Not Convinced on Cuts - Views from the North

Ben Reitzes:

Welcome to Views from the North, Canadian Rates and Macro podcast. This week I'm joined by Dave Moore, part of BMO's London-based fixed income sales team. This week's episode is titled Not Convinced On Cuts.

I'm Ben Reitzes, and you're listening to Views from the North. Each episode, I'll be joined by members of BMO's FICC sales and trading team to bring you perspectives on the Canadian rates market and the macro economy. We strive to keep the show as interactive as possible by responding directly to questions submitted by our listeners and clients. We value your feedback, so please don't hesitate to reach out with any topics you'd like to hear about. I can be found on Bloomberg or via email at benjamin.reitzes@bmo.com. That's Benjamin, R-E-I-T-Z-E-S @bmo.com. Your input is valued and greatly appreciated.

Dave, it's been many, many months since I've had you on the show, much to my chagrin, but I'm happy to have you back now as we head into the summer here, the depths of summer. So welcome and this will actually be the last show until either late August or early September. So you're an honored guest.

Dave Moore:

Well, thanks for having me. And I don't know if I'm going to be able to live up to being the last show before the summer break, but I'll give it my best.

Ben Reitzes:

I'm not worried. That's why I love having you on. So we've had an interesting few weeks here. We had the Bank of Canada's 25 basis point rate hike last week. The Fed is on deck next week with a 25bp hike expected from them. We've had a number of inflation prints over the past couple of weeks. Tended to be softer, but we'll get to all that. Let's start with the Bank of Canada though.

What's the client base in London thinking on Canada at the moment? Because I know that comes and fits and starts when they pay attention to Canada and start ignoring it. But given how interesting the Bank of Canada has been for the past while, I assume there are plenty of thoughts on that side of the pond.

Dave Moore:

Absolutely, you're going to get a lot of attention when you move 475 basis points over a year and a half. I think the main questions come around, how strong is the economic backdrop to actually withstand the moves that the bank have done? How exposed as housing relative to these new base rates? And then how much of demand do we see coming in from new immigration and how much of a tailwind will that actually be? And I think for the most part the conversations are centered around those three main things. And I think it's right. I think that when we look at Canada as folks not living and breathing in Canada, we get these little snippets and the snippets tend to be housing is overheated, prices are ridiculous, there's going to be mass defaults. The snippets are immigration is real, but was it really just because of COVID and not being able to process the sheer number of people wanting to get into Canada?

And then, the economic backdrop is obviously front and center, particularly around CPI and the general strength of the consumer. But when we sit down and talk to the client base here, I certainly get a much more optimistic feel and view about Canada than say about a year ago. I think we're starting to understand the immigration story a little bit better. Last year was a million new immigrants into Canada. We've kind of run rate. Looking forward, there's going to be 500,000 a year into Canada and these are people who don't necessarily have to live in the majors like metropolitan areas. You can live a little bit further outside of the cities now and with a bit more work from home flexibility. You don't necessarily have to be paying for Toronto, Montreal, Vancouver prices in the main city core and you can still commute in a couple of days a week.

And it does change the landscape quite a lot for the new entrant into Canada. Having been one myself in the past is certainly a fairly large bar to get over. And so I think that the economic tailwinds that come from new people with money, they're not new families in terms of being children, being raised. This is a new subset of people that will both be a demand-driver of goods and services. But I think that there will also be a fairly decent lag in terms of how quickly the cities can facilitate and get up to speed for that new number of people in there. So wouldn't be surprised to see maybe more debt being put out by the provinces and the cities to fund broader infrastructure programs. So when we talk to our clients, that's really the feeling that they're coming away with. It's not one of apprehension or hesitancy as it had been in the past.

I think the mortgage story and housing story is getting a little bit better understood. And now that Canada's went from a right to buy market to a privilege to buy market in particular like the major cities, I think most people are quite comfortable with that model, be it in Manhattan or London, here or Hong Kong, Tokyo. Pick your major city. Most people don't expect that they can buy their property. So I think that was a bit of an adjustment and it's going to have a generational impact. There will be a portion of the general public who get hurt the most in that transition but it does feel like a lot of that has now went through. The one main concern around housing that the clients, I face a number of questions on a fairly regular basis is around the floating rate mortgages. How many are fixed? How many are floating? What's the exposure when they reset? That kind of stuff.

And I think that that's just not a CAD phenomenon, that's a global phenomenon that we just now have to attend to and we just have to get a bit more, I guess more comfortable with the fact that your monthly costs if you own a property at new rates, can be up to two times more, maybe two, two and a half times more depending on where you're fixing your mortgages. And so that's not just a CAD issue that we're going to be facing and certainly one that's coming down the pipeline very, very soon. But that really is the main concern that we face when having conversations with the clients here.

Ben Reitzes:

Okay, interesting that you note that. It's a good point that it's a global phenomenon that homeowners, mortgagers will face higher rates. And if you have a mortgage, it doesn't matter where you are, pretty much every jurisdiction in the world except for maybe Japan and probably even there as well is going to face higher payments over the next foreseeable future. I'm not even going to put a timeline on that 'cause I do expect rates to stay relatively high and a return to the past 10 years doesn't look all that likely. And so it's not just a Canadian story, even though that is a big focus here. It is going to drag a little bit on most countries. I think the US maybe the one exception there, since you got 30-year mortgages and that locks people in for a long time. It does dampen housing activity generally, but once you're locked into that 30-year mortgage, you're stuck with that rate unless you can get a better one later and when rates back up, you're just no worse off.

But I mean the narrative there is, I mean largely similar. I think there's still a lot of concern here about the lagged effect of rate hikes and be it on households with a mortgage or other aspects of the economy or other parts of things. And when that will weigh in, I mean it's the same stories in the US. Everybody wondering when things do eventually roll over. And I mean the longer we go here, the more it looks like we may get that kind of Goldilocks scenario. Soft landing, slowing inflation. I mean that's been the story over the past week or so.

We've had a softer US inflation print, now we've had a softer Canadian inflation print, softer UK inflation print. And it looks as though things are at least headed in the right direction for now. Whether that is just a cyclical move down in inflation, only time will tell there, but that's what central banks want to see. That's the direction things need to go in and I think the Bank of Canada, for one, will be at least, somewhat heartened by the direction of inflation, at least headline coming down nicely was helpful.

And if you read my piece earlier this week, on Tuesday, I do expect that next month's inflation numbers. So the July inflation rating that we'll get in mid-August, I think the core metrics there are going to improve a lot. And unless the core measures themselves are pretty hot on a month-over-month basis, the core measures, if let's say they come in at 0.2. That would bring the three-month annualized rates for the trim and the median down to 3%. And that's a long way down. I mean, one of them is at four now, the other one is at 3.6 and so coming down to three would really be encouraging for the Bank of Canada and set up a pause for them in September pretty nicely.

And that's our call right now. I don't think that's going to change. Again, when you mentioned they've done a lot in the past 18 months. Again, 475 basis points is a ton, and there's clearly more lagged effect there to come. So patience is important here and that is something I think that they will exercise now after pausing. Once before, I think they pause again but there will be a key difference this time. And that's going to be that they at least keep the door open for more moves. They don't want to see the rate market rally and bring mortgage rates lower and then re-spark another rally in housing.

You already have home prices starting to move higher and you mentioned the immigration story. How impactful that is, is really difficult to tell on its own, but it's pretty clear that there's this underlying bit for housing and if that's there, then there's probably an underlying strength in demand for all. Or many goods and services from the strength in population growth and that's probably not going away. And so the bank can't really ignore that, I don't think. Important I guess, overall, just to keep that in mind generally when assessing how the economy's performing and whether rates should go higher still or not.

I want to talk a minute about the UK inflation print this morning 'cause you're over there. So you experienced this on a day-to-day basis. Food prices is still 17% and inflation's still none in the double digits anymore, but in the high singles. I mean, how are things looking over there? Is the Bank of England still going to be aggressive here? Are they going to start backing off a little bit? I mean, are the softening global inflation prints, the precursor for central banks to start backing off, as we make our way, I guess, into the fall and winter runs.

Dave Moore:

Inflation, at least from how I look at it. But for the last little bit hasn't been driven by demand. It's been a supply-driven story and started obviously in commodities. And then it goes into producers where if you believe or you think inflation is going to come, you don't wait for it to come before you adjust your prices. You adjust your prices first and then it's almost a self-fulfilling prophecy. So these prints that we're seeing, obviously, they're good for the consumer. They're good for people if we have inflation coming down. But I don't think for a second that print makes people feel better off. We are in a time and space now where inflation is, I think, going to be with us for far longer than we would like. Partly because it's sticky on the way down, partly because supply-side driven inflation is likely going to reappear if we get a colder winter.

Like for Canada, you do have demand-driven price inflation too with the new immigrants coming in and people just spending more because of the base number of people in the country. UK has a bit of an opposite to that. We don't really have that same level of immigration coming in. Since the Brexit vote, industry has moved a little, hiring has changed, access to human capital has changed in terms of employment. So it's a bit of a different situation here, but I don't think for a second that any person saw that inflation print and said, "Yeah, I feel 2% better off today because of it." Since I've been in London, so I arrived September 5th, 2022. My coffee has went up, I think 60% by the price of the coffee that I buy at the Pret down the road-

Ben Reitzes:

That's mad. That's a lot in not a lot of time.

Dave Moore:

Yeah. Yeah. So I left and I paid 99 pence of coffee and then I was paying 150 there and now it just went up to one 170 just recently. Our energy bills aren't coming down. You're seeing in France that they just push through a 10% increase or I think it's 10 or 12% increase in energy costs. Even the energy producers here are coming out saying, "Yeah, just because commodity prices have come down, don't expect your energy costs have come down." So you're starting to get that tension again of those who make those decisions capturing net income margin and then those paying them being very, very frustrated that they're paying them. So it's not the most joyful situation here. I don't see how that changes anytime soon. And then we, of course, have those incentive to buy property during COVID.

There's a break given if you were to buy property and the standard here is a two-year fixed. You can't go out to a five-year fixed, but it's between a two and a five-year fixed or flowing the two-year term in terms of mortgages. And those are all resetting. All those two-year monies are going to reset in the very foreseeable future. And what does that impact look like? Well, we ran some numbers on it based on the country average. So the English average of mortgage payments assuming 20% down and purchased two years ago. And what's the impact on the consumer, like the mortgage holder refinancing? It's around 2.2x, 2.3x. The monthly cost of the mortgage is what it's going to be, if they were to refinance at current rates. Back then, London is very much a renter's city. We'll then get passed down to the renters. Those costs of course are much more significant.

And similar to Canada, London is a bit of a bubble, not in terms of house prices but seems to be less exposed to deterioration, and say house prices because of interest rates. There's other parts of the country that are, of course, far more exposed and that goes as true for England as it does for Ireland, Scotland, and Wales. And so we are in a bit of a weird little bubble here where people will be freaking out if house prices go down 5%. But then you'll just see a bit of a floor there because that supply will get scooped up pretty quickly and people will be comfortable taking on the mortgage for two years being like, "Well, I just managed to save 5% on this house price. I'm now able to potentially enter the market." Okay, does that negate two years' worth of increase in interest? Sure, maybe. But now I'm long the market in a long housing. So London's a bit different that way.

I do think that there's broader concerns outside of London, particularly inflation, cost of living, housing, that will be far more impactful to the country than the we square mile in the general inner circle of the M25.

Ben Reitzes:

Okay. So you mentioned a couple of things. One, mortgage costs rising and the interest cost there. So now that doesn't get included in most CPIs, it gets included in Canada. But it's still an impactful from a price perspective and that will be reflected in rent over time. And I think that's the case, probably most everywhere. From my perspective, as rates are higher and the carry cost of a property goes up, then rents follow a suit. I think that's a pretty direct line for me and in Canada clearly and everywhere else as well.

But you also mentioned energy prices and something. I mean, I've been worried about this, probably since last year when Europe had a really mild winter, luckily. And so that meant that natural gas usage was not all that high despite relatively low supplies and the region was given somewhat of a respite on energy prices. But I mean, as much as global warming is an issue, I'm still concerned that you can get a cold winter. I mean, who knows what what'll come, but if it does pan out that way, energy could become or get squeezed again and get pushed a lot higher and you get another cycle of energy-driven inflation. And that's I think a real risk to just keep in mind. And that's just one side of this potential inflation problem.

Dave Moore:

Yeah. If you think about it, right, when I left for Hong Kong in 2019 and when I reentered the UK, let's take the winter before I went to Hong Kong and then the winter that I came back and I would say, I would agree that it was certainly, it didn't feel nearly as cold as some of the winters that I've had here. My energy bill, gas and electricity went up from 2019, similar properties and all that kind of stuff. 2019, I would say that it went up 150%, maybe 200%.

Ben Reitzes:

That's chunky. Even in Canada and we have vast amounts of energy. Pretty sure my natural gas bill is up almost I think 80% or so from where it was a few years ago, if not a 100%, I can't. We'll see how they threw it up at the end of the year but it is in that ballpark. And so that even with our abundance of resources here, it is notably more expensive. The difference would be that Canada is probably isn't going up any further and there is a lot of upside, I think to Europe, unfortunately.

Dave Moore:

That's the risk.

Ben Reitzes:

And that's the risk. And then with that risk hanging out there, unless you get a real meaningful downturn in activity in Europe itself and/or the UK, rates are not like that they have to stay pretty vigilant on inflation and there's not going to be much appetite to pull rates down.

And I mean, you can bring that over to back to North America and bring it back to Canada and be like, "Okay. Well, that's nice that I'm saying that Bank of Canada's going to be on hold in September with core inflation slowing." But rate cuts are still a really long way off. And there's a world in which maybe the economy, it doesn't get a downturn or if it comes, it's only mild. And inflation only backs off to, maybe it gets to 2% at the low of the cycle. But I mean, at that point, is that enough for the Bank of Canada to be materially cutting rates and-

Dave Moore:

No, not at all.

Ben Reitzes:

... exactly. Follow through what's in the market. I mean, there's a reasonable possibility out there where rates just stay a little bit higher for a little bit longer. I doubt the base case is that they cut down to something a little bit more neutral, which I can very much believe and even in the Goldilocks scenario where things go pretty well, inflation comes down nicely. Even if it doesn't get all the way to 2% and stay there for a long period of time. They could still cut to 4% or three and a half or something that is still net tight but not as tight. And I make the same argument for the Fed at the end of the day. I think that looks like a pretty reasonable outcome at the moment, the market has that to some extent, but they're still pretty aggressive cuts in price in the US relative to what we have in Canada.

So there's still opportunities there in the market, I think, at least for now. On that same note, what are your thoughts on potential cuts, timing for cuts next year? Because I mean, if we are close to done for the Bank of Canada or done for the Bank of Canada and close to done for the Fed, I mean that's the next logical question. When we go into the winter months, once summer is over, when people come back in September after Labor Day. It's possible that will be the question that everyone starts asking and the theme for the fourth quarter. Or do you think I'm totally wrong? Which I can for sure believe, and more hikes might actually be coming and that's what the risk, real risk is not cuts 24.

Dave Moore:

Yeah. That is going to be my answer, is it? I think you're making a big leap from here to cuts. I don't think that it's that simple. I don't think another huge round of hikes are on the table but I think we're far more likely to see rates up here with... As you said earlier when we were chatting, that having that window of flexibility to do more if needed.

The central banks are in this really strange situation and we talked on this last time, is that if you think about the last 10 years, pre-10 years ago, most of the general public wouldn't be able to tell you who the governor is of the Bank of England. Or unless it was Carney 'cause that made some huge headlines because of what he was getting paid on a non-tech basis and all that kind of stuff. But let's go back and say in 2005, could many people say who the Bank of Canada governor was, if they were in Canada or the Bank of England governor or the head of the Fed? Probably not, but a couple would, but probably not. And in the last couple years-

Ben Reitzes:

Only the Fed 'cause of Greenspan.

Dave Moore:

Well, right. And that would be, as a push. And then, you think about it now is how many of these central bankers are somewhat known entities. What they do might not be well understood, but they have a name and the general public know that name. And when the general public know that name and they have been essentially tasked with this fight inflation dragon with sword and shield type persona, and inflation isn't really coming down and people aren't really feeling any better off and cost living is still excessively expensive or high. And then that central banker have start to slow down rates or slow down the narrative around monetary policies and effective tool for inflation fighting, the general public know more about the central banks than they have in the past and they're now much more public figures than they have been in the past. And if the general public think that the central banks are cutting rates because they spin it as oh, you're just helping the banks, you're helping the big guys, the companies while the little guys and the people are getting hurt. It's a very different situation now.

And I think because of that, the central banks globally have to be far more sensitive around their forward guidance, around their language, and around making any snap change decisions around monetary policy. With a potentially cool winter, we don't know, as you say, we can't possibly know. I'll crack out the Farmer's Almanac and have a look, but I don't know if there's anything pressure in that that I'm going to be able to gain. But let's assume it is a cold winter. Let's assume that those stockpiles of energy gets taken clean pretty quickly, energy goes up. For the most part of this inflationary cycle, supply-side impacts or supply-side forces have accounted for by 50% of it with demand-driven forces around 40% and the remaining coming from some monetary policy and prior monetary policy decisions made earlier. That's a huge amount coming from supply.

And if it is remains a supply-side story and you don't necessarily get that easing up, there is no reason, or at least no obvious reason for me, that inflation just suddenly turns around and stops. I don't see that how that happens. And in that scenario, where you're a known public figure, with whose being tasked to manage the inflation dragon or slayed or kill it or do something with it, you are concerned that you haven't done enough because inflation remains and monetary policy tools, we don't have a lot of choice when it comes to which tools do we actually put in place to fight inflation beyond printing money. Or stopping the printing presses if we're trying to fight on the other side, there's really not a whole lot they can do. And so if there's not a whole lot you can do and it remains a supply size story for 50% of the inflation that it currently is in system, I think this gets dragged out longer.

I think that the idea of cuts, even in 2024 seem nuts to me. I don't see, unless we have a material hard landing. Unless we have a significant recession and material job cuts. I don't see why the central banks would be forced to respond using monetary policy as a traditional tool, i.e. cutting rates. I don't see that, I don't see why they would need to do that. Now, of course things can change. I just think that jumping from simmering down the narrative today to cuts tomorrow is missing a whole lot of risk. And there's an old saying here is like many a slipped twit, the cup in the lip. You don't know what's going to happen. But if all of us are starting to project the idea that cuts recession, hard landings are the more likely path, then the skew is to anything but that. And so the response to anything but that will be far more significant and aggressive. And so I think that for now, I would be still in the camp of, yeah, I think rates are high for a long, long time in 2024 might not be enough.

Ben Reitzes:

So either way, in that case, you could make the argument that the curve is probably too inverted.

Dave Moore:

Yes.

Ben Reitzes:

I mean you're not getting cuts but you need more term premium.

Dave Moore:

Correct.

Ben Reitzes:

And so the bear steepener, the dreaded bear steepener, that is not an easy call to make. But...

Dave Moore:

It's just so expensive. Being in steepening is just so punitive. And, okay, let me rephrase that. Being in steepening is extremely punitive, if you rely on Fed effective to raise your liabilities. If you don't rely on Fed effective or funding costs like that to raise your liabilities, does carry and repo really matter to you?

Ben Reitzes:

Probably not.

Dave Moore:

Probably not, right? So if you're there where you have perpetual liability. You're not exposed to your liability being driven by the market or by the underlying base rate. Then yet, I think that you should be looking at steepening trades just because the Caddy component, which is so punitive, isn't so punitive for you. And it makes more sense to me to be in those types of steepening, be it bull or bear, just being in steepening makes a bit more sense to me than not. But we're seeing how crowded these positions get. We see it all the time. But look at Canada right now, how many questions have you had when Canada underperforms the US rather than outperforms? I get more questions when Canada's underperforming than when it's outperforming. Almost all the time, which tells me people are net long, right?

Ben Reitzes:

That's fair.

Dave Moore:

If you don't call me when it's going your way and you call me when it's not, I can guess pretty quickly which direction it is. And we've had this conversation, where does Canada, US trends go. Like Trend Channel says, probably 20 basis points. Negative point-

Ben Reitzes:

 Yep. I've been on 25 for a long time.

Dave Moore:

25. You and I have said 25 for ages and that little blip. I was almost second guessing myself and be like, "Oh, maybe minus 45, maybe minus 50. Maybe we go back to minus 80." And I was like, "Nah. Nah, definitely not." And again, we're seeing it today where Canada shouldn't be underperform in the US. We just had a really strong option that was taken back really well. I don't think it makes sense because positioning is ripe. If this feels kind of painful, it feels like just a bit of people on caught on the wrong side. I think fundamentally, the narrative is strong for Canada as we discussed earlier. And so I expect to see that continue. And I wouldn't be shocked at minus 20, minus 25 pretty quickly. But all these trades, they all make their way through the market roughly the same time and they're just difficult to handle.

But if you're an asset manager or your mandate is not one month looking or even three months looking, if you say, "Okay, my position is a one-year position," and you're less impacted by cost of funds, your liability is not necessarily driven by the market. There's few trades out there that I would be only trade, that I would be pretty comfortable in would be in steepen, right now. That would be the trade I'd be in. Or some expression of it if I needed to try and be cute and neutralize some of the Caddy, if that was the drive. But generally speaking, over the next year I would want to be in steepen.

Ben Reitzes:

2s/10s, 10s/30s, 5s/30s, where?

Dave Moore:

I wouldn't be touching in Canada, I wouldn't be touching the long end just because it's just so difficult with such little long end supply that we've seen this year. And with that, that demand gets scooped up so fast. I'm not sitting at my computer, but I am guessing that right now, 10s bond is flattening. Canada's underperforming the US but maybe even 5s/10s of steepening or 2s/10s of steepening at the time. That would make sense in terms of price action 'cause there's that persistent bid or need for long end assets. And so I don't think that there's much edge in using the long bond as your long piece on that. 2s/10s I think is fine or 3s/10s, 5s/10s, anything like that. Steepening just makes sense to me and I think you try to defend those positions as best you can with whatever tools you have. But again, if we're not stuck by the liability of the market in terms of how we raise our funds, I would just be putting that on in that as a structural trade that I think makes sense.

And we've just gotten a bit too far because people in positioning and low liquidity and poor volumes and high volatility is just driving people to stop out. Particularly coming into the summer months. No one wants to be going on their summer vacation, worrying about that position. No one does. That's just not how people, they want to get away from the market, they don't want to be thinking about it. So you do a snap kind of cleanup of the book, drives the curve flatter. But I think probably the best bet is try and get into steepening into August because that's when I think any of the big positions will have been unwind. Any of the steepening that was on is gone into this kind of painful flattening move. And then it'll start to move steeper from maybe from August, September onwards. And I'd be kind of core in that trade for a long time.

Ben Reitzes:

I can sympathize with that. My vacation starts on Friday. It's currently, Wednesday afternoon in Toronto. But I'll start it on Friday and I'm off for two weeks and I'm hoping to unplug. So for any asset manager looking to lighten things up a little bit going into their vacation, I mean, that makes a lot of sense to me. I'll hopefully unplug and lighten up my mental load. We'll see.

Dave Moore:

I'll just send you a message about where the curve is and whatever everything is happening just you know...

Ben Reitzes:

You won't be the only one.

Dave Moore:

Ben, what'd you think on housing? Ben, what do you think on inflation?

Ben Reitzes:

Well, that's when I click no or ignore. So it sounds like your favorite trade idea, so you like being short Canada...

Dave Moore:

Right.

Ben Reitzes:

In the 10-year space. The front end's a bit different though. I'm guessing more of a long bias in the front end.

Dave Moore:

Yeah, it's like long bias against US. Yeah, for sure. That gets so dislocated so fast and I struggle with that trade. Say for example, the one-year, one-year Canada/US, I had that on back when Polos did the snap in 2015 and I remember just how painful that was. And so I've always got this natural aversion to those kind of the one-year, one-year but if that hadn't happened to me in 2015, I'd be looking at one-year, one-year, Canada/US a 100%. I think it's looking at a really attractive level.

Ben Reitzes:

It's just a question of whether the bank's Treasury paying on the back of the mortgage flow, slows down at all. Because that helps keep the front end of Canada somewhat dislocated and that's a tough flow to fight. The Treasuries are pretty big here. So something at least to keep in mind when looking at that. So steepening, Canada/US and 10s. You want to be short? Canada/US to the front. You want to be long?

Dave Moore:

Yeah.

Ben Reitzes:

Anything else before we wrap up for the summer?

Dave Moore:

No, I think those are the big ones for me. And then of course, we'll just deal with the information as it comes. I still am firmly bullish with Canadian economy and firmly bullish the landscape there. And I think that being a Canadian, there's just a lot of upside and I continually am shocked at the resilience of the economy and the resilience of the consumer. I think that it's just says, it's not a fight that I think you want to really go too committed on because it continues to outperform expectations. So expressions that are Canada positive. Generally, I pray front and center for me and will continue to be. So unless there's dramatic change in the data and obviously, then I have to think about it. For now I think, yeah, it's just a strong economy that looks like it's going to continue to get stronger with a really robust talent profile with a lot of talent coming in and diverse talent, which is really what the country needs and any country needs is diverse talent.

And so if we're being able to draw on that 500 to a million people at a time, then that's just all good things for Canada. Yep. There's going to be some infrastructure issues with it. So I would probably looking at how the debt. Burden will be on the provinces, and the cities, and how we're going to fund schools, hospitals, all that kind of stuff. But generally speaking, the broader context, yeah, I think Canada's in a really good place.

Ben Reitzes:

We should get you on a billboard to advertise for Canada.

Dave Moore:

Let's see. Well-

Ben Reitzes:

Or maybe we'll put you on a podcast.

Dave Moore:

That's what I see. That's all I do. I'm just out here just spreading the good message about it.

Ben Reitzes:

Spread the pro Canada gospel. All right, Dave, thank you for coming on the show here. And...

Dave Moore:

Thank you for having me.

Ben Reitzes:

I hope, I'll try to have you on again this year if hopefully timing works out. And to all the listeners out there, have a great rest of the summer and we'll be back either late August or early September. It's just ahead of the next Bank of Canada policy meeting. Have a good summer. Thanks for listening to Views from the North, a Canadian rates and macro podcast. I hope you'll join me again for another episode.

Speaker 3:

The views expressed here are those of the participants and not those of BMO Capital Markets, it's affiliates or subsidiaries. For full legal disclosure, visit bmocm.com/macrohorizons/legal.