It was a great week to feel the heat of summer finally. Could I have been suffering from heat stroke or simply becoming forgetful with too many thoughts infiltrating my mind? Does this ever happen to you, or am I alone? 

You’re holding your phone, then get distracted to do something else, then once you get grounded, you forget where you placed your phone. Then you try and retrace your steps, but nothing is to be found. Then you go to the home phone, if you still have one, or borrow your kid’s phone to call your number. There is no ring, because you placed your phone on silent. 

All of a sudden, fear encompasses you, your blood pressure rises, and frustration sets in. Instead, you see the gift your daughters gave you for a birthday, a trimmer for manscaping, because you are distracted, you experiment, and all of a sudden, the hair on your chest disappears, and you look like a version of the 60-year-old virgin. A friend of mine used to brag that grass doesn’t grow on a busy highway. At least I learned how to eat the weeds and make something nutritious over time. Then, when you least expect it, you find the phone you were looking for to begin with and are relieved but hairless. Amen! 

Speaking of making things happen, the Middle East hostilities have entered into a ceasefire, after the American airstrikes on Iran took out their nuclear enrichment facilities. This week, NATO nations convened in the Hague and countries agreed to bolster defence spending upwards to 5% of their Gross National Product (GDP). 

The unfolding of events has had a major impact on the markets. Volatility has been extreme, especially with the price of Oil. As previously mentioned, one of the biggest contributors to the inflation crisis was the high cost of energy. Recently, as hostilities amplified, the price of Oil approached the $80/B level. Once the military strikes finished and negotiations began, the price of Oil plummeted to the USD$63/B range. 

The question remains: was strength through force the best way to bring peace to the region? One can argue all we want, but the results speak for themselves. Further, with a distraction out of the way, the markets can concentrate on the next move by the Federal Reserve, and Congress can vote on the Big Beautiful Bill to bring the economic policies to fruition. 

Chairman Powell testified before Congress this week and is still adamant about following the data. At first, his concern was the impact of tariffs on inflation, then the geopolitical consequences of war and the rise in inflationary pressures. To his dismay, nothing has materialized over the last six months other than promoting a clash between titans. The events that have transpired should clarify what the Fed has to do, even though Powell remains highly optimistic about the direction of the U.S. economy despite high interest rates and weaker economic data. 

A case in point, U.S. New Home Sales in May were down <13.7%> from the previous month’s increase of +9.6%. The expectation of 690k single-family dwellings sold came in at 623k, a significant decline. Yet, the markets continue to boom, and you have to ask yourself, with all the negative tones, social unrest, tariffs, and wars, how is it that valuations continue to climb? Is this the result of optimism? 

Nonetheless, the Fed looks and sounds like me, waiting for the perfect scenario before making an impactful decision. You either swim with the fishes or you get swallowed up! Chairman Powell’s term is also ending, so he has nothing to lose other than self-respect.

The USD Index is sliding toward the 97.0 level, anticipating interest rates will come down, sooner rather than later. The table has been set, and the Administration is expecting rates to fall to help promote its growth agenda. If not, there could be more fireworks before the 4th of July. 

In Canada, as Parliament closes for the summer recess, while we are supposedly in an economic crisis, the Consumer Price Index (CPI) remains stable @ 1.7% in May. This is also below the Bank of Canada’s (BOC) 2% target and opens the door for the BOC to lower interest rates. If the  BOC fails to do so, someone needs a few sharp elbows delivered! 

Precious Metals remain stable at the USD$3300/oz level. Silver also shows firmness and continues to grind upward in the USD$36/oz range. The CAD remains above the 0.73 cents level, a function of overall USD weakness despite the price of Oil sliding drastically. The Euro is also flying higher.