We have been bullish on the markets for most of the past two years. Earnings growth has been exceptionally strong, the AI/data-centre buildout continues, and despite all the political and geopolitical noise, the global economy has remained surprisingly resilient.

Lately we have had a few clients calling in concerned about the markets. For the most part, they are concerned about Trump, tariffs, the war, and Government debt.

Those things matter, but none of them by themselves change our outlook.

However, the one thing we are watching very closely is oil.

The world can handle oil at $80 or $90 a barrel. It can probably handle $100. But somewhere around $120, the math starts to change.

Oil is different from most commodities because it touches almost everything. Higher oil prices mean higher gasoline and diesel prices, higher transportation and manufacturing costs, more expensive food and air travel, and ultimately more inflation. Consumers have less money to spend, corporate margins get squeezed, and central banks have less room to cut interest rates.

History gives us a reason to pay attention: major oil shocks preceded the recessions of the mid-1970s, early 1980s, 1990 and 2008. Oil wasn't necessarily the sole cause, but when energy prices rise dramatically, economies have historically struggled to absorb the shock.

Source: Federal Reserve Bank of St. Louis, Spot Crude Oil Price: West Texas Intermediate (WTI) [WTISPLC]. LSEG. Data retrieved September 10, 2026.

That is why today's move deserves watching. Oil has pushed back above $100, but that alone doesn't change our view. $120 would.

For now, earnings remain strong and the AI investment cycle remains intact. We are still bullish. But if you're asking us what could change that outlook, don't watch every political headline…

Watch the price of oil.

I have also included a piece from our CIBC Economics Team entitled “Japan and the US: Swimming in the same churning sea”.

As always, if you have any questions, please feel free to give us a call at any time.

Have a great weekend.

Milan