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Hello, everyone and welcome to Economic Impact. Today is June 11th, 2024 and I am with our Chief Economist, Stefane Marion. Hello, Stefane! Morning. How are you today?

I'm good. Thank you very much.

Stefane, for change, we're going to start with rates or inflation?

We've been talking about potential rate cuts for a long time Denis. I don't know how many months it's been. First rate cuts in over four year... Last time we had a rate cut in Canada was the US presidential election. And so be it. We have rate cuts on the same year that we got another presidential election in the US but I don't think it's because of the US election that they're cutting rates.

I don't think so.

Now they're cutting rates because we're feeling the impact of restrictive monetary policy and case in point, profitability of US, of Canadian corporation has been declining in recent months. So yeah, I think it was time to cut rates. And at the same time, we're seeing a private employment kind of a stagnation. Well, I used to think policy makers or politicians don't like to admit if you don't have profits in your economy, there's a good chance that private sector employment won't do well. And the reality is with lack of profits, we've seen some stagnation in terms of private sector jobs. And you know Denis, the latest employment report in Canada show that on a monthly basis, the month of May was not very good, with seven of 10 provinces reporting a decline in job creation. It's actually outright job contraction. So yeah, you know what? It was time to cut rates.

And once again, when you're looking at the inflation, you know the ex shelter is still going down. Yeah, so I will admit to the fact that I know you're asking me that. Can I just look at employment? No, the BoC actually targets inflation, not the level of employment or the unemployment rate. And when you look at overall inflation at 2.7%, you could argue while it's still well above the 2% target, however, it's really is a shelter component that's driving the show. Excluding shelter 1.2%, yeah, the bank account was justified to cut rates. And who knows they and I do believe this is going to happen with rate cuts. You might entice property builders to bring us more supply of housing, which is desperately needed in Canada at this point in time.

That's quite interesting because lowering rates sometimes doesn't mean that you know the inflation will go down. Now it's the case because you're going to build more houses and probably that component will go down and it will help.

Permit and process the need because it's the first time that the Bank of Canada faces an environment where shelter is decelerating, where our shelter is accelerating. You never see this. But we've never seen this type of demographic growth or population growth. We've been speaking about that in 2024, it's going to be a very big year in terms of population growth. So yeah, it's an experiment in process. So I think you can think that those rate cuts, but it might entice more supplies. So let's see what happens in the coming months. And to add to all of this, economic data are not that good. No, not on the other side of the border in the US. So you you can see the Canadian side was decelerating. And in US as our main training partners still to this day, economic surprises have turned more negative in recent weeks. So clearly the impact of restrictive monetary policy is now being noticed in the US. And at the same time, US full time employment is going down. Yeah, so total employment was above expectation in May, but guess what full time jobs were down for the, I think the fifth time in six months and then you were down 1% year over year. It's a decline that's never been observed in the US outside the recession. So I think this is where corporations are also trying to protect the profit margins. They're hiring, but they're no only hiring part time, which doesn't speak to superb economic growth for the second-half of the year for the US. And with all of those good news that should bring rates down in the United States. Inflation is still high. Yeah. No, the Fed is handcuffed right now because we've had 4 consecutive months where the monthly change in inflation on an annualized basis is well above the 2% target, you know that the Fed would like to see. So no, you can't cut rates aggressively right now. So even though the job market is slowing down, the Fed is handcuffed. It's unable to provide fiscal or monetary stimulus as quickly as Canada. This is where we're seeing a big difference between the inflation in Canada and the inflation in the US. You know, the, let's say the data are different, the components are totally different, The source of inflation is different. In Canada, 70% of inflation is driven by supply issues, mostly because of the shelter component of CPI. In US it's only 30%. So 70% is driven by demand factors, which has been stimulated by this fiscal policy in the US. This is the US election year. So they've deployed the most aggressive fiscal stimulus in U.S. history with the unemployment below 4%. That generates inflation. Yeah, for sure. And at the same time, you know, to make things even worse or more difficult to predict, we see the shipping costs going up once again. So, you know, we've said before you have to manage your portfolio risk, but you have to have to manage uncertainty because of politicians. And while with all these fights between countries about, you know, tariffs, protectionism, etcetera, shipping costs are up 400% since the start of 2024. So that makes your inflation outlook slightly more uncertain as these politicians come in with more tariffs. So that's why the Fed can't act quickly. There's some resilience in inflation coming that from these policy maker. And that will affect all country no matter what. I absolutely believe so. So, yes. OK. And now if we talk about performance and return, assets did quite well, except bonds. Yeah, so, so far so good. 2024 has been the first half anyway, has been a good vintage. Every asset classes are up except the bond market. So for Canadian investors, we, we, we've done great this year considering all the challenges, but there's a lot of good news embedded in these, in these, in these evaluations. So I can't promise that we're going to get the same type of return in the second-half this year. Note Denis that what frustrates me on this is that the stock market has done well... Canada, not so good. It's still a positive return, don't get me wrong. But we are trailing the rest of the world when it comes to the performance of our stock market. And we tought just at our last Economic Impact, you know, and this time, once again, we see the gap going wider. Yeah. So the reason we're not performing as well as the other stock market is because the S&P/TSX is not seeing multiple expansion as aggressive as what we see elsewhere, so much so that we're trading in the second quarter of this year right now, where we are now at a nearest direct discount to the US. So yeah, hopefully we'll do better in 2025. Clearly, this is abnormal and reflects some unease about the Canadian economy. And with that data and that statistic, you know, we can translate that with investor demand in Canada and we see that the investors are not buying canadian asset. Yeah. So, yeah, there's a discount, no multiple expansion is because we're facing continued outflows from foreign investors. So if you look at net foreign purchases of Canadian equities, they've been on a trend decline since 2023. So 18 months, Denis. Hopefully the worst is behind. We're getting rate cuts in Canada that should stimulate profits and hopefully 2015 will show a better year in terms of economic policies. It's an election year. We're going to get fiscal stimulus. So hopefully we do better because clearly this is a trend that has never been observed outside the Canadian recession. So surely things are better than that in Canada. We'll see for 2025. OK, We start with rate cuts. We have to finish with rate cuts. How many rate cuts and where's the floor? So, I would think that maybe we can go, two to three times more by the end of this year. Monetary policy will still be restrictive. Now you're asking me how low can we go? I don't think we can go much lower than 3% Denis and again, the geopolitical backdrop argues for maybe stick your inflation globally. And as I said before, the reason why we see maybe less rate cuts in 2025 or the pace of rate cuts is more uncertain because we're going to get this fiscal stimulus in 2025 in Canada. So, ... good news, Denis, yes, more rate cuts coming this year and let's not be greedy on how many we're going to see though. OK, well on that, thank you, Stefane. Thank you everyone for being with us. Hopefully we'll see you next time in July. See you.

Hello everyone and welcome to Economic Impact. Today is May 14, 2024 an I am with our Chief Economist, Stéfane Marion allows the fan.

Good morning, Denis. How are you today? I'm good.

Good, once again. we are going to talk about performance on the stock market.

Yes, it wasn't a very good month in April. As you recall, we spoke to that last month. But so far this month we've regained some of the loss ground. Then global equities are slightly up on the quarter, Denis. Still comfortably up year to date, but on the quarter, we've regained the ground lost in April. Note that Canada is actually outperforming by a little bit the global index, so that's a bit of a change.

Is this widespread in Canada or is it only very few sectors?

No, it's quite narrow, Denis. It's, it's, it's mostly a reflection of what's happening in materials, gold prices, mining stocks and also the energy sector, up 3.7% in the quarter. Note that, year-to-date materials up almost 18%, almost 16% for energy. Were it not for these two sectors, we wouldn't have a positive return year to date on the S&P TSX. So, it's still narrow.

But, because of expectation on rates and rates seem to be reaching a plateau right now.

Well, I think the reason the market has been expected, you know, has done well year-to-date as a reflection of expectations that you know central banks are done with monetary tightening. You can see that in emerging markets, I mean some countries that I actually slightly lowered interest rates. As for the advanced economies, we saw Sweden coming down with rates. Europe's about to start, but the big question is what will happen in you as the second-half this year. This is what the stock market is looking at right now.

Yeah, but when we're talking about rates in North America, we're talking about inflation. But inflation has to come down to see rates coming down.

But it's not right now. Not collaborating. Not so far. This is CPI week this year. But if this week is CPI week - if you look at the PCE deflator, which is the Fed's preferred measure of inflation, we have 3 consecutive months where the monthly change in inflation annualizes well above the 2% Fed target the last reading. We had was close to 4%, so clearly this is not a Fed friendly number. An you know it's all due because of labour market once again. Well, I mean if inflation is not collaborating then you got to look at what's happening in wages and clearly that's not helping either. And labour compensation is actually accelerating on the quarter. This is what's happening when you deploy massive fiscal stimulus would on an unemployment rate below 4%. So at 4.8% , Denis, it's just not Fed friendly. And, so I'm not saying that the Fed won't be cutting rates this year, but I think it's going to be at the very end of this year. So right, cuts are coming, but maybe not as aggressively as we thought. So hands from the stock market perspective, you might limit somebody upside.

Yeah, and if we're coming back in Canada. So we just had the employment numbers, still a good number.

90,000 jobs created in April. That is almost five times above expectations. But you know what, Denis, the unemployment rate did not come down, so the door is still open for bank account or rate cuts. And the reason the unemployment rate did not come down is that, unlike expectations, population growth is actually accelerating so far in 2024. So note that historically over the first four months of the year normally population rose 110 thousand, last year was 280,000 on the first four months, which was an all time record high, but you know, new record this year. Up 47% above the all-time high recorded last year. More than 400,000 individuals, Denis, that is a new record, all time record, this is unprecedented.

Are you predicting a new record this year in terms of population growth once again. Well, to be honest, it's been 2 years in a row now.

Yeah, I know to be honest I thought that we might decelerate this year but based on these numbers you're likely to accelerate. And the reason for that, Denis, is Ottawa has warned people that starting in 2025, there will be some limits on foreign students and temporary workers. So, some people have probably front loaded their decisions to come to Canada. So, it's likely to be a new record in terms of population growth again this year.

And when we're talking about inflation, rent inflation also big part of that huge number that we have.

Remember when we said in the passage you quote David Foot, the most famous Canadian demographer, he once said demographics explain two thirds of everything. So would you have this type of demographic shock, you shouldn't be surprised to see rent inflation moving higher. So, Canada wide, where at 8.5%, which is the highest level since 1980. In provinces such as Alberta where population growth is the fastest in the world. We're talking about rent inflation at 14%. So, at 8.5% you have limited downside. So what that means it keeps inflation slightly elevated versus expectations. So, it means it doesn't mean that the Bank and I won't be able to cut rates. I think they will be able to cut rates, but it won't be as aggressive as what we've seen in the past. So, you have to be prepared for rate cuts, but not massive rate cuts.

Yeah, Thank you. Last month you started talking about electricity consumption in the US. If we do the same thing in Canada, how does it look?

Big surprise here too. So, in the US we know electricity demand is surging on the basis of manufacturing reshoring. From a Canadian perspective, it's not the case is not manufacturing reshoring. Again, it goes back to demographics explain two thirds of everything, and with surging population we've had it 4 million people over the past four years. We're on track to add four million people in the past 4 years, but that's what we normally do in 10 years, right? So yeah, I don't think Ottawa was ready for this type of growth or this change in trend in terms of electricity demand. So, after 15 years where we outsource manufacturing production to China or the rest of Asia manufacturing, electricity demand was quite stable and we're now at an inflection point. This is surprising. Everyone, every country is being surprised by this right now, this surge in demand for electricity. It's population growth, but also massive demand from AI, right?

For sure. But at the same time, because of that, it's the first time that we're seeing deficit in electricity production in Canada.

Well, you want to see how surprised you can be when you don't plan for that, do you? And, when there's less hydroelectricity available from BC or Quebec, because the water reservoirs are a little bit depleted, you end up having the first Canadian electricity deficit on records. So last winter we were forced to import electricity from the US. Which is produced from natural gas and coal. So that's a big surprise. I don't think anybody expected this and that's a big deal. So, you have to be prepared for rising demand that might lead to that. So, we need to add capacity here too.

Yeah, I'm talking about natural gas because now Ontario needs more electricity. They need more natural gas to produce that electricity. Well, which is a big change.

Again, demographics explain two thirds of everything. So from an Ontario perspective, think about the GTA. The Greater Toronto Area saw its population growth accelerating 66% above last year's level, which was in all-time high. So, on the GTA alone, you've added 100,000 people in the first four months, which is unprecedented. That means there's more demand for electricity, and the electricity capacity at Ontario has at this point in time comes from natural gas. Hence the reason why the natural gas electricity production, well the electricity production from natural gas actually more than doubled over the previous year. And it's likely to remain on an uptrend, Denis, because we have even yet to start producing all these electrical vehicles that will demand a high proportion of electricity. And what population growth so strong. I think what it does the need it argues for probably the need to probably push back those decarbonization objectives that have been put forward from a Canadian perspective again, we never thought we would get this type of demographic surge, so we need to adjust to this situation.

Thank you, Stéfane probably more question marks that we have in our head now than we had previously, but very interesting and thank you all for being with us. Above all, don't miss the next meeting early June until then, thank you.

Hello everyone and welcome to Economic Impact. Today is April 16, 2024, and as usual I am with Stéfane Marion, our Chief Economist. Stéfane, welcome again.

Good morning, Denis.

We have to come back to you know performance of stock market in this start of the quarter.,

Not that great. No, it's pretty much negative across every region, Denis. Still positive here to date, but there's some malaise in the market at this point in time to start the second quarter, Denis.

And, that malaise is probably linked to inflation once again.

Yeah, the big I world where the inflation numbers are not good, particularly in the US, it's been accelerating over the past three months. If you exclude the housing sector, you're running at roughly 8% annualized rate. The market was not happy to see this, Denis. And what that does is that if you recall back in November, Jerome Powell went on the record to say that I will have the ability to reduce rates aggressively in 2024. Well, with these inflation numbers, you know this, you know the bond market does not believe that anywhere. So, it's pretty much back to square one for the Fed with the bond market probably targeting, you know a level of 5% again just where we were last November.

Yeah, it's a nice comeback, but at the same time we have gold making new height.

Yeah, it's not just the bond market that's doubting the Fed's ability to cut rates, Denis. The price of bullion now is at an all-time high above $2200 an ounce. U.S. dollars by the way. But adjusted for inflation, the blue line was still 20% away from the all-time high that was reached in the 1980s, which was above $2600. Denis, I'm going to make a forecast, I think we will get closer to that record high in the coming quarters to reflect you know the global uncertainty related to inflation but also the geopolitical backdrop.

But talking about uncertainty, at the same time, you know we have a stock market going, going very well and the way you compared to Fed fund, there's a question that should come in the head of investors, right?

Well, the valuation question is a good one, Denis. And if you look at currently the return you get on the earnings yield on the SP500 versus the Fed funds, for the first time in over a generation, you get a higher return on just holding Fed funds as opposed to buying the stock market. You're just not compensated for the amount of risk that you're taking in the stock market unless you think that the Fed is able to cut rates aggressively in the not-too-distant future. So again, they need to see this type of stretch valuation, you have to go back to 1998. It's a type of stuff you don't see very often. So the Fed has to be able to cut rates quickly, if not, you have to reassess your valuation in the stock market. Hence our reason to be a little bit more prudent at this point in time.

Either or, rates will go down or stock market will go down.

Yeah, you're absolutely right.

But you cannot keep going like it is right now, that's unsustainable.

Yeah.

And at the same time, uncertainty about policy makers is not that great too.

Well, when you're trying to forecast your earnings guidance, you try to say what's my outlook in terms of economic policy. It's not very stable right now, Denis. Or if it's stable, it's very stable on the high end of risk and economic policy. The average of the past five years outside norm that we've seen since 2015. So from a stock market perspective, you know that's not that great to cope with both monetary policy uncertainty as well as economic policy uncertainty that reflects the more complicated geopolitical backdrop. We just saw what's happened with Iran and Israel right now. I mean this, this is complicated right now.

And all of that, you know, US small business index is still going down.

Well, yeah, you're right, like consumers, corporations don't like uncertainty. And small businesses in the US who account for 50% of job creation, they need are not very confident right now. It's actually the lowest level of confidence since the great financial crisis. So that argues for a more tepid job creation environment for the US in the months ahead, so yeah.

And there's one thing going up though, demand for electricity.

Well, that's surprising because if you're a small business, you're coping with, you know, monetary policy uncertainty, geopolitical uncertainty and now energy price uncertainty because for the first time in a generation, US electricity demand is on the upswing. That was not supposed to happen. No one was forecasting this, Denis. And the reason for that is we all knew that the US was planning to reshore manufacturing activity, but no one guessed that IA, artificial intelligence, AI was going to be deployed so quickly and that is so energy intensive, Denis. Now you have to increase your energy production or electricity production. And in the US, it mostly comes from natural gas and coal for 60% of electricity generation. So, what that means is for everybody that was saying, well, all these governments have these plans to decarbonize over you know, X many years, all of a sudden with surging demand on electricity, you have to push that back. So again, the uncertainty is even at the decarbonization level, what can government do under these circumstances? What it says to me, Denis, I think those targets will have to be pushed back, unfortunately, because you can't reshore and do AI with no electricity consumption.

Yeah. And you cannot build those dams at the speed that we need to achieve those goals.

Alternative energy cannot be deployed as quickly as demand is rising right now. So, yes, it means more uncertainty on that front too.

And more to come on that front. But at the same time this morning we had a Canada inflation. Any surprises?

OK, I'm here to provide some good news, right. So yes, the good news was that the Canadian inflation was actually lower than expected. Denis, having said that headline inflation is at 2.9%, which is a ball well above the 2% range by the Bank Canada having said this, it's mostly driven by shelter, which is at six points, you know close to 7% right now as you can see on the slide excluding shelter however, you're at 1.4%. So, Denis, to me, clearly those inflation numbers open the door for rate cuts in Canada before the US So we're going to get them here before the US for sure this year.

That's why the Canadian dollar is at 1.38 right now or so?

Again, everything correlates with something else. And yes, under the circumstances you're going to get a weaker Canadian dollar, which has been our forecast for quite some time. So, we're probably looking at another three to four cents depreciation of the currency. It's had a significant depreciation over the past few weeks. Expect a little bit more because now the markets have to reassess the fact that yes, the Bank Canada is able to cut rates before the Fed. So, there's a new currency impact on that.

Then to bring down that inflation due to shelter, we need to build houses... And a lot.

Yes. So finally in Ottawa they've concluded that the only way to bring down shelter inflation is to increase the supply of shelter. So, they have deployed a very ambitious plan to build formula and homes in the next seven years. So that would be doubling the number of homes starts versus what we have right now. It's very ambitious, Denis, and at the same time, it comes against a backdrop where we already have a record number of share of the workforce employed in the construction sector. So, it's we don't, we don't just need people to build homes, right. We, at the same time, need more schools, more hospitals, more roads, more sewers etcetera, etcetera. So that means that if there's one sector that's going to be busy and for the foreseeable future, it's the construction industry which is not bad news because it will limit the downside to the economy, but clearly something that might be supportive of the economy. But it's a very big challenge to meet the goals that were presented on April 12th by the federal government. Doubling home starts at this point in the cycle is a tall order, but at least we're going in the right direction.

On that note, thank you, Stéfane. Thank you everyone, for being with us. I will see you next month.

Hello, everyone and welcome to Economic Impact. Today is March 19, 2024 and as usual, I am with our Chief Economist, Stéfane Marion. Hello, Stéfane.

Morning, Denis.

Good morning.

Well, another month, same story. Equity is still doing very, very well, but not only in the US right now. Yeah, another month, another record. And you can see it's not solely driven by the US right now. The blue line is the overall equity markets global. The red line is excluding the US. So it seems like people are interested in buying something cheaper elsewhere. So therefore they're buying other country stocks and it's moving the needle higher for equity markets.

Well, good for them, but at the same time not all the economy are going in the right direction.

You're buying on hope, Denis, because economic data is not very constructive right now. It's mostly PE expansion, so price earning expansion, as you see on the slide, we only have 3 countries in the G7 economies that are contracting and 3 others that are stagnating. So really, it's the US that stands apart from other countries. But I assure you any monetary policy is restrictive in every country.

OK. But at the same time in the US we are seeing and keep seeing a very, very big deficit.

Yeah. So if you're asking me why the US is doing so much better than other countries, because I had not forecast unprecedented government deficits in the US, Denis, running at roughly 6% of GDP right now. It's unprecedented to see this type of fiscal stimulus at this at, at this point in the cycle. So were it not for the government, I assure you the US economy would be much weaker than it is right now.

Yeah, and we are in an election year. That means that they may stay like that for a while.

Yes. But it depends on what the impact will be. Also on interest rates down the road. If you de anchor inflation expectations because of massive deficits in the US. Yeah.

And at the same time we're seeing a contraction in employment, which is kind of unusual because you know we are having such a big deficit, we should create more jobs. But even if the jobless rate is at 4% or so, we're creating less and less jobs.

The impact on the private sector coming from restrictive monetary policies, particularly small businesses, Denis. So if you look at full time employment in the US, it's been stagnation for the past 12 months. So corporations, in order to salvage their guidance on profit margin expansion, are forced to reassess their needs on the labour market and therefore they have opted to hire people part-time nowadays as opposed to a hiring them full time. And that speaks to me to a potential deceleration in the US economy in the months ahead. And we're going back in history and you're bringing back the bank, you know, problem that we had in the regional banks last year and the next slide I think showing that we should be concerned now.

There is stress in the private sector. If you don't hire people full time, should you be surprised that we're seeing delinquency rates on the rise for consumer loans and credit card loans, which by the way, are higher than they were at the height of the global financial crisis in 2008, 2009. So that speaks to me, Denis, in saying that you know what, yes, the consensus is expecting a soft landing for the US economy. Perhaps that will happen, but that's not our baseline scenario because we view this stress as symptomatic of significant deceleration to come in the US not withstanding massive government support. At this point in time, I still think we're going to see significant economic slowdown and therefore you'll be forced to reassess your profit expectations.

OK. Then maybe on a better note or not, if we are coming back in Canada on the employment sector. How does it look now?

Denis, no but I want inflation to come down! But if you want inflation to come down, you gotta slow the private sector. So it's slowing in the US, so let's not be surprised, but let's be prudent on equity exposures at this point in the cycle. So in Canada, not much better than any restrictive monetary policy is impacting the private sector. And you can see on this slide that it's been stagnating for the past six months. So were it not for public sector employment, labour markets would be much weaker than what we've seen so far in Canada.

At the same time, we're not investing enough in the Canadian economy.

No, we're not. And two things, private sector slows in terms of employment. We've seen a resurgence in business insolvencies which are back to where they were in 2008. So Denis, that's not great for productivity down the road such as the private sectors being negatively impacted by restrictive monetary policy.

And you know if we're coming back to the GDP versus the US in term of PPP, how do we look?

Well, first of all, on productivity, we're not doing well at all. So that's a reflection of what you said. We need to attract investment in this country. And what we've seen is that the most recent data speaks to 3 consecutive years of declining productivity. So what that says, Denis, is that in order to get the economy to do better in the months ahead, we need to attract investments.

And that's kind of new. Three years in a row and we are accelerating right now compared to last year. Yeah, it's a big concern.

It's unprecedented and if you don't have good productivity, it will be reflected in earnings expectations and will be reflected in the relative performance of equity markets around the world. So we're definitely not doing well. And it's a reflection also of what you see, this discount of the S&P TSX relative to the S&P 500, is investors, whether they are Canadian or foreign, are shunning the Canadian market right now. So as the data on productivity was published, Statistics Canada also showed that for the first time since 2007, both foreign and domestic investors were taking some of their marbles out of the Canadian market. So therefore, yeah, that explains the relative underperformance of the Canadian economy. So basically, it's really important in the next federal budget, Denis, that the federal government comes up and with a more business friendly environment to encourage institutional investors to bring back investment to this country. We need a more business friendly environment in this country.

And it's even worse when you compared to the US. Oh, if you don't want to do that, Denis, then we're just going to get, if you don't do anything, we're going to get this continued deterioration on the relative standard of living between us and the US. So per capita GDP in Canada, which used to be 82% of the US, right now is down to 76%. So we're earning, you know, 1/4 less than what the Americans are earning right now just because of this, this deterioration in productivity, which is symptomatic of lack of business investment in this country. And this is why we need this next federal budget to be more business friendly to attract investment to the country.

Last but not least, one of our favorite subject, inflation, and we have a very fresh number this morning. How does it look?

It just came out, Denis, so CPI was very, very low for this month. So you're down below 3%. But then if you exclude the shelter component on which the bank had is has no control, you're at 1.3%. So that to me opens the door for potential rate cuts in Canada this summer. You know you can't justify keeping monetary policy as restrictive given what's happening in the private sector, which we've been talking to for the past few minutes. The Bank of Canada has to change its forecast and open the door for rate cuts as soon as its next monetary policy. Meaning, they may not cut rates in April, but I think they will open the door for rate cuts this summer.

OK, is it too late?

They waited too long in my opinion, but it is what it is. Their models are calibrated. It's hard to calibrate models for this type of economy. But yes, that argues for rate cut, but it also argues for a weaker Canadian dollar, Denis.

Well, thank you, Stéfane, and thank you everyone for joining us today. We'll see you next month. Goodbye.