Juggling Dynamite

After a year of projecting confidence in America’s “strong” and “resilient” economy, at his recent Jackson Hole appearance, Federal Reserve Chair Jerome Powell suddenly changed his tune. He expressed concern about the deteriorating labor market, saying the situation may warrant a resumption of monetary easing notwithstanding the potential inflationary risks of tariffs. This comes at a time when stocks are at nosebleed valuations levels, with the general public more exposed to them than at any time since the 2000 and 2007 bubble peaks. Are investors sleepwalking into an oncoming painful market correction here? To find out, we have the good fortune to welcome Danielle Park back to the program. 

Here is a direct video link.

It is wild and indefensible that insider trading by politicians remains rampant. Conflicts of interest queer policy and undermine faith and trust in institutions. And yet, will efforts to ban it ever get passed? Reasonable people hope.

Here is a direct video link.

Canada’s GDP for the second quarter contracted by 1.6% on an annualized basis, following a downwardly revised 2.0% expansion in the first quarter (Statistics Canada), resulting in a total annualized growth of 0.4% for the first six months of 2025.

The weakness was in line with Bank of Canada forecasts but significantly worse than the .60%  Q2 annualized drop the consensus was expecting.

Significant sources of weakness included a 7.5% decline in exports during the second quarter, the largest drop in five years, as well as a 0.6% contraction in business investment in machinery and equipment–the first such decline since the pandemic.

Residential investments rose 1.5% in the second quarter of 2025, driven by an increase in new construction (in blue below, starting from Q3 2022). Ownership transfer costs, which represent residential resale market activity, rose 1.0% in the second quarter (in red), recovering slightly from a 16.3% decline in the first quarter. Residential renovations declined 1.1% in the second quarter (light blue).

Early tracking suggests a flat-to-slightly negative estimate for Canada’s third-quarter GDP. The BoC estimated last month that Canada’s economy would grow by around 1% in the second half under the current tariff scenario.

Money markets increased the odds of a 25-basis-point cut from the Bank of Canada (lowering its policy rate to 2.5%) on September 17 to 48% from 40% before the GDP figures were released. The segment below offers further detail.

There is no escaping the Pringles can. While the Bank of Canada has been on hold with its rate cutting since March, Canadian GDP, payrolls and even the latest Canadian CPI figures leave no doubt. Plus, the globally synchronized implications will be heard in central bank deliberations worldwide. Here is a direct video link.