El Predicto

Well, it’s that time of year when we write (and say) things that are cringe a year later.

Yes, predictions. What’s next on this path ahead? Who among us would be silly enough to forecast events and conditions when we have no idea what next week will bring?

This blog, of course. Fearless. Shameless. Arrogant and prescient. Oh, and manly. Let’s go.

The economy
Meh. Next year should bring growth in Canada of maybe 1.5%, which is tepid, lackluster but a helluva lot better than recession. A lot depends on what happens with CUSMA, the son of NAFTA – which opens up for review and renewal in 2026. Trump signed the last deal, but may actually pull the plug on this one, meaning an uptick in tariffs. Because he’s crazy, business investment has been weak since corps fear being caught offside in the White House trade hissyfit. But, whatever he does, Canada survives.

Interest and mortgage rates
The Bank of Canada is done. No more rate cuts – unless there’s a Code Red for the economy (not happening). The key rate will stay where it is for most of the year. A few banks are calling for one or two quarter-point increases in the back half. Nobody is expecting a reduction, even as the US Fed – under political pressure – sheds basis points like a molting husky.

Home loans stay around the 4% mark, with upward pressure starting near the summertime. Fixed rates track the bond market, where there’s concern about big government deficits and the return of inflation. Variable rates are tied to the CB and also the prime rates at the chartered banks. Five-year, fixed-rate mortgages may swell to a range of 4.8% to the low 5s. Variables will be a better deal for most of the year, but could increase by half a point.

The stock market
This year was nuts. Liberation Day in April sent stocks skidding towards bear market status, only to be followed by rally after rally, high after high. The American market gained close to 20%. Bay Street jumped almost 30%. Many international markets did even better. And this was despite Trump, a global trade war, real wars and political polarization. Corporate profits soared. Technology romped. The wealth divide grew dramatically. And financial dudes are convinced it will continue.

Next year is expected to bring strong corporate earnings and a further inflating of the AI bubble. Tech spending will explode and the huge productivity gains that artificial intelligence is realizing for companies and governments will plump bottom lines. The downside is AI replacing humans – a trend we’ll hear endless stories of next year. But stock markets are expected to advance at least 10%; corporate profits will swell by more than 14%; gold will hit $5,000, feeding the Toronto market, plus there will be more billionaires and poor people.

Our leaders
Next year the NDP will pick some irrelevant person to lead that party into its final stages of descent. The Bloc is under pressure in Quebec and may likely become more rad. That misplaced sovereign-Alberta-Wexit separatist referendum in the autumn will fail, but the ruling Danielle Smith Party will be shredded by it. In January Pierre Poilievre will be reaffirmed as federal Con leader, but remain far too spooked during the year to push an election (that nobody wants). Mark Carney will preside over big spending, big projects, big debt and continue his makeover into a progressive conservative.

Inflation.
It’ll go up, silly. So will wages. Not rents, though. Certainly not condo prices.

Trump
Coming off wins in Ukraine and Gaza while punishing Venezuela and hitting on Greenland, Trump is in trouble. It’s not ‘America First’ anymore. Not even MAGA. It’s more foreign entanglements, personal aggrandizement and family grift while average folk struggle with tariff inflation, ugly immigration raids and job insecurity. Key promises of cheaper living costs and a golden age for America have not been kept. Come the November elections, he’s hobbled – and probably more unpredictable and dangerous. The resistance will increase. America will not be happy place.

Real estate
Expect 2026 to open badly for realtors, sellers and builders. It’s likely that, once again, there’ll be no spring market with lousy sales, steadily-but-slowly-melting prices, rising inventory, condo crisis and the entire construction sector having a cow. Will a bottom come? After all, mortgages rates at 4% are not brutal, bidding wars and bully offers are largely gone, sellers are more pliant and flexible, VTBs are a thing again, plus we have home-helping tax shelters in place – which all means purchasing and financing costs are down bigly.

Or is this the prelude to something bigger? A real estate collapse? And if that happens, won’t an economic crisis follow? Will Big Daddy Carney and Governor Tiff even allow that to happen?

Nope. Nodda chance. Prove me wrong.

About the picture: “Greetings Garth. Another year has gone by, and what a great one it has been for me!” writes Andre. ” The goal has long been achieved and  the plan continues to be modified… I continue to be “Livin’ the Dream!”  Bijou continues to contribute to that Dream and wishes You and the Team all the best for this coming year.”

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

Source: https://www.greaterfool.ca/2025/12/29/el-predicto-6/