Canada’s Economy in Big Trouble? (Uncut) 04-30-2025

Canada’s Economy in Big Trouble? Jonathan Wellum on the Election Fallout, And A Looming Recession

When you look at the the last nine to ten years of liberal rule it has been Devastating to the Canadian economy. It’s surprising that after almost ten years of policies That we’ve seen in Canada that they would be reelected again Jonathan thank you very much for joining us today. How are things in Toronto? Well, not too bad.

I mean it’s a day after the election I was hoping it was going to be a liberation day in Canada yesterday, but it doesn’t look like we reached that point So I’m doing doing fairly well looking at the bright side and looking for the opportunities in the market All right. So why don’t we start right here? I want to talk about the election and get your views on it and before we jump into it in great detail I want to provide a little bit of context for our American viewers There are 343 seats in the House of Commons and whatever party wins the most seats The leader leader of that party becomes the next Prime Minister of Canada, but in order to have a majority you need 172 seats and with the majority you can rule with power and impunity and Unless you get a majority though, you can’t really rule with a lot of power It’s hard to get anything done the Liberals won 168 seats compared to 160 in the last election so they did not get that majority of 172 seats the Conservatives gained a lot of ground they won 144 seats versus 119 in the last election and So Why don’t we start right here? Tell me what are your views? Are you surprised that? Liberals got as many seats as they got Yes, I mean I think when you look at the the last nine to ten years of liberal rule It has been devastating to the Canadian economy on a lot of levels And we’ve talked about that previous shows and we can get into some of those policies in a few moments So it’s surprising that after almost 10 years of policies That we’ve seen in Canada that they would be reelected again on the surface on the surface But when you go below the surface and you look a little more closely at some of the numbers I mean, there’s a couple of issues. I think that influence the election number one We did have a further left-wing party the NDP they call it that collapsed and so their vote went from something around 17 percent of the popular vote down to six and A lot of that moved to the Liberals and that was a surprise So you didn’t get that vote splitting within the different seats And so that was something that I think was a surprise because the conservative popular vote was around, you know I can give these numbers and moving around a little bit as we’re finalizing them around 42 percent or so and the Liberals were 43 44 percent There’s about a 2% differential in the popular vote between the Liberals and conservatives And so typically a party that gets 42 percent if it could serve the party 40 percent you’d have a majority government But because you didn’t get the vote splitting with the NDP and they collapse their vote collapse That really swung over to the Liberal Party the other major factor, which is quite interesting It seems rather ironic and that is Donald Trump Donald Trump’s Sort of statements in terms of Canada being the 51st state and in going after and having a little bit of fun with Canada really concerned a lot of Canadians and particularly Canadians that are 60 and over when you look at the numbers and Again, I’ve talked to people have been over them on the road knocking on doors and they got very concerned about their financial position Stability and they felt that Mark Carney who was just the leader that was just inaugurated and put into the Liberal Party was going to be quite different than Pierre than Justin Trudeau and he because he is a central banker background in Canada UK and Comes from the business world would be a better Negotiator and would open the purse more to give more support more stability to the Canadian economy at a time of tension Now I think that’s crazy idea and I don’t think that’s true but but that had a big impact on the election So when you look at the collapse of the NDP, you look at the Donald Trump factor It’s not a surprise then that the Liberals snuck ahead and the Conservatives weren’t able to grab that minority or majority government The good thing about what happened is that it’s still a minority government as you pointed out Jimmy that they won’t have as much power They’ll have a fair bit though Unfortunately, but they won’t have absolute power to get through everything that they need to get through or they think they need to get through number one and number two the youth vote The youth vote really started to go to the Conservative Party.

We saw that in the United States We’re seeing in other countries. The youth are getting a little smarter and they’re realizing that state ism and large government Spending and deficits is actually not really beneficial to anybody including the older people, but especially the young people so I think things are trending in the right direction and Now Mark Carney actually has to govern and that is not going to be easy Canada is not in a good position because of the Liberal Party and the policies that he is actually espousing along with What Justin Trudeau was doing and so that’s going to make it difficult I think that could set us up for a fall in government less than certainly four years from now maybe in a couple of years 18 months 24 months usually a Minority government survives what 18 months and that could set us up for a large conservative majority and that’s what certainly I’m hoping I think the trend lines are pointing in that direction Yeah, so a couple more a couple of things I want to touch on first of all You talked about the NDP or the National Democratic Party and once again for the benefit of our US viewers We actually have five parties in Canada But three of them are irrelevant for the most part and the NDP is one of them They went from 25 seats down to seven seats they pretty well got obliterated and a big part of that had to do with their leader and he’s just his Level of arrogance knows no bounds. It’s just unbelievable.

But anyhow that party is gone. So that’s a big positive in my mind yeah, and the other thing you talked about or you touched on was what’s happened to the Canadian economy under Justin Trudeau and the Liberals and Under the 10 years this Canadian economy has grown 1.5% GDP wise versus the US which has grown 2.5% If you look at it from a per capita point of view the disparity Between the US and Canada is just shocking the GDP per capita in the US is around $80,000 worse versus Canada, which is below 60,000 now once again, this all has to do with policies put forth by the Liberal government the party that So many Canadians so many people in Ontario and Quebec voted for last night and they wanted they put them back into power for another Four years. So in one of the things I’d point out to Jimmy I think is important also for both Canadian and US listeners Is that a lot of our value of our GDP depends on our dollars value? And so if you were running a country like Justin Trudeau did where you’re basically Chasing capital out of the country and you’re not making it easy to go into our resource sector Which is you know a very rich sector and that’s across a lot of resources and you’re basically putting a lot of Regulations on businesses and capital and high taxation It has a tremendous downward move on your dollar and so our dollar under Trudeau went from you know Low 80s all the way down into around 70 cents So that kind of move also has a tremendous impact on our wealth and the value of our GDP if we had prudent Policies we had the policies that Pierre Poliev was was espousing which were just sane sensible free market Policies and shrinking the private the public sector our dollar I think in a few years could easily go back up to that 80 cents level when Harper was Our former prime minister who was a conservative back Up until 2015 but back in 2011 in 2007 our dollar was worth more than the US dollar And so I think again it gets back to these policies They’ve been devastating but we can shift that if we had some, you know, intelligent leadership and prudent leadership in Ottawa Yes, very valid point the Canadian dollars at a 20-year low.

Okay, so this is basically a referendum. This is what International investors are saying about Canada. We don’t want to put our money there.

The economy is too slow. There’s no growth We’re putting our money elsewhere So it’s going to be interesting to see what happens here in the coming months and in years with the yeah With Donald Trump trying to attract capital to the US and as we know capital moves where it’s going to be respected treated well and you can get returns and so I think this is going to put a lot of pressure on the current government’s because money is going to continue to flow into the US and not into Canada if we he doesn’t ease up on some of these policies and We’ve already got Danielle Smith the premier of Alberta out this morning and she’s taking a very hard position with Ottawa and saying look you’re not going to stop us from developing our resources in Alberta and And so we need a bit more of that pushback So it’s going to be interesting days for Carney and I think the up the optimistic side of me says it’s going to be rough road for Carney and he’s going to be exposed if he does not compromise and And ease up on some of these left-wing ideologically driven policies that have dominated the Liberal Party And it’s something else. He said I just want to touch on to and a lot of Americans don’t realize this but Trudeau created a lot of division Trudeau who is our former prime minister the head of the Liberal Party created a lot of division in this country like we’ve never seen before and unfortunately Trump because of his rhetoric has united this country like I’ve never seen before and there’s a level of National pride that I haven’t seen in my lifetime But the late liberals were able to capitalize on this and so the Liberals they basically have Donald Trump to thank for this win Because without that they never would have won.

They were all but dead three months ago the conservatives on the other hand They built their whole Campaign around it was more focused on Canada and the damage that was done and what they want to do to fix things internally as opposed to looking to The Donald Trump and what he was saying about Taking over Canada. Yeah, and the irony is Pierre Polly I pointed out was that if it weren’t for ten years of weak economic growth and bad decisions and over regulation and over taxation We would be in a much superior position to negotiate with the United States and have much more leverage it’s because we’re in a weakened position that we are more vulnerable and Suggest that the party that put us in that position is going to be do a better job at negotiating is I think the height of Insanity, but it be it as it is. That’s what that’s what that’s what they were able to convince quite a few Canadians So good for the Liberals.

They were good at that at least I think the other thing that were worked against the conservatives was that the fact that some provincial leaders in Canada The premiers which would be similar to a governor in the u.s Did not support the Conservative Party the federal Conservative Party and Doug Ford who’s the premier of Ontario? Canada’s largest province with 15 million people did not support Pierre yeah, it Doug Ford is as a complete and total disappointment absolute disappointment I mean, yes He’s won he’s won in Ontario simply because the other two parties the Liberal Party in Ontario and also the NDP party are just Abysmally worse, but he has just been a disappointment and has has not led the province Well at all and he’s been really in the back pocket of Justin Trudeau up until just the last little while and so that’s disappointing It was interesting that Gordon Campbell. We actually had Premiers from the past who were in the Liberal Party with Gordon Campbell as a liberal premier of British Columbia come out and support Pierre Poglia because of the devastating policies of the Liberal Party Including you know their policies on crime and we have virtually I think all of the police Across the country supporting Pierre Poglia because of their their their handling of the crime situation letting people back out in the streets I think for Americans what you really want if you really want to understand what’s going on in Canada the Liberals are the Democratic Party basically and And the Conservatives are much closer to the Republicans So it’s the same kind of divisions and issues of drugs on the streets crime people You know where the the jails are revolving door all of those sorts of things That’s exactly what we have up here in Canada, and that really comes out of the left ideology and left-wing policies It’s really driven by a worldview that is deficient and and not not consistent with the real world Yeah, and to Just further reinforce this point so our American viewers can understand Doug Ford the premier of Ontario He’s basically what an American would call a rhino Even though he’s the head of the Conservative Party here in the province. He’s not a real conservative Yeah, exactly exactly get on and the other thing that I find very interesting and once again This has been going on since the beginning of time But what politicians do they try to distract the electorate and in the province of Ontario our unemployment rate right now is 7.5% that’s the highest has been in over ten years once again, and this is under the leadership of Doug Ford He’s been in power since 2018 he’s basically saying don’t look here look over there, and that’s all that’s going on right now It’s a massive distraction, and I see the province the economy in the province of Ontario It’s gonna just keep going down this downward spiral the unemployment rate is going to continue to tick higher I can I see it easily go into 10% here in the coming months Yeah, and what we saw with the policy that Mark Carney was pushing is get more government spending.

He calls it government investing Well as far as I’m concerned the public sector does not invest It’s the it’s a private sector that does the investing that doesn’t mean the government can’t help out It doesn’t mean they can’t give some tax credits and support different industries a little bit but they should not be in there allocating large amounts of tax dollars into you know into businesses and Doug Ford believes in that and that’s what they one of the ways he’s trying to prop up our auto industry or auto parts or auto Manufacturing industry is just by buying these companies off and giving them so much money that these incentives But he’s running into Donald Trump He’s running into other problems And so this issue that the Liberals and also Doug Ford Being as you say a rhino this idea that government is going to help us out Yeah, government is going to make the long-term and capital investments necessary is crazy. It never works out They squander the money. I mean look at them in Ontario They put billions and billions and billions of dollars into battery facilities And whether that was they’ll ever pan out to anything I doubt very much and so again you get this issue of should the private sector be driving the economy or the public sector this Was the big debate, you know in Canada here Pauliev said no We’ve got to cut taxes put money into the hands of businesses in the private sector Which knows where to put the capital knows where to put it at risk how to make that how to make long-term returns or do We let the government become larger and spend more money in deficit finance in order to fund these great infrastructure projects Well, we know which one’s going to work because it’s a hundred percent on one side versus zero on the other side It never works out when the government takes over these large initiatives We need the private markets.

We need smart people putting money at risk to make these decisions and And so I think this is why again, we’re going to continue to see as you say a very lethargic economy We’ll be going nowhere probably down if anything and this is going to put a lot of pressure on Carney I think again, hopefully there’s always darkness before light and the light will shine and people will say you know what this was a bad move we should never have put this man into this position his policies are not going to work and And so we’ll move forward in that basis so one more question on the Canadian economy before we move to the US economy, but So the Liberals don’t have a majority. They’re very close, but they don’t have a majority. They got 168 seats.

They need 172 the NDP have seven seats. Do you think these the NDP could? Walk over and join the Liberal Party so the Liberals do have a majority or do you think the Liberals are going to form some sort of alliance with the Conservatives to get things done That’s a very very good question. And I would suspect of course, I don’t know the internal workings of these parties I would suspect because the ideological differences are so large between the Liberals and Conservatives that there won’t be a lot of alignment there and I suspect that the NDP if I were the NDP here’s what I would be doing because you have like seven seats and you you put those together with 168 puts you over that 172 so you can control the agenda.

I would not give them a blanket Policy relationship like they had before I would say no you bring the bills forward and we’ll influence those and we’ll vote based upon You know our belief that these are good bills and I would control every bill that went through I think that’s more likely with the NDP because they’ve been eviscerated. They need to build back their credibility and So it’ll depend on the leadership there if they want to build back their credibility They don’t just want to sell out I think to the Liberals. I think you want to be careful about that That would be my strategic move And I think you know I’m not necessarily any smarter than some of these other politicians when it comes to politics And so I think that’s what I would expect I think the bloc will be Siding with the Conservatives a bit more because I think it’s in their interest to give the Liberals a harder time and they’re very concerned Immigration in Quebec so the bloc is only in Quebec and Quebec is French-speaking and they’re very concerned about you know the number of immigrants and the Sort of the watering down of the French culture and influence there.

I think that’s that’s that’ll be an issue for them Okay, so let’s move on and discuss. What’s happening in the US and the US economy And I can’t believe we’re approaching a new month the month of May. I love the month of May Yes, it’s a beautiful month especially in Canada all the leaves come out We have new life and it’s always it’s always invigorating and the warmth coming back into into our environment Which is nice.

So I know you’re a big Buffett Advocate and so we got the Buffett AGM coming up this weekend. We also have the Kentucky Derby We have Cinco de Mayo next week. So and it’s also a huge week in terms of earnings and economic data Later this week.

We have numbers coming out of Meta Microsoft Apple Amazon. Then we have non firms on Friday What are your thoughts on the earnings that have come out so far and any concerns about the US economy? Yeah, I mean, I mean overall the US economy is is I say just Walking along it’s not moving quickly, but it’s there’s some there’s some data points that show some weakness in the economy But overall it’s it’s plugging along not too badly The businesses that were invested in which we follow we’re catching I got my analysts and they’re following all the earnings calls Basically been quite solid We’ve been very careful to be in the businesses that we think are much more resilient and protective and it shouldn’t be hit too Hard by some of these trade concerns and so on So they’re plotting along Well But it is interesting to see that there are businesses that are a little bit more in the heart of this trading issue Especially with China and so we see the port business coming off We see some of the I think it was UPS and FedEx and some of these companies also are seeing some diminishing Activity which can be expected because of the shipments can coming overseas or a little slower or not coming and You’re also seeing in air travel to the airlines having some issues in some cases so wherever there’s you know, you need a robust consumer to spend there’s there’s points of tension there and You know coming off a bit which I think you know is to be expected just given You know First of all, the US economy was already stretched and you got large deficits and you’re trying to get those under control And some of those numbers are getting better and they’re trying to also, you know Trim the size of the government and so forth at the same time. You’ve got a globe that’s concerned about terrorists So it’s perfectly understandable that there’s going to be a slowdown in growth and a little bit more tension and pressure in certain industries Yes, I think the real pain comes in q2 right now, you know, we’re still transitioning from this.

Yeah trade war that’s going on But the real pain is going to come when these q2 numbers start coming out in July But yeah, there’s quite a few companies that have also said that they’re not giving guidance going forward I mean again, I haven’t followed them all now that it’s coming out as we’re as we’re on the headlines But they just can’t give the guidance. They’re not sure what to do. Obviously the auto companies can’t give guidance And so there’s a number as you start to see that again It’s more and more uncertainty and I think that will translate into more volatility in the market and you touched on the airlines and we’ve had warnings and From Delta America and Southwest and God knows how many other airlines once again people are not flying business class because of the uncertainty within the economy and people are not flying for Vacations or leisure travel because of the uncertainty.

I know myself we were thinking about going to Europe But we said now we’re gonna wait put things on hold and see how things shake out in the coming year I saw another interesting data point out of UPS They also said they were laying off 20,000 employees because they’re expecting less shipments from Amazon. What are your thoughts on that? Yeah, again, you’re seeing the the purchasing of items and In the transportation now So, you know So again, the consumer is stretched and the consumer is nervous and the consumer is being careful in terms of their spending We’ve certainly seen that in Canada in space and it’s now being translated into the US economy And so again, some of the manufacturing numbers are off also in the US again I just looked across a number of them. And so basically there’s pressure.

There’s also pressure in the housing market in the United States So you’ve got certain regions in the US and you know, and you know, the markets are down, you know, 15 20 25 percent So the areas of Florida areas of Texas, of course, the California market is really soft Also, so that starts to translate into people spending if their home values are dropping And so again, it’s just pressure everywhere It’s just it’s just gonna be I think it’s tough slugging and companies are gonna have to be really careful resilient Cutting costs and having pricing power if they’re gonna forge ahead, but Amazon I think that’s a good good case in point where you’re going to see a slowdown in traffic and that’s purchases And that would also be probably coming from overseas also I mean that you know these the terror fight with China is going to have some reverberations in terms of our market Yes, and to your point about the home sales March home sales in the US fell 5.9% from the previous month. That’s the lowest since 2009 so things are really starting to pull back with home sales. Yeah.

Yeah again just uncertainty I mean, I Applaud most of what Donald Trump’s trying to do in the United States, you know cut regulations cut taxes Make the government more efficient try to bring back some of your industries bring capital into your country that takes time And it’s all about transition So there’s changes that have to take place and that is going to be great uncertainty and businesses are going to be careful in terms Of how what they’re up to and also I think we’ll pull money out of the global economy So, you know, you listen to these companies you’re saying well, we’re gonna put manufacturing more manufacturing us We’re gonna spend more money in the US and that’s great, but it’s coming out of other regions in the world I was listening to a couple of pharmaceutical companies talking about pulling business out of Ireland, for example, and they say well We’re just gonna pull the business out of Ireland that we’re going to be selling in the United States But again, that’s a shift. That’s a change. And so that’s gonna have impact on the global environment and other areas So again, we’re going through a real transition.

I think spurred on largely by Donald Trump and the American government and a lot of those changes I think are necessary the path we are on as you know It really wasn’t sustainable these trillion dollar trade deficits and so forth But it is creating uncertainty and changes and capital flows that are different than what people expected and that’s going to have impact on the market and on countries and on currencies as we’ve seen and seen major shifts in currencies over Alaska really asked last month or So the US dollar coming off quite a bit and the European, you know The euro up the pound up the Swiss franc it just skyrocketing and so on so big changes That’s not bad. But it’s just the reality of changes and uncertainty So I think investors have to be careful look what where you’re investing know why you’re investing these areas be patient And don’t panic and as I mentioned earlier Warren Buffett is holding his AGM this weekend and have you ever gone to that event? I’ve been down at least 16 times Yeah, my first time was in 1993 and then we as our company I was with AIC funds back in the day and ran it was the CEO and they ran quite a few of their funds and Michael Lee Chin who was the founder of that company we go down and bring a lot of advisers with us So we went down year after year after year. We made the pilgrimage We were there’s the Woodstock of capitalism as they like to call it and and I loved going down so I haven’t been down in the last 10 years or so and but it is quite the experience and It’s it’s a real festival of Capitalists and investors and Buffett really knows how to put on a show.

He’s got all his businesses all his companies down there You can buy from them and marketing marketing expertise is fantastic, but he will be 95 in August and So he’s he’s you know, it won’t be too many more years He’ll be up there and of course last year was the first year that he had the annual meeting without Charlie Munger his sidekick and Those two were a wonderful pair and it was comic relief And along with learning a lot while you sat there for six hours and listen to questions and answers and it’s quite the show Yeah, I had the pleasure of going a few years ago and I would highly recommend for anybody to go I actually I want to take my kids. I would have taken them this year, but the dollar is killing me So can’t afford it, but I would highly recommend it. It’s a great event.

It’s almost cult like yeah Yeah, well, it’s a real following It’s a great it’s a great environment and if you if you want to buy any jewelry at half price you can get into Borsheim’s and Providing it’s not a branded jewelry. So if it’s an unbranded jewelry and they sell it to shareholders for half price So that alone so if you want to pick up some jewelry for your wife or your spouse Then that’s a great Avenue. I enjoyed that in my early days and I went down in 1993 just before I was married So I was able to buy some jewelry that my wife could wear at our wedding at her wedding so anyway, but it’s a great time it didn’t you meet so many people you can network and Everybody’s just having a lot of fun talking companies and businesses and and we were able to go to go rats which is his favorite steakhouse in Omaha and get big ribeyes and And get get big steaks there and my former partner he and another fellow who are very big guys They picked up 34 out steaks and knocked them down and but that’s a great place, Omaha, Nebraska Middle America good old values of America Yeah, I bring it up because it’s gonna be interesting to see if Warren Buffett has any comments about what’s happening in the economy So far, he’s been very quiet.

He’s been asked a few times during interviews and he He refuses to answer so it’s gonna be interesting to see what he has to say about what’s going on Another stat that I thought was really interesting. I just read recently was that the number of billionaires in the u.s. It’s at one thousand nine hundred ninety that number is up forty five percent since 2021 just think about that Okay once again and this all has to do with the policies put forth by the previous administration and also by The the Fed and the money printing that’s going on. What do you think of this number and are you shocked to hear it? Look, I like it when wealth is increasing, but unfortunately with these policies of monetary expansion printing money and And you know these record low interest rates So you’re supporting zombie companies in many cases and not really bringing financial discipline to the money into companies It rewards, you know Sort of inflation and businesses can take advantage of that and people that are in large organizations or companies They get the benefit of that asset values go up But they’re really not going up and trading true.

Well, it’s really just inflation and this I think we should be very upset with That’s one of the things I think Trump is trying to correct and Polly I was trying to do also in Canada by bringing real wealth back to the country, which has to come through private Investments you have to produce if you don’t make more goods and services You can’t distribute more and this idea that you can be a redistributory Economy without producing and making more things is crazy And all it does is put the prices of things up if you print more money But you’re not making more things and so you just chase the prices up and that rewards asset owners And so you see that reflected in this billionaires list and I have no problem with someone being a billionaire I mean, that’s wonderful if again They’ve done it sort of the old-fashioned way through hard work and building and creating real products and services of redeeming value But if it’s just been spurred on by bad Central bank policies and bad fiscal policies on the part of the government that’s a horrible thing and what’s happened is you’re getting a big split between the haves and the have-nots and So you’ve got a lot of people on the lower end are not benefiting and the only way they’re going to benefit is to take an inflation rate down and you create more jobs and Production more more jobs that they can work at so they can actually have a standard of living and you have to give them purchasing power so that that money actually can buy more over time if you have a productive economy your money should be able to buy More not less and so the only way to reverse this is we’ve got to get control of deficits and our debt And we’ve got to stop printing money We got to get interest rates to a proper market level and not what’s dictated to by by a bunch of central bankers Yeah, the risks just keep getting richer, but so we have a Fed meeting coming up next week What are your thoughts and maybe I can get your comments to on this war of words going on between Powell and the president Yeah, you know I’m not you know again. We we follow we watch the Fed and we’re making longer-term investments So we’re not trying to guess and anticipate interest rates. We’re not really any smarter than the overall market is is trying I mean, I do think that the rates probably should be coming down a little bit more in the u.s There is softness, but it would have to be slow there is a concern of inflation also So there is that that tension but around the world interest rates are down in most of the other countries in the u.s I think is slowing and they’re having a housing market problem and and in many many of the regions not all the regions but many regions and so I think that the pressure for the Fed to drop the Rates a little bit to start easing the two-year rate would indicate that they have room there to drop it for 25 basis points I mean the two-year Treasury bond rate yield is generally what the Fed operates off of to a certain degree.

And so yeah So the expectations could be either they hang ain’t tougher about 25 basis points is certainly probable The tension between Trump and Powell is classic Trump I mean he likes to put put pressure on people make them squirm a little bit Make them feel uncomfortable. He obviously does not really like Powell We saw this from before his first term and I think it’s just Trump making him feel uncomfortable and keeping the pressure on him Powell I’m a firm believer that the the central banks are very political I don’t think they’re independent and I think they generally are more favorable to the left-leaning side of things Powell was cutting rates Back when of course Biden was in power and the Democrats and he was trying in my view to try to encourage The economy so that gave a higher probability for them to get reelected And now he’s all of a sudden tight money So I think there is a bit of hypocrisy there and I think Trump’s just pushing and calling him out So that he at least get some mileage out of him, hopefully And maybe put pressure on him to step aside So let’s talk about the various asset classes in the US in the last few months the the S&P the bond market the US dollar they’ve all been Under pressure and the traditional 60-40 portfolio. The wealth destruction has been immense Well, what sort of advice would you give to investors in the u.s On how they should position themselves or deal with all this turmoil that we currently see in the financial markets Well on the bond side, we really approach it quite simply We typically will buy bonds based upon the the person’s time horizon for the assets And sort of match that to a large degree We also over the last number of years kept fairly short because you look To me interest rates could go up.

They could go down Of course, it’s a very simple statement to make but what I’m saying is that it’s going to be driven by policy and it’s difficult I know super smart people who say we’re going to go into a deflationary crash And then there’s super smart people say we’re going to go into an inflationary bubble, right? And and it’s all over the map and it’s difficult to know because it’s going to be driven a lot by policy Decisions and what what takes place and confidence in the marketplace. So we come to the bond market We typically are buying two three-year bonds. We’re holding them to maturity We’re you know in the u.s We’re grabbing that, you know close to 5% returns and just and just scooping that and keeping it safe and not making big yield curve That’s and that’s just what we do because we’re not we’re but more equity guys and so when it comes to the bond market I don’t want to lose any money.

Our clients want it for a position of non volatility and Consistency and predictability and so that’s what we do and the yields are still really good in the u.s These other other other markets and so we just cream it and make it a simple decision in terms of that So we’re not making these big deal go way out of the old curve Yeah, you can do that, but then you’re gonna be in there market timing and stuff like that I think it’s a different difficult trade and not necessarily clear how it all works out because that’s going to be driven as I say by policies on the equity side And then we also are keeping about 25 to 28 percent cash So really really short term and that’s because we are concerned about valuations We are concerned about the reordering of the global trading arrangements that are taking place There’s a bit of a reset going on not to hate to use that word But that’s that’s really what’s happening is sort of for Redoing Bretton Woods is what Trump is trying to do So in our view having cash on the side makes sense and still if it’s in the end if it’s in Canada It’s gonna make two and a half percent, you know Two and three quarters if it’s in the u.s, you’re gonna still be no close to close to four percent or so So cash some bonds short-term high-quality bonds and then on the equity side on the equity side We’re carrying in terms of that a good chunk in the precious metals and we stay there. It’s done Well, it can come back. I would not be surprised for it to come back that’s the way it moves, but until we solve our deficits and debt problems and a lot of these tariff Negotiations and all of the issues that we see in the marketplace inflation that I’m sticking with our positions We own a lot of royalty companies few mining companies.

That’s a position We’ve got some of the technology space you really can’t avoid the technology space software businesses are great businesses and also in some Infrastructure companies a number of infrastructure companies some basic businesses solid Companies with long-term prospects and long-term contracts So so I think again find great companies that are that are really well positioned perched in secular growth areas and the equities Keep some cash on the sidelines things get messy and then on the bond side We’re just being very careful and just picking off Yields that you know two years two years three years and just being very very safe in that area Jonathan you mentioned 28% of your portfolio is in cash What percent would be allocated toward precious metals either physical or miners or royalty? Yeah, these are total portfolio. It would be just under 20% of our total portfolio So if you take the percentage of our equities It’s actually it’s actually it’s actually pretty high So we’re probably running about 25% or more of our equities in the precious metal sector And that would include this company’s a Franklin, Nevada. We precious metals a Cisco royalties At Nico Eco we’ve owned now for a couple of years and we’ve been very fortunate That’s been a that’s been a stellar company.

And so we own some really serious companies in that space. We’re not buying juniors That’s not our game. We’re not geologists.

We’re not in that space, but we’re but we like the exposure area I do think that silver is you know, it’s the famous famous last words quite cheap So if we can pick up businesses that have a little bit extra silver in them, that’s fine I think that there’s silver gold ratio. And again, I’m not a fan of predicting ratios I’ve heard people predict them for the last 20 years and they’re always wrong but when it’s a hundred to one that seems a little bit outrageous and and so I think silver does have a little more upside and Driven by industrial demand and so forth and also copper some other strategic metals copper and We own a company called Altius minerals, which is a royalty company and they have copper You have some iron ore that is very green friendly some potash Resources along with some gold. So again trying to the commodities I think again are a good place to be if you can find good cash flow oriented commodities Where there’s not a lot of exploration risk like from our perspective.

There’s other people who are great exploration risk I respect them. That’s not our game So yeah, we like the space but we try to buy good companies and also some strategic minerals Like I say copper is I think a very important one also for the whole electrification digit digitization AI and so on 62% of Americans are invested in the stock market either directly or indirectly and of course everybody’s single largest Asset would be their homes and we’ve already talked about how the S&P is pulled back how the housing market is pulling back Are you concerned this is going to have a big impact on wealth effect? Okay, and people are just gonna stop spending and we’ve seen that so many in so many companies here in the last few months Even Louis Vuitton. I don’t know if you saw this, but they came out and they cut their guidance They said sales were down huge in the u.s I can’t remember the exact number also down big in China and I thought it was interesting because not even the rich are spending Money, but do you think there’s a threat of a recession here in the coming months? Yes There’s no question that there’s a threat of recession, I mean we’re in Canada We’re basically I would argue we’ve been in a recession when it comes to real real economic growth on a per capita basis I think the u.s. To there’s been so much spending I mean Jimmy you think of the last couple of years or not even the last year for that matter of the Biden administration Which is outrageous amount of spending not I mean through the whole kovat period and that’s coming off and you’ve got you know 10 10 12 trillion dollars that get passive debt that has to be rolled and You’ve got all these tensions going on in the world as you again as we rebalance trade and the tariffs and so forth If that doesn’t take the market off and down then I don’t know what will so you so what are you seeing you’re seeing? Housing prices coming off in different markets, especially the ones that were really quite inflated in the u.s You’re seeing some pressure on the funding of those loans and mortgages You still have issues below the surface on commercial commercial properties that hasn’t disappeared completely We don’t hear much about it, but there’s that’s underneath the surface Manufacturing and some other areas are weak Housing construction is weak.

And so you get into that and starts to transfer into people’s pocketbooks and uncertainty then Also is an issue and people then get more conservative and careful when I start sitting on the money and spending a little bit less As your neighbor starts to spend less you start to spend less then your other neighbor starts to spend like and that is a ricochet Effect. It’s a domino. And so I think that’s what we’re starting to see now And that’s why I think investors need to be careful know the companies you’re buying make sure you’re putting appropriate valuations on them Keep a little powder dry There’s money to be made in every market.

I’m not selling people to run off the market It’s all going to collapse but just be careful and know where you’re investing why you’re investing That’s why we go into different sectors and some your head just quite well to certain issues and some had just you know to other challenges and and keep a little cash around so just be careful and Things have been gone quite well, but a lot of that growth was funded by pure debt and deficits and the deficits were just Outrageous and again Trump’s trying to bring these into line and that inevitably will put pressure That’s a good thing You’re having pressure in your economy because you’re shrinking the public spending and you’re trying to balance out the economy in a healthier way That is a good thing, but it’s not easy and it will create volatility in the stock markets But again, you don’t want to stay on an unsustainable path, which is what we were on And so I think it’s very important people see the bigger picture that if it’s going to be healthier three to five years from now That’s what we want rather than pretend to artificially keep asset prices high When they shouldn’t be at the levels that they’re at Well, Jonathan, this has been a great conversation I always enjoy our chats and as we’ve already discussed We’re living through some crazy times and and during times like this people need help with Navigating these financial markets and looking after their future earnings And if they would like to have a chat with you about how to navigate these markets, where can they go? Yeah, a best place to be our website, which is rock link R-o-c-k-l-i-n-c. So link with a C, rocklink.com You can email us at info at rocklink.com. And if you go on our website, you get all our contact information Absolutely. Come in, talk with us.

We can zoom call with you and come into our offices We’re in Burlington, Ontario, and we love to talk to the people There’s no cost, there’s no charge at all to go over someone’s portfolio And I think it’s really important because over the last couple months, especially in Canada with the tariff conversation and the election There’s a lot of people just wanted to sort of jump right right out of the market You have to sit down and talk with them and and then they stay put and you know we’re positive year-to-date on all our numbers and Being very careful And so the worst thing you can do is sell at the bottom and buy at the top and in order to not Replicate that you have to know that what you’re investing in and feel comfortable with you know The marketplace and stay in it long enough And so sometimes you just need a professional To talk with and to go through some of the issues and we’re more than glad to do that We’ve got a fantastic client base We love talking to the people and that’s we’re in the business of doing investing and helping manage people’s assets Jonathan once again, thank you, and I look forward to our next conversation Great. Thank you very much