The prelude

Lurking beneath this morning’s inflation stat (up to 3%, from 2.8%) was some interesting data on how real estate is making life more affordable. Yeah, seriously.

• In July rents were down 2.5% from last year. One economist called this a “crumble” – not crazy since it was the weakest reading for lease costs in five years.
• Mortgage interest is also fading. Loan rates are not much changed from last summer, but borrowers find bankers are willing take more of a haircut on new loans and renewals.
• And the biggie is the value of property itself. This has been running in negative numbers for more than a year, and is down a further 2.1% in the latest reading.

“The deflationary pressure,” says economist Robert Kavcic, “could fade in the quarters ahead as home prices stabilize, but the broad weakness in rent and mortgage costs will persist.”

By the way, all the Bay Street dudes agree the latest inflation report will not – as in the US – lead to higher interest rates this year.

“Inflation is looking stable and well-behaved despite a bit of heat in July. We continue to see the Bank of Canada on hold for the remainder of the year,” says BMO economics.

“There’s no rush for the Bank of Canada to raise interest rates, and policymakers have plenty of time to assess oil price fluctuations, how the tariff situation plays out and whether the rebound in economic activity we are currently witnessing can be sustained,” says CIBC’s Andrew Grantham. He’s forecasting rates stay exactly where they are for about a year – until mid-2027. Stability. Imagine that.

“We aren’t too concerned that core inflation running slightly above 2% should spook the BoC into raising interest rates,” adds Leslie Preston, in RBC’s golden tower. “The BoC has noted that Canada continues to deal with the confidence shock of on-again-off-again tariff threats from the U.S., which given there is no deal as yet to avert the 50% tariffs set to come into effect on August 19th, remains a clear downside risk to Canada’s economy.”

Indeed. The tariff thing. Wednesday.

Nobody knows what the capricious and mercurial Trump will decree this week. On Friday the bets were on TACO. On Monday, nobody’s being too cocky. The fool may actually do it, slapping 50% duties on $28 billion of our stuff and dooming prairie honey bees.

The American administration is floundering. Iran is a mess. Trump’s interference in the midterm primary season is a mess (Hello, Ken Paxton). USA affordability is a mess. The toilets on the Abraham Lincoln broke. ICE is still out of control. The White House is burning through friends and allies fast. And America is slipping into unrepayable debt while all the current GDP growth is coming from the tech and AI sector – where rogue agents have escaped their labs, fled onto the web and hacked companies on their own. Anyway, the Chinese are now close top matching what American artificial intelligence frontier labs are putting out, and doing it open source. That means they’ll probably win.

In short, Trump is nuts. The economy he runs is somewhat at risk due to this over-reliance on one sector while his 19th Century tariffs hurt households, consumer confidence, international trade, American prestige and influence and threaten to turn inflation into global deflation.

That’s the theory and the fear. The reality ius closer to home. Big tariffs on Canada on Wednesday. Knowing Trump they could be short-lived. Or not. The evidence of his mental instability seems to grow weekly. He just threatened to “bomb the shit out of Oman.” That country is an American ally and hosts its military.

So it’ll be an interesting week. In fact, the remainder of 2026 will be a riot.

Stay invested. Stay calm. Remain focussed on the big life goals – retirement, educating kids, buying a home, having a family, getting a third dog – and not the weekly, monthly or quarterly market gyrations. If there’s a storm coming (likely) ignore it. Never sell into one. Don’t try to time to market. Don’t be a cowboy. Be diversified and balanced. Stuff your tax shelters. And stay married.

Oh, and back to the bees. They have four lessons for us

Stick close to your honey. Create a buzz wherever you go. Mind your own beeswax. And sting when necessary.

About the picture: “Hope you, Dorothy and Cody are keeping well and staying safe,” writes Heather in Sueey. “If ever you’re running low on dog photos for your blog, please feel free to use this throwback photo of our beloved dog, Afrika, seen here frolicking in the dunes in the California desert, where we used to spend our winters. Not any more, though! Love your free, daily blog. Every day I tune in to learn something new and get my dog fix.”

To be in touch or send a picture of your beast, email to ‘[email protected]’.

Source: https://www.greaterfool.ca/2026/08/17/the-prelude-5/