‘On foreign soil’

As the price of oil bolted another 4% higher today, the odds of a rate hike in the States soared to 90.3%.

In other words, it’s happening. If the Fed blinked, Mr. Market would react. The bond guys would swoon. However, if rates are in fact increased, the increasingly unstable US president may do something rash. Yeah, again.

But, as mentioned here yesterday, we live in the bucolic Republic of Maple, where leaders never lie, folks are endlessly kind to each other and lambs lay with lions.

Seriously. We have major advantages, evident this Monday. High oil helps the economy since it’s our biggest export. As the Middle East grows flakier and facilities there are skanked, Canada shines as a stable, reliable, dependable source of American energy. Despite what the cowgirl says, we should be constantly reminding the Yanks of this. It’s leverage.

Also this morning comes decent news about inflation. Once again we’re coming in cooler than the States. At 3% there is no monthly increase and we remain within the Bank of Canada’s target range. Food price escalation has abated. Rents are up a tad, as are travel costs. And if you stripped out gasoline, overall inflation at 2.4% is, well, acceptable.

For most people, wages are outpacing the rise in living costs. StatsCan says employees over 55 saw gains of more than 5% and people aged 25 to 54 got an average raise of 4.5%. The kids (15 to 24) lagged at just 1.8%. But they have youth. Priceless. Stop whining.

What does this mean?

As mentioned on the weekend, while newbie house buyers in New York or Texas pay almost 7% for a mortgage, people here borrow at 4%. While the Fed hikes on Wednesday, our CB will likely stay on hold. While their leader drives allies and trading partners away, our guy is hosting a global summit in Toronto looking for another trillion in investment capital. We even saw the Con leader on American media in the last few days sound like a rational person.

“I will not criticize my prime minister on foreign soil,” PP told a US television audience.

Is he finally growing up? Has he discovered that Canada ain’t broken, after all?

Well, the Bay Street boys are convinced that the cost of money will be staying put at the next Bank of Canada setting, and maybe right through to the end of 2026 – despite what an unhinged Trump may do next.

“Given the recent move higher in global energy prices, it is possible that headline inflation accelerates slightly in the months ahead,” says CIBC Economics. “However, we still expect that the Bank will keep interest rates on hold, particularly if tariff and trade uncertainty is still clouding the economic outlook, with recent evidence suggesting that economic growth was slowing again even prior to the recent escalation in trade uncertainty and with core measures of inflation still fairly muted.”

Meanwhile economists at TD argue things look better for Canada than the bond market thought. More opinion that lines of credit and mortgages are staying in their current zone.

“Prior to today’s inflation reading, the 2-Year Government of Canada bond yield had risen over 40 basis points over the past month as markets moved to price in interest rate hikes from the Bank of Canada this year,” notes the bank. “We don’t think today’s inflation report supports this degree of tightening. Yes, core inflation is likely to move up in the coming months, but off a very low level, and is expected to remain with the BoC’s comfort zone. That is driven by our expectations for modest growth in Canada, as the economy continues to be weighed down by the uncertainty and tariffs on our exports to the U.S.”

Add into this mix the odds of more TACO. Hurting Canada is also hurting Republicans in many states that do huge biz with we beavers. With the midterm elections looming, Trump is getting desperate – as evidenced by the insane $5,000-per-adult bribe he offered last week if people vote red.

Nobody ever wins a trade war. Tariffs were never a good idea. They failed in the 19th Century. They are failing now. Carney is right to turn away, start dating other chicks and let nature take its course.

As for your portfolio, stay the course. Keep that exposure to Canadian equities, preferreds and REITs (35% in total) in place. Maintain your US equity (20%) and international (18%) positions. Plus the bonds and a smidgeon of cash.

Oh, and send PP a note. Such a good boy lately.

About the picture: “People send me pictures of their dogs, just because, like you, I appreciate them,” writes Pete.  “This is from Debra from Salmon Arm BC. I’ll keep you in pictures so you don’t have to post cats.”

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

Source: https://www.greaterfool.ca/2026/09/14/on-foreign-soil/