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We welcome you to “Bare With Us,” the podcast where we Bare Out the latest economic and financial questions that matter to you. Mike Robinson, a Chartered Investment Manager (CIM) from Calgary, Scott Richardson, a Certified Financial Planner (CFP) from Edmonton, and Finn McKay, a Chartered Financial Analyst (CFA) from Winnipeg, engage in an unstructured discussion, bringing you a wealth of knowledge and a diverse experience from the world of finance.
Each episode features an unstructured, unscripted and entertaining discussion where we pursue ideas and concepts as they arise naturally through our conversation. We tackle a broad range of timely topics, from economic or market trends and financial planning strategies.
Whether you’re one of our valued clients, or someone new to our insights, our goal is to provide you with valuable information, from diverse perspectives, that can help you navigate the complex world of finance.
We are experts in our field, but we are new to podcasting, so we invite you to Bare With Us, while we learn, grow and share! Please feel free to reach out to us with any feedback, to suggest any topics, or to learn how to work with us. You don’t have to, but you can!
On the last episode of Bear With Me.
Scott:Okay. So what are we doing here today?
Mike:We are gonna tackle a topic that I I, you know, initially was a little bit hesitant. The Trump administration is doing what they're doing. Whether they're right or not or whether we agree with them or not is obviously a different different discussion. There are reasons that they're doing it. We should understand as best we can what they might be.
Finn:There's this is a quote from someone. I can't remember who it's attributed to, but there's decades where nothing happens and then there's, like, weeks where decades happen. And that's what it kinda feels like in the last couple weeks.
Scott:But I said right now what it feels like is, Mike, you're buying Finn's house, but Finn didn't even know he was selling. And it's it's
Mike:Yeah. I love the discussion, but I'm gonna do it again just be because we're, you know, quote, unquote, possibly in a crisis. I wanna make sure we're addressing, you know, questions that people have of of us. And so I'm gonna shift it a bit more to Scott. If I can put you on the spot and say, like, k.
Mike:We're in a crisis. A lot of the norms that we are used to our entire adult life, we've been used to a certain way of doing business and trade. Are the current shenanigans causing do you think we should be doing anything different from a financial planning or investment planning standpoint?
Scott:No. And it's funny. I think speaking with clients, I think it kinda drives them nuts how nonchalant I am about some of this because it's it's Again, You're freaking out.
Finn:Why aren't you changing everything?
Scott:But it's it's because just Blow it up. Know, I just got to listen to you, Fin. Yeah. Mhmm. Explain all the stuff that you're doing behind the scenes in terms of investment management.
Scott:And so Yeah. I always feel that if if you're doing all that work and then I start making all these changes over here on this side, then there could be a big chance that I completely undo the changes that you did inside of a portfolio because I'm shifting out of things. And so, no, I I don't think that there is really a need to hit the panic button yet. Again, if you look at overall markets or or if, you know, I look at client portfolios on a regular basis, you know, they're only down maybe 5%. That's not a huge crisis right now.
Scott:That's not what we've seen in during the pandemic. It's not what we saw in '8. You know, I think it's not even 2018. So we're not there yet. We've seen a day or two like that, but it was a day or two.
Scott:So I'm not super concerned on that side of things. I think, you know, we talked about a lot of this in our last episode about RRSPs and TFSAs. I don't think any of that changes. I think I would still encourage people to put money in an RRSP, get a tax deduction, put money in your RESP, get a 20% grant, put money in your TFSA, have tax free compounding. I don't think any of that really shifts.
Scott:What has shifted for me a little bit has been a little bit more of a shift towards or focus towards paying down debt, especially more long term stuff. If if we're going to get into a long recession, the best thing that you can position you can be is not owing somebody money. Or if we're gonna go into a state of renewing, making sure that payments can be as low as possible. So that's been a little bit more of a shift. And and I have had, you know, personally as well, a little more cash sitting on the sidelines.
Scott:One, in case things get more expensive, but two, also for the ability to take advantage of opportunities if they arise with with low markets or or or low returns. So that's that's kinda the only shift that I have As long as I can continue to be confident that, you know, Finn, people like you who run all of my money and my client's money, that you're doing the things on your side and that's I have that confidence in you, so I don't feel the need to make massive shifts on on my side of things, if that makes sense.
Finn:If I can just add to that. Like, I think that we've talked a bit about in the past, you know, if you if you've owned the market, if you owned if you have invested in equities over the last, like, hundred years, I recently updated the data for our newsletter, but, you'd be up 980000% over the last ninety years in, investing in equities. Now and the cost of that to get that incredible return turning a million bucks into almost $10,000,000,000 is volatility. And, you know, volatility doesn't just happen on a on a whim. It's it's all there's always something real going on that's that's that's scary.
Finn:And the beauty of businesses is their ability to be flexible and to be able to manage through changes in the environment. You know, one one company that I I like to talk about sometimes is, like, Louis Vuitton. Right? So they've they you know, in the in the two in the early two thousands, something like 90% of people in Japan had an LVMH bag. It was absurd.
Finn:And everyone was like, oh, well, this is a bubble. They can't get any bigger. Like, this is gonna be this is gonna be terrible. And then, of course, you know, they just shift the business to where the wealth is. You know?
Finn:Then it was China. And, you know, maybe next it'll be India. They have this ability to to manage through these changes and just become bigger and more dominant. And if you start making changes to your portfolio, to your plan, because of these these things that are happening, then you will you will reduce your returns over the long term. And the important thing to do personally is to make sure that you personally are financially indestructible so you can get through these periods without having to worry about it.
Mike:Well, that that's what I think. Like, for me, being prepared is part of the plan. And it's funny how you say people are getting frustrated with you because you're nonchalant. Like, I take that to a whole new level. And I you know, I kinda purposely I kinda purposely use some language that I know will throw people off to but more just to drive the point home.
Mike:And so, you know, I always say to people, regardless of whether we're in volatile volatile times or not, as I always say, like, listen. Every approximately every five years, there is some sort of correction or downturn or period of volatility. And about every five to eight years or once a decade or a little more than once a decade, that that downturn is a real doozy. Like, that's gonna happen. Like, every five years, we're gonna have a correction or downturn.
Mike:And about every five to eight years, it's it's a real doozy. And something causes it, and I don't I don't care what causes it. Like, I really don't. Now, again, that do is that really true? No.
Mike:I mean, as a person, as a citizen, I care. But from a planning standpoint, like, I don't care what causes it. This time, it's the trade war. It's yet to be seen whether this turns into a doozy or a real bear market. We'll see where this goes.
Mike:But, like, I don't care because we're prepared for this. If you need to be prepared that you are going to have volatility. And, you know, I'm gonna do a sidebar and tell, like, a bit of a personal story as to why I'm so passionate about this is very early in my career, I was in a social setting, and I was kind of eavesdropping, quite frankly, on a couple people because they were talking about markets and and stock markets. And so I started kinda listening in, and these were older people. I was very young at the time.
Mike:And one asked the other, Frank, you're about to retire. Aren't you in retirement zone? And he said, well, I was going to retire, but now I can't because of what's happened in in the market. And, like, that hit me like a ton of bricks. Right?
Mike:I wanted to jump in, but I wasn't in on the conversation. But I wanted to jump in and say, like, you got really bad advice. Like, whoever your financial adviser is should be taken out back because if naturally occurring market
Finn:I'm imagining you taking taking out a financial adviser out back. You. Get over here.
Mike:But it's a series
Scott:of Gotta make you what? Person who's
Mike:worked his whole life. He's worked hard his whole life. He's a white collar professional, and he now can't retire because he was unprepared for market volatility. Like, I'll never forget where I was when I heard that and the impact it had on me to make sure that never happens to anyone that that we know and do business with.
Finn:Mhmm.
Scott:I I agree. And I think I I'm usually a pessimist on this kinda especially with what's going on in the last, call it four or five years with the amount of money being injected into the system. You know, I've been telling people we're gonna go into a recession where you're like, I think I've predicted 10 of the last two recessions.
Finn:Right.
Scott:Right. Because I think I just always think that and so it's going to happen and and, you know, you're gonna see volatility, you're gonna see businesses go down in value and and even them going down now, you're still ahead of where you were this time last year and this time the year before that. So Yeah. Okay. I get that it's going down, but it doesn't stress me out that much because we see a lot of the underlying things happen all the time.
Scott:And so I just look at it as this is to be expected. There will always be volatility. So as long as we've built things properly, had cash on the side, know, I always say to people, there's only two rules that you really have to follow in my mind is you have to save money every month and you can't spend more money than you make. Both of those are still true today, no matter what's going on. Because there was so much money injected in the system, especially post COVID, during COVID and on top of it, much leverage done by citizens.
Scott:That has really inflated a lot of prices. So I've always been anticipating that there would be, there's going to need to be some sort of correction in order to suck that money back out of the system. It will just have to be. And so knowing that that has to happen, it it doesn't make it stressful for me as long as you're prepared for it. Mhmm.
Mike:Fin, go. Go ahead, Mike.
Finn:No. I was just gonna say that, you know, we we and then, you know, even if you don't have more cash to invest I mean, yeah, like, the market's not down that much right now. Like, I think that if you if you look at, you know, the funds or the market or anything like that, like, we're probably back to you know, most most people are back to, you know, where they were in November, of of last year. Like you said, like, the impact hasn't been been so significant so far. And that's not to say there won't be more volatility, but that's the that's the great thing about sort of how we run our portfolios is we can take advantage of it.
Finn:Right? There were some some companies where their shares were down materially, and we were able to buy, and those have actually recovered pretty nicely. We were able to make some changes within the portfolios to buy companies we think are better positioned over the next ten years, and, you know, anticipating some of that volatility and kinda taking some, some some cash back onto the onto the table, that kind of thing. So it's you know, we're doing things within the portfolio to set set up our clients for for better success. And then, you know, if clients can continue to to, you know, invest and to continue to save and to continue to spend less money than than they're making, like, they're we're we're all gonna be in a great position.
Mike:I'm gonna I'm gonna derail things and ask one of these totally off the wall questions. But
Finn:I love I love it.
Mike:Yeah. Like, get us back to some of the freewheeling here is okay. So if these tariffs stay in place or get worse, I think everyone would agree that that leads to inflation.
Finn:Mhmm.
Mike:Typically, inflation, though, comes into the system when you have a quote, unquote, overheated economy or a very hot economy, and therefore, central banks around the world tend to raise interest rates in order to Mhmm. Cool the economy. However, in this case, if we see inflation, it's not because of a hot economy. In fact, it might even be a recession. We might be in a recessionary environment with rising prices.
Mike:What does that do? I know none of us are economists, but we've all been around for a while. Like, how do we navigate that from a financial planning or investment standpoint? Or just a personal standpoint.
Finn:Yeah. No. Like, the the stagflation, economy hasn't happened in a long time, and it's truly a, central banker's nightmare. And that's why, like, Jerome Powell has been saying, like, you know, he's so there was something, like, about, you know, the chairman of the Federal Reserve in The US who, you know, has a big influence on what interest rates do. And he said, you know, he's in a dark room, and he doesn't wanna move because it's just he doesn't really know what's gonna happen.
Finn:And you don't wanna be you don't wanna be dropping you don't wanna be raising interest rates or dropping interest rates in this type of environment because you don't know what's sorry. What were you gonna say, Scott?
Scott:I just wanna can you explain stagflation?
Finn:Yeah. So, I mean, it's
Scott:a where stagflation, what is that?
Finn:Yeah. It's rising prices in a in a in a crappy economy, basically. It and it doesn't it doesn't yeah. It doesn't it's it's a terrible situation because people have less money and things cost more, at at at a, you know, at a ground level. From from a business perspective, I mean, this is one of the reasons why you wanna own companies that are able to take price.
Finn:And, you know, there are there maybe they're a small portion of the final cost of goods for the customer. Maybe they have very specific technology or very specific assets that are able to increase prices in different types of environments. There are certain companies that are able to increase prices directly in line with the consumer price index, but it's yeah. You you wanna own businesses that have pricing power. I think in most in most environments, that's true, but in a stagflationary environment, especially.
Scott:So my my response to it would be, it depends which country you're speaking of. And because I think if you're talking about it from a US perspective, I think the way that that which we've mentioned already is the way they're gonna try and deal with it is, one, tax cuts, two, striking all these new deals for free trade with other countries to offset what's about to happen to the American consumer. So I think that's the that's that that's my guess. Again, speculation, but that's how I think they're trying to hope to deal with it. So from a Canadian perspective, that's one thing that I remain to be unseen.
Scott:Haven't heard, again, we're going through an election, so I don't know how much we've really heard in terms of how they're going to deal with some of it. But I think that will be the true test for Canada. And that's why I'm optimistic about maybe it changes some of the mentality or thought that we're going to have to find ways as a country to offset that for us and make it and just deal with the stagnant economy. Because as long as the economy is going up while inflation's going up, then at least that should offset some of those issues.
Mike:I'm gonna say something Yeah. I'm gonna say two things quick. One is Okay.
Scott:Yep.
Mike:I think it highlights too from a personal standpoint versus an economic central bank or, you know, monetary or fiscal policy just from our own perspective as citizens, as consumers to make sure that your debt level is under control and that your spending is under control because we could be in an environment where prices are rising, wages are not rising, and even possibly debt payments might rise should central bankers increase rates, which I don't think they will in in this environment, but but who knows? Strange I
Finn:mean, the the thing that's the thing that's so strange about all this is that, like, it could you know, I mean, I think that a lot of the reputational damage is pretty significant and stuff. But something that could happen pretty quickly is, you know, he just comes out and and says no more tariffs, and then things change really quickly. Like, the this is all coming from one, you know, administration. But the other thing too, I'll be interested to see what happens in Canada specifically because if you if you were buying if you are, for example, Timu or Sheen or any other of these Chinese retailers, and you were sending tons of product into The US, And so, like, there was there was some analysis on because, I mean, Timo and Sheen, they've spent so much money on advertising. Like, they're the they're they're, like, among the largest advertisers on Facebook, on Google, and it's it's, it's gotten, like, it's gotten to be, like, a really big, that's how they create their demand.
Finn:Right? Is they've got this crazy advert this advertising engine. And now that's literally dropped almost to zero. Like, they went from the biggest to now they're not doing almost any, and that happened in the last, like, two weeks. And as, you know, as we were talking about, like, they are the ones that get hit the hardest from tariffs when they've got all these low value goods that have high cost out of China.
Finn:They get taxed the most. But, also, like, I I don't think the factories all just shut down. I mean, maybe maybe a lot of them did, but there's a lot of stuff out there that might not be going into The US. And I'll be interested to see what happens. Like, what are the second order impacts of less things going into The US?
Finn:Like, that's a big market to fill. Like, if if if The US stops buying French wine, if The US stops buying Italian wine and champagne and, you know, scotch I don't know why I'm on this liquor train where I'm only talking about liquor, but there's but there's other things
Scott:Or if Canadians can't buy bourbon. Yeah.
Finn:Yeah. Exactly. Yeah. But but yeah. Like like, do do to to kinda fill that demand gap from The US because there's less purchasing there because of tariffs, will prices actually fall in other regions of the world?
Finn:Right? Do we have to pick up that demand tab that they used to have? And and, you know, I haven't seen that many people talk about that as a potential thing that could happen, but, yeah. No. That that could be interesting.
Finn:Like, will all of a sudden start trying to dump things? I think there's been a lot of work around trying to prevent dumping because a lot of ships that were on their way to The US, you know, maybe they're pretty easy to just go into Canada and just kinda dump it all. But, yeah, that that could be interesting.
Scott:Yeah. I think it depends on how people decide to react to this individually. Because Yeah. Like I mentioned before, sucking a lot of that extra money out of the economy, it's gonna take and to be able to get debt down, it's going to take austerity measures. So it might be, you know Right.
Scott:Well and even in Canada too. You know? Canadians are caring
Finn:Yeah. No. We have a debt problem. Yep. We have way too much debt.
Scott:Yep. You know, I I think it was actually a slide that maybe you put it up or I can't remember where I saw it.
Finn:But Yeah. I think I think it might have been mine. The household debt by by country, I think. And it had, like, Canada, UK
Scott:Canada was second?
Finn:Yeah. Yeah. In in that And Yeah. There were there were We were that have higher.
Scott:We had, like, 1.6 or a dollar 60 of debt for every dollar we generated into the economy. Whereas Yeah. Our our US counterpart would have 75¢ of debt for every dollar they generated into the the GDP. So Mhmm. That's significant.
Scott:So it'll depend in order for Canada to be able to make any sort of adjustments, there's going to need to be some sort of austerity measures either for whether it be federal or even just individuals saying, okay, well, watch what I'm spending. So maybe we won't pick up all that. We might not pick up all that demand or supply because maybe we won't have the cash to do so. So yeah. So I don't Well, and then
Finn:you have countries like like Germany and India, specifically, and and and to some degree, China that have I mean, it kinda depends on which debt you look at because there's government debt, and then there's, like, local government debt, and then there's household debt. But, like, generally, in Germany and India, very little amounts of debt. In China, at the, you know, federal level, there's not very much debt. Across government entities, there's quite a bit, but, they don't have the big consumer economies that America has. And something that's also really interesting that's happening right now is, you know, people talk about trade deficits and stuff like that and how, you know, China has this huge, huge trade surplus.
Finn:And there's always been this push, like, what if China and Germany and all these other countries started really pushing to create a bigger consumer economy? And that that could be quite quite significant in terms of the change in trade dynamics around the world. And they have the ability to do it. They don't have the leverage that other countries do.
Scott:The one other thing that I was gonna touch on going back to something that we were speaking about before is with kinda some of the motivation behind some of this is and and not knowing what direction this will go is I think chaos is kind of the theory right now. And I think that's what's driving me crazy. I was listening to a podcast kinda on the way here this morning with David Sachs, who was named the crypto czar in Trump's administration. And he was kinda commenting how
Finn:Crypto czar. Can you imagine I think that's what they call him. Crypto czar for the White House. Imagine ten years ago being like, oh, there's gonna be a job title at The U in The The U the White House called the Crypto czar, and it'll be. Anyway, sorry.
Scott:So Continue. But his comment was he said, you know, we couldn't have got all these countries to come to the table to strike new trade deals if we just ask them nicely. You know, we had to create chaos and uncertainty in order for them to be forced to the table to strike these deals. And I it goes back to my original statement about the emotion behind all of this, But I think chaos is the design, and I think it will be like that for a little while, which is why I think there will be volatility and why I think there's going to be some sort of need for our country or or any other country to pivot because that chaos is is going to be there. And then the other thing that they talked about is is this potential of trying to strike up a new Bretton Woods agreement.
Scott:And and they called it the Mar A Lago Accord. And it's like, oh my So anyway, that was just something that I think brand new place, Dan.
Mike:I'm trying personally to stay away from why they're doing all this because I really think very few people actually know. And it also leads to this, well, is it right or is it wrong? Like, why is he doing this? And
Scott:Yeah. Yeah. Yeah.
Mike:You know? Well, it's not gonna work, and he's crazy and all that kinda stuff. And I'm not saying that's wrong, but it's so speculative, and it just takes us away from, okay. Well, this is happening, and and what do we do about it?
Scott:I agree. I I think it's For me, it's sort of
Finn:Go ahead.
Mike:Ben. Ben. For me, think
Finn:it's important that I think it's important that we, you know, look at what what is, yeah, like, what is the end goal, the end state that they wanna get to. I really hope you're right, Scott, that it's chaos by design because if it's not chaos by design, then we have a lot of other issues, you know, to think about. I think that I think that people are are I think I think across across the spectrum, people are allowing their own personal politics to influence their view of what's going on. I think there's a lot of really bad takes because of that. And and, you know, it it it it is confusing.
Finn:Like, the narrative coming out of the White House doesn't really make sense. It's like, you know, you're raising you're using tariffs to raise revenue to reduce the deficit, which, physically is, I think, you know, financial like, if you do the math, it's close to impossible. You're trying to raise tariffs so that you can counteract tariffs from other tariff, places. You're, you're you know, it's about how unfair other countries are. It's about how the US dollar is too strong.
Finn:It's about how, you know, overreliance. Maybe it's all of it. It it's hard to say. It just seems like it's kind of a mess. But if I think that if you look out and you say, like, okay.
Finn:Like, they're trying to if if you can take the perspective that they are trying to lower trade barriers globally, that's long term probably a good thing. I think that the the the approach that they're taking for it is, like, why did they tear off an island with penguins? That doesn't make any You know? And then and then there's an island there's I I should really know the details on this better, but there is an island where they they bought, like, a couple million there's not that many people live on the island. They bought, like, a couple million dollars worth of goods from The US, and US doesn't buy anything from them.
Finn:And they got, like, a % tariff or something. And the way they calculated the tariff, obviously, like, that's been in the news a lot about how Yeah. Was probably yeah. So that was things
Mike:that Pierre Saint Pierre and Mekelon, which is actually islands that are off the coast of Newfoundland that are Oh. Actually part of that are part
Finn:of France. Well and that's that's, like, another interesting piece a lot of folks are speculating that they used AI to determine, the tariffs, because the countries were organized by ISP addresses, not by, like, legal country states, which is what you get if you put into ChatGPT. Please put together a list of countries and and apply tariffs based on the amount that they import to us. So
Scott:So one last thing just because we didn't touch on it, but I I just wanna get it on the record in terms of we talked about markets, but one of the things that's come up that I got a question for you, Fin, that I just thought of is when Trump what was the day that he called it? Liberation day or whatever he announced all those And then he backtracked on it. Everything that I heard was about that what really scared him and why he backtracked on that is bond markets. That the stock market, if it fluctuates, that doesn't really scare people. But a bond market slowing down or or having issues is something that's really scary.
Scott:And I'd love it if you could kind of explain if you know how that And then is the design behind that, again, speculation to get Mhmm. Yields down because like I've heard, there's like two thirds of The US debt maturing in the next couple of months. And if they can renegotiate that at lower rates, it'll save them billions of dollars. So why is it that the bond market is something that they're concerned about?
Finn:Yeah. That's that's a good question, and I think there's a few there's a few layers on that. One one is that, yeah, there's a lot of folks that have speculated. I and I it's it's I think it's maybe a few trillion dollars that are are maturing in the next couple years. It's not it's not in in terms of the bigger picture of how much debt The US has, it's actually not not, I mean, it is significant, obviously, but it's not like it's it isn't it isn't quite, like, you know, two thirds or something like that.
Finn:But but the, yeah. There is there is a bit of there is a bit of speculation that, you know, that there was, like, an effort to, create chaos and destroy you you know, signal a weaker economy so that you could get yields down. I I personally think maybe somebody mentioned that at some point. I don't think that was part of the plan to begin with. I think that, you know, maybe somebody in the White House said, oh, and maybe we'll get that as well.
Finn:But I think that, you know, the you know, I I I kind of think that you you might be we it would be giving him a bit too much credit to to think that that was the the original plan. Yeah. What were you gonna say, Mike?
Mike:Well, I was gonna add. Again, I don't profess to be an expert on this, but I but I've been following it a bit because I've actually been following this before all these shenanigans broke, but it it ties right in. Is it's not so much the debt is maturing. It's that, really, The US is on the cusp of their debt being downgraded. And anyone that really follows the bond market would say they already should have been downgraded a long time ago.
Mike:And there's a couple of major implications to that. One is simply the interest rate that they would have to pay Yeah. In order to continue to do borrowing, not just on what's maturing, but, like, on everything. But then don't forget, every basically, every other fixed income or fixed interest vehicle in the world is priced relative to the US treasury. Mhmm.
Mike:So if you change the, you know, the quote, unquote risk free rate or the ten year rate on US treasury, like, it's
Finn:gonna
Mike:impact pricing, the bond market Mhmm. And financial models completely across the globe. Yeah. So there's great great concern that if The US does not get its books under control really quick, they are going to be downgraded, and then the entire bond market could be thrown into some chaos.
Finn:Yeah. And I think I think that well, and when the bond market goes into chaos, if interest basic I mean, you know, at at a very, very simple level, if interest rates go up materially, especially long term interest rates, this can really hurt, this can hurt consumers, it can hurt businesses, and it can definitely hurt The US where a large portion of their annual budget is now going towards servicing their growing dead load. And they've benefited from being the reserve currency of the world that's allowed them to get lower interest rates. That's also had the negative impact of having higher a higher US dollar, which makes it, you know, makes them a little bit less competitive in trade, which is something that I know they've they've, the White House has talked about quite a bit. So, yeah, when interest rates start going up and, I mean, the scary thing too for the White House is you see interest rates going up, and, I think that I think that the Donald Trump was talking about how he saw Jamie Dimon, on the news, and Jamie Dimon was talking about how the bond market was going to be a a very significant problem for, for the banking sector and for the economy, and that, you know, that kinda pushed pushed him to to making some changes, and trying to pull back the tariffs.
Finn:And I think that he kind of maybe revealed his hand a little bit that, you know, there that's kind of the line that they that they can't cross is, you know, the seeing bond yields go up. And and something else too is, you know, okay. Well, why are bond yields going up? Right? If you have if you're putting on all these tariffs and you are slowing down the economy, generally, interest rates should should they should, like, you know, wanna lower interest rates to try to stimulate the economy.
Finn:But the tariffs are stagflationary, like we were talking about, which can create inflation. But the other thing too is I think that, and this is why, like, I think that if if, you know, if if the plan was to lower interest rates, it was it was a pretty pretty, you know, low thought process plan. It's you know, you created a a very chaotic situation, and a lot of The US's reputation is built on trust and stability. And, this is totally the opposite of that. There's a lot of chaos.
Finn:And, you know, who's the largest owner of of US bonds? And it's not China, actually. It's it's Japan. No. It's Japan.
Finn:Japan has 12 I've got the numbers right here, actually. Japan has 12% of all the treasuries. China's next at 8%, and then it's The UK at 8% as well. And and so, you know, if you're if you're afraid of of stability and you're you know? Because usually in a in a crisis, people go people rush to buy the safest assets, and that's usually US government debt.
Finn:And then you if the US government is creating the chaos, why would you wanna buy why would you wanna buy the, you know, US US government debt? So so people are are selling it, and that's that's led to a drop in the currency and an increase in yields, which is, something that doesn't normally happen.
Mike:Yeah. Just out of interest sake, this whole notion of that China owns all The US debt is is not true. And but everyone kinda thinks it is. And also, like, Japan is not the number one holder either. The number one holder is is US Investors.
Mike:Japan is the highest Oh, federal reserve. Yeah. It's the federal reserve. Japan is the highest holder of nondomestic Foreign.
Finn:Yes.
Mike:Holders. And and nondomestic holders makes up, like, a third total of the debt. So it's not nearly as significant as everyone thinks. I think that's one of those, you know, just stories that that sort of spread a little bit. I just wanna throw that in there for interest like, really.
Finn:Yeah. Yeah. Yeah. So so the the the numbers are that the Federal Reserve has 47% of of the debt, and then I believe the remainder the remainder is is foreign. Japan, Twelve.
Finn:China, Eight. So, yeah, like, it's true. Like like, the The US is is the largest holder of their own of their own debt.
Mike:Yeah.
Finn:But but it does have an impact. You know? If you have if you have someone who has 12% of something selling it, they're you know, that'll that'll drive the yields around. Right?
Mike:Yeah. So, you know, there's a lot of things we can talk about that we could talk about this for another twelve hours, I'm sure, with interest, but let's not do that. You know, I like, we should just put a little button on this and and summarize your from your own perspective a little bit. I'll start, and I'm just repeating myself. I've already said it.
Mike:I don't like what's going on right now. I keep calling it the shenanigans because I have no better word for it. But at the same time, like, I don't care what causes the market volatility because I'm prepared for it. I know that market volatility is going to happen, you know, say every five years, every five to eight years. And all of our clients and ourselves need to be prepared for it.
Mike:And, you know, for myself personally and for people that are not close to retirement, I like, I take advantage of it. I added money to my RRSP, when things went down. And if things go down even more, I'm gonna I'm gonna do it again. And, I think though it is really important to have these discussions, especially to hear from you, Fin, because that's what gives me the confidence about that is I know what you guys are doing behind the scenes. So that's that's sort of my ultimate take on on everything that's going on.
Mike:I'm gonna point to Scott next for a quick wrap up.
Scott:Again, I agree with you, Mike. I think the volatility is going to happen. And I also think we've seen a lot of this before. It's it's in different. It's a different flavor.
Scott:It's got a different spin, but we've seen, you know, Alberta bonds be downgraded before. We've seen, you know, trades and we've seen The US go after income tax from foreign people before with massive we we've seen all these things before. It's just a different version of it. And so I don't think it causes any sort of need to shift strategies to move away from things that you've normally done. I think you you make some adjustments towards protection, when there's uncertainty.
Scott:Mhmm. So, you know, making sure you've got a little more cash that you pay down your those type of things, take advantage of opportunities. So I think that part stays the same. I I do agree. And to go back on my earlier statement, I think the emotional side of it really sucks.
Scott:I don't like how it feels. And and, you know, the saying always goes, the bad thing about political jokes is sometimes they get elected. So so, yeah, it it feels bad and
Mike:it is
Scott:what it is and
Finn:but it's a
Mike:good Yeah. And on that note on the feels bad, I'm gonna clarify one of my comments. When I say volatility is gonna be is gonna happen and you need to be prepared for it, I don't mean just, oh, be mentally prepared for it and just roll with the punches. I mean that too, but I I mean, no. Like, in your actual structure of your retirement investment plan, be prepared for it.
Mike:As in Yeah. If you are in retirement or close to retirement, you should limit your exposure to volatile capital markets. Doesn't mean you shouldn't be in them, but be very mindful of how much money you have in volatile markets versus what you have in in treasuries or cash or or very liquid investments. And if you're not close to retirement, what does your allocation look like, and what can you do to take advantage? So I wanna clarify that because I'm I I hate the old, oh, just think long term.
Mike:It'll be fine because that's that's just useless rhetoric as well. I mean, literally be prepared in your plan, your retirement plan, your investment asset allocation.
Finn:This is where the plan adds value. I mean, right, like, you know, you create plans for clients and, you know, being able to understand how it's progressing and sort of where clients need to make changes based on what's happening. Like, that's where, you know, you can add a lot of value for for clients in these situations and make sure that they're able to retire when they're planning too. Yeah. I mean, I think I think in in this type of situation, you need to use I mean, you know, this is this is obviously a a very big change for a lot of folks potentially with everything that's happening in The US, and and and it's about making sure you're prepared from, like just from, like, an investment perspective, making sure you've done the work on the businesses so you understand them very thoroughly and sort of how the impacts will will sort of flow through to the businesses.
Finn:And also making sure because this is where this is where businesses can make really incredible decisions to enhance their competitive position and become better and bigger. And, I mean, you're seeing you're seeing some really interesting discussions from the companies, that we have across the portfolios that are talking about that, and that's that's exciting to me and also to be able to use the indiscriminate selling to the advantage of our clients and be able to accelerate their returns through through that. So I think that there's yeah. It's it's a it's a tough situation, and there's a lot of chaos and chaotic situations and narratives going on, but we we will, you know, continue to muscle through it and come out the other side better.
Mike:Okay. So Awesome. Well done. Well done. Yeah.
Mike:Thanks, everyone.
Finn:You too, Mike.
Mike:We'll, we'll see how long this ends up being, and maybe we don't maybe we have to cut this out. I don't know. I don't know how long we've been going and how much is gonna get edited out.
Scott:Yeah. Anyway Yeah. It's almost lunchtime for you guys, so I don't know. Do you wanna talk about food and what you're doing for Thanksgiving?
Mike:Well, I'm just why do we keep saying Thanksgiving? It's it's Easter.
Scott:Oh, no. I keep saying Thanksgiving. So, yeah, Finn, it's it's lunchtime, but we're leading into Easter weekend Easter long weekend. What are you doing for Easter long weekend? You got anything cooking up?
Finn:Yeah. So we're we're going up to Rebecca's or I guess down, depending on how you look. We're going down to Rebecca's Folks Place. They live on a farm in in Crystal City, Manitoba, which is, not really much of a city. It's, I think 200 people live there or something like that.
Finn:Very small, like, farming community. So and, Rebecca's, mom is gonna make us a delicious Easter meal, and I'm very excited for
Scott:it. Oh, cool. Mike, what about you? You must be cooking.
Mike:I I am. That's I I was just gonna say that's that's very audacious of whoever it was to name it Crystal City. It's a farming community, but hey. You know? Yeah.
Mike:I'll be I'll be doing some cooking this weekend. We're, you know, we're not a particularly religious family in any way, but my wife is French Canadian originally and was raised Roman Catholic. So Easter is a a thing for us in our house. And in Quebec as well, like, spring is a thing. Like, Easter coincides with maple syrup season as well.
Mike:Although this year, Easter's a little bit later. And even though I'm not French Canadian, I kind of embrace some of those roots. So I kind of put the spring and Easter together, and I do a bit of a French Canadian Easter dinner. So we'll do, like, ham, but I'll do ham on the smoker, and I'll do, you know, like, beans with maple syrup. And I'll try and find the best I can, like spring vegetables that you would see in Quebec at the time, like like fiddleheads, which I haven't actually got my hands on yet, but I'm hoping to in the next couple days.
Mike:And if I can get some greenhouse grown spring asparagus, that would be great as well. And then I'll do some kind of maple dessert, even though I'm not a big dessert guy, but like maple cheesecake or maple cookies or something to just sort of bring Easter and spring and our French Canadian roots altogether. Cool.
Scott:That's kind of exciting.
Mike:What about you?
Scott:This year we're going to my sister's. She lives not too far from us. So we're going there with the whole family and she's doing ham and have you ever heard of Schwerty's potatoes?
Finn:No. Tell me about Schwerty's potatoes.
Scott:I think it's a best of bridge recipe and it's like, basically, like, casserole style potatoes, but it's got, like, hash browns, mushroom soup, sour cream, cheese, and cheddar cheese. Like, it's this it is this soupy, potatoey goodness. Well, it doesn't become soupy, but it's it's so good. It goes so well with ham, not diet at all, but very tasty. And so that's very much a tradition around our house and then leftover the next day, they're awesome pan fried the next day.
Scott:So she's doing that. If I have time, Easter and spring is always like you, Mike, it's when I start the smoker again. So traditionally, I always used to do an Easter dinner that was more southern. I would do like a smoked turkey with cornbread and sausage stuffing with and then I love doing like a succotash with it. And and then you get this amazing smoky gravy that goes awesome on the cornbread and sausage stuffing.
Scott:And then I you would would always make Mississippi mud pie. And it's this recipe that I found and you bake you you make like a a graham cracker crust, and then you bake a brownie inside that crust after you've done the crust and then you bake this brownie and then you fill it with pudding and whipped cream. And if you want to go actual authentic, have to use Cool Whip. But I usually use whipped cream but the Cool Whip is good too.
Mike:That's like my Thanksgiving. Our Thanksgiving is the smoked turkey and the cornbread and things like that. I also forgot to mention tortilla. We always have on special occasions, French my wife Like for Christmas? Yeah.
Mike:Christmas, New Year's, Easter. I that was one of the things I learned about their the French Gang culture is to me, like, that's just something like, I would eat that all the time if I could. They they they eat tortilla more on special occasions.
Scott:I love tortilla.
Mike:Wife makes it from her mother's recipe, and we make it all over the holidays when they're in the freezer. So we will have that as well.
Scott:Oh, cool. So like beef, shredded potato? No.
Mike:It it's well, you it's it's very contentious actually as to what should be in a tortilla. But she uses pork because they're they're part of Quebec and their family was actually in the pork farming industry. And so there's no there's no potato or anything. It's a pie. It's a meat pie with with a pastry crust and ground pork.
Mike:And then just seasonings, spices and seasonings. But it's Gravy
Finn:or anything on it?
Mike:I sometimes I used to put gravy on it. Again, this is a contentious issue across Quebecers as to what should or should not be. It's like pineapple on pizza kind kind of discussion or debate. My wife uses ketchup. Like, to her, it's impossible to eat it without ketchup.
Mike:Mhmm. Originally, I thought that was ridiculous, but I actually have grown to like it as well. But it is really good. Like, if you have it at Thanksgiving, it's really good with gravy, but the gravy can overpower it. Yeah.
Mike:So I like I actually just like to use a little bit of of hot sauce as a Oh, okay.
Finn:Yeah. That's that sounds good. Yeah. Nice. I have a potato problem.
Finn:Anytime anyone talks about potatoes, my mouth starts watering. The potatoes you were talking about, Scott, maybe maybe well, I was curious,
Mike:Finn, for a generational divide potential, I mean, you know, you have tremendous experience in the kitchen, but do you know what best of Bridge is? No. Okay. So that's that's the that's the generational divide that we Yeah. I know what it is and but it
Scott:back in the day, like, previous cookbooks.
Mike:It's a series of cookbooks. Like, where you turned down.
Finn:Is that when they were using, like, like, Campbell soup stuff? Like tuna casserole, Campbell soup, you know, you mix it in with that that kind of stuff like nineteen eighties?
Mike:Could be. Yeah. Very Could be.
Scott:Is. Eighties. Very popular casserole era.
Finn:Yeah. The casserole era. I mean, great era. Nothing wrong with
Mike:that era. It's one of those it's like the almost like the Betty Crocker cookbook, like, in the seventies or eighties. You know, if you were learning to cook at home, like not professionally, like, Best of Bridge was a staple. Like, abs like, everyone had that book. Like, my mother had that book.
Mike:My grandmother had multiple of those books because those were the the go tos for sure. Like, how do you put a weeknight meal on the table and you don't know how to cook? Best of bridge.
Scott:Right. Cool. And there was a lot of really cool things that like I still use today, even though the internet and food network had food explode. I still use a lot of those things because they make just They're just really good staple. There's usually not a million ingredients.
Scott:Usually the recipe fits on one page of a cookbook. It's maybe two, but it's they're just they were awesome.
Mike:Yeah. It's almost a topic for another day. Like, we often talk about some of the really more intricate or or neat or unusual things that we cook because we all have great background experience. We're trying to talk about different things. There's also just great benefit in, like, home comfort food or weeknight meals.
Mike:Like, what's your best go to weeknight meal that's still awesome but doesn't take, you know, fancy ingredients or, you know, stopping at three different stores across the city to get specialty stuff, like just Campbell soup into this casserole or
Finn:Right. Whatnot. Yeah. Yeah. I'll have to think on that.
Finn:That's a good one. We should talk about that next time.
Mike:Yeah. Okay.
Scott:Let's table that for next time.
Finn:Cool. Something to look forward. Awesome. Cool.
Scott:Oh, yeah. Thanks, gentlemen. I think that was an awesome episode.
Mike:Actually, we should do one more shout out as part of the recording that we can mix back in in the editing, which is we we should acknowledge our our technical and executive producer, Ed Lobo, who Yes. We could not do this without because of the technical inabilities that certainly I have and the editing and keeping us going. So you you don't hear from him in the podcast, but Ed is our executive producer and technical producer extraordinaire.
Scott:You very much. Awesome. Okay.
Finn:Yes. Thank you, Ed.
Mike:K. See you later.
Scott:And this podcast is meant for entertainment and educational purposes only. It is not financial advice. And all the opinions that we express in this podcast are not necessarily the opinions of the companies that we work with or affiliated with. So bear with us while we discuss these topics and remember that financial and investing decisions are different for everyone and you should consult a financial professional or do your own research before doing anything for yourself.
Mike:Well said.
Scott:Thank you.
Mike:I also like to say, trust me, when I'm giving you financial advice, you will know it. Yes. It will be one on one and in person and it will be clear that this is financial advice. This is not.
Scott:You will know exactly what I'm talking about. Yeah.