This Week in Money explores the significant divergence between consumer confidence at record lows and stock markets at record highs, explaining that this gap typically signals brewing market corrections. The program analyzes how institutional capital flows to equities as a 'least ugly house on the block' during uncertain times, while consumer sentiment reflects everyday economic burdens like inflation and housing costs. The analysis covers multiple markets including oil, gold, silver, Bitcoin, and Canadian real estate, demonstrating how different market segments can move independently based on their underlying drivers and risk premiums.
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Ross Clark: Markets. Martin Straith: Stocks, Oil, Gold. Hilliard MacBeth: Canada Housing Collapse.Added:
Welcome to This [music] Week in Money.
I'm Jim Goddard. Today, Ross Clark from chartsandmarkets.com runs down the major markets [music] where once again, we saw a new highs. He tells us even though Canada is now officially in a recession, [music] the Canadian dollar has remained surprisingly high. Ross looks at crude, gold, silver, and Bitcoin.
Founder of the trendletter.com, [music] Martin Streith, looks at what could happen with the markets and oil if the US and Iran finally come to a peace deal. Martin comments on the gap [music] between consumer confidence being at a record low while the stock markets are at record highs. He also examines gold, silver, Bitcoin, [music] and the AI semiconductor sector.
Author of the second edition of the book When the Bubble Burst: Surviving the Canadian [music] Real Estate Crash, Hilliard Macbeth, joins us from Edmonton to talk about the slow collapse of the Canadian [music] real estate market, Canada slipping into a recession, Alberta separatism, and the latest in electric vehicles. We'll talk to Ross [music] Clark right after this.
>> [music] >> Don't miss out. Stay informed. Receive the howstreet.com weekly recap with thought-provoking podcasts, [music] radio, and articles delivered to your inbox. Sign up for the howstreet.com weekly [music] recap on our homepage at howstreet.com.
Welcome [music] to This Week in Money, the source for market opinions. Here is Jim Goddard.
>> My guest is Ross Clark from [music] chartsandmarkets.com, where you'll find insightful market commentary and [music] timely technical analysis. You can find him on X at chartsbyross. Welcome back to This Week in Money.
>> Good to be with you, Jim. And uh you know, a uh small pause in the market into the middle of the month, and here we go at the end of the month, right back up to the highs. Um S&P and NASDAQ new highs for the move.
And the we're starting to see some divergences here now. Things like the relative strength index is pausing at a lower high. So we'll see what happens as far as this run is concerned.
You know, historically when you've had the big run-ups like we've had since April, you get initial pauses that hold around the 20 or 50-day moving average. In this case, it's the 20-day. And we would expect that if this divergence now holds in place for a few days, that maybe we give back half of the gains that we've had since the middle of the month. That wouldn't be terrible, but and would still maintain the upward trend that we've got here.
One of the key items that we look at on the monetary side is always the M2, the money supply on a global basis.
And that has been a leading factor in the marketplace.
It typically leads the equity markets.
The you know, that that liquidity factor finds its way into stocks.
And at this point, the the G2, the M2 that we're looking at would be looking at another month here of upside bias as far as stocks are concerned.
Maybe a correction in June in July, August, but for now, the monetary side of things is looking pretty darn good.
And if we look at over the bond market, which had had a pretty bad break on the CPI numbers back into the middle of the month. you know, bonds had been up around 114, broke down to 109, and now they're back to 112 and a half, and looks like there might be a reasonable bottom in place here in the bonds, and that would be another positive effect as far as the equity markets are concerned.
>> What's happening with crude?
>> Uh well, here we go. We're finally getting closer and closer to a resolve for the US and Iran, and we've got 8770 on crude oil. That's the the lowest weekly close that we've had in over a month, and if if anything, starting to first see the first oversold readings that we've had in well, really since this market took off and the first of the first quarter of the year. So, you know, we have to look at is this buy the buy history and sell the mystery. And in this case, you know, if we are close enough to a resolve on things, maybe that's going to produce a bottom in here. And as far as the the stocks are concerned, the the XLE on the US side, that the index has held in a pretty darn well since March.
And it's down a little bit this week, but like crude oil, not breaking down in a big way, but I would suggest if you see some nice oversold readings in those oil stocks, that that should be a a buying opportunity on the news.
>> What's going on with gold and silver?
>> Uh we are basing action as far as I can see is in both of those. You know, historically when you've had a just an exponential move to a top like we had at the end of January, you go through this consolidation phase afterwards. The first phase of that was a bounce in April that was pretty much on great in concert with what we have seen historically.
And then during May we went back and both in silver and gold and in the stocks, we did a retest of the April high. Once again, that's the normal kind of back and forth action that you see following a post bubble top. Now, we're positioned here with some stability in the last week or so and it looks as though there's going to be another uh test of the the April resistance, sort of April-May depending upon whether you're looking at silver or gold. But at this point, I think there's a pretty good chance of gold tacking on a couple hundred dollars and we'll see what it looks like on that rally. But for now, the the initial retest of the March support seems to be holding.
>> What's happening with Bitcoin, the Canadian dollar and US dollar?
>> Uh I Everything's quiet over there.
Bitcoin at 73,600 and that's given back about a 30% of the the gains that it made off the the March low.
And as I talked about the last week or so, this looks as though it's trying to base out in here.
I think that there might be a little bit more on the upside. So, for now, um, you know, uh, we had [snorts] originally a target of an 85,000. We got to 83,000.
Uh, maybe it goes back and tests that uh, 84,000 before things are finished.
On the uh, currency side of the equation here, um, pretty darn quiet considering all that's going on. Uh, and uh, the uh, US dollar at uh, 98.90, uh, that's 10 days inside a very, very small trading range. Um, and the Canadian dollar 72 and a half. And considering that uh, the you know, the really negative GDP numbers are out now. Uh, so Canada is officially into a recession, but um, that seems to have been priced in quite well. And uh, if anything, when we take a look at uh, the uh, the euro, the yen, the British pound, um, there's no reason to say that the Canadian is any different than those. I guess the one positive as far as Canada is concerned is that uh, considering how uh, the oil market has uh, eased its way back to the bottom, uh, Canadian dollar held its own this week.
So, uh, I always look for the potential divergences. And right now, there if anything, there's a small positive divergence over the last two or three days. But uh, way too early to call that uh, as anything that would have a lasting effect.
>> Ross, thank you so much for being on This Week in Money.
>> Good to be with you, Jim.
>> My guest has been Ross Clark from chartsandmarkets.com.
You can find him on X at chartsbyross.
Coming up, Martin Streith next on This Week in Money.
>> Always [music] consult your investment professional before making any investment decision.
>> [music] >> This Week in Money is archived online at talkdigitalnetwork.com. [music] >> My guest is Martin Streit, founder of Trend News online at the trendletter.com. [music] He's speaking to us from Coquitlam, BC, which is just east of Vancouver. Welcome back to This Week in Money.
>> Always a pleasure, Jim. Thanks for having me.
>> A tentative 60-day deal between the US and Iran has a reportedly been reached.
Mines to be cleared, the strait to reopen to traffic, nuclear talks to begin, but Trump hasn't signed and Iran hasn't formally responded to this. What do you read from these headlines?
>> Yeah, well, well, exactly what you say.
Trump hasn't signed and Iran hasn't officially responded. And and it's not like we haven't heard these potential deals before, only, you know, only to see things fall apart.
And this is is not a peace deal. It's a 60-day proposed ceasefire extension with terms to get the Strait of Hormuz reopened and buying time for the harder issues and like the negotiation of a nuclear Um, you know, so that fundamental question remains completely unanswered, you know, Iran's nuclear program, which is, you know, supposedly was the main reason that Trump wanted to do this.
So, that's being deferred, but it hasn't been resolved. So, you know, the markets will rally on a signing, for sure, but the ceiling is going to be lower than it would be for a permanent resolution.
You know, the risk premium for oil, gold, you know, other safe haven assets would drop, but they're not going to fully unwind.
So, if what's reported is real, this is quite different from the previous announcements. So, for the first time, we would actually have operational details. So, things like the mines being cleared, no tolls, uh, US blockade lifted, sanction relief, all that would be on the table according to the all the reports.
But the caution is just as important, you know, again, Trump hasn't signed, Iran hasn't fully responded, and what's Vice President Pence, he's publicly saying this is to be determined, so it's it's not resolved yet. And as I said, we've we've seen all this before.
I think from my account, you know, five or six times we've had announcements since February and nothing ever has happened here. So my take is it's the most credible version of a deal story we've heard, but credible is not the same as done. So we'll see. I mean, let's hope that this is the end of a war that almost nobody wanted.
>> Oil has been quietly selling off all week in anticipation of this deal. If Trump signs this weekend, how does oil trade next week?
>> Yeah, well, as you say, I mean, oil's already been dropping here. It was was $104 late last week. It's been down every day this week.
Right now, it's 87.75 here on Friday.
So it's already down, you know, over 15% on the rumor of an agreement. And again, as we just said, this is a 60-day deal, it's not a permanent resolution.
So for the oil price, if if the deal I think it's signed this weekend, we're going to see a drop in oil for sure.
You know, again, it's about $87 from 104. I can see it dropping initially to about the low 80s.
Then, you know, if things continue to progress, so if the mines do start getting cleared out, if the straight does open, and Iranian barrels do start flowing again, well, that's genuinely uh, know, a meaningful supply coming back online.
So, then if there's no breach of agreement, you know, our models would see oil dropping down to the low 70s if the strait remains open.
Um, but the permanent, uh, premium risk for the Persian Gulf oil is not going to be fully unwound here on any temporary agreement.
The market has learned a major lesson this year.
You know, key shipping choke points, so we're talking the straits and pipelines, you know, they're not just simply lines on a map, they're powerful economic weapons and they, you know, we've seen how, uh, Iran's been using these and and and being very effective with them.
So, because traders now recognize this there's a permanent risk here, oil prices have kind of a safety built-in, uh, safety net.
So, even if oil prices drop dramatically, uh, in when the agreement if it's signed, uh, don't expect it to crash down, you know, below those pre, uh, conflict levels. I think the baseline for oil cost is fundamentally shifted higher.
So, once we get an official announcement that the strait is open, uh, and and we see the ships are starting to move through, um, like I say, we'll see a big drop in oil, again, likely down to the low 80s at first, and if the strait remains open, again, probably down to the mid to low 70s.
And then at that range, though, uh, I think the all these countries that have depleted the strategic reserves, they're going to have to restock those reserves and that's going to put a floor under the oil price certainly, uh, in the near term. And so, after initial drop to maybe 70, even, you know, 65, I think our our target range is 75 to 80 and I think that seems really likely.
You know, we just sent out an alert to our subscribers, actually, to book gains. Uh, we have a number of oil stocks and positions which have done very well. So, we're resizing those positions for a number of the stocks in our portfolio.
>> In last week's trend letter, you noted a big contradiction. Consumer sentiment is at all-time lows, yet the stock markets are at all-time highs. Can you explain?
>> Yeah, I mean that's quite quite a situation. I mean, you know, something has to give there. You know, when you've got the everyday economy, so you're talking like Main Street and the stock market, which is Wall Street, when they're miles apart like that, typically a massive corrections usually brewing there. So, and history shows that these gaps don't typically get fixed by the average consumer suddenly getting rich enough to justify skyrocketing stock prices.
So, instead, it's almost always resolved by the stock market dropping back down to Earth to meet the reality.
So, now the bull case for the markets is that the Orion deal gets signed, oil prices drop, gasoline falls, sentiment snaps back quickly, and the gap closes from the consumer side.
The bear case is that the deal is another kind of head fake, sentiment stays pretty depressed, consumer spending cracks, and the earnings growth estimates get revised lower.
I mean, realistically, consumer sentiment does not rocket back overnight. Even if a deal signed tonight, um and a major geopolitical bottleneck like the Strait of Hormuz opens up, sentiment behaves more like a you know, it behaves more like a massive container ship than the speedboat. It takes time to turn around. It takes time for people to get confident that this is real.
You know, consumer sentiment surveys, they capture the mood of the entire population, and it's heavily weighted toward the everyday realities, like you know, food, gas, rent, housing costs.
And inflation, it's a massive tax, especially on the lower and middle classes. And that's driving the sentiment that's down to historic lows.
So, meanwhile, the top 10% of households, they own the vast majority of stocks. And I think the number I last saw was 91 to 93%.
Um so, for asset owners, rising inflation and corporate pricing power actually inflated the value of their their investments, keeping, you know, equity demand high.
You know, when a consumer feels bad, when they have to pay $10 for something that used to cost six.
But a corporation, you know, they can remain highly profitable if they successfully pass on higher costs onto the consumer. You know, it's called corporate pricing power.
So, as long as profit margins hold up, Wall Street can bid stocks higher, completely independent of how painful that transaction feels to the end buyer.
You know, stock markets are driven by institutional capital, you know, pension funds, endowments, you know, global investors looking for a place to park capital.
In an inflationary or uncertain global environment, US equities are often viewed as, you know, I use this term all the time, but the least ugly house on the block.
So, capital flows to where it's perceived to be treated the best.
And right now, that is into the stock market because there's very few alternatives, regardless of how pessimistic the domestic retail consumer feels.
So, the main takeaway to me is, you know, consumer sentiment tells you how the public feels about the present burden of everyday life.
The stock market tells you where institutional capital thinks future corporate profits are going.
So, right now corporations are winning that tug-of-war. Um you know, that's creating the exact split of historic consumer low, confidence low like you just said, and you got record high stock prices.
>> The SOXX semiconductor index has been on an absolute tear up over 80% since the April 10 low, yet Nvidia, the tech leader, has dropped over 10% since its massive earnings beat. What does it mean?
>> Well, to me it's it's a warning sign. I mean and the reason it matters is So, Nvidia, so you've got 76 analysts ratings on a stock and there are basically one sell signal.
So, price targets implying an 8 and 1/2 trillion-dollar valuation.
So, that was good news baked in uh even though the blowout earnings number couldn't move it higher.
So, the classic signal we saw was Nvidia opening at a new all-time high on those great earnings but it closed lower taking good news negatively.
So, that's typically I mean it's not 100% at all, but it's typically a warning that it's the beginning of the end of a bull market.
So, if you strip out the semi semi-conductors entirely then the main leadership portal on the S&P 500 has been the commodities.
So, the semi bubble has you know, been the one thing keeping the rotation trade. I I know we talked about last few months.
You know, I've been calling for this rotation trade, you know, out of the high-tech, the big you know, mag seven and into commodities. And we've seen part of that playing out, which is exactly what happened in 2022 when big tech got clobbered and the metals, the mining, they were all up, you know, 15, 20% or 30%.
But now we need to see a factor in the we've got to factor in the Iran-US deal.
So everybody's friend, the Iran-US deal is an oil story.
But it's also a rate story, an interest rate story.
Because as a rate story, that means it's a tech story. Cuz semis, semiconductors, they're long-duration assets, meaning their valuations are based on earnings projected years into the future. We're talking, you know, three, five, even 10 years into the future.
So when you discount those future earnings at lower interest rates, the present value jumps dramatically. You know, a 50 basis point shift in the interest rate expectation, I mean, that can move a semiconductor stock 15 to 20% with no change in the underlying business. You know, Goldman Sachs just raised their year-end projection target for the S&P 500 to 8,000. And that's exactly based on the their earnings and expected rate cut um going forward.
So the irony is that while the the opening of the Strait of Hormuz it would certainly benefit airlines and shipping companies, it could also benefit Nvidia and the semiconductors due to the rate change.
So a deal doesn't resolve semis versus commodities rotation that we've been calling for, but it might actually let both win where the you know, the semis and the commodities simultaneously for a period, at least until you know, I project I would into the summer maybe where they both rise together. So I still think the money will ultimately be starting to come out of the semis and flowing back into the commodities, metals, mining, and energy. I think that's going to be the next phase.
Obviously, the semis have been very resilient here. So, we've seen it in spurts, but we find when we finally get the semis rolling over, I think the commodity play is going to make a lot of sense.
>> The US Federal Reserve has a new Trump picked chair and Kevin Warsh, who's just been confirmed and sworn in. He came in promising a different approach to monetary policy, but he's walking into an economy with stubborn inflation, sky-high energy prices. Where do you see interest rates heading and realistically, what are the chances the Fed actually cuts this year?
>> Yeah, I mean, well, I mean, the honest answer to me is that Warsh, I mean, this guy is inheriting one of the most complicated monetary policy environments any new Fed chairs ever faced. You know, the gap between what Trump wants and what the data allows has never been wider. And you know, as you say, before his nomination, he argued that advances in artificial intelligence would boost productivity, which makes sense. It would push down inflation. That could be and allow the Fed to cut rates. And he viewed tariffs as one-time drivers of price increases. But that was all before the war. Now, the Fed has held its target rate steady at 3.5 to 3.75 throughout this year so far after cutting, I think they cut three times in 2025. But Warsh is facing, you know, they got their inflation now is up to 3.8%.
You know, their target inflation was 2%.
So, they're almost double what their target was. They got higher oil prices.
They got the tariffs. They got resistance from other Fed members. So, that makes a quick rate reduction really unlikely. So, and several Fed officials have recently stressed that they need to keep the option open to rate hikes, not cuts. So, now if a peace deal is announced, that's where it gets interesting to me because if Iran and US cut a deal here and oil falls deeply quickly and inflation starts to cool quickly, that could give wars the political justification and the and the basically the economic data he needs to start cutting interest rates. So now well, if all that happens, I mean if we get the straight open and you know, the next 60 days things are very calm and it looks good and they actually can start working on the nuclear agreement. Most analysts think rate drops won't happen till at earliest late 26 or 27. But you know, if you get a genuine Hormuz opening and the ships are flowing and things have calmed down, that could move the the window up a bit forward. So maybe you know, maybe somewhere around I mean this is what Trump wants. You know, they got midterm elections in November. You know, a rate cut somewhere of just before that. That's probably the best he could hope for.
>> What's your take on gold?
>> Well, you know, as I said earlier, money goes where it's treated best. So whether or not you expect something to happen, you know, rising oil prices means higher inflation.
That used to mean gold rallies, but higher interest rates also means higher yields and gold doesn't pay yields. So when interest rates go up, traders typically would sell tech stocks and then they would typically take that money and put it into resource and commodity stocks. But right now, what we've seen in the last few months here is that that money went back into the semiconductors. So the semis got sold off, but then they got bought back. So with gold, February was the highest monthly close at 5280. Then in March, we had a key reversal month to the downside. And this is important. So it was closed at 4668 and then April was lower still at 4622 and here in May we're looking at yet another close lower. So, right now we got gold 4568.
So, this would be a 3-month correction in gold and that strongly suggests I can say with the price right now closing in it definitely looks like it's going to be under 4622 and that would confirm a 3-month correction. And technically that suggests that we're going to see a bottom here for gold at least temporarily and we could very likely see a very nice strong rally into into the summer most likely topping out in our models around August September. So, we're looking for the next week or two very closely to see if it can produce that key bottom and then consolidation and a great buying opportunity. So, for the last 2 months we've been signaling to our subscribers how 4383 represents key support zone.
Well, it just tested that level yesterday on Thursday and bounced off it. So, as I say gold trading at 4568 4383 was that test. So, now we just see where we go next. So, the critical levels to watch again 4383 that's the support we just tested yesterday. If it breaks that in the next week or two then watch for 3930 and that's the ultimate floor for the correction and to me that must hold for this bull market to remain.
On the upside if we start to rally if we if we start to consolidate here and start to rally our first target is 4883 that's the immediate resistance and that has to be broken to signal that we're going to start gaining some momentum here and then of course we've got 5425.
That's the all-time high, and that's our ultimate target. And if we can get to there, that would suggest that we've got traction for a a new high. So, in the bigger picture, zooming out, long-term uptrend from October 23 is still intact.
The current correction is essentially to me a very healthy pullback within a large bull market. And again, as long as 4383 and ultimately 3931 hold, uh we're in good shape here.
So, but again, understand long-term we are very bullish gold. Uh you've got the debasement trade. We've got global debt approaching, you know, 350 trillion. US debt alone is now over 39 trillion.
Canada and virtually every G20 country are all racking up huge debt. Um you know, when these countries have to, you know, cover those debts, what they do is they print money.
And when they print money, they're debasing their own currency, and that that reduces the purchasing power of every one of those currencies. Now, everybody always focuses on the US dollar, got, you know, it got it got uh it goes down because of printing money.
Every of these countries does the same thing. So, you know, while we did see uh some central banks like Turkey sell some of their gold during the energy high energy prices, um we expect most of these central banks are going to resume the gold buying. Uh you know, I think I mentioned this last couple times, central bank holdings of uh gold has surpassed US Treasury reserves for the first time in over 35 years.
You know, and we talked, you know, China in 2020, they had 1.08 trillion dollars in US Treasuries. Today, they got barely over 690 billion. So, again, we're watching the next week or two very closely um for our subscribers. uh I suspect we're going to be sending out a buy signal in the next couple of weeks.
>> What's the story with silver?
>> Well, silver's you know the pattern that I've been highlighting for the last couple times I've been on it still applies.
After that huge sell-off in January 30th, silver's been trading in a range between 72 at the low and 92 at the high. You know, it tested 92 resistance a couple times in early March. But it could not break through it. Since then it's been slowly dropping down and testing the 72 level. As I noted in those previous interviews, you know, we expected 72 to provide really solid support. And that's you know, silver should be able to get some rallies off of that level. So far that calls been spot-on. Silver's been tested a number of times in late March, again in late April, and it just got tested again yesterday. So for each of those tests 72 has held. Now today it's trading at uh What have we got here? 75.50 right now.
Uh so we're looking at what? Two to three dollars above that 72 level.
Um so we're watching this level really closely for the next couple of weeks.
Now we could get a sharp sell-off before we hit the bottom here. So um 72's key.
Uh we do see it being vulnerable to break through and hit 65 and even down to 52.
Now and then remember 52 is very critical because that's the level silver started its huge parabolic rally when it went up to $120.
And I think if gold can rally here, it's going to pull silver along with it.
Uh but it could be a very volatile next couple weeks. So but be ready for our buy signals for both gold and silver soon.
>> Bitcoin told a very different story just a few weeks ago. It had surged 20% off its March lows and looked like it was breaking out through resistance, but the picture's changed dramatically since then. Can you give us an update?
>> Yeah, um well, Bit- you know, Bitcoin is you know, it's been in a parallel uptrend channel since that big sell-off that ended in uh what was that? Early February.
You know, when it went from uh you know, 126,000 yeah, in in October down to um whatever that was, you know, it it lost what? 35% in that period. But, since that low in February Bitcoin's been trading in a rising channel making a series of higher lows and higher highs and it's been doing that for about 3 months.
You know, that channel has defined every meaningful move. So, buyers have repeatedly stepped in at the lower boundaries of that channel and then sellers have appeared at the upper boundary at on you know, almost total precision. So, you got every time it hit the lower edge of that uh channel, uh the buyers came in. Every time it got to the top, the sellers bought or sold.
So, from the middle of March, that pattern's changed though and now we're seeing lower highs and lower lows since early April.
And each rally attempt has peaked at the lower level of the last one.
So, that's a deteriorating pattern of diminishing momentum and the buyers are losing energy on every one of these bounces.
So, Bitcoin is uh being compressed here between a rising floor from February low and a declining ceiling from the uh lower highs. Um just I know what I'm talking about. This people have to visualize this. This is why we show charts. Uh when we do our trend letter, there's uh you know, there's like 30, 40 charts in there and it's simple explanation. A picture's worth a thousand words here.
But when you get this kind of compression, it typically results in a big move. Obviously, the question right now, what direction does it break?
So, we've got 84,500 uh resistance. You know, that resistance seems to be getting harder and harder to reach, not easier. Every rally seems to be running out of steam at the lower level than the one before. The ceiling isn't moving, but the energy to reach that is moving. Um so, to me, that's a big warning sign. I think that uh Bitcoin's really trending down here.
Trading right now at 73,900.
Uh so, 74 is a key support level. It's It's right at that boundary of that uptrend channel. So, we're already dipping below it a little bit here. Now, you need to see confirmation. We need to see it a day or two, but if it stays below that for a day or two, um you're you're looking at lower prices here. And a break there that brings in 62,000 floor. It brings that back into play. So, this is a very key time for Bitcoin.
>> Before we go, can you tell us a bit about your services and how people can subscribe and contact you?
>> Yeah, of course. Um now, we've got six services now. We've got three free ones and three uh paid services.
Uh the paid ones we've got uh the trend letter, uh 20th year now we've been publishing that, a weekly publication. Uh it's for long-term investors who who want to understand what is driving these markets. So, it's about uh $600 a year.
Uh it covers all the sectors, equities, currencies, precious metals, commodities, and bonds.
The second one is Trend Technical Trader, uh online service updated Monday, Wednesdays, and Fridays. Um again, that's for both active and longer-term investors. It started out as a hedging service, but now covers long positions in, you know, most of the sectors, equities, precious metals, commodities. And it includes our proprietary gold technical indicator.
And that goes for us about $650 a year.
And the third one is Trend Disruptors.
So, that's for speculative risk capital available. This service invests in, you know, disruptive ideas. So, we're talking AI, virtual augmented reality, 5G, cloud, internet of things, all the cool stuff. And again, that one trades for our sales for about 600 a year as well.
On the free services, we've got our DeFi Digest. So, that's where we the review all the developments in the decentralized finance sector.
Very speculative, but this is a sector that if any of your listeners are people that are very interested in new technology, what's happening next, you know, people that wanted to get in on the next internet or the net, you know, crypto, Bitcoin kind of thing, this is that area. Um we also have uh what we call Market Pulse. So, those are market recaps highlighting, you know, the key market moves. So, it might be daily or weekly. And uh those are free to everybody. And the other one we have is Headlines. That's a a daily service. And what we do there is we review the review the markets every morning. We look at the news, what's going on in the market.
And then we pick the highlights that we think every investor needs to be aware of. Sometimes they're not front page news items. They're things that we see that people need to be aware of. And it's a quick quick read. Uh we'll give you all the headlines. And then if you want to uh read the details, you can just simply click on the link and read that particular article.
And then we also have um videos. So, you can go to our video page. We do short detailed videos there.
Again, showing the chart, explaining the charts, highlighting what the chart is telling us. And again, these are free and accessible to anybody wants to go to our video page or our YouTube channel. And then contact us any of your listeners have questions about our services or what's going on in the market, they can email us at [email protected].
So that's one word, thetrendletter.
And yeah, so check it out and uh let us know if you got any questions.
>> Martin, thank you so much for being on This Week in Money.
>> All right, Jim Dan, always a pleasure.
Have a great week.
>> My guest has been Martin Straith, founder of thetrendletter.com.
He was speaking to us from Coquitlam, BC. Coming up, Hilliard Macbeth next on This Week in Money.
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This Week in Money is archived online at talkdigitalnetwork.com. [music] >> Welcome back. My guest is Hilliard Macbeth, author of the second edition of the book When the Bubble Burst: Surviving the Canadian Real Estate Crash. His website macbethmaccloudpartners.com.
He's speaking to us from Edmonton. You can find him on X at hmacbe.
Welcome back to This Week in Money.
>> It's great to be back on the show. I just got back from Europe and Spain and it was lovely there. I managed to get back just before the heat wave hit.
Now I'm back in Edmonton long enough to get hit by a rain storm apparently. So, we'll find out how that goes.
>> Well, you know, on the prairies, the weather is always extreme. It's either too hot, too cold, too windy, too wet, or too dry.
>> Yes, and it's it's been really dry and it's about to become very, very wet. So, we'll see what happens. We're not used to that.
>> Mhm. Yeah, I saw somewhere Calgary's going to get like about an inch of rain a day for the next 3 days.
That's Vancouver weather.
>> Exactly. And they they don't have uh this capability to to uh ignore it the way Vancouver people have learned how to do.
>> Yeah. Well, yeah, we call it liquid sunshine.
>> Yeah.
>> Yeah.
Now, uh uh looking back at your uh book, When the Bubble Bursts, where can people get it? How important is it to read it right now? And where can people buy it?
>> Yeah, uh all the best bookstores and also uh more increasingly people are buying it as an ebook on uh Kindle and Kobo and all those ebook providers. And uh as far as the timeliness, so the first edition actually came out 11 years ago and uh second edition came out about 7 years ago.
And uh all of the things that I've talked about in the in the books were um are now happening. I was early, obviously, very early.
Uh and uh but but the fundamentals are about to to uh uh kick in. And that is that Canada has the highest household debt percentage of GDP of any any uh country, any developed country, probably any country in the in the world.
Um and uh there's one uh if you look at the numbers, they'll say, "No, no, we're number Canada's number two."
Switzerland's ahead of us, but when you when you go and look at the system in Switzerland, every wealthy person in Switzerland has a big mortgage because there's a a a fantastic tax break for holding uh residential mortgage debt. So, take that out, Canada's number one.
And of course, when house prices are rising, it's all good, but when house prices fall then everything starts to to unfold and unravel. As Warren Buffett said, you find out who's swimming naked when the tide goes out.
>> [laughter] >> So, the tide So, now we're about to see some ugly naked bodies. Like if you want to use that image.
>> Wow, that that is a sight. Now, statistics have just come out this weekend showing that Canada had negative GDP over the last two quarters and technically that means we're in a recession. How bad is it and how bad could it get?
>> Well, yeah, it's so it's not that bad so far. So, there's a something that, you know, I've been following it on uh Twitter today. There's quite a bit on Twitter.
And one thing that's hard for people to understand is that you don't know you're in a recession till 6 months after it starts. So, basically it doesn't We're in a recession that started 6 months ago.
That's the technical definition of recession. You have to have two consecutive quarters, so 6 months, of negative growth. And then there Prior to that, there was one quarter of positive growth and then prior to that, there was a a quarter of negative growth. So, of the last four quarters, last 12 months, um 9 months has been negative and and 3 months have been positive. So, so that's the the situation. We've we've we've been bordering on a recession for a long time and now officially we're we're we find out we've been in one for quite a while.
The second thing to note is that even though house prices have come down quite a bit in Ontario and parts of Toronto, like Brampton, we're down 40% on house prices. Uh the actual economic impact of that is not hit yet because um construction projects are always started with a lead time of two, three, four years. So, I just checked the housing numbers here on uh uh uh this this weekend and um >> [clears throat] >> the housing starts are still pretty close to record highs. At the highest, it's about 300,000 uh per year annualized and then it's about 279,000 right now. So, since I did the first edition of the book now over the last 7 years, it's been consistently in the high 2s, 250 to 300,000 and we're at the at the high end of that range. So, much higher on a per capita basis than the US.
So, long story short, that amount of construction activity is going to turn down and it's going to be quite a bit lower than that for the first time in probably a decade or longer.
And and that has not hit the unemployment numbers yet, hasn't hit the incomes of construction companies and and it it has a knock-on effect with lenders as well cuz there's a lot of borrowing that goes on during construction for all of these projects. So, the builders generally don't they need they need to borrow the money to build the building and then they when they sell the units, they get the they pay the loan back. So, um there's going to be a ripple effect from construction. It's such a big percentage of of the GDP. It's up in the depending on how you measure it, it's it's between 8% and and say 28% if you if you include all of the all of the related activities, but 8% is the actual direct impact and there's another approximately 20% that's uh second and third-order effects. So, uh if construction or I should say when construction slows down dramatically uh for the first time in a long time, that that will hit the GDP quite hard in a negative way. And unemployment will rise and um and of course we'll see for the first time, really for a long time, what what Canada's like in the in the in a real recession. We had a recession in 2000 and and 20.
COVID but the government flooded the the market with so much money and uh basically the economy was kind of shut down and everybody was living off of uh of savings or or government funding.
Um we didn't really see the layoffs. We didn't see the all of the banks said, "Oh, don't worry. You don't have to pay your mortgage. We'll we'll defer it for 9 months or a year or whatever." I don't know how long it froze my loan. They went off for a long time.
Same with business loans.
So, there's really no crunch there. And of course the and then the market reopened and and people went back to buying stuff even more aggressively than they were before. So, um we we are now we have now found out we're in a recession for 6 months. It's probably going to be uh something that most people haven't experienced for a long time, you know, as much as 16 to 18 years.
And um and with the housing bubble bursting at the same time, it'll be unusual because if you go back to the 16 years ago, last time we had a an actual recession in Canada, related to the global financial crisis in the US, our uh our housing sector and our residential real estate sector did not dip at all.
It was it was uh the Harper government was in charge of the time and they made sure that everybody kept buying houses and kept building houses. So, and kept building uh apartments and and condos. So, it it it really you have to go back prior to 2000 to find out what it what it what it's really like.
>> What's the latest on Canada's bear market in real estate?
>> Well, you know, it's it's like I mentioned Brampton minus 40%.
Uh housing starts in Vancouver have really gone down. They're down 30%. So, one part of Canada where the where the uh the housing starts have gone down. So, Vancouver's going to hit quite hard on the on the new building.
And and and we can see that there's there's a lack of data, but uh it's obvious that there's lots of completed buildings in Toronto and Vancouver and elsewhere that are that are are not able to find buyers. Um in the rental market, uh we can see that uh there's lots of new purpose-built rentals. CMHC, the government uh subsidiary that does financing mortgages for home buyers, but also big a bigger amount of financing for developers building purpose-built rentals.
And uh purpose-built rentals had a special uh there's a special uh deal on uh like a Kmart special on aisle 11 for for building these uh high-rise uh rental apartments.
And um they've been building them like crazy in Edmonton, Calgary, Toronto, Vancouver, everywhere. And uh they're starting to to uh try and look for renters, and they've had real they're having real trouble.
So, rents are officially have not come down a lot, you know, from 2,000 a month down to maybe 1,800 a month. I guess that's 10%, but but the actual real number is much much worse than that, because what they do, they don't drop their their rental their monthly rental down they because they need to meet their their conditions for the financing.
So, what they do is they offer 2 months rent free, 3 months rent free, or 6 months rent free. You know, they they all kinds of deals.
And so, and that of course that hurts sales of new homes as well and existing homes, because if people can get a really good rental for a really cheap price, and they see that house prices are falling, then their attitude is, "Well, I don't want to just rent for a while and we we till till the housing bubble's fully deflated."
>> If real estate prices are crashing, why are the stock prices of Canadian banks so high?
>> It's a great question. You know, it's like and they just came out this week.
So, their their earnings per share and their and their dividends all increased except for one one bank. CIBC was the only one that didn't increase its dividend. Um and I looked at the numbers and we can see that uh the most obvious there's two two really big things. One is uh capital markets. So, the frenzy in the stock market uh most most of the Canadian banks have a lot of exposure in the US now.
They're doing really well on the trading in the stock market and the investment side. The wealth they call the wealth management side because the stock markets in the US are hitting new highs, you know, uh some incredible numbers in the stock market. And so that's helping the Canadian banks.
But the other thing they've done and this is pretty shocking given what we just talked about with the GDP being in recession is the the the banks have have the management of the banks have the option to decide how much they should set aside for losses. And their biggest business by far is uh Canadian housing mortgages and business finance and that sort of thing. But the biggest one is is is housing related mortgages and there's been often very few defaults on on for decades there's been a small number of defaults on mortgages except in a really bad recession, which we haven't had as I discussed we haven't had for a long time. So, they've gotten comfortable with just keeping a very very low percentage of measured in ba- basis points, hundreds of a of a interest point. So, um we were down to 35 basis points, 25 basis points, like very very small. And so but you know, we just officially found out we're in a recession today on on well, this this week. And uh the banks would have known that was coming, I would think. They called they have big economic departments. they have economists, they've got all kinds of activity And yet, in their in their in their uh really shocking that in their quarterly reports that came out today. Now, that's you know, it's a month ago their quarter ended, but we've been in a recession for 6 months. So, they should have known.
But, they said because the economic forecast has gotten better, we're going to take a smaller uh uh provision that's called provision for credit losses, PCL for short.
Their PCLs all went down except for one bank, CIBC, where they didn't go up, but they didn't go down, they just stayed the same. So, five out of six banks uh lowered their provisions by quite a large amount um which boosts their profits cuz that's a direct deduction from profits. So, you lower a provision by $500 million, which is one one bank did, Royal Bank, then the profits go up by $500 million.
And um I I was really quite surprised to see that because you know, the the two things are the recession, they they should have known about that, but also the housing, you know, eventually the housing uh the crash in housing prices is going to hit the banks quite hard cuz that's their biggest line of business, mortgages. There you know, there's $2.4 trillion worth of mortgages outstanding in Canada.
The Canadian banks are are over 1.7 trillion. So, they're like 65-70% of that of all those mortgages. So, even if it doesn't amount to a loss for them in the sense that maybe the mortgage is only half the value of the house. So, the house goes down 20-30%, they still they still have enough collateral there to to not lose any money on the loan.
But, new loans are going to become much more difficult. And the mortgage business is such that everybody pays almost everybody pays back part of their mortgage every month. So, they have to keep going out and finding new mortgage borrowers to to keep their total amount of mortgages outstanding uh from at least growing a little bit or hopefully not falling. So, when when that starts to happen, when the when the actual total amount of mortgages outstanding shrinks, there's going to be a fight between the banks just you know, they'll start cutting their profit margins to try and attract new business.
And their and their revenues will decline. And so, that's hasn't happened for a long time since the 1990s really. So, so that's going to affect their uh their uh their share price and their profits.
And so, that's why surprisingly this the bank shares are up so much this year and their profits are up so much this year.
You know, it's a it's a it's a very the banks go along I think the way the banks work is they go along and then they they kind of you know, it's it's it's shocking really, but it's kind of like they're the last ones to know that there's there's bad times coming. And and then when the bad times do come, they they will they will reduce their dividend not their dividends, they don't reduce their dividends, but they'll they'll report lower profits and they'll when it's really bad, you know, like in 2009, they'll get some help from the government. And um they'll carry on.
But I think also the other thing with the banks are that they're very very heavily owned by Canadian retirement funds, life insurance companies, and everybody's individual RRSPs and and TFSAs. So, the government has a real in uh vested interest in keeping the Canadian banking sector in the at least in the stock market part of it in the in the positive trend.
>> It seems the stock market has not been impacted by the Iran war. Has the stock market been predicting a short war that will end soon?
>> Yeah, I mean as [clears throat] somebody on Twitter said or on X said the uh Trump has ended the war four times already.
So, it's been 3 months now. It's actually 1 day past 3 months.
Uh, and uh, the war is still going on and and the surprise to everybody, I think, uh, certainly uh, to the US military, I think, is that the Iran was so was able to close the Strait of Hormuz, which is everybody knows about the 20% of all the seaborne crude oil in the world passes through the strait. So, there's been a huge problem there.
So, the stock market must be thinking that either that whole thing doesn't matter and it if it goes on forever, the stock market doesn't care or there's going to be a reopening of the strait fairly soon. It's It's a little bit surprising because the price of oil this week has dropped. It was up if you take the WTI, it was up over $100 a barrel and today uh, at the end of the week, it's down to about 87. So, it has come down. It's still a lot higher than the $65 it was before the war.
But, um, so, there seems to be a feeling that the the war is going to end soon or at least it'll change the world change to such a way that the strait can open up.
Um, but what surprised me a little bit is that uh, you know, on Friday, the Canadian dollar was still above 72 cents and so, the price of oil is down. That should That's very directly related to the Canadian dollar. And then the other thing, which is a little bit more subtle, but is really is that is the Canadian economy is is much weaker than the US economy.
And therefore, uh, we might have to cut our interest rates in Canada, whereas the US uh, the inflation rate in the US is actually pretty strong. It's over 3%, 3 and 1/2%.
They might have to raise their rates.
Certainly, the the cutting of rates is very unlikely in the US at this time. So, with inflation being so high. So, um, so, we could see a situation where our rates are lower. They're already quite a bit lower and the crude oil price is lower.
And that generally is would push the Canadian dollar down. So, I'm I'm I'm I'm puzzled as to why the Canadian dollar wasn't wasn't weaker as as the week draws to a close on Friday afternoon. It's it's um it's odd.
And I you know, and so one of the problems I think is that um uh you know, if people really thought the war was going to end and a whole bunch of oil is going to flood through this the Strait of Hormuz, there's a whole bunch of ships with oil that are waiting to deliver.
And so, um the the Canadian Canadian situation would would be a impact because the price of oil would come down quite a bit. And uh it would have a negative impact on on Canada's revenue. So, um so, that's uh it it's hard to know. I think you know, the other side of that whole thing of course in the US is the US stock market being such a big part of the world stock market. Now, it's over over supposedly probably 70% is the focus on uh technology stocks especially AI related, data center related, SpaceX related, that sort of thing. So, that it's all it's that's that's maybe the thing that is is distracting people from the war right now.
>> Semiconductor chips and AI, SpaceX IPO, and AI IPOs.
Uh we also have uh Yes. So, could these be signs of I mean the SpaceX IPO is supposed to be something like a trillion dollars. Could these be signs of irrational exuberance?
>> For sure. And uh you know, that the history of these when these IPOs Well, first of all, we never had anything this big. So, to give you some scale, uh SpaceX they just announced the target.
They're targeting 1.8 trillion dollars.
So, up until fairly recently, there were there were very few companies over a trillion dollars and now there's companies coming out of the stock market for the first time like SpaceX and there's two more in the wings.
Uh Anthropic and A and Open AI >> Mhm.
>> that are targeting similar not not as big numbers but but close to a trillion dollars.
Um they're coming out on the market for the first time over the trillion-dollar mark. So, a company like Apple has been over a trillion for a long time, Microsoft, Google, uh to name three. Nvidia is the biggest in the world now. It's over 5 trillion.
But SpaceX is trying to come out on the market in about uh the middle of June on it'll start trading in June the 14th uh or not June the 14th. That's a Sunday.
That's Donald Trump's birthday. So, it must be June the 15th.
>> Wrestling day. Yes.
>> Yeah, wrestling day. That's right. I Yeah, I can you get tickets for that at all?
So, um anyway, so soon it'll be trading. And there's they're targeting a 1.8 trillion-dollar valuation for the sale of the shares. The the shares are it's a small number shares. So, they 1.8 trillion-dollar valuation for the whole company but only uh something like 80 80 80 billion uh will will be offered in new shares to the public. And so, and most of that will go to institutional. It won't go to retail.
So, um so, it's going to it's going to have what's called a tiny float. Most of it will be owned by Elon Musk and then a bunch of other people that are not going to be selling it for a long time or will own the rest and uh so, the trading on the market could be biased upwards as a whole bunch of new people who couldn't get stock on the new issue would come in afterwards to try and buy it in the aftermarket.
Um the second one is uh Anthropic which is targeting around uh a trillion dollars and Open AI I'm not sure if they're they're still talking a trillion dollars or maybe a little bit lower. So, the total of those is about 4 trillion.
And uh uh somebody went back and calculated all of the IPOs that that have happened since 1980. So, almost 50 years now.
Um the total is $12.5 trillion. So, this this these three that are happening in the next uh next month and maybe a month or two afterwards, next 3 months or 4, if they all get done, um are close to a third of the total amount of money raised by all the companies in the US market for the last uh 46 years. So, it's pretty phenomenal. And um of course, they're way overvalued. Like uh the SpaceX one is the one we know most about cuz they've they've they're they they at some point you have to reveal all your financials and they're they've already done that and uh they're losing money and the uh there's that $1.8 trillion, that's a huge percentage of sales, never mind profits.
Um but one of the big issues is uh SpaceX is the only company in the world that can actually lift large amounts of of of of uh mass into the into space and onto the moon and and eventually onto Mars.
The big thing now is uh they're talking about doing data centers in orbit. So, they would have to lift a lot of material up into the up into the orbit uh into space to to cuz to have data centers there. They've been lifting um the Starlink satellites for quite a few years now, probably 10 years now.
>> But they're tiny.
>> They're tiny and these things I didn't know this until just recently that uh they only last for about 5 years and then they fall out of the skies. Like you got to keep you got to keep lifting them. So, anyway, that Musk is has has put that data center thing in space because he claims it's more efficient to have uh the energy from the sun powering the and then you know, maybe there's some validity to that. I don't know.
Um so there wouldn't be any need for a huge expansion of the electrical grid to power these these these uh Nvidia chips that are AI designed for AI take way more power than a regular chip. A regular chip there's about 10 times uh need for power for the Nvidia chip for AI compared to just a regular chip.
So and there's a lot of heat generated as well. So that there's a lot of reasons why it might work in space, but it seems to me be quite far-fetched, but it is convenient for the for the uh for the IPO of SpaceX because uh the two are linked. They they if you have to have data centers in space, you got AI covers and then you've got data centers covered and then you now you've got the need for these big big rockets and the new uh Starship that they've got can can lift a much larger mass than any of the space ships that have ever happened before. So and then OpenAI and Anthropic Anthropic and OpenAI are more uh s- just specifically uh AI related and they've got uh a lot of uh models and they're doing a lot of training on models and they're doing a lot of inference and again, they have uh trillion-dollar um uh valuations with uh revenue in the 50 billion range or something like that.
And those you know, some people think those revenues are are exaggerated because right now everybody's trying to you know, train their models and do all this stuff. So they have to pay the big AI providers uh quite a bit of money per token. The term is token that they use for every time you and uh but eventually it'll settle down because they'll they won't need to to do as much and uh so if there's no it's I it's kind of like people are expecting these these revenues to grow 20 fold, 30 fold, 40 fold or 100 fold over the next few years, but once you get past this initial phase, it might actually be the opposite. They might not need to do nearly as much. So, um So, anyway, that the excitement is is so good in the stock market now that uh they should probably will get at least the first uh IPO done right.
My experience goes back almost 50 years in this and I I I have noticed over the years that um the the market seems to accommodate these these these big especially there's never been one this big, but the bigger IPOs tend to get done.
But then after that, there's kind of a of a a a slump because there's a lot of the demand for stock it's it's used up by the IPO. Everybody rushes out buys the IPO, they don't have the money to buy other stocks. So, there's often a slump of of uh months or even a couple of years after a big and when the IPOs are this big, we don't we've never tested before, but the chance chances are there'll be a slump, but it So, it could very well mark the time the top of the market, which is what some people are saying.
And I've been thinking that myself, but you just never know with this stock market is so incredible.
But uh it doesn't really You know, the price to earnings ratio that I watch is just about to hit right now the uh the peak that was reached in 2000, much much higher than 1929.
So, we're we're in we're in uncharted territory now for this market, but you know, you just you can't say when it's going to end. We just know that all stock market booms end and uh we just don't know when. That's the problem.
>> Uh could these IPOs for Anthropic and SpaceX suck so much money out of the market because people might sell their current shares to buy those?
Uh and would that cause an upset?
>> Yeah, it does because they're they're forced to. So that So what what uh what people may not realize is that about 75% of all of market stock market is is run by institutions, not by people not by individual people's making rational or irrational decisions with their exuberance and their and their discouragement and all that. It's It's It's more machine-like. And what And what they do is they they do their uh thing like an ETF exchange-traded fund.
They will They will proportion their their portfolios based on the capitalization weighted of of all the companies. So because these companies are so big they're going to immediately vault themselves into the top 10 of the holdings of all those all those institutions.
Uh and for technical reasons and for you know, obvious reasons like not wanting to miss out on good performance and get fired from your job as a portfolio manager if you don't buy SpaceX and it doubles and you're with such a big waiting is you're you're almost guaranteed that you're going to lose your job. So you have to buy it even if you think it's way over priced like I do.
So >> Right.
>> So um So all of those those changes to answer your question, they they don't have new money coming in fast enough to buy SpaceX. So what they're going to have to do is they're going to sell other stocks in order to get the money to buy SpaceX and move it into their portfolio and then the other one. So yeah, there'll be a huge um recalibration of of portfolios. Uh a lot of the portfolios done It's not just Americans.
Uh Chinese, European Brazilian, all of these institutions all over the world came Canada Canada pension plan.
They all follow the same model for SpaceX is that normally there's a 6-month period uh of when a company is green, they don't put it in the index right away.
Uh that was the rule and and Elon Musk somehow got the rule changed. So it's now it's going to go into the index almost I forget that it's just a few days after it comes out it's going to be in the index. So they'll be forced to they'll be forced to add it to the to their portfolios right away rather than waiting the usual 6-month period to do so. So you know, to answer your question yes, it's going to have a big impact and what stocks will they sell? Well, they might sell other stocks that are in the in the AI related business for you know, safety reasons.
They don't want to get too heavily weighted in AI in case it turns out to to be a bust. So the you know, the obvious one is Nvidia which makes the computer chips for the makes the specialized chips for AI processing. So Nvidia's got a $5 trillion market cap.
SpaceX will have a $1.8 trillion market cap. So the obvious thing to do would be for institutions to sell 25% of all its Nvidia stock and buy and use that to buy SpaceX stock. Not that simple obviously, but that's an example of how they could do it.
>> Do you think Alberta would be allowed to separate and in theory would Alberta separation be a good or bad idea?
>> So so what what I have in full disclosure I have to say I worked for the Alberta government for a couple of years forget in the 70s and uh in a department called Intergovernmental Affairs and that was that was the whole job of that department was to Quebec had had was in the middle of two referendums around that time.
Uh late 70s and 80s to separate from Canada.
And so the constitution of Canada has a what's called an amending formula and you can you can amend the constitution and you would have to to get Alberta to be allowed to separate.
But it requires the agreements of the federal government, all the provinces, and the territories.
And now, this wasn't such a big deal in the '70s when I worked there, but now today, there's also First Nations or Indigenous uh nations that would have to be included in that agreement. So So, Alberta could try, but it's very unlikely that uh they would be successful. So, they they couldn't get enough agreements to uh to make it happen. You'd have to ask Canada to amend its constitution, and and that's just too difficult. Um So, and and then even if they did succeed, what it's you know, the second part of your question is it's a good idea.
What do you What do you gain? I mean, like just to take oil, the biggest product in Alberta is oil. The second biggest product is probably agricultural, right? So, um both of those commodities are sold outside of Alberta, and they require export permits. And in case of oil, the pipelines go through Saskatchewan and Manitoba to go south, or they go through British Columbia to go to the west coast. Uh the new Trans Mountain expansion goes all through British Columbia. The new proposed pipeline will go through British Columbia.
And having upset everybody so much by demanding separation, it you know, the the negotiations to keep those pipelines uh going is going to be difficult because uh the the people people retaliate, right? You You make life difficult for them, they're going to make life life difficult difficult for you. It's just so um So, that's just human nature. And then on the on the cattle uh and other agricultural products that Alberta would need to sell uh to keep going, um again, it's international business.
So, the the federal government of Canada, even if Alberta is not in it anymore, because Alberta is landlocked, is going to need to they're going to need to Alberta's going to have to ask for help.
And uh to get across the borders, and that's going to be very difficult. So, um that's uh it's not a it's not a lot of upside to it. And you know, the thing about there is some validity to the to the complaint that uh Alberta sends more money to Ottawa than it gets back in return. That's the number one complaint um this go around.
We had a We had something similar in the '70s.
Back then, the complaint was bilingualism and the metric system. This So, that's Today, it's a different story. But, so anyway, the uh the problem The reason why it's like that is Alberta incomes are higher. So, that with a progressive income tax situation, you send most your money to the federal tax and some of your money to the provincial tax.
And uh so, at the current Alberta tax rate, 40-something percent of your of your money your income above $300,000 a year goes to the goes to the government. Most of it goes to the federal government. So, Alberta pays a lot more money uh every Alberta citizens and corporations pay a lot more money to the to the government than other parts of Canada because Alberta has higher incomes. It's not because there's any great conspiracy theory against Alberta or something. It's just If If the If those were in Saskatchewan, it would be Saskatchewan. So, So, uh that's the the it's misunderstood. And of course, people that want to separate and they they ex- they like to emphasize that and they sort of skip over the explanation. It's not a one province like Quebec taking money from Alberta. It's the money going to Ottawa, and the people with higher incomes send more money to Ottawa.
Um so it's it's it's not a not a really good doesn't have a lot of you know, being a resident of Alberta most of my life, I'd say the percentage that really wants separation is quite small, you're probably less than 10%, maybe 20%, um but they are uh powerful in a lot of cases they are powerful um and then there's something we haven't talked about yet, and that is the US wanting to annex Canada as Fitch foresee.
Alberta would be the the part of Canada that is most be more likely to be welcoming that possibility than practically any other part of Canada, I would guess. So at one point in Calgary 30% of the of the population of Calgary was uh was American because of the oil and gas industry. So there's quite a bit of uh of uh connections there, and uh of course some people think, and I I I kind of can see this happening is of a if Alberta somehow did separate from the rest of Canada, then it would join the US fairly quickly thereafter, and uh um you know, and some people might like that. I personally wouldn't, but uh some people would maybe.
>> Uh what are your feelings on the survey about happiness in Canada? It found Albertans are the least happy.
>> [laughter] >> Well, you know what they say is uh like uh I heard this saying that if you put a you have a room full of people that are worth a hundred million dollars you've got a a a room full of unhappy people cuz they're not worth a billion dollars.
It's like the more you have, the more you want, right? So that's that's the unfortunate thing. Uh having just been in Spain for 3 weeks, I would say it it's actually doing really well, and but it's not one of the wealthier parts of Europe. I think the wealthiest part of Europe is probably Germany and then maybe France is second, Spain is third or fourth, but um they seem to be quite happy, you know, they they they have long lunches, they they have a little siesta in the afternoon, they they have beautiful train system, they have great highways, they have great food, great weather, and uh they don't seem to be as disgruntled as maybe we are here in Alberta.
Uh but uh yeah, I I don't know. It's uh I I guess I've always I've always been on the idea that, you know, say if you're if you're feeling envious about something, you know, maybe sit down and do a gratitude list. What am I What am I What am I thankful for? And then it very quickly um takes the focus away from being happy about something you don't have cuz there's always going to be something I don't have, right? It's never going to be I'd like to have a better golf swing.
I'd like to have I'd like to have a lot of things, actually. It's but uh it's not much point in uh it's in focusing on them.
>> Is Alberta Premier Danielle Smith the biggest cheerleader for separation?
>> Well, I think she's not actually the biggest cheerleader for separation.
She's the biggest elected leader cheerleading for separation. If she And she doesn't even say she's cheerleading for separation, right? So, what she has uh is like I said that number 10, 20% of Albertans. Well, in her party, the United Conservative Party, especially the Wild Rose cuz it's it was put together with the Progressive Conservatives and the and the Wild Rose.
The Wild Rose were probably more like 50% in favor of of um of separation, but they're they're they're only 10% of the population, right? So, so she's got this wing of her party that is very, very uh uh angry about Canada and and Ottawa and and and they want to separate. So, she has to appease them and she seems to have chosen the route to to um to go all out in appeasing them and kind of ignoring everybody else. So, so she she's being forced to be and and so she's she's going to have a referendum in October with nine questions on it and one question is going to be about separation but because the Supreme Court of Canada disallowed the proposed question which is a direct question about separation.
She's got a new proposed question which is about which she thinks will be allowed by the court which is basically about would you like the government to enter into discussions to separate from Canada.
And a bit of a weasel uh wording.
And the wing of her party that is in favor of separation is really upset about that. Like they're really they like the there's two there's a lawyer named Raff and another guy and they're they're they're asking for her resignation or demand or asking. They don't ask they demand. They're demanding [clears throat] their issue her resignation because she's not being forceful enough on the on the push to separate. So, she's got a lot of pressures on her and unfortunately there's there's a lot of other things that are happening that are people care about more like in the health care sector, the education sector. So, um she's got she's got a tough um tough next little while ahead of her.
There'll be increasingly calls to have just call an election. Call an election see you know how many people have a party that's in favor of separation, have another party that's in favor in favor of staying in Canada and see what the election says, you know.
And uh >> Is there an Alberta separatist party like the Bloc Québécois?
>> No, there's no there's no party in Alberta that's officially the UCP the party that's in government that Danielle Smith head of and she's the premier is is is got more supporters than any of the other parties but uh but but it's not officially um she officially says she's wants to stay in Canada but have a sovereign nation called Alberta within Canada this sort of if I'm paraphrasing what she says so um somebody will say I did that wrong but it's sort of that's sort of my sense of it so um so uh so there's no official party that would say you know but I don't know an election would would force people to so there was a petition it's called forever Canada and they they they went around they collected 400 and something thousand signatures that are people that want to stay in Canada and they did not want uh uh a referendum they wanted to have a vote the legislature cuz they were trying to force the elected members of the legislature to to to vote yes or no on the question of of separation but but um the the the the governing party Danielle Smith's party they they won't allow it and they're the majority in the legislature right now so they won't allow that question to be put but that would be so that you put it in the legislature and then put it to the people in the form of an election that would be the way to solve it he came up in um in the '70s and the '80s it was called the Western Canada Concept Party and Lougheed was the prime premier at that time and I thought he handled that very masterfully he he he dealt with them but he never gave them center stage right so what what's I think the mistake Smith has made is she's she's got them she's given them a voice on center stage which is creating big problems for her.
>> What's the latest on electric vehicles?
>> Well, so the [clears throat] It's been imminent now for quite a while, but um the uh the Chinese cars are coming to Canada. They're going to be electric and they're uh Now, BYD's the largest now. It's just surpassed uh Tesla. Uh We talked about this before, I think.
become the largest EV manufacturer in uh in the world.
They're exporting more cars than they are selling in China. And um And now they want to actually they want to export cars to to uh to Canada. And they're opening up uh dealerships in Vancouver, Calgary, Toronto, Montreal, and a couple other places. I think they're uh talking about having uh a number of dealerships. And I haven't heard anything about some of the other vendors.
Literally hundreds of manufacturers in China. It's bizarre, but uh but BYD's the biggest. So, um there's some other Huawei, you know, the phone company, they make cars. Um it's quite interesting. Xiaomi, which is also makes phones, also makes cars. And um and there's a few others. I don't think necessarily that they're planning to come into Canada because there's only going to be allowed 49,000 cars. So, it is likely that the BYD model is going to And they have way too many models. They have over 20 models, BYD.
So, um we saw in uh when we were in Spain, we saw lots of BYDs, like lots and lots of BYDs. And um they have a model It's going to be called uh Seal, or Seal. No, S E A L, Seal.
And um it's a plain It's a plain uh four-door sedan.
Uh not as exciting looking as a Tesla.
If If like Teslas or these other cars, it's not competing at the high end like Tesla tried to do.
It's uh it's just a basic, but they're going to sell for like 20,000 US dollars. So, for 20,000 euros, uh 30,000 Canadian, whatever the number is.
It'll sell really well in Canada, I think. As long as they can solve the charging problem. And uh So, that's the big news. And that's imminent. Like it's been, you know, it's like possibly in June people will be able to actually go and buy one. So, um I wouldn't buy one cuz I got a Tesla which is a fancier car than that, but if one of the Chinese cars comes out that has that has specifications, cuz my Tesla now is coming up to 5 years old, I would look at it seriously because some of them uh they're not available yet in Canada, but the ones available in China, there's some pretty amazing cars that are coming out. And uh they don't really have them in Europe, either. I don't know what the deal is Europe. And Europe's probably got the same thing. They're only allowing a certain number of them in.
But in my travels, I I we took a number of Ubers and all of the Uber drivers just love the electric cars. They They They all know all the models that are coming from China and they all can hardly wait to get their hands on them because they're so much cheaper for for an Uber driver to operate. Right? So, they they they cost gasoline or petrol in Europe is way more expensive than it is in Canada or the US. So, um it really makes a big difference to them if they they can drive electric and uh make more money. So, it's probably coming. Uh you know, the last place the last holdout will be the US. Uh probably won't happen as long as the Republicans and Trump are in there, but the next government after them maybe will will allow it. I don't know.
Uh but um but all over the rest of the world, Brazil, Europe, uh Malaysia, Indonesia, all the Asian countries, uh there's you know, they're way more electric cars manufactured in China.
And they're opening up manufacturing plants in the like they're open they'll open up one in Spain. They'll open up one in other parts of Europe and uh they'll uh The only problem with that is the electric car manufacturing plants they don't employ nearly as many people as a regular car. Yes, so there's a huge couple of huge car manufacturing plants in Spain and and uh I was talking to them about that and they said, "Yeah, maybe the Chinese will open up a plant here."
But I I don't I don't I it hasn't really hit yet that they're going to be a lot of layoffs uh once they switch to electric cuz they're easier to make. The robots can make most of it. It's not you know, it's nothing like a combustion engine car.
>> Hilliard, where can our listeners follow you and buy your book?
>> So, uh you can buy the book in any of the best book stores and also as I mentioned in the the electric e-book versions. Um and uh in following me at it seems like I keep trying to get away from X and Twitter but it seems like that's where the most of this kind of stuff gets discussed.
So, I am fairly active on there and that they and I have a weekly um post that I do usually one of one of the other members of the team will sometimes do it as well, but I do it most of them.
Uh and it's comes out on Friday and today's version is the $4 trillion question which is about what we talked about with SpaceX and Anthropic and OpenAI. Um it it's um it'd be great to interact with anybody that want to want to connect with me on on X or Twitter as it used to be called.
>> Hilliard, thank you so much for being on This Week in Money.
>> Thank you, Jim.
>> My guest has been Hilliard Macbeth. His website macbethmccloudpartners.com.
You can find him on X at H MacB E. And that wraps up our show for this week.
We'd like to thank our guests, Ross Clark, Martin Streith, and [music] Hilliard Macbeth. And thank you for listening. If you have any questions for the show or our guests, you can send them to [email protected]. [music] I'm Jim Goddard. We'll be back next [music] week with more This Week in Money.
>> Comments made on This Week in Money are an expression of opinion only and should not [music] be construed in any matter whatsoever as recommendations to buy or sell any financial [music] instrument at any time. Archived online at talkdigitalnetwork.com.
This Week in Money is a production of House Street [music] Media Incorporated.
Executive Producer is Tom Allen.
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