So how does the global economy feel about Trump? Not surprising, the consensus appears to be uncertainty. While the stock markets don’t appear to be bothered by him, yet, the staples of a healthy global economy are showing fear. The Baltic Dry Index (the blue line) measures the demand for shipping capacity versus the supply of the goods being purchased for delivery.  If demand for goods was legit than the price of shipping would increase in tandem.  But that is not the case today.  

On February 14, 2025, the Baltic Dry Index was 51% lower than a year ago while the CRB Index, which measures a basket of nineteen commodities (the green line), increased 21% over the same time. This tells us that global economy is not stockpiling inventory, and either price inflation or speculation is making up a large chunk of the value of the commodities in the index.  If current commodity prices were a function of physical demand, then the Baltic Dry Index would be spiking as well because the commodities would be on the boats.  But it is not. The demand for shipping has declined.  According to the chart, we are in unchartered territory.  It should be noted that the chart shows it takes a minimum five-years before the Baltic Dry Index spikes again after it hits is lower trading range.

The stock markets have decoupled from reality. The average historical P/E Ratio for the major stock indices is roughly 17-times. As the chart below shows, today, markets are trading in very expensive territory.  There is no justification for today’s value other than speculation.  

P/Es & Yields on Major Indexes | Market Data Center | Barron's

To beat Trump we must steal his business. Contrary to what he says, L.A. will need our lumber for at least a decade and they will always need our energy, which was confirmed in the President's speech to the World Economic Forum when he stated they need to double their electricity supply for AI by 2030, which is impossible.  If not careful, the U.S. economy will be in trouble by year end due to Trump’s backward policies.

I do not believe he wants to impose 25% tariffs on us, or Mexico, but he recognizes how weak our leaders are and wants nothing to do with them. Who can blame him? Perhaps tariffs on his closest neighbours is a strategy to benefit all three countries by forcing an election in woke Canada and a cartel-friendly Mexico because a real leader knows that long-term commitments cannot be trusted when they are signed by those who are weak and corrupt.

Few leaders will ever trust Trump and will try to avoid him, just like they do Trudeau.  This could force the  U.S. dollar lower.  Hopefully by summer we will have a real government in Ottawa and foreign investors will be directing investment monies toward Canada again. Once this occurs,  our Loonie could be worth 75 cent U.S. within two years.  It must be remembered  Canada has more potential than any other country.  It is time we take advantage of this.

In the meantime, be patient in your investing and do not speculate.  Everything is lining up for a major correction.  Continue to favour capital preservation. 

There is a simple reason why our dollar slipped below $0.70US: Our leaders do not care about the financial well-being of Canadians.  They prefer to scare away investment and discourage savings via high taxes and record deficits.  They want to accommodate the heavily indebted, most who would benefit from bankruptcy, rather than reward savers for carrying the economy.  Without savers, lenders would not have money to make loans and there would be far fewer successful domestic companies to invest in. 

The world sees Trudeau as trying to make Canada a third world economy because that is exactly what he is doing. His climate extremism and wasteful spending is destroying our standard of living. What are outsiders supposed to think when Trudeau gifts hundreds of billions of dollars that we do not have to useless green investments and wars when he is responsible for the largest demand for charity in his own backyard outside of the Great Depression?  

The longer Trudeau stays PM, more the risk grows that are our dollar will hit $0.68US this winter.  Come the spring, and if he is still in power, the Loonie will fall to 65 cents. This alone lowers our national wealth and is another example of how Trudeau is trying to destroy the middle class.   A government must always protect the currency and try to make it move higher. On the international front a strong and stable currency attracts long-term investment and domestically is slows inflation which accommodates lower interest rates.  Both increase the purchasing power of the consumer. 

Trudeau should have spent his first day in office continuing Harpers’ habit of organizing meetings between Canadian businesspeople (rather than his MP’s)and their counterparts in Asia, South America and Africa. Getting trade pacts means less reliance on the Americans and lowers the risk of tariffs. This practice proved to be successful for Canada which the stronger Loonie under the Harper leadership proved. 

On a recent trip to Laos, Trudeau proposed a trade pact with Asian leaders.  Not one country took up the offer because like Trump, nobody trusts him.  Trudeau turned down offers from three allies to buy our natural gas.  He told them all it did not make business sense for them to buy our natural gas. As a result, Germany signed a multi-year contract with Qatar, a country where crooks and terrorists hide most of their wealth. Asian demand for our natural gas still exists but customers are waiting for the Liberals to leave.  A Conservative government will attract whatever foreign investment left under Trudeau’s reign, plus some. 

Canada must slice the government down from 38 cabinets to fewer than 20, saving billions of dollars.  I saw on tv a Liberal cabinet minister state he did not know how many cabinets there were.  Canada has one extra cabinet minister floating around doing nothing because most of the 38 cabinets  hire consultants to do the jobs they were elected to do. 

Trump knows our PM is a weak imbecile and he uses this to his advantage. Trudeau is afraid of Trump which is evident considering not once has he come to Canada’s defence. Trump is serious when he wants Canada to join the U.S., naturally with himself as President.  America would benefit greatly from all our natural gas, oil, base & rare metals, our grains, and especially our water. Trudeau must  be proactive rather than runaway, which is all he knows how to do.

The Liberals must be gone today, not tomorrow.  Ottawa is wasting too much time worrying about the 25% tariffs which will most likely never occur because Congress will not allow it. Things may be tightened but our economies are too intertwined and the less free trade there is the worse off both economies will be.  Fortunately, we have strong premiers in Ontario, Saskatchewan, and Alberta fighting for Canada to represent us while Trudeau hides.  Let’s hope our next federal leader cares for Canada and wants our country to prosper.  Canada must prove we can look after ourselves and concentrate on rebuilding the economy while ignoring the bully next door who is going to be 100% destructive for his country.

Everything the Liberals do pushes our economy closer to third world status.  Whoever dreamed up the stupid Christmas GST holiday and a promise of a $250 cheque for most Canadians should be fired.  This is going to cost every small business to convert their accounting system, only to have to undo the change in two months. More importantly, we do not have the money, so the cheque is going to be from borrowed money meaning the debt mountain will grow for no benefit.

If Ottawa wants to boost the economy, just cut taxes a point so every business and consumer benefits. Justin lacks any useful education and understands nothing about business or economics but still he demands we do not question any of his policies, no matter how ridiculous they are.  His train of thought proves he has never had to save, worry about a budget, knows nothing about what profits mean to the economy and has no clue that excessive debt is destructive.  He is the perfect example of a Golden Spoon boy.

One shining example of his stupidity is his belief the public service sector can support the economy, even though it did the opposite when all of his favorite dictators in history tried. Trudeau’s bureaucracy is the fastest growing sector throughout Canada, increasing by 40.4%. This gives us one of the world’s biggest governments to the determent of the country.  What has this accomplished? Nothing other than the largest spending on consultants in our history. Trudeau and his incapable minions have spent $21.6b on consultants since January 2023.  This cost $550 for every breathing Canadian.  Have you noticed the great job they have done? We certainly have not.   All we have seen is increased regulations, rights being restricted, a flight of capital, more crime, the most homelessness since the Great Depression, a worsening medical system, and a deteriorating military. 

There is stil hope. I have spent time in 39 countries and one thing you notice quickly is that Canada has so many opportunities.  Our only issue is a lack of leadership.  There is no will from Ottawa to take advantage of our opportunities.  With Ottawa’s help we can become leaders in nuclear power, the cheapest form of energy.  Our biggest asset is fresh water.  It has helped to make the Prairies one of the world’s largest reliable sources of wheat.  We have billions worth of undiscovered minerals stretching across the land waiting to be mined. Our workforce is educated and skilled thanks to our post secondary education which is amongst the best in the world.  

Canada has some of the largest reserves of ethical oil and natural gas in the world that the world demands.  However, Trudeau being the savvy business man he is, tells our friends Germany and Japan to take a hike when they came begging for it. Right after this Germany signed a contract with Qatar to buy up to two million tonnes of theirs annually for fifteen years.  Trudeau gifted the steady steam of taxes and high paying jobs that came with that contract to the Middle East. 

The bottom line is the longer Trudeau clings to power, the longer Canada's recovery will take.  The debt will continue to grow out-of-control, foreign investment will avoid Canada, and  our cost of living will grow. The future is Canada if we want it.  Only Ottawa seems to want to destroy rather than prosper.  Let’s hope we get an election soon.  When we finally get a real government Canada will boom.

Misconceptions: Falling interest rates and a war on fossil fuels will create a strong economy.

Fossil Fuels:

Climate change is an excuse used by the Greens to preach doom and gloom.  They love to call for ‘net-zero’ even though the earth has always greened in lockstep with every increase in CO2. This is a natural phenomenon that occurred even during Covid when the global economy shutdown.  It has become so insane that governments are trying to make companies use carbon capture to remove it from the atmosphere even though it is the life support for the plants that create the oxygen we need to survive. Even ice core samples provide evidence that life thrived on Earth when CO2 levels were close to five times higher than today's level. 

You will never hear a member of the Climate Clan complain about the high emissions China, India, the U.S. or Russia emit. Instead, they go after Canadians who are responsible for one of the lowest levels of GHG at 1.5% globally. If the climate alarmists had any dignity, they would at least be pushing their hardest to eliminate the use of coal power across the planet because it is the worst fossil fuel for emissions.

The astronomical cost of the green transition is never mentioned because it will be paid for by the consumer. via higher electricity prices and lost employment. 350,000 jobs are tied to the Oil & Gas industry in Canada. It is the largest single employer of Indigenous people and may turn out to be the most life changing for them when it comes to wealth.  This sector generates up to $140 billion to GDP (depending on oil prices), every year, and demand for our oil is growing.  The newly opened TMX pipeline will produce an additional $26 billion this year alone. In comparison, the Auto industry only generates $20 billion a year, and it relies heavily on government help eventhough it is a crumbling industry because of foreign competition.

According to Natural Resources Canada, the vehicle transition could cost up to $300 billion by 2040 just to expand the electrical grid.  This cost is not surprising considering that, using data from Statistics Canada, the average Canadian household uses about 10,861 kWh in electricity per year. Meanwhile, the average EV uses about 4,500 kWh of energy per year which means a household’s electricity use would jump by about 40 per cent if they bought only one EV and charged it at home.  

Canada is home to 24 million cars and light trucks that run on gasoline and diesel. If all those vehicles were powered by batteries, they would require 108 million mWh of power every year. These costs will be paid for by higher electricity prices which makes our economy less competitive globally because it consumes more income. Plus, there are non-electrical costs such upgrading every road in the country to be able to handle the increased weight created by batteries.

Interest Rates:

Falling interest rates are only good for people with too much debt, those who gamble their money, and spend on high price goods likes cars and homes. But there are also very negative aspects of low interest rates that never gets mentioned. A few are disposable income falls with rates, and they allow for larger loans that will ultimately end in higher interest expense when rates increase.  Both scenarios take money out of the economy. 

If you want to maintain the current level of passive income in a low-interest rate environment, the savings must be much larger than they actually are. As we have mentioned in the past, a healthy economy needs interest rates between 4 and 6%.  At 4% the saver gets an inflation adjusted risk-free return on savings and lending at 6% the bank can make a good profit. A spread below 2 percentage points results in less cash to reinvest and to pay out to shareholders.

Be prepared if interest rates fall further because it means the economy is shrinking.  The healthiest economies are the ones that  reward the saver rather than coddle the financially irresponsible.  Trudeau is a disaster, and we are paying for it today.  Thankfully, him and his party’s days are numbered.

We are amid three government elections in North America, one being in the U.S.  New Brunswick has the only leader who has cut debt and taxes. However, during this election  Premier Higgs has stated he will add $2b to the debt if re-elected.  Here in B.C. our Premier believes in Trudeau style of government; spend as much as possible and “let the budget balance itself”. 

Today’s elections should be fought on how to cut government spending by decreasing the size of the bureaucracy, reallocate funds we send outside our borders to the medical sector, education system, and military, and more importantly cut taxes so people have more money to spend. In 2023 the average Canadian family income was $109,225 and from that 44.8% ($46,988) went to taxes, compared to 33.5% in 1961.  An economy cannot flourish when it loses so much money to taxes. 

Canada’s economy is in a 5-year downward trend with no sign that the bottom is near as long as Trudeau is in power.  Yet our stock market is doing well because of falling interest rates, but more so because foreign investors are returning to Canada the more it looks like Trudeau is on his way out.  The Toronto stock market is up 14% this year, an excellent record considering Ottawa wants to make Canada a third world country. 

Other than investing in Chubb(a Canadian insurer) and Occidental Petroleum, Warren Buffett’s Berkshire Hathaway has been selling shares, including a sizeable investment in Apple. According to recent filings with the US Securities Commission, at the end of June, Berkshire Hathaway held $234.6 billion in T-bills, which is more than the U.S. Federal Reserve held on September 25. As of the end of June, Berkshire’s investments in stocks totaled $284.8 billion. It is easy to conclude that Buffett shares Sacola’s belief that Cash is King in this market and shows the world wants to invest in Canada. 

Even though falling interest rates tend to result in climbing share prices, the economy is slowing and the risks of a sell-off or a sustained period of falling corporate profits is growing.  Due to the stock markets being in expensive territory, continue to hold all those nice dividend paying shares, but currently do not to add to positions.  Place the available cash into one-year GIC’s which today is roughly 4%.  When reality returns to the stock markets we expect the correction to be fast but there will be no long-term bounce back due to too much debt holding back the economy. 

We strongly believe Canada has the best potential in the world.  The only thing missing is the will to make it happen.  We are one of the world’s richest countries due to our resources which will be needed for the rest of this century and well into the next. Investment returns will come from dividends and interest for the rest of 2024 and probably most of 2025.  Let commonsense be your guide for the next eighteen months. Stock markets in North America are vulnerable to sizeable drop.  

Today Canada must immediately change direction.  Whoever wins the coming election will need a couple of years of trying to begin to correct the mess Trudeau and the Liberals have created.  Canada has so much potential but zero drive to join the real world.  We desperately need an election today, not tomorrow.