Hello and welcome to The Download. I'm your host, Dave Richardson, and we are joined, as we usually are this time of month, by Canada's hardest-working economist, Eric Lascelles. Eric, welcome to Jobs Friday, which we've delayed because Jobs Friday was Good Friday, so now we're doing it Easter Monday. Which I guess is better. I don't know. When I was growing up in Montreal, we actually used to get Easter Monday off instead of Good Friday, which I always found very odd. Quebec has now changed and now they get Good Friday off like most other places. But even here in the Azores, which is very highly religious, all the stores are open today on Easter Monday. So I guess that makes this an appropriate day to do everything.

Well, I have to say, this is the one holiday of the year where every single year someone needs to tell me if I'm getting the Friday or the Monday off. I'm incapable of remembering this fact from one year to the next. So I'm impressed. The statistical workers at the BLS out there pumping out this number. I guess it's critically important it goes on a Friday. I guess some overtime hours being earned there. But we did get the numbers.

But only in the US.

But only in the US. That's right. Often Canada goes a little later. Canada's will come, I guess, a couple days from when we're recording this. And we're hoping that number, by the way, is a positive because it was a big, big deep negative in the last month. And so not that the Canadian economy is in great shape, but I'd like to think it's not in the kind of freefall that that one single jittery month would've otherwise suggested. And I don't think that it is. But yeah, for the US, the headline was quite good, in fact. And so, let's revel in the fact that the US payrolls added 178,000 jobs. I'm trying to pick the right year here, it almost feels like it's 2023 or something like that in terms of we were awfully spoiled and used to those 150,000 to 200,000 kinds of months for a very long period. Obviously, this is no longer that era. That's actually quite a good number and in fact, normal. I was just doing the math, over the last 6 months, the average month has been plus 89,000, and actually, there have been certainly spells where it's been sort of sub-50,000, and so it's been slower in general, but of course, the twist, as we know, is that immigration slowed, and so actually, that hasn't been too bad. Even at that lower rate of growth until recently, you were still sitting on a roughly steady, reasonably decent unemployment rate. How did the March numbers change it? Well, again, big strong number, and the unemployment rate did come down. It came down a tenth officially, but actually kind of beneath the weeds, it was, I think 0.18% or something. And so it was actually a bit of a bigger unemployment rate drop. The thing to know, and the reason you shouldn't be too over the moon about this, is first of all, there was a strike the prior month that got resolved. And so that does make some of these numbers look a little bit better. There was a healthcare strike. The other thing is, and this is very peculiar, and I was just noticing this as I was studying the numbers when they did come out—because of course I'm working hard on Good Friday, Dave, as I should—and so actually, every second month of US payrolls over the last 10 months has been positive. This is a positive one. Every second month, the other months have been negative. And so we've just gone back and forth between quite good and not so good and back and forth. And again, everyone's gotten scared each time you've a negative month. In fact, last month was a big negative. It was minus 133,000, so everyone's gotten excited with the big positive. And probably we should be looking at a smooth version of this and be neither overly excited nor overly grim. Sorry, I said 89,000 per month over 6 months. That was the cumulative, pardon me. So we've been running more like 15,000 or so a month, which if anything is a little bit underwhelming given where the immigration and population growth is. But again, not devastating, and the bottom line is this unemployment rate has sat between about 4.1%, 4.2%, and 4.5% for months and months now. It is not showing a particular direction. That is a pretty decent unemployment rate by our definition. Again, it just fell actually from 4.4% to 4.3%. Obviously, some concerns then, you say, well, gee, there's this war, of course, that broke out in the last month, and the cost of living goes up and other things go down, and so that may yet do damage. In fact, you would think it should slow some things down. However, interestingly we track weekly jobless claims, and they very stubbornly keep clicking along at a very low 200,000-type number every week. And we just got the latest, which I think is for just about the final week in March. And so 4 weeks into the war and it's sort of unbudged. And so I would say so far, we're not getting a big negative hit right into the gut of the economy in the US right now.

Yeah, a lot of different commentary that I was reading and listening to over the weekend. As I look at it, there's not a lot of hiring, but also not a lot of firing. So, that's a nice balance there. Unemployment rate, of course, is higher than it was if you go back a couple of years. But 4.3% unemployment in the US is not a bad number. I often remind everyone, I'm of a little bit older vintage, and I go back to a time when I was at the University of Toronto studying economics, they said the lowest you'd ever see unemployment in the US is around 5%. That was the natural rate of unemployment back then. Clearly, things have gotten better in that direction. Of course, I wanted to look at how this might impact the Fed or give a signal around what's happening with inflation and economic growth. Eric's on every Jobs Friday, which is the first Friday of every month. We sometimes get delayed by a holiday as we did this time, but right in around that Jobs Friday. If you want to subscribe, click to subscribe or wherever you get your podcasts or subscribe on YouTube to watch us. But we've talked a lot on previous episodes, previous appearances by Eric, about the idea that if you don't have any population growth—population growth in Canada and the US was largely being driven by immigration—you clamp down on immigration and all of a sudden, you don't have a whole lot of job growth. I haven't heard anyone use this term, but I look at it, is this a Goldilocks jobs market where it's not too hot, not too cool? It's just ticking along, and it doesn't say anything about economic growth and it just kind of looks like the Fed can just sit back. Don't worry, we're going to get into all the other stuff that's going on in the world, which can throw all of this into a blender, so to speak. But it really looks like we seem to be in some kind of an odd equilibrium.

I think so. And maybe the reason you don't hear people use Goldilocks is people want to have their cake and eat it too. And so they'd love job creation to be super strong and unemployment low, and yet somehow magically inflation is also low, and the Fed can cut and all the things that really don't logically fit together. But there's always some grumble, I suppose. But I agree with you. We're seeing a steady unemployment rate. We're seeing an unemployment rate that I would describe as the modern-day NAIRU, that concept you mentioned, where maybe 4 to 4.5% is the old 5%. You're right. I think you mentioned earlier, we did spend some time below that. We were in the mid-3s there for a while. But I do think in retrospect that was unsustainably low. We were seeing some accelerating inflation, and it didn't prove sustainable. And so I suspect the Fed does look at this and again, in isolation—and we've given this foreshadowing of other things we need to talk about in a moment related to wars and oil and things—but in that context, this isn't screaming for any particular urgent action from the Fed. I didn't mention it, but wage growth was up another 0.2% month over month. A pretty modest to moderate number, nothing really to write home about there. No sign of surging inflation, at least from that side, if that was where the concern was. If you're feeling lazy, and I often do feel lazy and don't want to look at every single individual data point, I do like to look sometimes at Citibank that runs a nice data change index. In fact, I've got that on my screen right now. It's a modestly positive number. That would suggest that the economy, the economic data, if anything, over the last few months has gotten a little bit better, not a little bit worse, but hasn't changed in a major way.

Yeah, it's really quite amazing. This is a March number. We have the conflict in the Middle East that begins on February 28th. The last time we had you on, it was really just the beginning of it. And I guess at some point, you expect that the effect of this starts to creep into the economy and perhaps employers' confidence in where things are going. And of course, again, the risk of inflation, the risk of then higher interest rates, that kind of creeps in as well. Just the cost of doing business when the price of energy is higher and so many industries are energy intensive, you would think that that would creep in, but it certainly didn't in the March numbers. So, Eric, when you come into a conflict like this, and particularly in an area where there's an enormous amount of energy supply to the world, along with a number of other things, but really it's oil and gas coming through the Strait of Hormuz. I'm still working on my pronunciation on that one, Eric.

Sounds better than mine.

I may get it right by the end of the conflict, But you take 20% of the supply off the table, 20 to 25% of the supply, with a little bit creeping out here and there. Has this played out the way you would have expected, given this kind of an oil price shock?

Dave, don't forget about all the birthday parties and the helium shortage as well that's resulting. There's also some helium. I should say the helium is more for the electronics industry, for those who don't know, than the birthday party industry. But you're certainly right. The main focus, correctly, is on the flow of oil and natural gas liquids through the Strait of Hormuz. So is it playing out according to expectations? It is in the sense that a pinch on the supply of oil sends the oil price higher, and we can see it showing up in some inflation numbers now. And we're waiting on the growth figures, but we would assume that for most countries there will be a temporary hit to growth. And so in a very loose stylized sense, all of the standard channels are playing out, and we are seeing some confidence metrics fall, which could then feed into spending decisions. There's quite a number of channels at play. Of course in markets, risk assets are down, as you would logically expect. It gets a little interesting when you start talking about the price of gold. I would say it wasn't crystal clear going into this which way bond yields would choose to focus on and whether risk aversion would send yields lower or inflation thoughts and central bank thoughts would send them higher. Broadly speaking, I would say this is fairly textbook in terms of the response. A month ago, I've said some other things on some other forums, but I will admit, and the market felt similarly, that we were all hopeful this might be resolved by now. And so here it is a full month and a week in, and it's still possible it gets resolved quite quickly. You really can't say when a ceasefire gets agreed to, and we know there are proposals and counterproposals. It's not impossible this thing wraps up sooner than people think, but equally, it is dragging on. And I was just checking some of those online betting markets. They are actually quite wonderful for getting a very clear sense for what the market is thinking and just checking those. The active debate right now is if you're an optimist, you think this gets resolved, the war ends within 3 months of its start date, and so you're talking about by the end of May. If you're a pessimist, you think it takes longer than that. That's about where the 50/50 odds of timing are. We'll see. If pushed, I remain stubbornly a slight optimist, but let's not focus on that. It really could go either way. Instead, it's worth recognizing, well this is lasting a bit longer, and so we do need to start to think a little bit about some of the second-order effects and the risk of things getting a bit sticky. For instance, I think the consensus, whether it takes 5 months to resolve this or it takes a month and a week if we're super lucky and it all gets fixed tomorrow, which is less likely, it's probably a temporary shock. We don't think this is a new permanent oil at $110 a barrel forever. We think it reverses, and so a lot of the damage gets to unwind, but the question is, how long does it last? And then you start to see some other consequences that are harder to reverse.

So, Eric, just explaining again how this creeps out into an economy. Let's stay with a shorter-term conflict. And where you've got this energy spike, if you look at the monthly oil futures. So those markets are telling you where it thinks the price of oil is going to be each month in the future. And by the time you get to December, January, the futures are pricing oil at around $70. I haven't checked just in the last few minutes, but it's around $70 a barrel. So in that case, the markets are expecting, as you suggested, a conflict that goes on a little bit more, but ultimately ends and then produces more of a shock than a sustained period of higher energy prices. We've talked about natural disasters where you get a storm comes into an area, destroys everything, hurts the economy in the short term, but ends up actually helping because afterwards you have all this additional building and rebuilding that happens post-disaster. Is that what happens here where in the short term, people clamp up a little bit? I go to the corner gas station and the price of gas is up. And that filters through everything, potential near-term. If you have supply shortages, prices go up in certain areas. But again, if it's short-term, it comes back later, I'm back to normal, and then I just kind of carry on as if it was the way it was before. Or is a little more complex than that?

Yeah, I think there is a lot of that temporary natural disaster sort of parallel, and then it depends how long it lasts and whether we need to start to factor in other things. So maybe the one difference versus a natural disaster is when we talk about the rebound after, some of it is just, hey, I was sheltering in my house for a week and now I'm back to work. Some is, I need to build a new house. Now, there's no build a new house here, broadly speaking. There is the get back to normal. So, for instance we're starting to see the effect of higher oil just on inflation, as you would expect. And I should say, through the channel of energy prices, of the direct effect, because there's some indirect things to think about, too. But the direct effect, the European inflation print did come out for March, and we did see a pretty notable jump. That was to be expected. And indeed, Asia and Europe are probably the most affected because the natural gas price side has been especially relevant for them. And even the oil side's a bit more consequential versus North America, which is not unaffected. And I can say that as I filled up a gas tank, triple-digit price there just yesterday. But it's actually affecting North Americans much less, certainly in the natural gas space, also in the oil space. And even we think about the price of oil, but actually just the availability is limited in some places. You can say, I'm willing to pay so much a gallon or liter per gas, and you can't necessarily get that in Vietnam right now. There are some additional consequences. We can see it in the inflation. We look at real-time inflation metrics too, and so even for the likes of the US, we can see CPI is going to jump by a good percentage point when we get that number out. In Europe and Asia, maybe it's a percentage point and a half when all is said and done, presuming the current oil prices prevail for a period of time. But as you say, to the extent we get a resolution a few months from now, you should expect not just prices to stop rising, but of course, we should have a month where prices fall by a percentage point or maybe spread over a few months, but that sort of idea. And so actually, we tend to focus these days on forecasting Q4 over Q4 inflation. So technically, we're actually forecasting what will the price level be October through December of this year versus last year. Still up for debate whether we need to significantly increase our forecast, because if you think the war is resolved by then, which is pretty far away, and takes longer, I think, for oil prices to settle, but as per that forward curve that you mentioned, it's still not clear how much extra we should price in if you think this is a temporary shock. Now, I think where it could get tricky is if instead we start to get that longer scenario, and it already is, but then transportation costs, of course, have gone up, and maybe the price of an apple has to go up to reflect that, and maybe it's harder to unwind that price increase later. It's just a little bit more removed from the gas pump itself. I don't think we're seeing too much of that. In fact, we've had a few anecdotes on the ground where, for the most part, people are eating that transportation cost for now. But I would say classically, if you start to see an oil shock that lasts for 6 months or something like that, that's when you start to much more significantly see it impacting other things. And even if it goes away in the 7th month, it's a little bit harder to put the genie back in the bottle in terms of getting prices down, particularly for other products that are less directly visible. And maybe similarly, I didn't mention the economy, but of course economic demand is also a bit softer when people are feeling poorer. That shows up too. We've seen consumer confidence hit for sure, though I would equally warn that consumer confidence is one of the least useful guides to consumer behavior, unfortunately. It's a great frustration to us all, but you would think that people would behave a bit more cautiously for a period of time. I will say this—and Dave, I'll stop soon because I'm talking too long—but when we run our models, which are simpler than they should be, it would say, yes, there is a hit to economic demand around the world—and this is if it's a permanent shock, and we're certainly hopeful it's not—on the order, the most adversely affected countries could lose a percentage point of economic growth or a bit more, which isn't nothing if you're talking Japan or the eurozone where they're only growing at 1.5% anyways. There is a real temporary diminishment there for sure. Interestingly, if you're talking North America—and it certainly varies enormously by sector, and I will never claim the consumer is going to celebrate high oil or anything—but our models would say, actually, the implication for the US economy is around neutral or flat. It would claim the Canadian economy should run a little faster because Canada is such a powerhouse oil and energy exporter. Now, within that, you're going to see consumers not feeling so good and manufacturers not feeling so good and energy producers feeling incredible. And so we're pretending we can all even that out and say, hey, look, it's a good thing, but it's not good for everyone. But at a bare minimum, I would say it's surprisingly nuanced. Now, those models, they are simplistic. They're also very complicated. I think there's 30,000 equations models, Dave, so I maybe shouldn't play up the simplistic side too much. But equally, they don't understand all of the nuance to this, and they don't know what the Strait of Hormuz is, and they don't realize this thing could be temporary and so on. And of course, what those models aren't assuming either is, well, we have seen the stock market go down a bit, and so maybe stock market wealth effects are now a bit less friendly to spending than they were. Somewhat unconventionally, interest rates have gone up, and so mortgage rates are a little bit higher than they were. So there is some damage trickling in from other channels such that I haven't quite gone and radically revised up my Canadian growth forecast, but it's worth recognizing at a minimum, there is more durability and resilience in North America than a lot of other places.

You've raised a lot of stuff there. Let's just pick it apart. I'm going to pick it apart in 3 different areas. The first one is the idea that this is a fairly quick conflict and then we actually get, dare I say it, transitory inflation because it's a transitory spike in energy prices. We came into the year with the expectation that the Fed was more likely to cut than raise rates, not a lot, maybe 1 or 2 times. I saw some forecasts as many as 3, but now that pushes that off, even in the sense of even a quick spike in energy prices that last 3 or 4 months. We're back down at 70, maybe even the high 60s for a barrel of oil by the time we get to the end of the year, early next year. It does put off any reductions in interest rate. Or could it happen so fast that you could still see that in the latter part of the year?

Yeah, it's a good question. I think it is right to say it puts off rate cuts. I do want to push back, and this, by the way, is very foolish on my part since if you're talking about markets and efficient markets, there's so many analysts covering one of the mega-cap stocks, it's probably a pretty efficient market. It's tough to get an edge in that particular space. It is very similar when you're talking about the Fed. There are tens of thousands of very smart people all analyzing it. You probably shouldn't spend too much time thinking you're sufficiently clever to say, a-ha, I predict the opposite. The opposite might happen, but not with great regularity. I would say, though, that you can't really get away with cutting when there's been this inflation spike, even if it's temporary and even if it probably goes away. You need a bit of proof it goes away. You also want a little bit of proof that we didn't get second-order effects. And so, unfortunately, that does slow everything down, even if there were to be a war that ended soon. I would stubbornly, and despite that caveat I gave, push back a little bit and say, I'll tell you what economic theory says, which is you're not supposed to be raising rates into a supply-side oil shock. I mean, it's not a function of excess demand, first of all, and so you're not trying to cool anything down, which is what rate hiking conventionally does. If you think it's temporary, well, it's temporary. You shouldn't be cooling the economy needlessly for something that should unwind at a later date. Now, I don't think this, but even if the worst-case scenario is so much energy infrastructure gets damaged that there isn't a rebound in production and a decline in prices later, even if somehow that's the scenario—which is not I don't think what's tracking right now—that still means you would have high inflation for one year and then the price level remains high, which of course none of us like. And this is one of the great frustrations coming out of the pandemic. But it's not high inflation after that first year. Actually, in theory, it's back to a normal rate of inflation, albeit higher. And that's not central banks' problem, believe it or not. They don't worry about that. And so meanwhile, the economy suffers in that scenario enduring damage. They are meant to. The models would say energy shock, you cut rates a bit more than hike. Now, the practicalities are that's not how they're thinking, and I suspect the models are again a bit simplistic, but I guess maybe I'm thinking more about in Europe and in the UK and so on, we had some significant extra rate hikes priced in. I'm not totally sold on that. Yeah, I think we're going to see a lot of sitting on hands in the near term. I'm still hopeful that with the resolution of a war and certainly acknowledging that there is set to be a new Fed chair who is in theory dovish and keen to prove his mettle there, that I still think there could be some cutting in the US a bit later in the year.

Yeah, I think what was interesting in terms of what the Fed officially said, which is Powell was out at his news conference after not raising or lowering rates at the last meeting, that they view this as a shock and that's not a time to be raising rates anyways. Then you want to see if there's any further damage done by extended periods of higher inflation due to higher oil prices. So then, let's flip it all the way over to the other side now, Eric, and we get into this where you've got those effects spill out into the broader economy. You have energy prices that remain high, maybe even go higher for longer. It looks a little bit more like the Russian invasion of Ukraine, where you started at a higher base for inflation, not as high as back then, but you still had inflation that some would argue was not completely under control. Then you get this energy spike, which goes on for several months. And again, maybe we get up to $120, $130, $140 a barrel, and that's where that demand destruction comes in. And how long would this have to last and what would it have to look like for us to have a recession out of this?

Yeah, that's the question. You do look at historical recessions and it's not unusual for there to be an energy shock component to it. Though I should say, I do think that some of that is overstated. For instance, did oil prices spike in 2008? They did. That wasn't really the main driver of the subsequent recession. It was a financial crisis, and the things did fit together a little bit, but we have to be a little bit careful with that. So I'm certainly with you that if things go in the wrong direction here and oil is rising, not falling, and the war isn't resolved, the recession risk goes up. We've got one very simple—that's my phrase on this call, I guess—forward-looking recession model for the US, which maybe isn't perfect since the greater risk would be Europe or Japan, but for the US, it has said, listen, the recession risk over the next year has gone up over the last month. It factors in oil prices, credit spreads, stock market, jobless claims, some other things. So a mix of market and macro forces, but critically oil prices. And it says the recession risk was really low going into this. It was sitting at 5-6%. Right now, it's saying the recession risk is around 12%, so doubled would be one way of framing it. Still saying fairly low. Now, let the record show that I've always thought that's a little low. I think the risk is probably higher than that. I don't think it's 50%. I didn't check some of the betting markets today, but when I did check late last week, they were sitting on 35%-type risks over the next year, which I might say the real risks for the US is a little bit lower than that. It's kind of in between those two numbers perhaps, but notable and up 10 or 15 percentage points from before the war. That's probably the right way to think about it now. I don't think it's a certainty though that even an enduring oil shock is equal to a recession. Let me maybe mention two critical thoughts. The important one is just that the intensity of orientation of the economy towards oil and energy is down. Versus the '70s, and that was the two big bad ones. I'm forgetting the exact number, but each unit of economic output needs about 62% less oil to function. That is to say that there's 62% less problems when you have an oil shock of a of similar magnitude. It's just the service sector of the economy is so much bigger and just does not lean on energy or oil to the same extent. The exposure is much diminished. You need a bigger shock to achieve that really bad outcome is, I think, the big point. You mentioned the war in Ukraine. In a bad scenario where oil goes up to $120 and sticks around for a number of months, that is sort of the 2022 Ukraine war scenario. Do note this though, I've seen a lot of analysis saying, okay, it wasn't so great and central banks were hiking rates and inflation was so high, it was really bad, markets were unhappy. I mean, 2022 was not a happy year. But keep in mind, most of that was not oil prices or the war in Ukraine. The oil prices sent inflation up a percentage point and a half. Inflation was 9% in the US, it was 10% in the UK. And so that was more of the post-pandemic rebound and supply chain constraints and all those sorts of things, which are totally separate. That was very much more the driver for why central banks were raising rates. The aggressive hiking from 0 to 4 or 5.5%, that was what would create suddenly this very high recession risk and the bear market. So we're only dealing with, at worst, one of about three things that were happening in 2022. And so it's a useful parallel, but it's an imperfect one, I think.

Yeah, and that's what I really wanted to draw on is just that idea that you can go back and history can be a guide for the way things play out through different economic circumstance, but then you have to come forward to where you're actually sitting in the present and make the adjustments for that. For example, I'm a child of the '60s. I was born in the '60s. I grew up in the '70s. I very much remember the oil crisis in the early 1970s in Canada. I remember the car that we were driving. We got about 5 or 6 miles to the gallon, where a typical car today, even what we view as a gas guzzler, is getting in the 25, 30 miles per gallon range. So this is a completely different set of circumstances. We didn't produce a whole lot of oil in North America at that time. That's obviously different. And then again, there's been moves to move away from carbon to begin with, which means we have other energy sources. And so there's all kinds of reasons why this looks a lot different from that. And then certainly, in 2022, we're at the back end of a global pandemic where we locked ourselves in our houses for several months and the global economy was shut down. And then we reopened it after spending trillions of dollars and cutting interest rates down to zero. We're not really in the same space there. The likelihood that that happens. I think a couple of the things that I'm watching, Eric. I get up and I watch the 10-year US Treasury yield, which is up a little bit from the start of the conflict, but has stayed incredibly tame through this. And if markets were expecting or seeing a significant chance of a recession, you'd likely see more of a pullback than we've seen in stock markets around the world at this point. We're not saying it's impossible for that to happen, but you would have to go well beyond this and well beyond, I think, at this point, most people's expectations of where this conflict goes.

Yeah, I think that's right. It's all very real and very serious, and markets are right to focus on it, but not an automatic recession, that's for sure. Again, it's back to the, as long as this is a temporary shock—and the point is not to now engage in military strategy and debate here, Dave; I suspect that's not where you're hoping to take this—but the ceasefires can happen for any number of motivations. Overwhelming victories are not completely out of the cards either. There's a number of ways this could go. As we're recording this, I was reading a fascinating article, and we track the number of ships transiting the Strait of Hormuz every day. And actually notably, it is up a little bit in the last couple of days. It's a tricky business where I gather ships are paying money to Iran and no one quite likes the ideas behind that. But I just read Pakistan's been given a quota of 20 ships to come through. They don't even have 20 ships, so they're looking at lending that to others. And we've seen a French ship through and apparently Iran has said that brotherly Iraq is allowed to send ships through. And so the worst of the pinch may even be starting to abate a little bit right now.

Yeah, and right around this time last year, we had Liberation Day. The day after we're taping this podcast, we have power plants and bridges day, apparently, in Iran, if we don't get a resolution. So by the time we have this posted, we could be in a completely different scenario, and all of this discussion is moot. But hopefully, that's not the case. Finally, just one last topic, Eric, because I do like to bring it back to Canada. We've talked a lot over the episodes the last several years, the underperformance of the Canadian economy, that we just can't seem to get the economy moving at the same level as what we've seen in the US. Fortunately, for the last 18 months or so, the Canadian stock market has actually outperformed the US, which is in some ways a little bit of a sign of maybe good things to come. But I was in Saskatchewan last week and I was out with a bunch of investors from the north end right down to the south end. And we've talked of the shortages, one being oil and gas, of course, fertilizer and tons of potash out there in Saskatchewan, a whole bunch of uranium if you want a different source power from nuclear power. And if you're worried about your kids' balloons, Eric, they got a ton of helium in Saskatchewan too. I don't know if you knew that. All kinds of helium in Saskatchewan.

I don't even know where helium comes from. Is it from a rock? Is there a gas bubble? I need to look these things up, I guess. Probably not the latter, as I think of it.

Well, there is a lot of helium in Saskatchewan in Canada, and for that matter, there's a lot of the stuff that everybody needs all around the world here in Canada. Hopefully a quick conflict, is this not just a bat signal out into the sky from Canada? Maybe it's not a bat signal, it's a big maple leaf signal out into the sky. Come to Canada, we've got what you need. And is this not, hopefully, a turning point for Canada and where the Canadian economy can go as people realize, hey, if I really need to get helium or fertilizer or oil or gas, geez, there's that friendly country of very, very happy, friendly, polite people that don't have a lot of conflicts, not a whole lot of issues there, and they got a bunch of good stuff that we could use. Am I being too optimistic that this is how this might play out in the end?

I am equally hopeful. Let me do the two-handed economist shtick for a moment. I'm cautious in the very near term just because, well, listen, for one, there is this war, there's uncertainty, there's a degree of risk aversion. Hopefully, that gets resolved within the next few months. The USMCA isn't quite settled. We do need to get that trade deal settled, and it's not quite clear if that's now going to be a 2026 proposition or a 2027. There are some uncertainties that I think are hanging a little bit over the big checks being written to really get going on all those fronts. I'm totally in agreement. I think those two things are temporary impediments, and I think as we look beyond those—and hopefully, we're all investing with medium-term and long-term time horizons—I think that's quite right. I've just finished an 11-city institutional client tour, and I shared that with my fellow economist Josh Nye, and we were presenting on the changing global order, which could not have been better timed. We proposed that back in October, and lots of Iran talk, but lots of talk about other things. And it's a more dangerous world. It's a power-based order. It's a multipolar world. All sorts of swirling implications, not all of them good. In fact, many of them negative. But one of the takeaways we kept flagging, particularly for Canada, is the world now cares more about resource security. Whether that's energy or food or other resources, it is a greater priority than it was, and Canada is very well positioned. We looked from a Canadian perspective and said, well it's still a tricky time to be a neighbor of the US and it's a tricky time to be a medium power, not a great power, but when push comes to shove, Canadian exports are set to be in high demand. And you're hopeful that a fortress North America concept does emerge. It was always the logical thing. As the U.S. prioritizes the Western Hemisphere, hopefully we can get to a point where why would you tariff, and you should be leaning on Canada for those resources and maybe Mexico for the cheap labor. And the U.S. leading the way on innovation perhaps but others contributing as well. Yeah, I do think Canada has a lot of options there and it seems like there's been an attitudinal shift at the policy level as well to help to make this kind of thing happen. I think that's quite important and boy, if we can get any kind of transparency on whether U.S. markets will be fully and enduringly open to Canada, hopefully in the next 6 months plus, I would think we see a real surge in activity there. That's what we're hoping and indeed, probably the best argument as to why Canada does look, as you say, pretty good over a longer period of time.

Yeah, and then hopefully, we can do it on our terms as we've traditionally done it to keep what is Canadian Canadian in the way that we do things, which is a little different from our friends south of the border. That's why we love Canada. Yeah, I just got a real feeling being out West, that it is just that, hey, we've got all this stuff and maybe the world starts to look at us a little bit more. And so, we've got more to export than Saskatchewan seal skin bindings.

Right, Dave, I was in Regina 3 or 4 weeks ago. We're just hitting Saskatchewan every which way. Isn't that something?

There we go. Well, I wish I'd seen you, but Super Dave has many places to go, and so do you, because I know you're up reading reports again and doing what Canada's hardest-working economist would do. Eric, thanks for stopping in as you do every month. Again, we'll have to get you on in the middle of the month because I would like to dig into that Changing World Order presentation that you're doing and have a discussion about that, because that sounds really fascinating. You must be getting a huge response in Saskatchewan and everywhere else you're going across Canada.

Exactly. That's great. Well, thanks for having me, Dave. It's always a pleasure. Nice to talk to everybody.