Canadians Getting Pessimistic
This morning, the Bank of Canada released its Business Outlook Survey and Survey of Consumer Expectations.
Businesses: They’re feeling a little less pressure. However, almost one-third of them are still expecting—or preparing for—a recession in the Canadian economy.
Consumers: They continue to be pessimistic. (This shouldn’t be shocking if you read these regularly. Canada has a massive sentiment problem these days—and rightfully so.)
Mind you: This survey is backward-looking. Tariff noise had calmed a bit in the second quarter. The Q3 Business Outlook Survey might tell a different story.
Economic Data
2. From an economic data perspective, it’s fairly boring until Thursday.
Overnight, we get European PMIs, followed early in the morning by the ECB’s rate announcement. Then, 15 minutes later, we get Canadian retail sales (I think this will be worth watching closely). At the same time, U.S. unemployment claims come out.
At 8:45 AM: ECB press conference.
At 9:45 AM: U.S. PMI.
At 10:00 AM: U.S. new home sales.
Tariffs
3. Over the weekend—and even last week—the narrative out of the Trump administration remains that August 1st is the hard deadline for tariffs.
Keep in mind what happened last time between February and April. The details were as clear as mud, which caused a lot of uncertainty and panic across the board.
Now, there are some actual details, and lower tariffs would be welcomed, I think. Markets seem to be climbing on that narrative right now.
But be very careful going into August through mid-October. We’re getting way too optimistic here. Don’t be shocked to see even a 10–15% move down within the next few months.
Silver Getting Set for a Big Move Up?
4. I’m keeping a close watch on silver—it’s really getting interesting.
Charts only: There was a solid re-test of the breakout, and it looks like buyers are stepping in.
Fundamentals: Silver has a lot of industrial use. The noise about “pressure in the physical markets” is great news for silver. The physical market for silver has been in a deficit for a while. If buyers come in to take delivery and potentially stock up, this thing can fly very quickly.
If silver can close above $40 this month, I won’t be shocked if we’re looking at $50—or even higher—by year-end. But time will tell. Also know: silver can drop just as hard too.
Forex & Crypto
5. The U.S. dollar is selling off a bit today. If you look at the dollar index, it’s almost like there were sell orders sitting right at the 50-day moving average. Will the dollar index fall below 96?
Interesting that the Canadian dollar isn’t budging. Is it signaling that higher rates are here for longer in Canada too? That’s a hard pill to swallow for leveraged Canadian consumers.
Bitcoin: There’s too much good news around crypto and bitcoin right now. That’s something to be cautious about. Too much good news usually shows up near major tops—not major bottoms. I’m not calling a top, but it’s just something to keep in mind.