Canada’s future is at a turning point. In this hard-hitting interview, RockLinc CEO Jonathan Wellum joins James Connor to expose the hidden forces behind the results of yesterday’s Canadian election and why economic storm clouds are gathering fast on both sides of the border.
Jonathan reveals:
- How Donald Trump’s comments helped the Liberals win
- Why Canada’s economy is sliding into crisis (GDP collapse, weak dollar, capital flight)
- The dangerous slowdown brewing in U.S. housing, shipping, and consumer spending
- The global trade reset is reshaping markets, and how to position your portfolio
- His 2025 strategy: 28% cash, 20% precious metals, and focus on resilient businesses
Investment Concerns? Get a free portfolio review with Wealthion’s endorsed financial advisors at https://bit.ly/4lYy6CW
Hard Assets Alliance – The Best Way to Invest in Gold and Silver: https://www.hardassetsalliance.com/?aff=WTH
Jonathan Wellum 0:00
When you look at the last nine to 10 years of liberal rule, it has been devastating to the Canadian economy. It’s surprising that after almost 10 years of policies that we’ve seen in Canada, that they would be re elected again.
James Connor 0:21
Jonathan, thank you very much for joining us today. How are things in Toronto?
Jonathan Wellum 0:26
Well, not too bad. I mean, it’s the day after the election. I was hoping was going to be Liberation Day in Canada yesterday, but it doesn’t look like we reached that point. So I’m doing doing fairly well, looking at the bright side and looking for the opportunities in the market. All right, so why don’t we
James Connor 0:41
start right here? I want to talk about the election and get your views on it, and before we jump into it in great detail, I want to provide a little bit of context for our American viewers. There are 343 seats in the House of Commons, and whatever party wins the most seats, the leader, leader of that party becomes the next prime minister of Canada. But in order to have a majority, you need 172 seats. And with the majority, you can rule with power and impunity. And unless you get a majority, though, you can’t really rule with a lot of power. It’s hard to get anything done. The Liberals won 168 seats, compared to 160 in the last election. So they did not get that majority of 172 seats. The Conservatives gained a lot of ground. They won 144 seats versus 119 in the last election. And so why don’t we start right here? Tell me what are your views? Are you surprised that liberals got as many seats as they got.
Jonathan Wellum 1:44
Yes. I mean, I think when you look at the the last nine to 10 years of liberal rule, it has been devastating to the Canadian economy on a lot of levels. And we’ve talked about that previous shows, and we can get into some of those policies in a few moments. So it’s surprising that after almost 10 years of policies that we’ve seen in Canada, that they would be re elected again on the surface, on the surface, but when you go below the surface and you look a little more closely at some of the numbers, I mean, there’s a couple of issues I think that influenced the election. Number one, we did have a further left wing party, the NDP, they call it, that collapsed. And so their vote went from something around 17% of the popular vote down to six, and lot of that moved to the liberals. And that was a surprise. So you didn’t get that vote splitting within the different seats. And so that was something that I think was a surprise, because the conservative popular vote was around. You know, again, give these numbers are moving around a little bit as we’re finalizing them, around 42% or so, and the liberals were 43 44% it was about a 2% differential in the popular vote between the Liberals conservatives. And so typically, a party that gets 42% if a conservative party at 40% you’d have a majority government, but because you didn’t get the vote, splitting with the NDP, and they collapsed. Their vote collapsed. That really swung over to the Liberal Party. The other major factor, which is quite interesting and seems rather ironic, and that is Donald Trump. Donald Trump’s sort of statements in terms of Canada being the 51st state and going after and having a little bit of fun with Canada really concerned a lot of Canadians, and particularly Canadians that are 60 and over when you look at the numbers. And again, I’ve talked to people who’ve been out of them on the road, knocking on doors, and they got very concerned about their financial position stability, and they felt that Mark Carney, who was just the leader that was just inaugurated and put into the Liberal Party was going to be quite different than than Justin Trudeau, and he, because he is a central banker background in Canada, UK, and comes from the business world, would be a better negotiator and would open the purse more to give more support, more stability To the Canadian economy at a time of tension. Now I think that’s crazy idea, and I don’t think that’s true, but that had a big impact on the election. So when you look at the collapse of the NDP, you look at the Donald Trump factor, it’s not a surprise then that the Liberals snuck ahead and the conservatives weren’t able to grab that minority or majority government. The good thing about what happened is that it’s still a minority government, as you pointed out, Jimmy, that they won’t have as much power. They’ll have a fair bit, though, unfortunately, but they won’t have absolute power to get through everything that they need to get through, or they think they need to get through, number one and number two, the youth vote. The youth vote really started to go to the Conservative Party. We saw that in the United States. We’re seeing it in other countries, the youth are getting a little smarter, and they’re realizing that statism and large government spending and deficits is actually not really beneficial to anybody, including the older people, but especially the young people. So I think. Are trending in the right direction, and now Mark Carney actually has to govern, and that is not going to be easy. Canada is not in a good position because of the Liberal Party and the policies that he is actually espousing, along with what Justin Trudeau was doing. And so that’s going to make it difficult, and I think that could set us up for a fallen government less than certainly four years from now, maybe in a couple of years, 18 months, 24 months, usually a minority government survives about 18 months, and that could set us up for a large conservative majority. And that’s what certainly I’m hoping, I think the trend lines are pointing in that direction.
James Connor 5:36
Yeah. So a couple more, a couple of things I want to touch on. First of all, you talked about the NDP, or the National Democratic Party, and once again, for the benefit of our US viewers, we actually have five parties in Canada, but three of them are irrelevant for the most part, and the NDP is one of them. They went from 25 seats down to seven seats. They pretty well got obliterated, and a big part of that had to do with their leader, and he’s just his level of arrogance knows no balances. It’s just unbelievable. But anyhow, that party is gone, so that’s a big positive, in my mind. And the other thing you talked about, or you touched on, was what’s happened to the Canadian economy under Justin Trudeau and the liberals and under the 10 years, this Canadian economy has grown 1.5% GDP wise, versus the US, which has grown 2.5% if you look at it from a per capita point of view, the disparity between the US and Canada is just shocking. The GDP per capita in the US is around $80,000 whereas versus Canada, which is below 60,000 now, once again, this all has to do with policies put forth by the Liberal government, the party that so many Canadians, so many people in Ontario and Quebec voted for last night and they wanted they put them back into power for another four years. So in
Jonathan Wellum 6:59
one of the things I’d point out too, Jimmy, I think is important also, for both Canadian and US listeners, is that a lot of our value, of our GDP, depends on our dollars value. And so if you running a country like Justin Trudeau did, where you’re basically chasing capital out of the country, and you’re not making it easy to go into our resource sector, which is, you know, a very rich sector, and that’s across a lot of resources, and you’re basically putting a lot of regulations on businesses and capital and high taxation, it has a tremendous downward move on your dollar. And so our dollar under Trudeau went from, you know, low 80s all the way down into around 70 cents. So that kind of move also has a tremendous impact on our wealth and the value of our GDP. If we had prudent policies, we had the policies that Pierre poilievre was was espousing, which were just sane, sensible, free market policies and shrinking the private the public sector, our dollar, I think, in a few years, could easily go back up to that 80 cents level when Harper was our former prime minister, who was a conservative, back up until 2015 but back in 2011 in 2007 our dollar was worth more than the US dollar. And so I think again, it gets back to these policies. They’ve been devastating, but we can shift that if we had some, you know, intelligent leadership and prudent leadership in Ottawa.
James Connor 8:22
Yes, very valid point. The Canadian Dollar is at a 20 year low. Okay, so this is basically a referendum. This is what international investors are saying about Canada. We don’t want to put our money there. The economy is too slow. There’s no growth. We’re putting our money elsewhere. So it’s going to be interesting to see what happens here in the coming months and in years, with the, yeah,
Jonathan Wellum 8:43
with with Donald Trump trying to attract capital to the US, and as we know capital moves where it’s going to be respected, treated well, and you can get returns. And so I think this is going to put a lot of pressure on the carne government, because money is going to continue to flow into the US, and not into Canada, if we he doesn’t ease up on some of these policies. And we’ve already got Danielle Smith, the premier of Alberta, out this morning, and she’s taking a very hard position with Ottawa, saying, Look, you’re not going to stop us from developing our resources in Alberta. And so we need a bit more of that pushback. So it’s going to be interesting days for Kearney. And I think the OP the optimistic side, of me says it’s going to be rough road for Carney, and he’s going to be exposed if he does not compromise and ease up on some of these left wing, ideologically driven policies that have dominated the Liberal Party.
James Connor 9:33
And something else you said I just want to touch on too, and a lot of Americans don’t realize this, but Trudeau created a lot of division. Trudeau, who was our former Prime Minister, the head of the Liberal Party, created a lot of division in this country like we’ve never seen before, and unfortunately, Trump, because of his rhetoric, has united this country like I’ve never seen before, and there’s a level of national pride that I haven’t seen in my lifetime. I. But the late liberals were able to capitalize on this, and so the liberals, they basically have Donald Trump to thank for this win, because without that, they never would have won. They were all but dead three months ago. The conservatives, on the other hand, they built their whole campaign around it was more focused on Canada and the damage that was done and what they want to do to fix things internally, as opposed to looking to the Donald Trump and what he was saying about taking over Canada.
Jonathan Wellum 10:28
Yeah, and the irony is, Pierre polio pointed out was that if it weren’t for 10 years of weak economic growth and bad decisions and over regulation and over taxation, we would be in a much superior position to negotiate with the United States and have much more leverage is because we’re in a weakened position, that we are more vulnerable. And to suggest that the party that put us in that position is going to be do a better job at negotiating is, I think, the height of insanity. But Be it as it is, that’s what, that’s what, that’s what they were able to convince quite a few Canadians so good for the liberals. They were good at that. So at least,
James Connor 11:05
I think the other thing that worked against the Conservatives was that the fact that some provincial leaders in Canada, the premiers, which would be similar to a governor in the US, did not support the Conservative Party, the Federal Conservative Party, and Doug Ford, who’s the Premier of Ontario, Canada’s largest province with 15 million people, did not support
Jonathan Wellum 11:31
Pierre. Yeah, Doug Ford is as a complete and total disappointment, absolute disappointment. I mean, yes, he’s he’s one. He’s one in Ontario simply because the other two parties, the Liberal Party in Ontario and also the NDP party, are just abysmally worse. But he has just been a disappointment and has has not led the province well at all, and he’s been really in the back pocket of Justin Trudeau up until just the last little while. And so that’s disappointing. It was interesting that Gordon Campbell, we actually had premiers from the past who were in the Liberal Party that Gordon Campbell was a liberal premier of British Columbia come out and support Pierre polio because of the devastating policies of the liberal party, including their policies on crime. And we have virtually, I think, all of the police across the country supporting Pierre polio because of their their their handling of the crime situation, of letting people back out on the streets. I think for Americans, what you really want to if you really want to understand what’s going on in Canada, the liberals are the Democratic Party, basically, and and the conservatives are much closer to the Republicans. So it’s the same kind of divisions and issues of drugs on the streets, crime, people, you know, the the jails are a revolving door, all of those sorts of things. That’s exactly what we have up here in Canada. And that really comes out of the left ideology and left wing policies. It’s really driven by a world view that is deficient and and not not consistent with the real world. Yeah,
James Connor 12:59
and to just further reinforce this point, so our American viewers can understand Doug Ford, the Premier of Ontario. He’s basically what an American would call a rhino, even though he’s the head of the Conservative Party here in the province. He’s not a real conservative.
Jonathan Wellum 13:14
Yeah, exactly, exactly, dead on. And the other thing
James Connor 13:18
that I find very interesting, and once again, this has been going on since the beginning of time. But what politicians do? They try to distract the electorate. And in the province of Ontario, our unemployment rate right now is 7.5% that’s the highest it’s been in over 10 years. Once again, and this is under the leadership of of Doug Ford, who’s been in power since 2018 he’s basically saying, don’t look here, look over there. And that’s all that’s going on right now. It’s a massive distraction. And I see the province, the economy in the province of Ontario, it’s going to just keep going down this downward spiral. The unemployment rate is going to continue to tick higher. I can I see it easily going to 10% here in the coming months. Yeah.
Jonathan Wellum 14:00
And what we saw with the policy that Mark Carney was pushing is, again, more government spending. He calls it government investing. Well, as far as I’m concerned, the public sector does not invest. It’s the it’s a private sector that does the investing. That doesn’t mean the government can’t help out. It doesn’t mean they can’t give some tax credits and support different industries a little bit, but they should not be in there allocating large amounts of tax dollars into, you know, into businesses. And Doug Ford believes in that, and that’s what the one of the ways he’s trying to prop up our auto industry, our auto parts, our auto manufacturing industry, is just by buying these companies off and giving them so much money that these incentives. But he’s running into Donald Trump. He’s running into other problems. And so this issue that the liberals and also Doug Ford being, as you say, a rhino, this idea that government is going to help us out, how government’s going to make the long term and capital investments necessary, is crazy. It never works out. They squander the money. I mean, look at them in Ontario. They put billions and billions. And billions of dollars into battery facilities. And whether that was they’ll ever pan out to anything, I doubt very much. And so again, you get this issue of, should the private sector be driving the economy or the public sector? This was the big debate, you know, in Canada here, polyev said, No, we got to cut taxes, put money into the hands of businesses and the private sector, which knows where to put the capital, knows where to put it at risk, how to make, how to make long term returns, or do we let the government become larger and spend more money in deficit finance in order to fund these great infrastructure projects? Well, we know which one’s going to work because it’s 100% on one side versus zero on the other side. It never works out when the government takes over these large initiatives. We need the private markets. We need smart people putting money at risk to make these decisions and and so I think this is why, again, we’re going to continue to see, as you say, a very lethargic economy, really going nowhere, probably down, if anything. And this is going to put a lot of pressure on Kearney, I think again. Hopefully there’s always darkness before light, and the light will shine, and people will say, You know what? This was a bad move. We should never have put this man into this position. His policies are not going to work and and so we’ll move forward on that basis.
James Connor 16:15
So one more question on the Canadian economy before we move to the US economy, but so the liberals don’t have a majority. The they’re very close, but they don’t have a majority. They got 168 seats. They need 172 the NDP have seven seats. Do you think these, the NDP could walk over and join the Liberal Party so the Liberals do have a majority, or do you think the Liberals are going to form some sort of alliance with the conservatives to get things done? That’s
Jonathan Wellum 16:44
a very, very good question. And I would suspect, of course, I don’t know the internal workings of these parties. I would suspect, because the ideological differences are so large between the liberals and conservatives that there won’t be a lot of alignment there. And I suspect that the NDP, if I were the NDP, here’s what I would be doing, because you had like, seven seats, and you, you put those together with the 168 it puts you over the 172 so you can control the agenda. I would not give them a blanket policy relationship like they had before. I would say, you know, you bring the bills forward, and we’ll influence those and we’ll, we’ll vote based upon, you know, our belief that these are good bills. And I would control every bill that went through. I think that’s more likely with the NDP, because they’ve been eviscerated. They need to build back their credibility. And so it’ll depend on the leadership there. If they want to build back their credibility, they don’t just want to sell out, I think to the liberals, I think you want to be careful about that. That would be my strategic move. And I think, you know, I’m not necessarily any smarter than some of these other politicians when it comes to politics, and so I think that’s what I would expect. I think the bloc will be siding with the Conservatives a bit more, because I think it’s in their interest to give the Liberals a harder time. And they’re very concerned about immigration in Quebec. So the block is only in Quebec, and Quebec is French speaking, and they’re very concerned about, you know, the number of immigrants and the sort of, the watering down of the French culture and influence there. I think that’s, that’s, that’ll be an issue for them. Okay, so
James Connor 18:13
let’s move on and discuss what’s happening in the US and the US economy. And I can’t believe we’re approaching a new month, the month of May. I love the month of May. Yes,
Jonathan Wellum 18:22
it’s a beautiful month, especially in Canada. All the leaves come out. We have new life, and it’s always it’s always invigorating, and the warmth coming back into into our environment, which is nice. So
James Connor 18:33
I know you’re a big buffet advocate, and so we got the buffet AGM coming up this weekend. We also have the Kentucky Derby. We have Cinco de Mayo next week so and it’s also a huge week in terms of earnings and economic data. Later this week, we have numbers coming out of meta, Microsoft, Apple, Amazon. Then we have non farms on Friday. What are your thoughts on the earnings that have come out so far, and any concerns about the US economy?
Jonathan Wellum 19:00
Yeah. I mean, I mean, overall, the US economy is, is, I say, just walking along. It’s not moving quickly, but it’s, there’s some, there’s some data points that show some weakness in the economy, but overall, it’s, it’s plugging along, not too badly. The businesses that we’re investing, which we follow, we’re catching, I got my analysts, and they’re following all the earnings calls have basically been quite solid. We’ve been very careful to be in the businesses that we think are much more resilient and protective and shouldn’t be hit too hard by some of these trade concerns and so on. So they’re plotting along well, but it is interesting to see that there are businesses that are a little bit more in the heart of these trading issues, especially with China. And so we see the port business coming off. We see some of the, I think it was UPS and FedEx, and some of these companies also are seeing some diminishing activity, which can be expected because of the shipments from coming overseas are a little slower and are not coming. And you’re also seeing an air traffic. Well, to the airlines having some issues in some cases. So wherever there’s, you know, you need a robust consumer to spend, there’s points of tension there, and, you know, coming off a bit, which I think, you know, is to be expected, just given the only, first of all, the US economy was already stretched, and you’ve got large deficits, and they’re trying to get those under control, and some of those numbers are getting better, and they’re trying to also, you know, trim the size of the government so forth. At the same time, we’ve got a globe that’s concerned about tariffs, so it’s perfectly understandable that there’s going to be a slowdown in growth and a little bit more tension and pressure in certain industries. Yes,
James Connor 20:35
I think the real pain comes in Cue too. Right now. You know, we’re still transitioning from this, yeah, trade war, that’s going on, but the real pain is going to come when these q2 numbers start coming out in July. But yeah, there’s quite
Jonathan Wellum 20:48
a few companies that have also said that they’re not giving guidance going forward. I mean, again, I haven’t followed them all. Now they’re just coming out as we’re as we’re on the headlines, but they’re they just can’t give the guidance. They’re not sure what they’re gonna do. Obviously, the auto companies can’t give guidance. And so there’s a number. As you start to see that again, it’s more and more uncertainty, and I think that will translate into more volatility in the market.
James Connor 21:08
And you touched on the airlines, and we’ve had warnings in from Delta American Southwest and God knows how many other airlines. Once again, people are not flying business class because of the uncertainty within the economy, and people are not flying for vacations or leisure travel because of the uncertainty. I know myself, we were thinking about going to Europe, but we said, Nah, we’re going to wait, put things on hold and see how things shake out in the coming year. I saw another interesting data point out of UPS. They also said they were laying off 20,000 employees because they’re expecting less shipments from Amazon. What are your thoughts on that?
Jonathan Wellum 21:46
Yeah, again, you’re seeing the the purchasing of items and in the transportation so So again, the consumer is stretched, and the consumer is nervous, and the consumer is being careful in terms of their spending. We’ve certainly seen that in Canada’s phase, and it’s now being translated into the US economy. And so again, some of the manufacturing numbers are off also in the US. Again, I just looked across a number of them. And so basically this pressure, there’s also pressure in the housing market in the United States. So you’ve got certain regions in the US, and the markets are down 1520, 25% so here in areas of Florida, areas in Texas, of course, the California market is really soft also, so that starts to translate into people’s spending if their home values are dropping. And so again, it’s just pressure everywhere. It’s just, it’s just going to be, I think it’s tough slugging and companies are going to have to be really careful, resilient, cutting costs and having pricing power if they’re going to forge ahead. But Amazon, I think that’s a good, good case in point where you’re going to see a slowdown in traffic, and that’s purchases, and that would also be probably coming from overseas also. I mean, you know these, the tariff fight with China is going to have some reverberations in terms of our market, yes.
James Connor 22:58
And to your point about the home sales March. Home sales in the US fell 5.9% from the previous month. That’s the lowest since 2009 so things are really starting to pull back with home sales.
Jonathan Wellum 23:12
Yeah, yeah. Again, just uncertainty. I mean, I applaud most of what Donald Trump’s trying to do in the United States. You know, cut regulations, cut taxes, make the government more efficient, try to bring back some of your industries, bring capital into your country. That takes time, and it’s all about transition. So there’s changes that have to take place, and that is going to be great uncertainty, and businesses are going to be careful in terms of how what they’re up to. It also, I think, will pull money out of the global economy. So you listen to these companies, you saying, Well, we’re going to put manufacturing more manufacturing us. We’re going to spend more money in the US. And that’s great, but it’s coming out of other regions in the world. I was listening to a couple of pharmaceutical companies talking about pulling business out of Ireland, for example. And they say, Well, we’re just going to pull the business out of Ireland that we’re going to be selling in the United States. But again, that’s a shift, that’s a change, and so that’s going to have impact on the global environment and other areas. So again, we’re going through a real transition, I think, spurred on largely by Donald Trump and the American government. And a lot of those changes I think, are necessary. The path we are on, as you know, really wasn’t sustainable, these trillion dollar trade deficits and so forth, but it is creating uncertainty and changes and capital flows that are different than what people expected, and that’s going to have impact on the market and on countries and on currencies, as we’ve seen and seen major shifts in currencies over the last, really, last month or so, the US dollar coming off quite a bit, and the European, you know, the Euro up, the pound up, the Swiss franc just skyrocketing, and so on. So big changes. But that’s not bad, but it’s just the reality of changes and uncertainty. So I think investors have to be careful. Look what where you’re investing, know why you’re investing these areas. Be patient and. Don’t panic. And
James Connor 25:01
as I mentioned earlier, Warren Buffet is holding his AGM this weekend. And have you ever gone to that event?
Jonathan Wellum 25:07
I’ve been down at least 16 times. Yeah, my first time was in 1993 and then we, as our company, I was with AIC funds back in the day, and ran it was the CEO, and they ran quite a few of their funds, and Michael Lee chin, who was the founder of that company, we’d go down and bring a lot of advisors with us. So we went down year after year after year. We made the pilgrimage. We were there’s the Woodstock of capitalism, as they like to call it. And I loved going down, so I haven’t been down the last 10 years or so, and but it is quite the experience, and it’s a real festival of capitalists and investors and Buffett really knows how to put on a show. He’s got all his businesses, all his companies down there. You can buy from them, and marketing, marketing expertise is fantastic. But he will be 95 in August, and so he’s, he’s, you know, there won’t be too many more years. He’ll be up there. And of course, last year was the first year that he had the annual meeting without Charlie Munger, his sidekick, and those two were a wonderful pair. It was comic relief, along with learning a lot while you sat there for six hours and listened to questions and answers. It’s quite the show. Yeah,
James Connor 26:18
I had the pleasure of going a few years ago, and I would highly recommend for anybody to go. I actually, I want to take my kids. I would have taken them this year, but the dollar is killing me, so can’t afford it, but I would highly recommend it. It’s a great event. It’s almost cult like, yeah,
Jonathan Wellum 26:34
yeah. Well, it’s a real following. It’s a great it’s a great environment. And if you if you want to buy any jewelry at half price, you can get into borschtheims and providing it’s not a branded jewelry. So if it’s an unbranded jewelry, and they sell it to shareholders for half price, so that alone, so if you want to pick up some jewelry for your wife or your spouse, then that’s a great avenue. I enjoyed that in my early days, and I went down in 1993 just before I was married. So I was able to buy some jewelry that my wife could wear at our wedding, at her wedding. So anyway, but it’s a great time. It didn’t you meet so many people, you can network, and everybody’s just having a lot of fun talking companies and businesses and and we were able to go to gorats, which is his favorite Steakhouse in Omaha, and get big rib eyes and and get get the big stakes there. And my former partner, he and another fellow, who are very big guys, they picked up 34 ounce steaks and knocked them down. And but that’s a great place, Omaha, Nebraska, Middle America, good old values of America. Yeah,
James Connor 27:38
I bring it up because it’s going to be interesting to see if Warren Buffett has any comments about what’s happening in the economy. So far, he’s been very quiet. He’s been asked a few times during interviews, and he he refuses to answer. So it’s going to be interesting to see what he has to say about what’s going on. Another stat that I thought was really interesting I just read recently was that the number of billionaires in the US, it’s at 1990 that number is up 45% since 2021 just think about that. Okay, once again. And this all has to do with the policies put forth by the previous administration and also by the the Fed and the money printing that’s going on. What do you think of this number? And are you shocked to hear it? Look
Jonathan Wellum 28:24
I like it when wealth is increasing. But unfortunately, with these policies of monetary expansion, printing money and and you know, these record low interest rates, so you’re supporting zombie companies in many cases, and not really bringing financial discipline to the money into companies, it rewards sort of inflation, and businesses can take advantage of that. And people that are in large organizations or companies, they get the benefit of that. Asset values go up, but they’re really not going up and trading true wealth. It’s really just inflation. And this, I think we should be very upset with, and that’s one of the things I think Trump is trying to correct, and Polya was trying to do, also in Canada, by bringing real wealth back to the country, which has to come through private investments. You have to produce. If you don’t make more goods and services, you can’t distribute more. And this idea that you can be a redistributory economy without producing and making more things is crazy, and all it does is put the prices of things up if you print more money, but you’re not making more things, and so you just chase the prices up, and that rewards asset owners. And so you see that reflected in this billionaires list. And I have no problem with someone being a billionaire. I mean, that’s wonderful, if, again, they’ve done it sort of the old fashioned way through hard work and building and creating real products and services of redeeming value. But if it’s just been spurred on by bad central bank policies and bad fiscal policies on the part of the government, that’s a horrible thing. And what’s happened is you’re getting a big split between the haves and the have nots, and so you’ve got a lot of people on the lower end are not benefiting. And the only way they’re going to benefit is you take an inflation rate down, and you create more jobs and production more more jobs that they can work at, so that they can actually have a standard of living. And you have to give them purchasing power so that that money actually can buy more over time. If you have a productive economy, your money should be able to buy more, not less. And so the only way to reverse this is we’ve got to get control of deficits and our debt, and we’ve got to stop printing money. We got to get interest rates to a proper market level and not what’s dictated to by by a bunch of central bankers. Yeah,
James Connor 30:32
the risks just keep getting richer. But so we have a Fed meeting coming up next week. What are your thoughts? And maybe I can get your comments too on this war words going on between Powell and the president.
Jonathan Wellum 30:44
Yeah, you know, I’m not, you know, again, we follow, we watch the Fed, and we’re making longer term investments. So we’re not trying to guess and anticipate interest rates. We’re not really any smarter than the overall market is, is trying? I mean, I do think that the rates probably should be coming down a little bit more in the US, there is softness, but it would have to be slow. There is the concern of inflation also. So there is that, that tension. But around the world, interest rates are down in most of the other countries in the US, I think, is slowing, and they’re having a housing market problem and and in many, many of the regions, not all the regions, but many regions. And so I think that the pressure for the Fed to drop the rates a little bit, to start easing the two year rate would indicate that they have room there to drop it or 25 basis points. And the two year treasury bond rate yield is generally what the Fed operates off of to a certain degree. And so yeah, so the expectations could be either the Hang Hang tough or about 25 basis points is certainly probable. The tension between Trump and Powell is classic Trump. I mean, he likes to put put pressure on people, make them squirm a little bit, make them feel uncomfortable. He obviously does not really like Powell. We saw this from before his first term, and I think it’s just Trump making him feel uncomfortable and keeping the pressure on him. Powell, I’m a firm believer that the central banks are very political. I don’t think they’re independent, and I think they generally are more favorable to the left leading side of things. Powell was cutting rates back when, of course, Biden was in power and the Democrats and he was trying, in my view, try to encourage the economy so that gave a higher probability for them to get re elected. And now he’s all of a sudden tight money. So I think there is a bit of hypocrisy there, and I think Trump’s just pushing and calling him out so that he at least gets some mileage out of him, hopefully, and maybe put pressure on him to step aside.
James Connor 32:39
So let’s talk about the various asset classes in the US in the last few months, the the s, p, the bond market, the US dollar, they’ve all been under pressure, and the traditional 6040, portfolio, the wealth destruction has been immense. Well, what sort of advice would you give to investors in the US on how they should position themselves or deal with all this turmoil that we currently see in the financial markets? Well,
Jonathan Wellum 33:06
on the bond side, we really approach it quite simply. We typically will buy bonds based upon the person’s time horizon for the assets, and sort of match that to a large degree. We also, over the last number of years, kept fairly short, because you look the to me, interest rates could go up, they could go down. Of course, it’s very simple statement to make, but what I’m saying is that it’s going to be driven by policy, and it’s difficult. I know super smart people who say we’re going to go into a deflationary crash, and then there’s super smart people say we’re going to go into an inflationary bubble, right? And it’s all over the map, and it’s difficult to know, because it’s going to be driven a lot by policy decisions and what what takes place and confidence in the marketplace. So we come to the bond market, we typically are buying two, three year bonds. We’re holding them to maturity in the US, we’re grabbing close to 5% returns and just and just scooping that and keeping it safe and not making big yield curve bets. And that’s just what we do, because we’re not we’re but more equity guys, and so when it comes to the bond market, I don’t want to lose any money. Our clients want it for a position of non volatility and consistency and predictability. And so that’s what we do. And the yields are still really good in the US, Visa, other, other, other markets. And so we just cream it and make it a simple decision in terms of that. So we’re not making these big deal go way out of the yield curve. Yeah, you can do that, but then you’re going to be in their market timing and stuff like that. I think it’s a different, difficult trade, and not necessarily clear how it all works out, because that’s going to be driven, as I say, by policies on the equity side. And then we also are keeping about 25 to 28% cash, so really, really short term. And that’s because we are concerned about valuations. We are concerned about the reordering of the global trade. Arrangements that are taking place. I mean, there’s a bit of a reset going on. Not to hate to use that word, but that’s, that’s really what’s happening. The sort of, sort of redoing Bretton Woods is what Trump is trying to do. So in our view, having cash on the side makes sense. And still, if it’s in the if it’s in Canada, it’s going to make two and a half percent, you know, two and three quarters. If it’s in the US, you’re going to still be, Close to close to 4% or so so cash, some bonds, short term high quality bonds, and then on the equity side, on the equity side, we’re carrying, in terms of that, a good chunk in the precious metals. And we stay there. It’s done well, it can come back. I would not be surprised for it to come back. That’s the way it moves. But until we solve our deficits and debt problems, and lot of these tariff negotiations and all of the issues that we see in the marketplace, inflation, and I’m sticking with our positions. We own a lot of royalty companies, few mining companies. That’s a position we’ve got some of the technology space you really can’t avoid the technology space of software businesses are great businesses, and also in some infrastructure companies, a number of infrastructure companies, some basic businesses, solid companies with long term prospects and long term contracts. So so I think again, find great companies that are that are really well positioned, perched in secular growth areas in the equities, keep some cash on the sidelines, things get messy. And then on the bond side, we’re just being very careful and just picking off a yields at, you know, two years, two years, three years, and just being very, very safe in that area.
James Connor 36:31
Jonathan, you mentioned 28% of your portfolio is in cash. What percent would be allocated toward precious metals, either physical or minors or royalty companies
Jonathan Wellum 36:43
our total portfolio, it would be just under 20% of our total portfolio. So if you take the percentage of our equities, it’s actually, it’s actually, it’s actually pretty high. So we’re probably running about 25% or more of our equities in the precious metal sector, and that would include companies like Franco, Nevada, Wheaton precious metals, a Cisco, royalties, at Nico ego, we’ve owned now for a couple of years, and been very fortunate, because that’s been a that’s been a stellar company. And so we own some really serious companies that space. We’re not buying juniors. That’s not our game. We’re not geologists, we’re not in that space, but we’re but we’d like the exposure that area. I do think that silver is, you know, if the famous, famous last words quite cheap. So if we can pick up businesses that have a little bit extra silver in them, that’s fine. I think that there’s silver gold ratio. And again, I’m not a fan of predicting ratios. I’ve heard people predict them for the last 20 years, and they’re always wrong. But when it’s 100 to one, that seems a little bit outrageous and and so I think silver does have a little more upside and driven by industrial demand and so forth. And also copper, some other strategic metals, copper. And we own a company called altius minerals, which is a royalty company. And they have copper. You have some iron ore that is very green, friendly, some potash resources along with some gold. So again, trying to the commodities, I think again, are a good place to be if you can find good, cash flow oriented commodities where there’s not a lot of exploration risk, like, from our perspective, there’s other people who are great at expiration risk. I respect them. That’s not our game. So yeah, we like the space, but we try to buy good companies. And also some strategic minerals, like, I say copper is, I think, a very important one, also for the whole electrification, digitization, AI and so on. 62%
James Connor 38:32
of Americans are invested in the stock market, either directly or indirectly. And of course, everybody’s single largest asset would be their homes. And we’ve already talked about how the s, p is pulled back, how the housing market is pulling back. Are you concerned? And this is going to have a big impact on wealth effect, okay? And people are just going to stop spending. And we’ve seen that so many in so many companies here in the last few months, even Louis Vuitton. I don’t know if you saw this, but they came out and they cut their guidance. They said sales were down huge in the US. Can’t remember the exact number. Also down big in China. And I thought it was interesting, because not even the rich are spending money. But do you think there’s a threat of a recession here in the coming months? Yes,
Jonathan Wellum 39:15
there’s no question. There’s a threat of recession. I mean, we’re in Canada. We’re basically, I would argue we’ve been in a recession when it comes to real, real economic growth on a per capita basis. I think the US too, there’s been so much spending. I mean, Jimmy, you think of the last couple of years, or not even the last year, for that matter, of the Biden administration, it was just outrageous amount of spending, not, I mean, through the whole COVID period, and that’s coming off. And you’ve got, you know, 1010, $12 trillion that get as of debt that has to be rolled. And you’ve got all these tensions going on in the world as you again, as we rebalance trade and the tariffs and so forth. If that doesn’t take the market off and down, then I don’t know what will so you’re so what are you seeing? You’re seeing housing prices come. Off in different markets, especially the ones that were really quite inflated. In the US, you’re seeing some pressure on the funding of those loans and mortgages. You still have issues below the surface on commercial, commercial properties that hasn’t disappeared completely. We don’t hear much about it, but there’s that’s underneath the surface, manufacturing and some other areas are weak. Housing construction is weak. And so you get into that, it starts to transfer into people’s pocketbooks and uncertainty. Then also is an issue, and people then get more conservative and careful, and they start sitting on the money and spending a little bit less. As your neighbor starts to spend less, you start to spend less, and then your other neighbor starts to spend less. And that is a ricochet effect. It’s a domino. And so I think that’s what we’re starting to see now, and that’s why I think investors need to be careful. Know the companies you’re buying, make sure you’re putting appropriate valuations on them. Keep a little powder dry. There’s money to be made in every market. I’m not selling people to run off the market. It’s all going to collapse. But just be careful. And know where you’re investing, why you’re investing, that’s why we go into different sectors, and some hedges quite well to certain issues, and some hedges to other challenges, and keep a little cash flow. So just be careful. And things have been gone quite well. But a lot of that growth was funded by pure debt and deficits, and the deficits were just outrageous. And again, Trump’s trying to bring these into line, and that inevitably will put pressure. That’s a good thing if you, if you’re if you’re having pressure in your economy, because you’re shrinking the public spending and you’re trying to balance out the economy in a healthier way, that is a good thing, but it’s not easy, and it will create volatility in the stock markets. But again, you don’t want to stay on an unsustainable path, which is what we’re on. And so I think it’s very important people see the bigger picture, that if it’s going to be healthier three to five years from now, that’s what we want, rather than pretend to artificially keep asset prices high when they shouldn’t be at the levels that they’re
James Connor 41:57
at. Well, Jonathan, this has been a great conversation. I always enjoy our chats, and as we’ve already discussed, we’re living through some crazy times, and during times like this, people need help with navigating these financial markets and looking after their future earnings. And if they would like to have a chat with you about how to navigate these markets, where can they go?
Jonathan Wellum 42:19
Yeah, best place to be our website, which is rock link, R, O, C, K, L, I, N, C, so link with a C, rocklink.com you can email us at info@rocklink.com, and if you go on a website, you get all our contact information Absolutely. Come in talk with us. We can zoom call with you and come into our offices. We’re in Burlington, Ontario, and we love to talk to the people. There’s no cost, there’s no charge at all to to go over someone’s portfolio. And I think it’s really important, because over the last couple months, especially in Canada, with the tariff conversation and the election, there’s a lot of people just wanted to sort of jump right, right out of the market. And you have to sit down and talk with them and and then they stay put. And you know, we’re positive year to date on all our numbers and being very careful. And so the worst thing you can do is sell at the bottom and buy at the top. And in order to not replicate that, you have to know that what you’re investing in and feel comfortable with, you know, the marketplace, and stay in it long enough. And so sometimes you just need a professional to talk with and to go through some of the issues, and we’re more than glad to do that. We’ve got a fantastic client base. We love talking to the people, and that’s we’re in the business of doing investing and helping manage people’s assets.
James Connor 43:32
Jonathan, once again, thank you, and I look forward to our next conversation. Great. Thank you very much.
