Good morning,

I hope this message finds you well amidst these challenging times. My heart goes out to those affected by the devastating wildfires in our beloved province. It's in times like these that our sense of community is tested and, invariably, proven.

Switching gears to discuss the investment landscape, the U.S. debt ceiling has been a hot topic recently. While it hasn’t yet triggered significant volatility beyond certain segments of the U.S. government bond market, it is undoubtedly a near-term risk that requires a speedy resolution. What is of greater concern, perhaps, is that the U.S. seems to be on a trajectory of escalating debt and deficits, which brings up questions about its financial sustainability.

You may already know that the self-imposed U.S. debt ceiling, which was established back in 1917, stipulates a legal limit on how much the U.S. government can borrow to cover its expenses. This limit has been reached and raised over a hundred times. Currently, we're seeing the drama unfold again due to political divisions in Congress, with Republicans controlling the House of Representatives and Democrats controlling the Senate.

The deadline for this decision was technically hit earlier this year, but some deft financial maneuvering has pushed the hard stop to early June, as per Treasury Department estimates. While the probability of failing to reach an agreement and consequently defaulting on the debt is low, we remember the near-miss in 2011 when negotiation delays led to the U.S. credit rating being downgraded for the first time ever by Standard and Poor’s.

This focus on the debt ceiling brings our attention back to the long-term concerns regarding U.S fiscal health. The Congressional Budget Office estimates predict the country’s deficit will almost double over the next ten years, escalating from $1.5 trillion to $2.9 trillion.

Potential remedies, such as tax hikes or expenditure cuts, face political roadblocks, and the long-term commitments to entitlement programs like Social Security and Medicare are slated to rise substantially unless substantial structural changes are made. Regrettably, comments from both political parties suggest entitlement reform is not in the cards.

Despite the complexities, we expect the debt ceiling issue to be resolved in the upcoming weeks, even if it comes down to the eleventh hour. Yet, our long-term concerns about the U.S.'s financial health are unlikely to be addressed anytime soon. As your trusted advisors, we'll be keeping a vigilant eye on these developments, given their implications on the country's credit rating, the role of the U.S. dollar, national competitiveness, and the long-term economic trajectory, all of which may inform our asset allocation and portfolio positioning strategies in the future.

Please continue to call us. Our commitment to guiding you through these uncertain times remains unwavering and Shannon, Brett, Tom and I are here for you. We can also be made available to speak to any family members or friends who may need reassurance during these times.

Have a fantastic long weekend,

Devin