Trudeau joined the APEC meeting in San Francisco last month and nobody gave him the time of day other than his climate buddy Governor Newsom. It should be no surprise though. President Biden does not talk to him unless necessary and world leaders try and avoid him in meetings. The few countries that listen to Trudeau have no impact on Canada and are usually just interested in his handouts. Most of the elite see him as the empty-headed golden spoon boy that he is.  They see what Canada has to offer the world and cannot understand why Trudeau does not take advantage of this and why he is happy to watch Canada crumble economically and socially.

Justin loves President Xi Jinping even though he is an enemy. NATO has warned him of China’s plans on taking over parts of our Arctic region next decade for the potential natural gas, oil and metal reserves. Justin just ignores the warnings and refuses to invest in our military, for China’s convenience.  Canada will need the U.S. to protect this land since Trudeau is shrinking our military for the sole benefit of our enemies. 

Trudeau is the biggest climate hypocrite in the world. This year he could very easily have set a world record for an individual producing green house gases jetting himself and his entourage around the world preaching climate change.  In his case, when a PM leaves the country a second jet follows in case the first breaks down. This is all on your dime of course.  

What right did Justin have telling Japan and Germany he will not sell them our natural gas because it does not make good business sense?  Weeks later Qatar sold Germany $15b U.S. worth of it. He is responsible for our companies missing out on those contracts plus hundreds of permanent high-paying jobs and billions in tax revenue that contract would have created. With close to 450 years of natural gas reserves around the globe, Canada needs every contract it can get to sell our supply. 

Whether you liked PM Chretien or Harper or not, at least they attracted fresh business.  They got our businesspeople to go with them to meet potential customers. Trudeau brings his friends and a photographer.  He just tells businesspeople to go elsewhere and that is what they have done.  Between 2015 and 2021, Canada experienced a net foreign investment deficit of $2.4t.  This means more than the 2021 GDP left the country for greener pastures. In 2022 direct investment in Canadian securities totalled $69.1b while $103.8b left Canada for foreign investments, A leader is supposed to attract capital, not scare it away.  

I have been in 39 countries and each time I return home I see so many opportunities. The future is 100% Canada.   Unfortunately, we lack the will to achieve it.  Foreign countries and businesses love our energy, food crops, mining reserves, forests, technology, and abundance of the most precious commodity, water. There is no reason why Canada is not a top economy other than Trudeau and his climate extremism.

Let us start 2024 with a fresh start. Canada needs to change.  No successful country limits its potential.  We need a government that gives us sensible policies and committed to strengthening our standard living.  More importantly, we need a real Prime Minister who cares about all of Canada and its future.  

One easy way to build more savings is avoid interest.  It is the biggest waste of money.  Everyone has a limit to what they will earn in their life so why do you want to share it with a lender?  Using cash builds savings and wealth because it provides a natural limit whereas credit cards and lines of credits create an artificial one that places deeds on future income. These instruments are the biggest waste of our savings and creates wealth and jobs for very few. 

Most debit and credit cards automatically offer limit protection, at a cost. Some cards increase their interest rates to 30% as soon as it goes over its limit and there are outrageous fees every time you go into overdraft or overlimit. This is why it is so important to turn down credit limit and overdraft protection.  It is smarter to let the card be declined rather than pay higher interest and fees. 

People like using credit cards to earn points. These are great if you pay your balance off every month. I always recommend people set your credit limit at two-thirds of your monthly spending. This way, you are always paying it off throughout the month and avoid interest.  I use a Cash Visa because there are zero fees and earns cash that can be used towards your balance. Depending on one’s spending, these rewards can build quickly and can cover an unexpected expense or travel. 

There are times when incurring interest does make sense.  Clearly, it is unavoidable for most when it comes to buying a home.  This is the only smart debt to have if you do not go overboard. Using a 5.5% mortgage rate on a $400k loan, the borrower will pay $336,905 in interest over 25 years, with nearly two-thirds of it paid within the first ten years. This is called the rent equivalent and averages $1,123 per month over the life of the mortgage in the above scenario. Borrowing $100k more will add an additional $84k to the interest.  An easy interest savings is always pay your mortgage weekly. Doing so will reduce a 25-year amortization by almost 3 years, most of this will be interest.

This is why it is so important to always stick to a mortgage that does not exceed between three-and-four times one’s household income. If you prefer more discretionary income, stick to the three, but if you are not a big spender than the four is safe. If you cannot stay within these limits, then chances are prices are too high and there is a net benefit from renting. Even though it may feel like one is wasting money on rent, the average home price always reverts to its average of three-to-four times household income. Some people today are already sitting on losses of a few hundred thousand dollars. This will haunt them for the bulk of their working years.

It is rare for the average investor to accumulate anymore wealth from using debt than without.  Under certain circumstances it does occur however it tends to be risky. During Covid one could earn a cashflow positive return by using margin to invest in dividend paying shares. The Covid market also created some very cheap shares, so the following price appreciation also worked well. It is on rare occasions like this that the risk of using debt for investing is low. However, one must learn how to sell. Today the interest rates on investment accounts are now more than dividend yields and the price appreciation of shares and real-estate purchased during Covid has been eliminated.

Recently I was shopping, and the cashier asked if I would be paying the bill with credit or debit.  She was surprised when I told her cash.  This is part of the reason so many people are having money problems. If one is unable to budget, credit cards and debit are an easy way to overspend.  A few businesses today will not accept cash and I refuse to deal with them. I pay cash because it is all I have.  It is amazing how easy one manages their spending habits when that is all you use.  

Just when you thought the Trudeau clan could not be anymore out of touch they continue to surprise.

They are not clueing into what is causing the housing shortage.  There is not a shortage of money, but the opposite.  The problem is there is a severe lack of tradespeople to build the one-million units needed to fill demand.  Plus, there is too much red tape to get the necessary permits.  For housing it can cost tens of thousands of dollars and take up to a year just to break ground. 

There are labor issues across the whole economy. We are also short of all medical professionals. As things now stand we can expect a tradesperson shortage for the next two years, but for the medical field at least until the end of this decade.  That is if governments create more school seats to train people starting in January. Making it it easier for foreign professionals and tradespeople to practice in Canada would also go a long way. But do not count on it under the current government. 

The Liberal solution is to raise taxes which has the opposite effect of their intention. Our banks are a prime example. They are responsible for writing the mortgages, but Trudeau has placed a special tax on excess profits.  This means there is less money to lend out and less dividend increases which hurt investors and pension funds. From an investment perspective, this tax alone is the reason for the bulk of losses by the big banks since they are writing down their mortgage portfolio as much as possible to avoid paying the tax. Their cashflow statements are strong and there will be large profit increases once they write up the value of their mortgage portfolio when the tax is eliminated with Trudeau.

Now they want to raise taxes on grocery stores because they are making money, albeit a small 3% profit margin.  Yet the grocery stores must pass on the rising costs of production, transportation, rising electricity costs, and now potentially higher taxes onto the consumer. Our politicians do not understand that not one business pays a cent of taxes because the expense is included in the price of the product. This results in an indirect tax on the consumer.

Over one trillion investment dollars has left our energy sector alone under Trudeau. Today it requires up to ten years just to get the permits to break ground for a major project. This is the longest wait time in the world.  As a result, nothing gets done and investment leaves to where it is wanted. A prime example is the Ring of Fire in Northern Ontario. It is full of metals needed for EV batteries but there is not even an all-season highway built to develop mines.  Given the Liberal climate agenda, one would think this would be a priority.

Canada’s ‘do nothing attitude’ is now destroying the country.  As we have mentioned numerous times in the past, Canada needs politicians who solve problems, not make them.  Talk is cheap, but very costly. This is what causes recessions and why Canada has a declining standard of living.

Unless it has to do with green, very little is reported in the Canadian media about energy in general.  Recent news means the energy sector is about to go under major changes that will last well into the next century. Most of the information for this editorial is from The Economist, Bloomberg Businessweek, and from my observations from travelling throughout Africa six times.

The big change that is taking place around the world is the discoveries of major finds of oil and natural gas (NG).  Most of these fields will be in service by decade end.  The new reserves mean oil and NG will remain the main source of global energy needs for the reminder of this century.  With recent discoveries it is estimated there is enough NG to last 450 years, 50 years longer than coal.  There are enough known oil reserves to last sometime into the next century.

The biggest changes are coming from South America and Africa.

• There has been a massive oil field discovered off the coast of Brazil.  If this field is developed then it will be possible that Brazil can supply most of South America with their needed daily oil for the next couple of decades.
• Mozambique recently reopened a gas field they closed because the local mafia was extorting from it. The company negotiated with the government and the mafia and met somewhere in the middle. This year another massive gas field has been discovered.  It will be put into production by 2028.
• Another huge NG field has been discovered in Tanzania, valued at between thirty and forty billion dollars.  Smaller fields have been found in Senegal and Mauritania.  Libya has recently signed contracts to develop two new oil fields as well.
• Total Energies believes Namibia is sitting on top of massive oil reserves.  The company claimed there was “11b barrels of oil and potentially gas too”.  Namibia has plenty of flat land so it could also be a big producer of solar and wind power which it could export to neighbouring countries.
• There is a supply of natural gas under the eastern Mediterranean Sea that is so large it can provide Egypt, Israel, Jordan, and a handful of other country’s energy security for decades to come.

It is estimated Africa has more NG than the Middle East which means not one African country will ever need Russian NG and oil.  There are also plenty of known metals throughout the continent which the world needs and wants. If the proper governments are formed Africa will become an economic powerhouse.  The continent remains too unstable for us to justify investing in, for now.

This is bad for Canada because it means serious competition. Under Trudeau, we are the only rich country in the world that refuses to promote their natural resources.  We still have a head start but it can very easily be eliminated within a decade. For the rest of this century the changes to the global economy are going to be fast, and Trudeau is not allowing us to prepare. 

For investment purposes, we will begin to reassess our energy sector next year.  If it continues to look like the Liberal Climate Cabal is on its way out, our share prices will continue to climb slowly and then take-off once they are gone. Investing in the energy sector is probably safe until 2028 if Trudeau remains in power, when many of the African fields are going into production.

If it appears Trudeau will be re-elected (which it doesn’t) we will have to direct investments outside of Canada in the next two years.  Our companies will begin losing highly skilled workers to other countries, and our cost of living and business will go sky high because we will not have a source of cheap energy.  We will quickly become noncompetitive in the world and our dollar will drop to $0.50US. This will cause prices of imports to climb, lowering our standard of living further.  A declining currency works like the Carbon tax; it starts at the top and works it way to the bottom with the consumer paying the full price.

The only real competition for oil and gas are nuclear, geothermic, and hydro.  There is an excellent chance that hydrogen will become popular in the next decade because its delivery costs will be in a free fall. But if Trudeau has his way and closes the energy sector, Canadian hydrogen will not materialize since our engineers and scientists will have left Canada for where they are needed. Solar and wind power will survive as a niche market, but their costs will be soaring in the years ahead.  Plus, in a solar society we will be dependent on China for our panels because they are the largest manufactures and can manipulate the market with their rare-earth mineral stockpiles.

Today is the time to prepare for the coming changes.  Hopefully there will be a push for an election when the House of Commons opens because Canada desperately needs fresh people in Ottawa that truly care about our future. Not one that “has our back” as they purposely force a decline in our standard of living and international reputation.  The next inline must understand that our future is based on cheap energy, which is oil and NG.  Thankfully, the poles show that the party in the lead does, and more importantly care for Canadians overall. Justin’s reign is the best example in Canada’s history of how politics can cripple a country.

It is becoming more apparent every day that the consumer is feeling the pinch. It is no surprise though given the chart above clearly indicates the spending since Covid has been on the back of debt.  If this was not the case, there would be a widening gap between consumer credit and spending like what occurred between 2005 and 2020. Unless everyone wins a lottery, spending is about to slow down significantly for the rest of this year and next.  People have no choice but to clean up their balance sheets and central banks are willing to speed up the process.  There is nothing the government can do, except cut taxes that will stimulate the economy and we all know this will not happen under Trudeau. Over the next two years, the indebted are going to feel more pain from their bad financial decisions. 

After announcing that same-store sales dropped 10.9 per cent and EPS dropped nearly 40 per cent during the second quarter, the CEO of Sleep Country, Steward Schafer, stated “we continue to see softness in the second quarter following a slowdown in consumer spending on large discretionary goods”.  He was, however, “cautiously optimistic” that the shift in spending is temporary (obviously – good times will follow the bad). The same week Canadian Tire reported ok earnings but rescinded on a three-year financial forecast and stated, “as inflation persisted and rate hikes continued, consumer demand for discretionary goods softened, particularly in the latter half of the quarter, and Canadians shifted to more essentials”. 

The Office of the Superintendent of Bankruptcy reported that the 31,224 consumer insolvencies between April and June was up 23.5 per cent compared with the same period last year, while business insolvencies rose 36.9 per cent to 1,090. The agency said total insolvencies for the 12-month period ending June 30 were 116,653, up 23.2 per cent from the previous period. On the business bankruptcies front, it is estimated that there are 250,000 small businesses on the brink of insolvency across the country.

It is no surprise that bankruptcies are increasing. Driving through the neighbourhood leading to my favourite hiking area there is subdivision consisting of middle-class homes built in the sixties and seventies.  Today they start at $750,000. Homes in the new subdivision up the street are all priced between one and two million dollars.  Just about every driveway along the way had between two-and-four cars and a toy on it.  How can people afford these luxuries when the average family income is now $122,000 per year?  Even with a $200,000 income people cannot afford all these toys and big houses. 

To gauge how much trouble is coming take note of how many cars, RVs, and boats are for sale in driveways and parking lots. Keep an eye on websites like leasebusters.ca and autotrader.ca as well. Today it is not serious, but if the amount spikes, then you know people are getting stressed. If few are up for sale in the fall it means the borrowing party will continue, along with higher interest rates. Central banks are vocal about their goal to push down debt levels, but too few are listening.

Sadly, Europe, the US and Canada continue to throw endless amounts of money at pseudoscience. Wasting money on renewable energy, EV customers and manufacturers is a drag on the economy because it is funded by taxes which comes at the expense of the disposable income needed to buy the goods and services in the first place. If the above business models worked, corporate titans would be investing their own money, but they’re not. Most that did have already sold or are considering selling their holdings.

Climate change driven industries should be funded by stakeholders, like every other business.  Shareholders are smarter than politicians and always prove they do better with their own money rather than giving it to the government to manage.  The world has 400 years’ worth of natural gas reserves backed by an existing clean and reliable infrastructure created by shareholder funds, freeing taxes for areas that benefit everyone such as healthcare, education, and military.     

Spending has continued to slow and will appear in the third quarter earnings reports.  This is already evident in the Baltic Dry Index (dry-bulk shipping rates) which is still falling, and down 9% this year already. It is a sign that world-trade has slowed and will slide further in the weeks ahead. There should be an uptick in the index in the fall as stores stock for Christmas.  If there is not, watch out, because it means household finances are falling apart.

It is becoming evident everyday that the economy is close to contraction. To protect your savings, continue to buy one-year insured GICs and blue-chip shares which have with yields between 5 and 6.5 per cent. These include utilities, Canadian banks, and energy shares. A yield above this level tends to indicate a future dividend cut.   Avoid shares that do not pay a dividend.