Hello and welcome to The Download. I'm your host, Dave Richardson, and it is Jobs Friday, except it's Thursday. And we'll explain why with Canada's hardest working economist, chief economist at RBC Global Asset Management, Eric Lascelles. Eric, always great to see you. And before we get into the economics, there is a lot of stuff going on. Blue Jays are in first place. I know baseball is close to your heart. And since basically everything you touch turns to gold, where were you last night?

I was at the Blue Jay's game. Let the record show, for those who know the Rogers Center, in the 500 levels, it was not the most exciting of seats. But nevertheless, on that game, if they had won, they would be in first place. They did win. They are tied for first place with the Yankees who they beat. And we'll see if they can hang on to that in the final game of that series. I gather that's tonight. But I will say this, they were winning 8-0 after the first inning, and it seemed to be done. And so our hearts did sink somewhat by the eighth inning when suddenly it was 8-8 after an Aaron Judge home run. So that was not ideal, but they did pull through in the end. I think they won 10-8. But anyways, they did win in the end. So how about that?

Yes. While you were experiencing the thrill of victory, I was experiencing the thrill of the Canadian health care system. As a start, the people in the Canadian health care system are unbelievable. The doctors, nurses, amazing. It's great that we have health care. So let's just state that. But it was 13 hours. But everyone's okay, so we'll say that, and we'll move on with everything that is okay in job land in the US, because tomorrow is July 4th. Friday is normally when the US would release their employment data, but they brought it forward today. I think Canada is pushing theirs next week with our holiday, but in the US, they got their report out today. And Eric Lascelles is a close observer of all things jobs reports.

What is it saying? These job numbers were not born on the 4th of July, Dave. They were born on July 3rd. There you go. I saw that movie about nine times in a row as a 13-year-old. This is a very foolish thing for a 13-year-old to be doing. I was a serious runner once upon a time, and our track club, I think, ill-advisedly participated in a 24-hour relay. And so there were eight of us kids running for 24 hours. At one point, everybody was running. And they had a little tent showing one movie. And I seem to recall it was just that movie over and over again. So in any event, neither here nor there. We won. We beat an RCMP team, a Mounties team. So I guess that was the small consolation. But the US payrolls, they also beat something. They beat the consensus. So pretty decent looking. I'll temper it in a moment. There were a couple of little holes, but overall, you would say it was a good-looking report. What do you know, 147,000 jobs created in the US in the month of June. The consensus had been 106,000. So that was a pretty significant beat. I guess we were waiting with bated breath, you could say, because yesterday the ADP came out. So the ADP is a private sector equivalent. It was minus 33,000. We all thought, is this the moment when job creation vanishes? And so the answer is not at all. Often these reports in recent months have been undermined by downward revisions that make the number look good, and then it's not so good once you think about all the jobs that actually hadn't been created in earlier months that we had thought had been. That wasn't the case this time. So 16,000 upward revision jobs to the prior two months. So that wasn't a problem. The unemployment rate looked good. It went from 4.2 down to 4.1%. The consensus had been it would do the opposite, go from 4.2 to 4.3%. So this is a materially better spot, though, as is often the case when the unemployment rate moves around, there's also some labor force participation rate decline that muddies it a bit. But still, we're still in a low 4% unemployment rate range, which we have described as an economy that's pretty close to full employment, which is what you want. So I would say the conclusion is a pretty good report. Even the household survey, the other number that gets less attention and just really bounces around, was actually pretty similar. It was up 93,000. It looked fine. For the pessimists, for those looking for a cloud around the silver lining, I guess you could say the private sector hiring was only 74,000, actually a little bit less than expected. I think it was the education sector to the rescue and some other things. So corporations aren't going crazy right now. Aggregate weekly hours worked, which tend to swing a bit, were down as opposed to up. So you could say more workers, less work being done. That is in theory controlling for summer holidays and things like that. So it wasn't a perfect report, but overall, I would say, it looked fine. It very much pushes back the idea that the US economy is in big trouble. You could still maybe say there's a slight deceleration afoot when you look beyond the job numbers—happy to get into that, if you like—but I would say these numbers held up and would suggest there wasn't a collapse in June.

Yeah, and I think that's an important point, especially given that ADP report, which comes out usually the Wednesday in front of the jobs number—usually Friday, but this week, Thursday—it was a very weak number, and against much higher expectations. Not just that it was a negative number, which got some people concerned about this job number this morning. Then once again, we see the number come in okay. As you say, it's not spectacular, but good solid number with the holes that you'd poke in it as you just did. But there's a lot going on beneath the surface when we look at the US economy. We've got the beautifully named «big beautiful bill». I actually worked with big beautiful Bill several years ago, and yeah, he was a very solid coworker. But this is different. This is a massive package which is working through Congress. It's gone through the Senate. We're taping this at 10:00 AM on Thursday, July 3rd. We're just waiting for news that the House of Representatives in the US, the two chambers of Congress, they both have to pass the bill, the same bill. And then it goes to the President for signature. The President wants it in keeping with his July 4th holiday. When he signs it into law, then it becomes official government policy and law. He wants to do it on July 4th. Symbolic. That big, beautiful bill has a whole bunch of stuff in it. Yesterday, we got a deal on tariffs with Vietnam. We've got the July 9th deadline for the negotiation of trade deals all around the world. Of course, we had another hiccup in our own trade war or trade battle or negotiation with the US just this past week. All that will tee up Eric now for a 25-minute run, without taking a breath. Change your podcast speed to half speed. Eric, how do you pull all this together in a way that investors can think about this with respect to their portfolio and where the economy actually goes from here?

I sometimes listen to a French news podcast to work on my French skills at three quarters speed. Half speed, I'm not sure what that means. That's not a good thing if I'm talking that fast. Gee, you've certainly teed me up, though. Was I supposed to be keeping notes? There were about nine things in there. You'll have to refresh me on a couple of them. So let's start with that budget bill. As you say, it is looking as though it may actually pull off this July 4th deadline. I think we had thought it could slip further. And really the only thing that ultimately mattered was it got done before sometime in August when the debt ceiling would be hit. So a bonus if it happens earlier as opposed to later. There is a lot going on in there. It remains to be seen exactly how the House and the Senate reconciling the slight differences in the two packages that they've both proposed. But there are obviously some pretty massive common themes here. One would be tax cuts. And as much as a lot of the tax cuts are just extending existing tax cuts—so there's no real economic boost from that, it's more avoiding an economic drag—but there are some real tax cut bits to it as well. And tip income is tax exempt and over time is treated preferentially and some other things like that. There are other elements just focusing on the pro-growth side of things. There are elements that encourage capital expenditures back to the 100% depreciation, which is a pretty big deal as well. There is more spending in certain domains, and so military spending and border security spending, most prominently. Controversially, on the other hand, some of this is paid for via spending cuts elsewhere. And so Medicaid and food stamps are both getting trimmed to some extent. So obviously, fairly controversial, not areas that normally get touched with much regularity. And so that's in the mix as well. On the net, it looks as though this is being scored at increasing the US deficit cumulatively over the next decade by, I think, a little over $3 trillion is the current estimate. For the fiscal hat, that would be a bigger deficit in debt. That has its own discussion. A steeper yield curve and term premiums and long-term yields don't get to fall as much as we'd otherwise like. Economist hat, though, is, hey, government spending is government spending or tax cuts are tax cuts. And so this is something of a boost to growth. And it does seem set to enhance 2026 growth. So most of this is a relevance to next year and beyond. Expiring tax cuts would have expired at the end of this year, and so now they don't. And so that's a 2026 benefit. And so, yeah, the US economy should move more quickly than otherwise on the basis of this budget bill. Maybe two other budget thoughts that I can think of, at least. One would be of relevance to Canadian and other international investors. It looks as though that section 899 did get removed somewhere along the way, unless I've missed a beat here. We'd all been a bit nervous that this withholding tax would effectively increase the tax rate on investments into the US. That looks not to be the case. And so I guess that's a win or avoiding a loss in any event. And then maybe the other thought, just to step back for a moment—unless you've got other budget bill thoughts, Dave—is just when we think about the Trump agenda, post-election, the story was, okay, there's some things that are growth negative—tariffs are growth negative, and less immigration is growth negative—and there are things that are growth positive. Tax cuts would be one, deregulation, another, extra animal spirits would be a third one. And we were trying to weigh how these would come in. Initially we thought maybe the tailwinds would outmuscle the headwinds. And then for a moment, it looked like the headwinds were going to massively outweigh the tailwinds when those tariffs were the only thing that anybody could think about. And we're back to a slightly more balanced place here where tariffs are still here and they are set to hurt. We'll talk about that, I'm sure, in a moment. And I wouldn't want to underestimate that. I even think that that could still be the dominant theme and creating a net slight drag. But I think it's worth stepping back and saying, okay, let's not forget there are some tax cuts here and there, and some deregulation that is happening and that is coming. I was very stubborn in insisting there would still be a positive animal spirits effect. And stock markets are not far from all-time highs. And so there is an animal spirits effect, it would appear. So there are some tailwinds that go along with those headwinds is the takeaway. And we're being reminded of that recently. And I think that's partially why markets are feeling pretty good again.

So for the folks who are listening who have gray hair like me, they may remember this smacks in some ways of reaganomics. The military spending and the idea—and we touched on this last week, but I wanted to go a little bit deeper on it the last time you were here—of the Laffer curve, which is the idea that actually by reducing tax rates, and particularly tax rates on the wealthy, you get the trickle-down economics, and fewer people, in a sense, try to avoid taxes. You stimulate economic growth. And contrary or counterintuitively, you actually lower taxes yet raise government revenue to address the deficit and debt that you have. We know that the US has a significant debt problem. In fact, for those of us who are older and who need income, perhaps from the bond market, or we're concerned about rising prices during our retirement and inflation, the deficit and the debt getting under control, that's the big risk out there for both stock and bond markets. So where do you fall on the Laffer curve and the idea that when you actually cut taxes, you can raise tax revenue? Is there any evidence to that?

I think in certain niche cases, yes, but I'd be surprised if this was one of those cases. Don't get me wrong. Tax cuts, we are budgeting for more economic growth from them. It's a fiscal stimulus. So I wouldn't want to quibble with that side. You're certainly right in saying that any decision to deliver a fiscal stimulus does need to be weighed against the potential fiscal risks and the cost of servicing debt and those sorts of things. But you might mount a slight criticism that's probably not being done to the extent it might, just given how big the deficit is. Though equally, the US does have that special privilege of being able to borrow a whole lot before anyone really complains, as much as that's becoming maybe a bit less profound recently. The Laffer curve, the idea that tax revenue actually rises, it's certainly true if you go from 100% tax where no one's incented to work, to 99% tax, for sure. I mean, you can't collect no tax at 100 since no one's going to do anything, and you would at 99. So there are points on the curve, you could say, where that's certainly true. I would say if you're going from a pretty high tax rate to a somewhat less high tax rate, you could maybe squint your eyes and say maybe. I'm not sure the US is quite there right now. I would say they're going from a moderate rate to a lower rate. For sure, economic benefits and of course, for those who enjoy the lower tax rate. I'm not sure if the government actually is going to make more net revenue. Now, when we talk about revenue, though, it is worth mentioning. I mentioned, maybe unfairly, that this big, beautiful budget bill will potentially increase the US deficit cumulatively by over $3 trillion over the next decade, which is a lot of money, even for the US. Do note, though, that tariff revenue—and it depends where it lands and all sorts of uncertainties—but tariff revenue plausibly could be not that different than that. We had initially been thinking that it would fall somewhat short of matching that increase in costs, and it may not be that much short. And so that is a roundabout way of saying, if you were to factor in all these Trump policies in a broader context, maybe the deficit doesn't end up a whole lot bigger over the next decade, though it does still leave the fact that the deficit is pretty big right now and the debt load is pretty big right now, and any conventional approach would have been to do some fiscal trimming as opposed to the opposite at this juncture.

Yeah. And we should mention that back during the Reagan administration—it’s hard to believe, I remember the Reagan administration, it began 44 years ago—but I believe the top marginal tax rate, the top tax tier in the US, was at 70%. They took it from 70% down to around 28 or 29%. We're not talking about that a decrease here. We're not at the 70% range. And again, the Laffer curve relies on extremely high tax rates that people go out of their way to avoid. So you're right. That may not work the way quite the same.

Not to go off on this tangent too far, I may be speaking slightly out of turn here, but my recollection was in the era when the tax rates were really extraordinarily high, like 70% type numbers, I think the UK had a 95% at some point. You'll hear reference to a Beatles song, if I'm not mistaken. The bottom line is that there were also a fair number of exemptions that exist. You could twist your way around to avoid them. And so as the tax rate fell, they got rid of some of those exemptions in a way that also meant that it made for a more efficient tax system where you weren't having to call your accountant every second day. But it maybe wasn't quite the magic of more tax revenue related to that.

Yes. One of the things we're covering a lot here today, I recognize that, for those of you who haven't been on one of Eric's appearances, what Eric does such a spectacular job of doing, why we love him so much, is that he can break down these complex things that are going on in the global economy into terms that all of us can understand. Hi, mom, I know you're listening. It really allows you to take what's going on in the news—and you'll hear different interpretations in the news, and obviously, this is one interpretation as well—but it comes from a very clinical economic perspective. What Eric's role is to analyze the global economy and then bring it to the investment managers that he works with to lay out from an economic perspective what's happening in the economies that they're buying and selling stocks, buying and selling bonds, working with currency. So what Eric has to produce is an analysis that helps make good investment decisions. If we can do that and explain that to all of us in terms that we can understand, we can take those ideas and make better investment decisions as well. And that's what we're doing. So we're handling a lot here because there's a lot on the table, as there often is with the current president. So let's get to the final thing that has really been the top of the news. So this bill comes through. It's got some things in there that we've just discussed, but ultimately the tariffs are still kicking around in the background, and that's dominating the discussion around interest rates. It's dominating the discussion around inflation. It's dominating the discussion around employment and how businesses are making decisions around that. So where do we sit with the tariffs right now? We got a couple of deals. We got this deadline.

That's exactly right. So we're sitting at, I would say, a middling level of tariffs. That's, by the way, a meaningless word—middling—just because, of course, normally there's almost none. And so there's nothing ordinary about anything. It's hard to say what's high, what's low, what's medium when they're all high compared to what we're used to. But I would say in the context of possible outcomes, it's a middling medium level of tariffs right now. But as you say, there is this potential inflection point that's sitting not far in front of us. So July 9th is in theory when the reciprocal tariffs that were greatly reduced in early April are set to represent themselves unless the White House opts to do something else. No one quite knows. Of course, there's always this debate of what's a bluff and what's a negotiating strategy and what is just going to be outright policy. And so I guess there's a couple of things to say there. One would be, we've generally had the view that, well, the US probably does not want all those tariffs to rise, and it's just painful for the US as well. And so likely we won't see that. That would be a worst-case scenario. So probably not that. It's possible just the can gets kicked down the road and everybody gets three more months. And it was just logistically to negotiate 100 plus trade deals all in the span of 90 days. So it could be that. I'm inclined to think—and I guess we're seeing this play out a little bit—it may actually be three buckets of countries to some extent. You've got a bucket that strike deals, and we've seen the UK strike a deal. And I know Canada is hopeful, though the timeline they've set is a bit longer than July 9th. And there are murmurs that other regions might be in that position. Vietnam just struck a deal, which we'll get to in a moment. I think a lot, maybe the bulk of countries, are just going to get an extension. And if they're negotiating in good faith, that's what the White House has suggested they can expect to get. And so maybe they get until September to sort this all out. And so I think a lot of countries are that. And then we've generally thought—and I would say with less conviction—but you might get some countries do get hit, and they either haven't been negotiating with much enthusiasm or they are the countries that have the biggest trade surpluses with the US. And so some countries probably will see their tariff rates go up. That's been our reasonably neat and tidy assumptions without really feeling all that confident about our ability to put countries into one bucket or the other. But it probably plays out a bit like that. I will say it's just proving that any neat and tidy theory will never be precisely right. So Vietnam, as you mentioned earlier, did just strike a deal with the US. And so you're tempted to say, hey, they're in bucket A. They're in the bucket that managed to negotiate a deal, which I guess technically is true. However, we'd been thinking that they stood a high chance of being in bucket C, which is the bucket that would see higher tariffs. In a sense, they are in both buckets at the same time. I'm not sure if this is like Heisenberg's uncertainty principle—or I don't understand particle physics— but they struck a deal and the deal involves higher tariffs than they were paying before they got it, which is weird when you think about it. They were paying that baseline 10% rate that most countries are paying in the world right now, and their deal is that they will pay a 20% rate on almost everything and then a 40% on things that are essentially deemed to be transhipped from China and trying to work around China's own tariffs. I don't know. We have both a good news and a bad news story in there. But I guess maybe the point is we have the view that for the countries that have huge trade surpluses with the US—we're talking East Asia, Southeast Asia, obviously, China's in the mix, Vietnam's in the mix, you might say Thailand and Taiwan, and South Korea and some others—it's not unreasonable to think even if they strike a deal, that tariff rate is more likely to be up than down. And so, in fact, if anything, we're getting a bit of a flavor here. And so maybe the countries with the big trade surpluses get a Vietnam-like deal where their 10% becomes 20%. Maybe more developed countries in general that maybe don't have quite the same mismatch of competitiveness get a deal a bit more like the UK. And so the UK deal was keeping that baseline 10% rate, but with some carve-outs for certain critical sectors and with quota limitations and with some promises that you wouldn't incorporate China too deeply into your supply chain. And so, again, we now have two examples, and I would say that those are probably both pretty decent looking frameworks here. Without a ton of precision as to what July 9th looks like, I think over time we're going to see countries probably drift into one of those two buckets. And I guess for the Canadian viewers out there, Canada is a bit of a funny case just because, of course, it's A, trade oriented toward the US, and B, isn't paying the baseline 10% rate. So not obviously tracking precisely either of those two paths right now. It would look grim, as I think you alluded to for a moment for Canada, where a big threat was being made just about a week ago, and Canada backed down on its digital services tax. We always thought Canada would. It wasn't clear it would be exactly this way, but we always figured that was probably gone for one reason or another. And so it is gone. And that likely will appease the US to some extent. The US did then immediately pivot and say, we don't like the supply management either. So I wouldn't say we're through the difficult negotiation time. But at the end of the day, Canada suggested they think they can get to a deal within, at the time, 30 days, which I believe maps out to July 21st or thereabouts. And so I suspect maybe Canada gets an extension. And then working towards a deal, it's pretty clear that in terms of back channels and the Canadian government talking with key sector leaders within Canada, those sector leaders have been asked what tariff rate could you survive with? So it does seem as though there's some resignation that probably tariffs are not completely going away for Canada. And so there's likely a deal, but the deal will include some tariffs, probably not too high. And Canada is only paying an average 6% rate right now anyhow. So maybe not totally dissimilar to that has been our working assumption. Canada made the digital services tax concession. We will see on the supply management. It's awfully hard to read on that. And there was recent legislation you might have seen that actually banned Canada from making that concession. I'm not a legislative expert. I'm not quite sure how you can navigate that, but in any event, that complicates things. And then, conversely, probably making some military concessions or at least military commitments. Not just that commitment that NATO countries are making, which is where they're going to spend 5% of GDP on the military, which is a big number, having spent 1.5% or so in recent years. Really, it's 3.5% on military and 1.5% on infrastructure. So it's not quite as big a leap as it looks, but it's a big leap. And then the real question is, does Canada commit maybe to more US procurement, specifically, maybe the rest of those F-35s or something like that? Does Canada also commit, as has been rumored, to the US Golden Dome, which would be a North American missile defense system? That could incorporate bases or installations in Northern Canada, since missile threats largely come over the Arctic from the other side of the world. So it does sound as though a deal might be forthcoming, but equally, probably not a miracle deal for Canada that avoids concessions.

Vietnam is an interesting one. The similarity with Canada is that a significant portion of the economy in Vietnam is driven by goods that go to the US market. But it's a key in the supply chain, shifting the supply chain away from now what is more expensive in theory, manufacturing in China, to some less expensive regions in Southeast East Asia. Vietnam has been a big beneficiary of that. I think the test on this, though—and I just want to tie it quickly back to the US economy, and then we'll come back to Canada in a second—but the idea that thus far, even with these tariffs out there, we haven't seen that translate into inflation. On the President's side, the argument is, hey, these tariffs are there and we're not seeing any inflation. The job market is good—we said it's not good, it's okay. We could cut rates here. It's important because the US cutting rates helps us here in Canada as well. But take a country like Vietnam, 20% tariff—it could have been 50, could have been much higher—lots of the economy dependent on coming to the US. Some evidence that some of these countries thus far are eating the tariffs. Or was this what we were talking about three months ago, this inventory buildup, so people brought a bunch of goods in before the tariffs all hit. And now those are the things that are selling in stores and the retailer doesn't have to raise the price in theory because it's old inventory. But now the new inventory with the higher tariffs is going to come over, and now we're going to raise the price. How do you see this all coming together with this Vietnam example?

That's exactly right. And so there are a number of ways that the tariff effect can go. And so it can be the foreign producer who eats it, it can be the exchange rate, it can be wholesalers, retailers eating it via a lower profit margin, or it can be the consumer eating it. Of course, in practice, it tends to be some mix of those parties. Famously, during the first Trump term, it was disproportionately the US consumer that ended up eating that. So that's not a bad assumption for this time. I haven't seen a ton of evidence of foreign producers absorbing all that much. And so what we're actually tracking is US import prices. So this is very head scratching or it makes my head hurt to think about. But if we were seeing US import prices fall, that would be a sign of the tariffs and of the tariffs pushing price declines back to the foreign producer. The tariff gets leveled after the import price, if that makes sense. So bottom line is we really haven't seen too much there, I would say. Certainly not import prices falling in any profound way. So I would say not too much there. The exchange rate, of course, not at all. The US dollar is weaker, not stronger. The stronger part would have been absorbing the tariff effect. If anything, there's more to absorb, unfortunately, in terms of this currency effect on top of the tariff effect. And it's not trivial. It's a 10% drop in the currency. You can argue that's almost as profound as the tariff effect. So that's an extra amount to absorb. Equally, we haven't seen it in the consumer that much. And so that leaves for the moment two interpretations. One is what you presented, and I think it's very much true, which is there was some front loading and inventories were built and hedging occurred. And we've seen companies so far managed to avoid raising prices without themselves feeling pain either. So I think that's a fair chunk of it. And so that would be a but-there's-more-pain-later story. And then the other question, which we really haven't answered yet—and I guess so far we're not seeing too much of this—but it would just be whether we're actually seeing profit margins diminish. And is it the American companies absorbing some of it. And it's not an absurd proposition. And we've seen explicit pressure even from the White House on some big retailers: you better not raise your prices. I don't doubt there is some. I will say we're surprised it's taking this long for higher prices to show up. So highly fallible ourselves. So I'm not the final authority or voice of God on this subject by any means. I will still say we are expecting some increase in prices coming down the pipe. I can say that from a theoretical standpoint, that's how it worked last time. It's usually how a lot of this works out. When you look at the products differentiated, it makes sense. I'm not a corporate level analyst, but we have a lot of really smart people who do that here, and from what I'm hearing from them, the bigger retailers, be it the Walmart, Amazon, Costco, are suggesting they will be passing higher prices through, notably in July, August, September, the time frame they've talked about, gradually, but substantially. That would suggest we may see more coming. And then the other one is—and this is imprecise as well—but we look at some of this alternative daily inflation type data, and it's not exploding or anything. But when we look at products that are associated with China—furniture, electronics, recreational goods, etc.—the prices are definitely rising more quickly than we're used to. So we are assuming we get something, but I do want to put this into context, which is even if we get the full-bore effect that we've been assuming—so far we haven't, let the record show—even if we're getting that, we're talking about another percentage point on the level of prices. And so not to diminish that, but it's 3.5% inflation for a year instead of 2.5%, is what we're saying. We did live through 8 to 9% inflation a couple of years ago, and none of us want to go back to that. But it's not the same, I guess, is the point.

Yeah, and let's go to that. And just again, baseline, what I'm hoping this does and why we're digging into this. It's so important because you're going to have members of the Trump administration on TV, and they're going to be talking about this economic agenda and what they're looking for. And then you're going to hear people from the Fed, and you're going to hear others who are going to say, well, if you do this, this can happen, and we need to fight the deficit. And how it all comes together as you're watching the news in whatever way you consume it. So I just want to give you some tools through Eric to be able to say, okay, here's what I need to watch here. Here's how I can interpret that statement, because we really are, as we go through the second half of the year, with markets at all-time highs, with interest rates low, but the longer-term interest rates have not come down as much as you might have expected once you start to cut rates and the economy slows a little bit as it did in the first half of the year. How do you piece all this together and make decisions around investments? So we wanted to lay that groundwork. But one of the things that we've also got to point out as you talk about currency, is people miss currency. People don't watch it. I think Canadians watch the Canadian dollar versus US dollar conversion rate, but they don't often think about the US dollar versus the euro and things of that nature. But if we look at the US dollar against a basket of currency, so far this year, it is down nearly 12%. Now, if you look at the previous Trump administration, that was in the midst of what you would say one of the more powerful long-term bull markets or upward market in the value of the US dollar. Again, as you say, that is one of the ways you can absorb some of these tariffs. Instead of having that as a positive effect, this time it's going to be a negative effect. These are some of the things we have to keep watching, and we'll keep you abreast with Eric coming on every couple of weeks. Eric, just one last question then. We've got a pro-growth agenda. We've got interest rates that are likely not going to rise. At some point, we see them falling. Canada, hopefully, is going to get through the worst of any tariff scare. We're already seeing the Canadian market, particularly in Canadian dollars, which is the way most Canadians invest in Canada, and then they invest in the US. They've got to bring their dollars back into Canadian dollars. We've seen the Canadian dollar appreciate almost 10% from its bottom in February. The markets seem to be sensing that things might get a little bit better on the economic front here in Canada. As we piece all of this together, most of this looks on a relative level anyways like it's going to be good news.

I think there's some truth to that. The tariff blow is not as bad as feared. If anything, we're a bit surprised by the extent which the Canadian economy has shown tariff associated damage on that basis. And so I'm holding myself back until I see evidence to this to say there should be an acceleration to unwind the overreaction that maybe predated it. I certainly wouldn't want to underestimate the very real damage being suffered by three sectors of the economy that are facing tariffs right now and the potential for more. So it is tough to say, but at a minimum, we're very much in the camp that thinks there doesn't have to be a recession. I think we're slight optimists relative to the consensus in the market in that regard right now without expecting great success in the next couple of quarters. We are seeing government policy changes. Tax cuts are in now for Canada, and there is a real effort, it seems, to get the infrastructure investment and resource investment and military spending and some other things going. Not to suggest the government is the central driver of any economy, but it's a contributor. And so I guess as we look into 2026 and beyond, at least, we are feeling better about Canada. We think that there's a reasonably good story there.

Excellent. Well, that's a terrific way to end it. Just so listeners know, we teed up a bunch of podcasts over the next two, three weeks where we're going to be checking in with the investment managers from all over the world to check out what's going on in their markets, their outlook for the second half of the year and into 2026. We're starting to get a little bit more clarity around what's going to go on with the budget in the US. We're starting to see how Canada is reacting to that from a policy perspective. We're getting a little bit more clarity on tariffs, although I imagine there's going to be a cloud around that for a while. From an investment perspective, you're going to want to tune in because we're going to have people in markets all around the world operating virtually everywhere—emerging markets, Europe, Asia, everywhere—giving their thoughts on what happened in the first half and what they think is going to happen in the second half. A lot of these folks rely on the guidance and wisdom of Eric Lascelles. Eric, always great. We covered arguably way too much ground, so we'll try and do less the next time. Less may be more. But thanks for coming on today. I know how busy you are. Just great stuff.

For sure. My pleasure. Happy summer, everybody.