Recently, I woke up one morning and couldn’t fit into my pants. So, I took decisive action and stopped the culprit of nighttime snacking, which had become a crutch for feeding my emotions. Now, when I wake up, I start doing squats, building toward 100. I am halfway there and miraculously, I don’t have to jump off the roof anymore to fit into the pantalones. I breathe more easily and look forward to better results. 

Speaking of better results, Consumer Confidence in America took a sharp jump to 98.0 in May from the previous month’s 85.7 reading. As a result, the Federal Reserve will hold steady on any future interest rate cuts as it continues to stand firm. This is an annoyance to the Trump Administration as inflation has come down, yet it is a test of wills for the moment.

Meanwhile, the Fed has been allowing $25 billion of Treasuries to mature and reducing new issues to $5B per month. This is a means of shrinking the balance sheet to control inflationary pressures by printing less money.

On the other side of the border, the Canadian economy relies heavily on the housing market as its primary fuel to prosperity. The housing market has been decimated, and the actual culprit is the lack of confidence. Regardless of lower interest rates, people become petrified because they are worried prices can continue to fall and are becoming leery about pulling the trigger. 

Click below and hear it for yourself as Vince Gaetano from Owl Mortgages provides an in-depth analysis of what is going on.

https://youtu.be/303hIlXIQYE

Nonetheless, the expectation is for the markets to see a divergence in interest rate policies between Canada and the U.S.A. The Bank of Canada (BOC) is expected to lower rates by 0.25% as headline inflation fell to 1.7% in April, but excluding volatile food and energy, the rate rose to 3.15% despite the cut in the much-hated Carbon Taxes. 

With the Fed taking a wait-and-see approach to the new administration’s changes on trade, immigration, fiscal policy and regulations, it will be the results that will determine monetary policy. Therefore, no timetable has been set for a rate cut and don’t expect one to come in either June or July. 

The USD Index climbs toward the 100.0 level once again, renewing USD strength. Currencies slide further as trade negotiations between the Americans and the world continue. Further, peace talks to end wars are ongoing, hopefully soon ending the needless killing of innocent people. 

Precious Metals remain steady with Gold in the USD$3300/oz vicinity and Silver around the USD$33/oz level. On the other hand, Oil continues to trade within the USD$61/B range, and the CAD$ remains close to the 0.72 cent vicinity. 

After Bitcoin hit a new record high close to the USD$112k/coin level, presently in the USD$107/coin range, something quite interesting was said to me. These digital currencies have been created to steer money away from Treasuries and into these investments. Then one day, when we least expect it, the central bankers will eliminate all government debt, and the crypto market will implode. Sounds crazy, but then again, I couldn’t fit in my pants a few weeks ago, and now I can.