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Hello, everyone. Welcome to Economic Impact. We are September 8th, 2026. And Stéfane, happy to be with you here today. So, instead of just going through geopolitics as we do usually, today, we're going to do it, but through the lens of the bond market.

I think it's a good way to start given the move that we've seen in recent weeks, recent months, I would say, Nancy. So, note that, you know, bond markets globally, the 30-year bond yield is approaching levels that haven't been seen in over a generation. So, you can see that there seems to be some frustration in the bond market regarding the geopolitical backdrop.

Yeah. And here on your slide, Canada is in the middle of the pack, which is different.

So, we have to be honest, we're all trading at a spread to the U.S. bond market, right? That's the locomotive of the bond market. So, we're all going to trade higher, then the U.S. moves higher. Now it's a matter of how much higher, how much faster or slower can we grow. So, the good news is that there's a considerable spread from a Canadian perspective and note that, from the first time in my career, the Canadian bond market, bond yields is actually at the same level or lower than they are in Germany or Japan. So clearly, we're moving higher, but not as quickly as other economies. So, that's good news.

Yeah, and why is that?

Well, we have still had a good reputation in the eyes of global investors. We're trading at a significant spread to the U.S., more than 100 basis points. That reflects roughly 2 important things. We have a good reputation regarding fiscal policy. Our deficits are quite modest compared to other countries. And the other thing to remember is there's an energy shock globally. We're not, actually, that tends to benefit our economy, helps government revenues, so it helps to keep fiscal, an anchor on debt to GDP ratios.

And very different from the United States.

Yes. So, what's driving bond yields higher is frustration at the investor level who now demand a higher term premium. The term premium is the minimum compensation that you asked before even considering investing in a 30 year in U.S. Treasury. So historically, you demand, the average was 100 basis points. So, the first one-point percentage point belongs to you, the investor, to compensate me, the investor, for uncertainty. Now, over the past decade, the term premium was negative. We were actually subsidizing the U.S. government. You were giving the first 50 basis points to the U.S. government thinking that inflation would be very low, fiscal policy would be.

Controlled.

Controlled, no longer the case. So, you're converging on the historical average so that, when you speak to the term premium, you speak to the geopolitical uncertainty and the lack of visibility on fiscal policy and perhaps the volatility on inflation.

And it seems that the history repeats itself in terms of the debt in the United States. Oh, lack of discipline at the fiscal level is clearly evident on that chart. This is debt to GDP, Nancy, and for the past 20 years, the Congressional Budget Office said, well, they won't, you know it's going to come down, or it won't trend higher or faster. Now the reality has caught up to the Congressional Budget Office and we're now seeing debt to GDP levels that will exceed the all-time record high that was seen after World War 2. So, that speaks to the term premium that we saw in the previous chart. You no longer believe that there is fiscal discipline in the U.S.

Mhm. And what is happening in the expectations for the opening of the Strait of Hormuz?

Okay, now you want to go to the inflation backdrop. That could be another element of frustration on the term premium. And until recently, well, this is the first time that this happened since the start of the conflict. The market was all saying "Oh things going to be back to normal by the end of 2026 for sure". And then those probabilities collapsed in October. And as we speak today, there are odds of less than 25% probability that the Strait of Hormuz gets back to normal by the end of this year. So, this has ramifications for the global economy and the supply chain.

And this is not refined petroleum. This is pure, gross exports. So, what happens?

Yeah. So, crude oil is interesting to look at because that speaks to crude oil. But the reality is that this is too simple. Because the reality is there are wars in Europe, refineries are being destroyed in Russia, there's lack of refined petroleum exports from China because they're having issues by getting supply from the Strait of Hormuz. So, at the end of the day, Nancy, you're right to allude to the fact that the economy doesn't work on crude oil, it works on refined petroleum, right? And pressure on refined products is the highest we've ever seen. So, the crack spread as a ratio of crude oil prices, that's 70%. So, we've never seen, ever seen this before. The circle averages 20%. This is a 5 standard deviation move. So, that speaks to the importance of the supply shock on refined products that could impact the economy. And there might be some persistence in that because you don't rebuild a destroyed refinery overnight. It takes many, many months.

Many months, if not years.

Yes.

And, what about Canada?

So, when a situation like that happens, people tend to say, "Well, which economies are less impacted?" Canada is in net beneficiary because we export crude oil, we do some refined products in Canada too. So that helps boost economic activity. And this is exactly what we saw in Q3 with, Q2 with GDP exceeding 3%, well above expectations. It's the first time since 2025 that Canadian GDP growth, the red line is above the blue line, Nancy, and the boost in Q2 was due to gross domestic income. So, the green line speaks to the impact of higher commodity prices, higher energy prices, and that was up 8%. So, consider that the wealth effect coming from higher energy prices, so higher profits, higher government revenues, you can deploy more programs to help, you know, impacted industries, yes, etcetera. So, 8% was the biggest increase in 2022, so that was the boost to the economy that we saw in Q3.

And I just want to note that when we had our Economic Impact a couple of months ago, you said even though there are two quarters, it is not a.

Sufficient condition.

There you go, not enough for a recession and then again, you were right.

So, we said it back then, two consecutive quarters of negative growth is not a sufficient condition to call a recession. And behold, the history was revised with the Q2 release and there was no second negative quarter. So, if you didn't believe me before it wasn't sufficient, then you have the proof that there weren't even 2 negative quarters, so history has been revised. So, I think the recession in Q1 is a foregone conclusion. There were no recessions.

That's great. And what happens in the markets?

Well, GDI surges, profits surge, S&P TSX does well, Strait of Hormuz not reopening, so the energy sector was a boost to the S&P TSX. Banking sector didn't do so bad either. Gold did okay also. So, yes, the S&P TSX in geopolitical turmoil is somewhat of a safe haven in the eyes of investors. So far, so good. But let's not be complacent for the months ahead.

Yeah, definitely. And as I said in the opening, we are September 8th. So as of midnight and one minute today, we have the tariffs from Canadians on U.S. goods.

So, counter tariffs in reply to the tariffs that were imposed. Big tariffs were imposed on 50% of certain Canadian products back in August that have lifted the U.S. effective rates on Canadian products from 3 to 6%. So, you can see that, until recently, we had a considerable advantage to the rest of the world when it came to U.S. tariffs. That considerable advantage has melted away. So, Canada opted to deploy a policy of counter tariffs to say, "Well, no, this cannot remain in place".

Yeah. And it's tough for Canada, of course, but there's a lot of states that are also suffering south of the border.

So, the rationale for embarking on a counter tariff policy with the U.S. is the fact, reflects the fact that, contrary to what the White House is saying, Canada is important to the U.S. economy because it's the main export destination for 27 U.S. states. So that dwarfs the importance of Mexico, which is the most important, you know, export destination for 10 US states. So 27 U.S. states — I think by putting in place these counter tariffs, you might get some of the governors, senators, politicians from all these states to interact with Washington, the White House and say, "Well, no, it's important. It could impact my jobs market by having a negative impact on my export markets". So, I think when you look at it this way, two-way trade is important. Nancy, let's not dismiss this. And yes, Canada is important to the U.S. economy, even though the White House won't admit to it at this point in time. But this is the way to get talks, you know, maybe, or negotiations, you know, back on track. And I think, I'm still hopeful that we'll have a positive outcome in the coming weeks, but it's unfortunate that we had to come to tariffs, counter tariffs on counter tariffs on counter tariffs. So, let's hope that this does not escalate because if that escalates, it's not good for U.S. inflation, not good for the U.S. economy. So we are, as I said before, the solution for lower U.S. inflation down the road, which is, you know, important from a political standpoint.

Well, thank you, Stéfane, very interesting graph. We will need to read the research that you and your team produce in the coming months because, as you can see, things are moving fast. And thank you for sharing your knowledge with us, and we'll see you soon. Thank you.

Hello everyone, we are Wednesday, July 15th, 2026. Stéfane, a pleasure to be here with you again today. So, tell me, are the markets running out of speed?

Geopolitics, oil prices and the Strait of Hormuz

Ah, they seem to be. Last time we saw a new record high on global equities, Nancy, it was the beginning of June. Notice that, you know, at the beginning of the Strait of Hormuz intervention, we had a correction, a big rebound stalling. And I think there's some geopolitics undermining the markets at this point in time.

I think so. So, you know, probably has an impact on the oil price for sure.

So, it coincides with renewed upward pressure on oil. Notice, Nancy, that we're still very far from the levels that exceeded $100, but it's.

Going up.

It's quite the rebound in recent weeks with renewed tensions.

And of course, that's mostly related to the Strait of Hormuz.

So, doesn't matter what politicians say. Politicians say, open or not open, traffic says it's not open. So, if you look at the underlying data, you can explain what's happening on the oil prices via traffic in the Strait of Hormuz, which is not reopened. So even though we put it, is it open? That is the question or not, it's not reopened at this point in time, hence the pressure on oil prices.

And it also has an impact because there is limited availability of various products, therefore.

Refining capacity, fuel prices and transportation costs 

So, there's something important to note. So, there's the Strait of Hormuz, but there's also a war elsewhere in the world. And what's happening in Europe where you're seeing destruction of refineries, particularly in Russia, which accounts for 11% of diesel sales around the world. You're seeing that refining, the cost of refining oil is surging because there's less refined capacity at refinery levels. So, crack spreads, which is one way to look at the price of refined products if you want, actually exceeds what you saw in 2022 that started the beginning of the war in Ukraine when crude oil was much higher. So what that means, Nancy, at the end of the day is like the economy works on refined products and they're up significantly, whether it's gasoline, diesel, diesel, and it shows up in a global supply chain. So yes, crude prices have rebounded. They're still below where they were before, but gasoline and diesel might hit new all-time highs in the coming week.

Yeah. And that's what consumers feel when they go to the pump, right?

Yeah. And remember, Russia actually said that they were restricting exports of diesel for the next month. And if there's more refinery capacity that's destroyed, probably that will last longer. So, hence the impact on global transportation costs.

 Supply chain strain and inflation risks

And it will take time before everything goes back to normal, right?

So, politicians say something, betting markets say something else. So according to betting markets, you're not gonna reopen by the end of July, 2% probability, end of August 13%, end of September 27%. We're below 50% until the end of the year. Nancy, what that means is that you're going to continue to impact the global supply chain. So, I know U.S. inflation was weaker than expected this month but be prepared for potential upside surprise.

And obviously, let's say it opens December 31st. The next day, everything will not be back to normal. We felt that during the pandemic, it took months before things.

You have to replenish inventories, yes, you're right. So, probably the key story here is to say global supply chains, you know, the pressures on global supply chains are the most acute we've seen since the COVID recession. Historically, that's accompanied with positive or if you want negative surprise in the sense that inflation is higher than expected. So, this is why we're still not out of the woods. So, coming back to your first question, are the markets running out of steam? Well, the markets are looking at this– How do we assess the impact on the global economy and earnings in this situation? 

Ambitious earnings expectations amid uncertainty

And even so, since the beginning of this conversation, we've had, you know, geopolitical not so good news, not dramatic, but not so good. But then again, markets expectations are surprisingly high.

So, this does not necessarily show up in terms of earnings expectation because right now, as we speak, the expectation is that virtually every large region of the world will deliver more than 20% earnings per share growth so profitability will increase by 20%. It's you know, listen, it's possible. I just want to say these expectations are quite ambitious if you have more pressure on the supply chain in the coming weeks.

And what's surprising is your graph is that there's no negative, there's no one single digit.

No, no double digit, minimum double digit. So, as we said last month, the expectations are still the best earnings per share growth globally ever seen outside a recession recovery. So, market surprise for better news, not worse news, hence the need to watch what's happening on the geopolitical front in the coming weeks.

Bank of Canada, interest rates and GDP growth 

So, one good news we got this morning is Bank of Canada.

Well, if not moving interest rates is good news, yes, it is because we're keeping our.

But for our consumers it is.

Well, most of our, you're absolutely right, most of our clients would appreciate that and we remain in a jurisdiction where interest rates are lower than the rest of the world. So, that's good news. And the other good news, Nancy, is the Bank Canada, actually, they stayed on the sidelines, and they recognized that well we might see a better rebound in GDP than we expected in the second quarter, remember we had two negative quarters. Now we're set to rebound 2% in the second quarter. That's good news.

Employment strength and Canada’s economic resilience

Yeah. And you have another one about employment.

Oh yeah, so GDP rebound is not very important for me if it's not accompanied by a jump in employment. And the good news is we seem to be confirming better news on GDP with the June employment data, particularly for people age 25 to 54 who are critical for the credit cycle, right? So, new all time high on employment for people 25 to 54. Now, Nancy, I know you're going to tell me "Yeah, but you told me population growth is negative this year", but permanent immigration is still up and it really has an impact on people 25 to 54. But yes, population will be down because many foreign students or temporary workers that tend to be younger will be negatively impacted. But that's good news for the credit cycle and for potential GDP rebound.

Oil production, trade diversification and the Canadian dollar 

Good. So, you have another good for us about the production level that would be increasing in Canada.

So, people have been talking about trade diversification. It's hard to do in the short term if you don't tap into natural resources. And so oil production's on the rise in Canada and the expectation is they will continue to rise because there was a new pipeline announcement between Ottawa, Alberta, and British Columbia that seems to be inclined to provide more oil to the rest of the world. 90% currently goes to the U.S. and if you want diversification, you need a pipeline. So, from that standpoint, it's positive news in terms of diversification and note that from a trade balance perspective, it will help support the Canadian dollar. So again, there's upside potential here for oil production in Canada. And if you want to become an energy superpower, you know, it goes with that title. So again, I think that this is constructive from a trade diversification perspective, which the government actually is hoping for. 

So, a lot of good news, Stéfane. So even though the microeconomic is very volatile, I mean, you've brought us a couple of very interesting news today. So, thank you for that.

Pleasure.

And for all of you, I hope that you will enjoy the summer and that you will take the time during your vacation to reflect on your situation and talk to your advisors. And we will see you again in August. So thank you. Thank you, Stéfane.

Welcome to Economic Impact. We are June 10th, 2026. Stéfane, so happy to be here with you again today.

Happy to be here with you.

So, I'm going to start hard. I'm going to ask you if we are in the most feared word for an economist. Are we in a recession?

That's a big word.

I know.

Yeah. I think it's important to demystify what's happening there. You know, the fact that people qualify recession as two consecutive quarters in that negative growth is not sufficient nowadays, not in a globalized economy. So, there were special factors that impacted Canadian GDP in the first quarter. But listen, I'm not here to be complacent, Nancy. Clearly, if you look at it from a year-to-year basis, you know, we're at 0, slightly negative. The U.S. is outperforming. Clearly it was not a great quarter, but it does not qualify as a recession.

So, that's a good news. You start with the scary graph, but it's a good news.

Yes. More importantly, what's happening for Q2 and the good news is that employment is rebounding and it's not just any type of jobs, it's full-time employment that is now back to an all time high. And the increase that we saw in May was the biggest increase in Canadian history outside the COVID episode. So, clearly.

Something.

It wasn't great in Q1.

Yeah.

But whatever it was, it wasn't a recession, but things looked much better because that will sustain consumption. Consumption was still positive in Q1, consumer spending. But with this type of job creation, it will remain resilient in the second quarter. So, I have the basically, the biggest component of GDP that is going to show a rebound in Q2. So that's good news.

So that's why Bank of Canada didn't move its rate this morning?

Yes because if they thought we were in a recession, let's be honest, they would have actually cut interest rates, not keep them where they are right now. They recognize that growth is underwhelming, but they will not also at the same time conclude that this is a recession. Not with what's happening on the job market.

That's good. And what about our GDP? How's it going?

Well, GDP, you mean the most important component after consumption.

Trade surplus.

The trade surplus. So, we spoke about it a few weeks ago as Canada normally benefits from higher energy prices. We have the confirmation for Q2, Nancy. New all-time record on net energy exports which brought the trade balance back from deficit into surplus. So, I have the two largest components of GDP in Q2 consumption that's doing better and the export sector. Now all we need is more business investment. We'll see what USMCA later this year, but I have a GDP rebound in the makings for Q2.

That's interesting because we had one scary graph, two good news. But then again, our loonie is the lowest that we've seen in so many times.

Well, it's.

And people are gonna take their summer vacation now, right?

Yeah, well, let's wait a few months. I don't think there's much more downside to the Canadian dollar at this point in time unless USMCA is completely derailed. But the reality is we have the worst performing reserve currency over the past month. So, we're actually back to where we were at the worst of the Hormuz.

Beginning of.

Beginning of the intervention in the Strait of Hormuz. So, this is not good news. This is frustrating for me as an economist. But we had predicted that Q2 might be softer and.

It shouldn't go down, right?

We're happy to stabilize it at this level here unless, as I say, there's a derailment in USMCA negotiations.

Absolutely. And what about gold? I recall one of our first calls of the year, we had called it for $5000 and it did surpass.

So yes, it did. And the reason we're here, Nancy, is because gold prices are not doing very well right now. We started the year at more than $5200. We're back down and we had said that gold will be in a $4000 to $6000 range, probably going to retest 4000, hence serve you that we were more cautious on the Canadian dollar. So, things are unfolding pretty much according to the scenario. And yes, you're absolutely right. What's weighing on the loonie right now is the performance of gold.

And when I was in college and university, I remember that we used to call our Canadian dollar the petro dollar, but it seems that it's not working that way anymore.

Well, we're not a petro dollar right now. We're more of a golden dollar because the correlation, again, intermarket correlations are not stable through time. So, you're absolutely right. Generally speaking, we should be positively correlated with oil, but now it's an inverted correlation. So, what is really, you know, driving the Canadian dollar is the price of bullion followed by the, you know, the interest rate differential with the U.S. But the price of bullion has been very, very important in determining what’s happening with the Canadian dollar. Oil might, you know, become positive in the months ahead. And I mean this can be temporary, but what's happening on gold has more importance on the Canadian dollar than it's ever had in the past. And that speaks to the geopolitical environment, right?

Of course, things are different, as we could say. And what about energy? Electricity?

This is so important. I mean, the new electricity strategy announced last month, and we spoke to this at the beginning of year. It doesn't matter. You might have all these nice plans for the Canadian economy down the road, reindustrialization, etcetera, but if I don't have access to electricity.

You can't, you can't do anything.

I can't execute. You're absolutely right. So, what happened in May, so yes, Ottawa signed a memorandum of understanding. They actually signed it off with Alberta and people are saying, well, that's just to please Alberta. It was more than that because by tabling the new electricity strategy, which aims to double electricity grid by 2050, they made natural gas or transition fuel. And that was not just to please Alberta, it was critical for the Ontario's electricity grid, which now relies more on natural gas than hydro to generate the electricity. And there's still capacity here on natural gas. So, it's just, we're not abandoning.

No, it's a transition, right?

The transition has been lengthened and that's critical because there's no way that we can participate in the AI revolution if we can't build data centres, if we can't reindustrialize. And the spare capacity that we have on the grid in Canada comes from natural gas. So, we need to be pragmatic. And for the first time in a decade, Ottawa became pragmatic, realizing that our growth potential was being seriously impaired if we did not declare natural gas a transition fuel.

So, that's another good news. So, it should translate in good markets, shouldn't it?

Well, it's— to have been good markets globally so far despite the geopolitical stress. So, but keep in mind this is quarter to date in Q2 and this is as of June 9th, last night, so basically.

39 days.

39 days and you're already up 23% for, you know, emerging markets, the S&P 13%, you know, the S&P TSX. These are performances that you see over the entire year. So, all I'm here to say, Nancy, yes, I respect what's happening in markets, but please do not necessarily expect a repeat performance in Q3 and Q4. A lot of good news is currently embedded in profit expectations and market performance. 

Okay. And what about the impact of the Strait of Hormuz still being closed?

So, hence the challenge of delivering strong markets like we've had so far in Q2. Inflation. It doesn't work when you have too much inflation, which might prod the Central Bank. So in Canada, into action. So, in Canada, we know the Central Bank's on the sideline. In the U.S. the issue that we have right now is that, you know, until recently, people are saying, "Well, the commodities' in short supply, is anything related to AI, nothing's happening elsewhere that would lead us to believe that inflation is going to be an issue in the next few months." But look what's happening in recent months, like for three months now, resins' an issue, aluminum.

Steel.

Steel, a first month now.

Yeah.

So basically, the longer you shut down the Strait of Hormuz, the more impacts you're gonna see on the supply chain. And they're becoming much more apparent in the U.S., hence the inflation numbers that were much stronger than expected this morning.

Absolutely. And it's affecting definitely the supply chain.

To put things in perspective, yes. And if you want to look how bad it is right now, it's the most stressed supply chain in the U.S. that we've seen since the COVID recession. So, it is a big deal. And you know what happened here, inflation actually surged at a higher level than expected. So, keep this in mind. Inflation is not, we're not out of the woods on inflation. So, the Central Bank might surprise us with a rate hike. So, that's the reason why markets will have to tread more carefully in the months ahead.

Okay. And what about the closing of the gap with China? I know you love to have a slide on China so.

Yeah, well, it's the AI stuff. So, there's a lot of excitement about, you know, high profile IPOs that are coming into the market.

This Friday.

Related to AI. And I just want to put things in perspective here, Nancy. I understand it's an industrial revolution. I get that. But unlike 2000, the U.S. doesn't have the monopoly on the new technology. Let me explain. Back in 2023, the U.S. had a comfortable lead about AI model performance. But China is using an open-source model to try to catch up to the U.S. and they've been able to close the gap. More importantly, also, or also China is able to offer these AI models at one seventh of the cost that you have to pay for the U.S. So, I'm just saying here.

There's competition.

There's a competitive environment so don't believe that the Americans, you know, dominate the way they did back in 2000. There are serious considerations to be made here about what's the profit outlook of these U.S. corporations if they have a competitor that's just that good and much cheaper to deploy. So, that will be the important test for markets in the weeks ahead as whether these profit expectations are realistic or not.

And that's why, I mean, our listeners need to talk to their advisors and read the research before deciding to invest because yes, you could be trying to buy the IPO on Friday, but there's also other ways to invest in this trend, in this AI movement without having to actually buy a certain stock.

You're so right. What we do know with conviction is the AI revolution is very energy intensive.

Yes.

As it turns out, there's a lot of energy in Canada and we're actually allowed to deploy it now under the new electricity strategy. So, there's all a bunch of ways that you can play it directly, buying these companies directly, or indirectly. So yes, I do believe it's an AI revolution. But, you know, sometimes, you know, there can be some fraud and yes, there's profit expectations down the road, but we have to play it according to our risk tolerance at this point in time.

Definitely. So, thank you very much Stéfane. I again invite you to talk to your advisors, read the research to make sure that whatever you choose in terms of segments does fit your risk profile. It was amazing doing this little mission today, you and I, and I really appreciate doing this. If you are going on vacation, please take the time to rest and I'll see you in a month.

Thank you.

Thank you.

Hello everyone. Welcome to Economic Impact. We are Tuesday, April 28th, 2026. Stéfane, great to have you here as always.

Likewise, Nancy.

It seems like nothing happened since the last time we spoke a month ago.

Yeah, well, many things happened, but we left a month ago, oil prices were $100. They're back to $100. So, nothing has changed. It's still one of the important oil shocks that we faced since the 1970s when expressed in 2026 dollars. So, it's a considerable oil shock that refuses to go away.

Hmm, something else happened in Canada, right?

Um, yes, we did get a majority government for the first time in over five years. So, that might be something to celebrate to the extent that optimal policies are deployed to bring investment back to our shores. That would be a positive.

That would be. And last time we spoke, now we're day 59 of the Iran War, so what's happening with the Strait of Hormuz?

Nothing happened. It's still closed, unfortunately. And we do monitor this on a regular basis, so I encourage people to go to our website. We have a special product called Monitoring the Iran War and people will be able to stay informed on that one. So unfortunately, still shut down and we are running out of inventories aside from oil. It's a big deal. So, the manufacturing supply chain is still held hostage from the shutting down of the Strait of Hormuz.

So, we're all just out of COVID with this shock and now back to another shock where it's impacting our reality.

Yeah, the last time the supply the manufacturing supply chain was impacted, you're right, you have to go back to COVID. And at this point in time, when you look at the probability by Polymarket of, you know, seeing a reopening of the Strait of Hormuz, you know, roughly 2% for the next, you know, we've only had two days, right.

Not gonna happen.

And then you only have 40%, below 50%. So, it looks like not reopening before June. So, you have another month of depleting inventories. That's going to have an impact on the supply chain. 

Definitely. And there's a lot of things that are going through the Strait of Hormuz.

Yeah.

Not just gas.

No, you're right. And we mentioned it last time where we didn't show it. So, this time around, say roughly 20% of energy flows, whether it's LNG or crude oil goes to the Strait of Hormuz. But look at helium 33%, aluminum production 8%. This has been destroyed. It's not coming back online anytime soon. You wanna do, if you want to grow food, you know, you need fertilizers. That's a big deal. Plastic, we have plastic economies. Well, that's also really important. 20% of NAFTA goes through the Strait of Hormuz. So yes, the supply, the manufacturing supply chain, I would argue is more negatively impacted than when we saw the Ukraine oil shock.

Wow. And fertilizer. So, finally spring is here in Canada so we're going to grow our gardens, vegetables, fruits, probably the prices are going to go higher.

Well, if energy prices go up and fertilizer goes up, I think it's a pretty good chance that food prices will go up. So yes, Ottawa said we're going to give you a rebate on GST. But, you know, reopening the Strait of Hormuz will have a greater impact in the short term, you know, GST rebates. So unfortunately, yes, food prices are going to be increasing in the coming weeks.

And even though this is all happening, we have the best market, equity market ever.

A new record high as of yesterday. It's a little bit tougher today. So, new all time high. There are no precedents going back to 1956 for an oil shock that is accompanied with a new all time high on global equities. It's fascinating, it's unexpected. The market will find, will always find a way to humiliate, you know, people that say, well, you know, I thought it was going to be more negative. The market has found a way. And it's not just, you know, global equities that are up, Nancy, it's even more than that. Every asset class is up here today. Bonds, you would think more inflation not good for bonds, but everything is up.

This was negative the last call we did and now it's back up.

It's back up. So, you did have a, I'll give you that. Yes, you're right. We did have a drawdown of roughly 8%, but 8% is very small considering that in every prior oil shock, you were down at least 20% on U.S. equity. So being down only 8% was quite the achievement when you think about it. And now we're back up 5%. It's a good point, Nancy. There was a market drawdown, but it was very short-lived and people said, no, this thing is going to reopen with no impact on the medium-term economic outlook.

And look at this emerging market.

Up 15. We're not bad, we're the second best. So, good news on that one. Yeah.

So, Asia has a very interesting emerging market. And I guess that's what's contributing to this amazing number.

And they're not supposed to be up because they're theoretically the most negatively impacted by the shutting down of the Strait of Hormuz because you impact global manufacturing, which is mostly located in Asia. But Emerging Asia is saying the best upward earnings revisions since the Asian crisis, which was a massive disturbance to the economy 1997-1998. So, this is unprecedented. And again, it's also global. So, these earnings revisions reflect not just the fact that, yes, Samsung, semiconductors, Korea seeing a big revival.

Artificial intelligence, all of that.

True, but there's pricing power also returning to Chinese producers because they control 32% of global manufacturing. So, if you shut down the ability to get inventories from the Strait of Hormuz and if I control 32% of global manufacturing, Nancy, I will raise prices.

Of course.

And that's exactly what's happening right now.

Of course. And if we look at your predictions or the earnings per share.

Not mine, not mine.

Not yours.

They're not mine.

The ones that you're showing.

This is company guidance. So, we started the year and we said, oh, my God, these profit expectations are ambitious, 15%, that would have been 50% higher than last year. That's a big deal. You know where we are now, 22%.

53.6.

For Emerging Asia, emerging countries generally speaking, yes, 53%. Aside from Japan, everybody's seeing an acceleration earnings. As I said, we flagged this a few months ago and said no, that's quite ambitious. Now it's even more ambitious because people are saying, well, companies will be able to raise prices and therefore protect profit margins. But I don't know again that I can promise you that everyone's going to be better off if you shut down the Strait of Hormuz for another month.

Definitely. But those are very impressive numbers.

And if you do, there's going to be higher inflation. If there's higher inflation, what do you think central banks are going to do?

They're going to raise interest rates again. U.S. dollars in all of these circumstances, what's happening? 

It's risk on.

Risk on.

Risk on means U.S. dollar down so we're back to the cyclical low. Back to square 1.

So, there's no refuge anymore in the U.S. dollar.

No, people are not fearing the outlook. So, they're saying we're not taking refuge into it. It's not the safe haven that I need at this point in time. It's a reflation trade. It's a steepening of the yield curve. So, people are saying the worst is behind us. I just can't promise you this right now, Nancy, because we don't know the full dynamic of shutting down the Strait of Hormuz for another month. Will I disappoint on the earnings front? And you better not disappoint me if I'm expecting 22% PPS.

Of course. And I know on this you and I don't agree, but even though the U.S. dollar is going down or back to what it was at the beginning of the year, for us Canadians wanting to go on vacation because it's May very soon, we don't really see.

That's the frustration of somebody traveling to the Eurozone because the Canadian dollar's at 1.60 against the Euro. And I agree with you, our fundamentals are better than the Eurozone. So, I will tell you we should have an appreciation of the Canadian dollar, but not in time for your vacation. But I do believe that with what's happening in commodity markets, we are likely to be noticed from foreign investors, and I think that could be positive for the Canadian dollar.

That's great. And Canadian, Canada, it's not just oil.

So, listen to this, a cheaper U.S. dollar normally means higher commodity prices. That's exactly where we are. So, energy, which accounts for 52% of our commodity exports from Canada, is at a very high level. But there's not just energy. There's metals which is 23% of commodity exports. Near, at a record high. Agricultural products, yes, I know higher food prices, but some provinces will benefit from that. So, aside from the forestry sector, which is being pummeled by.

The tariffs and.

Oh my God, prohibitive tariff structure from the U.S., the rest is doing okay. And that leads to a situation where governments can afford to be a little bit more generous than they had assumed before the Strait of Hormuz.

And there's something special this afternoon.

Yes, we have a fiscal update. And just because of what's happening to commodity prices, I think the federal government will need to upgrade its forecast for revenue growth from 3% to 5%, providing them with the ability to, if you want, experiment with new ways of attracting investment to Canada, such as the sovereign fund mentioned by the Prime Minister not too long ago. But notice for some provinces such as Alberta, which was tabling for only 1.9% revenue growth to looking at 7%, So a $9 billion deficit might turn out to be a $20 billion surplus. For Saskatchewan, you're talking about, you know, close to 10% because the price of fertilizer's moving up and down the potash. Yeah. So that's a big deal. So, all in all, every region is benefiting from higher commodity prices, but it's most apparent at the federal level and in Alberta and Saskatchewan. So, that's see, that's the positive wealth effect that comes from higher commodity prices. And that's the reason I think the Canadian dollar could appreciate in the coming months, provided that, you know, foreigners are saying, wow, Canada's for real. This fiscal update to be tabled this afternoon will entice us to invest more in Canada and we're starting to see it in the energy sector, right.

So, I know what you're doing this afternoon.

Yes, I have to monitor what Ottawa's doing and I'll be debriefing you. It's going to be on our website if you want, and we'll see what happens next month. But yes, the message today again is like, I don't know what happens if another month of shut down the Strait of Hormuz. I can't promise to deliver all these profits.

So, thank you, Stéfane. Always interesting as usual. I guess it's important to repeat that every research that you do and the graphs for the war in Iran, you can follow. You're gonna have the link to our website. So, definitely mark this up and go and see every day, every other day so that we can benefit from your knowledge and the one from your team. And for all of us listening to this, there's a lot of volatility. There's a lot of expectations. So, I guess the best thing to do is talk to your advisor, stick to your plans. It's not because the markets are moving that I will change my date of travel or retirement. So, stick to your plans. Go and see your advisors. And again, Stéfane, always a pleasure to be with you. 

May I say, make sure your jet has jet fuel on the way back, right?

On the way back. To go it's okay, on the way back I might have to stay two days extra, but we'll see. So, thank you everyone, and we'll see you next month.

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