1. Canada’s Economy: Stability or Just Dreadful Growth?
Here’s my thesis on the Canadian economy, just so we’re very clear.
The economy is going through the worst of it now, and the data will start to show up in a few months (later this year and early 2026). But overall, I think stability is coming within one or two quarters. Do we get robust growth? That’s debatable. I’m worried we’ll only see menial growth that feels like a dreadful economy.
Canada has a sentiment problem. Canada has a productivity problem. And Canada has a problem when it comes to trying new things. The country went too heavy on housing, and that bet only worked when rates were low. Now, even with lower rates, it’s hard to see housing having the same impact.
2. Stock Markets at All-Time Highs: Complacency Creeping In?
Markets are at all-time highs, the VIX is trending down, and it’s moving toward 2024 and 2019 lows. Why? Because everything is “awesome.” Earnings outlooks are robust. And why care about valuations when there aren’t any risks, right?
But here’s the bigger question: why do stocks keep making highs when the economy feels like it’s rolling over, global growth is stagnant, and earnings can’t keep this pace forever?
To me, this signals inflation could come back (value of money eroding). Though, I still think we’ll get a “head fake” making us feel inflation is done. Or maybe investors just don’t see anything else worth putting money into.
Whatever the reason, I believe the eventual hangover will be worse. Sure, markets can go higher. Bring on 10,000 S&P 500. But remember—sanity always returns. Don’t get complacent.
3. Gold Holding the Line, Miners Catching Fire
Gold has once again moved above its 50-day moving average—the third time since June. Each time, gold dipped below for a few days and then bounced. Pretty clear that buyers are stepping in. It also signals ongoing fear of inflation and systemic risks.
Still, gold is trading sideways without clear near-term direction. Levels to watch: $3,450 on the upside and $3,300–$3,250 on the downside. A break in either direction could trigger a bigger move and establish a trend.
Meanwhile, miners are catching a bid. Gold is up ~27%, while GDX is up ~72%. This is something I’ve highlighted before—miners need consistently higher prices to generate higher profits. With gold holding up for a while now, investors are rushing back into miners. (Same logic applies to oil producers… short-term spikes mean nothing without consistency.)
4. Brewing Trouble: Could a Sovereign Debt Crisis Hit?
Here’s an idea worth exploring: could we see a sovereign debt crisis in the next 2–5 years—or sooner—in a major country? Could this be why investors are piling into stocks?
Take Japan, for example. Their 10-year bond yields just hit 1.6%—the highest since around 2006 (and before that, 2000). Why does it matter? Japan isn’t even raising rates; it pretty much can’t. Remember what happened when there was just talk of the Bank of Japan hiking not too long ago?
In the UK, the 30-year bond yield is at 5.55%, the highest since 1998. And that’s with the Bank of England cutting rates and fiscal conditions already in a mess.
In the U.S., fiscal conditions are deteriorating as well. There’s a reason why Trump keeps pushing for rate cuts. It’s less about his personal views and more about debt and deficits.
5. Bitcoin, Oil, and the Dollar at Key Levels
Bitcoin has dropped to $112K, slipping below its 50-day moving average. That $112K mark is a key level to watch.
OPEN stock looks like a classic pump… and eventually dump story. For now, the party goes on. Remember with GME, it was framed as “Wall Street vs. the average Joe”? This feels more like a combined effort. But is it really worth $80+?
Also, keep a close eye on headlines from the Russia/Ukraine conflict. They could push oil higher, but plenty of forces want to keep oil from spiking too much.
Finally, the U.S. Dollar Index sits at a key level. If it drops below 98, the uptrend brewing since July will fail.