Canada just “unexpectedly” fell into a technical recession. But the important part is not just that Canada contracted. The important part is that Canada’s contraction is lining up with the same weakness now spreading through France, the UK, Germany, Sweden, Mexico, and increasingly the rest of the global system. As one result, central bankers hawkishness is starting to seriously evaporate. Eurodollar University&#x27;s Money &amp; Macro Analysis -------------------------------------------------------------------------------- Learn more about Augusta Precious Metals and what they have to offer - including physical gold for IRA accounts - by going to: https://EurodollarGold.com or text EURO to 35052. -------------------------------------------------------------------------------- https://www.eurodollar.university Twitter: https://twitter.com/JeffSnider_EDU Starting today, I’ll also be active on Bravais Social - a new AI-centered social network designed for professionals and knowledge workers. The platform aims to bring together a wider range of tools and functionalities tailored specifically for professional interaction, research, and knowledge exchange in one place. You can find me here: https://bravais.social/profile/edu

Canada Sends HUGE WARNING & its SPREADING To The Rest of The World

Eurodollar University

# Full Transcript

**Podcast:** Eurodollar University

## Participants

- **Jeff Snider** (Eurodollar University)

## Transcript

Canada just unexpectedly fell into technical recession. The country reported back-to-back negative quarters of GDP, but the important part is not the contraction. It's how that contraction lines up with a whole bunch of other data from around the rest of the world. We've got France, the UK, Sweden, Mexico, Germany, and a bunch of other places beyond.

And then the other part of this is how that weakness is getting to be so substantial, even formerly hawkish central bankers have had to change their tune. For months, policymakers have been trying to frame the energy shock as an inflation problem. Oil goes up, gasoline goes up, headline CPI goes up, therefore central bank policy rates need to go up. They need to stay hawkish, maybe even hike further. That was the fear. That was what the market was pricing too, knowing how irrational central bankers can be.

That's their bias. But the data is now saying those central bank theories were wrong. France just reported a surprise contraction of first quarter GDP, along with more job losses. The UK central bank, the Bank of England, is now openly saying it may tolerate higher inflation because economic and labor market weakness is becoming too obvious to ignore. Germany cut growth expectations, slashing them. Mexico has done the same thing.

Sweden's weak economy is keeping the Riksbank cautious as it reports, yes, another contraction in GDP. The energy shock is indeed turning into the classic recession case. Higher energy prices act like a tax. They squeeze household income, compress business margins, they destroy demand and eventually force employers to cut jobs. And worse than that, these GDP reports we're getting come in from before the oil spike itself.

Canada's technical recession began at the end of last year. Now, that's no surprise to us, but it is a shock to pretty much everyone in the mainstream. So the big story here is how Canada's contraction just fits with the economic weakness that was showing up long before we got to the energy shock. In other words, the big story in Canada is how that's just the beginning. For most of the cycle, the mainstream debate has been stuck on one question. Will inflation come roaring back?

But that was always the wrong question. The better question was how much growth is actually left underneath the headline numbers. Because if the economy is strong and energy shock, it can complicate things. But if the economy is already weak and energy shock doesn't create durable inflation, it accelerates the downturn. That's the lesson we're getting already from our friends in Canada. According to the numbers that were released yesterday, Canada has now dipped into a technical recession, meaning GDP contracted for two consecutive quarters.

Now, we don't care about technical definitions that aren't really that technical, nor do they define a reces...

Canada Sends HUGE WARNING & its SPREADING To The Rest of The World

Transcript

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Canada Sends HUGE WARNING & its SPREADING To The Rest of The World

Transcript

Built for investment professionals

Every day you wait, your competitors are findingedge in conversations you're not hearing.

Every day you wait, your competitors are finding
edge in conversations you're not hearing.