00:00:00.000are there benefits sure you know and they state them their manufacturing or steel demand and
00:00:06.160engineering contracts refinery activity uh long-term pipeline operations who owns it
00:00:18.480so mike i'm having my coffee the other day yeah and i'm reading this article it's about foreign
00:00:25.040investors who have bought canadian government debt at a record pace in april so you know there's a
00:00:32.480lag between reporting on all this stuff so purchasing 46.9 foreign uh billion in canadian
00:00:39.920securities overall which kind of caught my eye and i thought what was that number again well this is
00:00:46.320this is total security so this is everything right but these are foreign investors coming in
00:00:51.280but the thing that really caught my eye was that the government of canada bonds
00:00:58.000now have an ownership stake of 43 by non-resident canadiens that's a really really high number
00:01:06.640right so you know and and welcome to the show i didn't i just jumped in but you know and and
00:01:11.760everyone welcome to the show true patriot loves uh very happy to have everyone watching today
00:01:17.120but this one's a really interesting one because right away when i see something like 43 of bonds
00:01:24.000are owned by non-residents my mind asks and this is my accounting brain it says
00:01:28.960what are the total amount of government of canada bonds what do we have out there so we now have 1.48
00:01:36.160trillion dollars now this this is needs to be updated but that was the 1.5 trillion dollars
00:01:42.560in coming into 26 we had 1.48 trillion dollars of government bonds so you know those uh
00:01:50.480government of canada bonds we used to buy remember when we were kids oh yeah yeah we all had bonds
00:01:54.960you know our parents you know learn the bond market would buy a bond it seemed to be like a
00:01:59.920if you the bond market was primarily owned by canadians right well we did right we all bought
00:02:05.520and for some reason i don't know why that went away yeah it did so you know you don't say to
00:02:10.320your kids anymore get a government bond but you know there were canadian savings bonds we all
00:02:14.800used to buy them they had a low interest rate but it's kind of how you uh entered the investment
00:02:20.480world to learn a little about the market right so time went on these started to get bought up
00:02:26.720by foreign investors so if you have what we have let's say 1.5 billion now it's a little over 1.5
00:02:34.000sorry trillion trillion yeah right 43 of that
00:02:39.840is now in the hands of foreign investors so roughly 600 billion dollars is held by
00:02:46.320foreign investors in canada yes almost half of the the uh bond investment is held by foreign entities
00:02:56.240right so governments go out when they need money they go out and borrow money in the marketplace
00:03:01.520so half of it over 43 percent of it is now uh owned by us asian german other other countries
00:03:11.680and also uh other investment arms in other countries how do we work these bonds like
00:03:17.280do we have to say okay here is a national project specifically no no no we just we go get a bond
00:03:24.160rating for the cut so we basically say canada has a bond rating of like triple a therefore you know
00:03:29.920this is a good bond it's a safe place to do business which i find very interesting given
00:03:34.800the fact that our debt in the country is about 1.27 trillion dollars so we're already underwater
00:03:42.480with what we have out there in bonds right well and and we're the third i took a look so then my
00:03:48.320mind goes and says okay are there any other countries that have foreign ownership higher
00:03:55.040than us and there's only two others which not a good example is france and germany so we're the
00:04:00.960third so our 43 is like the third highest saturation or content of foreign ownership
00:04:08.880of government bonds so that's okay how do i feel about that so i started looking into it
00:04:15.120it feels like we've lost a huge chunk of our financial sovereignty to ownership in other
00:04:22.400countries i mean probably probably primarily the u.s yeah a lot of it a lot of it is as you know
00:04:30.080they they seem to be the april so uh in april uh government of canada bonds out of the total
00:04:37.520investment in securities accounted for uh 27.7 billion so they bought a lot of bonds so someone
00:04:45.200or some people they don't say specifically who um they they tell you the countries that buy them or
00:04:51.360the places of the companies that buy them where they're from but roughly it was a record uh
00:04:59.360coming in and most of them are from the us and asia so is there a limit that we will allow is
00:05:08.080there i mean at 50 foreign investment we stop it is there any place or any indication that we would
00:05:15.040do that no no we don't seem to have a you know no one's there's not a law or a guardrail yeah
00:05:22.800there's no mechanism to no no no we do say this is the interesting part and i've always i've always
00:05:29.520heard this but i've never tested the theory on it they say well canada the foreign countries
00:05:36.400and companies from foreign countries like the bonds because it we have a high uh bond rating
00:05:42.000okay a triple a bond rating we're a safe place to do business we have stability even though we have
00:05:48.0801.3 trillion in debt and 1.5 trillion in bonds out there we seem like a good bet huh
00:05:54.800we yeah i'm with you we always make the case that we have a low debt ratio um but you know we don't
00:06:02.080talk about how our productivity levels are low you know we don't talk about our gdp per capita we
00:06:08.480don't talk about quite frankly that we have which i find interesting we are going on what we're
00:06:13.920talking about a technical recession but yet at the same time our bonds are attractive that that's
00:06:21.600i don't understand how that how that aligns that's that's kind of where i was going with this now
00:06:27.760here's my other question yeah if we aren't on a growth pattern and the u.s is exceeding if their
00:06:35.280bond yield is exceeding ours do we not then have to go to the marketplace with a better value
00:06:40.800with more interest uh for investors do we do we not then have to enter with a more attractive
00:06:48.960product to the market and if so how can we afford to do that because doesn't that then
00:06:55.440lean on all the all the projects that we're going to use the money for yeah exactly well it's
00:07:01.280interesting because you know uh you know our defense projects so we've got some big projects
00:07:07.120coming up so infrastructure defense housing uh productivity initiatives that we put in our budget
00:07:13.520so what we're going to the market we're saying please come in and finance these essentially
00:07:19.440that's exactly what it feels like the timing on it is exact yeah yeah yeah and that's what we're
00:07:24.800doing so we're we're basically going to market we're bringing in for now the issue becomes
00:07:30.880what happens if no one talks about it what happens if there's a downturn in market
00:07:36.960so you can't you can't take care of these bonds right so you have to renegotiate the bonds you
00:07:43.280have to come up with other i suppose that could happen it is a financial arrangement
00:07:48.080and you've got these investors there if the bonds start to fail the security is the government right
00:07:53.040and the people so we elect the government the government goes out and creates the policies
00:07:57.360they've told us in a budget they want to do infrastructure defense and housing now they've
00:08:02.080gone to market and now all these firms no this is interesting because we just did a show on kuzma
00:08:08.480mike so we're we're actually going to have a negotiation with a country that is now buying up
00:08:16.000a substantial amount of our bonds on the market to get into those sectors it seems odd doesn't
00:08:22.960Yeah, that we're negotiating on one page on one day and over here selling investment in these very same things that we're, well, it's interesting that you say that because one of the things that crossed my mind just now was, okay, so now we've got this much in bonds out there at 1.5 trillion.
00:08:41.600does the arrangement now change with in the face of tariffs that we saw this morning you know
00:08:48.340Trump jetting right over Kuzma and adding Trump's tax or the tariff of 25 percent in a lot of cases
00:08:56.480an additional 10 percent how does that affect our bond rating and how does that affect our ability
00:09:01.380to service the bonds yeah it's got to have an impact so you should in other words of course
00:09:08.600it does right so if you can't reach an agreement the market goes soft you have to you can almost
00:09:14.020create your own outcome because you have now the other thing that he gets to write his own script
00:09:18.700on that one because we need bailed out essentially the other one we talked about you know which is
00:09:24.040the vulnerability say the ai bubble bust and he's got to actually pull his money back yeah because
00:09:28.920he's loaning the money right he's actually giving the money buying the bonds he's got to say okay
00:09:32.760i'm now going to either pay the penalty or the bonds come due i'm going to take them out i'm
00:09:36.740and take them back because they need the money back at home we're vulnerable to that because we
00:09:41.460take in the foreign investment whatever's happening in their world now impacts our world
00:09:46.260and as they have we get dragged along and as they exit this bond even though they're paying a penalty
00:09:52.020we're going to be i'm just guessing and please tell me if i'm wrong we're going to be borrowing