Higher Yields, Canada’s Housing Gridlock, and Investors Turn on Google
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What is the main topic discussed in this episode?
Investing is simple, but don't confuse that with thinking it's easy. A stock is not just a ticker. At the end of the day, you have to remember that it's a business.
Just my reminder to people who own cyclicals, don't be surprised when there's a cycle.
If there's uncertainty in the markets, there's going to be some great opportunities for investors. This has to be one of the biggest quarters I've seen from this company in quite some time. Welcome back to the Friday Macro Show. Now we actually have a title for the Macro Show, not a restring being live. So, yeah, welcome back. We have quite a bit on the slate. Pretty crazy in terms of macro. We'll talk a little bit about CPI coming out in Canada. We'll talk also about Bridgemark, new capital allocation, essentially cutting its dividend by 96%. For those not familiar, they own the real estate brokerage Royal LePage. We'll talk about Google drops 7% on earnings that look quite good on the surface.
So we'll touch a little bit on that, but-
I'll kind of give I have some reservations of what's happening with Google. I mean, you can make a case both way. You can make a case that it's well priced. You can make a case that there is a lot of risks that are not being priced in by the market right now. We'll talk a little bit about that. Of course, Dan Kent and I on our Thursday episode will be diving in. A bit more into that, we'll talk about the new U.S. tariffs, an additional 50% on about $20 billion worth of Canadian goods. We'll talk a little bit if we have time, Canadian retail sales. Not sure if you had a chance to look at that, Dan.
No, I didn't actually. I meant to because it's in my calendar. My open call puts it in my calendar, but I should have just got it to give me a summary.
That's okay. Yeah. So if we have time, there's so much to talk about, obviously, resuming tensions in the Middle East, what that means for oil. We'll talk also about what that means for bond yields that have been rising pretty significantly. And I guess if we have time, along with the retail sales, maybe talk a little bit about the Japanese yen hitting, what, something like 40-year low, something like that. So just being hammered. Yeah. A lot to talk about. I think we'll also talk a little bit about boomers not being able to sell their homes. So we were just talking about that as we started recording. I know you've been posting quite a bit about it, so I think it'll be a fun topic to talk about.
Yeah. Cool. Where do you want to start?
Do you want to talk about June's CPI? Sure. Yeah. Yeah. Okay. What's your first impressions on it?
Well, I think like my... And I didn't look at the retail sales, so I don't have a ton to compare to on the consumer. But like, you know, our original read was... this, you know, the acceleration, like gas prices have gone up significantly, even though oil is being controlled and low from an input perspective by the strategic petroleum reserves, which I think we want to discuss a little bit, you know, so consumers, it feels like are, you know, can, well, we saw gas prices come down in that period of time, but I feel like consumers are, you know, there's potential that they're reacting in such a way that was sort of like what we forecasted that, you know, you're more likely to see a demand destruction outcome than a inflationary outcome.
So I think, you know, I don't think the inflation story is over. I'm going to try and, I missed the button on your screen share there, but I'll figure it out. I don't know if you want to try and share it again, actually. Let me see if I can find it. Sure. Yeah. I mean, your consumers seem to be reacting in such a way that there's probably limited upside to significant long-term upside to the inflation story in the long-term. I think that gas prices could probably give us another couple of high monthly readings on inflation, but it seems to me like both the US and Canadian consumer are sort of reacting by spending shrinking on the inflation side. So I do still think that conflict in the Middle East, oil price shock is more likely a recessionary or demand destruction outcome than an inflationary outcome.
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Chapters
5 chapters
1
What is the main topic discussed in this episode?
0:01–13:05
2
What did June's Canadian CPI and retail sales data reveal about demand destruction?
13:05–28:13
3
How are rising U.S. bond yields affecting Fed expectations and monetary policy bets?
28:13–41:32
4
How will higher Canadian bond yields and mortgage spreads impact the housing market?
41:32–52:00
5
Why are Canadian borrowers shifting toward variable-rate mortgages and what risks does that create?
52:00–52:31
Speakers
3 identifiedMore from The Canadian Investor
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