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

Likewise, Nancy.

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

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

Hmm, something else happened in Canada, right?

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

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

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

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

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

Not gonna happen.

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

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

Yeah.

Not just gas.

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

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

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

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

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

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

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

And look at this emerging market.

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

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

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

Artificial intelligence, all of that.

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

Of course.

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

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

Not mine, not mine.

Not yours.

They're not mine.

The ones that you're showing.

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

53.6.

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

Definitely. But those are very impressive numbers.

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

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

It's risk on.

Risk on.

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

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

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

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

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

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

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

The tariffs and.

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

And there's something special this afternoon.

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

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

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

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

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

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

Hello everyone, welcome to Economic Impact. We are Wednesday, February 18th, 2026. Stéfane, great to see you again.

Nice to see you.

What a week and we're only Wednesday.

It's a big week for Canada.

I know it's an amazing week for Canada. So before we start, the last time, I think we're going to do it every call because I love this. So, all the little brackets were on the right side of the line. So, can you tell us what happened in the last not even 4 weeks?

So, we had positive returns when we saw each other last month.

Yeah.

The year is still young, obviously, but it's actually more positive than it was last month. And notice, Nancy, positive for everyone except maybe 1 market, the U.S., which we'll speak to, but notice that, you know, everything related to the reflation trade that we spoke to last month shows positive returns. Emerging markets, the S&P TSX, Europe. So, all in all, it's still this concept that earnings are likely to accelerate this year with higher commodity prices.

And as it was in 2025, it's still very concentrated the investments that are being made. So, you have a slide that's very interesting about AI.

Well, what happened last year and what people said, well, okay, AI, if you look at the hyper scalers, they're investing a formidable amount of money in this. And for 2026, the investment plan is more than $680 billion. That's only four companies Nancy. So that would account for roughly 2.1% of GDP with just four companies.

Wow.

This has never been seen before. If you want to make a historical comparison to other big projects in the U.S., if you go back to 1850-1859 when they built the railroad system in the U.S., they were spending 2.2% of GDP all these companies put together. If people want to compare it now, the AI cycle versus the Internet cycle, well the Internet cycle was consuming 0.8% of GDP annualized. So the 2.1%, these people, are they spending too much? Will this be a fuel, a Dutch disease where the AI sector is taking all the capital and with diminishing returns? So, that's what we're seeing this year a little bit more concerned. So, when I said the US dollar, the S&P 500 was down year to date, it's mostly because of IT, because look at everything related to what we spoke to last month. U.S. reindustrialization, rebuilding the electrical grid, all these sectors are up 16, 21, 12%. So, it's a big sector rotation happening within U.S. equities.

So that means markets are thinking that this reindustrialization will work. That's what we're seeing here.

Yeah. And, and as you said before, and as you've told me before, does that mean the AI cycle is dead? No, but everyone was overweight AI coming into 2026. So, it's a sector rotation given the question marks regarding the profitability that was promised, will they deliver this year?

Yeah. And last time we spoke, we spoke about gold. So, I think it's going to be a subject of this conversation again today.

Oh, we have to because, so anything related to the energy sector, materials, industrials doing good in U.S., Canada, energy is doing well. If you're going to deploy, we spoke about it, you want to deploy AI, it's energy intensive. So, a big increase here. Notice materials however, it's up 18.3% and it's having a formidable impact on both our economy and the perception of what's really happening in the economy is being, I think, biased by gold. Let me explain. A lot of people are saying well Canada is finally diversifying out of the U.S. We have found a formula to diversify. Look at the exports to U.S. down 10%, which has never been seen outside of recession and non-U.S. exports are up 20%.

So, who's our new friend?

Well people are asking me name countries that are our new friends and I can't find any, Nancy, because it's not a friend, a country friend per se. It's really one commodity that is our best friend right now. It's gold prices at roughly $5000 an ounce. If you go back to 1791 and you price gold in 2025 dollars, that's well above the historical average of $650.

So, there's a funny story about the $650. So, talks about men’s suits. So, you want to tell us about it? 

Well, I can't, you know, I can only speak for men’s suit, unfortunately, on that one. But historically, people have associated the-.

The ounce?

Yeah, the equilibrium value of gold, 1 ounce of gold should be equal to your ability to buy a decent suit if you're a man. So right now, as you can see at $5000, those men at home that have a lot of, you know, some ounces of gold.

A lot of gold can have a very nice suit.

Or they can go shopping for many suits.

Yeah and 650 you can still have a reasonable suit in Canadian dollars today, right?

So, the point is we're well above the historical average. Last time we were there was 20 years ago. You can remain above 650 for quite some time. The geopolitical complex or backdrop is supportive of gold prices, but it stretched. So, our view for the next 12 months or so, it's a target range for gold of four to five, 6000. So, it might be volatile, but we're not collapsing it because we know the central banks are buyers. So, there is still some support and U.S. dollar is still set to depreciate.

And so, without gold, what would we look like?

Well, it really shows that we don't have really good friends right now, new best friends, because the reality is our trade balance is a negative, a deficit of $30 billion right now for Canada. If you were to exclude gold or surplus on gold, which is driven by prices, our trade balance would be a deficit of $80 billion, two and a half times greater. See how important that is? Because that's supporting the currency, it's supporting the stock market and it's supporting our exports.

Yeah. So, gold takes over all the other categories now. It's never seen before?

Well, if you think this is interesting, well, at least the next one, which shows that the market capitalization of gold stocks surpasses energy for the first time ever in Canadian history. So, that speaks to the importance of gold because that's been a key driver of the S&P TSX. So, gold is still popular with investors going into 2026 because a lot of people were not overweight gold. So, there's some catch up there. You have to go back to neutral. So, it is supportive and as I said, the backdrop is supportive, but it's important to tell our clients that this is a stretched.

Rebalancing, diversification. Those are the principles, right?

It's a crowded trade. Doesn't mean that you don't remain crowded for a while, but be wary of how gold is impacting the economy and the stock market.

So, we have a couple of minutes left. Can we talk about the announcement from our Prime Minister, Mr. Carney?

Okay so we need to find new friends, right?

We do.

And one way. So in order to find new friends, we need to reindustrialize and we have spoken to that last month or in previous discussions. And the reality is that was the big news that came yesterday where the federal government is pledging to spend billions of dollars in order to find us new friends. How do we do this? By reindustrializing. And, it's a big deal, Nancy, because it's the first time that I can recall in many years that we're deploying in industrial strategy based on our defence spending with a procurement system that might favor our domestic corporations. And you know what? It's so big. And the money spent, 5% of GDP. We haven't seen this since the Korean War. It might entice people to come from overseas.

And invest.

And invest here in Canada with a transfer of intellectual property to actually build stuff in Canada to benefit, obviously.

Our economy.

And the manufacturing sector, right?

And therefore, if we are investing, all of this will create jobs. We'll create good jobs. How does it look right now?

We need jobs.

We need jobs.

Yeah, well, it depends where you live. But really the reality is Quebec and Ontario, who are mostly or the biggest manufacturing hub in the country, have seen disappointing job markets. So, full time jobs, they're barely up in the territory, they're down in Quebec, but total employment is down in Ontario. So, out West, if you want to look at the four large provinces, in order to simplify the chart, there's a regional divergent so you can see who's being hit with the uncertainty about the manufacturing sector. Hence the importance of this plan that was unveiled yesterday. Finally, we are willing to reindustrialize and that's how we make new friends.

Well, Stéfane, thank you for this great conversation. Looking forward to next month, there's going to be a lot of things happening, I'm sure. Thank you for all of us for attending this little conversation, and we'll see you again next month.