The Canadian Investor - Trade Deal Hopes, Consumer Weakness, and Bond Market Jitters Send Gold & Bitcoin Higher

Episode Date: August 22, 2026

In this episode of Canadian Macro, Simon and Dan break down a busy week for inflation, trade, bonds, currencies and commodities. They start with the latest Canadian CPI report, including the renewed pressure from gasoline, food and diesel prices, and why the headline inflation number may not fully capture what households are actually feeling. They also discuss the early details of a potential U.S.-Canada trade deal, including tariffs on autos, steel and aluminum, the push to reopen Canadian markets to U.S. alcohol, and whether Keystone XL could re-enter the conversation. The main focus of the episode is the U.S. bond market. Simon and Dan explain why the U.S. Treasury is increasing buybacks of older Treasury bonds, what that could mean for long-term yields, and why recent moves involving Japan, the yen, and the FIMA repo facility suggest policymakers may be getting more nervous about Treasury market stability. They also discuss why gold and Bitcoin have rallied, what it could say about confidence in government bonds and fiat currencies, and why rising U.S. yields matter directly for Canada, mortgage rates, the loonie and the Bank of Canada.   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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Just my reminder to people who own cyclicals. Don't be surprised when there's a cycle. If there's uncertainty in the markets, there's going to be some great opportunities for investors. This has to be one of the biggest quarters I've seen from this company in quite some time. All right. We are back with, I don't know, episode. What are we at? Like, this is like our our 10th one maybe of the Canadian macro. Something like that. Yeah. Canadian macro live stream, Daniel Foch, Canadian real estate investor podcast, Simone Belanger, the Canadian investor podcast, two of Canada's top investing podcasts right now on Spotify and Apple. What do we, we, we, there's a lot

going on right now. It's, it's not my scope. It's more your scope. So I hope you're going to be Oh, I hope you'll chime in. I don't, I want to do a model. Ask the right questions, hopefully. Okay. I mean, there's a whole lot going on. So I had fun doing notes. I feel like I've been preparing for this live stream, like for the last three, four days. Like, we record usually for the Canadian investor podcast on Wednesday.

So I do most of my notes on Monday and Tuesday, obviously trying to make sure I capture anything that happens. And obviously, the big news on the bond market was that you saw the U.S. increasing the rate of buybacks and we'll go over what that means. and how the market's reacting, how gold, and even Bitcoin seems to be reacting pretty violently as well. So we'll talk about that. We'll also talk about CPI. So came out earlier this week.

Not sure on which day. Was it Monday that came out? Yeah. I think it was Monday. Yeah, Monday. Yeah. So we'll talk about CPI here on that came out. Just have a look what it means and the big indicators for CPI if you wanted to.

Oh, there you go. So, yeah, the treasuries. And what else? Just look at my notes here. And yeah, the U.S. consumer weakening. So there's definitely a lot of news on the U.S. front. And then obviously the trade deal or the announcement of a trade deal, even though there's not many details that have come out just yet. But Trump seemed to be pretty happy at saying that there was a deal reach. We'll see what that encompasses. What's that? I've heard. Like this guy always. says there's a deal reached and then it's pretty it's pretty funny right because like i know ben rabbit who is saying like Canada probably has nothing to be worried about and it's like um you know like it's going to end up being a decent deal for us and it it seems like that's the case right like on the surface for sure yeah yeah yeah on the surface for sure steel tear of stuff that came out right so i mean we can talk about yeah cpi then move into uh the trade deal and then finished by talking about the bond market the u.s consumer obviously it's hard to to ignore the U.S. because it has such a big impact on the world and Canada. There's a reason why

the trade deal has been such a big topic of discussion over the last year and a half now since Trim took office. So yeah, for CPI, did you have a look at the numbers a little bit? Yeah. Yeah, so it's definitely accelerated. Not a big surprise. Energy was doing a whole lot of the heavy lifting there. Gasoline prices jumped 25.7% year over year. And it's a accelerated from the 20.5% in June. So there's going to be pressure on inflation. And I know you'd send me something about the diesel prices going up to. Yeah, the diesel crack spreads.

Yeah. Yeah. Yeah. We went kind of viral on that on Instagram. By the way, I don't even know if you noticed. I tagged the podcast Instagram account. And it's been.

Oh, no. Pull it up. Yeah. Well, and people sometimes they just, obviously you feel a bit more what you see at the pump, right? If you, yeah,

yeah, You go and put gas in every couple weeks, every weeks, depending how much you drive. You definitely feel it at the pump a whole lot more. But diesel is what's going to impact the inflation that will ripple through the economy a whole lot more because your goods are transported at least in part by trucks that use diesel. And at some point, that will flow into a whole lot of goods that people buy, including food, which has been extremely sticky. I think it's the 18 consecutive month.

Yeah, that grocery inflation actually exceeded headline CPI. And I know they focus and the Bank of Canada always refers to the core metrics, which were definitely are trending down CPI medium. It's usually convenient for them to do so. But like I feel like they're kind of stuck. Like there's no good looking metric right now. I mean, we knew this was going to happen. Like you'd get a push through.

I think my question was always how violent of a push through was it going to be? And it seems like it's not actually that bad. Like if we're at 3, 4%, like that's a persistent inflation that's just going to be a long-term drag on the economy. If it was 4-5-6, I think you get to demand destruction. We're not there yet, in my opinion. This chart tells me we could get there,

but we're not at the point where I think, you know, this is going to be like it's not violently recessionary yet. Like, again, writing is on the wall that it probably could go there. bond yields are hitting the same, you know, the same pattern that, that ran us into the GFC blow off. I think we're at a 19 year highs. We'll talk about a bunch of that stuff because like mortgage rates, obviously, derivative of bond yields. They did come back down a little bit, but not like, not like what, you know, how much they've run up. Right now, it's at a level where governments can still say it's vibe fission or vibe, uh, whatever, vibe session. Yeah. Viblation. I like that one.

I think that's a, you know, I've got a trade market and give kudos to Christy Freeland. But it's at that level where at 3%, it's not like the alarm bell when you see the headline number. The problem is when you have something like food that's increasing at a higher pace than that and has been consistently higher, core is all nice and dandy and TIF and his crew of economists, they focus on that to apparently take policy decisions. But let's be honest, I think they're much more focused on what's happening the U.S. and what the Fed is going to do than that. and a big focus on the Canadian dollar most likely as well, even though their answer is always, it's a floating exchange rate that it's free floating.

But at the end of the day, you, myself, everyone listening, they don't really care about core because you got to eat, right? Like, core is all nice and dandy, but when you're going to the grocery store and you're getting less and less for $100 of spending, that's what people feel. Yeah, I don't feed my family core CPI. You're absolutely right.

Exactly. So it's not... I try. Kids don't do not like eating random cherry pick data numbers. Yeah, exactly. So if we strip out, you know, all the gas that we consume, the energy that we consume and the food, then yeah, probably inflation looks pretty good. But it's pretty hard to function in society without those.

So that's always the biggest thing, right? I think so. Like, it is funny. It's like they strip out all of the things that are volatile. But those are the ones. that consumers are going to care the most about, like, especially right now, right? So they, you know, they'll rebalance for basically selecting away from too much exposure to oil and groceries and shelter, which are literally the couple of things that you actually need, you know?

And so it's like, why does every, you know, when I posted the CPI numbers on my Instagram, like, no, everyone's like, I don't believe it. It's like, why don't consumers trust the data? It shouldn't be surprising to policymakers why their lived experiences is vastly different than the than what the data is communicating, right? Yeah, exactly. And I mean, I know Trudeau is not the most well-loved person in Canada. I think that's an understatement. But I think one of these biggest issues, especially towards the last few years, was that he definitely, when you listen to him, whether you're liberal or not, it doesn't matter. But I think you can, you could have been able to listen to him and just kind of feel a bit of a disconnect.

Yeah, it was like kind of, it was almost like condescending or like it felt like patronizing is the word, right? Like it was like, this guy doesn't have a clue what we're going through. No, exactly. And. I think, I think Carney kind of has that. Like, he has to be careful with that too, right? Because he's very much like, you know, I think he's probably learned from Trudeau.

I think he's more careful on it. Does it definitely. Yeah, it seems like it. But I think that was one of these biggest downfalls is he really. really seem like out of reality. And, you know, you'd see these pictures and he's going to like, uh, you know, state banquets and stuff like that. But you all always see him like in these amazing retreats or going on vacation and stuff and people are struggling making ends. Me like it's hard to feel like your prime minister actually understands what you're going through when all that you see is

like, okay, well, this guy is just living the life as prime minister. And obviously every prime minister will be well off or head of state. I'm not saying not criticizing him for that specifically, but just the way was kind of conducting, portraying, just making like everything's great when, when you start talking to people, everyday people, that's not the case. But having said that, just to wrap it up here on the inflation front, one interesting thing they mentioned is that the World Cup effect. So they said that hotels and flights to a U.S. host cities contributed to a surge in travel tour prices. So they love talking about travel tours and the CPI. They always

mention about it. It's a massive point of contention for a CPI, but I don't think it was really unexpected. It'll be interesting what happens for the rest of the year, especially if we see those diesel crack spreads stay pretty high. At what point do companies start

passing through those prices? Because we've seen with Walmart in past quarters, they said, look, we're going to absorb part of these increases, but we can do that for so long. And Walmart actually reported today and they had a, you know, not a bad quarter per se, but not a great quarter. The market disagrees apparently.

What's that? I said the market disagrees. I think the market feels like it's pretty bad based on the way. I mean, it wasn't. So the actual numbers, it was kind of a mixed bag. So you always have to be careful because sometimes when you look at earnings, the earnings on the surface might look pretty good. And they actually raised some of their guidance for 2027.

fiscal year, which during Q2 right now, they just have a bit of a weird reporting schedule. But one of the things that's interesting is comparable cells here. So this strips out like opening new stores and stuff like that. And essentially for those just listening on the audio, what you're seeing is the comparable cells for the quarter. This is the lowest level that you've seen in. I mean, I can't even make the graph go further out. So lowest levels since, there you go.

since January of 2020 quarter. So that's the lowest level of comparable sales. Never been at 2.6% in. I guess that's like one lockdowns were starting. Yeah. People were basically. Yeah. Well, I guess the January quarter, no, it would have been pre-logged down.

But I think the economy was already slowing a little bit back then, but just gives you a good indicator. So that was a bit of a surprise, those comparable sales. And I listened to the call and was it actually pretty interesting. So they add, like, quite a few questions. about on the US consumer. And I think it's really relevant for this podcast, but also understanding we constantly talk in Canada.

Canada is like slowing down. The consumer is weak. And Canada, look at the U.S. is going so well. Well, they said they can actually tell when the gas prices are $4 or gallon or more. They actually can tell that people are substituting, spending less. And it's why when we talk on one of the lives where they announced on July 6th that they were doing like 11,000, I think, items rollback.

They actually said they were doing that because they could see that the consumer was slowing down and they could see the money run out from those tax refunds that happened earlier in the year. And really, Walmart, what's helping them perform relatively well compared to peers is their grocery segment. That's increasing at mid-high single digits. Everything else is in the low single digits. So it really shows that people are focusing on the essential and whatever. is not an essential, it kind of goes overboard. And Home Depot reported too, I talked to that about

on our recent episode. And Home Depot and Lowe's, they are seeing U.S. sales really weak. Believe it or not, the comparable sales were higher because of Canada and Mexico, not because the size of the U.S. And Canada, Mexico is about 15% of sales for Home Depot. So it just gives you an idea that you just bold, man. We like, you know, like we just will keep levering up and, you know, I mean, honestly, like, in the US, they seem to be, they don't really want to push above that 100% debt to household income in Canada. We're like, screw it. Economy's garbage.

Like, let's just take on more debt. And so we feel better. Maybe it's those bottom feeders. Yeah, bottom feeders in Toronto, right? In the Toronto condo market, they're just buying these old condos, renovating them, boosting sales at Home Depot. I think also, like, probably what could be driving Canada is, I mean, we're a lot like earlier in sort of what you would call like the K-Shay. economy than the US, like they're very disparate between like the rich and poor.

And so you're rich like really can't like we we called this like whenever like the first couple of lives that we did together. It was like there's a limit to how much the rich can continue propping up consumption spending in the US. And it's clearly like happened way faster than we thought it would or like, you know, I mean it's just it was it was convenient timing to make that call. But in Canada, we, you know, we're kind of really in the process of inflating away are middle class, to be honest with you. And so, you know, I do think you kind of get a bit of

that pull up from us, you know, pushing towards that, that disparity that you see in the U.S. where the wealthy account for whatever it is, like, I don't care of what, like, is it, what is it, 50% of consumption? Is like the top 20%? Yeah, something like that. It's a crazy number. Like the top five or 10%. Yeah. accounts for like half of the spending. like that. And I think in Canada, people are confident using credit, which is, which is actually dumb because our recourse environment is way, way more violent than the U.S. Like, you know, they're, most of their mortgages are no recourse. So they just take, that's why they're tethered to home values a bit more and their home values don't get as extreme. Here,

their full recourse. So they really just care about the borrower. So we shouldn't, we should actually be less incentivized to lever up and do all this. But here we are, alas. 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 switched to the new EQBank business account. Now, every dollar earns high interest with no monthly fees and no minimum balance. You also get free everyday transactions like EFTs, bill payments, mobile check deposits,

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I mean, you're seeing companies being more creative. Like Apple is a good example, right? They came out with this new lease thing to own program with Klarna a few weeks ago, maybe two, three weeks ago. And they essentially are letting people rent an iPhone and then buy it for a price at the end of the, I think, the two-year terms. through the buy now pay later with Clarn. And that's brand new. And that's actually a model that we saw here with the teleco providers where you can do that too, right?

I think they all offer it where you pay an extra amount a month to lease to own, but you have to pay a premium plan instead of just buying your own phone and then just, you know, bring your own phone type of deal. But you're seeing companies being creative because clearly they're realizing that consumers are getting tapped out and Apple's not a stupid company. They're raising prices because of memory costs and they figure that, you know what, we have to keep ourselves going and that's a good program to put in place for that. Yeah.

Yeah, I mean, hey, I actually lease my phone. Like, I have no issue with it. I do it because it's just like they're functionally obsolete after two years anyway. So I use the telis bring it back plan and I just send them my phone. It's like I don't really care about like what I'm absorbed. I'm on 13. I'm on iPhone 13. Dude, I like work my phone so hard.

So I can't like I cannot a phone that's two years old for me. I might as well. I might as well be on a realtor plan. Yeah. Yeah. I am. I might as well be on a Nokia brick. I mean,

I'd probably be better off on a Nokia brick. But so okay, we got we already got a pretty lit thread here actually. So I'm going to get into some of these, these things in the chat from, from YouTube. And if you're on, on Instagram,

I have the comment threads up there, TikTok, whatever. We're on like everything right now at LinkedIn. Mm-hmm. So when you guys talk about Kuzma, can you please touch on how the narrative for the last 24 months was to diversify trading partners? But here we are overinvesting into USA. Overinvesting equals giving more than LY. I don't know what L Y.

It was LY there. I am not sure. Mr. What to do today, you're going to have to confirm what LY is. What is LY? Anyway, I think I understand sort of like at least the line of questioning here, which is like I've, I've personally always said that, you know, the idea of diversifying our trading partners is like, it's just, it's just math why it's not going to work. Like, no, it's, it's, oh, last year, he said, giving more than last year.

Oh, okay. Yeah. So, man, this is cool. We're talking to people. This is, this is fine. So I, I think that, like, and I think we'd said this when, you know, they were kind of getting hard with trade with trade war and stuff. It's like how are we going to be competitive selling stuff? Like there's a couple of goods maybe you know like LNG you know a few other things

that maybe other countries need that we could provide at a reasonable cost. But there's not a ton like anything like that we pull out of the earth that isn't liquefied natural gas or like a couple of other items. They're very heavy and the logistical costs of us getting them to Europe or Asia where they can also just pull these things themselves. It just doesn't like the math doesn't, I don't, I'm not an expert in this stuff, but like it, I feel like it's probably a lot more expensive to take something halfway around the world to find a market that is smaller, I mean, unless it's China, smaller on a GDP basis to trade with than to put it on a train and ship it across the border like 10 kilometers or whatever, you know?

So, yeah, I mean, this was always my case of like, Like that was like you could you could see the cards that we were holding. It was like, are you really going to start like, you know, I didn't, I felt like that was an easy bluff to call for Canada. Yeah. I mean, at the end of the day, I think, I don't think it's a bad idea to diversify your trade partners. But the reality, the like you just said, the geographical reality is just you're going to do it, but it's going to be on the margins. Like it's not going to resolve the issue. Like the reality is sure you might be slightly less dependent on the U.S.

that's not a bad thing, but you're still dependent on the U.S. So it just, yeah, for the most part, I think that's where I stand it. Like I don't think it's a bad idea to do it, but yeah. Yeah. I think that we always needed to have more diverse trading partners, more diverse economy, like, you know, the sectors. And you can start to see that happening. And that those are, that's some of the things that are giving me a little bit of, you know,

hope in both the GDP and jobs. And you mentioned FIFA on CPI. I also think FIFA was huge on jobs, right? Like for, you know, July jobs, it was really strong. Yeah, they mentioned it. Yeah. Like, obviously, you know, everyone in my comments is like, oh, it's all seasonal hiring. It's like, well, no, LFS is seasonally adjusted.

And like, LFS is just a survey too. So like, let's just take it with a grain of salt, period. But the FIFA is probably, if you're going to, if you're looking for the thing where you're going to blame it, you know, for the data being inaccurate and, and it's, you know, it's skewing too positive and it's going to get revised down or, you know, know the next print won't be in line with that it's FIFA it's not seasonal you know construction whatever jobs because that's all baked into the data and i think that that's a factor for sure like because most of the jobs like but there's no reason why ontario was the leading province for job growth

in in canada other than FIFA and maybe like some infrastructure projects and stuff yeah so what's your thought on the initial trade deal like just that little that we know so that tariff the 50% being delayed and that would have only apply to 20 billion worth of Canadian exports or around 5% of exports. So I think sometimes there's a bigger deal made. But of course, the sector is that it would have targeted, it would have been pretty sensitive, especially for Ontario. I think the headline where I've seen are the articles I've seen is Canadian vehicles tariffs going from 25 to 15%. Apparently Canada's pushing for 10%. But it looks like 15% might be the mark. Steel and the aluminum tariffs.

could be cut in half some from 50 to 25, but there could be some quota quotas in place. And then I guess one of the big, the other things I guess is agricultural products. So Trump was saying the agreement will improve access for US ad products to Canada. But I guess there hasn't been any details on that. I think he was just going off the cuff like he always does. And then I guess the one of the biggest bargaining chips seems to be the booze. Yeah, yeah, that was an interesting one actually. I'll try and pull up that article, but yeah, which is funny because it's like it's pretty nominal,

but I feel like they're like that's almost a brand power one. Like it's a like those are really strong visible businesses. Like a lot of the things. They're probably in big lobbies too. Well, yeah, that's true. Yeah. And so I guess Carney had met or is now meeting with the premieres. I know see if I can pull that article up.

I got it. I got it. Oh, yeah, perfect. Yeah, basically to try and. get them to end their bands of U.S. alcohol sales in Canada. So there's a couple of factors, I would say, like, there's a lot of things that are invisible. And, you know, one of the commenters, I have it up here, Mr. What to Do Today. I appreciate everybody who's like just like the threads absolutely lit today.

So the, I think the, I guess the weather's bad, that's why. But the alcohol one is it? Yeah. The alcohol one is like, I feel like it's just, you know, it's going to be easy to, like that's just very visible. So they like Trump always wants to have the you know like the there's definitely an ego like ego driven play or like a branding driven play. You know like he's that's the kind of guy is a marketer. And I feel like that. And it really hits some of the big alcohol brands that were very prominent in Canada. Like some of them really took a big hit in their sales. Like Canada was a meaningful part of

their sales. For sure. Yeah. Yeah. I mean, Canadians do like drinking for sure. So so there's that. But then, But then I think what Mr. What to Do Today says in the YouTube comments is like a lot of it is us caving a little bit on basically continuing to be able to provide the U.S. cheap inputs. Like they still need us as a cheap provider for a lot of supply chains. Like the idea that they're just going to resurrect a manufacturing base to like, like I think we still play a role in a lot of industry in the U.S. And CAD's pretty weak. Like we're a compelling trading partner for a lot of good. that they need within their, within the supply chain of many of the different things. Otto will be the interesting one because, you know, I mean, we saw like a lot of, like,

even if they scale back the tariffs, like a lot of those producers have already made commitments to move to the U.S. Yeah. I think Stalantis took, what Stalantis took, 3,000 jobs out of Brampton, Oshawa. I think they, and I think they're even looking to sell into their plants. Yeah, yeah. So auto's a really interesting one to me. And a good point, just circling back quickly on liquor. I was going to mention it, but someone said still never buying American liquor. So first, Carney has to convince the

premiers to lift those because it's provincial jurisdiction. And second, even if they do lift it, it's not a guarantee that people just won't willingly boycott, continue to boycott not buy American booze going forward. I don't drink. I'm also not going to be buying. But like it has not a political. I'm curious like this like NERBOS commenter. Like how many Canadians do you think echo that sentiment?

Like you know, remember there was photos from like the grocery stores when this first started where like all the American like produce was still sitting there and the Canadian stuff was all bought even though it was more expensive? Like do we think that consumers are actually like doing this kind of fighting back? Like I've heard of boomers like saying they're going to. sell their properties in Florida or like California or whatever. I think it's died down a bit.

I think it's still, you can still see it. I know people that said they will not buy U.S. booze regardless. I don't drink all that much either. Like sometimes this summer a bit more, but we're not big booze buyers. And I, yeah. It's funny. Like alcohol is a tough industry because like the next generation like doesn't drink at all. Like I think we have like the lowest number of like since they started recording data.

like the lowest number of young people drinking alcohol ever. Psychedelics and Canada is that's a place to be, I guess. Yeah. Yeah. So the other one that I thought was interesting, a comment that I have up here on the screen is that he wants to humble Ford who deserves it. I really,

really agree with this. And I think both Carney and Trump are kind of incentivized to do it because he really, really messed things up in the first, like, wave of the trade war when he was, like, threatening to shut off the power and like dumping the crown royal out and uh and then well there was a couple other ones that were just like it was just like insane theatrics like you know and i'm like this is like really messed up like weird stuff like why are you doing this and then oh the super bowl ad was the other one right and yeah yeah yeah yeah it's a man to the u-s super bowl ad yeah so so i think

i agree i agree totally agree with that i think a lot of this is just like political theater and like people just like fighting back in like these like funny manipulative ways because they're pissed off at each other. Like it's literally just like beef, which is, which is actually funny. Like I don't know. It's kind of. Yeah, it is funny. It's like, it's their egos, right?

Yeah. Yeah. It is kind of dumb that like, you know, consumers and like, you know, Canadians, Americans are the, are the, the, have to absorb the consequences of this. But it is, I will say it's, it's entertaining. Anything else you wanted to add on that on the, on the trade war stuff? I can't, I can't think. No, I think, the only thing that was kind of interesting is the, uh,

Keystone Excel pipeline that seems to be resurfacing now. Trump threw that out there. So we have to see. I mean, he just throws a lot of shit out there. And you do wonder what, you know, what is true or not or what I think there's just, I think negotiations are still happening. But clearly they're at an advanced state of Trump is tweeting and they've actually pause or delayed the 50% increased tariffs.

So I think that's that's good news from there. And from Trump's perspective and the Trump administration, I think they need a win also. I would agree. I would say that that would be like definitely a win that they would try and target. I mean, he's definitely like a legacy guy. He would probably try and call it like the Trump pipeline or something. Yeah, but they just need a win like to show a trade deal. Like even if it's improving farmers access to the Canadian market, like just having something to show that, look, tariffs worked.

We got a better deal from Canada. don't think too much about higher gas prices, what's happening in the Middle East, and the war that we said would be done in a week. And now I don't know if it will even be done in a year. But at least for the midterms, I think it's really a big thing that they can say, especially because I didn't look at how it could change after the midterms, what states are most susceptible to turning blue. But I assume quite a few of those states do a lot of trade with Ken.

So that would be that's probably a good selling point. I mean, the Midwestern states do a lot of trade with Canada. So I would assume that that's something that they're looking to say, you know what, we got this trade deal done. Obviously Canada wants like, you know, you got to give to get like Canada. It's also in Canada's interest to get a deal done. But I think there's probably a reason that the US is more serious about a deal right now as well. For sure.

Yeah, no, I completely agree. I think incentives are aligned. I mean, like, Carney, you know, I mean, he didn't run on on energy, but he did run on projects and infrastructure. And I think it would be a win for him too. And also, like, I mean, support for pipelines in Canada is the highest that it's been in like half a century. So, like, even Quebec is like relatively not that opposed, which is, you know, remarkable. And so, you know, where they're getting all of this, like, really, really difficult pushback on, like, the condo bailout and other random policies, they aren't really, like, nobody's really complaining

about the pipelines, like any of the pipeline proposals. Honestly, I don't think. I haven't seen it. People are, like, too focused on complaining about data centers and immigration and condo bailouts and whatever, right? So I feel like if you've got the runway on that one, you might as well take it. Now is the time. Yeah, now is the time to get support for those projects. That would be huge for both Canada and the U.S. So I do think that, yeah, I think that's in it. Like, I don't know. I'm interested to see how this one plays out.

I'm optimistic because I think it would be great for Canada. And I mean, the more we can diversify into oil and gas. I mean, you're seeing it again. Like, where are we seeing growth right now in Canada's economy? I don't know if you saw the chart that I had pulled up when we did the jobs. But like if you go like one year job growth, it's like all the prairies, you know. That's a place to be. That's where we're seeing GDP growth.

That's where we're seeing job growth. And like that I'm not going to complain. I want to say that the data is fabricated. Like I'm just happy that we're actually taking our natural resources seriously in this country. And, you know, and like if Alberta is pulling up the entire country because of their role and their industry, so be it. Like that's a good thing. I don't think that's a bad thing. You know, we should get away from all of it.

I think you're also seeing more. development and interest from mining companies in northern Quebec and Ontario. So it's not just, obviously there are different kind of resources, but it's not just maybe, I don't think they're in the same stages of development, but you're seeing more interests. And it's hard not to when the liberal government now is much more open and trying to really push the development of those. So it's really been a big change versus what we had under Trudeau that they were making it more difficult to, extract those natural resources and now clearly it's very clear that the garning government the carni government is looking to boost that production but do you want to shift over to what's

going on with those buybacks in the u.s yeah yeah one more thing because i think somebody uh it ties in with what you were mentioned but yeah somebody mentioned you know they don't see bc caving easily on the on the booths they they haven't they really haven't gotten anything out of this like this whole trade thing and when you talk about, you know, Quebec, like Quebec and Ontario, at least they still have, like Hamilton, steel sector, Saga and I with the, I don't know, I probably said it wrong, but, you know, the aluminum. Stegnexia. Yeah.

Yeah. There you go. Perfect. I love having you here for that. You know, the aluminum side of things. Like if you get getting a little bit of progress there, you know, when you think BC and Ontario and Quebec as well, you're thinking softwood lumber and I didn't see any progress on softwood lumber.

And like that's, I mean, we're not building a ton of, like, we're building a lot of condos here. I know some, you know, some steel frame stuff like mid, mid-rise, missing middle. But, you know, I mean, we're not building enough ground-based housing to keep that industry alive. And the U.S. is still building. I mean, they're actually, builders are, I mean, they're not doing exceptionally well, but they're doing better than the resale market would reflect because you can literally buy a brand new house for less money than a, than a resale house in the U.S. right now. I'll pull that chart up because it's kind of crazy when I get a minute. But I think if we don't get like a deal on soft with lumber it doesn't look super optimistic for me either no but at the end of

the day i guess you you got a i think they have to make some kind of a deal maybe i don't think the us will get everything at once i don't think canada will get everything at once i think it's a good deal when everyone's a bit unhappy about the deals so i think that's uh that's probably what we're going to see 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 EQ Bank business account. Now, every dollar earns high interest with no monthly fees and no minimum balance. You also get free everyday transactions like

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best in basically trying to, like, they're trying to suppress. No. No. Okay. I don't think so. So I've read a bit about that. I wasn't super familiar with how it works. So I read quite a bit on it. So essentially the U.S. Treasury. So I'll just explain how that works. So the U.S. Treasury announced that it was ramping of buybacks of off-the-run treasuries. So off-the-run treasuries are simply older U.S. Treasury bonds. Think about like stuff that's a 30-year that's been issued like a year or two ago. They're not the newest issuance. The newest issuance tend to be more liquid. they get traded more. But once their older issuances, what ends up happening, they end up on balance sheets of banks, of pension plans. And they just sit there. So they're not very liquid.

So by doing that, they're essentially trying to increase liquid. Like, well, that's the official statement is that they're trying to increase liquidity in the bond market, but also I think the byproduct was that, was that it also pushed bond yields down.

So I think you have it here. Yeah. So it pushed a, on, yields down, where they only increased the pace of the buyback. So it was already happening. I think that's an important distinction to make. And if essentially what's happening with the announcement is you saw the yields, the day of the announcement, they had gone from like for the 30 year was like from 5.33, roughly 5.3 percent to around 5.18. And then you'd seen the 10 year around like 5.7 to 5.63.

So you saw a bit of an immediate reaction. And what you saw a lot of commentators say was like, okay, they're saying it's liquidity, but it's trying to get a lid on those higher yields. And there's a lot of different implications here. Essentially what they're doing to do that is they'll be also issuing more like shorter term debts. So treasury bills, for example, to be able to do that.

The buyback here, it is noteworthy because just a few weeks ago they had announced the schedule of buybacks and then they just doubled it. So in that span of two weeks, the bond yields actually increase around 14, 15 basis points depending if you look at the 10 or 30 years. Now, on its own, I wouldn't say it's too noteworthy, but then you start thinking about what the U.S. did with Japan, how it is. intervene and I think it's becoming clearer and clearer that the reason the U.S. intervened there was to prevent Japan from selling U.S. treasuries, which would have put the price down, but they yield up. And especially with Besson saying that they should use the FEMA facility, which is a repo facility.

So it's called the foreign and international monetaries authorities. And if you're not sure what a repo facility is, there's an easy way to think about it. So just say you bring your bike to pawn shop. The pawn shop gives you a loan for $100 for your bike as a collateral. And when you come back, say you do come back for your bike, you have to pay the $100 plus a $10 fee or whatever interest on it. I've never used a pawn shop, but that's essentially how it works. Well, a repo facility is essentially the same thing. So in that example, you're using the bike as your collateral.

In the repo facility, you're actually using U.S. treasuries as collateral. roll. So you're getting U.S. dollars in exchange, but there's no selling of the actual U.S. treasuries. So you're not putting some pressure on the treasury market. The problem is if you start just rolling that over and over and over and over and over and over and over, it's essentially like stealth QE because you're getting reserves from the Fed perpetually. So that's essentially what it is. And the FEMA facility was actually created on March 31st. 2020. I'll let you guess why it was created then. I think people will guess pretty quickly because the treasury market was not very liquid. So it was a way to prevent some selling there. So they

created that and was made permanent in July of 2021. So you're seeing that more and more with the Fed making these facilities temporary and then they all of a sudden become permanent. That's, I think, something in noteworthy. And essentially what people might start looking at what what it says with the U.S. government. And let's be honest, the U.S. Treasury works hand in hand with the U.S. Fed. Like it's not, it's saying the Fed is independent as just putting your head in the sand at this point. Yeah.

But it's probably saying that they get nervous at 4.7% for the 10 year and 5.3%. And on top of that, and whether, well, on top of that, the U.S. also reach 40 trillion in terms of debt this week or yesterday. So you have all these things happening together. So when the announcement came, US dollar failed, yields failed and gold started ripping. Gold is up pretty significantly. I can show that here. Unless I don't think I have it.

But it's up pretty significantly. And that's definitely noteworthy. I mean, of course, gold is denominated in US dollars. So you're going. I left the comment up from the thread on gold where it because like I knew this was going to segue there. And as it should, right? I mean, like, you have pretty solid evidence that people are, sorry, I have our live thread in the bottom there just monitoring it.

But, you know, that the market is, it's clear that we're just going to keep repeating currency to basement, you know, M2, right? Money Supply. So I think people are going for the real money trade, right? It's funny, though, because, like, the idea that Bitcoin and, like, crypto or whatever, you know, it was like digital gold and like that, you know, it was kind of via hedge. Seems to be kind of kind of quiet right now. Well, there's a twist to all of this involving Bitcoin too. So you could have expected gold going up because it's denominated in USD.

The yield's going down on the 10 and 30 years. So the market might be getting a bit nervous saying, okay, I'm not getting compensated just enough. But there's also another thing in play here. where the market is saying, okay, well, I'm looking for alternative assets to U.S. government bonds because who knows what they're going to do in terms of trying to keep a lid on yields. And I mean just not be compensated well enough. But you're also, I think you're also starting to see the market being a bit nervous in terms of the government intervening, but also nervous on the size of the debt and the interest payment that you are showing. And what's even more interesting is if you look at yields today, they've started creeping back up. Yeah.

I mean, I feel like that was just like the writing was on the wall that that was going to happen, right? Like, yeah, the drop was basically their market intervention and then the market price that back in by basically saying, okay, these people are just going to keep borrowing indefinitely. Like, so why would we, why do we like, you know, we're in, we're in the price setting position. as purchasers of this of this of this of this debt product yeah yeah and what's really interesting right now is okay so you'd expect gold to be up when the u.s dollar is down and it was down on the news because it's price in u.s. dollars the treasuries came down so you're not getting paid as much to old u.s. long-term debt but now it's creeping back up the real yield that's probably around 2.4% for the 10 year i believe for the 30 year i'm not quite sure

sure. So that's the real yield after inflation. So in theory, you're getting paid pretty nicely to old U.S. Treasury. So there's definitely, I think, a confidence issue that's starting to creep up. And gold as the yields are creeping back up, gold is actually ripping even higher. So that's where there's like some, I don't know if there's warning lights or whatever, but there's definitely some weird shit happening. And then on top of that, where I think it could be a bit of a confidence issue. So Bitcoin has just. really just ripped over the last few days. It's gone from 62, 63,000 in the last week to around 72,000. So it's Bitcoin, yeah, it's up 15% in the last week. So it's gone up a lot. And that's

where you might have starting to have some questions at looking for assets that are just, you know, they're not government controlled. So I'm not. I'm not. saying necessarily Bitcoin's a hedge against inflation. I think Bitcoin's too volatile for Adam and I do own some some Bitcoin. I have some Bitcoin exposure, but I think you're starting to see a little bit of demand tied to the fact that people are not trusting what governments will do and more specifically the U.S. government and the Federal Reserve. And they're looking for alternative kind of sovereign, alternative asset to those sovereign assets. So assets that are just independent and can be controlled by governments.

I think that's, I mean, that's my thesis. Obviously, it's a very short time frame we'll have to see. But just the way that it's all acting together, it's just really, really strange right now. Well, like, I think, you know, I've mentioned this a couple of times to you and to Brayden when it came to Bitcoin. And like, I sold that, like, I pretty much top tick the. Yeah, you did good. You did good. I was pretty close.

Pretty close. I think I was like 110, right? and what it ran to 125 after that. And I was starting to worry and then it draw wherever we are now. So but my thesis was just that like, you know, Bitcoin doesn't really have that, that anti-feet like thesis anymore. It's not like it doesn't feel like decentralized to me. Like I think if you combine like Sailor, you know, basically stacking like all of these

financial instruments behind collateralized Bitcoin and like and the fact that the community loves Sailor is like kind of weird to me too. because he's not really, I don't think. I mean, there's, yeah, it's hit or miss. I would say the hardcore Bitcoiners are not big fans of. True. Yeah, okay. So that would be sort of mine.

And I don't even really consider myself a hardcore bitcoiner. But the reason I was interested in it originally was for the reasons that I feel are being eliminated by his behavior. And then, you know, so you're giving access to, you know, massive financial markets to this product through all of these swaps and, you know, it's basically like your 08, you know, insurance stack behind mortgages, but on Bitcoin. So, you know, that's one. So now you have all of this like massive capital playing in it. It's, you know, it's on exchanges, ETFs, et cetera. They're spot trading. And then you also have the governments that are, you know,

taking strategic Bitcoin reserves, et cetera. So it's like, well, isn't it like, it's basically as centralized as like pretty much anything else you can get in, in the market. And so I I just think that the compelling value proposition of Bitcoin as a store of value, but also as like a currency or mechanism of transaction, privacy, decentralization, et cetera. You know, when you started to see M2, like changes in M2, it reflected that it was reflected on the Bitcoin curve. So it was like, I thought I was getting into this to not be attached to that. But it's there, you know, so that that, that to me, I think, I think that plays a decently large role in it is that people are maybe just calling the bluff. being like, this isn't it anymore. Like, this isn't what I signed up for.

Even if you think it's more centralized, it's still less centralized than U.S. dollars and U.S. treasuries. So I think that's, I think that's where the, my thesis is that's where the market is kind of reacting. They're trying to hedge. I don't think they're dumping necessarily U.S. treasuries right now, but I think they're looking at some alternatives and gold is the obvious one. But just the fact that you saw all these events happen kind of within what like a couple weeks with the Japanese Yan intervention.

You're always seeing all of that. Like it's hard to not think that the U.S. government is the U.S. Treasury Besson is like they're getting nervous about U.S. treasuries. Like they are. Like why would you? Yeah. Yeah. Why would you be doing that? And then you get into the whole debate of interest rates and I'll show here because we are a Canadian.

base podcasts and people oftentimes will say like, why the hell are you talking about the U.S. Well, it's affecting Canadian bond yields too. Like if U.S. yields rise, Canadian bond yields will be rising. It's that simple. They may not rise as much, but they'll be rising. It's just, you know, it's just that easy. It's not like Canada's like pristine finances either. Well, I think that's the market kind of saying that it feels that Canada still has to fall in line

with the US based on a rate environment simply to protect the currency, right? Like we saw this happen when, you know, the U.S. was pricing in hikes and, you know, CAD was kind of weakening because it was sort of saying, well, we don't think that that Bank of Canada could follow suit. But I think when it comes to the setup now, especially that our economy is looking a little bit stronger than it did when, you know, when that was kind of taking place, we kind of have to stay in lockstep with them if we want to, if we want protect CAD. Yeah.

And I mean, can the you can the Fed like lower rates on the short end? Like I I think they're stuck. I just don't think because I we've talked about it quite a bit, but I think it just all comes down so people thinking the lower rates like okay they lower rates and then what they start issuing everything on the short end. Right. What's what's the plan here like it's the market the bond market will absolutely punish them if they lower rates when they're actually pricing in heights.

Well, and they would be forfeiting. I mean, like, that's that, I mean, you're really forfeiting reserve currency, like, strength at that point when, you know, they have the unique ability to be one of the few places on earth that people are willing to buy 30-year bonds. You know, like, we don't have that in Canada. Do we? I don't know. We don't have a 30-year, yeah.

What is it, like France? I don't know. You know, I think France has, like, 25-year mortgage bonds. They have 25-year mortgages. I mean, U.S., how can you, like, it's, like, it's, Same thing in their mortgage market. Like Canada mortgage bonds, you're only getting five or 10 year. US, you can, they can sell a 30 year mortgage bond to a US, like, you know, a pooled

No, we have 30. I think they're just probably not very liquid. Yeah, exactly. Yeah, there's not. So, like, so they're one of the few places where you're actually seeing activity and this, this matters. If they start loading everything to the front end of the curve, then they, I think they sacrifice a little bit of their strength.

Obviously, like, I'm not like Ray Dalio, like, you know, the USD is going to go, like, you know, that's, but I, I do think that there are reserve currency consequences to, I think you're playing with fire a bit with that. Yeah, I think the end game in all of this as we go back to gold back currency. I think that's just the end game in all of this. But yeah, and just to get back to interest rates, like, if you lower rates, okay, but then you're stuck, right? Like, you can never raise rates.

if you start raising rates, then your interest payments just go through the roof. And if you keep the rates lower on the short end, then you just stimulate inflation. So there's really no good answer. And Kevin Warsh can talk all tough, all hawkish as much as he wants. They're really, really in a tough, tough spot right now. And again, by association, Canada, too. So I think for those hoping for much lower rates in Canada, I don't think, I mean, it's not impossible, but there are consequences for that. Yeah, that's why I think.

Yeah. Yeah. Well, it's basically like you have to, it's like be careful what you wish for kind of thing. It's like we can get lower rates. And I still think it's a likely outcome, but it comes with a lot of bad economic data to get there. I mean, jobs are suffering. GDP growth is suffering. Do I think that it'll happen?

Yeah, probably. Like it would, it feels like a reasonably likely outcome at some point of what's going on. You can see them trying to fight it off with all of these things that we're describing in today's episode. Yeah. But I think it's probably a good point to wrap it up. I just say, I do have a plumber coming in a few minutes. Always got some. I got to go record with Nick for three hours.

So yeah, that's all good. I'll let you go. Cool. Yeah. For anybody who's listening to this on the recording, we do these live. We've been doing them on Thursdays throughout the summer at noon. and hope to see you on here. I mean, thanks to everybody who played along in the in the comment threads. We appreciate it. A lot of good questions, a lot of good thought.

Yeah, big shout out to Stuart and Mr. What to Do Today and Nairbo's with a few comments. There's a couple others in there too. I got to find out. Yeah, no, it was a good, good thread. So keep it coming and hopefully we'll pick this up even more in September when everybody's back at the desk trying to kill time at their office. Anyway, talk soon. The Canadian investor podcast should not be construed as investment or financial advice. The host and guests featured may own securities or assets discussed on this podcast. Always do your own due diligence or consult with a financial professional before making any financial or investment decisions.