. So to me, those are two very, very, very bad charts for the Canadian economy. if personal credit utilization, consumer debt utilization is ramping up and savings rates are dropping. That's like that's about as bad as it gets. And certainly that's...

I'll try and find those. Ben has... Ben did illustrate that in the last... Those weren't ones that you put on your on your Twitter, right? I'm just trying to, I'm checking your Twitter here. Not yet. They're coming out this week. There you go.

I have the deposit one ready. Nice. Yeah, there's that. There's, you know, you got delinquencies as well. That's scary. That's called a steep decline.

I didn't, I didn't see that. It's not good when it goes into the negative. That's what I heard. Negative, no good. Yeah, it's interesting,

right? Because, I mean, like to tie, even to tie back to housing, like we, we've seen so many times, you know,

where you start to see data points like this. And it's like, how long under pressure does it take to create either a further down leg or more risk in housing or just in the general economy where if people are now like net taking money out of Canadian financial institutions and we've also seen credit card utilization rates rising, auto loan delinquencies rising, like kind of your top end of the interest rate stack really getting piled on with debt. And Ron, did you, I think I mentioned this to you, but the Bank of Canada report

called Consumer Path to Mortgage Delinquency. Have you seen this thing? It's crazy. I talk about it all the time, but the Bank of Canada spent a lot of time analyzing. Like what is it? What, what, what, what actually happens for somebody to go to Lincoln on their mortgage. And it's actually a two-year process. So, and Equifax has their, uh, their, their, their trends reports quarterly. That one's coming up, I think, in September, but at which I'm, I always love that data. But from what I can see is, like, we're probably still pretty early in this for Canadians, at least on like that organic, it's not to say that, you know, supply and demand can't fix it. And Ben, Ben presented some decent arguments in that regard. But like the, the stress for Canadian households, we're pretty early to it. If people are

still levering up on credit cards to deal with inflation, now taking money out of their bank accounts to deal with inflation, you know, maybe the renewal wall, maybe their mortgage payment went up 300 or 500 bucks a month, even if it was nominal and all the other costs in their life. Now all of a sudden, you know, a year ago I was spending my household burn rate was whatever, six grand a month and now it's 10. Eventually, I'm going to, if I have, if something meaningful hasn't changed in my income side, eventually I'm going to run out of money. Are we still on that? Like is that still, that bleeding out still happening from what you're seeing?

Like probably how many calls do you get that are, that are like, I'm in shit, help me with this, you know, whatever. The concise answer is many. That would be the concise answer.

Look, I would say this. I think we're halfway through. I think we're halfway through the troubles. Because if you just look at the growth in, the final disposition of a disaster, a financial disaster is how's this being sold under power sale. That is the,

that is the end game. to everybody's point, it is about a two-year process. We observe it in our own business. It's about a two-year process. From the first day that people start, are we going to be able to make mortgage payment? From that day to the sheriff coming up and saying, you've got to leave the house now is about a two-year process.

And by the way, that almost never happens. All rational people get out of the house or sell it. They do something. I mean, but there is a tiny category of people, tiny number of people who will actually wait until the sheriff appears. to move them out of the house. And that's like a second or third visit by the sheriff. And sometimes they will bring the local constabulary,

the local police force along. So because the the sheriffs don't actually carry guns. But the, yeah, that is the most severe inflection point is when the sheriff picks you out. But it is a long process. And so I would say today we're halfway through. I believe that we'll see continued increases in foreclosure and power of sale, bankwarded sales across Canada. we'll see that continue to increase in 2027 and then finally level off in 2027.

So I think it's accurate. We're about halfway through this disaster in the Canadian real estate market. Yeah, I would agree based on the data. I think I would say, you know, T plus two years after whatever those curves start to revert on the Equifax data set is when household stop bleeding out. And so if people are still levering up, like we still have people entering into the situation where they're forced sellers. Your non-forced sellers are leaving the market. So that could balance the housing market a little bit more, which is what we're seeing right now. Ben highlighted that really well. But still, like, the idea that just because the housing market

is balanced, people aren't running out of money and having to sell their houses in a hurry is, you know, it's kind of silly. I think the interesting thing on this chart that I have up here on the consumer's path to mortgage relinquency, because I'm really curious to get your take on this as somebody who works in the mortgage space and, like, actually does deals. I feel like everybody, you know, for you and I, like, we are, we do so much of this, like, public commentary that people actually forget, like, what we actually do throughout the day. And, like, you're talking about power of stale work. I mean, my entire book of business right now is lender dispositions, right? Like, there you go. Like, to the point where, yeah, to the point where I brought on a partner

that I used to work with in the debt space to help me do, like, basically he goes in as a special loans team for a lot of these, like, smaller mix and books of business to actually do workouts and, like, take over the lawyer file because he's got experience with it. And, and that's one of the big hurdles right. And a huge bottle. that because courts are behind on the on the lawyer stuff, which is what you highlighted to me. But before I get too far into that, you're like on this curve, you can see, okay, person starts increasing their credit card utilization rate. And okay, now I'm, now my, my, I'm above my 30% limit on my, whatever, the revolving credit and maybe my HELOC and all of these things. And now everything's

maxed. I run out of options, I think, right? Because my credit is impacted. I can't call somebody like you to maybe try and get a HELOC or a refi to consolidate that debt down to a lower rate. And then eventually I'm at the point where, okay, one of these payments is going to get missed. Are you seeing people like still try and solve their way out of this problem with the consolidation? And is it working? Because I've heard banks are not really playing that game right now. It's absolutely, it is a universally continuous process. Everybody asks when they're, when they reach that tertiary moment, they always want to do more

net consolidation. Always, always, always. It's just universal. And if they own a house, it involves attempting to refinance a house. Now, banks, yeah, but in Ontario and British Columbia, the problem with that today is reduced home values. That is the problem that just makes it all unworkable. If your house value has dropped, you can't do the refinance. That's it. That's why, And that's why we see the rapidly increasing number of power sales foreclosures. And that's why we see the rapidly increasing number of homeowner bankruptcies and solvencies, consumer proposals. And that's why we see that in some regions of Canada, the new standard discount from previous high prices, like in the city of Brampton, the new standardized discount is 45% from the 25% from the 2022 eye is the new. Yep, that's what it is.

Like, if you want to sell your house, you've got a price at 45% less than what the value was in 2021, which is staggering. It's just unbelievable. Is that the most pronounced area, Brampton? Yeah, there's pockets in Niagara that are very, very similar. And there's a few pockets in north parts of Durham that are similar. And little, put you this way. Any street that was mainly student housing anywhere in Ontario, is highly impacted right now.

I mean, it just is. But, yeah, Brampton is the key because it's the largest city with the, so yeah, that is the epicenter right now. Absolutely. Nice. I put the full chat on the screen here because I,

I was trying to share all these comments one by one and it's just like blowing up. So just some random, other questions from the chat here. And Ron, I want to be mindful of your time. So hop off when I. you need to. And Simone and I can drive it home. But does a home equity tax drive home prices to zero, not down a bunch, zero? I mean, like, nothing's going to drive home prices to zero.

But you would see a pretty big race to the exit if they, if they, they're never going to do that, realistically. I mean, look at, we all, we got to stop talking about home equity tax. We all going to stop talking about home equity tax. There's no home equity tax. You know, Mark Carney is, popularity is off the charts. He's one of the most popular prime ministers that's ever existed in Canada. There is only one. way to destroy Mark Carney's popularity is a home equity tax or some kind of capital of gas on the sale of primary residence. The biggest turnaround you can imagine, that is its entire voting block or people over the age

of 55. So yeah, there is no goddamn home equity tax coming. There is absolutely no capital gains tax on primary residence on sale coming. Everybody's got to stop talking about that because it's a waste of time. Never going to happen. Well said. I totally agree. I knew exactly you were going to say that. So yeah, it makes no sense to it. I mean, just for the thought experiment of this question and then I'll move on to it, like,

or move on from it because I agree it's not exceptionally relevant to the discussion. But, you know, when we saw the original capital gains inclusion rate suggestion that that could be increased, there was a rush to the exit from commercial owners before that. And think of it, they rolled it back. So a bunch of these guys dumped assets to get ahead of that. I mean, you just made a huge, huge financial move to so I also think that you know the Canadian politicians that you know the Carney keeps calling it the new liberal party because I guess he can't change the name of it and he doesn't want to be associated with the old administration but I feel like he's really being mindful of not repeating some of these silly mistakes that the Trudeau administration did and you can see that

even just in like staying away from a lot of the really really leftist stuff that nobody related to which by the way even like AOC seems to be getting away from now everybody's sort of kind of playing more towards the middle, the right side as well. Hold on. Mamdami is not getting away from it. Yeah, yeah, yeah, that's different. He's mean as football. That doesn't matter.

Mondami is pure Stalinist, okay? Like, let's be clear of that. Not everybody's running away from it. No, no, not everybody. No, yeah, there are, you're right. There are folks that are leaning. I mean, well, you see the same thing with Chow in Toronto, right? Like, in a city, I mean, New York's an exceptional example.

And this is not a statement about the economics of homeowners versus tenant class. But in cities where you have a high concentration of, of renters like low homeownership rate cities. Leftist politics tend to work relatively well, which is a bit of a canary in the coal mine for the direction that we're trending with Canada's homeownership rate, by the way. Like, don't expect politics to go more towards the right

if homeownership rates continue to fall. Just saying. Yeah, it's my favorite subject. My favorite subject is the destruction of homeownership, particularly for young people in Canada. Yeah, well, like, I mean, it's just the writings on the wall, right? Like, and I said this three, four years ago, like, CMHC's insured and forced cross the line in 2017 on dollar value and,

and sorry, on a number of units and in 20203 on, on number or on total dollar value. I mean, if it's, it's just, uh, whatever Charlie Munger says, show me the incentives and I'll show you the outcome. If we are put, get making the best, most compelling financial products, uh, for rental, people are going to use them. And, uh, and, and that, that's what's happening in Canada right now.

And then you see the curve where, where rents, well, that means rents become more affordable. It delays homeownership and people like by choice. I would say most people don't rent by choice based on Canada's obsession with homeownership, but people start to by choice or the economic incentive to go pursue homeownership starts to diminish. And now a decade passes by or two decades pass by and your homeownership drops substantially. This to me is like a big headwind against like, you know, boomers trying offload their assets over the next 20 years too. You know, who are they going to sell their houses to? Never worry about boomers. Never, never worry about boomers.

Boomers will find a way for foreign buyers. They'll sell them to each other if they have to. Rumors will find a way to continue to put the world. Yes, they will. And I am one. So there you go. There you go. Anything you wanted to add, Ron, before we wrap up or some all?

Yeah, well, just quick question, Ron. I know Banna had this in his report, but what are you seeing? Are people navigating more towards variable rates now versus fixed rates, kind of betting that the Bank of Canada will stand path or cut rates? Like, what are you seeing from, like, are you seeing a shift from fix, a five-year fixed to more variable, or maybe I'm off? It's more two, three years fixed. So what are you seeing? It is absolutely a move from fixed variable, even though, even when we try to convince people that it may not be the perfect answer, it is definitely happening.

It will continue to happen. There's a couple of trends come together. There is the longer the Bank of Canada continues to remain on hold with no increase. is convincing to people that my god is because in October we'll have gone a full 12 months with no change. So the longer that goes on, the more people feel common making a choice to go ahead with variable, that the rate differential continues to exacerbate. So, you know, although there's a drop in bond yields in the last three days, which seems to have flattened out and may start to head up again soon, we had a significant rise in bond yields, five-year bond yields, three-year bond

in the weeks coming up to the blowup of the trade war, and therefore the fixed rates are climbed all into the fours. So you had a 3.5, 3.6 variable, a 4.09, a 4.19 fixed rate. If that continues to exacerbate, if that, that continues to move up to be a 75 basis point, 75 basis point difference is kind of the magic number. As soon as it goes past 75, interest in variable continues to accelerate the fact that the Bank of Canada has been on hold for a year in October will also add to the virus of variable. And yeah, I think we will just see a continuation of that trend. Yeah, it's funny. I have this chart up from CMHC's Mortgage Industry report. But to me, like, usually inverse Canadians would be the best trade because they all piled into the variable rate

at the worst possible time in human history, March, I guess, what is that? January 22. Literally. the worst time to possibly make your variable rate mortgages, almost 60% of mortgage originations during that period of time. I don't think we're headed down the same path this time, though. It feels like maybe the Canadians are making the right call. The interesting part too, on this one is even on the fixed side, people are taking three years, right? So even your fixed people are anticipating that they think that rates are going to come down. Is it just like when people make the decision? No, no, no, no, no. That's not it. It is, that is the rate. That is 25 basis points less last 5 year.

Yeah. It's just a price issue. That's, that's exclusively what it is. Is variable a pricing thing too? Variable's absolutely a pricing thing. Like I said, once the delta goes beyond 75 basis points, del.

Variable just keeps taken off. I mean, that's just how it works. So, yeah, it's all a pricing thing for sure. Somebody asked if you do a Rob Ford impression before leaving. My friend. I am telling President Trump

to kiss my eyes. No, that's Doug. That's Doug. What impression do you want? What impression do they want? They said Rob Ford, I think. Rob Ford's dead. I don't do impressions of the dead.

That's fair. That's fair. Yeah, that isn't the question of that taste. You just got a good good greatness. You got a good Doug Ford right there. There you go. You just got a pour a bottle of Crown Royal. Thank you, Ron.

Really appreciate it. Yeah, feel for it off here, whatever. We'll wrap it up. But yeah, appreciate having you on, man. Awesome discussion. Thanks so much. Take care. Take care.

Okay. Simone, what should we do? Drive it home here? Yeah. Man, I've been playing around with this. I don't, hopefully this isn't bothering people, but I'm trying to like reconfigure these layouts to try and make the,

because the chat, the chat is just making. I think you notice, but that's okay. No, well, I don't know where to put that chat thing and I can't keep just sharing them one by one. Anyway, anyway,

I'll figure out a better layout whenever I have a minute here, but this, I'm not, I wasn't equipped to become an actual streamer. I don't think like this is a very challenging job to try and organize this, this screen with this huge chat thread going on. Like, look at, like, this is just lit. Anyway, appreciate support, everybody.

And anything you wanted to add before you wrapped up that you've learned from our guests, I feel like we didn't get much of a chance to chat, which is fine. Yeah, no, that's fine. I mean, I did appreciate Ron's perspective on the different nuclear options that Canada could use. I still think the treasury thing is the signal it would send and also just what the U.S. has been doing to intervene in the Japanese yen market. You could see them doing that. Like you actually think like without like just being.

I don't think they would do that. Right. Okay. Yeah. I agree. That would just. That would just blow things up. I think it would just,

it would really piss off the U.S. Just like exactly the same things that Ron said for fertilizer doing an export tax on that, whether it's natural gas. Like there are levers that Canada. could press, but then getting back to what Ben said, there's still some support in the U.S. for having Canada as a trade partner. Like a lot of states and popular opinion in the U.S. is not like super favorable for these tariffs on Canada. And there's a lot of states that I know Canada is more dependent on the U.S. and the other way around, but there's a lot of state that do

a whole lot of exporting to Canada that are very important states for winning, whether it's a by-election, but also the general election in two and a half years from now or co- yeah, two years I guess from now at this point. So I, you know, I think Canada has to be careful because if the measures become too harsh to the U.S., public support might change. And if that public support changes and it becomes more anti-Canada, whether you have Democrats in power in two years from now, then it could make it even, it could still make it hard to get through a new trade deal with the U.S.

And I think there's a lot of people that have misconception that once the Democrats come in, it'll be much easier to negotiate. But not if we play too tough, right? Not if we play too tough and they may like Joe Biden, there's a lot of stuff that he did that he necessarily didn't change from the

Trump administration prior to him. So we have to just be careful even though Trump will say a lot of stupid shit and, you know, he'll be provocative like on America or the 51st state, the Democrats might not be, they might be more diplomatic, but it doesn't mean that they'll have that much of a softer approach on Canada.

I think we just have to be careful with that. Yeah, I think, like, I mean, there's precedent for that, right? Like, Biden didn't roll back the U.S. tariffs. I mean, I think Canada is a bit different, but Biden didn't roll back the U.S. tariffs on China. And China is their largest trading partner, I think, right? Or sorry, after Canada. So, I mean, if it makes sense.

And, like, if the U.S., like, you start to see this in Canada, too, with our politicians kind of starting to align around the same platforms, then we can wrap it up here. I know I got to jump too, but if the U.S. public does seem in favor of, hey, like, you know, we actually like paying lower taxes and having all of these foreign governments paying taxes or foreign businesses paying paying taxes, even though it's capitalizing the cost of our goods, we don't see it, right? We don't have to go write the check or, you know, and that's their price of admission for wanting to do business in our market. Like, this could be a seismic shift in just like a way that the U.S. revenue structure and like global markets operate, if this ends up being like sticking around

indefinitely. It makes you wonder, like I know a couple of people in the thread kind of said like, oh yeah, they all work for the same people, Carney and Trump and whatever. It's like was what, you know, what was he inserted as the person who gets to have his face on the crazy shift that where the US actually starts to use that as their as a primary revenue tool to try and get out of this huge deficit problem that they're trying to solve. Anyway, we can talk about it another time because We're out of time here. But amazing. Thanks so much.

I really appreciate. Yeah, appreciate the chats. Appreciate the questions coming every Thursday noon. We've got to keep it at Thursday now. It's way easier to get guests. Yeah, it's way easier. And I think even for us, right, like you have kids. I have kids too.

So, you know, if you're planning a long weekend, sometimes you leave a bit early on Friday. So it makes more sense too. Yeah. Yeah. Okay. Amazing. Yeah, thanks a lot.

Everybody, full episodes live on the TCI stream on Saturdays for this show, the recording. So you'll be able to listen to the, back if you want to. It's already on the YouTube channel to be done as soon as the lives done. But we'll have to put a parental advisory one at the beginning of this. Yeah, and explicit one. Just to say Ron Butler's on this podcast,

FYI, so if you're listening to it with kids in the car, do not. I've been known to swear quite a bit too, like when I want to put emphasis on a word, the F word is quite good. But we try to keep it PG-13 for the podcast. But with Ron, I mean, it would not be Ron without some swearing. It is funny.

Like, you know, because he went to the the Canadian government to do like the, I don't know what you call it, like, deputation or testimony or whatever. And he couldn't swear, right? So, and he was like, it was pretty, actually pretty difficult, but he's like, I didn't. And if you watch the recordings, it is funny. Like, it's just, you're like, this is weird. You like, see you like, catching himself in real time. Yeah. Yeah. Yeah, what word do I put here? I maybe does it instead of saying, um, or all. Anyway, we'll leave it there. Thanks a lot. Everybody, appreciate the support. And we'll, we'll see you again next week. The Canadian Investor Podcast should not be

construed as investment or financial advice. The host and guest 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.