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Hello everyone, Welcome to Economic Impact. Today is Feb 11th, 2025 and as usual I am with our chief Economist Stéfane Marion. Stéfane, surprisingly once again, assets are doing well.

All the countries that are in the crosshairs of the US President of Washington on a tariff war are out actually outperforming the S&P 500. But more tellingly, Denis, all-asset classes are up this year so far this year. And as I said, might be surprising to see a stock market behaving so well outside the US on the premise that we understand that there's a global trade war. But whether it will be as punitive as what we think for the global economy is not the baseline scenario at this point in time. So, the market is thinking otherwise versus what the president is saying at this point in time.

At this stage, it seems that Europe and Asia are not too concerned.

Exactly. I mean, again, these are the countries that are facing the biggest threat of US tariffs right now. And yet the market's saying it will be too punitive for the US to proceed with a 25%. Doesn't mean there won't be any tariffs, Denis, but 25% tariffs will be too punitive on US inflation. Therefore, they're not, markets are not buying it right now. I think it's interesting to look at this this way, market expectations. But again, let's not be complacent because you know, something might still happen in the next few years.

Surprisingly, in Canada, we see up 3.1%. But it's not all sectors. In fact, it's only two.

That's the point, because just the sheer threat of these tariffs is fragilizing the Canadian economy. In case in point, most sectors are not behaving so well year to date. But the sector that's carrying the TSX, actually there's two. Well, you know, technology, but that's a small component of the S&P TSX, but mostly it's the materials sector up 13% year to date, really enabling the Canadian stock market to outperform the US, for example.

And with the uncertainty, there's gold and there's materials and gold is in a new high.

Well, if you're going to look at materials, you cannot not speak to gold prices because we're a big producer and that's a large chunk of the S&P TSX and gold price is that new all-time high. In nominal terms, $2900 or so U.S. dollars. Adjusted for inflation, you go back more than 50 years and it's a new all-time high. So, basically some components of financial markets saying while you were not so sure about this tariff war and the way to protect myself is to buy a tangible asset and one of them would be gold. There's probably still upside for that.

And in history gold has been, you know, a safe haven against inflation.

It could be a safe haven against U.S. dollar depreciation, but the US dollar is a new all-time high. But you're absolutely right against inflation. Gold is looking at inflation expectations right now. And this is a poll made at the consumer level and say, Denis, what do you think inflation might be a year from now? It actually has surged more than 100 basis points in the past month or so. And people saying, you know, it might be 4%, Denis, I'm telling you, if we have 4% inflation, there's no way that the Federal Reserve can ease monetary policy. So, this is why gold price is saying if you want to be aggressive on a tariff war, a global tariff war, we might keep you in check because inflation is going to be going to be higher.

Yeah. And at the same time, you know, we have rates staying pretty high in the states and the stock market doesn't go down. Then we have that, you know, what we call the first-time negative equity premium that we haven't seen for a long, long period of time, almost 20 years.

Yeah. So, if you're an investor, you say if I'm willing to take the risk to invest in the stock market, there's a there's a premium I'm willing to cope with. But if at some point the equity risk premium turns negative, that means I'm not necessarily compensated to take that type of risk in the stock market not knowing what whatever tariff war will unfold or not versus what I get to invest in something perceived to be safer. 10 year treasury yield. This is the first negative equity risk premium in a generation. That's a generation. So, this is why the stock market is vulnerable to this global tariff war. This is why we said last month that we don't think 25% users baseline scenario. We know there will be some tariffs on China. Right now, there are some, but whether they can be aggressive, or Washington can be aggressive remains to be seen without fragilizing the stock market and creating a negative wealth effect for US consumers.

And back in Canada, there's a big concern. Uncertainty is at the highest level that we haven't seen.

The Canadian economy is fragilizing. You're absolutely right. We saw it in some certain industries of the S&P TSX that we showed previously. But at the same time, if you want to go put a number on it, if you look at the index of policy, economic policy uncertainty, record high. So, it doesn't matter that we've signed free trade agreements with more than fifty countries. Corporations right now don't know how to manage their business plan because we don't know if these tariffs threats will unfold or not. That we saw this week a 25% tariff on aluminum and steel. That would be a big impact on the Canadian economy. But the tariffs are not to be applied. well, might come into effect on March 4. So we'll see what happens over the next three weeks. But clearly, you are fragilizing the Canadian economy right now with tariff uncertainty. You don't need to have the tariffs in place. The uncertainty itself is fragilizing the Canadian economy.

Yeah. And investors in those new factories and, you know, and so on. They're frozen right now. They won't do anything.

You're going to get weak investment and therefore probably weak economic activity in the first half of 2025.

That's why we need the government to be in place and put, you know, stuff that will help those industries to invest and keep the economy going, you know, up and working despite the fact what's going on South of the border.

I think there are discussions on that. Remember when we spoke to interprovincial trade barriers. Now there's more talk about this. People are talking about, you know, energy security is very important for economic sovereignty. So, we're saying, you know, a big change. We could actually aspire to policies that will be, you know, positive for the Canadian economy in the second half of 2025. The first half will be shaky, but the second half, in the meantime, what it means, Denis, is that the Bank of Canada is forced to be more aggressive on monetary policies in which they mentioned just a week ago when they ease monetary policy.

And with that uncertainty, you know, the Loonie the Canadian dollar keeps going down.

Well, since the Bank of Canada is saying that, you know, this uncertainty is fragilizing the Canadian economy. So, they're opening the door to further rate cuts. Therefore, the interest rate differential is driving the value of the Canadian dollar, which early in February when we thought that the tariffs would be imposed at the beginning of this month, it's been delayed till March, Canadian dollars went to 147, came back to 143 where we stand right now. But again, you can't forecast an appreciating dollar until we have a better visibility on tariffs or not. But at the same time, having visibility on Canadian policies will be very important to support the currency. And Denis, you know what, we want to put a positive spin on that. We believe that what's going to happen in the second half of this year should be more positive for the Canadian economy, but there's still a few weeks of uncertainty to cope with.

Well, we'll keep the positivism of your comments and thank you once again. Thank you all for joining us. We'll be back early March. Thank you. Have a good day.

Hello everyone and welcome to Economic Impact. Today is January 22nd, 2025 and as usual, I am with our Chief Economist, Stéfane Marion. Hello Stéfane.

Hi Denis.

Well, we have a lot of noise on the market so far this year and as usual can we have a look at how the market performed so far?

It's a complicated world, Denis, and sometimes you have to look at what the market is saying. And at this juncture, many people might be surprised from the fact that, you know, equity markets are actually positive year to date. And maybe except for Japan and emerging Asia, which is, you know, down very slightly. It might surprise many people to say that despite all the political noise and the tariff threats, the markets saying, well, we're not sure that's the baseline scenario where the US president would come in very forcefully and put us in a situation where we have a global tariff war. So, so far, so good. Of course, it's early in the year, but it might surprise many people to see that the markets are important.

And because of what's going on today, the presentation will be a bit different. We need to talk about, you know, the trade balance, tariff and so on and so forth. But if we start with the trade balance.

I think we want to be very clear to like, we don't know what the full answer is right now. So maybe we'll find, you know, potential solutions for Canada to deal with this uncertainty that we face right now. Now what is clear that we know from Washington is the president is annoyed with the US trade balance, which is very much, it's significant trade deficit with the entire world, 3% of GDP. Denis, it's been a long time since the US actually saw a trade surplus.

And when you compare those tariffs from where they were many, many years ago, where do we sit?

It's very low and the president will say we are tariff structure is very low, but your deficit is very large. So either you want to bring that to surplus, then your tariff structure is going to have to be very high. So, what the president is talking about is going for a tariff structure that's roughly 2% right now to something that will be equivalent to something much more punitive sometimes that we see, you know, double digit tariffs that we saw 100 years ago. But keep in mind, Denis, that back then the import content of US consumption was much smaller. Nowadays for every dollar consumed in the US, about 12 cents comes from imports. So if you want to put 25% tariffs on 12% of consumption, well, you know what it means on inflation, 2 percentage point higher, that would bring inflation closer to 5%. I don't think that's palatable for the president and I'm not sure it's palatable for the bond market.

And if we just turn back a bit to performance and instead of the stock market going to the bond market, the bond market is reacting quite differently this time around. And it's probably because of all of the uncertainty that's in the air.

So, that's why I say, we can't say for sure what the scenario will be for the balance of the year. Clearly the stock market is saying, well, I don't see much chance in a big tariff structure or a very aggressive one. But the bond market is saying, well, I'm going to give you something you've never seen and that's a 10-year treasury yield that's–

Which one is right? The bond trader or the stock trader.

We will find out in the next few months. That's why we've been telling clients, well, be careful because there's no certainty in this type of world. But I think there is something to be said to that the president is not comfortable with the 10-year treasury yield moving higher by 100 basis point since the Fed started easing interest rates. Because that what it means, Denis, is that the mortgage rates are rising in the US. So a lot of people wanted to refinance their homes and say, well, the Fed is easing. I'm going to get a cheaper rate. But you're not getting a cheaper rate because the bond market for the first time in over a generation is saying “Hey, if you're too aggressive on tariffs, there's going to be more inflation and rates will go higher”. So I think this is what the president will be keeping an eye on. And this is why there's no certainty on how we can go with the 25% tariff without hitting the US economy negatively on long term rates.

Let's come back to the, you know, the commercial balance and can we explain how does it look Canada versus what Mr. Trump is saying?

So what I showed to the bond market and what's happening in equities saying, well, I don't think he can be overly aggressive without jeopardizing economic growth in the US. But from a Canadian perspective, clearly we need to find a better response to how we approach Americans. There's no, you know, having a free trade agreement is not a given, right, right. So we need to maintain good relationships with, with the US and US saying, well, I'm subsidizing you dramatically with trade on USMCA, to which I reply: listen it is true that the Americans have a slight, you know, trade deficit with us, but it's only $32 billion.

If you put things in perspective, the 32 billion versus the whole commercial deficit in the state, it's pretty small.

Well, let's put in a number. The Americans have one thousand billion dollars, so 1 trillion in terms of deficit, but with Canada 32 billion.

Its peanuts.

3% yeah, exactly not much. And of that 3%, Denis, it's all oil and gas because the Americans actually for since 2008 are actually running a surplus outside oil. So even in terms of the balance on motor vehicles, the Americans are running a surplus. Yeah. So again, this is where we need to be very good at explaining to Americans, listen, the deficit is really oil and gas.

And they want that.

They need it because without us they wouldn't have a surplus on energy exports because they can refine the crude oil that we sell them and sell it and transform gasoline, which–

And if I recall correctly, the one that because they want to have a fair sources of gas coming from Canada instead of other country that they're not that close.

We are a de facto strategic petroleum reserve for them. You're absolutely right. And the reason for that is because we now export. So the US imports 62% of the oil from Canada via pipeline, which is quite from a national security standpoint, which is quite attractive from their standpoint. So that's why, I mean, I'm not saying it won't happen for sure, but it would be, it is unlikely that the Americans would put a 25% tariff structure on oil and gas, which they need to main keep their inflation lower.

OK, let's get very clear. If they put a 25% everywhere, how does that affect the GDP?

No one wins. OK, but from a Canadian perspective, since you're asking, it would be quite ugly. It would be a GDP drawdown, or let's call it a recession, 6 percentage point, which would be the largest recession since the 1980s when interest rates were 20% in Canada. So the point, Denis, is this is the extreme case where there's a 25% tariff on everyone and there's retaliation. Obviously we're a small open economy. Even our energy would be taxed. Then we would have a problem. But again, Denis, that's not our baseline scenario. But you wanted me to give you the extreme case. This is the extreme case that we would contend with.

That's big.

It's big, but obviously the market is not pricing. But this is if you want the extreme scenario.

Those are numbers.

Bank of Canada numbers by the way, not mine.

OK, now we can shift a little bit to the industrial sector in Canada compared to the other countries where we're not at par.

Well, here's the challenge. The politicians are saying, OK, the Americans we need to diversify our export sources, but unless we want to sell them energy and it's very hard to do because our energy goes to us via pipelines. There's no real pipeline going east-west. So if we're gonna sell stuff–

We can’t put that in boxes.

Exactly. But what we can put in boxes are the widgets that are produced by our manufacturing sector. God knows we could do better there because what we've done over the past year is, we haven't been paying attention to our manufacturing sector. We were too obsessed and moving production elsewhere. Basically we were saying, oh, let's move or production elsewhere; will be less pollution in Canada. I get that it works, because manufacturing is very energy intensive, but if production moves elsewhere and forms of energy used to produce the manufacturing are more polluting in Canada, the planet doesn't win. Now I'm not happy that we now boast to have the smallest manufacturing sector in the G7 despite the fact that we have a comparative advantage on electricity prices and natural gas which are critical for the manufacturing production process.

That was one of your battles for the past year or so that we underinvested in our industries. We thought that everything can be digital nowadays. But you know, if trade is not so secured, whether southern partner, we need to have a critical base in manufacturing. There's a critical mass that we must keep in this country. And this is where I think that this is part of the solution. Let's say, well, OK, fine, the Americans don't want to. Let's, let's build a relationship where we sell within Canada on a higher proportion than what we're doing right now.

And last but not least, you want to bring us on another thinking about tariff, but tariff between provinces that are not really tariffs.

So what concerns me is that we're saying it's not fair that the Americans want to put a 25% tariff structure on us. But since you're asking, Denis, the tariff equivalent of the trade barriers that we have between us, between the provinces in this country is a whopping 21%. When you think about it–

Do people know that?

People are not paying attention. There is a way to take those into interprovincial barriers and put them in a terrific equivalent one, 21%.

You're telling me that we are as protective between us then the Americans wants between the Canada.

You know, Americans want to put 25%. We have 21% on ourselves. And that's not normal. And that's a way where I say, OK, maybe it's frustrating for producers not to have the visibility that they want to have with the Americans. But here's the thing, I can get rid of this almost overnight and say, hey, you know what, we can increase interprovincial trade that is only 40% of our production, maybe to back to 50% where it was before the free trade agreement. So, you know, it's all not doom and gloom. If you think about it, it's an opportunity that comes only once in a generation where all the Premiers sit down and you say enough with this, that's gone and we can actually provide visibility to our producers and keep a critical mass on manufacturing. So again, Denis, yes, it's annoying, yes there's lack of visibility, not sure what the market is pricing at this point in time, but not pricing the end of the world for sure. But from a Canadian perspective, this is probably the most important chart of the presentation. Please, let's get rid of this.

Well, on that Stefane, thank you very much. Thank you for that very special presentation. Hopefully it helped you. Hopefully it was constructive and we'll see you next month in February.

Hello everyone, Welcome to Economic Impact. Today is December 10th, 2024 and as usual I am with our Chief Economist, Stefane Marion. Stefane, once again stock market is going up.

Hi, good morning, Denis. It's been a great wealth effect for most households. We know that most portfolios are composed of equities new all-time high on the MSI all country index. So, yeah, it's striking how well the stock market is doing globally.

And is it worldwide or it's only North America phenomenon?

Well, you might not suspect this thing, but if I was to tell you who's what's the best stock market perform where? Where's the country, where the stock markets performing the best so far in Q4?

I saw the slide.

Yeah. OK.

So Canada we're up almost 8% quarter to date, outperforming the rest of the world. Year to date, we have a 24% gain exceeded only by the US at 28%. I can bet you that not many people thought Canada would follow the US as well as it has in 2024.

Stefane, are we catching up in Canada versus the US because our price earning ratio are lower?

Yeah, we spoke to that a few quarters ago saying that it was abnormal to see this discount on Canada versus US on the stock market perspective. So you're absolutely right that there's a catch up phase here. Half of the gains on the S&P TSX this year were accounted by P/E expansion. Yet Denis, despite this catch up, we're still trading at historical discount to the US. So if I was to qualify the Canadian stock market right now, I would not call it overvalued. It's fairly valued, not overvalued for the US it's probably a different connotation.

OK. And now if we go back to economy, the exportation, I think we need to talk about that.

Well, people thought that stock market would be under pressure this quarter because of the potential threats of tariff coming from the US. I know the president-elect spoke to 25%. 25% would be a massive deal on Canada, Denis. Because we have $600 billion of exports going to the US, that's 20% of GDP. So I mean, you know, putting these slapping 25% tariffs on that would seriously fragilized any economy and probably the stock market.

And we can talk about crude oil because people, I don't think they know how much exportation we're doing to the State.

So the reason the market is not buying into the 25% tariff structure is because they know full well that the president-elect has promised the Americans that they would get affordable energy going forward. So if you impose a 25% tariff on Canada, which accounts for 62% of US imports of crude oil, we are now shipping 4 million barrels a day to the US right now. You would certainly ignite inflationary pressures in the US. So that's why the, you know, the components of the Canadian stock market that's performing so well in Q4, aside from the IT sector is the energy sector because the market is saying no, no, no, there's no way Washington could put 25% of tariff without fragilized its own economy.

OK, Stefane, but there's something doesn't add up here, why the Canadian dollar is so low compared to the US dollar despite that.

Well, for some people it's a conundrum because the models are broken because normally you have an historical relationship between the Canadian dollar and the price of oil. We also include, you know, interest rate spreads on that one. So what is striking this time is that the Canadian dollar is so cheap... well, you know, 1.40$ more than 1.40$ versus U.S. dollar and oil is trading at $70.00. We've never seen this combination in the past whenever the Canadian dollar traded at current levels, oil was trading at no more than $30.00. So obviously it's a revenue boon for the energy producers, but from a purchasing power it's quite frustrating. So a lot of people are saying why is the relationship broken between oil prices and the exchange rate?

OK, but how are you explaining that? Is it because of the employment?

Interest rate spread. So economic performance, the relative economic performance in Canada vs US. We're not doing very well right now. The unemployment rate at 6.8% last month versus US at 4.2%. So the markets have jumped on this and they are now saying that we can justify the divergence in monetary policy between the two countries.

OK, what's your call on the next Bank of Canada rate cut or not?

Well, the market is calling 90% odds that they'll be cutting rates 50 points. Yeah, 50 basis points. So we gotta get closer to 3% as quickly as possible. Denis, I want to bring your attention to the fact that this gap in the unemployment rate is the widest we've seen since 2001, so over 20 years. So yes, you can justify this. And so the Canadian dollar is trading on rate differential between Canada and US as opposed to oil prices.

Well, it's the end of the year and now we need to look at 2025. How does it look?

More uncertainty Denis. So uncertainty can bring positive surprises, but also can be challenging for markets or the economy. The reality, if we look at economic policy uncertainty in US right now, it has surged. The president-elect is not yet sitting in the White House and there's a whole bunch of policies that been rolled out there. We know that there might be a tariff war between China and the US, not just Canada and Mexico. So we're reinventing the global supply chain. It's uncertain what it means to inflation and expectations down the road. The president wants to avoid inflation expectations to rise. But this is pretty acute in terms of policy uncertainty right now. And this is a fairly high level, even if you compare to 2016 when he was first elected.

Well, we've never seen. Outside COVID, you have to go back to 2012 where it was the debt crisis in Eurozone, US was downgraded back then also, don't forget that... And there was also the beginning of a war in Syria, which is reigniting again. So we'll see what happened.

Syria is back again.

Yeah. So that can bring more challenges for markets. So again, this is not everything is so calm looking into 2025.

And we had two really spectacular year in terms of performance.

Yeah. So the message is don't be greedy when we've had two exceptional years of market returns, doesn't matter which asset classes, 2024 is just as good as 2023. It's exceptional to see back-to-back years like that. So again, looking into 2025, there are still uncertainties. So just be comfortable with your current asset mix and whether it respects your investment horizon. If not, then just give you know the calls that need to be made. But again, I can't promise you a third year of exceptional returns given the uncertainty that we see out there.

Well, on that, Stefane, thank you very much. Thank you for all of you to participate and to listen to our monthly Economic Impact. On behalf of the technical team of Economic Impact, on behalf of Stefane and myself, we wish you a happy holidays and hopefully we'll see you back in 2025.

Hello everyone, welcome to Economic Impact. Today is November 20th, 2024, and as usual I am with our chief economist Stéfane Marion. Stéfane, we had an election in United States.

Yeah, it's been a shock for many people, many sectors, but for financial markets, Denis, I have to tell you it's been positive so far. And as you look at the year so far, year to date, we're looking at positive returns for every asset class. And you know what? Despite the fact that the stock market has done particularly well this year in the US, Canada too and last year, investors now believe that next year could be yet another banner year.

Wow! Can we say the same thing for across the world? Is it the same situation? Are we seeing the same results?

No breadth is not that great Denis when you when you think about it because the reality is that—there's a lot of numbers on this slide, but bear with me—if it's green, these markets reach a new all time high in November. There's only three markets in the world that did that, the US, Canada and Hungary. So not everyone wins in this new political or geopolitical environment.

And since the election of Mr. Trump, price earning are still at the top, at the highest.

Well, the reason the US is as high as it is right now, it's been driven by multiple expansions. So forward P ratios are now trading at 23 times forward earnings. Denis, if you look prior to the COVID pandemic, when earnings normally surged during a recession, you have to go back to 1999 to see earnings or price the valuation on the stock market as high as what we have right now. And, and notice that the valuation on U.S. stock market is 35% higher than it was when Mr. Trump first won his election in 2016. So there's a lot of good growth expectations already built in the current valuations.

And at the same time, we're observing shift into yield curve, major shift in the yield curve.

This is where I'll need you to help me because you used to be a fixed income specialist and you still are, but you are actively involved in terms of trading. So what we're seeing right now, what's helping fuel the rally in financial markets is the fact that the yield curve, which had been inverted for two years. And remember, you and I exchanged a lot of times on that saying an inverted yield curve is not a good sign for the economy. Well, guess what? The inversion has disappeared. And now people are saying, wow, if the yield curve inversion has disappeared, therefore the economy can only do better in the months ahead.

Yeah. What's quite interesting that we're seeing a yield curve, you know, shifting upward while we're seeing rates going down, and we don't see that very often in the cycle.

No. So it's a yield curve. You know, it's a steepening, but it's a bear steepener.

That's getting complicated.

It's complicated, but it's most important. Because if you calibrate your model on just the shape of the yield curve, you say, OK, it's steepening, it's good for the economy is one thing. But what's happening right now, it's steepening, but I can't calibrate a model for something I've never seen. So what I'm trying to say here is that yes, rates are coming down at the short end of the curve. The feds already reduced the Fed funds rate by 75 basis points. But long-term rates, 10 year treasury yields, are up 79 basis points. So this type of bear steepener, Denis, has not been observed in over 30 years. Since the Fed started targeting the Fed funds rate, this is the first time it happens when the Fed starts cutting rates. So most unusual.

But what's kind of weird also is that the government, U.S. government are going for, you know, probably one of the biggest deficits ever and we're seeing the yield curve going down. In fact, shifting U and treasury Fed fund going down, that's weird.

There's a malaise here that seems to be explained by the fact that the 10 year treasury yield is moving higher because people are concerned now because with the level of government debt in US. So unless the US is able to significantly reduce its spending, what we're looking at for the next few years is that the US debt to GDP ratio will exceed the previous high, which was reached after... well at the end of World War 2 when the US was financing a global war. So we are in unchartered territory. Hence the movement of the yield curve that is most uncanny.

Despite all of that P/E are high, yield curve is shifting up, Fed funds are going down. People are still expecting good results or good performance for the coming year. So people are looking at the yield curve with not necessarily the same amount of details that we should speak to, you know, is it a bear or bull steepener? So you're absolutely right. What's driving the market right now? It's a steepening of the yield curve, as simple as that. And yes, every region of the world is expected to benefit from the new economic policies that will be unveiled by Washington in the quarters ahead. So anyway, Denis, when you look at this, every region of the world is expected to be up next year. So I'm not sure everyone wins in a new political or geopolitical environment, but these are the expectations as we speak.

There's a lot of positive on the market right now.

There's a lot of positive on the market right now.

There's a lot of good news already priced in the market.

But the bond market is getting a little bit more suspicious.

OK, let's come back to Canada and talk about the, you know, what's going on in our own country in terms of unemployment.

So I'm going to tell you why we have a weak currency, right? So the reality is we have a big divergence in terms of economic performance with the unemployment rate for people age 25 to 54, which is your biggest consumer base if you want, at over 5.5% in Canada, whereas the US it's at closer to 3.5%. So this massive divergence, Denis, brings that if the economy is not performing, obviously monetary policy can diverge between the two countries.

Yeah, that does mean lower Canadian rate but lower Canadian dollar.

So the way your forecast models work, when you do your currency forecasts, if you have an historical, it's a near historical spread. Well, I won't say historical, but the highest since 1997. This divergence between monetary policy between two countries is likely to be sustained for longer because of the behavior of the unemployment rate which brings about a cheaper currency. So we're at 1.41 to buy U.S. dollar. Well, we might have to pay 1.45 in the months ahead according to our model if those interest rate differentials prevail for a little bit longer, which I believe they will just because of where the economy is relative to the US. So a lot of moving parts Denis.

Well, you have a lot to say today, OK, What kind of conclusion we can come with?

Well, the conclusion is it's even difficult to know precisely with precision where you are in the cycle because the US keeps on pushing more fiscal stimulus despite the fact that the unemployment rate is low. And with the yield curve that is starting to steepen right now and in bear steepener mode, we will see what happens in the months ahead, particularly that the stock market is not cheap in the US. So if long term rates move higher because people are concerned about fiscal policy, that might be an issue. Denis, I would also say, you know, not everyone will win in the new economic regime, but the market seems to be positioned that everyone wins. So I'm a little bit more skeptical on that one. I know that people are—there's a lot of hype that AI could boost productivity and that's fine by me, I have no issues with that. But down the road, we have to be, you have to be consistent with economic theory. If I want to do more AI, more robotics, I need more electricity and electricity costs are becoming a concern at this point in time. So by at large, Denis, it's a structural change. The selection will bring about structural change. Deregulation, tax cuts will be good for corporate earnings. But there are other concerns, particularly what happens with this steepening of the yield curve. So the message here today. So let's just be prepared to live with market fluctuations in a month ahead. There will be volatility, the market will find a direction. But I'm not sure that it's a one way bet that everything goes up next year.

And once again, let's be careful.

Absolutely.

Well, thank you, Stéfane, for being with us today. Hopefully, it's gonna help you in your investment, you know, assets and everything, portfolio management. We'll see you in December. Thank you for being with us.