Jose: Thanks for tuning in. Now time for part two.
This is the first sign that the long Canadian productivity boom that's been well talked about maybe starting to inflict. And how do you maintain that momentum. What needs to be done more. Let's say you were the Canadian PM. What is your wish list for like 2 or 3 things?

Damian: Like I think it's the start for sure. And to maintain momentum you have to execute and execution you know often involves partnership. And I think that's one thing where we're hearing more from, the current federal government is, is that they're bringing in more people from industry, and they are going to try and work together with the provincial premiers and leaders to, tackle issues together.
And there are important issues that need to be addressed, particularly around housing and health care delivery. But there's no reason why they can't be working together more effectively and, and to deliver those things. So yeah, like I'm, I'm optimistic that we're going to start moving in the right direction and we are yeah. Like the speed of some of the initial cuts to like resolving the, the capital gains tax and, and the carbon tax like they, they took those off the table fairly quickly.
So, there's no reason to think they won't make some good progress through the balance of the year. And, and maybe in 2026 as well.
Jose: Damien, if you were the Canadian PM for a year, what would be your first couple of things that you think could really accelerate going forward?

James: … wishful thinking there. So, if I could be the Canadian, if I could be the Canadian every year up the, like the last few years, GDP growth is population growth multiplied by labor productivity hub. Right. Like economics one and one, GDP growth is population multiplied by how much those people are producing. And so, the last few years we've had population growth, we've actually had.
But that second variable, productivity of the labor force has actually been declining. I think if I was a, if I'm sitting right now, you know, and, in a leadership position and, and I don't mean, I don't mean at the Prime Minister, but even the provincial like the premiers and stuff, I would be we've had the we've had the population growth.
We need to channel that population growth into more productivity to actually lift this up. And so, I would be focusing on, you know, trailing efforts to improve our current workforce to deal with this, I'd be focusing on removing barriers to that. I would be focusing on just like on removing, you know, for example, James is talking about, we're both in Toronto…
… just removing institutional barriers to red tape to improve their product because I think that'll that will help us get to that, you know, to a higher sustaining level.

Jose: Because we have all the inputs, right? We have the land. We have the resources. Yeah. It's, like the, the ingredients, the high quality, Michelin star ingredients are there. It's the dishes. Pretty lukewarm.

Damian: But there's an even there though at the margin. Right. Like we're at a really we're in an inflection point like we, you know, like Kitimat is just being built in like there are going to start this is out in B.C., the LNG thing they're going to very soon in the next few weeks are going to actually have their first shipment.
They're talking about expanding that, exporting LNG. Like I think at the margin there is a change that people haven't fully accepted, like the housing market. This country isn't collapsing.

Jose: Was a big worry for….

James: Like the last few years. It's not like, you know, the population growth we've enjoyed is slowly being absorbed. If we get them into more productive roles and improve productivity, I could actually see you could paint a picture. And James talked about this starting sentiment and valuation is attractive and sentiment like no I don't think most people know the TSX is up high single digits, double digits.

Damian: O breaking out to new...

James: Or breaking out to new (highs), exactly!

Jose: What keeps breaking out new all-time highs. And it's like being in or no one seems to … stealth rally, right?

James: The those are ingredients of outperformance. And I'm saying this from, you know, being a global PM and you look at the TSX, it's it looks like one of the best performing markets technically. Like we just broke up to new highs. And you know 26,000 looks like support now .. and it looks like moving higher from here.

Damian: To expand on that just for a second. So, what's really interesting to me about it is that it's not some of the sort of "set it and forget it," traditional Canadian sectors that are leading what's leading like what's not leading right now is banks, railroads and energy. On an absolute level, some of those parts of the market are doing really well, but they're not leading the market higher.

Damian: What is leading is insurance and gold and to some extent food retail. These are different parts of the market that maybe don't typically get quite as much attention. And it's a little more Canadian, as a Canadian manager (looking at it), it's Canada specific. But these are things that we've noticed as managers. And what we're trying to make sure we're avoiding is that some of the stocks that have idiosyncratic problems and in the traditional parts of the market that aren't being priced accordingly or might not resolve soon, like we're trying to make sure we don't own too many of those and we have noticed that there at these other parts of the market that are moving higher. And so, we want to understand why that is and if the trends are sustainable and if there are companies that have competitive advantages that we can come along for the ride with.

Damian: Just think about that for a second. Right. Just to build on James (point) Oil is at 62 bucks….

Jose: And the Canadian stock market is at an all-time high…

Jose: … breaking out to all-time highs, which is a great sign.

Damian: And imagine if like, oil just stops falling? Right? Or as it goes to $65-70? Canadian oil and gas is a big part of the TSX. If that stops declining, like you could actually see … is the ingredients are in place for, you know, I don't even know just what the, the. But I feel like this podcast is like a go Canada on the day of like the Stanley Cup where we have a deep…

Jose: I was going to like a rapid-fire question at the end anyway. But like now that I have you here are your predictions here because we have two Canadian Representatives, SGA (Shai Gilgeous-Alexander), you know, let's just say the MVP for a basketball championship. Are we doing a Canadian sweep?

Damian: And we're definitely we're overachieving in sports and equity markets.

James: So that is the right way to describe it.

James: So obviously my biases are … I threw the Leafs jersey in the bonfire ...

Jose: Are you behind "McJesus" now?

James: Yeah I think Conor is … I think they're a better team, so I'm hopeful. And I think as we've, as you're saying, and equity markets, I think there's underlying resilience here. There are some actually really good things. And I think that actually dovetails nicely if we're just, you know, into what, all of us can do or even what SGA has been able to achieve and for a team that people at the start didn't think would make it to the NBA finals.

Jose: Kind of very much in parallel with our stock market, if you think about it. So that's a great segue to the other side of the border. Now we've discussed Canadian politics. We've seen the Canadian stock market, very encouraging on the other side of the border to I would say policy has been chaotic, to say the least. But it does feel like the last few weeks have been a little calmer. Do you sense, a shift over there where there are calmer heads in the room driving the decision-making the messaging better, post "Liberation Day" chaos. What are your thoughts on what's going on in the US policy wise? And we'll dive into the other topics.

Damian: I'm curious to hear James's thing, because James is an observer for what's happening in the US market. But I'll start with this. And I think this is, again, if there's lots of things I hope people take away from this podcast. But one thing I really want people to take, because there's academic evidence about this right now, is that how do I say this?
People are crappier online or like, you know, you look at the comment section in your Instagram feed, people are just like, you know, I can't like people are just crappier online. You know what? I mean? Are online, you know, use whichever way, whichever adjective you want. That's a lot more coarse than crappier. But why am I saying this?
It's because when you look at the sentiment, the soft data numbers in whether it's, you know, we just like consumer confidence or like they like people are expecting Armageddon after, you know, Liberation Day. And we just had Q1 earnings and, you know, and what's happened since then that the like we had the "JOLTs" number job openings by industry that suddenly, you know, that's stopped declining, that's making new highs.
We're going to have the non-farm payrolls in a few days, like the US economy is doing just fine. It's not … it's slowing from you know … But what I'll call from really like a in a good way was it was overheating. So, we're slowing from, you know, peak levels, but we're nowhere even close. Like we're still growing above trend.
And I think what's happened, right, is that to get to my point, is that when you ask people questions and this is what I talk about academic, I've been supporting this before. When you had surveys, people actually went door to door as people called people up on the phone. Ask them how they're feeling. Now, a lot of surveys are digital.
You get you get a link in the inbox you send and you just you have you almost have like, free reign to be a crappy person. It'll be much.

Jose: More not as thoughtful, not as…..

Damian: Thoughtful, and just and so what you're finding is that the sentiment is underperforming the actuals, right? The reality is much better than how people feel like. If you told me in the US, one of the biggest, online … Like people's views of inflation, both actual inflation and, for the most important components expected are like, they're like, oh my God, inflation is significantly high.
It's going to keep getting higher. Inflation is falling.

Jose: And even then, you showed me something where there's a bifurcation.

Damian: Yeah, there's a bifurcation between. But like inflation is falling I could talk about that. That's funny. But inflation is falling. But more importantly for the regular, you know, middle, middle class, higher income, like American or even lower, the biggest variable in their perception of inflation is the price of gas. Gas prices, to our point, like WTI is 60 bucks, like, oh, like to fill your gallon.
And it's like everyone's gone… You go fill up your tank. You know it's gone. So, people's perception and like versus reality people are like oh my God inflation is really high. And it's going to keep increasing versus reality. It's falling and it's going to keep falling. And the biggest variable that you.

Jose: See disconnect has been there for a while now.
Damian: And I think that's that continues for our team. That continues to be exploitable where people's whether it's what we did post Liberation Day or just, you know, exploiting this panic that is being amplified through social media channels that when an a complete almost like … ignoring what's happening on the ground, like the actual like hard facts.

Jose: James, you've, you've been observing …but no one can ignore the US market. And of course, the US market policy has a lot of implications for Canada. Right. So, what are your thoughts of just, the chaos and since then, the recovery and messaging?

James: Yeah, yeah. So, I think there's been a change of tactics. You can see how the market has been recovering in the last couple of months, and we've been seeing a lot more and hearing a lot more from Treasury Secretary, Scott Bessent. And you know, Peter Navarro's off in a corner somewhere talking to himself or whatever. So, I think that's, that's a change in tactics.
And I have to admit, I've, I've watched and listened to a number of the long form interviews and, and it gives it gives investors, I think, more confidence that there's actually some method to the to the madness, or at least a willingness to, change, tune or adapt, because…

Jose: That feedback from the market basically.

James: Right, exactly. I think that's an encouraging sign. what I've been watching for, from the sort of the Canadian income world has been the budget deficits. I think this is really important. And it's, it's also quite fascinating. Like, if you think back to the 80s, 90s, 2000s, budget deficit in the US was like 2% of GDP, which was, you know, meaningful, but in hindsight, not that high.
It sorts of doubled to the 4 to 5% range in the 2010s. And I think last time I checked the numbers, it's been running at 8%, 7% in the 2020s so far.

Jose: In a non-war, non-disaster.

James: Non recession.

Jose: Recession. Sorry.

Damian: Like a significant change. And it's I think underappreciated. And it's putting this upward pressure on the long end of bond markets. And it's really important for, for me and the number of portfolios that I manage because we have so many income-oriented stocks. So, I'm paying attention to that. And I'm just I'm hoping that they're able to thread the needle of … okay, they want to do these trade deals.That'd be good. They want to cut taxes. That'd be good. But they also have to deliver some of those DOGE- related, spending cuts. Otherwise, the bond market at some point is going to start rejecting these, like massive deficits. And that's sort of what I got my eye on.

Jose: So, I love that you brought that up. let's unpack that a little. So, U.S. equities have made a resurgence. So, the spike in yields have not really yet, work that way to the equity market. At the same time, let's say the spread between the 30 and the ten is also widening, like the term premium is widening.
So, my question is, is this a sign that, the bond market is pricing in some sort of growth and inflation, you know, both sides where the policies are actually really pro-growth? Or is it the risk of the deficit widening, which element is playing more or what's the thought process there?

James: I think the deficits need to be priced. And if things are really going to get shaky, then that steepening of the yield curve will advance more quickly than people expect and more than people want. So, I do think that be careful that the key is to have the growth and the inflation imbalance. And I think one of the plans that I've heard is this so-called 3-3-3 plan that's been making the rounds.
Once they get that 3% inflation, 3% GDP growth, 3% budget deficit. So, if they can bring these factors into sync and not allow one part of the agenda or one part of the puzzle to really get out of sync, I think it can work. And the equity markets are hopeful for that outcome in the next 12 to 24 months.
That seems to me what what's being priced in or what's being hoped for. And I think the administration has to steer the boat in that direction.

Jose: Damian your thoughts here like has also just broader picture globally. Just adding on to that. Yeah, I want your comments there. But like has the nature of fixed income investing changed. And in general, that's the extent.

Damian: I think fixed income is getting back to what our, fixed income colleagues will say, which is like you buy a fixed income for it's in the word its income. Right. So before like people are buying fixed income for capital gains because they watch bond yields go from 5 down to like 50 basis points like that is that's not like you buy fixed income for impairment right now fixed income yields. And the ten-year Treasury sitting around 4.4%, 4.5%. That actually feels normal. And let's break this down. Right. like what is your fixed income yield composed of. It's composed of real growth expectations for inflation over that horizon and the term premium. The term premium is just your compensation for being wrong. Right. And so real growth let's call it 1.5%, 2% inflation. You know two likes over the medium term likely headed back to 2% or a little more. So, you get around 4%. Well what people are what people have to get to terms at is what's the right term premium. And the term premium it really addresses would, you know, both James and you have just been talking about which is how comfortable are people that the deficit will start normalizing to a more sustainable level.
Let's talk about that for a second. When people are people are rightly panicking about the deficit. But we're at the same level we were last year, the, the, the actual tax, the actual, platform being proposed. It's sitting right now with the Senate in terms of, the, in terms of the new budget, it keeps the deficit at the same level it was last year, which is still insane right there .. like technical term insane, but -6% of a deficit. You can't you like that? Like the deficit is how much you're borrowing divided by GDP. You can actually run a -3% deficit. You can take your deficit to be 3%. And if you're doing 2% normal growth and 2% inflation, by definition your leverage ratio is falling. Right. And that's what the Scott Bessent's been talking about.
So I think we have to see a pathway for getting, the deficit from these all like, you know, like eye watering levels of -6% where you are now crowding out … like where interest payments are now higher than defense spending, rightly, or where interest payments are now slowly crowding on non-discretionary spend. You have to get that lower.
And the problem is, and this is the cynic in me, politicians will do the right thing, but just when they when forced it, whether it's the Democrats or the Republicans, they will address government spending but it's not going to be organic. It's not going to be, you know, especially out of this current administration, it's not going to be, hey, let's wake up and talk about, you know, the deficit hawks.
We might have something here that we should probably like. It's not happening organically. It will be a tantrum that in the bond market that forces their hand.

Jose: So probably well that's at number yields go to 5%, 6%?

Damian: I think. Yeah. Well, we know ..

Jose: 5%, 6%?

James: 5% seems to be the line in the sand

James: But it could be higher. But that's the line

Jose: On the ten year ..

James: Year. Yeah. Yeah, I think 5% though you have unintended consequences where something will break. A lot of the financing takes place, things that people forget right. At 5% ten-year yields like even just, you know, lines of credit and stuff or overnight, you know, just but the issuing lines like, oh, commercial paper gets expensive, that starts going up like the ..

Jose: The, the plumbing of the economy, the economy.

Damian: So yeah, I think that will, that will force their hand.

Jose

Hey, thanks for tuning in so far. Now let's jump into the final part of our discussion. This is happening broadly to like you've seen you're a global investor. Now Japan is interesting in that sense where after 30 years, Japanese yields are rising again. The German bond the yields are rising. Is this a global sign? What is driving this global rise in yields across the world?

Like we're just there was an era of low rates. And with its regime change what's what are your thoughts here?

Damian

Well, easy thing is I'm curious. Like I'll just have one answer for this. It's just like the insane amount of deficits, I think. Right. You like if you're an investor, a bond investor, you want a higher compensation for, offer you more money. That's exactly like James. I don't have what, one.

James

Other thought, which, you know, I'm not in tune enough with the population characteristics of the other. Like big G7 countries. But I do know that the millennial cohort in the US is a huge cohort. I think it's 70 or 80 million people, sort of between born between 1980 and 1999. Midpoint of that is 1990. So those people are sort of 35.

What do you do when you're 35? You buy a house, you get married, you have a kid, you buy a car and a bunch of furniture. And that is, I think, juicing demand in the economy. It's in the.

Jose

Real world.

James

Economy, the real-world economy. And I'm sure that's playing out in the US and to some extent in Canada. I it's probably not a factor in Japan, but, you know, there could be, you know, pockets of the globe where that's also going on. So, it's, it's more of like an underlying cycle that's playing out. And, you know, 1990 is sort of the, the midpoint.

We're probably past the midpoint, a little bit of the millennial cohort. But like there's probably a still a few more years of like upward pressure on economic activity. That's one of the potential, theories that I've heard as well.

Jose

This fits in line with the industrial super cycle, too, right? You need more real world. You need more.

Damian

And the other thing, too, just you know, we talked to like, the James is talking about, you know, just big demographic shifts, you know, supporting the other more technical shift is like, no, no, no central banks doing QE anymore. If you take you've taken a buyer like just plainly speaking, you've taken you've taken a.

Jose

Massive buyer price.

Damian

Insensitive, price insensitive buyer out of the marketplace. And if all is left is us, as in, I've talked about active participants who want to be compensated for the risk. People want higher yields.

Jose

Yeah, yeah. In some sense that is also forcing governments to be more disciplined at some sense.

Damian

but no, it is not yet but we can it will.

Jose

It will right where you pushed us to the extreme and.

I do its so many things going on. And another narrative, that seems to have made the round trip, with particularly with the new US equities and maybe even globally is a team of like data centers in, in January, February. It was basically DeepSeek has ended the story. And next thing you know there's a resurgence in US tech, large cap tech and the narrative again.

So, what are your big picture thoughts? Is it bounce back from the lows or has the thesis changed since just a few months back?

I think DPC has Democrats sized the idea that everyone is going to have transformational AI at their fingertips, like a pretty. And it will be transformational. I, I compare AI to, our smartphones. Right. And let me just take a like just a little step back. Right. Apple had the smartphone in like 2007 at that point we were all walking around James and I and you had BlackBerry, and we thought BlackBerry.

Damian

We were the.

Jose

Kind of things.

Damian

And you asked us, why do we like our Blackberries? Because people said, I can send emails. That was exciting because it be the keyboard. Yeah. And Steve Jobs at the time said, I don't think people want to sell rebels. I think people want to have the access to the internet at their fingertips. And the idea of apps and on your phone that we all take for granted right now with your banking app, your travel app, the app I used to spy on my kids in the cameras in their rooms, like those weren't even thought of when the iPhone first came out.

And then we built a full program of, like the Play Store, the Apple Store, which all these apps which have completely, significantly improve productivity. Why am I telling you this is because we're in 20, 25, 17, 18 years ago, I couldn't have even imagined how transformational the smartphone would be to my daily life. Right? As it gets socialized through the system as people.

And I think we're at the we're at the nascent infancy stage of AI, and we've been I've been using it now for a few years, and I cannot imagine I'm being very well by humble when I say this. I cannot imagine how transformative it's going to be on our lives and just more on productivity. and I'll end on this, right.

like, right now, the most profitable companies in the, in the world are U.S tech companies. When you look at their free cash flow margins, when you look at their EBITDA margins, etc., the biggest cost item on their balance, on their income statement is salaries, right? Because these aren't they're not drilling for oil. They're paying people. Right.

That's how they produce output. But if you and you know, Joe, you had this great chart. You look at the, you look at job openings for computer programmers. They're collapsing. Why? Because now you can just add.

Jose

The best programmers can do the work.

Damian

Right? Because they're more productive. Because now you have a digital assistant that allows you to write code at a fraction of the cost. So, I just like the bullish cases. What happens if the most profitable companies on the planet through and they're the furthest along in implementing AI in their in their systems actually increases the margins and profitability?

Like you, I can easily beat a scenario where you're like, oh my God. Like, you know, like meta, which.

Jose

Is already insanely profitable.

Damian

At 50%. You know, EBITDA margins can be even more profitable. And it's growing its top line at double digits. Like the compounding just becomes quite transferred. So, I think people are slowly waking up to this idea that, yes, there is a huge Capex build to get this out there, but there's a full transformational aspect to and improving margins and productivity and profiles.

Jose

Also, it seems that demand may have been underestimated with all these deals being signed in the Middle East. The true global demand of like water for chips and for computing seems to have been overly, pessimistic in some sense. Like, any thoughts? James, what are your thoughts here?

James

So, I'm the manager of our real estate ETF, Global Real Estate ETF. And one of the biggest, real estate companies in the world is in Australia. And it's a company called Goodman Group. It's been a developer for many decades of industrial real estate. And I think it was about two years ago they announced that I think it was a third of their backlog is now data centers.

And the stock went up a lot. And I just bring that up to highlight that even in some of the infrastructure space that we know. Well, whether it's, some real estate companies that are transitioning to developing data centers or pipeline companies that have had, you know, for the last 5 or 10 years, not a lot of growth, but all of a sudden you need a.

Jose

Demand for.

James

For power, natural gas to feed the data centers, like we are seeing the theme play out in different parts of the market, not just semiconductors and the big the big tech companies. So, I think that there's some insight to be gained. from how it's, it's showing up in, in different sectors. And, and for us, it, it gives us an opportunity to, you know, buy, buy some stocks that are somewhat exposed to the theme, but like benefit from contracted cash flows.

And, you know, delivery.

Damian

Yeah. The like the James talked about this right. It's the day this is really bullish for Canada too right. Because we are by definition long energy where long energy we don't. And so if we can export this like the numbers are up like I have, I had stuffed the top of my head in the US you know like terawatt hours for like the total grid right now is sitting at like 280 or something like data demand just incrementally is expected to move that to between 4 and 600.

So, you're looking at like you know, doubling the demand sorry U.S data center right now is sitting at 280. We're looking at doubling that in the next two years to between 4 and 600. Let's take the midpoint 500 terawatt hours. That's the output of France, the energy demand of France. Right. Like that's.

Jose

A country.

Damian

Or adding yeah, that's a country. You're adding in compute energy intensity. So hey, if our Canadian oil and gas, if our Canadian pipeline can companies or Canadian IPPs, independent power producers can help alleviate some of that. You know that that that that demand by providing, you know, cheap, renewable, sustainable energy to it. This is we profit.

Jose

A lot of things. We've discussed a lot of things to tie up in some sense of volatility has been a theme. how have you managed what are the opportunities that were interesting? Big picture thematically. And looking ahead, we're entering some generally lighter summer trading seasons. What is your thought process to approaching the markets for the rest of the year?

Jose

Yeah.

Damian

James, you to go first. It gives me time to think.

James

Yeah, sure. I, I was I was going to answer that by, by saying one of the things I think we do really well, TDM is an equity team is a focus on portfolio construction. And, when I took over the t monthly income fund, you know, you don't want to, change something that's worked really well for our clients for a long time, but with an emphasis on portfolio construction.

Go through the portfolio and just think about the risk hotspots and what opportunities were maybe not taking full advantage of. And so, my headspace coming into the year was, boy, you know, things are, really hot. The market is frothy. And so, if there were any areas where there's more defensive businesses that seem like they've been forgotten about, we added a few of those to the portfolio.

And then as the market sold off, we shifted from, bonds to equities a little bit and took on a little bit of risk. Unfortunately, not right at the very bottom. You know, you buy as it goes down because you don't know when it's going to stop. So, the head space has been to take advantage of opportunities both when things are, you know, too frothy and when things are oversold.

And so, I sort of will carry forward that mentality over the next six, 12 months. We're optimistic that equity markets are going to continue to climb the wall of worry, but we're watching the policy developments and we'll, you know, stay really focused on, you know, what does the portfolio really need so that we can hit our objectives and give clients, you know, what they sign up for.

Jose

Yeah. Damien. That's exactly yeah. That's fantastic.

Damian

Yeah. Just like, you know, if I could just summarize what just, you know, James said, because that's what he was talking about is the philosophy we have across all our portfolios and the idea that, you know, I keep saying it right, like keep calm and compound on is that we here at TDs measured our portfolios that James runs, that I manage along with Ben.

It's it is it's like high quality compounding. We're not flash in the pan. Are alpha up. You know our outperforms isn't episodic. It's like you know just like hey let's exploit these locations when they're there. For example, you know being aggressive when the VIX is above 60 because it's pricing in 4% up and down moves next 30 days which never happy.

It's just yeah. So, you know but right now if you know like if we're talking six weeks ago said yes, the market is still on balance. People are still on the, on the world is ending side of the of the boat. And we should take the other side of it right now it feels pretty like there's no exploitable niches in the market that I can see.

Which means to James, what right do we want to be balanced in our exposures? We still want to keep focused on you know, the quality companies tied to cyclical growth. We talked about, you know, data center spends. That's still I that's still something we're excited about. But overall, you're not getting to balance. And you you're not getting paid to you know get out on any ledges.

You're really not you're not getting compensated for that. If I was going to look, I think I agree. I think our quality portfolios in uncertain environments will continue to deliver alpha. But the one thing I want to leave people on which I'm focused on is that, you know, we're looking for signs. And whether we go from, you know, little from trend economic growth to, you know, to like much below trend and at risk of recession because like, what's been the policy has been positioned they could you know, they could upend the apple cart.

I just don't know. So, I'm trying to think about looking for actual evidence, not sentiment. Hard data that shows that, you know, like, oh, because like that will requires like if you ask me what we'll do that will require us to get more defensive. We're just not seeing it there. But I do want to put it out there in the space that it's not like where I think markets are fine and they're there, but there's no exploitable opportunities right now.

Damian

There's no real big dislocation. So, I think our quality compounding bias in our portfolios that James talked about being balanced, not taking big risks will continue to deliver. But we're on the lookout for, you know, for if this could if this could slow.

Jose

Yeah, that's the thing. There is an element of uncertainty still at the end of the and you have to balance out that that, that risk. And that's generally speaking, what would just to wrap it up, what would be a blue-sky scenario, for the rest of the year for equity markets to keep performing?

Damian

Have you heard of, like, the, like, you know, Trump and tariffs and the term taco?

Jose

I, I heard that recently. Right.

Damian

Like trouble and trouble out of Trump always chickens out. the,

Jose

Taco.

Damian

Taco tariffs. look, if tariffs if tariffs at the you know, like we'll end up with tariffs because they have to be used to pay for some of the extension of tax credits. But if tariffs come to something much more reasonable like 1,012%. Right. And we do have, you know, some changes at the margin. And people are focused on reducing.

And there are some like right now the bills being passed through the Senate. I'm talking about the US here specifically. If we do have some, you know, claw backs and reducing some of the most egregious items and to help redress the deficit. And then that actually paints a very good scenario for markets. That would be my blue sky. And I think that will actually lift most global equity markets, because by the way, global equity markets have already taken measures.

We talked about this. Trump is incentivizing change and individual countries. I think if that continues, I think we could be setting ourselves up for, you know, like a really nice run, a really nice run here. Right. Like actually improvements in economic growth supported by earnings growth, supported by less tail risks of tariffs. I think that that's my blue-sky scenario.

Jose

And for Canada, James, that's.

James

I think that's right. If we can de-escalate the, the tariff talk and then push forward with infrastructure build out in Canada and deregulation in the US, I think that will give us, you know, the reasonable, optimistic, you know, case for the for the balance of the year.

Jose

Now, that's a fascinating conversation. Last question, the rapid-fire question for James on the joy of being, and joy and excitement of being a multi-billion PM. Which is scarier, having your baby or managing the portfolio?

James

Having a baby is very scary. And it's been the best experience. I have a daughter that's, almost a year old and congrats.

Jose

yeah.

James

all happen at the same time, you know, get married, buy a house, have a daughter, take over portfolios. It's been a crazy couple of years for me. And nothing. Nothing competes with having a human who depends on you screaming in the room next to you. It's.

Jose

It's not while managing your vast trillion-dollar portfolio.

Damian

Can I. Can I ask a question? A follow up to James. So what? How's risk management and portfolio silver to risk management and, and raising, you know, a little child.

James

I have no idea. I had that question. not at all.

Jose

Is, is learning the, as we go? Yeah, yeah, yeah.

James

I think that's how we, how we all avoid sharp.

Damian

Avoid sharp objects is right. Definitely.

Jose

Well, gentlemen, thank you so much for the conversation. This has been a pleasure. And, looking forward to the next time you're on here as well.

James

Yeah. So great to be here. Thanks, Joe.

Damian

Nice. Joe's always great.