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Hello everyone, we are Wednesday, July 15th, 2026. Stéfane, a pleasure to be here with you again today. So, tell me, are the markets running out of speed?

Ah, they seem to be. Last time we saw a new record high on global equities, Nancy, it was the beginning of June. Notice that, you know, at the beginning of the Strait of Hormuz intervention, we had a correction, a big rebound stalling. And I think there's some geopolitics undermining the markets at this point in time.

I think so. So, you know, probably has an impact on the oil price for sure.

So, it coincides with renewed upward pressure on oil. Notice, Nancy, that we're still very far from the levels that exceeded $100, but it's.

Going up.

It's quite the rebound in recent weeks with renewed tensions.

And of course, that's mostly related to the Strait of Hormuz.

So, doesn't matter what politicians say. Politicians say, open or not open, traffic says it's not open. So, if you look at the underlying data, you can explain what's happening on the oil prices via traffic in the Strait of Hormuz, which is not reopened. So even though we put it, is it open? That is the question or not, it's not reopened at this point in time, hence the pressure on oil prices.

And it also has an impact because there is limited availability of various products, therefore.

So, there's something important to note. So, there's the Strait of Hormuz, but there's also a war elsewhere in the world. And what's happening in Europe where you're seeing destruction of refineries, particularly in Russia, which accounts for 11% of diesel sales around the world. You're seeing that refining, the cost of refining oil is surging because there's less refined capacity at refinery levels. So, crack spreads, which is one way to look at the price of refined products if you want, actually exceeds what you saw in 2022 that started the beginning of the war in Ukraine when crude oil was much higher. So what that means, Nancy, at the end of the day is like the economy works on refined products and they're up significantly, whether it's gasoline, diesel, diesel, and it shows up in a global supply chain. So yes, crude prices have rebounded. They're still below where they were before, but gasoline and diesel might hit new all-time highs in the coming week.

Yeah. And that's what consumers feel when they go to the pump, right?

Yeah. And remember, Russia actually said that they were restricting exports of diesel for the next month. And if there's more refinery capacity that's destroyed, probably that will last longer. So, hence the impact on global transportation costs.

And it will take time before everything goes back to normal, right?

So, politicians say something, betting markets say something else. So according to betting markets, you're not gonna reopen by the end of July, 2% probability, end of August 13%, end of September 27%. We're below 50% until the end of the year. Nancy, what that means is that you're going to continue to impact the global supply chain. So, I know U.S. inflation was weaker than expected this month but be prepared for potential upside surprise.

And obviously, let's say it opens December 31st. The next day, everything will not be back to normal. We felt that during the pandemic, it took months before things.

You have to replenish inventories, yes, you're right. So, probably the key story here is to say global supply chains, you know, the pressures on global supply chains are the most acute we've seen since the COVID recession. Historically, that's accompanied with positive or if you want negative surprise in the sense that inflation is higher than expected. So, this is why we're still not out of the woods. So, coming back to your first question, are the markets running out of steam? Well, the markets are looking at this– How do we assess the impact on the global economy and earnings in this situation?

And even so, since the beginning of this conversation, we've had, you know, geopolitical not so good news, not dramatic, but not so good. But then again, markets expectations are surprisingly high.

So, this does not necessarily show up in terms of earnings expectation because right now, as we speak, the expectation is that virtually every large region of the world will deliver more than 20% earnings per share growth so profitability will increase by 20%. It's you know, listen, it's possible. I just want to say these expectations are quite ambitious if you have more pressure on the supply chain in the coming weeks.

And what's surprising is your graph is that there's no negative, there's no one single digit.

No, no double digit, minimum double digit. So, as we said last month, the expectations are still the best earnings per share growth globally ever seen outside a recession recovery. So, market surprise for better news, not worse news, hence the need to watch what's happening on the geopolitical front in the coming weeks.

So, one good news we got this morning is Bank of Canada.

Well, if not moving interest rates is good news, yes, it is because we're keeping our.

But for our consumers it is.

Well, most of our, you're absolutely right, most of our clients would appreciate that and we remain in a jurisdiction where interest rates are lower than the rest of the world. So, that's good news. And the other good news, Nancy, is the Bank Canada, actually, they stayed on the sidelines, and they recognized that well we might see a better rebound in GDP than we expected in the second quarter, remember we had two negative quarters. Now we're set to rebound 2% in the second quarter. That's good news.

Yeah. And you have another one about employment.

Oh yeah, so GDP rebound is not very important for me if it's not accompanied by a jump in employment. And the good news is we seem to be confirming better news on GDP with the June employment data, particularly for people age 25 to 54 who are critical for the credit cycle, right? So, new all time high on employment for people 25 to 54. Now, Nancy, I know you're going to tell me "Yeah, but you told me population growth is negative this year", but permanent immigration is still up and it really has an impact on people 25 to 54. But yes, population will be down because many foreign students or temporary workers that tend to be younger will be negatively impacted. But that's good news for the credit cycle and for potential GDP rebound.

Good. So, you have another good for us about the production level that would be increasing in Canada.

So, people have been talking about trade diversification. It's hard to do in the short term if you don't tap into natural resources. And so oil production's on the rise in Canada and the expectation is they will continue to rise because there was a new pipeline announcement between Ottawa, Alberta, and British Columbia that seems to be inclined to provide more oil to the rest of the world. 90% currently goes to the U.S. and if you want diversification, you need a pipeline. So, from that standpoint, it's positive news in terms of diversification and note that from a trade balance perspective, it will help support the Canadian dollar. So again, there's upside potential here for oil production in Canada. And if you want to become an energy superpower, you know, it goes with that title. So again, I think that this is constructive from a trade diversification perspective, which the government actually is hoping for.

So, a lot of good news, Stéfane. So even though the microeconomic is very volatile, I mean, you've brought us a couple of very interesting news today. So, thank you for that.

Pleasure.

And for all of you, I hope that you will enjoy the summer and that you will take the time during your vacation to reflect on your situation and talk to your advisors. And we will see you again in August. So thank you. Thank you, Stéfane.