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Year-end Tax Tips

December 06, 2021

Help your clients review their personal finances and take advantage of any tax planning opportunities before the December 31 deadline.

 

1
2021 YEAR END TAX TIPS
[Soft music plays]
[Jamie Golombek, Managing Director, Tax and Estate Planning, CIBC Private Wealth]
As we get closer to the end of 2021, there are a number of specific tax planning
opportunities that you might wish to take a look at before the end of the year.
We just released our brand new and updated 2021 year end tax tips. And it's something
that would be a great reference to review before the end of the year. Let's go through
some of the highlights and things that you want to think about before December 31st.
[Tax-loss selling]
Every year we talk about tax loss-selling. Most people don't have a lot of losses in the
portfolio this year, but if you do, you want to recognize that loss so that the trade date is
no later than December the 29th, so that the trade settles by December 31st. So, you
can recognize that capital loss in 2021.
[A close-up of various international currencies followed by U.S. $100 bills fanned out]
Pay attention; if you bought perhaps securities in foreign currencies like the U.S. dollar,
to take into account any foreign exchange rates when calculating that gain or loss.
Because depending on the timing of when you bought that security, you might actually
have a gain on the FX side, even if it appears that you had a loss on the security side.
[Be mindful of the superficial loss rules]
Of course, you want to be mindful of the superficial loss rules.
[A young man types at a desk looking at financial data on a computer screen. A young
couple look at the screen of a laptop.]
2
If you buy it back within 30 days, the loss would be denied. If you buy it back, your
spouse buys it back, your partner buys it back, corporation, trust, RRSP, TFSA, any of
those things buy it back within 30 days, you're going to be denied that capital loss. So,
just pay attention, wait at least 30 days plus one before you buy back a stock or any
other position that you've sold and you wish to recognize the capital loss.
[RRSP contributions]
RRSP deadline, of course, is still March 1st.
[An older man sits at a table talking on a cell phone with a laptop open in front of him.]
However, if you did turn 71 in 2021, you've got to make your final contribution by the
end of the year unless, of course, you have a younger spouse or partner, which you can
continue to make a spousal RRSP contributions.
[Prescribed rate loan strategy]
The prescribed rate loan strategy will be available still till the end of the year.
[An older couple talk to a financial advisor.]
That's the 1% prescribed rate loan, so an opportunity to loan assets to a spouse or
partner for the benefit of income splitting, as long as you charge a minimum prescribed
rate. And just a reminder that if you have done a prescribed rate loan, you’ve got to
make sure that you make those payments within 30 days of the end of the year. That's
January 30, 2022, which is coming up pretty soon, for that strategy to work for the
current year and for all future tax years.
[Changes to tax rates]
Other things to think about, in particular, are changes to tax rates.
[People fill out tax forms on a messy desk.]
3
So, in other words, if you think your tax rate is going to be very different next year in
2022 versus 2021, there may be things that you can do depending on your situation to
either accelerate income for this year or defer that income to next year.
[Low angle shot of Canadian flags on a sidewalk. Images of the Parliament of Canada
buildings.]
You may also want to think about changes to our tax regime in general, as a result of
the recent federal election. We know that there are certain potential changes in tax law
that might actually impact your future taxes.
[The clocktower of the Parliament of Canada seen at dusk. A lawn sign that reads,
“HOUSE FOR SALE BY OWNER. An aerial view of a residential neighbourhood. The
interior of an empty apartment.]
For example, the Liberals’ pre-election proposal to tax the sale of residential properties
that were held less than one year, could result in tax payable on what otherwise would
have been something that would qualify for a principal residence exemption.
We also know that the NDP have a couple of proposals to increase the top marginal
rate and increase the capital gains inclusion rate.
[Drone shot over Rideau Canal with parliament buildings in the distance. The clocktower
of the Parliament of Canada.]
Those may hold some sway with the Liberals as they put together their agenda in the
months ahead. So, keep in mind that there could be higher tax rates in 2022 and think
about whether you want to take some of those potential gains in 2021, if it makes sense
to do so.
[Business owners and employers]
4
For business owners and employers, things to think about, compensation planning, that
classic issue of salary versus dividends. You want to think about being able to pay
yourself, in most cases, sufficient salary in 2021 to make an RRSP contribution in 2022.
[An image of the report “Just do it: The case for tax-free investing”.]
So, something to think about. We discuss this in several of our other reports, including a
report called “Just do it: The case for tax-free investing”…
[An image of the report ““Bye-Bye bonus! Why business owners may prefer dividends
over a bonus”.]
…and a report “Bye-Bye bonus”, which discusses compensation decisions in greater
detail.
[Get your affairs in order before tax season]
And then finally, you want to think about the opportunity to make sure that you get all
your tax affairs in order well before tax season.
[Folders stacked on top of each other. Numbers being input on the calculator app of a
cell phone. Images of people looking over documents and tax forms.]
So again, instead of rushing next March or April to prepare your personal tax return,
now is a great time to go through the year, review your financial records. Because most
of the tax planning that you're going to do for 2021, and your 2021 tax return, must be
done in 2021.
So, for example, if you've got significant medical expenses, you want to make a
significant charitable donation, if you've got interest on deductible investment loans,
those all must be paid by December 31st to claim a deduction in 2021.
It will be too late come next spring when you're trying to file your 2021 tax return, to do
most of the tax planning that we talked about today. So again, think about it, read the
5
report and at the end, speak to your tax advisor to recommend if any of these strategies
would be appropriate for you.
[Soft music plays]
[CIBC advisors provide general information on certain tax, investment and estate
planning matters; they do not provide tax, accounting or legal advice. Please consult
your personal tax advisor, accountant, licensed insurance professional and qualified
legal advisor to obtain specialized advice tailored to your needs.
This video is provided for general informational purposes only and does not constitute
financial, investment, tax, legal or accounting advice, nor does it constitute an offer or
solicitation to buy or sell any securities referred to. Individual circumstances and current
events are critical to sound investment planning; anyone wishing to act on this video
should consult with his or her advisor. All opinions and estimates expressed in this
video are as of the date of publication unless otherwise indicated, and are subject to
change.
™The CIBC logo is a trademark of Canadian Imperial Bank of Commerce (CIBC), used
under license. The material and/or its contents may not be reproduced without the
express written consent of CIBC.]
[CIBC logo]
[The CIBC logo is a trademark of CIBC, used under license.]

1
2021 YEAR END TAX TIPS
[Soft music plays]
[Jamie Golombek, Managing Director, Tax and Estate Planning, CIBC Private Wealth]
As we get closer to the end of 2021, there are a number of specific tax planning
opportunities that you might wish to take a look at before the end of the year.
We just released our brand new and updated 2021 year end tax tips. And it's something
that would be a great reference to review before the end of the year. Let's go through
some of the highlights and things that you want to think about before December 31st.
[Tax-loss selling]
Every year we talk about tax loss-selling. Most people don't have a lot of losses in the
portfolio this year, but if you do, you want to recognize that loss so that the trade date is
no later than December the 29th, so that the trade settles by December 31st. So, you
can recognize that capital loss in 2021.
[A close-up of various international currencies followed by U.S. $100 bills fanned out]
Pay attention; if you bought perhaps securities in foreign currencies like the U.S. dollar,
to take into account any foreign exchange rates when calculating that gain or loss.
Because depending on the timing of when you bought that security, you might actually
have a gain on the FX side, even if it appears that you had a loss on the security side.
[Be mindful of the superficial loss rules]
Of course, you want to be mindful of the superficial loss rules.
[A young man types at a desk looking at financial data on a computer screen. A young
couple look at the screen of a laptop.]
2
If you buy it back within 30 days, the loss would be denied. If you buy it back, your
spouse buys it back, your partner buys it back, corporation, trust, RRSP, TFSA, any of
those things buy it back within 30 days, you're going to be denied that capital loss. So,
just pay attention, wait at least 30 days plus one before you buy back a stock or any
other position that you've sold and you wish to recognize the capital loss.
[RRSP contributions]
RRSP deadline, of course, is still March 1st.
[An older man sits at a table talking on a cell phone with a laptop open in front of him.]
However, if you did turn 71 in 2021, you've got to make your final contribution by the
end of the year unless, of course, you have a younger spouse or partner, which you can
continue to make a spousal RRSP contributions.
[Prescribed rate loan strategy]
The prescribed rate loan strategy will be available still till the end of the year.
[An older couple talk to a financial advisor.]
That's the 1% prescribed rate loan, so an opportunity to loan assets to a spouse or
partner for the benefit of income splitting, as long as you charge a minimum prescribed
rate. And just a reminder that if you have done a prescribed rate loan, you’ve got to
make sure that you make those payments within 30 days of the end of the year. That's
January 30, 2022, which is coming up pretty soon, for that strategy to work for the
current year and for all future tax years.
[Changes to tax rates]
Other things to think about, in particular, are changes to tax rates.
[People fill out tax forms on a messy desk.]
3
So, in other words, if you think your tax rate is going to be very different next year in
2022 versus 2021, there may be things that you can do depending on your situation to
either accelerate income for this year or defer that income to next year.
[Low angle shot of Canadian flags on a sidewalk. Images of the Parliament of Canada
buildings.]
You may also want to think about changes to our tax regime in general, as a result of
the recent federal election. We know that there are certain potential changes in tax law
that might actually impact your future taxes.
[The clocktower of the Parliament of Canada seen at dusk. A lawn sign that reads,
“HOUSE FOR SALE BY OWNER. An aerial view of a residential neighbourhood. The
interior of an empty apartment.]
For example, the Liberals’ pre-election proposal to tax the sale of residential properties
that were held less than one year, could result in tax payable on what otherwise would
have been something that would qualify for a principal residence exemption.
We also know that the NDP have a couple of proposals to increase the top marginal
rate and increase the capital gains inclusion rate.
[Drone shot over Rideau Canal with parliament buildings in the distance. The clocktower
of the Parliament of Canada.]
Those may hold some sway with the Liberals as they put together their agenda in the
months ahead. So, keep in mind that there could be higher tax rates in 2022 and think
about whether you want to take some of those potential gains in 2021, if it makes sense
to do so.
[Business owners and employers]
4
For business owners and employers, things to think about, compensation planning, that
classic issue of salary versus dividends. You want to think about being able to pay
yourself, in most cases, sufficient salary in 2021 to make an RRSP contribution in 2022.
[An image of the report “Just do it: The case for tax-free investing”.]
So, something to think about. We discuss this in several of our other reports, including a
report called “Just do it: The case for tax-free investing”…
[An image of the report ““Bye-Bye bonus! Why business owners may prefer dividends
over a bonus”.]
…and a report “Bye-Bye bonus”, which discusses compensation decisions in greater
detail.
[Get your affairs in order before tax season]
And then finally, you want to think about the opportunity to make sure that you get all
your tax affairs in order well before tax season.
[Folders stacked on top of each other. Numbers being input on the calculator app of a
cell phone. Images of people looking over documents and tax forms.]
So again, instead of rushing next March or April to prepare your personal tax return,
now is a great time to go through the year, review your financial records. Because most
of the tax planning that you're going to do for 2021, and your 2021 tax return, must be
done in 2021.
So, for example, if you've got significant medical expenses, you want to make a
significant charitable donation, if you've got interest on deductible investment loans,
those all must be paid by December 31st to claim a deduction in 2021.
It will be too late come next spring when you're trying to file your 2021 tax return, to do
most of the tax planning that we talked about today. So again, think about it, read the
5
report and at the end, speak to your tax advisor to recommend if any of these strategies
would be appropriate for you.
[Soft music plays]
[CIBC advisors provide general information on certain tax, investment and estate
planning matters; they do not provide tax, accounting or legal advice. Please consult
your personal tax advisor, accountant, licensed insurance professional and qualified
legal advisor to obtain specialized advice tailored to your needs.
This video is provided for general informational purposes only and does not constitute
financial, investment, tax, legal or accounting advice, nor does it constitute an offer or
solicitation to buy or sell any securities referred to. Individual circumstances and current
events are critical to sound investment planning; anyone wishing to act on this video
should consult with his or her advisor. All opinions and estimates expressed in this
video are as of the date of publication unless otherwise indicated, and are subject to
change.
™The CIBC logo is a trademark of Canadian Imperial Bank of Commerce (CIBC), used
under license. The material and/or its contents may not be reproduced without the
express written consent of CIBC.]
[CIBC logo]
[The CIBC logo is a trademark of CIBC, used under license.]

Back to Video
 

Ben Tal Calgary Virtual Event November 2021

December 01, 2021

 

00:04:49.586 --> 00:04:52.606
Alright, I think we should probably get it get things.

00:04:52.606 --> 00:04:55.926
rolling here. So good afternoon.

00:04:55.926 --> 00:04:59.446
everyone. It is afternoon now. I my name is Nathan Thornton the branch.

00:04:59.446 --> 00:05:02.596
manager CIBC Wood Gundy and on behalf of.

00:05:02.596 --> 00:05:05.926
all of our advisors and their teams here in Calgary.

00:05:05.926 --> 00:05:09.066
and Lethbridge and in Medicine Hat welcome, it is great.

00:05:09.066 --> 00:05:12.076
to have you here. I've been certainly a goal to have.

00:05:12.076 --> 00:05:15.546
this in person and I'd hope we'd be able to do so by now, but.

00:05:15.546 --> 00:05:19.496
the weird world we're living in has conspired to make.

00:05:19.496 --> 00:05:21.306
us rely on the virtual connections.

00:05:21.356 --> 00:05:24.666
Once again, so and we'll talk a little bit more.

00:05:24.666 --> 00:05:27.686
our guest. We'll talk a little bit more about the weird world that.

00:05:27.686 --> 00:05:30.756
we are living in a little more detail, little bit.

00:05:30.756 --> 00:05:33.866
of housekeeping though before we start. So first off this presentation.

00:05:33.866 --> 00:05:37.006
is being recorded just so you'll notice.

00:05:37.006 --> 00:05:40.186
That chat function has been disabled on this for this.

00:05:40.186 --> 00:05:43.446
presentation, but the Q&A function at the top.

00:05:43.446 --> 00:05:46.546
toolbar will be will be active. So if.

00:05:46.546 --> 00:05:49.666
you have any questions throughout the presentation, type those in.

00:05:49.666 --> 00:05:52.926
I will be forwarding those to bend towards the end of the presentation.

00:05:52.926 --> 00:05:55.186
and we'll get to as many of them as we possibly can.

00:05:55.806 --> 00:05:58.966
Uhm with that I'm going to turn it over to our guest speaker.

00:05:58.966 --> 00:06:02.336
so Mr. Towel, frequent contributor to regional national media.

00:06:02.336 --> 00:06:05.376
Over 20 years of experience in the private sector. Advising clients.

00:06:05.376 --> 00:06:08.836
industry leaders, corporate boards, trade associations, governments.

00:06:08.836 --> 00:06:12.056
He is our deputy chief economist and.

00:06:12.056 --> 00:06:15.746
it is my pleasure to welcome Benjamin Tal van over.

00:06:15.746 --> 00:06:18.896
to you. Thank you very much and listen. I've about that 30.

00:06:18.896 --> 00:06:22.156
minutes to tell you everything I know about the situation that.

00:06:22.156 --> 00:06:25.216
29 minutes, too much because quite frankly.

00:06:25.216 --> 00:06:25.216


00:06:25.596 --> 00:06:28.626
Nobody has a clue. It's all about the virus. It's all about the.

00:06:28.626 --> 00:06:32.006
tug of war between the virus and the economy and.

00:06:32.006 --> 00:06:35.626
the vaccines. So we'll talk about this tug of war at what it means.

00:06:35.626 --> 00:06:39.066
We also talk about the elephant in the room.

00:06:39.066 --> 00:06:42.446
and that's of course inflation. And how much sleep we should lose.

00:06:42.446 --> 00:06:45.526
over inflation will talk about interest rates.

00:06:45.526 --> 00:06:49.086
how they're going to react to rising inflation, and if there.

00:06:49.086 --> 00:06:52.216
is a need to do so at all. We talk about government.

00:06:52.216 --> 00:06:55.306
debt. Who is going to pay down that debt, and what it means?

00:06:55.306 --> 00:06:58.186
in terms of future spending and maybe taxes.

00:06:58.446 --> 00:07:02.106
And we'll talk about some long term implications to what extent.

00:07:02.106 --> 00:07:03.536
kovid is an event.

00:07:04.196 --> 00:07:07.286
Ola condition, but the first I would like to start.

00:07:07.286 --> 00:07:10.976
with the tug of war between you.

00:07:10.976 --> 00:07:14.126
virus and the economy and the WHO is now.

00:07:14.126 --> 00:07:15.826
very concerned about one thing.

00:07:17.146 --> 00:07:20.466
What they are going to do when they run out of Greek?

00:07:20.466 --> 00:07:23.946
letters to name the variance seriously?

00:07:23.946 --> 00:07:25.286
that was in their press release.

00:07:25.896 --> 00:07:29.406
So there thinking about variance coming which.

00:07:29.406 --> 00:07:32.746
means that it's not over by any stretch of the imagination.

00:07:32.746 --> 00:07:35.906
So we know the delta has been a very.

00:07:35.906 --> 00:07:39.466
vicious variant, but the doctor.

00:07:39.466 --> 00:07:42.506
in one of the hospitals told me that actually it's a good thing.

00:07:42.506 --> 00:07:45.546
Why? Because the next variant will have to be like a super.

00:07:45.546 --> 00:07:49.446
variant to outdo Covid Delta.

00:07:49.446 --> 00:07:52.726
which means that we are learning.

00:07:52.726 --> 00:07:56.546
how to function with this virus.

00:07:56.546 --> 00:07:56.546


00:07:57.126 --> 00:07:59.016
And soon enough we hope.

00:07:59.886 --> 00:08:03.306
It will turn from a pandemic to endemic and they hope it will happen.

00:08:03.306 --> 00:08:07.006
at one point in 2022 and as a society.

00:08:07.006 --> 00:08:10.406
we are going to learn how to cope with this.

00:08:10.406 --> 00:08:13.826
virus and therefore economic activity will recover.

00:08:13.826 --> 00:08:17.606
and we'll talk about exactly how in a few minutes, so that said.

00:08:17.606 --> 00:08:20.386
this tug of war between the virus.

00:08:21.586 --> 00:08:24.636
And the economy. Now, what it?

00:08:24.636 --> 00:08:27.896
eans? In practical terms, we can see in the 1st.

00:08:27.896 --> 00:08:30.906
t chart. So at any point.

00:08:30.906 --> 00:08:33.256
in time, if you go to the first chart, this one.

00:08:34.006 --> 00:08:37.366
There are two factors impacting economic activity. One.

00:08:37.366 --> 00:08:40.746
is the fear factor, namely the restaurant.

00:08:40.746 --> 00:08:43.796
is open. Nobody showing up the other.

00:08:43.796 --> 00:08:46.826
is the availability factor, namely how much you.

00:08:46.826 --> 00:08:50.736
open. Look at this chart. This is actually from the first wave.

00:08:50.736 --> 00:08:50.736


00:08:51.386 --> 00:08:54.976
Some states in the US were totally open some.

00:08:54.976 --> 00:08:58.656
states were totally closed, we followed.

00:08:58.656 --> 00:09:02.096
consumer spending in those states and.

00:09:02.096 --> 00:09:04.176
you can see that you cannot distinguish between the two.

00:09:05.266 --> 00:09:06.276
Which means.

00:09:06.916 --> 00:09:09.956
Dad, the fear factor was dominating.

00:09:09.956 --> 00:09:13.136
and the fact that it was open was irrelevant clearly.

00:09:13.136 --> 00:09:16.476
the fear factor has been diminishing and diminishing with the vaccine.

00:09:16.476 --> 00:09:19.616
and all the ammunition we have now, but.

00:09:19.616 --> 00:09:23.406
it's not disappearing, and it's reasonable to assume that.

00:09:23.406 --> 00:09:25.376
with winter approaching.

00:09:26.916 --> 00:09:30.446
The fear factor will reappear. It will not dominate.

00:09:30.446 --> 00:09:33.606
but it will be in the background, something.

00:09:33.606 --> 00:09:36.786
to take into account and the next chart is telling you.

00:09:36.786 --> 00:09:39.846
that it's already starting to happen if.

00:09:39.846 --> 00:09:41.186
you look at the next chart.

00:09:43.106 --> 00:09:44.646
You can see what I mean by that.

00:09:46.966 --> 00:09:49.576
The high touch activity.

00:09:50.396 --> 00:09:53.406
He's starting to level off, which means that yes.

00:09:53.406 --> 00:09:56.476
we are this nice rebound. But now people are starting to think.

00:09:56.476 --> 00:09:59.676
twice before they go to restaurant, especially with.

00:09:59.676 --> 00:10:02.706
the winter approaching. So this level of activity.

00:10:02.706 --> 00:10:05.926
is kind of stabilizing, suggesting that slowly.

00:10:05.926 --> 00:10:09.026
the fear factor is entering our psyche.

00:10:09.026 --> 00:10:12.086
again, not dominating, but it's there something to.

00:10:12.086 --> 00:10:15.166
take into account now. Why is why all this?

00:10:15.166 --> 00:10:18.286
is important? Let's go to the next chart and.

00:10:18.286 --> 00:10:21.376
we know one thing that you still have.

00:10:21.376 --> 00:10:21.376


00:10:21.436 --> 00:10:24.466
A lot of time before global economy will be.

00:10:24.466 --> 00:10:28.896
ready for life after the BIOS we.

00:10:28.896 --> 00:10:32.276
know that it will take about nine months.

00:10:32.276 --> 00:10:33.486
to vaccinate.

00:10:33.546 --> 00:10:36.996
The global economy when?

00:10:36.996 --> 00:10:40.146
you have two shots. Now if you need 3A booster it.

00:10:40.146 --> 00:10:43.156
will take like 16 months, so we know that it will.

00:10:43.156 --> 00:10:46.406
take a long time. However, you can see from the chart to the right.

00:10:46.406 --> 00:10:49.676
that what counts now is really not the number.

00:10:49.676 --> 00:10:52.506
of cases, but rather.

00:10:53.806 --> 00:10:54.676
The.

00:10:55.986 --> 00:10:58.626
Situation in which people are dying.

00:10:59.606 --> 00:11:02.726
The level of hospitalization, so what?

00:11:02.726 --> 00:11:05.766
counts now in terms of government policy is not the number of.

00:11:05.766 --> 00:11:09.406
cases, but really the situation in the healthcare system let's.

00:11:09.406 --> 00:11:12.506
go to the next chart and explore this and the next chart.

00:11:12.506 --> 00:11:15.986
is very, very interesting. Look at this chart this.

00:11:15.986 --> 00:11:19.306
is hospitalization rate per capita.

00:11:19.306 --> 00:11:20.646
Look at that.

00:11:21.646 --> 00:11:24.676
Canada, the lowest. This is during the first this sorry.

00:11:24.676 --> 00:11:26.256
this is during the second wave.

00:11:27.076 --> 00:11:27.856
Look at Canada.

00:11:28.656 --> 00:11:29.406
The last

00:11:30.136 --> 00:11:33.126
3/4 times slower than the UK, the US.

00:11:33.716 --> 00:11:37.206
Is it a good thing or a bad thing but?

00:11:37.206 --> 00:11:40.556
it's not so good, why? Because if you go back and.

00:11:40.556 --> 00:11:43.636
look at the headlines in the dark days of the.

00:11:43.636 --> 00:11:47.406
second wave, the early early 2021, the.

00:11:47.406 --> 00:11:51.516
health care system in Canada was at a breaking point.

00:11:51.516 --> 00:11:51.516


00:11:53.446 --> 00:11:56.606
And we will, at the lowest level.

00:11:56.606 --> 00:11:57.356
of capacity.

00:11:58.416 --> 00:12:02.096
So we reached capacity much faster than.

00:12:02.096 --> 00:12:03.666
any other country.

00:12:05.146 --> 00:12:08.066
Why, let's go to the next chart and see why.

00:12:08.746 --> 00:12:09.426
Look at that.

00:12:10.266 --> 00:12:13.756
Spare capacity of acute beds per capita in Canada.

00:12:13.756 --> 00:12:14.816
is the lowest.

00:12:15.776 --> 00:12:18.956
The lowest in the LCD with the exception.

00:12:18.956 --> 00:12:19.816
of Mexico.

00:12:21.866 --> 00:12:25.946
We usually operate at 95% while.

00:12:25.946 --> 00:12:28.486
you supposed to operate at about 85%.

00:12:29.776 --> 00:12:32.706
So the minute you have covered you reach capacity in no time.

00:12:33.766 --> 00:12:36.916
If this is not a wake up call to inject.

00:12:36.916 --> 00:12:40.176
more money into the health care system, I don't know what it is.

00:12:40.176 --> 00:12:40.176


00:12:41.366 --> 00:12:44.526
Because it's clearly a situation in which.

00:12:44.526 --> 00:12:46.236
what other countries?

00:12:46.996 --> 00:12:50.216
Consider to be acceptable. We consider to.

00:12:50.216 --> 00:12:53.236
be pick and we reached that peak very very quickly and.

00:12:53.236 --> 00:12:57.076
remember what is impacting government.

00:12:57.076 --> 00:13:00.376
policies in terms of shutting down the economy is.

00:13:00.376 --> 00:13:03.536
not the number of cases, it's the situation in.

00:13:03.536 --> 00:13:06.636
the health care system. And if you reach peak much.

00:13:06.636 --> 00:13:10.036
quicker than any other country, it means.

00:13:10.036 --> 00:13:13.716
that you also start reversing.

00:13:13.716 --> 00:13:16.276
policy faster and in a more aggressive way.

00:13:17.336 --> 00:13:20.426
Let's look at the implications of that.

00:13:20.426 --> 00:13:21.506
That's the next chart.

00:13:22.516 --> 00:13:23.556
And you can see.

00:13:24.476 --> 00:13:25.006
That

00:13:25.746 --> 00:13:28.786
This is basically the conflict that.

00:13:28.786 --> 00:13:32.266
is defining this crisis, the conflict.

00:13:32.266 --> 00:13:34.666
between lives and livelihood.

00:13:35.376 --> 00:13:38.036
For a given level of hospitalization.

00:13:38.666 --> 00:13:42.726
The Canadian economy was much more restricted.

00:13:42.726 --> 00:13:44.446
than the US economy.

00:13:45.886 --> 00:13:49.536
And part of it has to do with the fact that we had to implement.

00:13:49.536 --> 00:13:53.216
more severe restrictions due to the increased.

00:13:53.216 --> 00:13:56.596
level of hospitalization rates and.

00:13:56.596 --> 00:13:58.316
the low level of capacity.

00:14:00.816 --> 00:14:04.026
So this has clear economic implications and.

00:14:04.026 --> 00:14:07.426
if you go to the next chart, you can see the.

00:14:07.426 --> 00:14:07.426


00:14:08.096 --> 00:14:08.776
Results.

00:14:09.386 --> 00:14:12.566
Since the beginning of Kovid, the US economy was able.

00:14:12.566 --> 00:14:15.976
to outperform Canada economically.

00:14:15.976 --> 00:14:19.006
speaking, a lot of it had to do with the fact that the US.

00:14:19.006 --> 00:14:23.206
was much more open. Now there are some positives and negatives, but economically speaking.

00:14:23.206 --> 00:14:26.346
that was a negative. There is no question about it so.

00:14:26.346 --> 00:14:27.666
from the beginning of Kovid.

00:14:28.576 --> 00:14:32.246
We have to run faster to stay in the same place when you compare.

00:14:32.246 --> 00:14:35.766
the situation to the USD are outperforming.

00:14:35.766 --> 00:14:38.806
us in terms of economic growth but.

00:14:38.806 --> 00:14:42.086
if you go to the next chart you can see something very interesting.

00:14:42.086 --> 00:14:45.906
Although the US is doing better from a GDP perspective.

00:14:45.906 --> 00:14:49.246
they are not doing better from a labor market.

00:14:49.246 --> 00:14:52.286
perspective. In fact we are doing better so we.

00:14:52.286 --> 00:14:55.716
have to explore this and see what makes sense and what doesn't.

00:14:55.716 --> 00:14:58.466
When it comes to the Canadian labour market.

00:14:58.606 --> 00:15:01.836
So let's go very quickly to the next chart and see.

00:15:01.836 --> 00:15:04.896
what makes sense and we can see something very interesting.

00:15:04.896 --> 00:15:04.896


00:15:06.986 --> 00:15:08.556
And let's go, where are we?

00:15:09.766 --> 00:15:10.826
Let's go to.

00:15:11.866 --> 00:15:12.766
Yeah next month.

00:15:15.886 --> 00:15:18.956
And we can see something very interesting first of all.

00:15:18.956 --> 00:15:22.416
we have a situation in which something.

00:15:22.416 --> 00:15:25.836
that is very relevant to you in Alberta is that despite.

00:15:25.836 --> 00:15:26.436
the fact.

00:15:27.276 --> 00:15:30.296
That we are the situation in which Canada was.

00:15:30.296 --> 00:15:33.766
able to close the employment gap relative to 2019.

00:15:33.766 --> 00:15:33.766


00:15:34.766 --> 00:15:38.036
We haven't seen a significant increase in hiring in oil and.

00:15:38.036 --> 00:15:41.196
gas. For example, in mining support Mom for.

00:15:41.196 --> 00:15:43.856
mining, namely, despite the.

00:15:44.956 --> 00:15:48.586
Mega Boom in the oil market we.

00:15:48.586 --> 00:15:51.876
haven't seen hiring happening in Alberta.

00:15:51.876 --> 00:15:51.876


00:15:52.586 --> 00:15:55.646
In the oil and gas sector the.

00:15:55.646 --> 00:15:59.006
question is why? And the answer is.

00:15:59.006 --> 00:16:01.236
maybe because of the fact that many.

00:16:01.766 --> 00:16:05.316
The CEO's of oil companies are saying listen this.

00:16:05.316 --> 00:16:08.816
boom, maybe it will not last for too long, we know.

00:16:08.816 --> 00:16:11.976
that energy is going to be relatively smaller.

00:16:12.556 --> 00:16:15.736
Segment of the Canadian economy. We are not investing.

00:16:15.736 --> 00:16:19.056
dramatically now to increase capacity, so we haven't seen.

00:16:19.056 --> 00:16:22.196
any significant increase in investment, and we haven't seen.

00:16:22.196 --> 00:16:25.296
any significant increase in hiring. And that's the reason.

00:16:25.296 --> 00:16:28.516
why valuation of oil companies.

00:16:28.516 --> 00:16:31.596
are rising because the price is rising. Their cost structure is.

00:16:31.596 --> 00:16:34.716
not rising in any significant way, so their profit is rising.

00:16:34.716 --> 00:16:37.876
dramatically, usually in this kind of environment when.

00:16:37.876 --> 00:16:41.476
oil prices go up, you see a significant increase in investment.

00:16:41.476 --> 00:16:41.476


00:16:42.576 --> 00:16:45.626
Among oil companies and hiring among.

00:16:45.626 --> 00:16:48.686
oil companies, that's not the situation now, which is very.

00:16:48.686 --> 00:16:52.106
interesting, reflecting maybe some change.

00:16:52.106 --> 00:16:55.386
in the way many companies are thinking about the long.

00:16:55.386 --> 00:16:58.566
term prospect of increasing capacity so.

00:16:58.566 --> 00:17:01.916
what we are seeing now is that maybe the.

00:17:01.916 --> 00:17:05.366
oil companies are looking at a situation.

00:17:05.366 --> 00:17:08.606
in which they will remain small, productive, efficient.

00:17:08.606 --> 00:17:08.606


00:17:09.396 --> 00:17:12.706
But will not increase capacity in any significant way, let's.

00:17:12.706 --> 00:17:15.936
go to the next chart and see the story of this recession.

00:17:15.936 --> 00:17:19.016
and that's the asymmetrical nature of this.

00:17:19.016 --> 00:17:22.316
crisis. Look at this. All the jobs created.

00:17:22.316 --> 00:17:25.616
Join Greek. This crisis were public sector jobs.

00:17:25.616 --> 00:17:25.616


00:17:26.246 --> 00:17:29.466
Private sector basically back to 2019.

00:17:29.466 --> 00:17:31.566
self-employed down.

00:17:32.886 --> 00:17:36.226
And the question is why self employment is so down and the answer is.

00:17:36.226 --> 00:17:39.346
that maybe if you pay people to stay home they will stay home.

00:17:39.346 --> 00:17:42.466
So the big question is to what extent we are going.

00:17:42.466 --> 00:17:45.766
to see some increase in self employment activity.

00:17:45.766 --> 00:17:49.186
The minute the government stops paying you and we know that this.

00:17:49.186 --> 00:17:52.446
basically happening now. So let's see how this will.

00:17:52.446 --> 00:17:55.486
develop. But this is very interesting. Basically if you.

00:17:55.486 --> 00:17:58.736
pay people to stay home they will stay home and that's exactly.

00:17:58.736 --> 00:18:00.966
what we have seen in Canada and to an extent.

00:18:01.816 --> 00:18:04.846
In the US, but the more interesting story is the.

00:18:04.846 --> 00:18:07.586
next chunk, and that's basically.

00:18:08.226 --> 00:18:11.596
The asymmetrical nature of this recession.

00:18:11.596 --> 00:18:14.756
when it comes to job creation by wage.

00:18:14.756 --> 00:18:18.416
Basically all the jobs that were lost early in the crisis.

00:18:18.416 --> 00:18:21.646
where low paying jobs all the jobs.

00:18:21.646 --> 00:18:24.736
that were gained wear high paying jobs. So if there.

00:18:24.736 --> 00:18:28.416
was any income gap in Canada before the crisis now.

00:18:28.416 --> 00:18:31.996
this income gap is actually wider and.

00:18:31.996 --> 00:18:35.176
this has major implications, for example the.

00:18:35.176 --> 00:18:36.336
housing market.

00:18:37.516 --> 00:18:40.796
The question is why during a recession this.

00:18:40.796 --> 00:18:44.016
housing market even in Alberta has been booming?

00:18:44.016 --> 00:18:44.016


00:18:46.356 --> 00:18:47.546
And the question is.

00:18:48.306 --> 00:18:51.906
How can you justify this kind of activity and?

00:18:51.906 --> 00:18:52.806
the answer is?

00:18:53.996 --> 00:18:54.686
In front of you.

00:18:56.166 --> 00:18:59.286
Basically, the S symmetrical nature of.

00:18:59.286 --> 00:19:02.326
that recession meant that most of the.

00:19:02.326 --> 00:19:05.806
people that lost their jobs were actually young people renters.

00:19:05.806 --> 00:19:08.836
not homebuyers, homebuyers, most.

00:19:08.836 --> 00:19:11.926
of them did not feel the pain financially.

00:19:11.926 --> 00:19:15.266
This crisis when it comes to the damage was.

00:19:15.266 --> 00:19:18.346
very, very deep, but also very narrow, which.

00:19:18.346 --> 00:19:21.176
means that if you were impacted by the crisis, you failed a pen.

00:19:22.246 --> 00:19:25.636
If you were a restaurant and division the hotel.

00:19:25.636 --> 00:19:27.336
but most people did not.

00:19:28.426 --> 00:19:29.746
They kept their jobs.

00:19:30.966 --> 00:19:32.086
There were zooming.

00:19:32.956 --> 00:19:35.976
Their income actually went up, so if you think about.

00:19:35.976 --> 00:19:39.316
it for a second, a very large segment of the population.

00:19:39.316 --> 00:19:39.316


00:19:41.316 --> 00:19:44.116
Did not feel financially this crisis.

00:19:45.806 --> 00:19:47.566
We have never seen anything like that.

00:19:48.386 --> 00:19:50.506
Before in any other recession.

00:19:51.146 --> 00:19:54.766
Which means if you think about it, what it really means is.

00:19:54.766 --> 00:19:57.946
that home buyers and potential home buyers.

00:19:57.946 --> 00:20:01.706
got the benefit of recession visa.

00:20:01.706 --> 00:20:04.826
vie extremely low interest rates without.

00:20:04.826 --> 00:20:08.326
the cost of a recession visa via broadly.

00:20:08.326 --> 00:20:10.946
based increase in the unemployment rate.

00:20:12.796 --> 00:20:15.886
That's the secret behind the.

00:20:15.886 --> 00:20:17.226
housing market.

00:20:17.826 --> 00:20:21.106
During this crisis, the asymmetrical nature of.

00:20:21.106 --> 00:20:24.506
the crisis. Now let's go to the next chart.

00:20:24.506 --> 00:20:24.506


00:20:25.466 --> 00:20:28.646
And you see another interesting story in the US.

00:20:28.646 --> 00:20:28.646


00:20:30.056 --> 00:20:33.176
We have seen a significant decline in the participation.

00:20:33.176 --> 00:20:36.716
rate among older people.

00:20:36.716 --> 00:20:39.996
55 and over, and I suggest that if.

00:20:39.996 --> 00:20:43.266
those people 55 and over decided to exit.

00:20:43.266 --> 00:20:43.266


00:20:44.206 --> 00:20:45.246
The labor market.

00:20:46.436 --> 00:20:48.436
During COVID, they're not coming back.

00:20:49.376 --> 00:20:51.476
In Canada we haven't seen it yet.

00:20:52.166 --> 00:20:55.686
So that's one big, different different between.

00:20:55.686 --> 00:20:56.726
Canada and the US.

00:20:57.986 --> 00:21:01.786
The other is the quit rate. You probably.

00:21:01.786 --> 00:21:04.686
eard about the great resignation.

00:21:05.566 --> 00:21:08.856
Trend and it is true in the US because.

00:21:08.856 --> 00:21:11.906
of the lack of labor and.

00:21:11.906 --> 00:21:13.246
the increase in wages.

00:21:14.126 --> 00:21:17.606
Labor has more power, so people are quitting like.

00:21:17.606 --> 00:21:18.486
there is no tomorrow.

00:21:19.266 --> 00:21:20.546
Looking for something else.

00:21:21.186 --> 00:21:24.266
In Canada, the quit rate remained.

00:21:24.266 --> 00:21:27.406
the same. The difference, however, that in Canada in.

00:21:27.406 --> 00:21:30.426
the latest survey, a record high.

00:21:30.426 --> 00:21:30.426


00:21:31.246 --> 00:21:33.746
Number of people said that they were thinking about.

00:21:34.796 --> 00:21:37.996
Retirement, it'll be about quitting. So in the USD.

00:21:37.996 --> 00:21:41.156
actually doing it in Canada as usual we are.

00:21:41.156 --> 00:21:42.336
just thinking about it.

00:21:43.766 --> 00:21:47.206
But I think that that's something that is coming the labor market.

00:21:47.206 --> 00:21:50.286
is very, very tight and without a significant increase.

00:21:50.286 --> 00:21:53.466
in wages, people in Canada also will start quitting.

00:21:53.466 --> 00:21:56.926
something to think about. So when you talk about wages.

00:21:56.926 --> 00:22:00.026
when you talk about people quitting because the labor labor, market.

00:22:00.026 --> 00:22:00.866
s so strong.

00:22:02.446 --> 00:22:03.816
You have to ask.

00:22:04.506 --> 00:22:07.996
The most important question at this point, inflation, how?

00:22:07.996 --> 00:22:11.116
uch sleep should we lose over inflation?

00:22:11.116 --> 00:22:11.116


00:22:11.766 --> 00:22:14.766
Now granted, if you are under the age of 30.

00:22:15.796 --> 00:22:17.856
You don't know how to spell the word inflation.

00:22:18.836 --> 00:22:21.916
But it does exist, so let's go to the next chart and start.

00:22:21.916 --> 00:22:25.506
exploring. While the next chart is telling us.

00:22:25.506 --> 00:22:25.506


00:22:26.316 --> 00:22:29.396
That although economic growth in Canada in.

00:22:29.396 --> 00:22:32.696
real terms adjusted for inflation was negative.

00:22:32.696 --> 00:22:34.736
If you look at nominal.

00:22:35.926 --> 00:22:36.486
Growth.

00:22:37.436 --> 00:22:40.036
It's up by 8%. It's all inflation.

00:22:42.926 --> 00:22:47.376
And given the fact that government revenue are based on.

00:22:47.376 --> 00:22:47.376


00:22:50.516 --> 00:22:51.616
Nominal GDP.

00:22:52.436 --> 00:22:54.736
Trudeau is much richer.

00:22:55.446 --> 00:22:56.746
Than he thinks.

00:22:58.246 --> 00:22:59.086
Every.

00:23:01.056 --> 00:23:01.636
Point

00:23:02.246 --> 00:23:05.456
Increase in GDP nominal GDP is an extra.

00:23:05.456 --> 00:23:08.436
$4 billion of revenues.

00:23:09.506 --> 00:23:12.546
And that's exactly the reason why the budget deficit will.

00:23:12.546 --> 00:23:15.946
be smaller when they update the numbers.

00:23:15.946 --> 00:23:19.426
And that's why in places like Ontario, you've seen a situation in which.

00:23:19.426 --> 00:23:22.456
the budget deficit was basically half of.

00:23:22.456 --> 00:23:23.166
what it used to be.

00:23:23.976 --> 00:23:27.036
This huge increase in nominal GDP is actually a very.

00:23:27.036 --> 00:23:30.156
good thing for governments, but beyond that.

00:23:32.156 --> 00:23:35.226
Inflation our sustainable our real.

00:23:35.226 --> 00:23:36.176
or it's all noise?

00:23:36.966 --> 00:23:40.236
Let me start by telling you one thing and this is very important.

00:23:40.236 --> 00:23:41.326
nobody.

00:23:42.206 --> 00:23:45.316
Nobody knows where inflation.

00:23:45.316 --> 00:23:46.506
will be six months from now.

00:23:48.946 --> 00:23:52.016
And when I say nobody, I include the Bank of Canada and the.

00:23:52.016 --> 00:23:55.226
Fed in that nobody. We're all pretending, but nobody.

00:23:55.226 --> 00:23:58.356
knows. So we have to invest and.

00:23:58.356 --> 00:24:02.196
think about investment given this environment, however.

00:24:02.196 --> 00:24:05.316
we must make some educated guesses.

00:24:05.316 --> 00:24:08.566
about what makes sense and what doesn't when it comes to inflation.

00:24:08.566 --> 00:24:11.896
because it's too important. So let's start and see what makes sense.

00:24:11.896 --> 00:24:13.516
Let's go to the next chart.

00:24:14.226 --> 00:24:17.436
And the next chart is telling you that basically one.

00:24:17.436 --> 00:24:21.056
of current inflation is.

00:24:21.056 --> 00:24:24.256
basically kovid. It's all covid sensitive.

00:24:24.256 --> 00:24:27.456
goods and services. Why? Because people have been sitting.

00:24:27.456 --> 00:24:30.716
on this mountain of cash. We are starting to open.

00:24:30.716 --> 00:24:34.116
up. Services are opening up, people are starting to spend.

00:24:34.116 --> 00:24:37.196
and spend like there is no tomorrow and we.

00:24:37.196 --> 00:24:40.416
are sitting on more than $200 billion.

00:24:40.416 --> 00:24:43.566
of excess cash looking for direction. There is so.

00:24:43.566 --> 00:24:45.436
much pent up demand and I remember.

00:24:45.616 --> 00:24:48.866
Back then, when I had a conversation with the Finance minister.

00:24:48.866 --> 00:24:52.046
she asked how can we convince people?

00:24:52.046 --> 00:24:55.066
to spend that extra money that they're sitting on?

00:24:55.066 --> 00:24:58.076
And I said provide the vaccine and get.

00:24:58.076 --> 00:25:01.406
out of the way. They don't need any motivation.

00:25:01.406 --> 00:25:04.516
There are motivated enough. What they need is the green light, so.

00:25:04.516 --> 00:25:07.596
we got a semi green light over the past few months and.

00:25:07.596 --> 00:25:10.966
that's why you see this pent up demand rising and what's interesting.

00:25:10.966 --> 00:25:10.966


00:25:12.096 --> 00:25:14.836
Is that companies that sell us all those stuff?

00:25:15.666 --> 00:25:18.706
They are able to transfer the cost to the consumer.

00:25:18.706 --> 00:25:18.706


00:25:19.406 --> 00:25:22.226
Because this consumer is willing to pay.

00:25:23.156 --> 00:25:26.206
The price is activity of the consumer is much lower than it used to be.

00:25:26.206 --> 00:25:29.226
because we are sitting on this mountain of cash and that's why if you look.

00:25:29.226 --> 00:25:32.346
at profit margins in the US, there are.

00:25:32.346 --> 00:25:36.006
back to normal because companies are able to transfer.

00:25:36.006 --> 00:25:39.266
the extra cost to the consumer so that's important.

00:25:39.266 --> 00:25:42.846
The next chart is the most important story.

00:25:42.846 --> 00:25:45.866
and that's wages as I.

00:25:45.866 --> 00:25:47.906
indicated the.

00:25:49.486 --> 00:25:50.426
Vacancy rate.

00:25:51.076 --> 00:25:54.176
In the US and Canada, when it comes to label is.

00:25:54.176 --> 00:25:57.656
at a record high. The minute people need people.

00:25:57.656 --> 00:26:00.896
they pay more and that's starting to happen.

00:26:00.896 --> 00:26:04.736
You can see it in restaurants. You can see it in hospitality.

00:26:04.736 --> 00:26:07.536
You can see it in other sectors that need people.

00:26:08.266 --> 00:26:11.516
And some people that have been getting money from the government to sit home.

00:26:11.516 --> 00:26:14.676
I've been watching from the window through the window.

00:26:14.676 --> 00:26:18.076
and see their future wage rising.

00:26:18.076 --> 00:26:19.516
while they were waiting at home.

00:26:21.166 --> 00:26:24.196
And this is still happening. Try to find somebody in a.

00:26:24.196 --> 00:26:25.876
restaurant walking. It's very difficult.

00:26:27.056 --> 00:26:30.436
Companies small businesses are telling us they are unable to find people.

00:26:30.436 --> 00:26:33.476
everywhere is people are hiring wages.

00:26:33.476 --> 00:26:34.016
are rising.

00:26:35.056 --> 00:26:38.106
The question is our sustainability is and I believe that.

00:26:38.106 --> 00:26:40.066
this is actually relatively sustainable.

00:26:40.996 --> 00:26:44.376
Because we started this crisis with a significant shortage of labor.

00:26:44.376 --> 00:26:47.806
and now this crisis exposed out shortage.

00:26:47.806 --> 00:26:50.826
and if other people will be exiting the.

00:26:50.826 --> 00:26:54.236
labor market dot shortage will be even worse. So that's something.

00:26:54.236 --> 00:26:57.486
that we have to take into account. The fact that people are willing to quit.

00:26:57.486 --> 00:27:00.886
to get a new job means that the bargaining power now is with labor.

00:27:00.886 --> 00:27:04.296
and that's inflationary. One factor that is actually.

00:27:04.296 --> 00:27:07.356
benefiting Canada relative to the US when it comes to the.

00:27:07.356 --> 00:27:10.906
supply of labor is the next chart, and that's immigration.

00:27:10.906 --> 00:27:10.906


00:27:12.196 --> 00:27:15.426
I will immigration policies suggests that.

00:27:15.426 --> 00:27:18.486
our population growth is much faster than what you see in the US.

00:27:18.486 --> 00:27:21.746
so at least we have something that is compensating.

00:27:21.746 --> 00:27:24.926
for the lack of labor and that's new immigrants.

00:27:24.926 --> 00:27:27.946
In the US you don't have it, which means that any wage.

00:27:27.946 --> 00:27:31.286
inflation in the US might be might be.

00:27:31.286 --> 00:27:34.866
more significant than in Canada because they don't have this offsetting.

00:27:34.866 --> 00:27:37.926
force called immigration. But then of course there.

00:27:37.926 --> 00:27:41.206
is another factor, and that's the next chart which.

00:27:41.206 --> 00:27:43.046
is the supply chain.

00:27:43.106 --> 00:27:46.356
That we all read about in newspapers and feel on a daily basis.

00:27:46.356 --> 00:27:49.576
Listen, economists have many.

00:27:49.576 --> 00:27:50.416
many flaws.

00:27:52.666 --> 00:27:54.136
But amnesia is not one of them.

00:27:55.646 --> 00:27:57.466
We all remember the 1970s.

00:27:58.456 --> 00:28:01.636
And the big question is to what extent we.

00:28:01.636 --> 00:28:04.696
have a situation in which we.

00:28:04.696 --> 00:28:08.056
are back to the 70s, and I suggest the following.

00:28:08.056 --> 00:28:10.536
comparing the current situation.

00:28:11.396 --> 00:28:14.676
To the 1970s is not only.

00:28:14.676 --> 00:28:17.876
wrong, but also irresponsible this.

00:28:17.876 --> 00:28:20.886
is not the 1970s by any.

00:28:20.886 --> 00:28:22.516
stretch of the imagination.

00:28:23.716 --> 00:28:24.556
Back then?

00:28:25.266 --> 00:28:28.666
Baby boomers were consuming like there is no tomorrow. That's not.

00:28:28.666 --> 00:28:31.976
the case. Now back then, interest rates.

00:28:31.976 --> 00:28:35.236
were extremely extremely high. Today, the opposite.

00:28:35.236 --> 00:28:38.246
is the case back there and the level of death was lower, which means.

00:28:38.246 --> 00:28:41.256
that the sensitivity to higher interest rates was not the same.

00:28:41.256 --> 00:28:44.516
We cannot compare the current situation to the 19.

00:28:44.516 --> 00:28:47.656
0s and when people talk about the economy slowing down.

00:28:47.656 --> 00:28:51.016
stagflation, you all don't have it because we are seeing the economy.

00:28:51.016 --> 00:28:54.236
expanding by about 4% next year. That's.

00:28:54.236 --> 00:28:55.336
not stack flashing by.

00:28:55.396 --> 00:28:58.416
And it's touch of dementia Nation that sell bit of inflation in.

00:28:58.416 --> 00:28:59.396
a growing economy.

00:29:02.306 --> 00:29:03.546
And the issue.

00:29:04.226 --> 00:29:05.386
It's not just supply.

00:29:06.506 --> 00:29:09.666
The issue is actually demand more than supply. Let me explain.

00:29:09.666 --> 00:29:10.666
Let's go to the next chart.

00:29:12.226 --> 00:29:15.566
You see, look at the chart to the left. That's durable goods.

00:29:15.566 --> 00:29:15.566


00:29:18.456 --> 00:29:21.106
Look at the dotted line. The dotted line is where it should be.

00:29:22.076 --> 00:29:23.726
This solid line is where it is.

00:29:24.596 --> 00:29:27.656
So when it comes to services we are not back when it comes to.

00:29:27.656 --> 00:29:31.396
goods we are 20% higher than where we should be. Why?

00:29:31.396 --> 00:29:34.716
Because you press a button and you get your exercise bike.

00:29:34.716 --> 00:29:35.656
no issue.

00:29:37.096 --> 00:29:40.616
And it's still there. It's still up there, it's it doesn't corrected yet.

00:29:43.026 --> 00:29:46.166
A normally functioning supply system will face.

00:29:46.166 --> 00:29:47.416
major difficulties.

00:29:48.396 --> 00:29:51.966
Supplying these kind of shock in demand.

00:29:51.966 --> 00:29:55.126
in a very short period of time, a normally functioning supply.

00:29:55.126 --> 00:29:58.856
system and this is of course not a normally functioning.

00:29:58.856 --> 00:30:02.366
supply system. You have covid in China.

00:30:02.366 --> 00:30:05.586
Asia, you have situation in which you have to mortgage.

00:30:05.586 --> 00:30:08.766
your business to get a container from China. We are all.

00:30:08.766 --> 00:30:12.076
familiar with the story, the semiconductor story, so you have.

00:30:12.076 --> 00:30:13.446
a huge demand shock.

00:30:14.706 --> 00:30:18.546
Met with a weak and sick supply system.

00:30:18.546 --> 00:30:18.546


00:30:20.456 --> 00:30:21.046
That will do.

00:30:22.536 --> 00:30:25.036
But it's all covered. It's all covered.

00:30:25.776 --> 00:30:28.806
The minute you remove Covid from there question, this goes.

00:30:28.806 --> 00:30:32.006
back and the supply system will go back and it will happen.

00:30:32.006 --> 00:30:32.006


00:30:32.716 --> 00:30:35.796
So I buy the argument that this is not a permanent.

00:30:35.796 --> 00:30:39.306
situation, but it will last longer than expected.

00:30:39.306 --> 00:30:39.306


00:30:40.396 --> 00:30:42.686
And that's inflationary. In the short term.

00:30:43.566 --> 00:30:47.156
And when the Bank of Canada and the Fed are talking about short.

00:30:47.156 --> 00:30:50.496
lived inflation. They're talking about this but.

00:30:50.496 --> 00:30:53.756
one aspect is wages, and this we don't know because.

00:30:53.756 --> 00:30:57.556
when it comes to inflation, and that's very important inflation.

00:30:57.556 --> 00:31:00.716
is something that takes.

00:31:00.716 --> 00:31:01.516
time to.

00:31:02.196 --> 00:31:04.656
Develop. It's a lagging indicator.

00:31:06.756 --> 00:31:09.846
And it can impact your psyche. And if you believe that.

00:31:09.846 --> 00:31:13.026
inflation will continue to go up, you change your inflation.

00:31:13.026 --> 00:31:16.526
expectations and that's the nightmare. As far as the.

00:31:16.526 --> 00:31:19.636
Bank of Canada and the Fed are concerned, they would like you to keep your inflation.

00:31:19.636 --> 00:31:22.646
expectations and they will use all the tools they are to do so.

00:31:22.646 --> 00:31:25.906
once their tool interest rates. So let's discuss so.

00:31:25.906 --> 00:31:29.546
t's go to the next chart and see what's reasonable and what's not reasonable.

00:31:29.546 --> 00:31:29.546
le.

00:31:31.606 --> 00:31:35.126
Now inflation is accelerating and.

00:31:35.126 --> 00:31:38.236
that's in part due to the supply issues for.

00:31:38.236 --> 00:31:41.546
example, look at the used cars prices.

00:31:41.546 --> 00:31:44.626
contributing a significant amount.

00:31:44.626 --> 00:31:47.746
of inflation today because you don't have the semiconductor.

00:31:47.746 --> 00:31:50.786
The chips that, so that's something that will.

00:31:50.786 --> 00:31:54.026
fix itself over time the wage story.

00:31:54.026 --> 00:31:57.166
is still not there, but will come, so we believe.

00:31:57.166 --> 00:32:00.556
that overall inflation will accelerate over the next six months.

00:32:00.556 --> 00:32:02.346
reflecting the supply chain story.

00:32:02.486 --> 00:32:06.096
And then slowly we'll start going down toward something.

00:32:06.096 --> 00:32:09.136
normal. What will bring it to normal will be.

00:32:09.136 --> 00:32:10.076
higher interest rates.

00:32:11.066 --> 00:32:14.746
And here we have to discuss this the reaction.

00:32:14.746 --> 00:32:17.866
curve by the Bank of Canada and the Fed.

00:32:17.866 --> 00:32:21.086
Let's go to the next chart, and that's very very.

00:32:21.086 --> 00:32:23.606
interesting. The Bank of Canada.

00:32:24.566 --> 00:32:27.726
He's now tweeting about the possibility of raising interest rates early.

00:32:27.726 --> 00:32:31.126
in 2022, just recently just recently.

00:32:31.126 --> 00:32:34.256
the Bank of Canada was talking about 2023 to be.

00:32:34.256 --> 00:32:37.696
the first move. Now we're talking about early 2022.

00:32:37.696 --> 00:32:38.966
That's a huge change.

00:32:39.936 --> 00:32:43.506
And you can see that the market is getting very aggressive.

00:32:43.506 --> 00:32:47.396
The market now is pricing in no less.

00:32:47.396 --> 00:32:50.656
than six moves by the Bank of Canada.

00:32:50.656 --> 00:32:50.656


00:32:51.876 --> 00:32:55.046
In a 2020 to 6.

00:32:55.046 --> 00:32:57.746
moves, that's a very aggressive move.

00:32:58.386 --> 00:33:02.636
That was doubled. What was discounted before?

00:33:02.636 --> 00:33:02.636


00:33:04.066 --> 00:33:07.736
The Bank of Canada is expected to move aggressively.

00:33:07.736 --> 00:33:10.916
but the same market is expecting the Fed to move only twice.

00:33:10.916 --> 00:33:10.916


00:33:11.546 --> 00:33:13.426
In 2022

00:33:14.046 --> 00:33:15.756
so the Bank of Canada seeks.

00:33:16.896 --> 00:33:19.946
The Fed twice doesn't make any sense.

00:33:19.946 --> 00:33:23.196
especially given the fact that remember the point.

00:33:23.196 --> 00:33:26.286
about the American economy moving.

00:33:26.286 --> 00:33:28.226
faster than Canada.

00:33:28.886 --> 00:33:32.466
Still, the market is expecting interest rates, delta rise more slowly.

00:33:32.466 --> 00:33:34.606
Remember the story about wages?

00:33:35.336 --> 00:33:38.406
And the fact that they don't get the new.

00:33:38.406 --> 00:33:41.426
supply of new immigrants to is.

00:33:41.426 --> 00:33:42.366
wage pressures.

00:33:42.956 --> 00:33:46.676
Therefore inflation that can be higher still, the market is expecting.

00:33:46.676 --> 00:33:49.696
low interest rates in the lower interest.

00:33:49.696 --> 00:33:52.956
rates in the US and Canada. So something is missing.

00:33:52.956 --> 00:33:56.136
here and therefore we believe that they will meet somewhere in between.

00:33:56.136 --> 00:33:58.976
namely the Bank of Canada will not be as aggressive.

00:34:00.266 --> 00:34:03.336
And the Fed will be more aggressive than expected. And if you listen.

00:34:03.336 --> 00:34:04.236
to the thread now.

00:34:04.856 --> 00:34:08.276
Every day they are becoming more and more hawkish.

00:34:08.276 --> 00:34:11.676
So what's reasonable? Not in 2022.

00:34:11.676 --> 00:34:14.976
the Bank of Canada will move twice or three times. The Fed will now.

00:34:14.976 --> 00:34:18.236
move twice or three times and then another move the.

00:34:18.236 --> 00:34:20.006
year after. What's reasonable?

00:34:20.716 --> 00:34:23.786
A terminal rate, namely our high rates.

00:34:23.786 --> 00:34:26.906
can go if you look at the bank right now in Canada is.

00:34:26.906 --> 00:34:30.206
25 basis points. What is normal?

00:34:30.206 --> 00:34:33.546
rate about 2 to 25? That's.

00:34:33.546 --> 00:34:36.806
where I believe we are going over the next two to three years.

00:34:36.806 --> 00:34:39.926
What's the risk? The risk is that the market is.

00:34:39.926 --> 00:34:43.426
right. The risk is that the Bank of Canada will be moving.

00:34:43.426 --> 00:34:43.426


00:34:44.516 --> 00:34:45.156
Too quickly.

00:34:46.186 --> 00:34:49.526
Every economic recession over the past.

00:34:49.526 --> 00:34:53.006
40 to 50 years was helped if not caused.

00:34:53.006 --> 00:34:56.186
by monetary policy error, in which.

00:34:56.186 --> 00:34:59.186
central bankers raise interest rates way too quickly.

00:34:59.846 --> 00:35:00.326
And.

00:35:01.206 --> 00:35:02.486
Basically killed their economy.

00:35:04.046 --> 00:35:07.586
Even the 2008 mother of all recessions was helped.

00:35:07.586 --> 00:35:10.736
by the fact that before the recession, Greenspan.

00:35:10.736 --> 00:35:13.806
Bugden raise interest rates from 1% to 5%.

00:35:13.806 --> 00:35:15.426
over the course of breakfast.

00:35:19.186 --> 00:35:22.256
So when I meet with the Bank of Canada and I meet with the Bank of Canada.

00:35:22.256 --> 00:35:23.096
very often.

00:35:23.766 --> 00:35:27.186
Unfortunately my message is go slowly.

00:35:27.186 --> 00:35:27.186


00:35:27.876 --> 00:35:31.196
No need to move six times in.

00:35:31.196 --> 00:35:32.576
2022.

00:35:33.656 --> 00:35:37.096
Inflation is a lagging indicator. You don't want inflation to get too close.

00:35:37.096 --> 00:35:40.756
but at the same time we don't want to raise rates.

00:35:40.756 --> 00:35:43.956
too quickly and shock the economy by some insurance.

00:35:43.956 --> 00:35:43.956


00:35:44.846 --> 00:35:46.186
And remember, I told you.

00:35:46.896 --> 00:35:49.946
Nobody knows where inflation will be six months from now, so what?

00:35:49.946 --> 00:35:53.366
do you do when you don't know what to do? You don't take chances.

00:35:53.366 --> 00:35:56.446
and you start raising interest rates early, but you don't.

00:35:56.446 --> 00:35:59.726
overshoot and I believe that's a reasonable scenario.

00:35:59.726 --> 00:36:04.026
which means that the market.

00:36:04.026 --> 00:36:04.026


00:36:05.266 --> 00:36:08.766
Is looking at interest rates today and already.

00:36:08.766 --> 00:36:12.066
applying it to the stock market in terms of evaluation and.

00:36:12.066 --> 00:36:15.246
that's why energy. And that's why financials are doing.

00:36:15.246 --> 00:36:18.296
well. But at the same time, if you raise interest.

00:36:18.296 --> 00:36:19.166
rates too quickly.

00:36:20.346 --> 00:36:22.406
Doc talks very negative for the stock market.

00:36:23.896 --> 00:36:27.366
And therefore the fact that interest rates will not be rising as quickly.

00:36:27.366 --> 00:36:30.446
as the market is expecting make is making me.

00:36:30.446 --> 00:36:33.466
more optimistic about the stock market because the remember.

00:36:33.466 --> 00:36:35.746
the stock market is now pricing in six months.

00:36:36.636 --> 00:36:39.676
If we get three, it's actually positive for the stock market.

00:36:39.676 --> 00:36:43.116
In addition, I believe that the three moves.

00:36:43.116 --> 00:36:46.396
will reflect the fact that inflation will not be a major.

00:36:46.396 --> 00:36:49.716
issue, and economic growth in 2022 will be.

00:36:49.716 --> 00:36:53.056
around 4%. That's positive for earnings the pricing.

00:36:53.056 --> 00:36:54.376
power of many companies.

00:36:55.196 --> 00:36:58.526
Still there, because consumers are willing to buy so.

00:36:58.526 --> 00:37:01.866
I suggest that the stock market will outperform.

00:37:01.866 --> 00:37:04.946
the bond market over the next year, and I.

00:37:04.946 --> 00:37:08.286
like for example, dividend paying stocks because I think that.

00:37:08.286 --> 00:37:12.306
in this environment dividends will be a more significant.

00:37:12.306 --> 00:37:15.806
contributor to our overall return and.

00:37:15.806 --> 00:37:19.146
I like energy, for example because of the reason I mentioned earlier.

00:37:19.146 --> 00:37:22.786
I don't see a significant increase in.

00:37:22.786 --> 00:37:25.386
cost. I don't see a significant increase.

00:37:25.836 --> 00:37:29.296
In hiring or investment therefore.

00:37:29.296 --> 00:37:32.326
the cost function, which table is the same but profit is rising.

00:37:32.326 --> 00:37:36.176
because of higher prices that will be translated into better.

00:37:36.176 --> 00:37:36.176


00:37:36.586 --> 00:37:39.636
Valuations in the energy space I.

00:37:39.636 --> 00:37:42.666
think that's the direction we are going, and we already starting to see.

00:37:42.666 --> 00:37:45.736
it and then the next question of course.

00:37:45.736 --> 00:37:47.116
and that's the last one.

00:37:47.896 --> 00:37:49.016
Is to what extent?

00:37:49.756 --> 00:37:51.436
COVID-19 is an event.

00:37:52.566 --> 00:37:53.626
Only condition.

00:37:55.196 --> 00:37:58.616
And I believe that every crisis is.

00:37:58.616 --> 00:38:02.296
a trend accelerator and this crisis is not very different. Many of.

00:38:02.296 --> 00:38:05.876
those trends were there before ecommerce was there before we healthy education.

00:38:05.876 --> 00:38:07.856
Even Deglobalization was there before.

00:38:09.186 --> 00:38:10.186
But beyond that.

00:38:10.916 --> 00:38:14.856
What I'm asking is to what extent the potential.

00:38:14.856 --> 00:38:15.756
growth of the economy.

00:38:17.256 --> 00:38:19.026
The ability of the economy to grow.

00:38:20.606 --> 00:38:23.846
Has changed dramatically from a long term perspective due to covid.

00:38:23.846 --> 00:38:27.046
Let's assume that we are lucky, and let's assume.

00:38:27.046 --> 00:38:30.146
that by 2022 this pandemic is turning into.

00:38:30.146 --> 00:38:34.086
endemic and we simply live with it and you go back to semi normal.

00:38:34.086 --> 00:38:34.086


00:38:36.316 --> 00:38:39.526
Our ability to consume iron will our willingness.

00:38:39.526 --> 00:38:42.546
to consume is the same. Our willingness to invest.

00:38:42.546 --> 00:38:43.086
is the same.

00:38:44.676 --> 00:38:46.666
Interest rates will go back to semi normal.

00:38:47.896 --> 00:38:51.346
And therefore, I believe that the economically speaking, although.

00:38:51.346 --> 00:38:54.906
it doesn't look like that now, kovid is an event as.

00:38:54.906 --> 00:38:55.816
opposed to.

00:38:56.606 --> 00:38:57.376
Air condition.

00:38:58.286 --> 00:38:59.226
It is true.

00:38:59.906 --> 00:39:02.246
That the global economy is being transformed.

00:39:03.146 --> 00:39:06.426
But when the fog clears everything we look.

00:39:06.426 --> 00:39:08.646
very very familiar.

00:39:10.776 --> 00:39:13.976
I will stop here and see if we have time for a discussion.

00:39:13.976 --> 00:39:13.976


00:39:17.746 --> 00:39:20.806
Thanks, ben. We've we do have a few questions that have been.

00:39:20.806 --> 00:39:21.566
coming in.

00:39:21.616 --> 00:39:24.736
Uhm, one and I'll combine, I think.

00:39:24.736 --> 00:39:28.426
a couple of questions. I wonder if you could comment on the.

00:39:28.426 --> 00:39:31.786
obviously debt is growing dramatically.

00:39:31.786 --> 00:39:35.176
federal provincial debts? You've got a government.

00:39:35.176 --> 00:39:38.256
that seems hell bent on reducing or.

00:39:38.256 --> 00:39:41.306
eliminating oil and gas production here in Canada.

00:39:41.306 --> 00:39:44.736
What do you think that does for our petro dollar?

00:39:44.736 --> 00:39:47.826
Is it's long been known. What's the dollar going to look like?

00:39:47.826 --> 00:39:51.066
going forward? OK, so let's discuss the debt situation.

00:39:51.066 --> 00:39:54.566
Fails to fold, and then we'll discuss the currency so when it comes to.

00:39:54.566 --> 00:39:54.566


00:39:54.926 --> 00:39:56.416
Let me tell you one thing.

00:39:57.886 --> 00:40:01.476
The numbers are very well known the debt level.

00:40:01.476 --> 00:40:04.526
went up from 30% of GDP to 50% of GDP. The budget.

00:40:04.526 --> 00:40:07.846
deficit. We know the story, so he's going to pay down all this debt.

00:40:07.846 --> 00:40:07.846


00:40:08.716 --> 00:40:11.056
The short answer is nobody.

00:40:12.646 --> 00:40:15.996
Because governments don't pay down debt, that's the reality.

00:40:15.996 --> 00:40:19.336
Know Margaret Thatcher's in the 80s said.

00:40:19.336 --> 00:40:22.816
that governments are like families. They have to balance their budget.

00:40:22.816 --> 00:40:26.416
They have to pay down their debt. No, they are not families.

00:40:26.416 --> 00:40:28.896
because families don't have the Bank of Canada behind him.

00:40:30.236 --> 00:40:33.606
So what we are going to see is basically rolling.

00:40:33.606 --> 00:40:34.166
it over.

00:40:34.946 --> 00:40:38.376
And basically soon you will see the government trying to fix.

00:40:38.376 --> 00:40:41.556
rates and take advantage of those low interest rates before they go.

00:40:41.556 --> 00:40:41.856
up.

00:40:42.506 --> 00:40:45.546
So you will see a rolling over making sure that the economy is growing.

00:40:45.546 --> 00:40:48.716
faster than that, then that's enough, so I don't see paying.

00:40:48.716 --> 00:40:52.006
down debt anytime soon. That's one thing. The other is the dollar.

00:40:52.006 --> 00:40:55.106
and the question is why the dollar is so elevated. Part of it of.

00:40:55.106 --> 00:40:57.406
course has to do with the.

00:40:57.466 --> 00:41:00.566
The commodity market, and especially oil we know.

00:41:00.566 --> 00:41:04.386
that, but beyond that, remember what the market is expecting 6.

00:41:04.386 --> 00:41:07.026
moved by the Bank of Canada only two moves by the Fed.

00:41:08.236 --> 00:41:12.196
That's significant in terms of making the Canadian dollar more attractive.

00:41:12.196 --> 00:41:12.196


00:41:13.316 --> 00:41:16.486
No, let's assume for a second, and I think it's a reasonable assumption we're starting.

00:41:16.486 --> 00:41:19.896
to see that oil will stabilize, so it will be neutral.

00:41:19.896 --> 00:41:19.896


00:41:21.136 --> 00:41:24.246
And let's assume that for a second the market will start.

00:41:24.246 --> 00:41:28.286
realizing that maybe six is too aggressive and two from the USA is not.

00:41:28.286 --> 00:41:31.386
aggressive enough. They will meet somewhere in between that can take.

00:41:31.386 --> 00:41:34.526
one or two cents out of the value of the dollar. So we believe that the dollar.

00:41:34.526 --> 00:41:37.566
will remain more or less where it is for now and then, maybe at.

00:41:37.566 --> 00:41:40.696
one point in 2022. So we lose one or two cents reflecting this.

00:41:40.696 --> 00:41:43.726
miss passing in the market that we currently view.

00:41:43.726 --> 00:41:43.726


00:41:48.036 --> 00:41:51.376
Perfect shifting gears a little bit to health care.

00:41:51.376 --> 00:41:51.376


00:41:51.646 --> 00:41:54.896
So help you talked to a fair bit about.

00:41:54.896 --> 00:41:58.136
it. Do you think the reality is we're not spending enough?

00:41:58.136 --> 00:42:01.636
dollars on health care? Or is it the way we spend our dollars?

00:42:01.636 --> 00:42:04.796
That's a very, very good question. That's a very good question.

00:42:04.796 --> 00:42:08.356
and I wrote a paper about this.

00:42:08.356 --> 00:42:11.896
health care situation and my conclusion was basically.

00:42:11.896 --> 00:42:15.216
first of all, for sure, we need to look at it and.

00:42:15.216 --> 00:42:18.386
we need maybe to spend more money and inject more money and then.

00:42:18.386 --> 00:42:19.656
a lot of people responded to it.

00:42:19.756 --> 00:42:23.006
In the newspapers basically.

00:42:23.006 --> 00:42:26.116
saying it is true that we need to spend more, but we also have to be much.

00:42:26.116 --> 00:42:29.596
more efficient. We have to merge hospitals.

00:42:29.596 --> 00:42:33.056
We have to see how we spend the money. And I totally agree so.

00:42:33.056 --> 00:42:36.076
I will not get too much into it because we don't follow it very closely, but I.

00:42:36.076 --> 00:42:39.636
would say clearly we need to fix the situation regardless.

00:42:39.636 --> 00:42:42.736
what the right way is. We know that it's broken.

00:42:42.736 --> 00:42:45.936
Now if you operate at 95% capacity in normal.

00:42:45.936 --> 00:42:48.976
times and you basically reach capacity like that, something is.

00:42:48.976 --> 00:42:50.176
wrong. We have to fix it.

00:42:50.236 --> 00:42:53.426
And I totally agree, it's not just spending more money sending more money.

00:42:53.426 --> 00:42:56.746
and we are doing it as the government is spending more money to.

00:42:56.746 --> 00:42:59.816
the problems is not part of the budget. But I think we.

00:42:59.816 --> 00:43:02.986
have to look at the way we do business and the health care system there where.

00:43:02.986 --> 00:43:06.246
erate, hospitals. If to the extent that there is efficiency issues.

00:43:06.246 --> 00:43:07.986
Let's fix it because that's too important.

00:43:11.336 --> 00:43:14.846
Can you comment on gold in?

00:43:16.246 --> 00:43:19.616
A hedge for any number of things any.

00:43:19.616 --> 00:43:21.936
thoughts, yes?

00:43:22.726 --> 00:43:26.696
Clearly, first of all, when it comes to inflation, if inflation expectations.

00:43:26.696 --> 00:43:29.746
go up, that will fuel gold at.

00:43:29.746 --> 00:43:33.296
the same time, gold is not what it used to be because of Bitcoin, so.

00:43:33.296 --> 00:43:36.656
Bitcoin is actually competing with gold, and some of the.

00:43:36.656 --> 00:43:36.656


00:43:37.926 --> 00:43:41.266
Improvement in process. That goal was supposed to see.

00:43:41.266 --> 00:43:44.346
was actually seen in Bitcoin because they.

00:43:44.346 --> 00:43:47.466
basically serve the same purpose. If you wish so.

00:43:47.466 --> 00:43:51.506
when it comes to Bitcoin, I can tell you one thing. I have 0 interest.

00:43:51.506 --> 00:43:54.726
in the currency in the calling itself 0 interest.

00:43:54.726 --> 00:43:58.406
It's so volatile I don't care, but I'm fascinated.

00:43:58.406 --> 00:43:59.186
by the.

00:44:00.006 --> 00:44:00.606
Technology.

00:44:01.456 --> 00:44:02.456
And I think that's a future.

00:44:03.116 --> 00:44:06.256
But this future will arrive only after you regulate that.

00:44:06.256 --> 00:44:09.556
space in a significant way that will allow financial.

00:44:09.556 --> 00:44:12.636
institutions to use it without thinking compatibility too much.

00:44:12.636 --> 00:44:16.126
So that's more or less where we are going regulations going.

00:44:16.126 --> 00:44:19.156
back to gold, you really cannot talk about gold without talking.

00:44:19.156 --> 00:44:22.176
about bitcoin, unfortunately, because they really move at the.

00:44:22.176 --> 00:44:25.376
same direction and to the extent that inflation will.

00:44:25.376 --> 00:44:28.506
be an issue over the next six months, gold can benefit from.

00:44:28.506 --> 00:44:31.066
but much less than it used to in the past.

00:44:32.766 --> 00:44:35.926
Perfect hey, can you comment?

00:44:35.926 --> 00:44:39.026
on the great reset and how that's going to affect Canadian?

00:44:39.026 --> 00:44:39.526
banking?

00:44:41.046 --> 00:44:44.226
Reset of what? Sorry that that's the question.

00:44:44.226 --> 00:44:47.506
that I've got, so I'm not really clear on what.

00:44:47.506 --> 00:44:48.526
exactly that is.

00:44:49.166 --> 00:44:52.376
I'm not give us your thoughts.

00:44:52.376 --> 00:44:55.516
ts on the mix, yes, so uh.

00:44:55.516 --> 00:44:58.696
talking about a situation which now interest.

00:44:58.696 --> 00:45:01.706
rates are starting to rise, and that's actually benefiting.

00:45:01.706 --> 00:45:01.706


00:45:02.166 --> 00:45:05.226
And bunks. And that's definitely a factor.

00:45:05.226 --> 00:45:08.556
Another factor is that as banks would be allowed to.

00:45:08.556 --> 00:45:11.666
increase dividends now, and that's a positive for banks. So banks.

00:45:11.666 --> 00:45:14.846
have been doing relatively well. Relatively speaking we are going.

00:45:14.846 --> 00:45:18.026
to see a situation in which banks will use.

00:45:18.026 --> 00:45:21.126
this deposit. Remember, although all these modern.

00:45:21.126 --> 00:45:22.456
of money that we are sitting.

00:45:23.266 --> 00:45:26.716
And in terms of accumulation.

00:45:26.716 --> 00:45:29.996
of wealth over the past two years.

00:45:29.996 --> 00:45:31.266
is sitting in deposits account?

00:45:32.636 --> 00:45:34.496
They're all sitting in banks.

00:45:35.226 --> 00:45:38.316
And backs of so much liquidity they don't know what to do with it.

00:45:38.316 --> 00:45:41.576
so they're actually going to spend some money and they're going to.

00:45:41.576 --> 00:45:44.766
reprise things in a very significant way. And that's a positive thing.

00:45:44.766 --> 00:45:44.766


00:45:45.256 --> 00:45:48.546
Clearly, when you have interest rates rising, and maybe that's.

00:45:48.546 --> 00:45:52.186
what they meant, the reset reset of interest rates rising.

00:45:52.186 --> 00:45:55.656
What does it mean? For example, for the mortgage market and that's.

00:45:55.656 --> 00:45:59.226
very interesting, because clearly it will slow down the mortgage market.

00:45:59.226 --> 00:46:02.426
and I suggest that that's a good thing because the housing market.

00:46:02.426 --> 00:46:05.476
as I suggested earlier, was on fire because of Covid and.

00:46:05.476 --> 00:46:08.806
because the of the asymmetrical nature. So there are two things happening.

00:46:08.806 --> 00:46:12.106
here. Let's assume that interest rates go up next year by 1.

00:46:12.106 --> 00:46:13.446
e percent 100 basis points.

00:46:14.716 --> 00:46:15.826
If you have to renew.

00:46:16.456 --> 00:46:19.656
Your mortgage next year. You will not feel the pain.

00:46:19.656 --> 00:46:22.776
Why? Because your rate is already 100 basis points.

00:46:22.776 --> 00:46:23.656
higher than it is now.

00:46:24.546 --> 00:46:26.276
So it will be a wash.

00:46:26.946 --> 00:46:30.356
In fact, if you took a mortgage in the past between.

00:46:30.356 --> 00:46:33.396
2019, is 1718 and 19.

00:46:33.396 --> 00:46:36.346
you're not feeling the pain because interest rates back then were higher.

00:46:37.016 --> 00:46:40.056
If you took a mortgage in 20 and.

00:46:40.056 --> 00:46:43.096
21, namely during covid and originations went up by.

00:46:43.096 --> 00:46:46.456
30% during this period, then you are exposed.

00:46:46.456 --> 00:46:48.216
because your interest rates.

00:46:49.526 --> 00:46:52.636
Are much lower than what they might be in 2020.

00:46:52.636 --> 00:46:56.616
2020, 6-5 years from now, when you when you that's why.

00:46:56.616 --> 00:46:59.956
we are going to see a bit of an impact, so overall.

00:46:59.956 --> 00:47:03.176
I suggest that the main impact will not be on people renewing the.

00:47:03.176 --> 00:47:06.296
main impact will be on new buyers and.

00:47:06.296 --> 00:47:07.706
just to put things in perspective.

00:47:07.766 --> 00:47:10.876
Sales went up dramatically.

00:47:10.876 --> 00:47:14.026
during Covid and they might go down and that will be a good thing.

00:47:14.026 --> 00:47:14.906
in 2022.

00:47:18.356 --> 00:47:22.026
Perfect, haven't talked at all, but.

00:47:22.026 --> 00:47:25.406
a topic that's near and dear to us here in Alberta climate.

00:47:25.406 --> 00:47:28.926
change. Any thoughts on the impact on?

00:47:28.926 --> 00:47:32.406
I mean global economy, but in particular the Canadian.

00:47:32.406 --> 00:47:35.626
or even Western Canadian economies.

00:47:35.626 --> 00:47:35.626


00:47:37.296 --> 00:47:40.606
I wouldn't make it very clear point here that the notion.

00:47:40.606 --> 00:47:44.046
of you can add the economy and the environment moving together.

00:47:44.046 --> 00:47:46.846
and everybody is happy not going to happen.

00:47:47.806 --> 00:47:50.926
Not in the next five years, and I'm very, very clear about it.

00:47:50.926 --> 00:47:53.986
You cannot have a huge change, and it seems that.

00:47:53.986 --> 00:47:57.476
we are in the midst of a huge change when it comes to the environment and.

00:47:57.476 --> 00:47:59.626
policies. And there is this openness towards.

00:48:00.286 --> 00:48:01.376
Accepting the pen.

00:48:02.156 --> 00:48:03.736
Without impacting the economy.

00:48:04.896 --> 00:48:08.006
And this is simply not going to happen in the.

00:48:08.006 --> 00:48:11.286
short term. It's not going to happen. We are in a transition period 5.

00:48:11.286 --> 00:48:14.726
0 years from now. We might be able to marry the two and both will benefit.

00:48:14.726 --> 00:48:17.586
But while you were going through the transition, there is a cost.

00:48:18.566 --> 00:48:19.806
This goes up. This goes down.

00:48:20.656 --> 00:48:24.146
And I believe this will reduce the ability of the economy.

00:48:24.146 --> 00:48:27.226
to grow. The potential growth of the economy, and that's something.

00:48:27.226 --> 00:48:30.306
that we should accept. Or we should realize.

00:48:30.306 --> 00:48:31.566
that we have to accept.

00:48:32.396 --> 00:48:35.596
And if it means carbon tax, if it means other things, unfortunately.

00:48:35.596 --> 00:48:38.956
it also means that the potential growth of Alberta will.

00:48:38.956 --> 00:48:42.416
be impacted by that during this transition period, ironically.

00:48:42.416 --> 00:48:45.836
however, I expect Alberta to outperform.

00:48:45.836 --> 00:48:49.096
the rest of the country in 2022, economically speaking.

00:48:49.096 --> 00:48:52.116
you will be #1, but unfortunately from a low base.

00:48:52.116 --> 00:48:52.116


00:48:53.526 --> 00:48:57.076
It doesn't mean that the office buildings.

00:48:57.076 --> 00:49:00.156
will be full again, unfortunately, but when.

00:49:00.156 --> 00:49:03.316
ou start from a low base you moved fast and I think.

00:49:03.316 --> 00:49:06.486
that's what we are going to see. But I will. I'm not under any.

00:49:06.486 --> 00:49:07.076
on here.

00:49:07.766 --> 00:49:10.366
But the more we focus on the environment and we should.

00:49:11.756 --> 00:49:14.886
The more the damage will be to the rest of the economy and we have to accept it and.

00:49:14.886 --> 00:49:15.916
don't pretend that it's not there.

00:49:18.856 --> 00:49:22.216
Perfect any reason to be concerned about?

00:49:22.216 --> 00:49:25.606
a wage price spiral if.

00:49:25.606 --> 00:49:28.806
we do expect wages to increase and obviously a tight.

00:49:28.806 --> 00:49:31.836
labor market people not used to go into.

00:49:31.836 --> 00:49:35.066
work for awhile. So thoughts on that? That's it. That's it, that's.

00:49:35.066 --> 00:49:38.206
it. That's the question. That's the question, and we'll.

00:49:38.206 --> 00:49:41.406
see where just rising we see the bargaining power.

00:49:41.406 --> 00:49:44.886
of labor rising for the first time. They are able to get those.

00:49:44.886 --> 00:49:48.226
raises and the longer.

00:49:48.226 --> 00:49:48.836
it lasts.

00:49:49.506 --> 00:49:52.696
The more it gets into your psyche and when it gets to your.

00:49:52.696 --> 00:49:54.276
psyche, you expect more.

00:49:55.976 --> 00:49:56.436
No.

00:49:58.456 --> 00:50:01.586
The issue at the end of the day, at the end of the day, let's face it, the issue is.

00:50:01.586 --> 00:50:02.626
not inflation.

00:50:03.776 --> 00:50:06.836
Because we have 50 years of experience dealing with inflation.

00:50:06.836 --> 00:50:10.056
and the Bank of Canada and the Fed will tell.

00:50:10.056 --> 00:50:13.376
you we have the tools to deal with inflation. What are the tools?

00:50:13.376 --> 00:50:16.406
higher interest rates? So the question is not repression the question.

00:50:16.406 --> 00:50:19.856
is what will be the cost in terms of higher interest rates to bring this information back.

00:50:19.856 --> 00:50:20.436
to 2%.

00:50:23.126 --> 00:50:26.136
And my fear, and that's a risk.

00:50:26.916 --> 00:50:28.916
That if you start raising two quickly.

00:50:30.146 --> 00:50:33.526
To fight inflation to aggressively, you can raise interest rates too much.

00:50:33.526 --> 00:50:37.066
and that's why I'm watching wages so quickly.

00:50:37.066 --> 00:50:38.506
there is.

00:50:39.126 --> 00:50:40.536
A positive probability.

00:50:41.386 --> 00:50:44.416
Dot wages will rise faster than expected.

00:50:44.416 --> 00:50:47.616
and we'll get into the psyche of people and therefore the Bank of Canada.

00:50:47.616 --> 00:50:50.756
will have to be more aggressive to reduce those inflation expectations.

00:50:50.756 --> 00:50:54.096
and that can be too aggressive. That's the risk that we are facing now at.

00:50:54.096 --> 00:50:57.146
this point. This is like 20% probability, but the more.

00:50:57.146 --> 00:51:00.616
likely scenario in which they will go slowly and the.

00:51:00.616 --> 00:51:03.656
supply chain story will disappear 6.

00:51:03.656 --> 00:51:06.956
x months from now, and therefore the wage aspects will not be big enough.

00:51:06.956 --> 00:51:10.036
to inflate the economy. But there is a risk and we.

00:51:10.036 --> 00:51:11.166
have to admit that that's a risk.

00:51:13.426 --> 00:51:16.596
You touched on supply chain disruptions.

00:51:16.596 --> 00:51:19.656
and obviously there's covid related ones, but there's also the.

00:51:19.656 --> 00:51:22.886
events in British Columbia right now and that.

00:51:22.886 --> 00:51:26.236
disruption that's would you view that as more of a short term.

00:51:26.236 --> 00:51:28.816
or something to play. It will play on.

00:51:29.256 --> 00:51:32.416
Yeah, that's a natural disaster. Unfortunately, a very significant one.

00:51:32.416 --> 00:51:35.576
and as busy went through it over the past summer 3.

00:51:35.576 --> 00:51:38.656
hree times. Heartbreaking, but it's not.

00:51:38.656 --> 00:51:39.656
an economic event.

00:51:41.016 --> 00:51:44.036
Because the way it works, you have this destruction and.

00:51:44.036 --> 00:51:47.186
then you have the build up so it's just timing in.

00:51:47.186 --> 00:51:50.206
terms of economic activity. You go down one quarter.

00:51:50.206 --> 00:51:53.736
you go up 1/4 to compensate for that if.

00:51:53.736 --> 00:51:56.856
that. If you look at the period of 2 years that will.

00:51:56.856 --> 00:51:59.896
e filled from a long term perspective, so it's a.

00:51:59.896 --> 00:52:03.176
it's not, it's.

00:52:03.176 --> 00:52:06.276
something that impacts the economy from a short period of.

00:52:06.276 --> 00:52:09.516
time. It's very deep, very significant. But the recovery also.

00:52:09.516 --> 00:52:10.196
is very strong.

00:52:12.556 --> 00:52:12.936
K.

00:52:14.816 --> 00:52:18.036
Federal government policies. Do you see anything?

00:52:18.036 --> 00:52:21.486
that's either constructive, positive, or negative?

00:52:21.486 --> 00:52:25.026
in terms of sort of long term growth on canon, things like subsidized.

00:52:25.026 --> 00:52:25.696
childcare.

00:52:25.986 --> 00:52:29.096
Some of those sort of long term fundamental changes that.

00:52:29.096 --> 00:52:32.136
we're looking at. Yeah, what we are seeing now to put things.

00:52:32.136 --> 00:52:35.586
in perspective is a permanent increase, I believe.

00:52:35.586 --> 00:52:38.636
in government spending as a share of the economy we.

00:52:38.636 --> 00:52:41.736
see before the crisis, government spending as a share of GDP was.

00:52:41.736 --> 00:52:44.776
about 15%. It went to 30.

00:52:44.776 --> 00:52:48.326
0% during Covid was unsustainable. Now it's stabilizing.

00:52:48.326 --> 00:52:51.456
going down, but I suggest it will stabilize at, let's say.

00:52:51.456 --> 00:52:53.676
718% higher than it was.

00:52:55.406 --> 00:52:58.776
And that's a permanent increase in spending why we already have a national.

00:52:58.776 --> 00:52:59.676
day care system.

00:53:00.456 --> 00:53:03.486
We are talking about the significant injection of money to.

00:53:03.486 --> 00:53:04.766
health care as we discussed.

00:53:05.526 --> 00:53:09.116
Those are permanent changes. We're talking about making the EIS.

00:53:09.116 --> 00:53:09.116


00:53:09.356 --> 00:53:13.396
System more accommodating maybe.

00:53:13.396 --> 00:53:15.496
something for self employed.

00:53:16.116 --> 00:53:19.166
Dots, permanent increase and therefore I believe that the level of.

00:53:19.166 --> 00:53:22.216
activity will stabilize at a higher level at.

00:53:22.216 --> 00:53:23.376
one point you have to pay for it.

00:53:24.626 --> 00:53:27.656
And I would not be surprised if in addition to.

00:53:27.656 --> 00:53:30.946
all the tax measures that were introduced already there.

00:53:30.946 --> 00:53:34.446
will be some others. Maybe corporate taxes maybe?

00:53:34.446 --> 00:53:37.546
something along the line.

00:53:37.546 --> 00:53:40.626
of raising the inclusion rate on capital gain tax.

00:53:40.626 --> 00:53:44.126
I will not be totally shocked. Carbon money can.

00:53:44.126 --> 00:53:45.996
be used for general purposes.

00:53:46.926 --> 00:53:50.296
And we saw tax on banks coming.

00:53:50.296 --> 00:53:53.696
and you can question to what extent. It's a wide thing, but it's coming.

00:53:53.696 --> 00:53:56.816
And if they are totally desperate and I don't believe they will get to.

00:53:56.816 --> 00:54:00.456
this point, but you never know they will go after HST and GST.

00:54:00.456 --> 00:54:03.536
But that's something that is basically a political suicide.

00:54:03.536 --> 00:54:05.216
So I got I doubt it will do that.

00:54:08.436 --> 00:54:11.906
I'm switching orbit to trade a bit of.

00:54:11.906 --> 00:54:15.246
a little bit more protectionism in the world it.

00:54:15.246 --> 00:54:18.446
seems these days impact on Canada. I mean, we largely.

00:54:18.446 --> 00:54:21.626
export a great deal of our economy is exports.

00:54:21.626 --> 00:54:24.716
yes in a big way I believe and.

00:54:24.716 --> 00:54:27.986
that's something that we discussed before covid it started before.

00:54:27.986 --> 00:54:31.166
covid and that trend was accelerated during covid it.

00:54:31.166 --> 00:54:34.366
started with the Trump. Let's face it, the deglobalization.

00:54:34.366 --> 00:54:38.606
nature of trade globally and.

00:54:41.006 --> 00:54:44.456
And you realize that a 90% of your antibiotic.

00:54:44.456 --> 00:54:47.706
supplies coming from China you.

00:54:47.706 --> 00:54:50.856
wake up one morning and you say you realize that without China you cannot.

00:54:50.856 --> 00:54:54.256
build a car in North America because you're missing those semiconductors.

00:54:54.256 --> 00:54:54.256


00:54:54.916 --> 00:54:55.936
This has got to change.

00:54:56.806 --> 00:54:57.296
Big time.

00:54:58.446 --> 00:55:01.636
I estimate that about 20% of what America is buying.

00:55:01.636 --> 00:55:02.956
from China and I will come back home.

00:55:04.326 --> 00:55:05.356
And let's face it.

00:55:06.336 --> 00:55:09.466
Unfortunately, and this is something that I've been saying before.

00:55:09.466 --> 00:55:11.536
the crisis, we are in the midst.

00:55:12.816 --> 00:55:13.436
Of.

00:55:14.386 --> 00:55:15.096
A Cold War.

00:55:16.336 --> 00:55:19.766
A technology called more. It's not the Cold War going.

00:55:19.766 --> 00:55:23.646
back to the Soviet, but it's a cold war for my technology technology perspective.

00:55:23.646 --> 00:55:23.656


00:55:24.946 --> 00:55:28.236
And if there is a cold.

00:55:28.236 --> 00:55:29.776
War and you are a third party.

00:55:30.456 --> 00:55:32.956
What do you have to choose a side?

00:55:34.776 --> 00:55:38.606
Canada where you are. If you're Australia, that.

00:55:38.606 --> 00:55:41.686
our security needs are coming from the US, but your economic needs are.

00:55:41.686 --> 00:55:43.086
coming from China. Good luck with that.

00:55:44.676 --> 00:55:47.806
So what I suggest is that this is not a full scale.

00:55:47.806 --> 00:55:50.126
globalization. You cannot reverse it.

00:55:51.216 --> 00:55:54.656
What are the margin and those margins will be wider than expected you?

00:55:54.656 --> 00:55:57.766
will see we will see more money coming back or more production.

00:55:57.766 --> 00:56:00.256
coming back to North America and our job.

00:56:00.946 --> 00:56:03.466
Is to make sure that the by America.

00:56:04.456 --> 00:56:05.746
Means by North America.

00:56:06.516 --> 00:56:09.466
We have to be part of this exercise.

00:56:10.246 --> 00:56:13.356
And I think that's the direction we are going this by.

00:56:13.356 --> 00:56:17.186
the way, can have some inflationary implications because if globalization

00:56:17.186 --> 00:56:20.326
n was the disinflationary deglobalization is.

00:56:20.326 --> 00:56:22.506
s the opposite. So that's something to think about.

00:56:24.226 --> 00:56:27.316
For sure, so when we got a couple left here and we do.

00:56:27.316 --> 00:56:30.396
want to be because of the time and get you out of here.

00:56:30.396 --> 00:56:33.576
on the on our on the schedule. Do you see?

00:56:33.576 --> 00:56:36.596
any asset classes that are instant that institutions are using?

00:56:36.596 --> 00:56:39.756
to deal with inflation risk? Or are they viewing it as more?

00:56:39.756 --> 00:56:40.826
temporary as well?

00:56:41.256 --> 00:56:44.286
Are you think you've mentioned gold earlier?

00:56:44.286 --> 00:56:47.706
cryptocurrencies? Do we see institutions stepping?

00:56:47.706 --> 00:56:48.686
into those spaces at all?

00:56:49.776 --> 00:56:53.256
Yes, to an extent. We see more gold activity.

00:56:53.256 --> 00:56:56.536
people just hedging making sure that that's the case you look.

00:56:56.536 --> 00:57:01.196
at the plane, the bond market just incase inflation is accelerating.

00:57:01.196 --> 00:57:04.586
you can actually play the bond market. You can invest in real bonds the tip market.

00:57:04.586 --> 00:57:08.176
So there are many ways to actually edge yourself against inflation and at the margin.

00:57:08.176 --> 00:57:11.386
we're starting to see it. Many institution investors cannot take the risk.

00:57:11.386 --> 00:57:14.456
of just single can. Trust me, it's everything and nothing will happen because.

00:57:14.456 --> 00:57:17.796
as I suggested, nobody knows. So there is a lot of.

00:57:17.796 --> 00:57:19.336
hedging happening at this point.

00:57:20.856 --> 00:57:24.976
Perfect and looks like the last one we've got any.

00:57:24.976 --> 00:57:28.416
thoughts on the impact Mark Carney? Pressure obviously.

00:57:28.416 --> 00:57:31.516
very influential individual in Canada? Pressure to restrict?

00:57:31.516 --> 00:57:35.496
financial institutions from lending to oil and gas companies? Yes.

00:57:35.496 --> 00:57:38.876
that would be a very gradual process I.

00:57:38.876 --> 00:57:42.036
think that we all realize that you cannot just shut.

00:57:42.036 --> 00:57:45.116
down energy in Canada and go home. This is.

00:57:45.116 --> 00:57:48.316
a pressure, but with all due respect, other suggested.

00:57:48.316 --> 00:57:50.396
ou have to do it on a gradual basis.

00:57:50.706 --> 00:57:53.946
We believe that the energy sector.

00:57:53.946 --> 00:57:57.286
in Canada is going to lead.

00:57:57.286 --> 00:58:00.706
the way towards greener economy in terms of free R&D and.

00:58:00.706 --> 00:58:03.986
we know that that's the case in Alberta. Is heading this direction.

00:58:03.986 --> 00:58:07.086
So I suggest that yes, at the margin.

00:58:07.086 --> 00:58:10.266
there will be less credit going to high polluters, but at?

00:58:10.266 --> 00:58:13.346
the same time, with the improvement that we see in Alberta in terms.

00:58:13.346 --> 00:58:16.446
of reducing emission, you will see this process being.

00:58:16.446 --> 00:58:18.946
very very slow or regardless, what county is saying.

00:58:21.496 --> 00:58:22.096
Perfect.

00:58:22.926 --> 00:58:26.556
We are about 5 minutes ahead of schedule.

00:58:26.556 --> 00:58:29.586
Ben, I want to thank you for taking the time.

00:58:29.586 --> 00:58:32.756
to join us and to inform.

00:58:32.756 --> 00:58:35.816
us always very insightful. We genuinely appreciate it.

00:58:35.816 --> 00:58:38.956
and we'll look to invite you back.

00:58:38.956 --> 00:58:42.036
here as soon as we possibly can and hopefully do it in.

00:58:42.036 --> 00:58:45.456
person and show you a little bit of Alberta and Calgary hospitality.

00:58:45.456 --> 00:58:48.566
So let's do it in April or May.

00:58:48.566 --> 00:58:48.576


00:58:50.016 --> 00:58:50.506
Yeah.

00:58:52.396 --> 00:58:55.766
Alright, thank you sir. Appreciate your time at.

00:58:55.766 --> 00:58:56.746
pleasure. Good luck.

00:58:57.396 --> 00:58:59.196
Thank you everyone. Have a wonderful afternoon.

00:04:49.586 --> 00:04:52.606
Alright, I think we should probably get it get things.

00:04:52.606 --> 00:04:55.926
rolling here. So good afternoon.

00:04:55.926 --> 00:04:59.446
everyone. It is afternoon now. I my name is Nathan Thornton the branch.

00:04:59.446 --> 00:05:02.596
manager CIBC Wood Gundy and on behalf of.

00:05:02.596 --> 00:05:05.926
all of our advisors and their teams here in Calgary.

00:05:05.926 --> 00:05:09.066
and Lethbridge and in Medicine Hat welcome, it is great.

00:05:09.066 --> 00:05:12.076
to have you here. I've been certainly a goal to have.

00:05:12.076 --> 00:05:15.546
this in person and I'd hope we'd be able to do so by now, but.

00:05:15.546 --> 00:05:19.496
the weird world we're living in has conspired to make.

00:05:19.496 --> 00:05:21.306
us rely on the virtual connections.

00:05:21.356 --> 00:05:24.666
Once again, so and we'll talk a little bit more.

00:05:24.666 --> 00:05:27.686
our guest. We'll talk a little bit more about the weird world that.

00:05:27.686 --> 00:05:30.756
we are living in a little more detail, little bit.

00:05:30.756 --> 00:05:33.866
of housekeeping though before we start. So first off this presentation.

00:05:33.866 --> 00:05:37.006
is being recorded just so you'll notice.

00:05:37.006 --> 00:05:40.186
That chat function has been disabled on this for this.

00:05:40.186 --> 00:05:43.446
presentation, but the Q&A function at the top.

00:05:43.446 --> 00:05:46.546
toolbar will be will be active. So if.

00:05:46.546 --> 00:05:49.666
you have any questions throughout the presentation, type those in.

00:05:49.666 --> 00:05:52.926
I will be forwarding those to bend towards the end of the presentation.

00:05:52.926 --> 00:05:55.186
and we'll get to as many of them as we possibly can.

00:05:55.806 --> 00:05:58.966
Uhm with that I'm going to turn it over to our guest speaker.

00:05:58.966 --> 00:06:02.336
so Mr. Towel, frequent contributor to regional national media.

00:06:02.336 --> 00:06:05.376
Over 20 years of experience in the private sector. Advising clients.

00:06:05.376 --> 00:06:08.836
industry leaders, corporate boards, trade associations, governments.

00:06:08.836 --> 00:06:12.056
He is our deputy chief economist and.

00:06:12.056 --> 00:06:15.746
it is my pleasure to welcome Benjamin Tal van over.

00:06:15.746 --> 00:06:18.896
to you. Thank you very much and listen. I've about that 30.

00:06:18.896 --> 00:06:22.156
minutes to tell you everything I know about the situation that.

00:06:22.156 --> 00:06:25.216
29 minutes, too much because quite frankly.

00:06:25.216 --> 00:06:25.216


00:06:25.596 --> 00:06:28.626
Nobody has a clue. It's all about the virus. It's all about the.

00:06:28.626 --> 00:06:32.006
tug of war between the virus and the economy and.

00:06:32.006 --> 00:06:35.626
the vaccines. So we'll talk about this tug of war at what it means.

00:06:35.626 --> 00:06:39.066
We also talk about the elephant in the room.

00:06:39.066 --> 00:06:42.446
and that's of course inflation. And how much sleep we should lose.

00:06:42.446 --> 00:06:45.526
over inflation will talk about interest rates.

00:06:45.526 --> 00:06:49.086
how they're going to react to rising inflation, and if there.

00:06:49.086 --> 00:06:52.216
is a need to do so at all. We talk about government.

00:06:52.216 --> 00:06:55.306
debt. Who is going to pay down that debt, and what it means?

00:06:55.306 --> 00:06:58.186
in terms of future spending and maybe taxes.

00:06:58.446 --> 00:07:02.106
And we'll talk about some long term implications to what extent.

00:07:02.106 --> 00:07:03.536
kovid is an event.

00:07:04.196 --> 00:07:07.286
Ola condition, but the first I would like to start.

00:07:07.286 --> 00:07:10.976
with the tug of war between you.

00:07:10.976 --> 00:07:14.126
virus and the economy and the WHO is now.

00:07:14.126 --> 00:07:15.826
very concerned about one thing.

00:07:17.146 --> 00:07:20.466
What they are going to do when they run out of Greek?

00:07:20.466 --> 00:07:23.946
letters to name the variance seriously?

00:07:23.946 --> 00:07:25.286
that was in their press release.

00:07:25.896 --> 00:07:29.406
So there thinking about variance coming which.

00:07:29.406 --> 00:07:32.746
means that it's not over by any stretch of the imagination.

00:07:32.746 --> 00:07:35.906
So we know the delta has been a very.

00:07:35.906 --> 00:07:39.466
vicious variant, but the doctor.

00:07:39.466 --> 00:07:42.506
in one of the hospitals told me that actually it's a good thing.

00:07:42.506 --> 00:07:45.546
Why? Because the next variant will have to be like a super.

00:07:45.546 --> 00:07:49.446
variant to outdo Covid Delta.

00:07:49.446 --> 00:07:52.726
which means that we are learning.

00:07:52.726 --> 00:07:56.546
how to function with this virus.

00:07:56.546 --> 00:07:56.546


00:07:57.126 --> 00:07:59.016
And soon enough we hope.

00:07:59.886 --> 00:08:03.306
It will turn from a pandemic to endemic and they hope it will happen.

00:08:03.306 --> 00:08:07.006
at one point in 2022 and as a society.

00:08:07.006 --> 00:08:10.406
we are going to learn how to cope with this.

00:08:10.406 --> 00:08:13.826
virus and therefore economic activity will recover.

00:08:13.826 --> 00:08:17.606
and we'll talk about exactly how in a few minutes, so that said.

00:08:17.606 --> 00:08:20.386
this tug of war between the virus.

00:08:21.586 --> 00:08:24.636
And the economy. Now, what it?

00:08:24.636 --> 00:08:27.896
eans? In practical terms, we can see in the 1st.

00:08:27.896 --> 00:08:30.906
t chart. So at any point.

00:08:30.906 --> 00:08:33.256
in time, if you go to the first chart, this one.

00:08:34.006 --> 00:08:37.366
There are two factors impacting economic activity. One.

00:08:37.366 --> 00:08:40.746
is the fear factor, namely the restaurant.

00:08:40.746 --> 00:08:43.796
is open. Nobody showing up the other.

00:08:43.796 --> 00:08:46.826
is the availability factor, namely how much you.

00:08:46.826 --> 00:08:50.736
open. Look at this chart. This is actually from the first wave.

00:08:50.736 --> 00:08:50.736


00:08:51.386 --> 00:08:54.976
Some states in the US were totally open some.

00:08:54.976 --> 00:08:58.656
states were totally closed, we followed.

00:08:58.656 --> 00:09:02.096
consumer spending in those states and.

00:09:02.096 --> 00:09:04.176
you can see that you cannot distinguish between the two.

00:09:05.266 --> 00:09:06.276
Which means.

00:09:06.916 --> 00:09:09.956
Dad, the fear factor was dominating.

00:09:09.956 --> 00:09:13.136
and the fact that it was open was irrelevant clearly.

00:09:13.136 --> 00:09:16.476
the fear factor has been diminishing and diminishing with the vaccine.

00:09:16.476 --> 00:09:19.616
and all the ammunition we have now, but.

00:09:19.616 --> 00:09:23.406
it's not disappearing, and it's reasonable to assume that.

00:09:23.406 --> 00:09:25.376
with winter approaching.

00:09:26.916 --> 00:09:30.446
The fear factor will reappear. It will not dominate.

00:09:30.446 --> 00:09:33.606
but it will be in the background, something.

00:09:33.606 --> 00:09:36.786
to take into account and the next chart is telling you.

00:09:36.786 --> 00:09:39.846
that it's already starting to happen if.

00:09:39.846 --> 00:09:41.186
you look at the next chart.

00:09:43.106 --> 00:09:44.646
You can see what I mean by that.

00:09:46.966 --> 00:09:49.576
The high touch activity.

00:09:50.396 --> 00:09:53.406
He's starting to level off, which means that yes.

00:09:53.406 --> 00:09:56.476
we are this nice rebound. But now people are starting to think.

00:09:56.476 --> 00:09:59.676
twice before they go to restaurant, especially with.

00:09:59.676 --> 00:10:02.706
the winter approaching. So this level of activity.

00:10:02.706 --> 00:10:05.926
is kind of stabilizing, suggesting that slowly.

00:10:05.926 --> 00:10:09.026
the fear factor is entering our psyche.

00:10:09.026 --> 00:10:12.086
again, not dominating, but it's there something to.

00:10:12.086 --> 00:10:15.166
take into account now. Why is why all this?

00:10:15.166 --> 00:10:18.286
is important? Let's go to the next chart and.

00:10:18.286 --> 00:10:21.376
we know one thing that you still have.

00:10:21.376 --> 00:10:21.376


00:10:21.436 --> 00:10:24.466
A lot of time before global economy will be.

00:10:24.466 --> 00:10:28.896
ready for life after the BIOS we.

00:10:28.896 --> 00:10:32.276
know that it will take about nine months.

00:10:32.276 --> 00:10:33.486
to vaccinate.

00:10:33.546 --> 00:10:36.996
The global economy when?

00:10:36.996 --> 00:10:40.146
you have two shots. Now if you need 3A booster it.

00:10:40.146 --> 00:10:43.156
will take like 16 months, so we know that it will.

00:10:43.156 --> 00:10:46.406
take a long time. However, you can see from the chart to the right.

00:10:46.406 --> 00:10:49.676
that what counts now is really not the number.

00:10:49.676 --> 00:10:52.506
of cases, but rather.

00:10:53.806 --> 00:10:54.676
The.

00:10:55.986 --> 00:10:58.626
Situation in which people are dying.

00:10:59.606 --> 00:11:02.726
The level of hospitalization, so what?

00:11:02.726 --> 00:11:05.766
counts now in terms of government policy is not the number of.

00:11:05.766 --> 00:11:09.406
cases, but really the situation in the healthcare system let's.

00:11:09.406 --> 00:11:12.506
go to the next chart and explore this and the next chart.

00:11:12.506 --> 00:11:15.986
is very, very interesting. Look at this chart this.

00:11:15.986 --> 00:11:19.306
is hospitalization rate per capita.

00:11:19.306 --> 00:11:20.646
Look at that.

00:11:21.646 --> 00:11:24.676
Canada, the lowest. This is during the first this sorry.

00:11:24.676 --> 00:11:26.256
this is during the second wave.

00:11:27.076 --> 00:11:27.856
Look at Canada.

00:11:28.656 --> 00:11:29.406
The last

00:11:30.136 --> 00:11:33.126
3/4 times slower than the UK, the US.

00:11:33.716 --> 00:11:37.206
Is it a good thing or a bad thing but?

00:11:37.206 --> 00:11:40.556
it's not so good, why? Because if you go back and.

00:11:40.556 --> 00:11:43.636
look at the headlines in the dark days of the.

00:11:43.636 --> 00:11:47.406
second wave, the early early 2021, the.

00:11:47.406 --> 00:11:51.516
health care system in Canada was at a breaking point.

00:11:51.516 --> 00:11:51.516


00:11:53.446 --> 00:11:56.606
And we will, at the lowest level.

00:11:56.606 --> 00:11:57.356
of capacity.

00:11:58.416 --> 00:12:02.096
So we reached capacity much faster than.

00:12:02.096 --> 00:12:03.666
any other country.

00:12:05.146 --> 00:12:08.066
Why, let's go to the next chart and see why.

00:12:08.746 --> 00:12:09.426
Look at that.

00:12:10.266 --> 00:12:13.756
Spare capacity of acute beds per capita in Canada.

00:12:13.756 --> 00:12:14.816
is the lowest.

00:12:15.776 --> 00:12:18.956
The lowest in the LCD with the exception.

00:12:18.956 --> 00:12:19.816
of Mexico.

00:12:21.866 --> 00:12:25.946
We usually operate at 95% while.

00:12:25.946 --> 00:12:28.486
you supposed to operate at about 85%.

00:12:29.776 --> 00:12:32.706
So the minute you have covered you reach capacity in no time.

00:12:33.766 --> 00:12:36.916
If this is not a wake up call to inject.

00:12:36.916 --> 00:12:40.176
more money into the health care system, I don't know what it is.

00:12:40.176 --> 00:12:40.176


00:12:41.366 --> 00:12:44.526
Because it's clearly a situation in which.

00:12:44.526 --> 00:12:46.236
what other countries?

00:12:46.996 --> 00:12:50.216
Consider to be acceptable. We consider to.

00:12:50.216 --> 00:12:53.236
be pick and we reached that peak very very quickly and.

00:12:53.236 --> 00:12:57.076
remember what is impacting government.

00:12:57.076 --> 00:13:00.376
policies in terms of shutting down the economy is.

00:13:00.376 --> 00:13:03.536
not the number of cases, it's the situation in.

00:13:03.536 --> 00:13:06.636
the health care system. And if you reach peak much.

00:13:06.636 --> 00:13:10.036
quicker than any other country, it means.

00:13:10.036 --> 00:13:13.716
that you also start reversing.

00:13:13.716 --> 00:13:16.276
policy faster and in a more aggressive way.

00:13:17.336 --> 00:13:20.426
Let's look at the implications of that.

00:13:20.426 --> 00:13:21.506
That's the next chart.

00:13:22.516 --> 00:13:23.556
And you can see.

00:13:24.476 --> 00:13:25.006
That

00:13:25.746 --> 00:13:28.786
This is basically the conflict that.

00:13:28.786 --> 00:13:32.266
is defining this crisis, the conflict.

00:13:32.266 --> 00:13:34.666
between lives and livelihood.

00:13:35.376 --> 00:13:38.036
For a given level of hospitalization.

00:13:38.666 --> 00:13:42.726
The Canadian economy was much more restricted.

00:13:42.726 --> 00:13:44.446
than the US economy.

00:13:45.886 --> 00:13:49.536
And part of it has to do with the fact that we had to implement.

00:13:49.536 --> 00:13:53.216
more severe restrictions due to the increased.

00:13:53.216 --> 00:13:56.596
level of hospitalization rates and.

00:13:56.596 --> 00:13:58.316
the low level of capacity.

00:14:00.816 --> 00:14:04.026
So this has clear economic implications and.

00:14:04.026 --> 00:14:07.426
if you go to the next chart, you can see the.

00:14:07.426 --> 00:14:07.426


00:14:08.096 --> 00:14:08.776
Results.

00:14:09.386 --> 00:14:12.566
Since the beginning of Kovid, the US economy was able.

00:14:12.566 --> 00:14:15.976
to outperform Canada economically.

00:14:15.976 --> 00:14:19.006
speaking, a lot of it had to do with the fact that the US.

00:14:19.006 --> 00:14:23.206
was much more open. Now there are some positives and negatives, but economically speaking.

00:14:23.206 --> 00:14:26.346
that was a negative. There is no question about it so.

00:14:26.346 --> 00:14:27.666
from the beginning of Kovid.

00:14:28.576 --> 00:14:32.246
We have to run faster to stay in the same place when you compare.

00:14:32.246 --> 00:14:35.766
the situation to the USD are outperforming.

00:14:35.766 --> 00:14:38.806
us in terms of economic growth but.

00:14:38.806 --> 00:14:42.086
if you go to the next chart you can see something very interesting.

00:14:42.086 --> 00:14:45.906
Although the US is doing better from a GDP perspective.

00:14:45.906 --> 00:14:49.246
they are not doing better from a labor market.

00:14:49.246 --> 00:14:52.286
perspective. In fact we are doing better so we.

00:14:52.286 --> 00:14:55.716
have to explore this and see what makes sense and what doesn't.

00:14:55.716 --> 00:14:58.466
When it comes to the Canadian labour market.

00:14:58.606 --> 00:15:01.836
So let's go very quickly to the next chart and see.

00:15:01.836 --> 00:15:04.896
what makes sense and we can see something very interesting.

00:15:04.896 --> 00:15:04.896


00:15:06.986 --> 00:15:08.556
And let's go, where are we?

00:15:09.766 --> 00:15:10.826
Let's go to.

00:15:11.866 --> 00:15:12.766
Yeah next month.

00:15:15.886 --> 00:15:18.956
And we can see something very interesting first of all.

00:15:18.956 --> 00:15:22.416
we have a situation in which something.

00:15:22.416 --> 00:15:25.836
that is very relevant to you in Alberta is that despite.

00:15:25.836 --> 00:15:26.436
the fact.

00:15:27.276 --> 00:15:30.296
That we are the situation in which Canada was.

00:15:30.296 --> 00:15:33.766
able to close the employment gap relative to 2019.

00:15:33.766 --> 00:15:33.766


00:15:34.766 --> 00:15:38.036
We haven't seen a significant increase in hiring in oil and.

00:15:38.036 --> 00:15:41.196
gas. For example, in mining support Mom for.

00:15:41.196 --> 00:15:43.856
mining, namely, despite the.

00:15:44.956 --> 00:15:48.586
Mega Boom in the oil market we.

00:15:48.586 --> 00:15:51.876
haven't seen hiring happening in Alberta.

00:15:51.876 --> 00:15:51.876


00:15:52.586 --> 00:15:55.646
In the oil and gas sector the.

00:15:55.646 --> 00:15:59.006
question is why? And the answer is.

00:15:59.006 --> 00:16:01.236
maybe because of the fact that many.

00:16:01.766 --> 00:16:05.316
The CEO's of oil companies are saying listen this.

00:16:05.316 --> 00:16:08.816
boom, maybe it will not last for too long, we know.

00:16:08.816 --> 00:16:11.976
that energy is going to be relatively smaller.

00:16:12.556 --> 00:16:15.736
Segment of the Canadian economy. We are not investing.

00:16:15.736 --> 00:16:19.056
dramatically now to increase capacity, so we haven't seen.

00:16:19.056 --> 00:16:22.196
any significant increase in investment, and we haven't seen.

00:16:22.196 --> 00:16:25.296
any significant increase in hiring. And that's the reason.

00:16:25.296 --> 00:16:28.516
why valuation of oil companies.

00:16:28.516 --> 00:16:31.596
are rising because the price is rising. Their cost structure is.

00:16:31.596 --> 00:16:34.716
not rising in any significant way, so their profit is rising.

00:16:34.716 --> 00:16:37.876
dramatically, usually in this kind of environment when.

00:16:37.876 --> 00:16:41.476
oil prices go up, you see a significant increase in investment.

00:16:41.476 --> 00:16:41.476


00:16:42.576 --> 00:16:45.626
Among oil companies and hiring among.

00:16:45.626 --> 00:16:48.686
oil companies, that's not the situation now, which is very.

00:16:48.686 --> 00:16:52.106
interesting, reflecting maybe some change.

00:16:52.106 --> 00:16:55.386
in the way many companies are thinking about the long.

00:16:55.386 --> 00:16:58.566
term prospect of increasing capacity so.

00:16:58.566 --> 00:17:01.916
what we are seeing now is that maybe the.

00:17:01.916 --> 00:17:05.366
oil companies are looking at a situation.

00:17:05.366 --> 00:17:08.606
in which they will remain small, productive, efficient.

00:17:08.606 --> 00:17:08.606


00:17:09.396 --> 00:17:12.706
But will not increase capacity in any significant way, let's.

00:17:12.706 --> 00:17:15.936
go to the next chart and see the story of this recession.

00:17:15.936 --> 00:17:19.016
and that's the asymmetrical nature of this.

00:17:19.016 --> 00:17:22.316
crisis. Look at this. All the jobs created.

00:17:22.316 --> 00:17:25.616
Join Greek. This crisis were public sector jobs.

00:17:25.616 --> 00:17:25.616


00:17:26.246 --> 00:17:29.466
Private sector basically back to 2019.

00:17:29.466 --> 00:17:31.566
self-employed down.

00:17:32.886 --> 00:17:36.226
And the question is why self employment is so down and the answer is.

00:17:36.226 --> 00:17:39.346
that maybe if you pay people to stay home they will stay home.

00:17:39.346 --> 00:17:42.466
So the big question is to what extent we are going.

00:17:42.466 --> 00:17:45.766
to see some increase in self employment activity.

00:17:45.766 --> 00:17:49.186
The minute the government stops paying you and we know that this.

00:17:49.186 --> 00:17:52.446
basically happening now. So let's see how this will.

00:17:52.446 --> 00:17:55.486
develop. But this is very interesting. Basically if you.

00:17:55.486 --> 00:17:58.736
pay people to stay home they will stay home and that's exactly.

00:17:58.736 --> 00:18:00.966
what we have seen in Canada and to an extent.

00:18:01.816 --> 00:18:04.846
In the US, but the more interesting story is the.

00:18:04.846 --> 00:18:07.586
next chunk, and that's basically.

00:18:08.226 --> 00:18:11.596
The asymmetrical nature of this recession.

00:18:11.596 --> 00:18:14.756
when it comes to job creation by wage.

00:18:14.756 --> 00:18:18.416
Basically all the jobs that were lost early in the crisis.

00:18:18.416 --> 00:18:21.646
where low paying jobs all the jobs.

00:18:21.646 --> 00:18:24.736
that were gained wear high paying jobs. So if there.

00:18:24.736 --> 00:18:28.416
was any income gap in Canada before the crisis now.

00:18:28.416 --> 00:18:31.996
this income gap is actually wider and.

00:18:31.996 --> 00:18:35.176
this has major implications, for example the.

00:18:35.176 --> 00:18:36.336
housing market.

00:18:37.516 --> 00:18:40.796
The question is why during a recession this.

00:18:40.796 --> 00:18:44.016
housing market even in Alberta has been booming?

00:18:44.016 --> 00:18:44.016


00:18:46.356 --> 00:18:47.546
And the question is.

00:18:48.306 --> 00:18:51.906
How can you justify this kind of activity and?

00:18:51.906 --> 00:18:52.806
the answer is?

00:18:53.996 --> 00:18:54.686
In front of you.

00:18:56.166 --> 00:18:59.286
Basically, the S symmetrical nature of.

00:18:59.286 --> 00:19:02.326
that recession meant that most of the.

00:19:02.326 --> 00:19:05.806
people that lost their jobs were actually young people renters.

00:19:05.806 --> 00:19:08.836
not homebuyers, homebuyers, most.

00:19:08.836 --> 00:19:11.926
of them did not feel the pain financially.

00:19:11.926 --> 00:19:15.266
This crisis when it comes to the damage was.

00:19:15.266 --> 00:19:18.346
very, very deep, but also very narrow, which.

00:19:18.346 --> 00:19:21.176
means that if you were impacted by the crisis, you failed a pen.

00:19:22.246 --> 00:19:25.636
If you were a restaurant and division the hotel.

00:19:25.636 --> 00:19:27.336
but most people did not.

00:19:28.426 --> 00:19:29.746
They kept their jobs.

00:19:30.966 --> 00:19:32.086
There were zooming.

00:19:32.956 --> 00:19:35.976
Their income actually went up, so if you think about.

00:19:35.976 --> 00:19:39.316
it for a second, a very large segment of the population.

00:19:39.316 --> 00:19:39.316


00:19:41.316 --> 00:19:44.116
Did not feel financially this crisis.

00:19:45.806 --> 00:19:47.566
We have never seen anything like that.

00:19:48.386 --> 00:19:50.506
Before in any other recession.

00:19:51.146 --> 00:19:54.766
Which means if you think about it, what it really means is.

00:19:54.766 --> 00:19:57.946
that home buyers and potential home buyers.

00:19:57.946 --> 00:20:01.706
got the benefit of recession visa.

00:20:01.706 --> 00:20:04.826
vie extremely low interest rates without.

00:20:04.826 --> 00:20:08.326
the cost of a recession visa via broadly.

00:20:08.326 --> 00:20:10.946
based increase in the unemployment rate.

00:20:12.796 --> 00:20:15.886
That's the secret behind the.

00:20:15.886 --> 00:20:17.226
housing market.

00:20:17.826 --> 00:20:21.106
During this crisis, the asymmetrical nature of.

00:20:21.106 --> 00:20:24.506
the crisis. Now let's go to the next chart.

00:20:24.506 --> 00:20:24.506


00:20:25.466 --> 00:20:28.646
And you see another interesting story in the US.

00:20:28.646 --> 00:20:28.646


00:20:30.056 --> 00:20:33.176
We have seen a significant decline in the participation.

00:20:33.176 --> 00:20:36.716
rate among older people.

00:20:36.716 --> 00:20:39.996
55 and over, and I suggest that if.

00:20:39.996 --> 00:20:43.266
those people 55 and over decided to exit.

00:20:43.266 --> 00:20:43.266


00:20:44.206 --> 00:20:45.246
The labor market.

00:20:46.436 --> 00:20:48.436
During COVID, they're not coming back.

00:20:49.376 --> 00:20:51.476
In Canada we haven't seen it yet.

00:20:52.166 --> 00:20:55.686
So that's one big, different different between.

00:20:55.686 --> 00:20:56.726
Canada and the US.

00:20:57.986 --> 00:21:01.786
The other is the quit rate. You probably.

00:21:01.786 --> 00:21:04.686
eard about the great resignation.

00:21:05.566 --> 00:21:08.856
Trend and it is true in the US because.

00:21:08.856 --> 00:21:11.906
of the lack of labor and.

00:21:11.906 --> 00:21:13.246
the increase in wages.

00:21:14.126 --> 00:21:17.606
Labor has more power, so people are quitting like.

00:21:17.606 --> 00:21:18.486
there is no tomorrow.

00:21:19.266 --> 00:21:20.546
Looking for something else.

00:21:21.186 --> 00:21:24.266
In Canada, the quit rate remained.

00:21:24.266 --> 00:21:27.406
the same. The difference, however, that in Canada in.

00:21:27.406 --> 00:21:30.426
the latest survey, a record high.

00:21:30.426 --> 00:21:30.426


00:21:31.246 --> 00:21:33.746
Number of people said that they were thinking about.

00:21:34.796 --> 00:21:37.996
Retirement, it'll be about quitting. So in the USD.

00:21:37.996 --> 00:21:41.156
actually doing it in Canada as usual we are.

00:21:41.156 --> 00:21:42.336
just thinking about it.

00:21:43.766 --> 00:21:47.206
But I think that that's something that is coming the labor market.

00:21:47.206 --> 00:21:50.286
is very, very tight and without a significant increase.

00:21:50.286 --> 00:21:53.466
in wages, people in Canada also will start quitting.

00:21:53.466 --> 00:21:56.926
something to think about. So when you talk about wages.

00:21:56.926 --> 00:22:00.026
when you talk about people quitting because the labor labor, market.

00:22:00.026 --> 00:22:00.866
s so strong.

00:22:02.446 --> 00:22:03.816
You have to ask.

00:22:04.506 --> 00:22:07.996
The most important question at this point, inflation, how?

00:22:07.996 --> 00:22:11.116
uch sleep should we lose over inflation?

00:22:11.116 --> 00:22:11.116


00:22:11.766 --> 00:22:14.766
Now granted, if you are under the age of 30.

00:22:15.796 --> 00:22:17.856
You don't know how to spell the word inflation.

00:22:18.836 --> 00:22:21.916
But it does exist, so let's go to the next chart and start.

00:22:21.916 --> 00:22:25.506
exploring. While the next chart is telling us.

00:22:25.506 --> 00:22:25.506


00:22:26.316 --> 00:22:29.396
That although economic growth in Canada in.

00:22:29.396 --> 00:22:32.696
real terms adjusted for inflation was negative.

00:22:32.696 --> 00:22:34.736
If you look at nominal.

00:22:35.926 --> 00:22:36.486
Growth.

00:22:37.436 --> 00:22:40.036
It's up by 8%. It's all inflation.

00:22:42.926 --> 00:22:47.376
And given the fact that government revenue are based on.

00:22:47.376 --> 00:22:47.376


00:22:50.516 --> 00:22:51.616
Nominal GDP.

00:22:52.436 --> 00:22:54.736
Trudeau is much richer.

00:22:55.446 --> 00:22:56.746
Than he thinks.

00:22:58.246 --> 00:22:59.086
Every.

00:23:01.056 --> 00:23:01.636
Point

00:23:02.246 --> 00:23:05.456
Increase in GDP nominal GDP is an extra.

00:23:05.456 --> 00:23:08.436
$4 billion of revenues.

00:23:09.506 --> 00:23:12.546
And that's exactly the reason why the budget deficit will.

00:23:12.546 --> 00:23:15.946
be smaller when they update the numbers.

00:23:15.946 --> 00:23:19.426
And that's why in places like Ontario, you've seen a situation in which.

00:23:19.426 --> 00:23:22.456
the budget deficit was basically half of.

00:23:22.456 --> 00:23:23.166
what it used to be.

00:23:23.976 --> 00:23:27.036
This huge increase in nominal GDP is actually a very.

00:23:27.036 --> 00:23:30.156
good thing for governments, but beyond that.

00:23:32.156 --> 00:23:35.226
Inflation our sustainable our real.

00:23:35.226 --> 00:23:36.176
or it's all noise?

00:23:36.966 --> 00:23:40.236
Let me start by telling you one thing and this is very important.

00:23:40.236 --> 00:23:41.326
nobody.

00:23:42.206 --> 00:23:45.316
Nobody knows where inflation.

00:23:45.316 --> 00:23:46.506
will be six months from now.

00:23:48.946 --> 00:23:52.016
And when I say nobody, I include the Bank of Canada and the.

00:23:52.016 --> 00:23:55.226
Fed in that nobody. We're all pretending, but nobody.

00:23:55.226 --> 00:23:58.356
knows. So we have to invest and.

00:23:58.356 --> 00:24:02.196
think about investment given this environment, however.

00:24:02.196 --> 00:24:05.316
we must make some educated guesses.

00:24:05.316 --> 00:24:08.566
about what makes sense and what doesn't when it comes to inflation.

00:24:08.566 --> 00:24:11.896
because it's too important. So let's start and see what makes sense.

00:24:11.896 --> 00:24:13.516
Let's go to the next chart.

00:24:14.226 --> 00:24:17.436
And the next chart is telling you that basically one.

00:24:17.436 --> 00:24:21.056
of current inflation is.

00:24:21.056 --> 00:24:24.256
basically kovid. It's all covid sensitive.

00:24:24.256 --> 00:24:27.456
goods and services. Why? Because people have been sitting.

00:24:27.456 --> 00:24:30.716
on this mountain of cash. We are starting to open.

00:24:30.716 --> 00:24:34.116
up. Services are opening up, people are starting to spend.

00:24:34.116 --> 00:24:37.196
and spend like there is no tomorrow and we.

00:24:37.196 --> 00:24:40.416
are sitting on more than $200 billion.

00:24:40.416 --> 00:24:43.566
of excess cash looking for direction. There is so.

00:24:43.566 --> 00:24:45.436
much pent up demand and I remember.

00:24:45.616 --> 00:24:48.866
Back then, when I had a conversation with the Finance minister.

00:24:48.866 --> 00:24:52.046
she asked how can we convince people?

00:24:52.046 --> 00:24:55.066
to spend that extra money that they're sitting on?

00:24:55.066 --> 00:24:58.076
And I said provide the vaccine and get.

00:24:58.076 --> 00:25:01.406
out of the way. They don't need any motivation.

00:25:01.406 --> 00:25:04.516
There are motivated enough. What they need is the green light, so.

00:25:04.516 --> 00:25:07.596
we got a semi green light over the past few months and.

00:25:07.596 --> 00:25:10.966
that's why you see this pent up demand rising and what's interesting.

00:25:10.966 --> 00:25:10.966


00:25:12.096 --> 00:25:14.836
Is that companies that sell us all those stuff?

00:25:15.666 --> 00:25:18.706
They are able to transfer the cost to the consumer.

00:25:18.706 --> 00:25:18.706


00:25:19.406 --> 00:25:22.226
Because this consumer is willing to pay.

00:25:23.156 --> 00:25:26.206
The price is activity of the consumer is much lower than it used to be.

00:25:26.206 --> 00:25:29.226
because we are sitting on this mountain of cash and that's why if you look.

00:25:29.226 --> 00:25:32.346
at profit margins in the US, there are.

00:25:32.346 --> 00:25:36.006
back to normal because companies are able to transfer.

00:25:36.006 --> 00:25:39.266
the extra cost to the consumer so that's important.

00:25:39.266 --> 00:25:42.846
The next chart is the most important story.

00:25:42.846 --> 00:25:45.866
and that's wages as I.

00:25:45.866 --> 00:25:47.906
indicated the.

00:25:49.486 --> 00:25:50.426
Vacancy rate.

00:25:51.076 --> 00:25:54.176
In the US and Canada, when it comes to label is.

00:25:54.176 --> 00:25:57.656
at a record high. The minute people need people.

00:25:57.656 --> 00:26:00.896
they pay more and that's starting to happen.

00:26:00.896 --> 00:26:04.736
You can see it in restaurants. You can see it in hospitality.

00:26:04.736 --> 00:26:07.536
You can see it in other sectors that need people.

00:26:08.266 --> 00:26:11.516
And some people that have been getting money from the government to sit home.

00:26:11.516 --> 00:26:14.676
I've been watching from the window through the window.

00:26:14.676 --> 00:26:18.076
and see their future wage rising.

00:26:18.076 --> 00:26:19.516
while they were waiting at home.

00:26:21.166 --> 00:26:24.196
And this is still happening. Try to find somebody in a.

00:26:24.196 --> 00:26:25.876
restaurant walking. It's very difficult.

00:26:27.056 --> 00:26:30.436
Companies small businesses are telling us they are unable to find people.

00:26:30.436 --> 00:26:33.476
everywhere is people are hiring wages.

00:26:33.476 --> 00:26:34.016
are rising.

00:26:35.056 --> 00:26:38.106
The question is our sustainability is and I believe that.

00:26:38.106 --> 00:26:40.066
this is actually relatively sustainable.

00:26:40.996 --> 00:26:44.376
Because we started this crisis with a significant shortage of labor.

00:26:44.376 --> 00:26:47.806
and now this crisis exposed out shortage.

00:26:47.806 --> 00:26:50.826
and if other people will be exiting the.

00:26:50.826 --> 00:26:54.236
labor market dot shortage will be even worse. So that's something.

00:26:54.236 --> 00:26:57.486
that we have to take into account. The fact that people are willing to quit.

00:26:57.486 --> 00:27:00.886
to get a new job means that the bargaining power now is with labor.

00:27:00.886 --> 00:27:04.296
and that's inflationary. One factor that is actually.

00:27:04.296 --> 00:27:07.356
benefiting Canada relative to the US when it comes to the.

00:27:07.356 --> 00:27:10.906
supply of labor is the next chart, and that's immigration.

00:27:10.906 --> 00:27:10.906


00:27:12.196 --> 00:27:15.426
I will immigration policies suggests that.

00:27:15.426 --> 00:27:18.486
our population growth is much faster than what you see in the US.

00:27:18.486 --> 00:27:21.746
so at least we have something that is compensating.

00:27:21.746 --> 00:27:24.926
for the lack of labor and that's new immigrants.

00:27:24.926 --> 00:27:27.946
In the US you don't have it, which means that any wage.

00:27:27.946 --> 00:27:31.286
inflation in the US might be might be.

00:27:31.286 --> 00:27:34.866
more significant than in Canada because they don't have this offsetting.

00:27:34.866 --> 00:27:37.926
force called immigration. But then of course there.

00:27:37.926 --> 00:27:41.206
is another factor, and that's the next chart which.

00:27:41.206 --> 00:27:43.046
is the supply chain.

00:27:43.106 --> 00:27:46.356
That we all read about in newspapers and feel on a daily basis.

00:27:46.356 --> 00:27:49.576
Listen, economists have many.

00:27:49.576 --> 00:27:50.416
many flaws.

00:27:52.666 --> 00:27:54.136
But amnesia is not one of them.

00:27:55.646 --> 00:27:57.466
We all remember the 1970s.

00:27:58.456 --> 00:28:01.636
And the big question is to what extent we.

00:28:01.636 --> 00:28:04.696
have a situation in which we.

00:28:04.696 --> 00:28:08.056
are back to the 70s, and I suggest the following.

00:28:08.056 --> 00:28:10.536
comparing the current situation.

00:28:11.396 --> 00:28:14.676
To the 1970s is not only.

00:28:14.676 --> 00:28:17.876
wrong, but also irresponsible this.

00:28:17.876 --> 00:28:20.886
is not the 1970s by any.

00:28:20.886 --> 00:28:22.516
stretch of the imagination.

00:28:23.716 --> 00:28:24.556
Back then?

00:28:25.266 --> 00:28:28.666
Baby boomers were consuming like there is no tomorrow. That's not.

00:28:28.666 --> 00:28:31.976
the case. Now back then, interest rates.

00:28:31.976 --> 00:28:35.236
were extremely extremely high. Today, the opposite.

00:28:35.236 --> 00:28:38.246
is the case back there and the level of death was lower, which means.

00:28:38.246 --> 00:28:41.256
that the sensitivity to higher interest rates was not the same.

00:28:41.256 --> 00:28:44.516
We cannot compare the current situation to the 19.

00:28:44.516 --> 00:28:47.656
0s and when people talk about the economy slowing down.

00:28:47.656 --> 00:28:51.016
stagflation, you all don't have it because we are seeing the economy.

00:28:51.016 --> 00:28:54.236
expanding by about 4% next year. That's.

00:28:54.236 --> 00:28:55.336
not stack flashing by.

00:28:55.396 --> 00:28:58.416
And it's touch of dementia Nation that sell bit of inflation in.

00:28:58.416 --> 00:28:59.396
a growing economy.

00:29:02.306 --> 00:29:03.546
And the issue.

00:29:04.226 --> 00:29:05.386
It's not just supply.

00:29:06.506 --> 00:29:09.666
The issue is actually demand more than supply. Let me explain.

00:29:09.666 --> 00:29:10.666
Let's go to the next chart.

00:29:12.226 --> 00:29:15.566
You see, look at the chart to the left. That's durable goods.

00:29:15.566 --> 00:29:15.566


00:29:18.456 --> 00:29:21.106
Look at the dotted line. The dotted line is where it should be.

00:29:22.076 --> 00:29:23.726
This solid line is where it is.

00:29:24.596 --> 00:29:27.656
So when it comes to services we are not back when it comes to.

00:29:27.656 --> 00:29:31.396
goods we are 20% higher than where we should be. Why?

00:29:31.396 --> 00:29:34.716
Because you press a button and you get your exercise bike.

00:29:34.716 --> 00:29:35.656
no issue.

00:29:37.096 --> 00:29:40.616
And it's still there. It's still up there, it's it doesn't corrected yet.

00:29:43.026 --> 00:29:46.166
A normally functioning supply system will face.

00:29:46.166 --> 00:29:47.416
major difficulties.

00:29:48.396 --> 00:29:51.966
Supplying these kind of shock in demand.

00:29:51.966 --> 00:29:55.126
in a very short period of time, a normally functioning supply.

00:29:55.126 --> 00:29:58.856
system and this is of course not a normally functioning.

00:29:58.856 --> 00:30:02.366
supply system. You have covid in China.

00:30:02.366 --> 00:30:05.586
Asia, you have situation in which you have to mortgage.

00:30:05.586 --> 00:30:08.766
your business to get a container from China. We are all.

00:30:08.766 --> 00:30:12.076
familiar with the story, the semiconductor story, so you have.

00:30:12.076 --> 00:30:13.446
a huge demand shock.

00:30:14.706 --> 00:30:18.546
Met with a weak and sick supply system.

00:30:18.546 --> 00:30:18.546


00:30:20.456 --> 00:30:21.046
That will do.

00:30:22.536 --> 00:30:25.036
But it's all covered. It's all covered.

00:30:25.776 --> 00:30:28.806
The minute you remove Covid from there question, this goes.

00:30:28.806 --> 00:30:32.006
back and the supply system will go back and it will happen.

00:30:32.006 --> 00:30:32.006


00:30:32.716 --> 00:30:35.796
So I buy the argument that this is not a permanent.

00:30:35.796 --> 00:30:39.306
situation, but it will last longer than expected.

00:30:39.306 --> 00:30:39.306


00:30:40.396 --> 00:30:42.686
And that's inflationary. In the short term.

00:30:43.566 --> 00:30:47.156
And when the Bank of Canada and the Fed are talking about short.

00:30:47.156 --> 00:30:50.496
lived inflation. They're talking about this but.

00:30:50.496 --> 00:30:53.756
one aspect is wages, and this we don't know because.

00:30:53.756 --> 00:30:57.556
when it comes to inflation, and that's very important inflation.

00:30:57.556 --> 00:31:00.716
is something that takes.

00:31:00.716 --> 00:31:01.516
time to.

00:31:02.196 --> 00:31:04.656
Develop. It's a lagging indicator.

00:31:06.756 --> 00:31:09.846
And it can impact your psyche. And if you believe that.

00:31:09.846 --> 00:31:13.026
inflation will continue to go up, you change your inflation.

00:31:13.026 --> 00:31:16.526
expectations and that's the nightmare. As far as the.

00:31:16.526 --> 00:31:19.636
Bank of Canada and the Fed are concerned, they would like you to keep your inflation.

00:31:19.636 --> 00:31:22.646
expectations and they will use all the tools they are to do so.

00:31:22.646 --> 00:31:25.906
once their tool interest rates. So let's discuss so.

00:31:25.906 --> 00:31:29.546
t's go to the next chart and see what's reasonable and what's not reasonable.

00:31:29.546 --> 00:31:29.546
le.

00:31:31.606 --> 00:31:35.126
Now inflation is accelerating and.

00:31:35.126 --> 00:31:38.236
that's in part due to the supply issues for.

00:31:38.236 --> 00:31:41.546
example, look at the used cars prices.

00:31:41.546 --> 00:31:44.626
contributing a significant amount.

00:31:44.626 --> 00:31:47.746
of inflation today because you don't have the semiconductor.

00:31:47.746 --> 00:31:50.786
The chips that, so that's something that will.

00:31:50.786 --> 00:31:54.026
fix itself over time the wage story.

00:31:54.026 --> 00:31:57.166
is still not there, but will come, so we believe.

00:31:57.166 --> 00:32:00.556
that overall inflation will accelerate over the next six months.

00:32:00.556 --> 00:32:02.346
reflecting the supply chain story.

00:32:02.486 --> 00:32:06.096
And then slowly we'll start going down toward something.

00:32:06.096 --> 00:32:09.136
normal. What will bring it to normal will be.

00:32:09.136 --> 00:32:10.076
higher interest rates.

00:32:11.066 --> 00:32:14.746
And here we have to discuss this the reaction.

00:32:14.746 --> 00:32:17.866
curve by the Bank of Canada and the Fed.

00:32:17.866 --> 00:32:21.086
Let's go to the next chart, and that's very very.

00:32:21.086 --> 00:32:23.606
interesting. The Bank of Canada.

00:32:24.566 --> 00:32:27.726
He's now tweeting about the possibility of raising interest rates early.

00:32:27.726 --> 00:32:31.126
in 2022, just recently just recently.

00:32:31.126 --> 00:32:34.256
the Bank of Canada was talking about 2023 to be.

00:32:34.256 --> 00:32:37.696
the first move. Now we're talking about early 2022.

00:32:37.696 --> 00:32:38.966
That's a huge change.

00:32:39.936 --> 00:32:43.506
And you can see that the market is getting very aggressive.

00:32:43.506 --> 00:32:47.396
The market now is pricing in no less.

00:32:47.396 --> 00:32:50.656
than six moves by the Bank of Canada.

00:32:50.656 --> 00:32:50.656


00:32:51.876 --> 00:32:55.046
In a 2020 to 6.

00:32:55.046 --> 00:32:57.746
moves, that's a very aggressive move.

00:32:58.386 --> 00:33:02.636
That was doubled. What was discounted before?

00:33:02.636 --> 00:33:02.636


00:33:04.066 --> 00:33:07.736
The Bank of Canada is expected to move aggressively.

00:33:07.736 --> 00:33:10.916
but the same market is expecting the Fed to move only twice.

00:33:10.916 --> 00:33:10.916


00:33:11.546 --> 00:33:13.426
In 2022

00:33:14.046 --> 00:33:15.756
so the Bank of Canada seeks.

00:33:16.896 --> 00:33:19.946
The Fed twice doesn't make any sense.

00:33:19.946 --> 00:33:23.196
especially given the fact that remember the point.

00:33:23.196 --> 00:33:26.286
about the American economy moving.

00:33:26.286 --> 00:33:28.226
faster than Canada.

00:33:28.886 --> 00:33:32.466
Still, the market is expecting interest rates, delta rise more slowly.

00:33:32.466 --> 00:33:34.606
Remember the story about wages?

00:33:35.336 --> 00:33:38.406
And the fact that they don't get the new.

00:33:38.406 --> 00:33:41.426
supply of new immigrants to is.

00:33:41.426 --> 00:33:42.366
wage pressures.

00:33:42.956 --> 00:33:46.676
Therefore inflation that can be higher still, the market is expecting.

00:33:46.676 --> 00:33:49.696
low interest rates in the lower interest.

00:33:49.696 --> 00:33:52.956
rates in the US and Canada. So something is missing.

00:33:52.956 --> 00:33:56.136
here and therefore we believe that they will meet somewhere in between.

00:33:56.136 --> 00:33:58.976
namely the Bank of Canada will not be as aggressive.

00:34:00.266 --> 00:34:03.336
And the Fed will be more aggressive than expected. And if you listen.

00:34:03.336 --> 00:34:04.236
to the thread now.

00:34:04.856 --> 00:34:08.276
Every day they are becoming more and more hawkish.

00:34:08.276 --> 00:34:11.676
So what's reasonable? Not in 2022.

00:34:11.676 --> 00:34:14.976
the Bank of Canada will move twice or three times. The Fed will now.

00:34:14.976 --> 00:34:18.236
move twice or three times and then another move the.

00:34:18.236 --> 00:34:20.006
year after. What's reasonable?

00:34:20.716 --> 00:34:23.786
A terminal rate, namely our high rates.

00:34:23.786 --> 00:34:26.906
can go if you look at the bank right now in Canada is.

00:34:26.906 --> 00:34:30.206
25 basis points. What is normal?

00:34:30.206 --> 00:34:33.546
rate about 2 to 25? That's.

00:34:33.546 --> 00:34:36.806
where I believe we are going over the next two to three years.

00:34:36.806 --> 00:34:39.926
What's the risk? The risk is that the market is.

00:34:39.926 --> 00:34:43.426
right. The risk is that the Bank of Canada will be moving.

00:34:43.426 --> 00:34:43.426


00:34:44.516 --> 00:34:45.156
Too quickly.

00:34:46.186 --> 00:34:49.526
Every economic recession over the past.

00:34:49.526 --> 00:34:53.006
40 to 50 years was helped if not caused.

00:34:53.006 --> 00:34:56.186
by monetary policy error, in which.

00:34:56.186 --> 00:34:59.186
central bankers raise interest rates way too quickly.

00:34:59.846 --> 00:35:00.326
And.

00:35:01.206 --> 00:35:02.486
Basically killed their economy.

00:35:04.046 --> 00:35:07.586
Even the 2008 mother of all recessions was helped.

00:35:07.586 --> 00:35:10.736
by the fact that before the recession, Greenspan.

00:35:10.736 --> 00:35:13.806
Bugden raise interest rates from 1% to 5%.

00:35:13.806 --> 00:35:15.426
over the course of breakfast.

00:35:19.186 --> 00:35:22.256
So when I meet with the Bank of Canada and I meet with the Bank of Canada.

00:35:22.256 --> 00:35:23.096
very often.

00:35:23.766 --> 00:35:27.186
Unfortunately my message is go slowly.

00:35:27.186 --> 00:35:27.186


00:35:27.876 --> 00:35:31.196
No need to move six times in.

00:35:31.196 --> 00:35:32.576
2022.

00:35:33.656 --> 00:35:37.096
Inflation is a lagging indicator. You don't want inflation to get too close.

00:35:37.096 --> 00:35:40.756
but at the same time we don't want to raise rates.

00:35:40.756 --> 00:35:43.956
too quickly and shock the economy by some insurance.

00:35:43.956 --> 00:35:43.956


00:35:44.846 --> 00:35:46.186
And remember, I told you.

00:35:46.896 --> 00:35:49.946
Nobody knows where inflation will be six months from now, so what?

00:35:49.946 --> 00:35:53.366
do you do when you don't know what to do? You don't take chances.

00:35:53.366 --> 00:35:56.446
and you start raising interest rates early, but you don't.

00:35:56.446 --> 00:35:59.726
overshoot and I believe that's a reasonable scenario.

00:35:59.726 --> 00:36:04.026
which means that the market.

00:36:04.026 --> 00:36:04.026


00:36:05.266 --> 00:36:08.766
Is looking at interest rates today and already.

00:36:08.766 --> 00:36:12.066
applying it to the stock market in terms of evaluation and.

00:36:12.066 --> 00:36:15.246
that's why energy. And that's why financials are doing.

00:36:15.246 --> 00:36:18.296
well. But at the same time, if you raise interest.

00:36:18.296 --> 00:36:19.166
rates too quickly.

00:36:20.346 --> 00:36:22.406
Doc talks very negative for the stock market.

00:36:23.896 --> 00:36:27.366
And therefore the fact that interest rates will not be rising as quickly.

00:36:27.366 --> 00:36:30.446
as the market is expecting make is making me.

00:36:30.446 --> 00:36:33.466
more optimistic about the stock market because the remember.

00:36:33.466 --> 00:36:35.746
the stock market is now pricing in six months.

00:36:36.636 --> 00:36:39.676
If we get three, it's actually positive for the stock market.

00:36:39.676 --> 00:36:43.116
In addition, I believe that the three moves.

00:36:43.116 --> 00:36:46.396
will reflect the fact that inflation will not be a major.

00:36:46.396 --> 00:36:49.716
issue, and economic growth in 2022 will be.

00:36:49.716 --> 00:36:53.056
around 4%. That's positive for earnings the pricing.

00:36:53.056 --> 00:36:54.376
power of many companies.

00:36:55.196 --> 00:36:58.526
Still there, because consumers are willing to buy so.

00:36:58.526 --> 00:37:01.866
I suggest that the stock market will outperform.

00:37:01.866 --> 00:37:04.946
the bond market over the next year, and I.

00:37:04.946 --> 00:37:08.286
like for example, dividend paying stocks because I think that.

00:37:08.286 --> 00:37:12.306
in this environment dividends will be a more significant.

00:37:12.306 --> 00:37:15.806
contributor to our overall return and.

00:37:15.806 --> 00:37:19.146
I like energy, for example because of the reason I mentioned earlier.

00:37:19.146 --> 00:37:22.786
I don't see a significant increase in.

00:37:22.786 --> 00:37:25.386
cost. I don't see a significant increase.

00:37:25.836 --> 00:37:29.296
In hiring or investment therefore.

00:37:29.296 --> 00:37:32.326
the cost function, which table is the same but profit is rising.

00:37:32.326 --> 00:37:36.176
because of higher prices that will be translated into better.

00:37:36.176 --> 00:37:36.176


00:37:36.586 --> 00:37:39.636
Valuations in the energy space I.

00:37:39.636 --> 00:37:42.666
think that's the direction we are going, and we already starting to see.

00:37:42.666 --> 00:37:45.736
it and then the next question of course.

00:37:45.736 --> 00:37:47.116
and that's the last one.

00:37:47.896 --> 00:37:49.016
Is to what extent?

00:37:49.756 --> 00:37:51.436
COVID-19 is an event.

00:37:52.566 --> 00:37:53.626
Only condition.

00:37:55.196 --> 00:37:58.616
And I believe that every crisis is.

00:37:58.616 --> 00:38:02.296
a trend accelerator and this crisis is not very different. Many of.

00:38:02.296 --> 00:38:05.876
those trends were there before ecommerce was there before we healthy education.

00:38:05.876 --> 00:38:07.856
Even Deglobalization was there before.

00:38:09.186 --> 00:38:10.186
But beyond that.

00:38:10.916 --> 00:38:14.856
What I'm asking is to what extent the potential.

00:38:14.856 --> 00:38:15.756
growth of the economy.

00:38:17.256 --> 00:38:19.026
The ability of the economy to grow.

00:38:20.606 --> 00:38:23.846
Has changed dramatically from a long term perspective due to covid.

00:38:23.846 --> 00:38:27.046
Let's assume that we are lucky, and let's assume.

00:38:27.046 --> 00:38:30.146
that by 2022 this pandemic is turning into.

00:38:30.146 --> 00:38:34.086
endemic and we simply live with it and you go back to semi normal.

00:38:34.086 --> 00:38:34.086


00:38:36.316 --> 00:38:39.526
Our ability to consume iron will our willingness.

00:38:39.526 --> 00:38:42.546
to consume is the same. Our willingness to invest.

00:38:42.546 --> 00:38:43.086
is the same.

00:38:44.676 --> 00:38:46.666
Interest rates will go back to semi normal.

00:38:47.896 --> 00:38:51.346
And therefore, I believe that the economically speaking, although.

00:38:51.346 --> 00:38:54.906
it doesn't look like that now, kovid is an event as.

00:38:54.906 --> 00:38:55.816
opposed to.

00:38:56.606 --> 00:38:57.376
Air condition.

00:38:58.286 --> 00:38:59.226
It is true.

00:38:59.906 --> 00:39:02.246
That the global economy is being transformed.

00:39:03.146 --> 00:39:06.426
But when the fog clears everything we look.

00:39:06.426 --> 00:39:08.646
very very familiar.

00:39:10.776 --> 00:39:13.976
I will stop here and see if we have time for a discussion.

00:39:13.976 --> 00:39:13.976


00:39:17.746 --> 00:39:20.806
Thanks, ben. We've we do have a few questions that have been.

00:39:20.806 --> 00:39:21.566
coming in.

00:39:21.616 --> 00:39:24.736
Uhm, one and I'll combine, I think.

00:39:24.736 --> 00:39:28.426
a couple of questions. I wonder if you could comment on the.

00:39:28.426 --> 00:39:31.786
obviously debt is growing dramatically.

00:39:31.786 --> 00:39:35.176
federal provincial debts? You've got a government.

00:39:35.176 --> 00:39:38.256
that seems hell bent on reducing or.

00:39:38.256 --> 00:39:41.306
eliminating oil and gas production here in Canada.

00:39:41.306 --> 00:39:44.736
What do you think that does for our petro dollar?

00:39:44.736 --> 00:39:47.826
Is it's long been known. What's the dollar going to look like?

00:39:47.826 --> 00:39:51.066
going forward? OK, so let's discuss the debt situation.

00:39:51.066 --> 00:39:54.566
Fails to fold, and then we'll discuss the currency so when it comes to.

00:39:54.566 --> 00:39:54.566


00:39:54.926 --> 00:39:56.416
Let me tell you one thing.

00:39:57.886 --> 00:40:01.476
The numbers are very well known the debt level.

00:40:01.476 --> 00:40:04.526
went up from 30% of GDP to 50% of GDP. The budget.

00:40:04.526 --> 00:40:07.846
deficit. We know the story, so he's going to pay down all this debt.

00:40:07.846 --> 00:40:07.846


00:40:08.716 --> 00:40:11.056
The short answer is nobody.

00:40:12.646 --> 00:40:15.996
Because governments don't pay down debt, that's the reality.

00:40:15.996 --> 00:40:19.336
Know Margaret Thatcher's in the 80s said.

00:40:19.336 --> 00:40:22.816
that governments are like families. They have to balance their budget.

00:40:22.816 --> 00:40:26.416
They have to pay down their debt. No, they are not families.

00:40:26.416 --> 00:40:28.896
because families don't have the Bank of Canada behind him.

00:40:30.236 --> 00:40:33.606
So what we are going to see is basically rolling.

00:40:33.606 --> 00:40:34.166
it over.

00:40:34.946 --> 00:40:38.376
And basically soon you will see the government trying to fix.

00:40:38.376 --> 00:40:41.556
rates and take advantage of those low interest rates before they go.

00:40:41.556 --> 00:40:41.856
up.

00:40:42.506 --> 00:40:45.546
So you will see a rolling over making sure that the economy is growing.

00:40:45.546 --> 00:40:48.716
faster than that, then that's enough, so I don't see paying.

00:40:48.716 --> 00:40:52.006
down debt anytime soon. That's one thing. The other is the dollar.

00:40:52.006 --> 00:40:55.106
and the question is why the dollar is so elevated. Part of it of.

00:40:55.106 --> 00:40:57.406
course has to do with the.

00:40:57.466 --> 00:41:00.566
The commodity market, and especially oil we know.

00:41:00.566 --> 00:41:04.386
that, but beyond that, remember what the market is expecting 6.

00:41:04.386 --> 00:41:07.026
moved by the Bank of Canada only two moves by the Fed.

00:41:08.236 --> 00:41:12.196
That's significant in terms of making the Canadian dollar more attractive.

00:41:12.196 --> 00:41:12.196


00:41:13.316 --> 00:41:16.486
No, let's assume for a second, and I think it's a reasonable assumption we're starting.

00:41:16.486 --> 00:41:19.896
to see that oil will stabilize, so it will be neutral.

00:41:19.896 --> 00:41:19.896


00:41:21.136 --> 00:41:24.246
And let's assume that for a second the market will start.

00:41:24.246 --> 00:41:28.286
realizing that maybe six is too aggressive and two from the USA is not.

00:41:28.286 --> 00:41:31.386
aggressive enough. They will meet somewhere in between that can take.

00:41:31.386 --> 00:41:34.526
one or two cents out of the value of the dollar. So we believe that the dollar.

00:41:34.526 --> 00:41:37.566
will remain more or less where it is for now and then, maybe at.

00:41:37.566 --> 00:41:40.696
one point in 2022. So we lose one or two cents reflecting this.

00:41:40.696 --> 00:41:43.726
miss passing in the market that we currently view.

00:41:43.726 --> 00:41:43.726


00:41:48.036 --> 00:41:51.376
Perfect shifting gears a little bit to health care.

00:41:51.376 --> 00:41:51.376


00:41:51.646 --> 00:41:54.896
So help you talked to a fair bit about.

00:41:54.896 --> 00:41:58.136
it. Do you think the reality is we're not spending enough?

00:41:58.136 --> 00:42:01.636
dollars on health care? Or is it the way we spend our dollars?

00:42:01.636 --> 00:42:04.796
That's a very, very good question. That's a very good question.

00:42:04.796 --> 00:42:08.356
and I wrote a paper about this.

00:42:08.356 --> 00:42:11.896
health care situation and my conclusion was basically.

00:42:11.896 --> 00:42:15.216
first of all, for sure, we need to look at it and.

00:42:15.216 --> 00:42:18.386
we need maybe to spend more money and inject more money and then.

00:42:18.386 --> 00:42:19.656
a lot of people responded to it.

00:42:19.756 --> 00:42:23.006
In the newspapers basically.

00:42:23.006 --> 00:42:26.116
saying it is true that we need to spend more, but we also have to be much.

00:42:26.116 --> 00:42:29.596
more efficient. We have to merge hospitals.

00:42:29.596 --> 00:42:33.056
We have to see how we spend the money. And I totally agree so.

00:42:33.056 --> 00:42:36.076
I will not get too much into it because we don't follow it very closely, but I.

00:42:36.076 --> 00:42:39.636
would say clearly we need to fix the situation regardless.

00:42:39.636 --> 00:42:42.736
what the right way is. We know that it's broken.

00:42:42.736 --> 00:42:45.936
Now if you operate at 95% capacity in normal.

00:42:45.936 --> 00:42:48.976
times and you basically reach capacity like that, something is.

00:42:48.976 --> 00:42:50.176
wrong. We have to fix it.

00:42:50.236 --> 00:42:53.426
And I totally agree, it's not just spending more money sending more money.

00:42:53.426 --> 00:42:56.746
and we are doing it as the government is spending more money to.

00:42:56.746 --> 00:42:59.816
the problems is not part of the budget. But I think we.

00:42:59.816 --> 00:43:02.986
have to look at the way we do business and the health care system there where.

00:43:02.986 --> 00:43:06.246
erate, hospitals. If to the extent that there is efficiency issues.

00:43:06.246 --> 00:43:07.986
Let's fix it because that's too important.

00:43:11.336 --> 00:43:14.846
Can you comment on gold in?

00:43:16.246 --> 00:43:19.616
A hedge for any number of things any.

00:43:19.616 --> 00:43:21.936
thoughts, yes?

00:43:22.726 --> 00:43:26.696
Clearly, first of all, when it comes to inflation, if inflation expectations.

00:43:26.696 --> 00:43:29.746
go up, that will fuel gold at.

00:43:29.746 --> 00:43:33.296
the same time, gold is not what it used to be because of Bitcoin, so.

00:43:33.296 --> 00:43:36.656
Bitcoin is actually competing with gold, and some of the.

00:43:36.656 --> 00:43:36.656


00:43:37.926 --> 00:43:41.266
Improvement in process. That goal was supposed to see.

00:43:41.266 --> 00:43:44.346
was actually seen in Bitcoin because they.

00:43:44.346 --> 00:43:47.466
basically serve the same purpose. If you wish so.

00:43:47.466 --> 00:43:51.506
when it comes to Bitcoin, I can tell you one thing. I have 0 interest.

00:43:51.506 --> 00:43:54.726
in the currency in the calling itself 0 interest.

00:43:54.726 --> 00:43:58.406
It's so volatile I don't care, but I'm fascinated.

00:43:58.406 --> 00:43:59.186
by the.

00:44:00.006 --> 00:44:00.606
Technology.

00:44:01.456 --> 00:44:02.456
And I think that's a future.

00:44:03.116 --> 00:44:06.256
But this future will arrive only after you regulate that.

00:44:06.256 --> 00:44:09.556
space in a significant way that will allow financial.

00:44:09.556 --> 00:44:12.636
institutions to use it without thinking compatibility too much.

00:44:12.636 --> 00:44:16.126
So that's more or less where we are going regulations going.

00:44:16.126 --> 00:44:19.156
back to gold, you really cannot talk about gold without talking.

00:44:19.156 --> 00:44:22.176
about bitcoin, unfortunately, because they really move at the.

00:44:22.176 --> 00:44:25.376
same direction and to the extent that inflation will.

00:44:25.376 --> 00:44:28.506
be an issue over the next six months, gold can benefit from.

00:44:28.506 --> 00:44:31.066
but much less than it used to in the past.

00:44:32.766 --> 00:44:35.926
Perfect hey, can you comment?

00:44:35.926 --> 00:44:39.026
on the great reset and how that's going to affect Canadian?

00:44:39.026 --> 00:44:39.526
banking?

00:44:41.046 --> 00:44:44.226
Reset of what? Sorry that that's the question.

00:44:44.226 --> 00:44:47.506
that I've got, so I'm not really clear on what.

00:44:47.506 --> 00:44:48.526
exactly that is.

00:44:49.166 --> 00:44:52.376
I'm not give us your thoughts.

00:44:52.376 --> 00:44:55.516
ts on the mix, yes, so uh.

00:44:55.516 --> 00:44:58.696
talking about a situation which now interest.

00:44:58.696 --> 00:45:01.706
rates are starting to rise, and that's actually benefiting.

00:45:01.706 --> 00:45:01.706


00:45:02.166 --> 00:45:05.226
And bunks. And that's definitely a factor.

00:45:05.226 --> 00:45:08.556
Another factor is that as banks would be allowed to.

00:45:08.556 --> 00:45:11.666
increase dividends now, and that's a positive for banks. So banks.

00:45:11.666 --> 00:45:14.846
have been doing relatively well. Relatively speaking we are going.

00:45:14.846 --> 00:45:18.026
to see a situation in which banks will use.

00:45:18.026 --> 00:45:21.126
this deposit. Remember, although all these modern.

00:45:21.126 --> 00:45:22.456
of money that we are sitting.

00:45:23.266 --> 00:45:26.716
And in terms of accumulation.

00:45:26.716 --> 00:45:29.996
of wealth over the past two years.

00:45:29.996 --> 00:45:31.266
is sitting in deposits account?

00:45:32.636 --> 00:45:34.496
They're all sitting in banks.

00:45:35.226 --> 00:45:38.316
And backs of so much liquidity they don't know what to do with it.

00:45:38.316 --> 00:45:41.576
so they're actually going to spend some money and they're going to.

00:45:41.576 --> 00:45:44.766
reprise things in a very significant way. And that's a positive thing.

00:45:44.766 --> 00:45:44.766


00:45:45.256 --> 00:45:48.546
Clearly, when you have interest rates rising, and maybe that's.

00:45:48.546 --> 00:45:52.186
what they meant, the reset reset of interest rates rising.

00:45:52.186 --> 00:45:55.656
What does it mean? For example, for the mortgage market and that's.

00:45:55.656 --> 00:45:59.226
very interesting, because clearly it will slow down the mortgage market.

00:45:59.226 --> 00:46:02.426
and I suggest that that's a good thing because the housing market.

00:46:02.426 --> 00:46:05.476
as I suggested earlier, was on fire because of Covid and.

00:46:05.476 --> 00:46:08.806
because the of the asymmetrical nature. So there are two things happening.

00:46:08.806 --> 00:46:12.106
here. Let's assume that interest rates go up next year by 1.

00:46:12.106 --> 00:46:13.446
e percent 100 basis points.

00:46:14.716 --> 00:46:15.826
If you have to renew.

00:46:16.456 --> 00:46:19.656
Your mortgage next year. You will not feel the pain.

00:46:19.656 --> 00:46:22.776
Why? Because your rate is already 100 basis points.

00:46:22.776 --> 00:46:23.656
higher than it is now.

00:46:24.546 --> 00:46:26.276
So it will be a wash.

00:46:26.946 --> 00:46:30.356
In fact, if you took a mortgage in the past between.

00:46:30.356 --> 00:46:33.396
2019, is 1718 and 19.

00:46:33.396 --> 00:46:36.346
you're not feeling the pain because interest rates back then were higher.

00:46:37.016 --> 00:46:40.056
If you took a mortgage in 20 and.

00:46:40.056 --> 00:46:43.096
21, namely during covid and originations went up by.

00:46:43.096 --> 00:46:46.456
30% during this period, then you are exposed.

00:46:46.456 --> 00:46:48.216
because your interest rates.

00:46:49.526 --> 00:46:52.636
Are much lower than what they might be in 2020.

00:46:52.636 --> 00:46:56.616
2020, 6-5 years from now, when you when you that's why.

00:46:56.616 --> 00:46:59.956
we are going to see a bit of an impact, so overall.

00:46:59.956 --> 00:47:03.176
I suggest that the main impact will not be on people renewing the.

00:47:03.176 --> 00:47:06.296
main impact will be on new buyers and.

00:47:06.296 --> 00:47:07.706
just to put things in perspective.

00:47:07.766 --> 00:47:10.876
Sales went up dramatically.

00:47:10.876 --> 00:47:14.026
during Covid and they might go down and that will be a good thing.

00:47:14.026 --> 00:47:14.906
in 2022.

00:47:18.356 --> 00:47:22.026
Perfect, haven't talked at all, but.

00:47:22.026 --> 00:47:25.406
a topic that's near and dear to us here in Alberta climate.

00:47:25.406 --> 00:47:28.926
change. Any thoughts on the impact on?

00:47:28.926 --> 00:47:32.406
I mean global economy, but in particular the Canadian.

00:47:32.406 --> 00:47:35.626
or even Western Canadian economies.

00:47:35.626 --> 00:47:35.626


00:47:37.296 --> 00:47:40.606
I wouldn't make it very clear point here that the notion.

00:47:40.606 --> 00:47:44.046
of you can add the economy and the environment moving together.

00:47:44.046 --> 00:47:46.846
and everybody is happy not going to happen.

00:47:47.806 --> 00:47:50.926
Not in the next five years, and I'm very, very clear about it.

00:47:50.926 --> 00:47:53.986
You cannot have a huge change, and it seems that.

00:47:53.986 --> 00:47:57.476
we are in the midst of a huge change when it comes to the environment and.

00:47:57.476 --> 00:47:59.626
policies. And there is this openness towards.

00:48:00.286 --> 00:48:01.376
Accepting the pen.

00:48:02.156 --> 00:48:03.736
Without impacting the economy.

00:48:04.896 --> 00:48:08.006
And this is simply not going to happen in the.

00:48:08.006 --> 00:48:11.286
short term. It's not going to happen. We are in a transition period 5.

00:48:11.286 --> 00:48:14.726
0 years from now. We might be able to marry the two and both will benefit.

00:48:14.726 --> 00:48:17.586
But while you were going through the transition, there is a cost.

00:48:18.566 --> 00:48:19.806
This goes up. This goes down.

00:48:20.656 --> 00:48:24.146
And I believe this will reduce the ability of the economy.

00:48:24.146 --> 00:48:27.226
to grow. The potential growth of the economy, and that's something.

00:48:27.226 --> 00:48:30.306
that we should accept. Or we should realize.

00:48:30.306 --> 00:48:31.566
that we have to accept.

00:48:32.396 --> 00:48:35.596
And if it means carbon tax, if it means other things, unfortunately.

00:48:35.596 --> 00:48:38.956
it also means that the potential growth of Alberta will.

00:48:38.956 --> 00:48:42.416
be impacted by that during this transition period, ironically.

00:48:42.416 --> 00:48:45.836
however, I expect Alberta to outperform.

00:48:45.836 --> 00:48:49.096
the rest of the country in 2022, economically speaking.

00:48:49.096 --> 00:48:52.116
you will be #1, but unfortunately from a low base.

00:48:52.116 --> 00:48:52.116


00:48:53.526 --> 00:48:57.076
It doesn't mean that the office buildings.

00:48:57.076 --> 00:49:00.156
will be full again, unfortunately, but when.

00:49:00.156 --> 00:49:03.316
ou start from a low base you moved fast and I think.

00:49:03.316 --> 00:49:06.486
that's what we are going to see. But I will. I'm not under any.

00:49:06.486 --> 00:49:07.076
on here.

00:49:07.766 --> 00:49:10.366
But the more we focus on the environment and we should.

00:49:11.756 --> 00:49:14.886
The more the damage will be to the rest of the economy and we have to accept it and.

00:49:14.886 --> 00:49:15.916
don't pretend that it's not there.

00:49:18.856 --> 00:49:22.216
Perfect any reason to be concerned about?

00:49:22.216 --> 00:49:25.606
a wage price spiral if.

00:49:25.606 --> 00:49:28.806
we do expect wages to increase and obviously a tight.

00:49:28.806 --> 00:49:31.836
labor market people not used to go into.

00:49:31.836 --> 00:49:35.066
work for awhile. So thoughts on that? That's it. That's it, that's.

00:49:35.066 --> 00:49:38.206
it. That's the question. That's the question, and we'll.

00:49:38.206 --> 00:49:41.406
see where just rising we see the bargaining power.

00:49:41.406 --> 00:49:44.886
of labor rising for the first time. They are able to get those.

00:49:44.886 --> 00:49:48.226
raises and the longer.

00:49:48.226 --> 00:49:48.836
it lasts.

00:49:49.506 --> 00:49:52.696
The more it gets into your psyche and when it gets to your.

00:49:52.696 --> 00:49:54.276
psyche, you expect more.

00:49:55.976 --> 00:49:56.436
No.

00:49:58.456 --> 00:50:01.586
The issue at the end of the day, at the end of the day, let's face it, the issue is.

00:50:01.586 --> 00:50:02.626
not inflation.

00:50:03.776 --> 00:50:06.836
Because we have 50 years of experience dealing with inflation.

00:50:06.836 --> 00:50:10.056
and the Bank of Canada and the Fed will tell.

00:50:10.056 --> 00:50:13.376
you we have the tools to deal with inflation. What are the tools?

00:50:13.376 --> 00:50:16.406
higher interest rates? So the question is not repression the question.

00:50:16.406 --> 00:50:19.856
is what will be the cost in terms of higher interest rates to bring this information back.

00:50:19.856 --> 00:50:20.436
to 2%.

00:50:23.126 --> 00:50:26.136
And my fear, and that's a risk.

00:50:26.916 --> 00:50:28.916
That if you start raising two quickly.

00:50:30.146 --> 00:50:33.526
To fight inflation to aggressively, you can raise interest rates too much.

00:50:33.526 --> 00:50:37.066
and that's why I'm watching wages so quickly.

00:50:37.066 --> 00:50:38.506
there is.

00:50:39.126 --> 00:50:40.536
A positive probability.

00:50:41.386 --> 00:50:44.416
Dot wages will rise faster than expected.

00:50:44.416 --> 00:50:47.616
and we'll get into the psyche of people and therefore the Bank of Canada.

00:50:47.616 --> 00:50:50.756
will have to be more aggressive to reduce those inflation expectations.

00:50:50.756 --> 00:50:54.096
and that can be too aggressive. That's the risk that we are facing now at.

00:50:54.096 --> 00:50:57.146
this point. This is like 20% probability, but the more.

00:50:57.146 --> 00:51:00.616
likely scenario in which they will go slowly and the.

00:51:00.616 --> 00:51:03.656
supply chain story will disappear 6.

00:51:03.656 --> 00:51:06.956
x months from now, and therefore the wage aspects will not be big enough.

00:51:06.956 --> 00:51:10.036
to inflate the economy. But there is a risk and we.

00:51:10.036 --> 00:51:11.166
have to admit that that's a risk.

00:51:13.426 --> 00:51:16.596
You touched on supply chain disruptions.

00:51:16.596 --> 00:51:19.656
and obviously there's covid related ones, but there's also the.

00:51:19.656 --> 00:51:22.886
events in British Columbia right now and that.

00:51:22.886 --> 00:51:26.236
disruption that's would you view that as more of a short term.

00:51:26.236 --> 00:51:28.816
or something to play. It will play on.

00:51:29.256 --> 00:51:32.416
Yeah, that's a natural disaster. Unfortunately, a very significant one.

00:51:32.416 --> 00:51:35.576
and as busy went through it over the past summer 3.

00:51:35.576 --> 00:51:38.656
hree times. Heartbreaking, but it's not.

00:51:38.656 --> 00:51:39.656
an economic event.

00:51:41.016 --> 00:51:44.036
Because the way it works, you have this destruction and.

00:51:44.036 --> 00:51:47.186
then you have the build up so it's just timing in.

00:51:47.186 --> 00:51:50.206
terms of economic activity. You go down one quarter.

00:51:50.206 --> 00:51:53.736
you go up 1/4 to compensate for that if.

00:51:53.736 --> 00:51:56.856
that. If you look at the period of 2 years that will.

00:51:56.856 --> 00:51:59.896
e filled from a long term perspective, so it's a.

00:51:59.896 --> 00:52:03.176
it's not, it's.

00:52:03.176 --> 00:52:06.276
something that impacts the economy from a short period of.

00:52:06.276 --> 00:52:09.516
time. It's very deep, very significant. But the recovery also.

00:52:09.516 --> 00:52:10.196
is very strong.

00:52:12.556 --> 00:52:12.936
K.

00:52:14.816 --> 00:52:18.036
Federal government policies. Do you see anything?

00:52:18.036 --> 00:52:21.486
that's either constructive, positive, or negative?

00:52:21.486 --> 00:52:25.026
in terms of sort of long term growth on canon, things like subsidized.

00:52:25.026 --> 00:52:25.696
childcare.

00:52:25.986 --> 00:52:29.096
Some of those sort of long term fundamental changes that.

00:52:29.096 --> 00:52:32.136
we're looking at. Yeah, what we are seeing now to put things.

00:52:32.136 --> 00:52:35.586
in perspective is a permanent increase, I believe.

00:52:35.586 --> 00:52:38.636
in government spending as a share of the economy we.

00:52:38.636 --> 00:52:41.736
see before the crisis, government spending as a share of GDP was.

00:52:41.736 --> 00:52:44.776
about 15%. It went to 30.

00:52:44.776 --> 00:52:48.326
0% during Covid was unsustainable. Now it's stabilizing.

00:52:48.326 --> 00:52:51.456
going down, but I suggest it will stabilize at, let's say.

00:52:51.456 --> 00:52:53.676
718% higher than it was.

00:52:55.406 --> 00:52:58.776
And that's a permanent increase in spending why we already have a national.

00:52:58.776 --> 00:52:59.676
day care system.

00:53:00.456 --> 00:53:03.486
We are talking about the significant injection of money to.

00:53:03.486 --> 00:53:04.766
health care as we discussed.

00:53:05.526 --> 00:53:09.116
Those are permanent changes. We're talking about making the EIS.

00:53:09.116 --> 00:53:09.116


00:53:09.356 --> 00:53:13.396
System more accommodating maybe.

00:53:13.396 --> 00:53:15.496
something for self employed.

00:53:16.116 --> 00:53:19.166
Dots, permanent increase and therefore I believe that the level of.

00:53:19.166 --> 00:53:22.216
activity will stabilize at a higher level at.

00:53:22.216 --> 00:53:23.376
one point you have to pay for it.

00:53:24.626 --> 00:53:27.656
And I would not be surprised if in addition to.

00:53:27.656 --> 00:53:30.946
all the tax measures that were introduced already there.

00:53:30.946 --> 00:53:34.446
will be some others. Maybe corporate taxes maybe?

00:53:34.446 --> 00:53:37.546
something along the line.

00:53:37.546 --> 00:53:40.626
of raising the inclusion rate on capital gain tax.

00:53:40.626 --> 00:53:44.126
I will not be totally shocked. Carbon money can.

00:53:44.126 --> 00:53:45.996
be used for general purposes.

00:53:46.926 --> 00:53:50.296
And we saw tax on banks coming.

00:53:50.296 --> 00:53:53.696
and you can question to what extent. It's a wide thing, but it's coming.

00:53:53.696 --> 00:53:56.816
And if they are totally desperate and I don't believe they will get to.

00:53:56.816 --> 00:54:00.456
this point, but you never know they will go after HST and GST.

00:54:00.456 --> 00:54:03.536
But that's something that is basically a political suicide.

00:54:03.536 --> 00:54:05.216
So I got I doubt it will do that.

00:54:08.436 --> 00:54:11.906
I'm switching orbit to trade a bit of.

00:54:11.906 --> 00:54:15.246
a little bit more protectionism in the world it.

00:54:15.246 --> 00:54:18.446
seems these days impact on Canada. I mean, we largely.

00:54:18.446 --> 00:54:21.626
export a great deal of our economy is exports.

00:54:21.626 --> 00:54:24.716
yes in a big way I believe and.

00:54:24.716 --> 00:54:27.986
that's something that we discussed before covid it started before.

00:54:27.986 --> 00:54:31.166
covid and that trend was accelerated during covid it.

00:54:31.166 --> 00:54:34.366
started with the Trump. Let's face it, the deglobalization.

00:54:34.366 --> 00:54:38.606
nature of trade globally and.

00:54:41.006 --> 00:54:44.456
And you realize that a 90% of your antibiotic.

00:54:44.456 --> 00:54:47.706
supplies coming from China you.

00:54:47.706 --> 00:54:50.856
wake up one morning and you say you realize that without China you cannot.

00:54:50.856 --> 00:54:54.256
build a car in North America because you're missing those semiconductors.

00:54:54.256 --> 00:54:54.256


00:54:54.916 --> 00:54:55.936
This has got to change.

00:54:56.806 --> 00:54:57.296
Big time.

00:54:58.446 --> 00:55:01.636
I estimate that about 20% of what America is buying.

00:55:01.636 --> 00:55:02.956
from China and I will come back home.

00:55:04.326 --> 00:55:05.356
And let's face it.

00:55:06.336 --> 00:55:09.466
Unfortunately, and this is something that I've been saying before.

00:55:09.466 --> 00:55:11.536
the crisis, we are in the midst.

00:55:12.816 --> 00:55:13.436
Of.

00:55:14.386 --> 00:55:15.096
A Cold War.

00:55:16.336 --> 00:55:19.766
A technology called more. It's not the Cold War going.

00:55:19.766 --> 00:55:23.646
back to the Soviet, but it's a cold war for my technology technology perspective.

00:55:23.646 --> 00:55:23.656


00:55:24.946 --> 00:55:28.236
And if there is a cold.

00:55:28.236 --> 00:55:29.776
War and you are a third party.

00:55:30.456 --> 00:55:32.956
What do you have to choose a side?

00:55:34.776 --> 00:55:38.606
Canada where you are. If you're Australia, that.

00:55:38.606 --> 00:55:41.686
our security needs are coming from the US, but your economic needs are.

00:55:41.686 --> 00:55:43.086
coming from China. Good luck with that.

00:55:44.676 --> 00:55:47.806
So what I suggest is that this is not a full scale.

00:55:47.806 --> 00:55:50.126
globalization. You cannot reverse it.

00:55:51.216 --> 00:55:54.656
What are the margin and those margins will be wider than expected you?

00:55:54.656 --> 00:55:57.766
will see we will see more money coming back or more production.

00:55:57.766 --> 00:56:00.256
coming back to North America and our job.

00:56:00.946 --> 00:56:03.466
Is to make sure that the by America.

00:56:04.456 --> 00:56:05.746
Means by North America.

00:56:06.516 --> 00:56:09.466
We have to be part of this exercise.

00:56:10.246 --> 00:56:13.356
And I think that's the direction we are going this by.

00:56:13.356 --> 00:56:17.186
the way, can have some inflationary implications because if globalization

00:56:17.186 --> 00:56:20.326
n was the disinflationary deglobalization is.

00:56:20.326 --> 00:56:22.506
s the opposite. So that's something to think about.

00:56:24.226 --> 00:56:27.316
For sure, so when we got a couple left here and we do.

00:56:27.316 --> 00:56:30.396
want to be because of the time and get you out of here.

00:56:30.396 --> 00:56:33.576
on the on our on the schedule. Do you see?

00:56:33.576 --> 00:56:36.596
any asset classes that are instant that institutions are using?

00:56:36.596 --> 00:56:39.756
to deal with inflation risk? Or are they viewing it as more?

00:56:39.756 --> 00:56:40.826
temporary as well?

00:56:41.256 --> 00:56:44.286
Are you think you've mentioned gold earlier?

00:56:44.286 --> 00:56:47.706
cryptocurrencies? Do we see institutions stepping?

00:56:47.706 --> 00:56:48.686
into those spaces at all?

00:56:49.776 --> 00:56:53.256
Yes, to an extent. We see more gold activity.

00:56:53.256 --> 00:56:56.536
people just hedging making sure that that's the case you look.

00:56:56.536 --> 00:57:01.196
at the plane, the bond market just incase inflation is accelerating.

00:57:01.196 --> 00:57:04.586
you can actually play the bond market. You can invest in real bonds the tip market.

00:57:04.586 --> 00:57:08.176
So there are many ways to actually edge yourself against inflation and at the margin.

00:57:08.176 --> 00:57:11.386
we're starting to see it. Many institution investors cannot take the risk.

00:57:11.386 --> 00:57:14.456
of just single can. Trust me, it's everything and nothing will happen because.

00:57:14.456 --> 00:57:17.796
as I suggested, nobody knows. So there is a lot of.

00:57:17.796 --> 00:57:19.336
hedging happening at this point.

00:57:20.856 --> 00:57:24.976
Perfect and looks like the last one we've got any.

00:57:24.976 --> 00:57:28.416
thoughts on the impact Mark Carney? Pressure obviously.

00:57:28.416 --> 00:57:31.516
very influential individual in Canada? Pressure to restrict?

00:57:31.516 --> 00:57:35.496
financial institutions from lending to oil and gas companies? Yes.

00:57:35.496 --> 00:57:38.876
that would be a very gradual process I.

00:57:38.876 --> 00:57:42.036
think that we all realize that you cannot just shut.

00:57:42.036 --> 00:57:45.116
down energy in Canada and go home. This is.

00:57:45.116 --> 00:57:48.316
a pressure, but with all due respect, other suggested.

00:57:48.316 --> 00:57:50.396
ou have to do it on a gradual basis.

00:57:50.706 --> 00:57:53.946
We believe that the energy sector.

00:57:53.946 --> 00:57:57.286
in Canada is going to lead.

00:57:57.286 --> 00:58:00.706
the way towards greener economy in terms of free R&D and.

00:58:00.706 --> 00:58:03.986
we know that that's the case in Alberta. Is heading this direction.

00:58:03.986 --> 00:58:07.086
So I suggest that yes, at the margin.

00:58:07.086 --> 00:58:10.266
there will be less credit going to high polluters, but at?

00:58:10.266 --> 00:58:13.346
the same time, with the improvement that we see in Alberta in terms.

00:58:13.346 --> 00:58:16.446
of reducing emission, you will see this process being.

00:58:16.446 --> 00:58:18.946
very very slow or regardless, what county is saying.

00:58:21.496 --> 00:58:22.096
Perfect.

00:58:22.926 --> 00:58:26.556
We are about 5 minutes ahead of schedule.

00:58:26.556 --> 00:58:29.586
Ben, I want to thank you for taking the time.

00:58:29.586 --> 00:58:32.756
to join us and to inform.

00:58:32.756 --> 00:58:35.816
us always very insightful. We genuinely appreciate it.

00:58:35.816 --> 00:58:38.956
and we'll look to invite you back.

00:58:38.956 --> 00:58:42.036
here as soon as we possibly can and hopefully do it in.

00:58:42.036 --> 00:58:45.456
person and show you a little bit of Alberta and Calgary hospitality.

00:58:45.456 --> 00:58:48.566
So let's do it in April or May.

00:58:48.566 --> 00:58:48.576


00:58:50.016 --> 00:58:50.506
Yeah.

00:58:52.396 --> 00:58:55.766
Alright, thank you sir. Appreciate your time at.

00:58:55.766 --> 00:58:56.746
pleasure. Good luck.

00:58:57.396 --> 00:58:59.196
Thank you everyone. Have a wonderful afternoon.

Back to Video
 

Your journey inspires us

November 18, 2021

We're proud to be part of our clients’ journeys and to help them make their ambitions real.

 

Music plays

 

(Visual: The red CIBC logo slides in on the top left. Multiple quick flashes of lightning streak across the dark sky, illuminating the dark purple clouds.)

 

CIBC logo

 

(Visual: An empty street, with houses on either side. Hurricane-force winds whip trees and power lines back and forth, rain falls heavily, pooling on the road. The red CIBC logo in the top left fades out.)

 

Barrie Hall: Our busy season really starts in June.

 

(Visual: Trees bend in the strong wind from a hurricane, leaves blowing one direction and then the other, a palm tree whips side to side, as heavy rain falls, making ripples on the ocean behind the trees, which is scattered with pieces of debris floating on the water.)

 

Barrie Hall: The hurricanes start spinning up at that time.

 

(Visual: A strong gust of wind blows a large piece of a roof off of a building. It flies quickly up and away in the wind, breaking apart as it turns end to end in strong gusts of wind and rain. Debris litters the street. The trees around the building sway from side to side, and bits of leaves fly off the palm trees.)

 

(Visual: A scenic view of a coastal highway stretching off into the distance, with light traffic in the many lanes, running alongside the ocean, where waves break along the shore in large sprays of white foam.)

 

(Visual: A group of three people wade slowly and carefully through thigh-high flood water towards a building with a  large nature mural on the side. A man in a wet grey t-shirt and shorts rests his arm on the shoulder of a man in a red baseball cap and black and grey hoodie, and black pants soaked with water, who holds out his hand to help steady the man. Slightly ahead of the two men is the third man, in a blue t-shirt. He is walking toward a silver pickup truck, where two women stand throwing belongings in through the truck’s windows. Beyond the truck, a river overflowing with water is separated from the flooded road by a small group of bushes. Large chunks of debris float by in the river.)

 

(Visual: Interview shot, Tim Noble and Barrie Hall, inside a large industrial-sized garage. Two orange and white bucket lift trucks are parked behind them. The orange and black T&T Line Construction logo is painted on the door of the truck directly behind them. They sit side by side, Tim Noble on the left in a blue plaid shirt, and Barrie Hall on the right in a dark blue golf-style shirt. Barrie Hall looks at Tim Noble as he talks. A red rectangle slides in from the left. Text appears in white identifying Tim and Barrie.)

 

Barrie Hall: We've traveled most of the eastern seaboard as far as Miami, Florida.

 

Tim Noble & Barrie Hall

CIBC Clients

 

Tim Noble: Alabama.

 

(Visual: A heavy rain obscures all but the silhouettes of trees and power lines in the distance. In the foreground, hydro poles and power lines lean over, and others lay strewn about, splintered, and twisted on the road. One pole hangs suspended in the air in a tangle of wires.)

 

Barrie Hall: Georgia.

 

(Visual: Two workers, in bucket lifts work high up in the air, at the top of a hydro pole, fixing and attaching wires. The workers are silhouetted against the darkening sky, their features indistinct. They wear lamps on their hard hats, lighting their way as they work.)

 

Barrie Hall: To bring the power back.

 

(Visual: A black SUV slowly moves through an empty middle space between two rows of trucks in of a fleet of orange and white T&T Line Construction trucks. The trucks are different sizes and configurations, some smaller and boxier, and some longer, with bucket lifts on top.)

 

Barrie Hall: And when we roll in as a company, people cheer.

 

(Visual: Close up on the front wheels of the black SUV as they roll to a stop.)

 

(Visual: Close up on the window of the black SUV. Barrie Hall sits in the driver’s seat. He is partially lit by sunlight, and partially in shadow. He wears a dark blue golf-shirt style T&T Line Construction uniform shirt, with a T&T Line Construction logo patch on the chest and a logo patch on the arm with a Canadian flag intertwined with an American flag. He is wearing glasses, and has short grey hair.)

 

Barrie Hall: Because they know that we’re there to help them,

 

(Visual: A man stands in silhouette in a darkened garage. His back is to the camera, and he is facing a large white garage door, which is slowly opening, moving upwards.)

 

Barrie Hall: and to possibly save lives.

 

(Visual: As the garage door opens, light streams into the garage, revealing the large fleet of orange and white trucks parked outside. The man stands, still silhouetted in the doorway.)

 

Barrie Hall: And we just kept growing and growing, because the demand was there.

 

(Visual: Looking into the garage, the interior is dim compared to the bright sunshine outside. Tim Noble steps out of the garage into the sunlight. He is wearing a blue and white plaid dress shirt with a T&T Line Construction logo patch on the chest. He is cleanshaven, with white hair, and is looking intently forward.)

 

Barrie Hall: And that’s when we reached out to CIBC for support.

 

(Visual: The screen fades to white, and text appears in red in the centre of the screen.)

 

T&T Line Construction

Fredericton, New Brunswick

 

(Visual: Close up on a man’s hands putting on thick brown work gloves with bright yellow stripes on the backs. He is standing inside the garage with the large white door.)

 

(Visual: A man in a dark blue uniform shirt carries a green safety harness in front of him as he walks outside, past the row of white T&T Line Construction trucks.)

 

Barrie Hall: When Tim and I decided we’d form this company,

 

(Visual: Close up on a man’s hands. He holds a coil-shaped metal part on a rectangular frame in front of him, wearing thick brown work gloves. He is wearing a dark blue uniform, and his face is offscreen. He stands in front of an open door of a panel, leaning over the rectangular slots inside. He gently places the coil-shaped metal part into an open space inside the panel.)

 

Barrie Hall: we started out thinking we were gonna have five trucks each.

 

(Visual: Close up on a clipboard holding a form with three columns on it. The left column is full of lines of type, and the other two columns are blank. Different headings separate sections on the form. The clipboard is being held by a person wearing thick brown work gloves. The person is holding the clipboard in front of them as they walk through the row of T&T Line Construction trucks.)

 

Barrie Hall: We’ll do a little work, help some people out.

 

(Visual: Interview shot, Tim Noble and Barrie Hall, inside the large garage. Orange and white bucket lift trucks are parked behind them. The orange and black T&T Line Construction logo is painted on the door of the truck directly behind them. They sit side by side, Tim Noble on the left and Barrie Hall on the right. Barrie Hall looks at Tim Noble and smiles as he talks.)

 

Tim Noble: Weekend trip.

 

Barrie Hall: Yeah, a weekend trip, yeah. (Laughs)

 

(Visual: Close up on the headlights and grilles of a row of white T&T Line Construction trucks. The closest truck has a black number 10 on the hood, just above the grille. The trucks are gleaming in the sun, sitting outside in the parking lot, with tall trees in the background.)

 

(Visual: Close up on the headlights and grilles of another, longer row of white T&T Line Construction trucks. An orange safety cone sits halfway down the row of trucks, directly in front of one of them. The second truck in the row has a black number 67 on the hood, just above the grille. The trucks are gleaming in the sun, sitting outside in the parking lot, with a large grey building in the background.)

 

(Visual: Close up on a black number 83 on the hood of a white truck, just above the grille, which is gleaming in the sunshine.)

 

Barrie Hall: We went from five trucks, ten trucks, 20, to 40.

 

(Visual: Interview shot, close up of Tim Noble, sitting in front of orange and white parked bucket lift trucks inside the garage.)

 

Tim Noble: Today we’ve got over 200 vehicles in our fleet.

 

(Visual: A male worker in the dark blue T&T Line Construction unform shirt, with a brown beard and moustache, wearing thick work gloves, a blue hard hat, and sunglasses, closes a panel on the side of one of the white trucks in the parking lot. Another worker, also wearing a blue hard hat, and sunglasses, stands nearby, the garage in the background.)

 

(Visual: The man in the blue hard hat who was standing by climbs into the passenger seat of the truck through the open door. The interior of the truck is grey, and the sun shines through the windshield.)

 

(Visual: The other man with the beard and moustache who closed the truck’s panel, puts on his seatbelt in the driver’s seat. He is also still wearing a blue hard hat, sunglasses, and dark blue uniform shirt. )

 

Barrie Hall: Once we get that call, and things start spinning up,

 

(Visual: Close up on the white truck door swinging closed.)

 

(Visual: Close up on the white truck door on the other side swinging closed.)

 

Barrie Hall: The meter is rolling at that time.

 

(Visual: Close up on another white truck’s driver’s side door swinging closed. The T&T Line Construction Ltd. orange swirl logo with the words in black is painted in the centre of the truck door.)

 

(Visual: Overhead view as the two long lines of orange and white T&T Line Construction trucks in the fleet start driving down the centre aisle and offscreen one by one, leaving only a few trucks, spaced out, still sitting in the lot.)

 

Barrie Hall: The cost? It’s quite phenomenal.

 

(Visual: A white truck drives through the now nearly empty lot, picking up speed as it moves toward the road. The view moves along with the truck, looking forward from just below window level on the truck, with the T&T Line Construction logo on the door in the foreground. As the truck moves onto the road, a solid yellow centre line divides the lanes. Trees and bushes line the road, and the sky is blue.)

 

Barrie Hall: We have to feed everybody,

 

(Visual: The truck moves past a white house with a red roof, past another car going the other direction, continuing at a steady speed to move down the road, the view still moving along with the truck, looking forward from just below window level.)

 

Barrie Hall: fuel the vehicles,

 

(Visual: The driver sits in the driver’s seat, in profile, looking forward, both hands on the wheel. He is wearing his blue hard hat and sunglasses. Tall trees pass by, glimpsed through the windshield. )

 

Barrie Hall: Lodge everybody, it’s a lot of money.

 

(Visual: A view through the windshield of the truck. The radio cable hangs down in a curve in the top centre of the windshield. The driver’s hands sit on the steering wheel, visible in the left of the windshield. Tall trees grow along the side of the road. A grey car drives past on the other side of the road as the truck moves along.)

 

(Visual: Close up on a dark blue suit jacket lapel, where a silver pin with the CIBC logo on it sits just below the buttonhole gleaming in the sun.)

 

(Visual: Two men, their backs to the camera, the one on the right in a blue suit, and one on the left in a grey suit, walk towards Tim Noble and Barrie Hall, across a parking lot. The man in grey waves, and Tim and Barrie wave back. Cars are parked in front of a grey building in the background.)

 

Barrie Hall: Knowing that CIBC is behind us and we can depend on them,

 

(Visual: Close up on the men’s hands as they move close together in the parking lot. They all extend their hands, and Barrie shakes the hand of the man in the blue suit in the foreground, and Tim shakes the hand of the man in the grey suit in the background.)

 

Barrie Hall:  that makes them an integral part of our team.

 

(Visual: Interview shot, Tim Noble and Barrie Hall, inside the garage. Orange and white bucket lift trucks are parked behind them. The orange and black T&T Line Construction logo is painted on the door of the truck directly behind them. They sit side by side, Tim Noble on the left and Barrie Hall on the right. Barrie moves his hands expressively as he speaks.)

 

(Visual: Close up on Barrie Hall as he continues to speak, sitting in the garage.)

 

Barrie Hall: I feel that they understand that when we’re out rolling, they gotta be right there rolling with us.

 

(Visual: Five men sit in a circle inside the garage, which is brightly lit, the orange and white lift trucks still parked in the background, with the orange and black T&T Line Construction logo visible on the truck behind them. The men sit on metal folding chairs. Barrie Hall and Tim Noble sit on the right, with the men from CIBC on the left, in blue and grey suits, and another man with light brown hair in a black suit.)

 

(Visual: Close up on Tim Noble and Barrie Hall. Both smile widely as they converse with the other men.)

 

Barrie Hall: The team at CIBC has been great for us.

 

(Visual: Close up on Barrie’s hands as he moves them expressively while he speaks to the other men.)

 

(Visual: Close up on the man in the black suit, who has short brown hair, and is cleanshaven. He is nodding slowly as he listens with an interested expression.)

 

(Visual: Close up on the man in the grey suit. He has short blond hair and is cleanshaven, wearing a dark-coloured tie. He nods as he speaks.)

 

(Visual: Interview shot, Barrie Hall, in the garage, sitting in front of the orange and white trucks.)

 

Barrie Hall: Getting some financing in place to help us not have to worry when we’re on one of these trips.

 

(Visual: The men sit in a circle on folding chairs in the parking garage talking, all leaning in and talking intently and smiling.)

 

Tim Noble: Once they found out what we were doing, and what our needs were,

 

(Visual: Tim Noble, interview shot, sitting in the garage, in front of the orange and white trucks.)

 

Tim Noble: it helped us a long way in getting to where we are.

 

(Visual: Close up on the silver CIBC pin on the man in the grey suit’s lapel. He is wearing a tie that matches the colour of his suit. He sits in the chair, the background out of focus behind him.)

 

(Visual: Close up of the same man in profile. He is speaking to the others in the circle of metal folding chairs in the garage. The man in the blue suit sits in the background, watching the man in the grey suit as he speaks.)

 

Barrie Hall: But they’ve also helped us individually to look at our future.

 

(Visual: Barrie Hall sits in a metal folding chair in the garage, in the circle with the other men, smiling, laughing and nodding at something offscreen. He is looking in the direction of the other men in the circle. Behind him the orange and white trucks are parked in the background. A beam of sunlight sits across the right side of Barrie’s body.)

 

(Visual: Close up on Tim Noble as he sits in the circle, talking to the other men. He has a thoughtful expression, and is speaking to someone offscreen. Behind him, tools hang in rows covering the wall. He turns as he speaks so that he addresses different people in the circle, who are all offscreen.)

 

Barrie Hall: Not only us as individuals, but our families.

 

(Visual: A wide view of the garage shows the whole circle of men in metal folding chairs, talking. The man in the blue suit and the man in the grey suit sit with their backs to the camera, and Barrie and Tim sit on the right. The man in the black suit sits on the left of the circle, his face visible in profile. The men in the circle talk animatedly with each other. Tools hang on the garage wall behind them, and a small portion of the garage is reflected in a truck’s side mirror in the foreground, on the left.)

 

Barrie Hall: We have this wealth through what we’ve done and how we’ve grown,

 

(Visual: Close up on the driver’s hands on the steering wheel of one of the white trucks. He is wearing a dark blue T&T Line Construction uniform shirt, of which just the sleeve can be seen. Outside the windshield of the truck, trees and bushes pass by at a steady rate of speed.)

 

Barrie Hall: and they’ve been helping us manage all that.

 

(Visual: Close up on the driver’s face. He has long curly brown hair to his shoulders, and is wearing a blue hard hat. He has black mirrored wraparound sunglasses, and is looking straight ahead as the truck moves down the road. He is wearing the dark blue uniform shirt. Behind him, through the windshield of the truck, tall trees can be seen, and as he moves the truck into a right turn, his hands moving on the wheel, a white house passes by outside along with a scenic view of the road as the car turns into a driveway. A brick pillar sits at the end of the driveway, and he pulls into the lot in front of a large grey building. As the truck turns the corner, a red rectangle slides in from the left, with text identifying Tristen Noble in white.)

 

Barrie Hall: It’s something that needs to really be pushed forward, to the new generation.  It’s not only about us,

 

Tristen Noble

Tim’s Son

 

(Visual: Interview shot, Tim Noble and Barrie Hall, inside the garage. Orange and white bucket lift trucks are parked behind them. The orange and black T&T Line Construction logo is painted on the door of the truck directly behind them. They sit side by side, Tim Noble on the left and Barrie Hall on the right. Barrie moves his hands expressively as he speaks.)

 

Barrie Hall: it’s about reaching out,

 

(Visual: Interview shot, Barrie Hall, in the garage, sitting in front of the orange and white trucks.)

 

Barrie Hall: and helping people within the community as well.

 

(Visual: A wide view of the garage shows the whole circle of men in metal folding chairs, talking. The man in the blue suit and the man in the grey suit sit with their backs to the camera, and Barrie and Tim sit on the right. The man in the black suit sits on the left of the circle, his face visible in profile. The men in the circle talk animatedly with each other. Tools hang on the garage wall behind them, and a ladder and more tools sit in the foreground.)

 

(Visual: The camera slowly moves around Barrie Hall and Tim Noble sitting in the circle of men. Barrie Hall sits with his hands on his knees, looking at Tim Noble as he speaks, who also sits with his hands on his knees, looking around the circle intently.)

 

Tim Noble: CIBC has exceeded my expectations.

 

(Visual: Interview shot, Barrie Hall, in the garage, sitting in front of the orange and white trucks. He moves his hands expressively as he speaks.)

 

(Visual: Close up on Tim Noble’s face. He is smiling and looking offscreen. Tools hang in rows on the wall behind him.)

 

Barrie Hall: We feel comfortable knowing that CIBC is behind us.

 

(Visual: Close up on Barrie Hall’s face. He is smiling and looking offscreen. Tools hang in rows on the wall behind him. A beam of sunlight shines to his left, and reflects light on his face. He laughs heartily, leaning back in his chair.)

 

Barrie Hall: They have our back so that we have our clients’ back. It’s a really good feeling.

 

(Visual: The screen fades to red as the CIBC logo flies in to the centre of the screen in white. Text appears below in white.)

 

CIBC logo

Ambitions made real™

 

The CIBC logo and “Ambitions made real” are trademarks of CIBC.

 

Music ends

 

(Fades to black)

 

Music plays

 

(Visual: The red CIBC logo slides in on the top left. Multiple quick flashes of lightning streak across the dark sky, illuminating the dark purple clouds.)

 

CIBC logo

 

(Visual: An empty street, with houses on either side. Hurricane-force winds whip trees and power lines back and forth, rain falls heavily, pooling on the road. The red CIBC logo in the top left fades out.)

 

Barrie Hall: Our busy season really starts in June.

 

(Visual: Trees bend in the strong wind from a hurricane, leaves blowing one direction and then the other, a palm tree whips side to side, as heavy rain falls, making ripples on the ocean behind the trees, which is scattered with pieces of debris floating on the water.)

 

Barrie Hall: The hurricanes start spinning up at that time.

 

(Visual: A strong gust of wind blows a large piece of a roof off of a building. It flies quickly up and away in the wind, breaking apart as it turns end to end in strong gusts of wind and rain. Debris litters the street. The trees around the building sway from side to side, and bits of leaves fly off the palm trees.)

 

(Visual: A scenic view of a coastal highway stretching off into the distance, with light traffic in the many lanes, running alongside the ocean, where waves break along the shore in large sprays of white foam.)

 

(Visual: A group of three people wade slowly and carefully through thigh-high flood water towards a building with a  large nature mural on the side. A man in a wet grey t-shirt and shorts rests his arm on the shoulder of a man in a red baseball cap and black and grey hoodie, and black pants soaked with water, who holds out his hand to help steady the man. Slightly ahead of the two men is the third man, in a blue t-shirt. He is walking toward a silver pickup truck, where two women stand throwing belongings in through the truck’s windows. Beyond the truck, a river overflowing with water is separated from the flooded road by a small group of bushes. Large chunks of debris float by in the river.)

 

(Visual: Interview shot, Tim Noble and Barrie Hall, inside a large industrial-sized garage. Two orange and white bucket lift trucks are parked behind them. The orange and black T&T Line Construction logo is painted on the door of the truck directly behind them. They sit side by side, Tim Noble on the left in a blue plaid shirt, and Barrie Hall on the right in a dark blue golf-style shirt. Barrie Hall looks at Tim Noble as he talks. A red rectangle slides in from the left. Text appears in white identifying Tim and Barrie.)

 

Barrie Hall: We've traveled most of the eastern seaboard as far as Miami, Florida.

 

Tim Noble & Barrie Hall

CIBC Clients

 

Tim Noble: Alabama.

 

(Visual: A heavy rain obscures all but the silhouettes of trees and power lines in the distance. In the foreground, hydro poles and power lines lean over, and others lay strewn about, splintered, and twisted on the road. One pole hangs suspended in the air in a tangle of wires.)

 

Barrie Hall: Georgia.

 

(Visual: Two workers, in bucket lifts work high up in the air, at the top of a hydro pole, fixing and attaching wires. The workers are silhouetted against the darkening sky, their features indistinct. They wear lamps on their hard hats, lighting their way as they work.)

 

Barrie Hall: To bring the power back.

 

(Visual: A black SUV slowly moves through an empty middle space between two rows of trucks in of a fleet of orange and white T&T Line Construction trucks. The trucks are different sizes and configurations, some smaller and boxier, and some longer, with bucket lifts on top.)

 

Barrie Hall: And when we roll in as a company, people cheer.

 

(Visual: Close up on the front wheels of the black SUV as they roll to a stop.)

 

(Visual: Close up on the window of the black SUV. Barrie Hall sits in the driver’s seat. He is partially lit by sunlight, and partially in shadow. He wears a dark blue golf-shirt style T&T Line Construction uniform shirt, with a T&T Line Construction logo patch on the chest and a logo patch on the arm with a Canadian flag intertwined with an American flag. He is wearing glasses, and has short grey hair.)

 

Barrie Hall: Because they know that we’re there to help them,

 

(Visual: A man stands in silhouette in a darkened garage. His back is to the camera, and he is facing a large white garage door, which is slowly opening, moving upwards.)

 

Barrie Hall: and to possibly save lives.

 

(Visual: As the garage door opens, light streams into the garage, revealing the large fleet of orange and white trucks parked outside. The man stands, still silhouetted in the doorway.)

 

Barrie Hall: And we just kept growing and growing, because the demand was there.

 

(Visual: Looking into the garage, the interior is dim compared to the bright sunshine outside. Tim Noble steps out of the garage into the sunlight. He is wearing a blue and white plaid dress shirt with a T&T Line Construction logo patch on the chest. He is cleanshaven, with white hair, and is looking intently forward.)

 

Barrie Hall: And that’s when we reached out to CIBC for support.

 

(Visual: The screen fades to white, and text appears in red in the centre of the screen.)

 

T&T Line Construction

Fredericton, New Brunswick

 

(Visual: Close up on a man’s hands putting on thick brown work gloves with bright yellow stripes on the backs. He is standing inside the garage with the large white door.)

 

(Visual: A man in a dark blue uniform shirt carries a green safety harness in front of him as he walks outside, past the row of white T&T Line Construction trucks.)

 

Barrie Hall: When Tim and I decided we’d form this company,

 

(Visual: Close up on a man’s hands. He holds a coil-shaped metal part on a rectangular frame in front of him, wearing thick brown work gloves. He is wearing a dark blue uniform, and his face is offscreen. He stands in front of an open door of a panel, leaning over the rectangular slots inside. He gently places the coil-shaped metal part into an open space inside the panel.)

 

Barrie Hall: we started out thinking we were gonna have five trucks each.

 

(Visual: Close up on a clipboard holding a form with three columns on it. The left column is full of lines of type, and the other two columns are blank. Different headings separate sections on the form. The clipboard is being held by a person wearing thick brown work gloves. The person is holding the clipboard in front of them as they walk through the row of T&T Line Construction trucks.)

 

Barrie Hall: We’ll do a little work, help some people out.

 

(Visual: Interview shot, Tim Noble and Barrie Hall, inside the large garage. Orange and white bucket lift trucks are parked behind them. The orange and black T&T Line Construction logo is painted on the door of the truck directly behind them. They sit side by side, Tim Noble on the left and Barrie Hall on the right. Barrie Hall looks at Tim Noble and smiles as he talks.)

 

Tim Noble: Weekend trip.

 

Barrie Hall: Yeah, a weekend trip, yeah. (Laughs)

 

(Visual: Close up on the headlights and grilles of a row of white T&T Line Construction trucks. The closest truck has a black number 10 on the hood, just above the grille. The trucks are gleaming in the sun, sitting outside in the parking lot, with tall trees in the background.)

 

(Visual: Close up on the headlights and grilles of another, longer row of white T&T Line Construction trucks. An orange safety cone sits halfway down the row of trucks, directly in front of one of them. The second truck in the row has a black number 67 on the hood, just above the grille. The trucks are gleaming in the sun, sitting outside in the parking lot, with a large grey building in the background.)

 

(Visual: Close up on a black number 83 on the hood of a white truck, just above the grille, which is gleaming in the sunshine.)

 

Barrie Hall: We went from five trucks, ten trucks, 20, to 40.

 

(Visual: Interview shot, close up of Tim Noble, sitting in front of orange and white parked bucket lift trucks inside the garage.)

 

Tim Noble: Today we’ve got over 200 vehicles in our fleet.

 

(Visual: A male worker in the dark blue T&T Line Construction unform shirt, with a brown beard and moustache, wearing thick work gloves, a blue hard hat, and sunglasses, closes a panel on the side of one of the white trucks in the parking lot. Another worker, also wearing a blue hard hat, and sunglasses, stands nearby, the garage in the background.)

 

(Visual: The man in the blue hard hat who was standing by climbs into the passenger seat of the truck through the open door. The interior of the truck is grey, and the sun shines through the windshield.)

 

(Visual: The other man with the beard and moustache who closed the truck’s panel, puts on his seatbelt in the driver’s seat. He is also still wearing a blue hard hat, sunglasses, and dark blue uniform shirt. )

 

Barrie Hall: Once we get that call, and things start spinning up,

 

(Visual: Close up on the white truck door swinging closed.)

 

(Visual: Close up on the white truck door on the other side swinging closed.)

 

Barrie Hall: The meter is rolling at that time.

 

(Visual: Close up on another white truck’s driver’s side door swinging closed. The T&T Line Construction Ltd. orange swirl logo with the words in black is painted in the centre of the truck door.)

 

(Visual: Overhead view as the two long lines of orange and white T&T Line Construction trucks in the fleet start driving down the centre aisle and offscreen one by one, leaving only a few trucks, spaced out, still sitting in the lot.)

 

Barrie Hall: The cost? It’s quite phenomenal.

 

(Visual: A white truck drives through the now nearly empty lot, picking up speed as it moves toward the road. The view moves along with the truck, looking forward from just below window level on the truck, with the T&T Line Construction logo on the door in the foreground. As the truck moves onto the road, a solid yellow centre line divides the lanes. Trees and bushes line the road, and the sky is blue.)

 

Barrie Hall: We have to feed everybody,

 

(Visual: The truck moves past a white house with a red roof, past another car going the other direction, continuing at a steady speed to move down the road, the view still moving along with the truck, looking forward from just below window level.)

 

Barrie Hall: fuel the vehicles,

 

(Visual: The driver sits in the driver’s seat, in profile, looking forward, both hands on the wheel. He is wearing his blue hard hat and sunglasses. Tall trees pass by, glimpsed through the windshield. )

 

Barrie Hall: Lodge everybody, it’s a lot of money.

 

(Visual: A view through the windshield of the truck. The radio cable hangs down in a curve in the top centre of the windshield. The driver’s hands sit on the steering wheel, visible in the left of the windshield. Tall trees grow along the side of the road. A grey car drives past on the other side of the road as the truck moves along.)

 

(Visual: Close up on a dark blue suit jacket lapel, where a silver pin with the CIBC logo on it sits just below the buttonhole gleaming in the sun.)

 

(Visual: Two men, their backs to the camera, the one on the right in a blue suit, and one on the left in a grey suit, walk towards Tim Noble and Barrie Hall, across a parking lot. The man in grey waves, and Tim and Barrie wave back. Cars are parked in front of a grey building in the background.)

 

Barrie Hall: Knowing that CIBC is behind us and we can depend on them,

 

(Visual: Close up on the men’s hands as they move close together in the parking lot. They all extend their hands, and Barrie shakes the hand of the man in the blue suit in the foreground, and Tim shakes the hand of the man in the grey suit in the background.)

 

Barrie Hall:  that makes them an integral part of our team.

 

(Visual: Interview shot, Tim Noble and Barrie Hall, inside the garage. Orange and white bucket lift trucks are parked behind them. The orange and black T&T Line Construction logo is painted on the door of the truck directly behind them. They sit side by side, Tim Noble on the left and Barrie Hall on the right. Barrie moves his hands expressively as he speaks.)

 

(Visual: Close up on Barrie Hall as he continues to speak, sitting in the garage.)

 

Barrie Hall: I feel that they understand that when we’re out rolling, they gotta be right there rolling with us.

 

(Visual: Five men sit in a circle inside the garage, which is brightly lit, the orange and white lift trucks still parked in the background, with the orange and black T&T Line Construction logo visible on the truck behind them. The men sit on metal folding chairs. Barrie Hall and Tim Noble sit on the right, with the men from CIBC on the left, in blue and grey suits, and another man with light brown hair in a black suit.)

 

(Visual: Close up on Tim Noble and Barrie Hall. Both smile widely as they converse with the other men.)

 

Barrie Hall: The team at CIBC has been great for us.

 

(Visual: Close up on Barrie’s hands as he moves them expressively while he speaks to the other men.)

 

(Visual: Close up on the man in the black suit, who has short brown hair, and is cleanshaven. He is nodding slowly as he listens with an interested expression.)

 

(Visual: Close up on the man in the grey suit. He has short blond hair and is cleanshaven, wearing a dark-coloured tie. He nods as he speaks.)

 

(Visual: Interview shot, Barrie Hall, in the garage, sitting in front of the orange and white trucks.)

 

Barrie Hall: Getting some financing in place to help us not have to worry when we’re on one of these trips.

 

(Visual: The men sit in a circle on folding chairs in the parking garage talking, all leaning in and talking intently and smiling.)

 

Tim Noble: Once they found out what we were doing, and what our needs were,

 

(Visual: Tim Noble, interview shot, sitting in the garage, in front of the orange and white trucks.)

 

Tim Noble: it helped us a long way in getting to where we are.

 

(Visual: Close up on the silver CIBC pin on the man in the grey suit’s lapel. He is wearing a tie that matches the colour of his suit. He sits in the chair, the background out of focus behind him.)

 

(Visual: Close up of the same man in profile. He is speaking to the others in the circle of metal folding chairs in the garage. The man in the blue suit sits in the background, watching the man in the grey suit as he speaks.)

 

Barrie Hall: But they’ve also helped us individually to look at our future.

 

(Visual: Barrie Hall sits in a metal folding chair in the garage, in the circle with the other men, smiling, laughing and nodding at something offscreen. He is looking in the direction of the other men in the circle. Behind him the orange and white trucks are parked in the background. A beam of sunlight sits across the right side of Barrie’s body.)

 

(Visual: Close up on Tim Noble as he sits in the circle, talking to the other men. He has a thoughtful expression, and is speaking to someone offscreen. Behind him, tools hang in rows covering the wall. He turns as he speaks so that he addresses different people in the circle, who are all offscreen.)

 

Barrie Hall: Not only us as individuals, but our families.

 

(Visual: A wide view of the garage shows the whole circle of men in metal folding chairs, talking. The man in the blue suit and the man in the grey suit sit with their backs to the camera, and Barrie and Tim sit on the right. The man in the black suit sits on the left of the circle, his face visible in profile. The men in the circle talk animatedly with each other. Tools hang on the garage wall behind them, and a small portion of the garage is reflected in a truck’s side mirror in the foreground, on the left.)

 

Barrie Hall: We have this wealth through what we’ve done and how we’ve grown,

 

(Visual: Close up on the driver’s hands on the steering wheel of one of the white trucks. He is wearing a dark blue T&T Line Construction uniform shirt, of which just the sleeve can be seen. Outside the windshield of the truck, trees and bushes pass by at a steady rate of speed.)

 

Barrie Hall: and they’ve been helping us manage all that.

 

(Visual: Close up on the driver’s face. He has long curly brown hair to his shoulders, and is wearing a blue hard hat. He has black mirrored wraparound sunglasses, and is looking straight ahead as the truck moves down the road. He is wearing the dark blue uniform shirt. Behind him, through the windshield of the truck, tall trees can be seen, and as he moves the truck into a right turn, his hands moving on the wheel, a white house passes by outside along with a scenic view of the road as the car turns into a driveway. A brick pillar sits at the end of the driveway, and he pulls into the lot in front of a large grey building. As the truck turns the corner, a red rectangle slides in from the left, with text identifying Tristen Noble in white.)

 

Barrie Hall: It’s something that needs to really be pushed forward, to the new generation.  It’s not only about us,

 

Tristen Noble

Tim’s Son

 

(Visual: Interview shot, Tim Noble and Barrie Hall, inside the garage. Orange and white bucket lift trucks are parked behind them. The orange and black T&T Line Construction logo is painted on the door of the truck directly behind them. They sit side by side, Tim Noble on the left and Barrie Hall on the right. Barrie moves his hands expressively as he speaks.)

 

Barrie Hall: it’s about reaching out,

 

(Visual: Interview shot, Barrie Hall, in the garage, sitting in front of the orange and white trucks.)

 

Barrie Hall: and helping people within the community as well.

 

(Visual: A wide view of the garage shows the whole circle of men in metal folding chairs, talking. The man in the blue suit and the man in the grey suit sit with their backs to the camera, and Barrie and Tim sit on the right. The man in the black suit sits on the left of the circle, his face visible in profile. The men in the circle talk animatedly with each other. Tools hang on the garage wall behind them, and a ladder and more tools sit in the foreground.)

 

(Visual: The camera slowly moves around Barrie Hall and Tim Noble sitting in the circle of men. Barrie Hall sits with his hands on his knees, looking at Tim Noble as he speaks, who also sits with his hands on his knees, looking around the circle intently.)

 

Tim Noble: CIBC has exceeded my expectations.

 

(Visual: Interview shot, Barrie Hall, in the garage, sitting in front of the orange and white trucks. He moves his hands expressively as he speaks.)

 

(Visual: Close up on Tim Noble’s face. He is smiling and looking offscreen. Tools hang in rows on the wall behind him.)

 

Barrie Hall: We feel comfortable knowing that CIBC is behind us.

 

(Visual: Close up on Barrie Hall’s face. He is smiling and looking offscreen. Tools hang in rows on the wall behind him. A beam of sunlight shines to his left, and reflects light on his face. He laughs heartily, leaning back in his chair.)

 

Barrie Hall: They have our back so that we have our clients’ back. It’s a really good feeling.

 

(Visual: The screen fades to red as the CIBC logo flies in to the centre of the screen in white. Text appears below in white.)

 

CIBC logo

Ambitions made real™

 

The CIBC logo and “Ambitions made real” are trademarks of CIBC.

 

Music ends

 

(Fades to black)

 

Back to Video
 

Election outcome – Federal minority: What's next for investors?

September 21, 2021

 

Election outcome - Liberal minority: What's next for investors?

[Soft music plays] Financial Markets tend to react to surprises, and this election result was anything but a surprise.

[Avery Shenfeld, Chief Economist, CIBC World Markets] Score one for the pollsters, they basically had the seat count projections right on.

[Low angle tracking shots of parliament buildings in Ottawa.] And of course, in terms of the parliament, it's out with the old parliament, in with the old parliament, because we really haven't changed the distribution of seats. So, I don't expect a significant market reaction to this. What investors will be focusing on are some of the new agenda items that came out during the election.

[Aerial view of the Parliament of Canada in Ottawa. Low angle tracking shots of Canadian flags.] So, we see in Canada, as in other countries, for example, on climate change…

[Aerial view of solar panels. A wind turbine on a cliff. A man charges an electric car at a dealership.] …some further measures proposed, a more ambitious target, for example, for Canadians to be buying electric vehicles.

[An aerial view of two smokestacks. A time-lapse shot of cars speeding past two smokestacks. A high angle view of traffic at night.] I think in general, people around the world are seeing that the political momentum is towards more efforts on carbon emissions, and therefore some realignments of portfolios designed to both avoid the companies that might be most affected negatively, but also capitalize on the opportunities there. There were some items in terms of raising corporate taxes on some sectors that I think investors will be looking at for their implications.

[Parliament of Canada at night. Parliament of Canada during the day. Low angle tracking shots of Canadian flags.] But remember, all of this was an election result that was well predicted by pollsters, leaves the political landscape in Canada little changed, and therefore, you really have to just look back to the last liberal budget. That's where most of the initiatives are. And that's where most of the things that will affect investors also lie. Good news is that we didn't see in this campaign talk of increasing the tax on capital gains. That's always one that every budget I get asked about. Are we going to see an increase in the capital gains inclusion rate?

[Low angle tracking shot of a parliament building in Ottawa. Aerial view of the Parliament of Canada.] It didn't come up in this campaign. There is a tax on high income earners, a minimum tax of 15 percent that really won't affect that many people. So overall, I would say that investors are probably a bit relieved that at least during the campaign, we didn't see more of an effort to dip into people's pockets.

[Soft music plays]

[Economic outlook] In terms of the economic outlook.

[Low angle view of the parliament clock tower. Aerial view of the Parliament of Canada.] We come out of the election pretty much where we were at the beginning of this campaign, which is that in terms of the biggest risks to the economy, but also the biggest opportunities for the economy, it's all about COVID.

[Birdseye view of an empty parking lot, followed by images of an empty mall and grocery store.] So, in the here and now, we're seeing some disappointments in some economic readings associated with some caution on behalf of consumers in terms of what they're doing out there in the world due to the latest wave of COVID. But it's also still the biggest opportunity. [An plane sits on the tarmac. An empty restaurant.] Most of the gains that we will see in GDP in 2022 and 2023 will lie in the recovery of sectors that have been held back by COVID.

[Vaccine vials in a row. A nurse holds up a vial to camera.] That will benefit as increasing vaccination rates and the fact that more people around the world will be somewhat immune because they've already had COVID.

[A time-lapse shot of cars on a highway. Time-lapse shots of workers in a warehouse.] All of that is going to open the doors to, we think, quite brisk growth globally in 2022, a move to full employment. And while a lot of that is priced into equity markets, you know they're counting on earnings gains associated with the revitalization of the global economy. We still are reasonably comfortable that those gains are in fact coming.

[Soft music plays] [What this means for budget deficits] There isn't much of an impact of the election on budget deficits. They are slated to come down quite dramatically over the next few years, largely because the economy will recover… [Aerial views of the Parliament of Canada.] …and therefore, government revenues will recover. And in addition to that, of course, we'll gradually see the fading out of some of the pandemic relief spending that has helped elevate budget deficits. It turns out that although the liberal platform did include some additional spending as well as part of that paid by tax increases, we also, between the time of the last budget and the election, had an upgraded economic outlook that has lowered the projected budget deficits. So, at the end of the day, we might have had a slightly faster track of deficit reduction that's now offset by the new campaign measures if those indeed go ahead. And you can see that from the bond markets perspective, it doesn't seem that markets are particularly worried about the current level of deficits not only in Canada but around the world.

[Low angle tracking shot of a Canadian flag. Low angle shot of a row of American flags in front of the Washington Monument.] Just judging by how low real interest rates are not only in Canada but in the U.S.

[Soft music plays]

[Market outlook] We don't think that the election itself will cause jitters in the equity market. We certainly didn't see any volatility in equities during the campaign that you could attribute to the election. Nor for that matter did we see it in the bond market or the value of the Canadian dollar. In the very near term, there are reasons for some caution.

[A man wearing a mask walks down a street in slow motion. A woman wearing a mask looks at her phone on a train.] Again, a lot of the optimism that's already reflected in stocks could be challenged a little bit in the near term by the fact that COVID-19 is still out there, might weigh on economic activity and therefore earnings in the upcoming quarter. But for investors with a longerterm perspective, I think we have to look through this, this last perhaps serious wave of COVID towards the better times beyond 2021.

[Soft music plays]

[This video is provided for general informational purposes only and does not constitute financial, investment, tax, legal or accounting advice nor does it constitute an offer or solicitation to buy or sell any securities referred to. Individual circumstances and current events are critical to sound investment planning; anyone wishing to act on this document should consult with his or her advisor. All opinions and estimates expressed in this video are as of the date of publication unless otherwise indicated, and are subject to change. ®The CIBC logo is a registered trademark of Canadian Imperial Bank of Commerce (CIBC). The material and/or its contents may not be reproduced without the express written consent of CIBC.] [CIBC Logo] [This logo is a trademark of CIBC, used under license.]

Election outcome - Liberal minority: What's next for investors?

[Soft music plays] Financial Markets tend to react to surprises, and this election result was anything but a surprise.

[Avery Shenfeld, Chief Economist, CIBC World Markets] Score one for the pollsters, they basically had the seat count projections right on.

[Low angle tracking shots of parliament buildings in Ottawa.] And of course, in terms of the parliament, it's out with the old parliament, in with the old parliament, because we really haven't changed the distribution of seats. So, I don't expect a significant market reaction to this. What investors will be focusing on are some of the new agenda items that came out during the election.

[Aerial view of the Parliament of Canada in Ottawa. Low angle tracking shots of Canadian flags.] So, we see in Canada, as in other countries, for example, on climate change…

[Aerial view of solar panels. A wind turbine on a cliff. A man charges an electric car at a dealership.] …some further measures proposed, a more ambitious target, for example, for Canadians to be buying electric vehicles.

[An aerial view of two smokestacks. A time-lapse shot of cars speeding past two smokestacks. A high angle view of traffic at night.] I think in general, people around the world are seeing that the political momentum is towards more efforts on carbon emissions, and therefore some realignments of portfolios designed to both avoid the companies that might be most affected negatively, but also capitalize on the opportunities there. There were some items in terms of raising corporate taxes on some sectors that I think investors will be looking at for their implications.

[Parliament of Canada at night. Parliament of Canada during the day. Low angle tracking shots of Canadian flags.] But remember, all of this was an election result that was well predicted by pollsters, leaves the political landscape in Canada little changed, and therefore, you really have to just look back to the last liberal budget. That's where most of the initiatives are. And that's where most of the things that will affect investors also lie. Good news is that we didn't see in this campaign talk of increasing the tax on capital gains. That's always one that every budget I get asked about. Are we going to see an increase in the capital gains inclusion rate?

[Low angle tracking shot of a parliament building in Ottawa. Aerial view of the Parliament of Canada.] It didn't come up in this campaign. There is a tax on high income earners, a minimum tax of 15 percent that really won't affect that many people. So overall, I would say that investors are probably a bit relieved that at least during the campaign, we didn't see more of an effort to dip into people's pockets.

[Soft music plays]

[Economic outlook] In terms of the economic outlook.

[Low angle view of the parliament clock tower. Aerial view of the Parliament of Canada.] We come out of the election pretty much where we were at the beginning of this campaign, which is that in terms of the biggest risks to the economy, but also the biggest opportunities for the economy, it's all about COVID.

[Birdseye view of an empty parking lot, followed by images of an empty mall and grocery store.] So, in the here and now, we're seeing some disappointments in some economic readings associated with some caution on behalf of consumers in terms of what they're doing out there in the world due to the latest wave of COVID. But it's also still the biggest opportunity. [An plane sits on the tarmac. An empty restaurant.] Most of the gains that we will see in GDP in 2022 and 2023 will lie in the recovery of sectors that have been held back by COVID.

[Vaccine vials in a row. A nurse holds up a vial to camera.] That will benefit as increasing vaccination rates and the fact that more people around the world will be somewhat immune because they've already had COVID.

[A time-lapse shot of cars on a highway. Time-lapse shots of workers in a warehouse.] All of that is going to open the doors to, we think, quite brisk growth globally in 2022, a move to full employment. And while a lot of that is priced into equity markets, you know they're counting on earnings gains associated with the revitalization of the global economy. We still are reasonably comfortable that those gains are in fact coming.

[Soft music plays] [What this means for budget deficits] There isn't much of an impact of the election on budget deficits. They are slated to come down quite dramatically over the next few years, largely because the economy will recover… [Aerial views of the Parliament of Canada.] …and therefore, government revenues will recover. And in addition to that, of course, we'll gradually see the fading out of some of the pandemic relief spending that has helped elevate budget deficits. It turns out that although the liberal platform did include some additional spending as well as part of that paid by tax increases, we also, between the time of the last budget and the election, had an upgraded economic outlook that has lowered the projected budget deficits. So, at the end of the day, we might have had a slightly faster track of deficit reduction that's now offset by the new campaign measures if those indeed go ahead. And you can see that from the bond markets perspective, it doesn't seem that markets are particularly worried about the current level of deficits not only in Canada but around the world.

[Low angle tracking shot of a Canadian flag. Low angle shot of a row of American flags in front of the Washington Monument.] Just judging by how low real interest rates are not only in Canada but in the U.S.

[Soft music plays]

[Market outlook] We don't think that the election itself will cause jitters in the equity market. We certainly didn't see any volatility in equities during the campaign that you could attribute to the election. Nor for that matter did we see it in the bond market or the value of the Canadian dollar. In the very near term, there are reasons for some caution.

[A man wearing a mask walks down a street in slow motion. A woman wearing a mask looks at her phone on a train.] Again, a lot of the optimism that's already reflected in stocks could be challenged a little bit in the near term by the fact that COVID-19 is still out there, might weigh on economic activity and therefore earnings in the upcoming quarter. But for investors with a longerterm perspective, I think we have to look through this, this last perhaps serious wave of COVID towards the better times beyond 2021.

[Soft music plays]

[This video is provided for general informational purposes only and does not constitute financial, investment, tax, legal or accounting advice nor does it constitute an offer or solicitation to buy or sell any securities referred to. Individual circumstances and current events are critical to sound investment planning; anyone wishing to act on this document should consult with his or her advisor. All opinions and estimates expressed in this video are as of the date of publication unless otherwise indicated, and are subject to change. ®The CIBC logo is a registered trademark of Canadian Imperial Bank of Commerce (CIBC). The material and/or its contents may not be reproduced without the express written consent of CIBC.] [CIBC Logo] [This logo is a trademark of CIBC, used under license.]

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