Bees, knees and American Cheese

If tariff news was a banana it would be a nice firm, sweet yellow specimen at 9:00 am, but by around 10:30 that morning it will have morphed into a brown-spotted leathery lump.

Bees knees, Bananas and Battlestar Galactica: A study in the March 2023 Science journal showed that some 80% of honey bees are experts in interpretive dance – that is they give and take directions to help other bees find the best nectar using something called a “waggle dance.”

(I’m definitely going to try that next time someone asks for directions downtown.)

Interestingly, somewhere around 20% the bees ignored the waggle dance and wondered off on their own – and some of these bees found new sources of plenty. This mix of behaviours – (free-thinking entrepreneurs and… um… jive lawyers?) work to help hives thrive.

Recipe for Prosperity: In 2024, the Nobel prize for economics was summarized in the researchers’ book that same year, “Why Nations Fail.” There the authors argue that national fortunes thrive when reliable institutions genuinely serve the population, and when leaders themselves bow to those same established laws.

On the other hand, in counties where leaders cheat the system for their own selfish benefit, economies tend to wither. “Cheaters never prosper,” as we used to say, meaning eventually. We don’t tend to see prosperous nations under dictatorships.

Implied in the Nobel laureates’ work is the sense that the teaming throngs at the bottom of the wealth pyramid have a reason to get up in the morning if they can reasonably expect to prosper inside the walls of their system, much like they would expect to enjoy a football game once they learned the rules and honed their skills. For libertarian readers, there’s still the need to let a few wonder around exploring. Think of the richest men on earth today. And bees.

Chesterton & Waggle Dances: If you contemplate Chesterton’s fence, (be very cautious before you break apart a system) you’ll see he’s not against removing the old tradition entirely. He just says make sure understand why it was built and give it due reverence rather than give in to the tyranny of the latest goofy idea without much thought.

Implications for International Trade: These concepts spill over into international trade regimes. Agree upon the rules of fair trade and participating countries prosper within them, notwithstanding dislocations along the way. Just as a garage sale is a nice way to make a few bucks on a weekend, there’s no serious argument that fair trade is a bad idea. From Adam Smith to Thomas Sowell, it’s well-established road to general prosperity.

And in other completely unrelated news. So yeah. Tariffs. Capricious. Wild-eyed. Maybe a person should slow down and take inventory of what we have here.

Every March we make fraud prevention a theme at RBC.

Here’s a few tips to protect yourself online:
Use multi-factor authorization to access accounts.
Protect your PIN (phone passcode, etc).
Ensure each password is unique.
Be cautious of what you and your family share online.
Keep your computers, devices, networks up to date.
Ignore calls, texts and emails that ask for credentials.

In general, when online, a healthy suspiciousness is good. Talk to someone you know and trust if you’re not sure.

Here’s this week’s investment newsletter:

Written before today’s Friday bounce which helped stem some of the tariff-related market drop for the week:

Global Insights – March 13/25

In brief – Tariffs: Bracing for market impact:

The 2018–2019 U.S.-China trade conflict underscored how tariff uncertainty can dampen sentiment, depressing valuations even if the earnings impact turns out to be modest. Given an unusually wide range of potential tariff outcomes, what approach should investors take? This is an executive summary of our more comprehensive article on the topic.

Regional developments: Bank of Canada lowers key policy rate by 25 basis points to 2.75%; Recency bias and the U.S. stock market’s malaise; European growth forecasts increased, regional defense stocks rally; China’s artificial intelligence race continues to heat up

More here: Global Insight Weekly.

Feel free to contact me with any questions.

Charts:

Equity Markets Versus Canadian Real Estate: (See chart below and full story here: Download Publication: Houses and Stocks)

The Canadian residential real estate market has enjoyed a prolonged period of strong price appreciation. Understandably, this has inspired debate among investors in recent years as to whether the stock market or real estate has been a better long-term investment. On balance, we believe the historical data paints a more nuanced picture than commonly perceived.

Starlink subscribers (see chart to the left from Prof G Markets): “Ontario pulled the plug on a $100 million contract with Starlink, citing newly imposed U.S. tariffs on Canadian imports. For Starlink, the cancellation is a rounding error. Its revenue doubled from $4 billion in 2023 to $8 billion in 2024. The bigger picture? Canada and Mexico are Starlink’s largest markets outside the U.S.”