The reality of the Canadian economy — With Martin Pelletier

[00:00:00] Speaker 1: Welcome to The Really Big Show with Jim Chek and Ian Burns. I'm Jim Chek with Ian Burns and with us Martin Pelletier from the financial hub of Canada right now, the heartbeat of Canada really, Calgary or Alberta as we would say, an author investing through the storm. And welcome to the show. You've got a big, big following on X there. We follow you a lot. We use a lot of your stuff all the time, too. And really great to have [00:00:35] Martin Pelletier: you on The Really Big Show. It's fantastic that I'm finally on here. [00:00:42] Speaker 1: And the headline that we're running is the reality of the Canadian economy. And there's the narrative and just kind of like the headline of your book there that you're going to tell us a little bit later, right? Investing through the storm, because there's the narrative that's pushed out by mainstream media and the government. And then there's the reality of what's going on. And they're two different things, right? [00:01:08] Martin Pelletier: Yeah, it depends where you're located and what demographic profile you're at as a Canadian. So, for example, if you happen to be in Alberta, you're doing okay. And Alberta's energy contribution to the country has been significant. You can see the value of having access to Tidewater with the TMX and what that's done to help our trade and to help our GDP. GDP numbers came out last week and they were quite strong. It was quite impressive to see. Setting up for a robust second quarter analyzed growth rate of 3.5%. And that's well ahead of what the Bank of Canada is projecting at 2.5%. And you can thank energy for that. Energy has been a big contributor to it. Banking has also been quite strong thanks to, again, the demographic profile of spending and borrowing from older baby boomers, for example, that have benefited from their stock portfolios and housing prices. They're still spending money. Now, on the flip side, you have a lot of people that are suffering on Main Street who don't have access to, who are unbuffeted, for example, by the debasement that we've experienced in our currency over the last decade or so and didn't have assets to help offset that. So now everything is 30% locked in more expensive and they're really [00:02:26] Speaker 1: struggling. You bring up the currency and we've highlighted on this show a few times the Canadian currency looking extremely weak and it has been weakened over time, too. And then, you know, they have that purchasing power, especially when most commodities are purchased in U.S. dollars. What do you see for the Canadian currency going forward? [00:02:47] Martin Pelletier: Well, it would be a heck of a lot lower if we didn't have oil, thankfully. Now, if oil prices continue to correct here and you can finally believe Mr. Trump down south in regards to this start-and-go thing with the straighter Hermes, then, you know, we could see some further weakness. What is happening politically, and I've stated this over the last couple of weeks here, is the Bank of Canada has chosen to defend its bond market and to keep yields relatively low. And that's come at the expense of their currency. Countries around the world have to choose between their bond market or their currency market. In Japan, they're struggling on both ends, so they're getting help from the U.S. Here in Canada, we want to keep rates low. And if you look at the yield spread between our debt and government debt versus U.S. Treasuries, you're over 100 basis points of a discount in Canada. But that's come at the expense of our currency. Now, why would Carney want to have low interest rates? Well, he's spending like a banshee. It's a top-down driven budget. He's trying to spur growth, economic growth, and in a controlled fashion instead of removing regulations and let private industry go about it. And so he needs to finance that debt and he needs to do so to lower rates at the expense of the Canadian dollar. The Canadian dollar is going to lower. And for the average Canadian, having those higher import costs is meaning higher food costs at the grocery store, higher import costs, and a whole bunch of goods at a time when, again, we've debased our currency by 30% from pre-COVID. And so everything's [00:04:33] Speaker 1: that much more expensive. There's some economists out there like David Rosenberg saying that, you know, the currency could go to the low 60s. I mean, that would be enormous pain for the Canadian consumer, I imagine. And then, again, if oil corrects lower, you know, like if it ends up in the low 60s and stuff like that, that could also hurt kind of like our Canadian dollar. [00:04:58] Martin Pelletier: And it would take something dramatic for that to happen though. So we'd have to see a global sovereign debt crisis. And what we've witnessed the past weekend and late last week was Besant coming in to support Japan, for example, and providing support to other currencies, for example, that have sold off against the rallying US dollar. What I'm keeping an eye on here in Canada, and I've written about it in one of my financial post columns is who's buying this Canadian debt at such a low yield. And right now it's half of the buyers are five hedge funds or six hedge funds in the Cayman Islands. And what they're doing is they're borrowing at the overnight CORA rate or the overnight short-term rate and leveraging up that 10 to 50 times and buying five and 10 years and hedging it out in Ford markets and playing the spread. Now for the average Canadian, what does that mean? Well, it means that the government of Canada continue to have low cost of debt as long as these buyers continue to be there. Now, if the bond markets start and the yield curve start to shift and things change, then those buyers aren't going to be there anymore. And then who's going to buy this debt? And that means higher interest rates, a higher cost of debt. And then that translates into if you have the same time of falling currency, we have our own mini Japan situation up here in Canada. And then that's [00:06:32] Speaker 1: another mess. Yeah. And Bessett jumping in there saying he's going to support the Japanese yen and that's been very low right now. I mean, that's at lows we haven't seen for a long time. And then would they do the same, do you think, for Canada? Or would they just allow the Canadian currency to fall? Because it seems like we're in this confrontational relationship. So could some of the people that have actually used the yen carry trade and transfer that over here and actually try to move the Canadian [00:07:01] Martin Pelletier: dollar lower? Yeah, that's thinking that we're a lot more important than we really are on the global stage. I think what are we 2% of the total global GDP contribution? So we're nowhere near the extent of what Japan would be or Asian markets would be. So I mean, are they good neighbors to help us out if we were in that kind of situation? I would think so. Maybe if we keep having forest fires, they won't. [00:07:28] Speaker 1: I got one more question. I'll toss you over to Ian. The question is, is the Canadian economy a bit too reliant? Like the oligopolies here, we have such protected environments with oligopolies and many of those oligopolies and supply management and marketing boards, they're reliant on heavy immigration as well. We saw that with TELUS's reporting. We saw that with Rogers Communications. And we saw that with even the smaller things with a Conestoga College, so reliant on high immigration. And now they're kind of like whining about it and saying, you know, no immigration means lower earnings. [00:08:03] Martin Pelletier: Well, OK, you can. I'm a big fan of saying you can make progress or excuses, but you can't make both. And right now there's a lot of excuses. I think the issue is a bigger issue in Canada. We have corporations that are supported by excessive regulation that are providing the moats for these corporations by our governments. We need to disrupt poor business practices, inefficiencies by having more competition. And the way you do that is by removing some of the regulations. Having Rogers by Shaw was terrible because Shaw was a disruptor. Shaw has done some fantastic things. And now we're stocked with Rogers. And it was a Western Canadian based startup that was doing some pretty cool things. WestJet was a disruptor to Air Canada and they became worse than Air Canada in regards to their level of service and product offering. So it seems to be a pervasive story in Canada. Banking. The banks have done really well, thanks to wealth management and capital markets. But this level of service offering that we get from all of these Canadian corporations are quite poor, especially when you compare it to other jurisdictions. We have clients in Dubai, for example, and you talk about the banking in Dubai compared to Canada. It's a complete head shake that we're even still around. I heard about five years ago that the Bank of Montreal had phased out of fax machines and in one of their divisions. So this is if we want to compete on a global stage, we need to embrace small and medium business, not call them tax cheats like the Liberal government did not so long ago. And we need to encourage that innovation. We need more Shopify's. We need more of these types of corporations that continue to grow and and disrupt these these titans that have these moats provided by the Canadian government. Ian? [00:10:18] Speaker 3: I have to ask you a slightly silly question to start, but I think I'm actually very interested in your answer. Are you going to buy the $100,000 a month Trump, you know, truth social faster access to his tweets? And do you know anybody that is interested in that? [00:10:37] Martin Pelletier: If only I made that much money. No, it's going to be those hedge funds that I was describing earlier. And it's going to be selective. And you need to be able to trade milliseconds and have the resource to do that with high frequency trading. We just don't have the technology in Canada. I don't think anyone in Canada is going to be able to do that. So why would you pay the money if you can't execute on it? Our custodial business in Canada is so archaic compared to the US. The custodian business is basically where people hold their assets. And then you have wealth management firms bolt onto that. These custodians are quite poor in regards to their technology. And so it's going to be very difficult, even on the prime side for prime brokerage, to be able to execute these those kinds of abilities to take advantage of buying those tweets if you're able to, assuming he allows Canadians to do so. [00:11:36] Speaker 3: It might be a national security risk. Something a bit more serious. You mentioned demographics earlier, which I'm very interested in that. And I feel like it's still, correct me if I'm wrong or if you think different, but I think it's still quite an abstract subject, isn't it? I don't, I feel like it's not, the idea hasn't quite penetrated into daily life, that our demographics are very unusual, very strange. We have a lot of older people, not very many young people that has profound effects on our economy. I'm just wondering if you, if you could sort of expand on that, talk about that in the Canadian context and maybe explain to people how that actually is relevant and tangible. And it's not, it's not abstract. It's not just sort of nerdy economics talk. [00:12:26] Martin Pelletier: So I think it's, I think there is the realization of it. Maybe more so among those who are suffering, but not so among those who are not. I put a post on X last week and I got over 5 million hits on it. It was wild. It was a Rockwell painting and I reversed, it was a picture of an old man in overalls and the sun's in a nice suit and with bread going off to school and I had reversed it around so that the old man's in a suit and he's all happy and the sun's in overalls and sad. And, and I think people clued on to how bad things are. And what I would recommend if you really want to have a wake up call is go volunteer at the food bank or go actually just like, just go two hours or whatever amount a week and go have a, have a look. My son does it in Calgary, a thousand people a day and all walks of life. Immigrants who come here for a better life are now having to go to food bank. My wife was at, at the grocery store the other day and the clerk told her that, that they were having a conversation that the clerk goes to the food bank and can afford to shop at the store that she's grocery store, she's working at. And so there's a dichotomy of wealth between the very poor, sorry, the very rich and, and Main Street, which, which seems to be a lot of people, elderly, young people, immigrant, immigrants, and the wire that, that this goes and doesn't seem to be any sort of solution other than having asset debasement so that you can have affordability. Because in the old days you would just give Main Street a lot of leverage to buy your assets that were being inflated by currency debasement. You can't do that anymore with interest rates being higher and bond markets saying enough is enough. And so what do these people do? They start to move to the extreme left, like you see in New York or the extreme right, like you've seen in the US, and to be careful because I'm going down there next week. But, but you're seeing that dichotomy politically. And I'll leave it with this. There's, I worked with a fellow who was an advisor to the Bush administration on energy. And he's long past what a wonderful man. And he told me when you have young people that are highly are unemployed, either you find work for them, or they leave, or they tear up the country. And they're, from what I'm seeing, a lot of younger people are leaving, and going from Ontario to Alberta, for example, or south of the border. Or, you know, you, you, you tear up the country, you got to find work for them. I don't know. So I think that something's happening globally. [00:15:19] Speaker 3: Well, another thing unemployed young people, particularly men might do is break into the European Union, as we saw last week, I think it was. And I saw your few tweets on that, that you, that you put out, and you were talking about how the Spanish should, Spanish government had tried to fix its demographic problem. I mean, as all, all Western countries have very similar problems, sort of demographics, they try to fix it with normalizing or legalizing illegal immigrants. But then one of your tweets as well highlighted something that a lot of people were talking about, which is that this might break the European Union. So I'm interested, I've got two sort of questions for you there. One is, why, why would that not work? What the Spanish socialists are trying to do sort of top up their broken demographics? I mean, Canada's done similar as well, but why, why do you object to that? And then the other thing is, do you really think that's possible with the European Union? And how would that affect world finance? And how would that affect Canadians as well, if the European Union did break up? [00:16:25] Martin Pelletier: So, you've all seen the videos of the people coming into the country, and, and the resulting riots and everything else. And, and then the level of frustration by those who live there reacting on a vigilante basis to what's happening, and it's just creating a big mess. It can work if you plan it right. And you just don't open the floodgates and let everybody and anybody in. And you say, Okay, we need to stage this growth, we need to have areas, these are the areas within the country that we could encourage some innovation and some new tech, some people with, with technological backgrounds, or medical backgrounds, or, or different areas that we're lacking in, and able to compete. And then we say, Okay, we'll open it up to those particular individuals to come in, where they're not seeing those opportunities. So we're stealing the best and the brightest, to help us change the nature of our economy so that we can compete. We're not seeing any of that, we just saw floodgates open, anybody and everybody could come over. And then we'll hopefully, it's a shotgun approach that they'll bring with them a lot of the good attributes that we're looking for, instead of the crime and the drugs and everything else. And at the same time, you can stage it so that you're not putting excessive pressure on the healthcare system, excessive pressure on policing, excessive pressure on schools. So you can do it in a staged process. I'm all for immigration. I think it's outstanding. I think we can reshape the nature of this country. And you can reshape the nature of what's happening in the European Union, because there's a lot of commonalities between what's happening in Europe and what's happening in Canada. But we're not seeing that we're seeing extreme left ideology result in policies that are having all kinds of unintended consequences and big ones, maybe even leading to the breakup of the EU, where Italy said, I'm not sure the name of the policy. I can't pronounce it with my accent per se, but not allowing people from Spain to move labor among the regions. So I view Canada being a lot like Europe, because you've got provinces, very similar economic regions in Europe with countries. And the same thing is happening. [00:19:05] Speaker 3: It's Schengen, I think, is what you were trying to remember, the Schengen system. Yeah. What's quite interesting, though, is Morocco, the country where they came from in that instance, but if you're talking about the legalization of all the immigrants, a lot of them came from South America as well. But if you look at their fertility rates, you know, Morocco is below replacement level. Now it's below two children per women, which a lot of people, I don't think a lot of people have quite clocked yet. The extent to which humans everywhere are just that they're stopping reproduction. That's not really happening anywhere. So I wonder what is going to happen to immigration? Is it because countries that surely at some point, these countries are going to be reluctant to lose their people if they have rock bottom fertility rates like we do? A lot of countries are not going to obey by liberal principles and let their people go off and migrate? I wonder if, is immigration going to become like a memory of the 20th century and early 21st century, something that we just don't see as [00:20:08] Martin Pelletier: much as much anymore? I think things change dramatically in this post-COVID world. It led to the Trump administration, whereas they are removing themselves from parts of the world where they once had a dominant presence. For example, in Asia, the Chinese are filling the spots where the American influence is now pulled out. The US is now repositioning themselves, looking at what's happening in South America, with Venezuela, with the Suez Canal, with Greenland, for example, and even with Canada. That's all strategic in nature. Even in the Strait of Hermes, which the majority of that oil goes to, is to Asia, whereas the US is now the world's largest exporter. So I think those two go together with immigration and the mobility of labor. So it's kind of a jump ball right now to see how it all shakes out. But COVID really changed the nature of everything, including the number of children that we're having globally. And I think a lot of that has to do with affordability and going back to that. So we've printed 25 to 30% more monies since 2020. Actually, I put a chart on Twitter that went viral showing G7 money supply. It was really interesting that Canada was ahead by a country mile 400% compared to the US at 270%, 279%. And so what that means is that the value of your dollar is now 70 to 75 cents of what you were able to buy pre-COVID. And so the cost of having another child is huge. It's huge. I got two teens in 20 and 18. And we do a family budget and we have an app and we put things on. It's crazy how expensive things are. And I want them to see that. And my son, I was driving with him the other day. And he's like, I don't know, Dad, if I can have kids without your help, per se. He didn't mean it in that way, but he was actually being honest about looking at the cost of how everything costs. And so that's not just here, it's happening in other jurisdictions. And so people are moving to other areas in the world that they think there's better chance for jobs, a better chance for me to buy a home that is cheaper. And you're seeing that with Canadians leaving to parts of the US and where there's tax efficiencies and other things. So I think this is at the early stages of what we're witnessing. How does it all shake out? I don't know. But it is something that concerns me. [00:23:15] Speaker 3: Well, if they're not moving to the US, they're moving to Alberta, aren't they? But I'll pass you back to Jim. [00:23:21] Speaker 1: You talked a lot about the youth and then about the, I think most of them are disenchanted or disenfranchised with what's going on. And I think some of that relates to the truth, right? Like, I mean, the truth, what they hear, and some of them feel like failures because, you know, like you get a prime minister standing up and said affordability has never been so good in the past decade. And they hear that stuff, but then they look at the reality of the situation. And, you know, when they go to the grocery store and, you know, they can't afford a house, they can't afford this, they can't afford that. Then they stand at the podium and they say, buy Canada, buy Canadian. And then you look at the capital markets, for instance, and, you know, Westinghouse, I'm sure you saw that IPO. It's going to happen in the United States. Brookfield moved its head off to the United States. The amount of listings in the TSX has dropped dramatically. Most people are trying to access the US market. Their economy looks like it's on a launch pad if you look at the reality of the situation compared to our economy. The narrative, I think, is where people are getting lost, especially the youth, because they hear one thing, but the reality is a little bit different. Do you think we need to confront the truth before we kind of move ahead in Canada? [00:24:28] Martin Pelletier: Yeah, and the only way we confront the truth is by having pain among those who think everything's okay, which control the vote, unfortunately. And by that, I'm not saying that the alternative is any better. I'm just saying that, well, the status quo is everything's great and everything's fine when it really isn't. And just because you have a nice portfolio and your house price is appreciated so much doesn't mean that that's the reality of what's happening out there. And so we have to begin by acknowledging the mental health crisis that we're having, the addiction crisis, the stress, the tremendous stress on people that are that come to this country and they have to work three jobs. And they're like, this isn't a better place for me, right? And instead of saying, hey, our kids just need to work as hard as we did. Well, I'll be frank with you. You can work 10 times as hard as we did. There just isn't the same kind of opportunities that we had. We had 30 years of falling interest rates. We had money printing like you couldn't believe that if you got into a house that you benefited from that because you were protected. Now the bill has come due and you're saying, well, you're going to have to pay for this and it's all okay. And it really isn't. So we need to back things up and say, okay, things are not well. How do we fix it for people? And my starting point is, and I've said this for some time, is don't cut interest rates. Don't try to load these young people up on debt because they're not going to want to do it. Cut your deficit. Cut your spending. And then maybe things get more affordable that way and you're not going to fix it. Empower the young people, give them the opportunities and skill sets to fix it themselves. And if that means them leaving, then they're going to send a direct message to the government. [00:26:41] Speaker 1: And what we've seen is the opposite. We see increased spending, like massive spending. And then just the leadership is, usually leadership is by example, right? Like, you know, I'll follow you if you show me good leadership. But what comes out is by Canadian. And then, you know, you have the same guy that has most of his assets in the United States. And, you know, like most of his wealth is tied up into, you know, options and things like that in a company that does most of its, you know, like work in the United States. So people, some people can see that and say, well, well, if you're doing that, why wouldn't we do that, right? And I do want to pick on the title there in your book, Investing Through the Storm, because we've had Joseph Barbuda on quite a few times, too, and talking about the economic storm. And, you know, like this storm is going on and some people are really feeling the storm while some people feel quite insulated. How do people weather the storm, I guess? You know, like how do people that are really, you know, susceptible right now to this storm, what do they do? [00:27:46] Martin Pelletier: Well, if you're an older person that's done okay and benefited from what we just talked about, it's time to go on the defense. And not try and chase things and FOMO, fear of missing out. What you have and try and benchmark yourself to beating whatever the hot index is. Now is the time to look at some defensive type of strategies. We're in a very macro-driven environment where macro drives the narrative and drives performance of what's happening. We have companies like McDonald's, for example, that have sold off heavily over the last six months here simply due to the rise in real rates. So having someone who can help understand how that relationship impacts your investments is very important. And if you're a young person, you have to be mobile and you have to be willing to go to any jurisdiction that you can. Don't give up. Don't say this is overwhelming for me. Look for opportunities. There was a lot of pushback. There's an area called Sturgeon County, north of Edmonton. It's where I grew up. I know the area very well. And there was a lot of pushback against building a data center there, $13 billion, $13 billion data center. That's going to fuel 3,000 jobs. Well, it's temporary jobs. It's not going to be there long term. It's still 3,000 jobs. Electricians, tin smiths, HVAC, like a whole bunch of different trades people that's going to create an opportunity for young people. And so maybe you want to look at, if you're any of those trades I just mentioned, or electrician, whatever. You can say, well, I'm going to go try and work there if I can. And we're going to attract all these young people and give them a chance to work. And if you're a leader and say, how do we get more of these types of projects? But again, the pushback was, I don't want that in my backyard for a number of different reasons from people who are very comfortable. So we need that mindset shift among older people to say, I'm okay with something like this. We need something for our kids. And lastly, I'll leave it at this. My family, I'm a direct descendant of the first Peltier family that came to Canada in 1648 or something like that, I believe. And there's five founding families and Peltiers were one of them. And they came here for a better opportunity. And then in 1905, the year Alberta became a province, my Papa or my grandfather, his father came to Alberta for farmland. And it was not a good life. It was rough, but they did it for the kids and grandkids and for me. And I'm thankful for that. And so we need that same kind of thinking, the same kind of mentality. And it's in our roots. It's there. We can do it. But we need to start thinking about our kids. [00:30:39] Speaker 1: Alberti, bring up Alberta. And we, on this show, we talk a lot about cheap, reliable energy is prosperity and it is security. And Alberta is obviously the heartbeat and the engine of Canada. And right now the opportunity for anybody that's looking to stay in Canada. I mean, Alberta is calling, right? I think, you know, like there's a lot of opportunity in Alberta. Alberta held hostage for basically 11 years with these policies and still kind of held hostage. And then there's a lot of people mad at Danielle Smith right now because of, you know, like she okayed the carbon capture and she kind of, you know, it went along with that. Do you think her main goal was let's just get a pipeline? I don't care how I have to do it. I need a pipeline. I need a pipeline to the West Coast. Or is there something else going on? [00:31:30] Martin Pelletier: No, there's a need. And if that was the only path forward to get one, then other than, you know, reconsidering our place, Alberta's place in Confederation, which some people have, have expressed. And, but, you know, her point was, we are part of this country in this, of this wonderful country. And if we want to get a pipeline, the Carney government is insistent on this carbon capture and insistent on the most environmentally friendly heavy oil barrels in the world, which I don't think anybody really cares about, especially in Asia when they're scrambling to get oil. And the only person that's going to end up paying that will be Alberta and taxpayers in this country and corporations are going to flow that through directly into some of the refined product costs to consumers. And, and even though many, there are some prominent academics will say otherwise, but I live in a real world, not a vacuum. And I know the, I spent 10 years in energy, I was at OPEC, I met with OPEC last year in Vienna with the Secretary General. And now there's, their own organization is facing some challenges with the UAE leaving, and UAE bringing on a whole bunch of boroughs to secure market share. And, and that could have been us, Alberta and Canada, but it isn't. We, fortunately we have the TMX, but going back to your question about Daniel Smith. I think it was, this is the only option that we have. So we're willing to entertain that if it means getting something done. Now, MOU is an MOU. It's not actually shovels in the ground. So we'll see if it actually materializes into something longer term. In the meantime, our biggest comp, our biggest competitor is also our biggest client is a consumer is the US. And they're, like I mentioned earlier, the biggest exporter in the world of oil. And, and they're buying our barrels cheap in refining it at huge crack spreads and making out to quite, quite well. With the exception of a company, couple of companies here in Canada, like Synovus and Imperial who are also benefiting from it. [00:33:51] Speaker 1: We just saw the, the CEO of British Petroleum say that, you know, they're selling their North Sea assets. They, they kind of got out of Bay, New Nord there, but they're putting money into Venezuela. Is, is Canada going to miss an opportunity if that Venezuelan oil ramps up a lot quicker than, than many industry analysts predict? [00:34:10] Martin Pelletier: Well, there's two different views on Venezuela. I actually went down there and visited right when Chavez came in. And I was absolutely astonished by the untapped potential that country has on, on its energy. Now I went the other direction and, and nationalized it. And, and we saw the result of the large drop in, in volume of output. That's changed. And, and it's going to change quite dramatically. Um, now with, uh, U S companies doing business down there. Guarana as well with, uh, Exxon and Chevron. And, and, um, they're going to, uh, benefit from that. And the U S is going to benefit and those are going to take some barrels away from Canada. Um, and there's only so much they can do due to the location of the refineries. But if that, uh, economic incentive is still there, maybe that, that changes even further. We don't know, but that's an additional threat to us in Canada. There's still, that I think exists longer term. Um, in the near term, probably not so much, but, uh, over the next decade or two decades, thinking things can change dramatically. And if we don't have another, uh, pipeline to the, uh, East or West coast, that puts us at a distinct disadvantage. [00:35:30] Speaker 1: I think almost anybody with a little bit of common sense sees energy is the key, right? That's what Canada has energy and, uh, and mining. But why do we still have, why do you think we still have all these anti-energy and taxation policies that get in the way of us really exploiting our natural resources to give more wealth and more opportunity to our youth and to the Canadian population in general? [00:35:54] Martin Pelletier: Well, it goes to even people in Alberta who are protesting data center. It's not in my backyard. It's a NIMBY. It's a NIMBY. So if I'm living the, on the West coast of Canada, um, do I want to see more tankers off my front porch go by? No, I don't want that. I don't, what would be the benefit of having that happen to me? Um, my view is going to be wrecked, right? Why would I want to have, you know, these changes? So we've become the playground for the rich and rich and famous. Um, surprised Katy Perry isn't spending more time up here. Um, but, uh, we are, uh, if you look at what's happening in, in Whistler, for example, in Canmore, Alberta, um, in Banff, um, would become a place for wealthy people to come globally and even domestically here and enjoy the nature and everything else. And they're like, well, I don't, we don't need to have any of these other things. We don't need to have pipelines here. We don't need to have these tankers coming up and down the coast. We don't need to have this data center that could make noise or maybe doesn't make noise. Um, what is the benefit to me? Well, instead of saying, what's the benefit to me? You need, they need to start asking what's the benefit to my grandkids and their kids. Right. And we're just not there yet. And so we have to get past this complacency and self-centeredness and start looking at, at things that are going to be better for our kids. And what's happening with Canadians, wealthy Canadians leaving is they're not leaving because of these things. They're leaving because their kids can't get jobs and their kids are going to the U S or Texas. And their kids are engineers and they're going down south to get jobs. And mom and dad want to be near their grandkids and then their kids. I don't blame them. I want to have grandkids one day and I want to live. Heck if they let me next door down the street, because it's going to be awesome. And so they're following their kids and they're taking their money with them. And those left behind are like, they don't care. Their grandkids, whatever, can maybe live in another place. And so we have to change that mindset. We need to start planting seeds for opportunities. Yeah. [00:38:02] Speaker 1: There was that report that came out that Mark Carney sneered at when it said that those with means will leave and the rest will kill all the wildlife. And, you know, it's pretty scary. Right. But I'll toss you back to Ian here for some final questions. [00:38:16] Speaker 3: I'm just going to mention another one of your tweets in your Uber. You were talking about getting rid of dairy supply management. And that's been a bit of a hot topic lately. Jason Kenny came out against it. I'm just interested in what you think the chances are of that actually happening and how you understand that at the moment as an investor. [00:38:44] Martin Pelletier: Zero, it's not going to happen. And there's no way you look at how powerful that lobby group is. And and again, like they're dumping millions of leaders down, down the drain to maintain pricing. And Canadians, like again, go to the food bank. Look at what's happening around you. We need we need to start opening the market up to more competition. And with that competition, it'll make those dairy farmers more productive and more. I mean, they may actually if they have access to two different segments in the market, maybe we get more grocery stores at the same time. I don't know. But if you open up, I know from my experience working energy, the best cure for high oil prices is higher oil prices. And and you can't say that for dairy. You can't say that for banking. You can't say that for telecom. And and and it's wrong. We need to be able to open up that competition. And if a company can't compete or a producer can't compete in an open environment, then, you know, maybe we need to have more efficiencies. Now, having said that at the same time, you can't be so hard. You have to look at at your competition globally. If they're subsidizing their own producers. I don't know. I haven't done the work, but there's like the food professor and others who have and I rely on what they're saying. And they're saying we can make some changes. We can get rid of supply management and it's not going to destroy the Canadian dairy industry. And if they're saying that and they're experts in that field and in that sandbox, then I'm like all for it. [00:40:30] Speaker 3: I want to ask you about your your specific industry, sort of finance investment. I keep reading a lot of highfalutin articles about how lower level analysts particularly are losing out on jobs because of AI. It's transforming that that industry. I think there's almost more focus on that industry than than any other at the moment. I was just wondering what your personal experiences of that is. Are you taking over? Do you do you see it happening? Are there fewer positions available now? [00:41:01] Martin Pelletier: Yeah, unfortunately. So the work that I'm doing utilizing AI is so powerful. It's like me having four analysts working for me. And and then I have people working for me who are utilizing it. So the scale of the depth of what I have is tremendous. So that means I'm not going to be able to hire as many people as I used to. And and and and if I think it goes back down to the analytical side, and I'll back it up a little bit and talk about this in my book. There's a great psychology psychiatrist, Dr. Ian McGill Christ and highly recommend it. He has a book called the master and his emissary and talks about right brain versus left brain thinking and the left brain is very analytical aspect of it analyzing processing. Now, it gets to be so good that it thinks it should be in charge and that's kind of what a eyes is replacing is the analytical work. So that old school system of memorizing and regurgitating that's not going to get you anywhere. Whereas the right brain thinking is the is the emissary or series, the master and is able to analyze all take all the analytical work that's being done like and then, you know, as you get older, I'm 52. So I've been around and I can form a big picture from all that analytical work that I'm using AI for. So the old days was I was one of those grunts grinding it out 70 hours a week as an as an analyst and and doing all that analytical work. And I learned a lot on how to do that. The big trick is, is how the young people get in those positions so that they can use AI and build that analytical mindset. So and then they can transfer over to the right brain and bigger picture. And so tying it all together, that's a real challenge for younger, younger people, and they're going to have to adapt and they're going to have to find jobs that are not can't be replaced by AI. And there's, unfortunately, there are a lot of jobs and that pay well. It just means transitioning. And so when I ever when I go and speak to schools, I talk about the CFA versus the financial planning CFP and the financial planning is worth more than the CFA potentially because you're interacting with people, you're learning the psychology of of how they think. And and that's more right brain thinking. [00:43:29] Speaker 3: I'm delighted you mentioned Ian McGilchrist. I wasn't expecting that, but it helps me see into my next question, which is about about books, because very much following on from what you said, I find people at the top of your industry. They tend to be masters of well, let's say masters of many different subjects, aren't they? There's a there's a wide range of expertise. And I presume that comes from reading. So I'm quite interested in what you would what you'd put out there. I guess it's just off the top of your head is essential reading. I'm sure you'd include Ian McGilchrist. And of course, your own book. But I'm interested in what else you recommend, like what are the essentials to help people? Because I guess it's about having that macro view, isn't it? And you have to just understand so many different aspects of human nature, really. [00:44:30] Martin Pelletier: There are some really good macro people out there that you can follow on X provide wonderful work and some good podcasts, even your own here, too, that is worth following and to sort through the noise. The area that I've spent considerable time on and I have a whole section of my book on it is on the psychology aspect of human behavior. And we talked a lot about it earlier about younger people and and not decision to have kids or not have kids, all sorts of things. The human behavior and it has a tremendous influence on the macro. The spending, YOLO spending by baby boomers is tremendous. It's what's fueling the growth in the global economy. They're spending trillions of dollars on experiences, on services, on travel, and they've got 10 year runway here before some of the health issues kick in. And so understanding the psychology nature of what drove that being locked up in your home for a year and realizing that you can't take that money with you. I'm younger people saying, well, there isn't a future ahead of me and how am I going to react? The psychology aspect of that. So we've been through some trauma and now we're coming out of that trauma and how's that impact influencing our behavior? So there's some really good psychology books out there. Bruce Perry, Dr. Bruce Perry. I mentioned the Gilchrist and others that there's a book I just picked up on the weekend called cues and understanding how you're just your behavior, how you act, understanding people. So all of those sorts of things, Annie Duke's book on, on when to walk away. She was a famous world poker tour champion. So there's under picking areas and books that can help you understand the human psychology nature of it. And then, and then tying it into the markets. That's what I really tried to focus on and how that influences the markets. And then you have algos coming in and, and, and playing off of that, right? Saying, okay, this is how, this is the response. So those are the, those are the areas that what leads to euphoria in this AI space. So there's all of these sorts of, I call them the right brain reading, thinking. That's the area that I would focus on because AI is going to do that left brain analytical work for you. And then you can use both to understand and try and derive your own picture of what, what goes ahead. [00:47:14] Speaker 3: And I'll pass you back to Jim now, but I just, I just want you to talk a bit more about your own book. Like what, what is the, is it, so it's about psychological phenomena or is it, is it, it's about, about everything? What, what can you give us a sort of brief description? [00:47:30] Martin Pelletier: So I spent a good chunk of my life going through storms and market and in life at my age. And, and, and it finally all came together. And in regards to how do you navigate these storms and what worked for me, how to, what worked for me to navigate some of these storms that hit me in my personal life, how it transformed me as a better parent, as a better husband, and as a better investor, a much better investor. And how I took those tools and applied it to investing. So I talked about the environment, the storms that hit the past. There's a whole book, 1929 written about it. It sounds a lot like it is now. I talk about the storms of the present where we are now. A lot of the stuff to talk about in my post columns. I talk about the storms of what lies ahead. You asked the question about not having kids. That's a storm. And then how is that going to play out into the global economy? How are we going to deal with this debt that all these governments are taking on, especially when you lost control of the yield curve? That's something that like there's another storm that comes ahead. Then I talk about the psychology aspect of it. How do you say emotional regulation? We have a fiduciary duty as a wealth manager, investment manager, to be regulated from an emotional standpoint on behalf of that client. Not just being a steward of their capital, but being a steward of emotions. Then I talk about some strategies that I use in this kind of environment that have proven very successful in this macro driven environment. And maybe you want to investors want to look at some of those tools that have worked so well for me. And and then, you know, maybe it can help in regards to some of the personal trials and tribulations that you're going through that we all go through in life. But at the end of the storm, there is sunshine and the sun comes up and we can choose to focus on. I call it being grateful instead of being happy and reframing our whole perspective and and focusing on what we do with our wealth after we come to the storms. And how do we get back? [00:49:37] Speaker 1: I got a final question for you. It's making better trades, I guess it's it's I'm going to back up a bit here. Most of Canadian wealth is kind of tied up in real estate and back, you know, in the 80s and that people said, you know, buy real estate. You can't go wrong. Real estate, real estate, real estate. And I think a lot of people are getting a little bit of dose of reality here as real estate is off substantially right now. And and then a lot of people are kind of like, you know, like, I guess not sure where to put their money. I've got my children involved in and like at first with with wealth simple. And I would say like because it's an app and I'm sure you're familiar with it is we're making better trades. Instead of buying that nine dollar coffee by a fractional share in I don't care whatever it is alphabet doesn't even matter. Right. And I say even if that stock goes down to like half, you're still further ahead than that coffee that you spent nine dollars on. That's no good for you. So. So I guess the question is, where do people, especially young people start? You know, like real estate was the thing for our generation, I guess, you know, like, you know, like buy real estate. Right now, real estate doesn't even look like it's achievable. So where do they go? [00:50:49] Martin Pelletier: Wow, there's a lot of stuff to unpack. Sorry. I think the the starting point is human capital. I mean, sure, you can save your money and put it in the market. I mean, that can add up, but it's not going to move the needle for these young people. And that's why they're taking big risks. That's why gambling is so huge among younger people. And it's dangerous as well, too, because they're saying I can't I'll never benefit from the housing market like we've seen ever, ever in our lifetime. So maybe I'll take a risk, take a swing doing this. I think that's a bad direction to go. But if you're doing what you just described about moving money instead of a coffee in the market, you're teaching yourself some good old fashioned budgeting and savings. And you're going to learn a lot from that, that you can't spend more than what you make. And then if you look at regards to what's going to really move the needle, it's going to be human capital. And so what I mean by that is investing in yourself and the days of working in a union job or working in a job and and getting a defined benefit plan and retire. And that those days are coming gone, you're going to need to be innovative and adaptive and take risks. And if you have parents like what I'm trying to do for my kids is provide a safety net. And so take some risk. And if it doesn't work out, we'll have the safety net for you. I wish the government would do the same thing like what we've seen in Sweden. I talk about that in my book. Whereas if you take the risk, you're not going to go be completely bankrupt like you see in the US. You're going to have a safety net and you can take another risk again. And so take risks and invest in yourself. Now, what does that mean? How do you and it doesn't mean to blindly do that. You identify opportunities that you think are going to be areas for growth. And we did a shame to our kids at the service by telling them to learn coding, for example, as another language when, boy, that that was just a bad investment because AI is going to do much better job. So try and position where you think there's going to be opportunities. I mentioned it earlier. If you're going to be a financial planner, the psychological aspect of coaching other people on how to transition from working into retirement and how to spend appropriately, how to enjoy your life is a skill set that's required. How to help younger people save up for retirement and providing psychological advice and coaching and career coaching. There's opportunities there. So to help younger people, it's investing yourself. Don't be scared. Take some risks. And you're going to get a huge ROI on that investment. [00:53:27] Speaker 1: I think risk is one of the things that a lot of people don't like to take these days. Risk is kind of like a bad name. And the risk equals reward, right? The bigger the risk, the bigger the reward. Or, you know, like obviously risk comes with some bad outcomes too, but it's the only way to get ahead too, right? Because the safety stuff that you're saying, those safe jobs don't really exist anymore. If we look at our forestry sector in Canada, I mean, the forestry sector is almost gutted. And those used to be really good paying jobs, right? [00:53:57] Martin Pelletier: And they're good paying, but some of them were soul sucking too, as well. Because, you know, you punch the clock, you go in and all you do is waiting for the time to go by. And then I'm not trying not to make a generalization, but my father-in-law worked in a coal mine. I mean, it was interesting. He liked me, but he didn't love getting up at 4:00 AM going on the blast of the coal mine. Right? And the risks that came with that as well, too. But what I'm saying is that I think, and this is the problem, and I fought quite hard and pushed back when the Trudeau government or the existing liberal government with the exclusion of Trudeau of Carney had said that the small business owners were tax cheats. No, they were entrepreneurs, they were the they were the lifeblood. And if and if you can have there was a great post that put her on X and you can probably see it about having your guy. I had a guy, my guy last night do my electronics in my car. He spent two hours and he fixed it. He was awesome. He came in and pay him 300 bucks cash. And and and then he's hustling. He had four jobs that day. My guy. So that's entrepreneur ism. And he came from someplace Nigeria or I forget someplace like that. And it was awesome. And he was hustling. And I want to have you need to be that my guy or gal, whatever you want to use and encourage young people to be entrepreneurial like that. And I thought that was I thought that was fantastic. It really got me got me excited when I see that I have a lot of those types of individuals. Well, thank you for sharing that hour with us. [00:55:35] Speaker 1: We really appreciate that. I'm going to put your name in there. Martin Pelsier there, CIO. That's M Pelsier. CIO is how you find Martin on X. And and I recommend strongly that people go get an X account, even if you don't want to post on X. There is such good information on X, probably one of the best places to find more truth and then find good people like Martin right here and follow those accounts because you're going to find more information there. He's got a very strong following. Like I said, how many million did you get? Nick, can you put up that one picture there before we go? How many million did you get on that one post? Five million. [00:56:10] Martin Pelletier: That's my ego speaking. [00:56:14] Speaker 1: But but you don't even like X is where I go all the time, right? And especially for finance X is there's no better place for information, finance news, all that kind of stuff. And you kind of see trends to like you say rinse, lather, repeat there for the hormones thing, all kinds of stuff like that. It's great stuff. And it's people like you that get out more good information. And then we hope to have you on again. Thank you for your generous generosity and sharing your time with us here today. [00:56:41] Speaker ?: Awesome. [00:56:42] Martin Pelletier: Well, thank you very much for having me and keep your head up. There's a couple of storms coming down the pipe after summer holidays here. And but no, there will be sunshine on the other end. Just make sure you make it through to the other end. [00:56:57] Speaker 1: Well, you look behind me right now. That's a live shot of the Okanagan and she's pretty socked in. You cannot see very far the smoke in from all the forest fires, right? So yeah, pay your carbon tax. [00:57:08] Martin Pelletier: It'll help get rid of that smoke. [00:57:10] Speaker 1: You got Ian's sarcasm there. All right. Thank you. Thank you, Martin. And thank you for watching the really big show. Take care. [00:57:19] Martin Pelletier: Take care.