Not so bad?

Grace just got divorced. “After 28 years he does this,” she spit. “At least he got shellacked.”

That means about $2 million will be in her bank account by the end of the month. Just in time, because her income stream disappears along with the philandering Phil. He got the house and the millwork business. She got all his liquidity.

She’s nervous, of course. Her bank is offering her a GIC in the upper 2% range. But the cash is locked up. The ‘high-interest” account is liquid, but pays only 0.75%. A regular RBC bank account delivers a stunning one-tenth of one per cent.

So, she worries about that, even as a new millionairess. “If I spend this money just living for the next twenty years, the family gets nothing,” she says. “Interest pays nothing, but the world is too scary to invest.”

Meanwhile in Ottawa, Big Daddy met with his cabinet today, two weeks before Tariff Man is set to turn the screws again on Canada. Will the PM throw retaliatory taxes on US goods? If he does, will Trump move the needle higher? Did the American president even agree to work out a new deal with us when he dropped into that Alberta gabfest? And if a deal comes, would he honour it? Will we get a recession?

Waiting for answers is pointless. Grace is 63. At certain moments in life, waiting is a really bad idea.

Trade wars are out of the hands of average people like her. So is monetary policy, interest rates and the corporate earnings that move stock prices. The American president is wholly unpredictable. Even the bravest economist cannot, will not, predict events a year from now.

The real estate market has frozen in its tracks in most cities. Like Grace, buyers seem to be waiting for something big that may not take place. A drastic drop in mortgage rates. Free trade. Tax cuts. Plunging prices.

Increasingly, it appears none of that is going to happen. Trump will continue to disrupt the world, but not blow it up. His tax cuts (passed on July 4th) will likely result in higher corporate returns and plumping equities. The lower US dollar will fuel more growth for commodities, which has helped Bay Street outperform. And his tariffs will end up pushing inflation high enough to keep interest rates where they are for more months to come.

The lattest stats, out today, confirm it. Canadian CPI crept ahead to 1.9% (up from 1.7%) and core inflation remained hot. Combined with Friday’s high-octane jobs report, it means the Bank of Canada will stay on hold at the end of July, and probably right into mid-autumn. Mortgage rates starting with a ‘3’, by the way, have largely disappeared and won’t be back until it’s cold outside.

In the US, inflation has also climbed, reflecting tariffs. “It is a step in the wrong direction that will keep the Federal Reserve on the sidelines,” says BMO Economics. “More signs of tariff pass-through are starting to appear, while services and housing inflation remain too hot for comfort. Today’s report keeps the tariff inflation debate going for at least another month and the Fed on hold until it receives more clarity and comfort on how tariffs are feeding through the economy’s supply chains.”

It’s possibly interest rates – which were supposed to tumble in 2025 – may not move from current levels. It’s possible as well that investors with B&D portfolios might be on track for a second straight year of double-digit returns. And it’s a certainty house values in some major Canadian markets will be less in December – also by double digits – than they were in January.

So, low but gently rising inflation. Wages gains which have outpaced CPI now for more than a year. Stable interest rates. Maybe a few quarters of negative growth, but no surge in the ranks of the jobless. Cheaper houses amid a buyer’s market. Rising commodity prices fuelling the Canadian market while Trump primes the American one. Probably an end to the Gaza and Ukraine wars within months. And Canada gets stronger with fewer internal barriers, increased infrastructure sending and more global trade.

Does that sound like a disaster? Stuff to fret and vex over? To keep you from buying a house if your family seriously needs one? Or to invest and live off the returns if you’re retired, in your sixth decade, and spouseless? Like, what are we all waiting for?

And what will Grace do? Stay tuned.

About the picture: “Our childhood terriers were spoiled as you can see by the splash pool,” writes Erin. “Ellie and Jet are both over the rainbow bridge but I saw this pic and thought it was fitting given the heat in Ottawa I see on the news.  Loyal reader here.  I particularly like the comments – some wild stuff!  The work that goes into the blog is much appreciated.”

To be in touch or send a picture of your beast, email to ‘garth@garth.ca’.

Source: https://www.greaterfool.ca/2025/07/15/not-so-bad-6/