Author: garth turner

On the eve of Canada Day, No. 158, did we just get CACO?

That, of course, means ‘Carney Always Chickens Out,’ the maple-flavoured version of TACO. As we all know by now, Trump has imposed massive, gruelling and historic global and national tariffs, only to chicken out repeatedly with delays, pauses, revisions and cancellations. As a result, Mr. Market has gone from a heart attack to a shrug.

But Carney backing down isn’t exactly consistent with the ’Elbows Up’ and the ‘Canada Strong’ that helped the guy win a federal election and sent Pierre Poilievre to some Dog-forsaken, hillybilly coven of cowboy Con conformity to try and win back a ticket to the House of Commons. So, wassup Mark?

As you likely know, late yesterday Ottawa threw in the towel and rescinded the Digital Services Tax. The first payment by Trump’s tech billionaire buddies was due today – about two billion – representing a levy on their Canadian earnings since 2022. Trump heard about it and said unless the tax was trashed there’d be no more trade talks with Canada. Moreover he would lay a big, juicy, suffocating new tariff on all our exports within seven days.

Carney blinked. Tax gone. In the best interests of the country, he said.

It’s not the first time lately, is it?

The shiny new PM agreed to raise our defence spending to the NATO target – something Trudeau failed to do for ten years,  which Trump demanded. We have thrown more money and resources into ‘beefing up’ our massive border, which was just peachy for the last century and a half – until Trump arrived. We imposed retaliatory trade levies, and then backed off when Trump said that would trigger even higher ones. And now we’ve caved to Meta and Netflix, as the American president decreed.

“Trump is a bully & every ‘concession’ made simply gives him that rush of power that he craves, effectively reinforcing his bully behavior because he gets the reward he desires,” one of the regulars posted here last night. “Basically at this point he is effectively ruling Canada because thus far his demands have seen Canada commit to higher NATO spending, bump up border enforcement, pause reciprocal tariffs & now back down on the DST. All of which sees Canada spending more & receiving what in return? More demands & continued tariffs along with helpings of ‘failed country’ & ‘should become 51st State’ comments. That went well – not!”

Why did the feds bring in a digital services tax in the first place?

Simple. It makes sense. Canadian advertisers hand over $25 billion a year to American social media platforms, which pay no corporate tax in this country. A whack of that cash no longer flows to our own content producers (like news organizations, which are croaking as a result). The DST was designed to harvest a modest amount (3%) of those revenues, with a portion of that then being given over to Canadian outfits, helping ensure their survival, so Facebook, Insta, X and TikTok don’t eat us completely.

Most of us can dig that. We don’t let Americans take over our airlines or banks, so we have flights into Charlottetown and tellers in Fort St. John. Why should they be allowed to kill off our remaining media, making us dependent on Musk, Zuckerberg and Fox News?

Anyway, this is why being in government sucks. No easy answers. When America turns rogue on us, threatens, intimidates and hurts citizens as it abrogates a valid trade agreement, whaddya do? Fight and get creamed? Capitulate and be ravished? Or try to massage your way to the best possible outcome?

Trump hurts Canada. He has no allegiance to anything but self-interest. The American brand globally is being tarnished as never before, from bombing to aid withdrawal to embracing authoritarianism to fomenting a world-wide trade war to dumping on close allies and strategic partners. No lasting good will come from this presidency, even as he makes investors happy and the wealthy wealthier.

Carney blinked. He had no option. But it stings.

About the picture: “Here is Shadow, our 18 month old Australian Labradoodle,” writes Alex, “enjoying some hammock time after a hard day chasing one of his many tennis balls, and keeping the local squirrels at bay. Keep up the good work, I’ve been here 15 years and counting, 

To be in touch or to send a picture of your beast, email to ‘garth@garth.ca’.

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Like Toronto and Van, NYC is an expensive place to live.

But many New Yorkers just voted to fix that.

The average selling price for a home across the five boroughs is currently $868,000 US in this city of almost nine million people. That equals $1.19 million Canadian. The average in Toronto these days is $1.12 million. In Vancouver it’s $1.17 million. So, there’s a ‘housing crisis’ in all three cities.

But New York City has more renters. Of the 3.7 million housing units there, 2.4 million, or about 62%, are rentals. In Toronto, 48% of residents are tenants. In Van, it’s only 38%.

One big difference is the power of the city. In New York it’s local politicians who have a direct impact on rents, for example. In Canada real estate is a provincial concern. Besides, the population of the Big Apple is about the same as the entire province of Quebec, or New Brunswick, Nova Scotia, Saskatchewan, Manitoba and Alberta – combined. The mayor matters.

The election of Zohran Mamdani as Democratic contender in the upcoming NYC mayoralty race is a big deal. For many reasons. First, he creamed the former state governor and high-profile dude, Andrew Cuomo. Second, the young (33) state politician used social media (especially TikTok) to sweep to victory. Third, Trump calls him a ‘lunatic communist’ which pretty much solidifies his popularity. And, fourth, he also scares the crap out of fellow Democratics since he openly identifies as a socialist. Plus, he’s Muslim, which is a first.

Now, what about housing?

It was a giant part of Mamdani’s platform and underscores his interventionist approach to governing. If life is too expensive for average people, he says, then elected folks have an obligation to make it cheaper. Like having the city run its own discount grocery stores, he says. Plus free day care for all the rugrats under five.

When it comes to accommodation he’s pledged (if elected) to freeze the rents of 2.4 million families who are tenants. The state assemblymen now jumping into municipal politics would also build 200,000 new publicly-subsidized affordable homes. As a result of these promises he was able to mobilize the enthusiastic support of younger voters, crushing the Establishment political machine.

Source: Fox Business News

The pushback has been immediate and loud. Landlords and developers argue a freeze won’t make apartments more affordable or plentiful and will actually carve into the number of units available. Already thousands of homes under existing rent controls are sitting empty because owners can’t afford to make costly repairs or preventative maintenance without more cash flow. If rents can’t pace inflation or the cost of those repairs, the situation will worsen.

As for building those new units, the cost would be $100 billion, says Mamdani. To pay for that, the city would impose higher taxes on the wealthy (unlike in Canada, local income taxes are possible).

Well, Mamdani has caused a lot of people to have a cow. Dems across America are worried a new breed like him could move their party farther to the left at a time when MAGA has dragged tens of millions of voters far to the right. This deepening polarization could keep the better-organized Republicans in power longer, they fear. And while the young may be comfortable with more government control of their lives, the mainstream is not.

But this is reality. If the pendulum swings back from Turmp in the next couple of years, it could overshoot the middle, making Mamdani the mayor of the greatest city in America, and a new national political star – with his heretical ideas about saving the common person from Jeff, Mark, Elon and Don.

Could the same happen here?

Of course. Toronto’s lefty mayor (Olivia Chow) is already busy building state-owned housing units. Vancouver’s doing the same. The feds and provinces are throwing more money at housing than ever before in Canadian history. And yet the market is a swamp. New-home construction is grinding to a virtual stop. Unsold inventory is stacking up. Most importantly, prices have remained too high for affordability to improve. Average families cannot afford average homes in the average city.

A maple-flavoured Zohran? One more thing to vex over.

About the picture: “Thanks a million for sharing a daily dose of financial wisdom – always delivered in your clear and humourous style!” writes Mark, from Vancouver Island. “Here’s our old friend Max, now long gone but not forgotten. Max loved canoes!”

To be in touch or send a picture of your beast, email to ‘garth@garth.ca’.

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Source: TruthSocial / @realDonaldTrump

   By Guest Blogger Ryan Lewenza

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It’s been a decent first half for the equity markets despite all the headline risks and uncertainty (e.g., Trump tariffs, multiple wars, bond market jitters). Currently, the S&P 500 is up around 4%, the TSX is up 8% and international stocks are up double digits.

The markets have had a huge recovery from the April lows, what we call a ‘V-shaped recovery’. President Trump’s reciprocal tariffs caused the big sell-off in March and April and then the ‘TACO’ trade – Trump Always Chicken’s Out – led to the recovery in May and June. But we now expect a period of consolidation and maybe even a pullback over the seasonally weak summer months. Why?

Year-to-date performance for the S&P 500 and TSX

Source: Stockcharts.com

First, with the big recovery the S&P 500 is back trading near its all-time highs/resistance. We see the S&P 500 facing some initial challenges around the resistance level of roughly 6,100. Also, with the swift recovery, the US markets have gotten a bit stretched on a short-term basis. One indicator we track is the percentage of stocks in the S&P 500 above the 50-day moving average (MA) and that is currently at 75%. Above 70 indicates overbought so this suggests markets could be due for a breather.

Current technical profile for the S&P 500

Source: Stockcharts.com

Second, the summer and fall tend to be weaker months for the markets. As seen in the chart below, the May through September period tends to be weaker months for the US markets. On average, the S&P 500 returns 7.5% from October to April and just 1% during the summer months. Make note of September, which historically is the weakest month of the year for the markets.

Now, these are just long-term averages, and there are times when the markets buck these seasonal trends. So, this is just one factor that could impact the markets over the summer/fall.

S&P 500 average monthly performance

Source: Bloomberg, Turner Investments

Third, with the big rally the US markets have gotten a bit expensive. Currently, the S&P 500 is trading at a 23x P/E ratio, which is elevated and above the 10-year average of 20x.

S&P 500 P/E ratio

Source: Bloomberg, Turner Investments

Fourth, we have a couple of key dates coming up that could lead to an increase in market volatility. The US Senate would like to pass Trump’s spending bill by July 4th and on July 9th Trump’s 90 day pause of the reciprocal tariffs expires. Will he announce trade deals keeping the tariff rates low, will he reverse course and slap on the high tariffs again or will he do another extension of the pause? We just don’t know so we’re watching those dates closely.

Finally, the geopolitical situation is getting worse with the recent bombing of Iran’s nuclear facilities and Isreal taking out many of their top military leaders and scientists. These are regional conflicts which shouldn’t drag down the global economy, but they could pose a risk to the markets.

Apologies for diving deep into the weeds with talk of P/E ratios, overbought indicators, and V-shaped recoveries. The bottom line is: we remain optimistic about global equity markets, but we wouldn’t be surprised to see a pause or some consolidation during the typically softer summer and fall months – a development we’d view as both normal and healthy for the overall market trend.

Ryan Lewenza, CFA, CMT is a Partner and Portfolio Manager with Turner Investments, and a Senior Investment Advisor, Private Client Group, of Raymond James Ltd.

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The folks from outside Atlanta stared at the embarrassingly-big Canadian flag nailed on the side of my house, and looked needy.

“We just want to apologize,” the woman said after approaching, “for our president. Please know most of us are not like that.”

It’s a typical tourist thing these days. Ashamed Americans. At least the ones who like coming through the eerily-empty border with their $1.40 dollars and spend time in a stable country. They know about the 51st-state thing. They know 47 has trash-talked us. They know about tariffs. And they’re sorry.

But wait. Is it over?

The latest numbers – out this morning – reflect the first full month of the orange guy’s attempt to start a global trade war and attack his country’s most faithful, lucrative, dependable partner. But despite the steel-and-aluminum hit (now 50%), plus the auto sector duties and other unfair American levies thrown against Canada, our economy has not disintegrated.

Canada’s GDP (gross domestic product = the economy) declined just a chin hair in April, down 0.1%. Manufacturing was off a couple of points, as expected. Services were up. Having five maple teams in the hockey playoffs helped the entertainment sector. So did a federal election. “Canadian GDP was essentially held to a standstill over the three spring months; that’s not great news, but also perhaps not as bad as initially feared,” says BeeMo Economics.

“The biggest drag by far was a steep 1.9% fall in manufacturing, including a 5.2% drop in the auto sector, as firms dealt with the initial wave of tariffs, as well as some further pullback after earlier tariff front-running,” the economists add. “Perhaps the surprise is that activity wasn’t even weaker.”

Indeed. The decline was more shallow than expected. And it will like be shorter than anticipated. As we know, TACO backed off on the crazy global reciprocal tariffs, pausing them until early July – when they may well be delayed again. Our new PM says a trade deal with the White House should be inked within the next month, which means stability, predictability and the ability of businesses to plan again.

Yes, we may have two or more quarters oof slightly-negative growth, which means a technical recession. But most people won’t notice it – and it may cause interest rates to decline a little faster than would otherwise be the case.

“An average growth rate of only around one per cent for the first half of the year as a whole, and weak momentum heading into the summer, suggests that slack in the economy is continuing to build and that further interest rate cuts from the Bank of Canada will be needed to support a recovery later in the year,” says CIBC economist Andrew Grantham.

The advent of a mini-recession, adds BMO’s Doug Porter, “is certainly not good news, but also a less dire outcome than expected a few months back at the height of the tariff drama.”

And as for rates: “We suspect that the underlying softness in growth and employment will eventually pave the way for additional rate relief.” Not next month, however – when the Bank of Canada is expected to stay on pause once again – but in September, when the US Fed is also likely to trim the cost of money for the first time in months.

What are the implications?

Mortgages stay in the 4% range all summer. Real estate continues to decline in value as supply overwhelms demand. The unemployment rate ticks higher, adding to the negative sentiment around housing. The construction industry is decimated. Targets for new home building are unmet. Buyers stay on the sidelines, convinced a market collapse is nigh.

Little do they know.

About the picture: “I’d still consider myself a young blog dog, but have been reading for over a decade,” writes Paul, in Hamilton. “Thanks to your advice, I’ve managed to put together a good life – fiance (soon to be wife), townhouse, dog, cat, and some decent retirement accounts. Thanks for the free blog, it is worth the price of admission, and then some. Attached is a photo of Azteca, our rescue dog from Mexico – worth every peso.”

To be in touch or send a picture of your beast, email to ‘garth@garth.ca’.

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Regular addicts may recall being told to sit on your nerves when Netanyahu decided to light up Iran.

Never sell in a storm, we said, mixing metaphors, because we’ve seen this movie before. Crises come. Crises go. Markets are momentarily distracted, but at the end of the day (more word salad) it’s only corporate earnings, the economy and monetary policy that matter. The rest is noise.

So, here we be.

US stocks have drifted back to record territory (last visited in February, when we still thought Trump was amusing). The bond market has stabilized. Yields are okay. On Bay Street the TSX has had a boffo 2025, despite elbows-up, a chippy federal election, tariff terror and a new Progressive Conservative PM. The gain as of this morning was about 6.7%, year-to-date.

Sure, the world is still a hot mess in many ways, but that’s getting normal. Through it all, a balanced and diversified global portfolio has once again proven to be the best defence.

Now, what next?

It looks like we may be closer to lower interest rates than seemed apparent a week ago. The US dollar has sunk (pushing the loonie higher) on speculation the orange guy is about to name a new boss for the Fed, America’s central bank. The current chair, Jerome Powell – whose term has not yet expired (and was appointed by Trump 1.0), has been a cautious dude, keeping rates steady for months now on the fear tariffs may push inflation higher and the economy lower.

Trump now hates Powell. Rather than pausing rates, he says, they should be slashed. Maybe by a full 2% or more (insane). The president wants explosive economic growth in order to pay for his fat tax cuts and spending plans, and looser monetary policy – leading to cheaper loans and more borrowing – is a quick way to get it.

Powell is in place until next May. Prying him out of office would not be easy. But not impossible. By naming a successor openly committed to loosening the reins, Trump would be sending out a signal that markets could soon expect a heap more liquidity. Almost as effective as a rate cut itself.

This, plus concern about trade wars, has helped push the US currency down about 10% this year – and drive ours above the 73-cent mark (when many people thought 60 cents was coming). Markets are also watching July 9th – when Trump’s 90-day pause on global reciprocal tariffs is set to expire.

The news of the day seems to be Powell. It’s a big deal. Implications already.

“His idea of naming a successor well before Powell leaves office would effectively create a shadow over the head of the U.S. central bank that could undermine him,” says Bloomberg. And adds a Wall Street analyst: ““It’s a given that Trump’s pick to succeed Powell, when it comes, will be one that sits at the highly dovish end of the spectrum and will support Trump’s agenda of lowering interest rates. The issue with this is (that) it will resurface questions from earlier in the year around the Fed’s independence, which, as we saw, undermines confidence in the Fed and the USD.”

Will the Bank of Canada follow? After all, our headline inflation number these days is a lowly 1.7%, with unemployment ticking higher. Most Bay Streeters now expect a modest recession in the back half of the year – and just when a million families are renegotiating their home loans. The ideal time for a rate cut, especially with the loonie in a comfort zone.

Unknowns?

Lots of them still. What’s Israel going to do next? What about Gaza? And poor Ukraine, now that Puttin clearly does not give a fig what Trump thinks. Iran one-and-done? Will the markets have a cow again if the trade war ramps up again the week after next? And what if 47 just fires Powell abruptly, as his tax bills clears the Senate and $3 trillion more is headed for the American debt pile?

Oh, so much to fret and vex over. And to ignore.

Stay the course. Focus on your family. Walk the dog. She never heard of Pete Hegseth.

About the picture: “Answering your call for dog pics – here is a photo my friend’s dog, Maple,” writes Lei. “She super well behaved rescue, living her best life in Fort Mac with multiple long walks/dog park visits daily. Appreciate it if you consider featuring her. I been a reader for 7 years now and thank you for the daily content and the consistent narrative that help me stay calm.”

To be in touch or send a picture of your beast, email to ‘garth@garth.ca’.

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Almost three thousand houses changed hands in the city last month. Like almost everywhere else, sales were down (less than 10%) from this time last year, and inventory was up (12%) from the early summer of 2024.

But unlike other places, citizens could actually afford homes.

The total residential average price in June was $464,177. That’s up 5% in a year. The detached average was $579,704 ahead 6%. That’s $1.42 million less than the benchmark in Vancouver. A 71% discount. Compared to Toronto, the saving is $1.14 million, or 66%.

And where is this magical city of 1.6 million people?

Three hours north of Calgary, called Edmonton.

And why is housing cheaper here?

Land is far less expensive. Population growth is modest. Even stable. It’s off the radar (largely) for both large-scale domestic investment and international money. And you need fluffy underwear plus a remote starter (for your car, silly) in February.

By the way, the typical condo in Toronto is about $800,000 (new = $1 million) while in Edmonton last month units sold for an average of $217,792. Oh, and there’s no sales tax in Alberta. But the premier is weirdly dangerous. Finally, there is a decent match between supply and demand in Deadmonton (as they call it in the evil East), which means normal people can actually afford real houses.

Check this out:

Source: Scott Ingram

The above graph charts the SNLR (supply to new listings ratio) which is an indicator of market strength or weakness. The further down the graph, the more desperate sellers are as buyers are few and far between. That’s Toronto and Vancouver, where residential real estate prices eliminate any family not gifted huge sums or earning $300,000 a year.

So check out Edmonton, Calgary, Ottawa and Montreal. Healthy, stronger, cheaper.

This pattern is likely to last all summer. Maybe all year. Or forever? After all, things are stacking up badly for the GTA and Lower Mainland. Population growth. Rising property taxation. A crisis in construction. And serious unaffordability that will not be alleviated by interest rate cuts.

The latest inflation news confirms that.

Headline CPI did not change from last month – still at 1.7%. And while that sounds peachy, core inflation at 3% does not, and is basically unchanged month/month. Groceries, rent, insurance, kibble – all still swelling in price.

“The latest inflation results are broadly similar to April’s outing—a deceptively calm headline number with core hovering too far above the 2% target for comfort,” says BMO Economics. “The BoC will likely need to see much more improvement before it’s convinced that underlying inflation is headed back to 2%…. the odds of a July cut are lower now.”

Hmmmm. So mortgages stay in the 4% range, a hardship for new buyers and also a million households who this year face renewing their cheapo Covid loans (as low as 1.5%). Six months ago everybody was forecasting at least two rate cuts by this time in 2025, but it looks like our CB will be holding the line once again in late July.

In fact, no rate relief could be coming until September. And perhaps not even then – depending on whether we get whacked by US tariffs or Big Daddy Carney makes a trade deal for us.

Meanwhile, don’t look south for any comfort in terms of Fed policy. Same thing there – where inflation stays stubbornly higher than in Canada. Chair Jerome Powell said this week he’s cool with doing nothing, sitting on his hands and waiting to see if the orange’s guy’s tariffs will goose inflation. (Trump is screaming at him to chop rates an incredible 2.5%. Powell laughs.)

“For the time being, we are well positioned to wait to learn more about the likely course of the economy before considering any adjustments to our policy stance,” the Fed boss told lawmakers today. So, no change expected there until the leaves start turning.

Conclusion: more misery in the steamy, teeming southern cities that think they matter. And a more affordable life where the cowboys roam. Go. Of course, you’ll need an F-150. With nuts.

About the picture: “In response to your plea for more dog pictures I offer this one of Ziggy,” writes Lloyd. “Here she is fresh from her ‘Walk For the Cure’ in Victoria – a fundraiser for ALS. It mystifies me how you continue to churn out entertaining and informative pieces virtually daily. Thank you for your work – you have accounted for many benefited lives. That must be quite gratifying.”

To be in touch or send a picture of you beast, email to ‘garth@garth.ca’.

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As Trudeau left, his approval rating was 16%. Now Carney’s is 60%, says Nik Nanos, the pollster. Poilievre’s numbers have tanked. He is viewed unfavourably by 60% of the population. Among females the negative number is 71%, says Angus Reid.

Can Pierre survive as leader, even if he wins back a seat in the Commons?

Nope. Toast. Canada chose a Progressive Conservative, not a MAGA Con. They rejected the angry guy and, praise be to Dog Above, most of those dour partisans have stopped taking a daily dump on this poor blog.

Carney has promised to fast-track infrastructure, lessen dependence on the US and learn to speak Albertan. So what else can people throw at him?

Well, how about this?

Yeah, it’s back.

In the last week a few articles of these have surfaced, the one above coming from Re/Max, of all places. As you may recall, during the election Poilievre raised this spectre, saying the Libs during a fourth term would spend so damn much money that a tax on home equity would be inevitable.

This is what he said in a Toronto speech to CARP members (wrinkly old coots) as the campaign was ending:

“What happens when the finance officials tap them on the shoulder and says, ‘You’re out of money, you need to go find more?’ Well, they’re going to go out and they’re going to tax your home equity. They’re going to go after your house,” he said, adding that hypothetical tax would be “crippling” for seniors.

“Bottom line is, Liberals will tax your home equity if you give them the chance in this election. We will never let that happen. Your home belongs to you, and when you sell, you should keep every single penny for yourself and your kids.”

The geriatrics didn’t buy it, as we know. But this is a tax threat dragged up repeatedly by the Conservatives, which refuses to die.

Of course, home equity profits should be taxed in the same way we treat capital gains on other assets. The fact this one single asset class has been exempted and carved out for special treatment helps explain why homes that cost $431,262 in 2010 (the average Toronto sale price that year) are now changing hands for $1.23 million. The shift in capital deployment to something that escapes tax has been massive, and helps explain why Canada’s per capita GDP lags far behind that of other G7 countries. Why invest in the economy, after all, when you can leverage up a house and make a bundle?

Okay, so Poilievre was wrong about Carney taxing equity (so far, and probably forever). But he’s also on the wrong side of the issue. And so is the prime minister. The best solution is to give everyone in Canada a lifetime capital gains holiday (of maybe half a million) that they can use to shelter profits from any asset – ETFs, stocks, hockey cards, rental condos, fine art or houses.

This would remove one of the greatest inequities in our current economic system – rewarding homeowners while disparaging renters. Not only has this disadvantaged a lot of people (like 50% of the population of the GTA and 60% of Montreal), but it’s created a stigma around leasing vs owning while inflating residential real estate and showering owners with unearned, tax-free wealth.

Would this mean tax-deductible mortgage interest and ownership costs?

Nope, not a chance. The lifetime cap gains tax exemption would be applied to the difference between the adjusted sale price (after selling costs) and the ACB of the property (purchase price plus land transfer tax paid and allowable improvements).

Anyway, not happening. Even though CMHC itself has acknowledged that it should.

“Reducing the tax shelter will disrupt feedback loops that fuel rising home prices. This would slow the escalation of home prices and improve affordability; reduce inequalities, including between renters/owners and younger/older Canadians; and attract savings and credit towards economic activity outside of the housing sector, which may produce more jobs and innovation than is often found in real estate.”

We elected the right guy, for a host of reasons. This is not one of them. And I am completely unelectable.

About the picture: “This is a pic from ’89 at our first house outside Golden, BC,” writes Phil. “A log house on 4 acres – we paid $68k for it. Every time I grabbed the wheelbarrow to do something, Cane jumped in and was  very happy to be wheeled around the property. I really appreciate what you do.”

To be in touch or send a picture of your beast, email to ‘garth@garth.ca’.

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Oil prices will pop when trading opens this evening. That’s the expectation after America did what its president campaigned against – getting into another foreign war.

Right or wrong, consequences be damned, it’s done now. Your TFSA, plus the price of gas you pump and berries you buy, will likely be affected. The long-term goal is defanging Iran by ‘obliterating’ its nuke program. The short-term impacts may be something else. And there’s always the risk the US gets pulled into another neverendum conflict – by that wily Israeli, Bibi Netanyahu.

Since geopolitical brinkmanship and cogent strategy are above the pay grade of this pathetic blog, let’s stick to the practical stuff.

Is this toxic for your investments? Does it hurt Canada?

As stated, oil’s going up. From $73 US a barrel on Friday to eighty or $90. If Iran or its Houthi buddies throttle the Strait of Hormuz (where 20% of the world’s crude ships) the spike could last a lot longer and maybe go higher. Hundred bucks? Dunno. Nobody does. But for now, plan on energy costs flaring.

Those costs are a big hunk of the inflation calculation, so if this lasts – at the same time we’re dealing with punitive Trump tariffs – you can kiss 2% goodbye. This could possibly push interest rates higher in July, or certainly keep them at current levels.

On the other hand, ninety-dollar oil is good for Canada, since this remains our largest export. It’s good for the TSX, and your exchange-traded fund that reflects Bay Street. So far this year the Canadian market has been peachy – up almost 6.5% by this weekend. That’s a huge premium over the S&P 500 (ahead 1.7%, ytd on Friday).

Just as rich oil helps the Canadian economy, it’s misery for the American one. This puts more pressure on the White House and the Senate, where Trump’s crazy tax bill is being debated. That would slash government revenues, hurt a lot of entitlement spending and add more than $3 trillion to the deficit and debt (now at a stunning $36 trillion). The last thing Americans need is a big hike in the energy bill, but that probably came on the wings of the B-2s last night.

Brent futures have jumped 11% since Israel started to attack Iran (which we now know was meant to destroy certain assets that might have imperilled the American attack). West Texas popped about 10%. That much again could be in place by tomorrow – depending on how serious Mr. Market thinks the supply garroting will be.

Bloomberg reports today the cost of hiring a ship full of oil to travel from the Middle East to China jumped 90% since this mess started. Insurance costs are bloating like a lovesick sea lion. Shippers everywhere are bracing for the unknown.

And here’s an expert opinion, also from the news service in the last few hours:

“Much depends on how Iran responds in the coming hours and days — but this could set us on a path toward $100 oil, if Iran responds as they have previously threatened to,” said Saul Kavonic, an energy analyst at MST Marquee. “This US attack could see a conflagration of the conflict to include Iran responding by targeting regional American interests that include Gulf oil infrastructure in places such as Iraq, or harassing passage through the Strait of Hormuz.”

Now, the salient question is what you should do about it. The answer, as usual, is nothing. Not if you have a balanced, diversified and global portfolio. In that case you already have a healthy 30% Canadian equity component. You have fixed income – with prefs and REITs doing swell in recent months. And your US exposure will be just fine as The Orange King muscles the Senate into passing his irresponsible but lovable tax chops.

We’ve been down this road before. Too many times. Regional wars threatening to spill over. Nuclear stakes. Bully states. The US as the global cop. Israeli overreach. Arab terrorism. Rogue Russia. Through it all, markets have generally expanded as the global economy did. Monetary policy and corporate earnings remain more consequential than 30,000-pound bombs and presidential bravado.

The main thing is this: the future is uncertain, volatile and guaranteed to bring big change. That’s why smart people (like you, because you’re here) have 60% growth assets 40% safer stuff, a third equity exposure to Canada, the US and international, ETFs instead of stocks or mutual funds and tax-efficient returns in the form of dividends and capital gains, which eschews GICs or those non-high, high-interest account.

Let them bust bunkers. Not your future.

About the picture: “This is our 9wk old black lab Gertie learning how to chew sticks,” writes Mark, aka ‘The Loonie Dr’, ” with her big sister Beatrice.”

To be in touch or send a picture of your beast, email to ‘garth@garth.ca’.

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Source: The Conversation, Spencer Colby / EPA

  By Guest Blogger Doug Rowat

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It’s been a tough year for Canada.

Trump, of course, has been tormenting us, so much so that the media at one point asked him, in all seriousness, if he was planning to invade. We’ve been in the crosshairs of his global trade war for months. And our labour market is now showing serious signs of stress. Our unemployment rate has ratcheted up steadily for the past three months and now sits at 7%, the highest level since September 2021.

Not surprisingly, analysts have been warning regularly of a recession with TD chief economist Beata Caranci recently stating, quite ominously, that “the fear is real.”

Yet our equity market soars.

The first lesson is that the Canada-is-dead-in-the-water newsflow assailing us daily should never be equated with equity-market performance. The S&P/TSX Composite is not only up nearly 8% this year but has roughly quadrupled the performance of the S&P 500. How is this possible?

We’re the picked-on little brother destined to be beaten to a pulp are we not? Clearly, many of this country’s top blue-chip stocks didn’t get that memo. Y-t-d, as of this writing, Barrick Mining is up 30%, Toronto-Dominion Bank is up 28%, Cameco is up 26% and Loblaw is up 18%. Even the perpetually underperforming Telus has posted double-digit gains this year.

You might further expect that this country’s top money managers have prudently overweighted many of these individual stocks and are therefore achieving tremendous outperformance of the broader market. Wrong.

The second lesson is that active fund managers are remarkably ineffective. Y-t-d performance numbers aren’t yet available, but according to SPIVA research, here’s how Canadian fund managers have performed longer term:

10-year track record of Canadian fund managers

Source: SPIVA

Blame it on their high fees or general lack of stock-picking talent, but the overall track-record for Canadian fund managers is dismal. Better to own the Canadian equity market through a low-cost ETF.

Proponents of active stock picking might argue that if you simply focus on the ‘hot hand’ fund managers then you’ll greatly improve your odds of selecting a winner. The thinking here being that genuine skill, once spotted, will be more likely to persist. Nope.

The third lesson: remember the Monte Carlo fallacy. Past results have no bearing on future odds. A ‘hot hand’ offers no assurances of future outperformance. SPIVA research further points out:

Among 169 funds in seven categories that placed in the top quartile for the 12-month period ending December 2020, only 2 managed to remain in the top quartile for the next four years.

Sadly, there’s no ‘persistence of skill’ amongst Canadian fund managers. Again, just buy an ETF.

The final lesson relates to the recession risks highlighted at the outset. If, in fact, Canada does drift into recession then our equity market is destined to struggle too, right? Wrong again. The Canadian equity market often sells off when the economy is good and often does well when the economy is suffering. There’s little relation between the two. The S&P/TSX Composite, for instance, did very well during the dark economic times of 1991, 2009 and 2020:

The Canadian stock market isn’t the Canadian economy

Source: FactSet, Raymond James Ltd.

So, has 2025 played out in the ways that you expected for Canada? You anticipated a US president desiring to make us the 51st state? Canada being relentlessly targeted in a hostile trade war? Pierre Poilievre snatching defeat from the jaws of victory and the Liberals remaining in power? Our unemployment rate, as mentioned, soaring to a nearly a four-year high? The president eventually visiting Canada but leaving early to maybe bomb Iran? And it’s only June.

Ostensibly, the Canadian equity market should be down this year.

But remember the lessons. Always beware your expectations.

Doug Rowat, FCSI® is Portfolio Manager with Turner Investments and Senior Investment Advisor, Private Client Group, Raymond James Ltd.

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The average property in the Big Smoke sold for $315,231 twenty years ago. When the pandemic started, fifteen years later, it was $819,153. Twenty-four months after that the same property commanded $1.33 million. And these days it’s back down to $1.1 million.

Do the math. House prices accelerated during two years of Covid by just over half a million dollars – equalling the growth over the previous decade and a half. That was a 60% pandemic pop when immigration levels plunged, but a health emergency and 2% mortgages fuelled FOMO. More proof humans are weird.

All this is relevant since the federal government has just radically changed its goals for house prices.

Until now CMHC told the country its aim was to restore 2004 pricing to real estate, pushing down prices until it would take – on average – just 30% of income to afford a roof. Well, that was last week. No longer. The new target is 2019. And it, too, will fall by the wayside.

If this agency is any indication, the new Housing Czar, poor Gregor Robertson, has already lost his way. CMHC’s media briefing yesterday was a farce. These guys told us 4.8 million new homes will need to be built over the next decade if the kiddos have any chance of owning one. That equates to about 450,000 units a year. Seriously. So far in 2025 we’ve seen 90,000 starts, and it’s June. So maybe we’ll hit 200,000 – or less than half the fed’s makebelieve target.

So, strike one.

Then there’s this, from CMHC’s chief economist: “As we increase housing over time, house price growth will come down.” Note he did not say prices would be falling – just the rate of growth in prices. In other words, returning to 2019 levels – a drop of 27% from current levels (atop the 15.7% decline since 2022) is unserious.

Strike two.

Finally, chew on this logic from Gregor’s troops:

“Housing supply will be increasing. This will start to slow the growth in house prices. Canadians will then be a little bit less keen to bid aggressively on housing … and they’ll diversify their savings into other money markets or the stock exchange or whatever. And so the pressure will be taken out of house prices.”

So there you have it. The price of real estate won’t actually fade until demand declines. So if a house becomes less attractive as a financial asset, no longer yielding consistent capital gains, Canadians will shun property in favour of  ‘money markets or the stock exchange or whatever.’

But that’s already the case. There are no capital gains in real estate currently,nor have there been for a couple of years. Prices are down, especially for condos, but affordability hasn’t improved given mortgage rates and the increasing costs for taxes, insurance, fees, utilities and maintenance. Property buyers are vanished, yet there’s no evidence billions in savings and borrowings is being diverted into ‘stocks or whatever’.

Strike three. The agency is rogue.

Now this is interesting. What does ‘affordable’ mean when the politicians throw that word around?

As stated, most people think a home is within reach if it costs about 30% of gross household income.  CMHC is telling people that is an achievable goal.

That ratio in 2019 was 40.3% of income. Now let’s review where we sit today. This is the latest real estate affordability reporting from RBC:

The insist that by building more houses, convincing people to divert their money into financial assets instead of a home, that affordability can be vastly improved. In fact, “doubling projected housing starts over the next decade would bring the figure down to 41.1 per cent of income being allocated for homebuying nationally.”

So, in 2035 more plentiful houses will be as easy to buy for the average family as they were in 2019, which is when we already had a ‘housing crisis’ which was exacerbated by lower mortgages and a global death watch? But we can’t actually build them? Sure.

The only thing more fantastic is that we’re supposed to believe it.

Carney’s doing great with Trump. But Gregor’s gotta go.

About the picture: “As requested, more dog pictures!” writes STephen. “This is Bingo, our hurricane rescue Frenchie, helping clean up after dinner. His sister Dixie, also a rescue, is a little less enthusiastic but helpful nonetheless. Together these two keep us entertained and distract us from that crazy world out there! They love all you do, Garth!”

To be in touch or send a picture of your beast, email to ‘garth@garth.ca’.

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