Trump’s 50% Tariffs, a Falling Loonie & the Gordie Howe Bridge Deal

[00:00:00] Darren Mitchell: You do not want to miss this episode. It's our August monthly update. Big news on the Canadian dollar, more trade tariffs we got to get into, the Gordie Howe Bridge, Canadian economy overall. Let's dig in. Hi everyone, welcome to Control and Compound. I'm Darren Mitchell and joining me as always is Christina Wyatt. Christina, how are you doing today? [00:00:20] Christina Wyatt: Hey Darren, I'm doing great. Excited for another summer monthly update. [00:00:25] Darren Mitchell: Well, I'm excited, but that just means we're another month into summer now. It seems to be going so quick, but lots of stuff to update listeners on. So glad we're doing this one because it is going to be some really key, key things we're going to talk about, how they affect the Canadian economy today. But before we get into this episode, Christina, we want to take a second and speak directly to everyone who's ever followed and supported Control and Compound over the years. [00:00:56] Christina Wyatt: Unfortunately, our original Instagram account was disabled and overnight we lost that connection with more than 33,000 of you. It was, it was really upsetting and we don't want anyone thinking that we've disappeared or we stopped creating content at all. We're still here. [00:01:12] Darren Mitchell: Yeah. We'll talk more about it later in the podcast, but what we're trying to emphasize right now is we're still here. We get a lot coming. Our new official Instagram account is at controlling compound underscore. So that's an underscore at the end of at controlling compound. [00:01:29] Christina Wyatt: I'm going to ask a very big favor today from all of you. If our podcast has ever helped you see your money or your business differently, please take a second to find us and follow us again. That's where we're going to continue the conversation between episodes. So please, we would really appreciate it. [00:01:45] Darren Mitchell: So again, it's at controlling compound underscore. We'd love to have you back with us. Appreciate it. And we'll talk more about it. You know, life of an entrepreneur, Christina, the highs, the lows, you come in one day and you're like, oh, okay. I don't think I have too much on the go today. And then boom, there's a big fire. And then you put it out and you move on. So we'll chat more about it later in the CNC news. But we just wanted to get that out there at the beginning of the episode. So let's dig into the economic update. Christina, you're ready to go? [00:02:18] Christina Wyatt: Yes. We'll start with the Bank of Canada where we usually start. There was a decision or there was an update in the month of July. So on July 15th, the Bank of Canada held its benchmark interest rate at 2.25%. So that's its sixth consecutive meeting without a rate change. Now the decision was widely expected, but I did think that the messaging was a little bit different. We had to switch up in the messaging. So Governor Chiff Macklem said the Canadian economy is beginning to show signs of improvement. The bank pointed towards, yeah, stronger growth, resilient consumer spending, and they expect that inflation is gradually going to ease back towards its 2% target over time. At the same time, though, as usual, it emphasized that uncertainty remains high. So particularly because of our ongoing geopolitical tensions, the U.S. trade policy. So the uncertainty has only increased. So since July 15th, we've actually had more uncertainty increase because the Trump administration announced that 50% tariff on a broad range of Canadian goods. That's expected to take place on August 19th, unless a new agreement is reached. So that definitely creates another layer of uncertainty for Canadian businesses, exporters, and investors. That happened after this announcement. Now, as well, since then, the Bank of Canada did do a survey that they released this month, and they found that 96% of financial market participants identified raising trade tensions as the biggest downside risk to Canada's economy. So a little bit concerning with what has transpired in the last few weeks since that update. Now, the next biggest concern that came out was tighter global financial conditions at 65% and increased geopolitical risk at 42%. So while the Bank of Canada is becoming more optimistic about the economy, it's also operating in an environment where trade uncertainty remains exceptionally high right now. So we'll see how that plays out. The next interest rate announcement is September 2nd, and between now and then inflation, GDP, and the outcome of these trade negotiations will likely be the biggest factors influencing what happens next. So again, I can't give you an actual, you know, I don't know what's going to happen at this point. Lots happened between the two announcements. Lots have happened. [00:04:30] Darren Mitchell: Yeah. Hopefully there'll be some movement in the trade before, before that September or trade agreement before that September 2nd one. But that word uncertainty, I think we've said it at least 10 times in every economic update we've given in the past year. So I'd love to get that word replaced [00:04:48] Christina Wyatt: with certainty at some point. Yeah, that would, that would be nice. I will jump into the inflation side, and that's where we have a little bit of positive news this month. So Canada's annual inflation rate eased to 2.8% in June down from 3.2% in May. So economists had expected inflation to come in around 3% and it was reported. It was, the report was slightly better than expected. So, um, a big reason for that was gas prices. As oil prices pulled back through June, gas prices fell by roughly 10.2% for May to June, helping drive the largest monthly decline in inflation in 18 months. Um, now the story is obviously not that quite, quite simple. Um, while headline inflation improved grocery prices as per usual, we're still not 3.9% higher than they were a year ago, marking the 17th consecutive consecutive month that fluid inflation has outpaced overall inflation. So although inflation is slowing, many Canadians still aren't feeling much relief when they go to the grocery store. It's also important. And this is important to remember right across the board that lower inflation doesn't mean prices are coming down. Unfortunately, it simply means that prices are rising more slowly than they were before. So it's, you know, it's good news, but keep it with a grain of salt. So looking ahead, there's still reasons to be cautious. Obviously we already talked about those proposed tariffs on Canadian goods that can really dramatically impact inflation. Uh, businesses are going to have to carry those costs. They're going to pass on those costs, um, downward. So that's why I don't think Bank of Canada is ready to declare victory just yet over inflation. We could see them talking about it again in a few weeks. Um, inflation is moving in the right direction, but again, all this uncertainty back to that word, um, could change the picture in the coming months. [00:06:33] Darren Mitchell: All right. Well, uh, let, let's get into the Canadian dollar. Cause remember, I remember like for a couple of years, we do the Canadian dollar and it was like, ah, not a lot of change, not a lot of change. You know, the Canadian dollar section of our monthly update, at least it's interesting now. So what's, what's going on with the Canadian dollar. Yeah. The Canadian dollar had a bit [00:06:53] Christina Wyatt: of a ride this month, it's a little ups, a little down. So on July 15th, after the bank held that interest rate and inflation came in lower than expected, the loonie briefly climbed to just over 71 cents, which it's been its strongest level in about a month. Um, so that was nice to see, but unfortunately the momentum didn't last on July 20th, when Trump announced those proposed 50% tariffs, um, that took us back. So we, um, dropped down at that point to 70 point, uh, we dropped when that came out and then markets reacted quickly. It fell back today. We're trading at around 70.9 us cents. So the main reasons for that first is the trade uncertainty. Canada sends roughly 75% of its exports to the U S so any uncertainty around our largest trading relationship definitely has a direct impact on investor confidence and ultimately the Canadian dollar. Second piece is oil prices. Canada is one of the world's largest energy exporters and our currency tends to move with the price of oil. Recent weakness in oil prices has put additional pressure on the loonie and finally interest rates. So investors continue to expect U S interest rates to remain higher than Canada's for longer. That generally supports a stronger U S dollar and puts additional pressure on our dollar. So to me, the loonie has become a reflection again of the broader uncertainty surrounding Canada's economy. It links all to it, right? Trade policy, commodity prices, central bank decisions. They're all pulling at the currency at the same time, making it very difficult for it to build any sustained momentum. So again, we'll see how the next few weeks play out. Uh, but when it comes [00:08:29] Darren Mitchell: to our, our dollar as well. All right. Like to get again, get some certainty, uh, if we jump to the stock markets, uh, in the U S the S P 500, pretty much flat for the month, um, up about 8% year to date. TSX, uh, was up, uh, one and a half percent on the month, um, about 11% year to date. So we're outpacing the U S market. Um, if we kind of drill down into the S and P 500, what's going on with, with, with the States, they had a bit of a choppy month, but, um, I think, I think the biggest story wasn't the index itself. It was artificial intelligence. And again, we're always talking about artificial intelligence and technology when we talk about the States, um, because it's such a huge part of their index. But for the first time in quite a while, investors started asking whether all these billions of dollars being spent on AI infrastructure will actually produce the profits promised. Now they think it'll, it'll obviously produce profits, but will it produce the level of profits that these companies have been promising? So some AI stocks actually fell after reporting strong earnings, but not strong enough on, on what the future earnings are going to be. So investors kind of looking more for a clear path on when is this AI investment going to pay off and how much is it going to pay off? Uh, at the same time, the, the, the U S market again, huge on technology. They're waiting for the earnings to come in from Microsoft, Apple, Amazon, and meta. These companies continue to have a huge oversized impact, uh, oversized influence on the S and P 500. So as they move, the market moves. So we're waiting to see on that investors. Uh, they're also watching the federal reserve. Inflation has improved in the States, but they're still concerned about rates staying higher for longer. Uh, again, markets want to want a rate rate cut, but they don't know if one's going to be coming. And then, uh, again, almost a monthly thing, geopolitical tensions in the middle East created some short-term volatility, oil prices spiked, and then they, they, they fell back, fell back down. So overall, despite some volatility, uh, the U S economy re remains amazingly resilient, right? Never, never bet, never bet against the U S economy. Their employment remains strong. Their consumers are spending money. Corporate earnings have generally held up really well, uh, higher than, than, than expected. So the economy doing well in the, in the, in the U S the market had a flat month, but nothing, nothing drastic. If we dig into the Canadian stock market, um, we hit another all time high, you know, cause up, up, uh, over a point this month. Um, now, unlike the U S where the, the, the, the S and P 500 is all about technology and AI, Canada's market is basically driven by banks, energy, and natural resources, right? So strong earnings from North Americans banked help lift our financial sector and higher commodity prices help support the mining companies. So energy, you know, energy companies had a bit of a rollercoaster ride with that oil up and the oil down, uh, with the middle East tensions. Um, but I think one of the, I guess you could call it positive, but one of the encouraged encouraging developments for Canada, um, was the proposed U S tariffs, the new 50% ones starting in, in, in August. Um, they excluded Canadian energy and critical mill minerals. So again, those are such a huge part of our, our, our index and our economy that, you know, I guess it's good news. They didn't get hammered like some of these, some, some of the other things, but it's basically banks, energy and commodities. So if you actually dig into the index, it's not necessarily a reflection of the Canadian economy, because some people will say, well, I thought the economy wasn't doing well, but the stock market keeps going up, but the stock market is not a representation of the Canadian economy. It's a representation of the 237 companies that make up the TSX composite index, but really those 237 companies, they're not treated equal. It's basically the financials, which is your banks and the insurance company, energy and, and your mining, mining and minerals. They're, they're well over half of the index. So those three things are what affect our stock market. If you just look at the TSX. So when interest rates move, huge impact on bank banks, financials, insurance, when commodity prices moves, huge impact on their energy companies, the, the mining companies. So commodity prices and interest rates have a, have a real big impact on our market. So those are the things that really drive the index, not necessarily the Canadian economy overall. Now, if we jump into Bitcoin, haven't said this in a while, Bitcoin had a great month. So again, we're not Bitcoin experts. We're recommending you buy Bitcoin. We just like, like talking about it. So Bitcoin is around $65,000. That's up about seven and a half percent on the month. I'm still down 25% year to date. For those of you that follow, you remember, I think it was around, uh, back April, it peaked around $79,000, $80,000. So that around 65 now, still not, uh, back to where it was back in April, but up seven and a half percent. So they had a better, Bitcoin had a better month in July than people were expecting. It fell below 60,000 at the end of June. So it was like doom and gloom there for a bit. Um, but Bitcoin recovered as inflation concerns kind of eased. People got more optimistic that we could see some interest rates eventually come down. But I think one thing that, that hasn't changed is who's buying, right? When, when Bitcoin's down, you know, the, it's, it's kind of like, kind of like the stock market, like the, the big institutions buy low and sell high and individuals buy high and sell low. Cause they, they buy when there's a frenzy and they sell when it goes down because, because, because they fear. So if we look who's buying Bitcoin right now, it continues to be the big institutions. So the ETF saw hundreds of millions of dollars flow back in, in July, large investors are still seeing Bitcoin as a long-term asset rather than a short-term trade. Um, so the big institutions are still putting money into this, uh, another important development. The U S continues moving, uh, towards clear rules, um, through this clarity act, they've been kind of moving forward through, through the past year. And you know, there's that word again, certainty, every step towards regulatory regulatory certainty makes it easier for pension funds, banks, large institutions to participate. So, you know, if we get to a point where the U S has clear rules on digital assets, clear regulatory rules, it's going to be a good news for, from the, from the sense that financial institutions will feel even more comfortable. And then, uh, last, last note on Bitcoin. I thought this, this was interesting. So BlackRock and Fidelity, obviously two of the large, largest investment firms in the world. Um, they actually put some money into, so quantum computing, you know, we're still not there yet, but it's going to be going to be down the road, but people are like, well, will quantum computing be actually able to, you know, break the Bitcoin code and stuff. And, and most people don't think it will, but BlackRock and Fidelity announced they're actually funding research to how to protect Bitcoin in the next 20, 30 years as quantum computing, um, gets more advanced through the years. So to me, um, that's a sign that, you know, we've got two of the largest investment firms in the country. They're thinking about protecting the network in the next 20, 30, 40 years. So that's what a, a long-term investor should be thinking. So, you know, when Fidelity and BlackRock are making plans for Bitcoin 20, 30, 40 years down the road, that's a long-term investment horizon. Um, they're not looking at necessarily at the day-to-day volatility. So, you know, will Bitcoin in 10, 20, 30, 40 years be a significant, uh, uh, asset could be, could go to zero, but that's the Bitcoin update a little less volatile than Bitcoin. Christina, [00:17:09] Christina Wyatt: what's going on in the real estate world? Yeah. So in the real estate, uh, world side of things, uh, the average home price in Canada is up just a bit from last year. So 0.5% from, uh, we're, we're looking at June numbers right now. So June, 2025 to June, 2026, we're sitting at approximately 690,000, 696,000 as that average home price as the housing market continues to stabilize. It's been stabilizing through, um, June. So national home sales increased 0.5% for May, marking the third consecutive monthly increase. Well, new listings did decline, um, about 1.3%. Sales are sales right now are about 7% higher than they were in March, suggesting that buyers are gradually returning to the market. So we're seeing some positive numbers on that side, which is nice. Um, but as always, we're seeing different parts of the real estate market move in different directions. So while I was doing some research research, I found in, uh, a vision young's latest mid-year outlook, which suggested that commercial real estate is really beginning to stabilize across Canada. So nearly half of industry professionals are expecting market activity to increase, um, uh, later this year as businesses and investors begin more willing to move forward despite the ongoing economic and geopolitical uncertainty. So we are starting to see that commercial market pick back up, um, which is nice to see now, residential real estate, usually a mixed bag across the, the, the country. When you're looking at it, Toronto's condo market still is a hot topic, right? People are definitely talking about, um, how it still remains under pressure. They've got that elevated inventory, softer investor demand. So some economists are now saying that that could actually go into 2027. Well, our others are also saying that they're beginning to see opportunities as prices are starting to adjust and sellers become more willing to negotiate. So we are seeing a little bit movement there. The one thing that, um, I did pick up on this month as I was going through new reports, um, was one that came out from CMHC and one of, I want to go back to one of the, uh, federal government's biggest election, um, commitments. Remember when they said that they were going to build 500,000 homes a year to help tackle Canada's housing affordability crisis, right? We all remember that. So we're now more than a year into this government and CMHC is forecasting the exact opposite. So this was a little frustrating to see when we want to start seeing momentum in that housing. Um, that those, those builds, um, instead of building more homes, Canada's national housing agency expects housing starts to decline 7% this year to approximately 241,400 units. That's what we're going to see. Followed by another 7.5% decline in 2027 and a 5% decline in 2028. So according to CMHC, the slowdown is being driven by trade uncertainty, higher construction and financing costs, slower population growth, buyer hesitation, and a growing inventory of unsold condos. That's what they said in the report was causing this. So those are real challenges, but they're also exactly the kind of challenges Canadians expect to get solved, right? Like, why isn't that red tape coming down? Why, like, why aren't we doing things to help this? We're just not seeing it. So, um, the Canadians were, well, I just feel like there's a major disconnect at the end of the day. We were promised a dramatic increase in housing supply. Instead, Canada's own housing agency is forecasting that will build fewer homes over the next few years. So I do think that if we want to get serious about building this afford or growing this housing affordability, we need to get better at it, right? Like, I think it fell off or it's not like, I don't know what's happened, but these reports come out a year later and it's like, it's only gotten worse. And, and before I remember when the problem was we had too many people coming to Canada. Now we don't have enough people coming to Canada. Like it's one or the other, right? [00:21:02] Darren Mitchell: Yeah. I think, uh, I think the only solution is we need another government committee and department to study, uh, study this, to come up with a project that we can launch in 17 years or get the government out of the way and let, let private business build homes without all the red tape. I don't know, could go either way. Um, all right, let's, uh, let's jump into the economic news. So I, uh, I want to start with something that's been in the news a lot. I want to start with the Gordie Howe Bridge and it is officially open. And I, I just want to say, this is great news for Canada. Um, now there's a big question I'm going to address at the end, but I think sometimes with all the, all the media and all, all the talking points, it gets lost in the shuffle that this is a really good news story for Canada. So I'm, I'm genuinely excited that this bridge is finally open. It's good news for Canada. It's good news for the United States. It's a beautiful piece of infrastructure. It's huge. It's something, something that Canadians should be, should be proud of. Um, so we signed a deal years ago to pay $6.4 billion to build this bridge on both sides. It connects the busiest trade corridor in North America. So $70 billion in goods travel through Windsor and Detroit every year, like 70 billion, more than 4 billion trucks cross this border annually, or 4 million trucks, 4 million trucks cross this border. The, the bridge is expected to save truckers 850,000 hours every year. Cause what's happening now is the weight at the kit to get across the other bridge is so long that they're sitting there, they're idling, they're waiting, they're getting paid to wait. Trucking companies are, are, are trucking companies, which pass on all the costs. Costs are getting passed, fall passed along. So the Canadian trucking Alliance estimates that trucking companies will save anywhere from 20,000 to a hundred thousand per month, depending upon their fleet size, lower tolls, less idling, lower fuel costs, lower labor costs. It's, it's the longest cable bridge span in North America. It has six traffic lanes, 16 toll lanes, 60 inspection lanes, and it's going to significantly improve the, the flow of people and goods across the border. So I think overall, this is a huge win for, for Canada and the United States. And I don't want that to get lost in all the other stuff. This is good news. Now, where I have my concerns is not about the bridge, but it's about the transparency surrounding this revised agreement we have with the United States. So the original, original agreement had called, called for Canada to finance the entire construction cost, 6.4 billion, with the understanding that Canada would recover those tolls, recover those costs, the 6.4 billion, before we share any tolls. Then Trump came in and said, ah, it's not good enough. I want a revised agreement. And here's where things got confusing because prime minister Mark Carney publicly stated several times that the new deal was great for Canada because the debt servicing costs would be deducted before we share 50% of the, of the, of the revenue or the net revenue for the next 15 years. So he said, Canada would get the revenues first, pay the debt, and then any remaining profits, which he said wouldn't be much after the debt servicing costs, uh, would be shared with the United States. And so with their 50%, it was going to, uh, an economic U S economic development agency, and they were going to be able to spend their money as they see fit. When critics asked the government to post the details of the new deal, Canadian government refused to do so, but then the U S side released the actual deal. Um, so when the details of the revised agreement were released, they appeared to show something completely different. The agreement provides for 15 year profit sharing of net operating revenues before the construction debt has been fully repaid. And it also gives the United States a role in approving future toll increases. That's a big difference. $6.4 billion. We get, we get that paid back first before we share, or we don't get that back before we share. Like that's not a rounding error. Um, so really like, I guess I have, I, my, my, my question is, was it option A or option B option A is did Mark Kearney knowingly mislead Canadians about what the new agreement actually contained or option B did he not fully understand the details of an agreement negotiated on behalf of the Canadian government? Like, let me know. What do you think of the comments? Is it A or B? Like those are the only two options or, or let me know if you think there's an option C, like I, I, I, I'm trying to just fully understand this. Like, is there another explanation that reconciles what he was saying publicly and what the actual deal was and the fact they wouldn't release, really release the, the, the actual deal or the Canadians wouldn't release the deal. So like, leave me a comment. Let me know. I'm, I'm open to, open to ideas. Now, again, I don't want this to get lost in the, this is still a good deal for, for Canada. If, if Mark Carney had said, listen, we paid $6.4 billion for this bridge. U S came in, we had to negotiate a deal. Yeah. It's not quite as good as the deal we had before we're going to have to pay, pay, pay some of this money up front. So it'll take longer to pay off the bridge, but this is still a phenomenal deal for Canada. For all those reasons I listed at the beginning, beginning of this, I think Canadians would have said, all right, it is what it is. We had to, we had to do that deal. It's still better than not opening the bridge. Makes sense. Appreciate your honesty. Let's move on. It's the, it's the transparency or the misleading I think that is, that is the big issue. And so I did a little napkin math here. Now, I don't, I don't want to pretend that I understand how a government finances $6.4 billion, but as a real estate investor of, you know, my mind instantly goes to, I wonder what a mortgage would be for $6.4 billion. So, so I did that math. So I said, what would a mortgage be for $6.4 billion over 30 years at 30%. And again, this is just hypothetical. Well, the mortgage payment on that is about $320 million a year. So again, about saying this is how they obviously pay for it. But if you think, okay, if you're an amortize it over 30 years and you assume with 3% interest rate, $320 million in mortgage payments. That's a big number. Like the fact that this number gets taken off or originally Mark Carney said it gets taken off before we share revenue, or it doesn't get taken off or whatever the actual number is, it's a big deal. So that's the Gordie Howe Bridge again, happy it's open. Christina, you mentioned the Bank of Canada held interest rates. I think that was a big economic story too, in the sense that they think the Canadian economy is gradually improving, sluggish. I think the term was, but, but improving. And they said the business investment is up marginally, but still sluggish. So again, at least not, not negative. The U S trade tensions obviously were the big, big economic news. 50% tariff on Canadian products, new Canadian products effective August 19th. What that's actually going to hopefully be is just a negotiating ploy by the Americans. So we get this whole trade agreement done by then, but it's going to include cement, dairy and food products, clothing, textiles, wood, wood products, chemicals, jewelry, plastic, sporting goods, and other various manufactured products. But I'll tell you where they think, I think as a Canadian, as a, as a beer league hockey player, I'll tell you where they've gone too far. The Americans are now going to tax 50% on Canadian hockey sticks. So that's too much. You can come after our steel and our aluminum and all the other, but you come after Canadian hockey sticks. You know, that would, that would stuck out to me. Now, again, I'm all joking aside, the, the economic impact of this is, is significant for those industries. But if we look at it in the big picture, the new tariffs they're proposing represent about 5% of Canadian exports to the U S. So that's about $20 billion. We compare that to the 1.3 trillion. We, the total annual bilateral trade. So, you know, it's a very, very small percentage of the overall trade. So it's not going to have a significant, you know, major, major threat on the Canadian economy. It will have a major, major impact on those affected industries. So I'm not saying it's not a significant thing for those industries, but the economy as a whole, it's not, it's, it's not catastrophic. It's not good news, but it's not catastrophic. Now I want to, I want to wrap up here with a couple of positive notes. Canada actually added 18,000 jobs last month. So unemployment tricked down slightly to 6.5%. Okay. That's still fairly high unemployment, but wages continue to outpace inflation for the month. So 18,000 jobs didn't see the breakdown of where they're from. I just hope they all weren't 18,000 government jobs, but I don't think they were. Um, but wages, outpacing inflation again, some, some good news. And, you know, sometimes it's hard to find all the good news, the good news, the good news portion of this, but consumer spending hasn't fallen apart. And what I mean by that, uh, higher borrowing costs, trade uncertainty, all this, all this uncertainty going on. Well, household spending has remained relatively resilient. And I mentioned that business investment ticked up slightly, uh, and second quarter GDP appears stronger than they expected. So again, not like huge, huge wins, but those things are, are at least staying where they are moving in the right direction. So, uh, when, when consumers or households stop spending, you know, the economy is going to suffer down the road. So the fact that consumers and households are still spending business on business investment ticked up slightly, that's good news for [00:31:59] Christina Wyatt: the Canadian economy. Yeah. There's a lot going on in the last month, a lot of, a lot of new, new things. And I, and I think you're right. Just more transparency would make things, um, make things a bit better. And if you could also let our loonie know that it's not a big deal, it's not an issue. That would be great. [00:32:17] Darren Mitchell: All right. Jump into some industry news. Uh, a couple of quick things on this. Um, I read a great, uh, great, great, great article. Uh, one of my insurance journals, cause you know, that's, that's kind of thing I like to read cause I get excited for them. Um, there's always been a, there for a number of years now, since I've been in the industry, more and more people are choosing term insurance, specifically 20 year term insurance versus mortgage insurance. Um, but that is starting to grow exponentially. So they had some cool stats come out. They just say more and more people are seeing why term insurance is a million times better than, than mortgage insurance. Um, so again, we're not going to do a whole, a whole breakdown here, but basically if you get mortgage insurance, you know, the, the, the death benefit is paid to the bank, not your family coverage gets smaller every year and your premium doesn't go down. Uh, if you go to refinance lenders, you want to switch one bank to another and you're longer insurable. Well, they kind of got you over the barrel because you can't switch your mortgage now. Cause you can't get mortgage insurance with the new company. If you make a 20,000 or 50,000 lump sum on your mortgage and you die the next day, well, that's a windfall for the bank. So the personal term policy, you own the policy, you pick the beneficiary, your family can pay off the house or not pay off the house. As the mortgage goes down, the term insurance stays the same. It's portable. If you want to switch, switch, switch lenders, you don't have an issue of, if you're no longer insure insurable, it's less expensive. So I think, you know, part of it is information is easily, is more accessible now to everybody with, with, with just technology and stuff. So banks kind of get away with this mortgage insurance for years. Cause people would go get the mortgage and the bank would say, you want mortgage insurance? Oh yeah, I want it. You don't want to get the host paid if, if I die. Um, but now with, with information free flowing out there and a lot easier, um, we're seeing more and more people buy term insurance, a set of bank owned insurance. Um, the average Canadian homeowner now carries $760,000 of, uh, of life insurance. And what they did is they looked at younger homeowners versus non homeowners. And they compared the two and how much term insurance they had. And it was significantly more for the homeowners, uh, which is again, just another indication they're selecting the term over, over the, uh, the mortgage insurance. And if, if you do have mortgage insurance, I encourage you to get a second opinion to see if, uh, some, someone, uh, some, someone on our team or someone can help you, um, replace that with a much better term insurance. Uh, and then, uh, my other, um, news AI, again, we're always following AI and specifically in the insurance industry, uh, Manulife's MOD, MOD stands for Manulife or Manulife Automated Underwriting Decision Engine. They're out approving over 60% of applications automatically. So 60, over 60% of life insurance applications are approved, approved without a person. Uh, now they're usually the smaller ones. Um, you know, not the massive ones, not necessarily ones we deal with, but what we love about it is if 60% of the cases are being improved automatically, then the larger cases that need more time and people get looked at so much more quickly than they did, you know, a couple of years ago without AI. So I think that's a great example of AI making a company more efficient. And then the question is, well, does it make a company more profitable? Well, Manulife actually said their, uh, AI investment is expected to generate over a billion dollars in enterprise value from using AI by 2027. And they're saying at the end of 2025, they already achieved 300 million, uh, enterprise value. So 300 million. And then two years later, a billion, like, you know, companies that are investing in AI are getting more efficient. They're getting faster. They're getting better. Their costs are going down. Uh, again, AI is not going away. It's going to be here. And those companies that are investing in it now, I think will really reap benefits, uh, down the road. [00:36:38] Christina Wyatt: Yeah. A hundred percent. You have to start, you have to be thinking AI first in a lot of what you're doing, but I'll tell you around here at control and compound, one of our, one of our best employees these days is Claude. I'm not, I don't know where I'd be without, uh, Claude and chat cheapy team [00:36:52] Darren Mitchell: these days. And we like the other employees too, but you know, the employee of the month was Claude [00:36:58] Christina Wyatt: last month. Yes. Well, we all had a good joke when we said it though. We all had a good joke when we said it, uh, which moving into the control and compound news, we started this, um, update the monthly podcast by talking about the new Instagram account that we have set up. That was a pretty big thing for us last month to go through. Uh, it was, you know, a little discouraging going from 30,000 plus followers down to starting from the beginning. Uh, so we, we do a pre at control and compound underscore is our new Instagram account. Uh, but what we went through to try to get that back. I'm not sure if other business owners have ever gone through that before, but we tried a lot, eh, Darren, and we just, uh, couldn't be disabled and it wouldn't, uh, we couldn't get it back. [00:37:40] Darren Mitchell: And like, no one's told us why, like we, we didn't change anything. We didn't violate any rules. We didn't do anything. Um, you know, the, the metal laid off 60,000 employees. And now, you know, the downside of AI it's AI reviewed and AI reviewed it. And they said, no, we're going to have disabled you and there, there's no appeal. And, uh, I'll tell you as a, as, as business owners, like we are that spent years building, you know, Christina, I remember you and I, I think, I think we get a cake when we get a thousand followers, we get a picture of you, you and I in the boardroom with a cake going, Oh, we're a thousand followers, you know, and then we're up to 33,000 a couple of years later. And, uh, and now, now we're really, you know, start starting back. Hopefully we'll be able to ramp up a lot quicker and hopefully those, uh, anyone listening today can, uh, can, uh, can, can follow us at controlling compound underscore. But, uh, yeah, that was, uh, that was a tough lesson, uh, as business owners, we went through this month and, uh, we got through it. We'll be stronger and better and bigger and all those things going forward, but, uh, always a couple curve balls in business. [00:38:50] Christina Wyatt: Yeah. Had to pivot on that one. So we'll, we'll keep, we'll keep growing. Uh, another piece of CNC news is keep a lookout. We are going to be launching a new monthly newsletter. That's going to be coming out, kind of recapturing some of the podcasts that we do each month. Some of the things we talk about on these updates coming out in a newsletter form, um, with updates across the team as well. So I'm excited to have that, uh, roll out happen here. So keep an eye on your emails for that as well. [00:39:18] Darren Mitchell: Nice. And then if we look at podcasts, uh, last month, uh, for those of you who haven't listened to the Travis McDonough entrepreneur spotlight, I encourage you, this was, this, this was one of my favorite episodes I've ever done. I've ever, I, I listened to it twice, even afterwards. Sometimes I don't listen to my own podcast. I just, what, what Travis, uh, how Travis spoke as an entrepreneur and the lessons and, and the stories and the highs and the lows. Uh, it was just an incredible podcast. So check that Travis McDonough episode out. We also did a great episode on what if you die tomorrow, what happens? Uh, we got some nice feedback on the EA EV gamble that the Canadian government took, uh, how that, uh, panned out and then, uh, loved our financial ops autopsy on, uh, Michelle, Michelle Romano. It's nice to actually, you know, take a Canadian to do the entrepreneur spotlight on someone who's alive or the financial autopsy on someone who's alive, Canadian, young. Um, and we actually, you know, had the chance to spend a little bit of time with, so that, uh, that I, uh, I really like [00:40:31] Christina Wyatt: that Michelle Romano one as well. Yeah. And going into the month of August, uh, we're going to continue our entrepreneur spotlight, which is becoming one of my favorites, especially after that Travis podcast, all the great entrepreneurs we have had on, uh, the show. We've got a business called Seven Fathoms that is coming on. So you're not going to want to miss that one. Uh, we have a, from business owner to banker. So why business owners are becoming bankers, why they have to become bankers. Uh, we're going to continue our financial autopsy with Ray Kroc. So I enjoyed doing that one. Um, uh, following that one through. And then the last one here, do high income Canadians pay their fair share in taxes? I'm going to answer that question for you. So you're not going to want to miss that one either. We'll, uh, we'll, we'll go through that as well. Excellent. Well, that's the August monthly [00:41:18] Darren Mitchell: update. Thanks for watching. Thanks for listening. Have a great day. Thanks for watching that episode. Don't forget to subscribe to our YouTube channel, click that like button, hit that bell button. So you never miss an episode. And if you want to learn more about us, go to controlandcompound.com. We'll see you next time. [00:41:35] Christina Wyatt: Thank you for tuning into this episode. 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