There is no shortage of opportunity. There is only a shortage of those who will apply themselves to the basics that success requires. Jim Rohn

Good morning,

Isn’t it funny how music can prompt reflection?

As I was playing DJ this weekend my kids requested Dire Straits’ “Money for Nothin” (yes, my kids like Dire Straits). The song first reminded me of my summer job in 1996….armed with Windex and a tooth brush, I was tasked to wash ALL of the phones in the dorm rooms at the local University. Although I wasn’t installing microwave ovens or moving refrigerators, it was certainly not a glamorous way to spend a summer. It did afforded me the opportunity to listen to music and have a better understanding of effort and labor.

In the spirit of the song, my weekend reflection quickly turned to a common theme I’m hearing across industries at the moment, the labor challenge being felt by employers. Here in Canada there seems to be a common understanding that the tight labor conditions are creating an undercurrent of employees demanding higher wages. This coupled with the fact that we are facing a record wave of retirements, is compounding our already tight labor market.

Unfortunately, companies in desperate need of labor are adjusting hiring expectations and bringing on people with little to no experience….the “money for nothing” approach can have subtle ripple effects through economies longer term.

It’s an important time for us, as dedicated employees, entrepreneurs and investors, it’s a time that we should be reminded in the law of abundance and how we can shift our mindset towards opportunity in all environments.

“Abundance is not something we acquire. It is something we tune into.” Wayne Dyer

The Law of Abundance is a universal law that states that everything we could ever want is plentiful, here, and available to us. According to the law of abundance, there is an unlimited abundant supply of energy, success, wealth, health, and everything else you might want….including advice and talent to hire and surround yourself with.

The Law of Abundance is a mindset, an outlook and attitude that allows you to welcome in the possibilities and opportunities around you. Abundant thinking embraces the perspective that growth is necessary and that you need to take risks and expand your thinking. That said, to quote my good friend Mr. Peter Barrow, we must “make haste slowly”. The resources we require are around us, but we must employ discipline in our decision making and our acquisition of them, the abundance mindset can be your advantage.

There is a wise saying by Krishna, a quote from the Bhagavad Gita, Gahano karmano gatih — the universe by its very nature works, works, works. The nature of the universe is to work, create, and expand. Life's flow itself is work. Wealth is a natural result of this process.

Remember, despite how the current labor market is impacting you, there is no shortage of money on this planet…only a shortage of people really going to go for it.

And now, to the Markets

Global markets have experienced a modest recovery in recent weeks, which has been met with a collective sigh of relief by investors. It is hard to point to a particular catalyst, but a growing view that inflation, while still very elevated, may be close to peaking could be partly responsible. The easing of virus-related restrictions in China also fueled some optimism that the worst of some of the global supply chain disruptions may be behind us. Closer to home, there have been some noticeable developments in recent weeks. We delve into this more below.

The Bank of Canada delivered another 0.5% rate increase over the past week, after having raised its policy rate by the same amount nearly two months ago. This was in-line with expectations. More surprising were the comments made by policymakers who expressed increasing concern about the state of inflation and the risk it could become more entrenched in the expectations of consumers, households, and businesses. They indicated they will act “more forcefully” if needed. When pressed to explain exactly what that meant, policymakers indicated that rates need to go higher than they initially thought, and this could involve either rate hikes of greater magnitudes than what we have witnessed thus far, or a longer tightening cycle in duration. Finally, they acknowledged that while they will try to do “what is best for Canadians” with respect to economic growth, the Bank’s inflation mandate will take precedence. In other words, slower growth is a cost they are willing to incur if it can ultimately bring inflation back down towards its longer-term target.

Meanwhile, the Canadian banks reported second quarter results within the past few weeks. Overall, they were solid, suggesting the recent operating backdrop remained healthy. The results were highlighted by reasonably strong consumer and commercial loan growth. The banks released some of their provisions, or capital buffers, they had set aside in recent years to cushion against any loan losses. This reflects a relatively benign environment for credit. Some banks raised their dividends in a sign of confidence in their businesses and capital positions.

It’s worth remembering these results were for the quarter that ended in April. This period was largely before some of the more forceful actions were taken by the Bank of Canada and U.S. Federal Reserve. Given the inflationary backdrop, rapidly tightening financial conditions, and the multitude of other issues the world is having to deal with, the management teams at the Canadian banks acknowledged they are preparing for a more challenging environment to emerge in the months that lie ahead. They expect economic growth to decelerate, with interest rate sensitive areas like housing to be particularly impacted, leading to lower growth in residential mortgage demand, among other things.

But, generally speaking, they believe the North American economy is starting from a relatively good position and appeared confident that their businesses can navigate through a period of heightened uncertainty.

It is clear that central banks remain committed to their aggressive monetary tightening plans. It may take a meaningful and sustained fall in the inflation rate to convince them that longer-term inflation risks have subsided. We are hopeful that kind of a change in trend – from rising to falling inflation - could appear in the second half of the year. In the meantime, we remain patient and prepared for the ongoing level of volatility to continue.

“When you realize there is nothing lacking, the whole world belongs to you.” Lao Tzu

As we head into this week, try to adapt an abundance mindset….looking at life as full of possibilities and embracing the opportunities rather than focusing on what might be wrong. If we can apply this mindset, it can allow you to step back, reflect, and understand that there is enough around us to be fulfilled. If we can take time, and make time, to define success and our own happiness, we can constantly create our own accomplishment.

Be well & enjoy the moments

Derek