Welcome to April 2025
April showers bring May flowers… we were told as children. This saying is kind of relevant today in our economic turbulence. Two things are currently creating turbulence in our economy:
US Tariffs
Announced this past week, the new tariffs prompted two reactions: relief that Canada was not hit with any additional tariffs, and shock at the level of US tariffs on almost all other countries. I don’t have to document the immediate negative response of the financial markets and most experts. Let’s just say the recession prognosticators are feeling more confident.
Federal Election in Canada
We also have a federal election coming up. Beware of politicians promising new spending and tax cuts. Our federal debt is at an unsustainable record level, and the debt rating agencies will quickly downgrade our rating—like they did recently in British Columbia—if the new government does not quickly put a debt control plan into their budget. A lowering of the credit rating means immediate higher borrowing costs for the country and fewer resources for social programs.
Good News
Canada has a highly skilled and specialized workforce, and a lot of untapped natural and human resources. It has been exciting to see how Canadians have supported each other by choosing Canada in their economic decisions—from groceries to vacation destinations.
A good example of our innovation and skills is the approval this week by the Canadian Nuclear Safety Commission of SMRs (Small Modular Reactors). This is a fairly new and growing technology. AI computing requires extremely high levels of power to keep processors cool. Microsoft, for instance, hired nuclear experts last year to lead their plans for these reactors, which will power their AI-driven data centers. Grande Prairie, Alberta has been approved by the province to build one such large facility for the industry.
Investment Advice
With the financial markets reacting negatively and the uncertainty in the macro economy, it is a good time to be careful. We have been recommending MIC shares as a safe haven for six months now and we continue. GIC’s are of course the safest option and we have the best rates for GICs but their rates have fallen substantially this past year. If you have been adventuresome and are in DMI (direct mortgage investments) then stay conservative with first mortgages or lower LTV second mortgages and in all cases good properties.
We have just approved some new issuers that we believe are recession proof. One is a long time REIT that has certain tax benefits for accredited investors, and we are also about to launch an equity opportunity for a new high-tech hotel in Richmond BC with a branded international hotel franchise. Feel free to check out our investments here (LINK) or call or stop in to talk to us about what might be suitable for your specific circumstances and goals.
April Quiz
Here is an Easter quiz that you can try. I scored 9 of 18. Not too good, but some of the questions are trivia that I doubt many people know. Good luck and let me know what your score is.
Ultimate Easter Quiz Questions 2023 - Best Quiz Questions
Financial Literacy Segment
Hardly a week goes by and we hear about some financial fraud or scam perpetrated on Canadians. I have had clients taken advantage of by elaborate frauds that cost them tens of thousands of dollars.
Some examples of these scams and frauds are:
· advance fee scams where you are told you won something but you have to send money for a courier to get it.
· Telemarketing fraud where scammers call and convince you to provide personal information, or they have your personal information as confirmation and want you to send money to win a prize or help someone.
· Phishing email or text message warns you of a security alert or issue insisting you click a link to fix it and the link is a program to steal your information. Or the message takes you to a fake bank or security web site to get you to provide your personal information.
· Vishing similar to phishing but the text or email gets you to phone a toll-free number in response to a security breach or threat and then the person on the call tries to get your personal information.
· Overpayment scams when you are selling or renting something, a criminal sends you a cheque or money order for too much and then asks you to send the difference back but the cheque or money order is a fraud.
· Identity theft criminals through various methods convince you to provide your personal information and then take your money online or run up bills in your name.
Here are some tips to help you avoid being vulnerable to fraud and scams
Keep personal information private: shred or cut up papers bearing personal information
Keep your ID cards safe and don't carry more than you need
Don't share passwords or PINs with anyone
Be creative in selecting a PIN, avoiding use of your telephone number, birthdate, etc.
Cover your PIN when entering the numbers at an ABM or payment terminal
Report suspicious problems with account statements
Ensure the “memorize passwords” function or “auto-complete” is disabled when conducting online banking
If you have a banking app that sends notifications for any charges or withdrawals from your accounts and credit cards, be sure to activate the notifications and advise your bank of any transactions you do not recognize.
Economic Update
Energy Sector Challenges: Canada's energy industry is facing turbulence due to global economic uncertainty, including falling oil prices and a surprise production increase by OPEC2.
Economic Growth: While January saw a 0.4% rise in GDP, February's growth appears to have stalled, partly due to harsh winter weather and looming tariffs.
Unemployment: March saw a loss of 33,000 jobs, with the unemployment rate rising slightly to 6.7%. This marks the largest monthly job loss since January 2022.
Trade and Tariffs: The ongoing trade tensions with the U.S., including new tariffs, are creating uncertainty and impacting sectors like manufacturing and retail.
Public Sentiment: Economic satisfaction among Canadians is at record lows, with concerns about affordability, housing, and inflation dominating discussions.
Links to my good news about SMRs:
Canada advances nuclear power with modular reactor's manufacturing
Microsoft is going nuclear to power its AI ambitions | The Verge
Sincerely,
Norm Holmes | Vice President