That’s about 6,600 miles at an average speed of 14 knots, around 500 hours at sea.

Before 28 February 2026, few people have heard of the Strait of Hormuz.

Unless you studied geography or followed geopolitics closely, you probably couldn’t have pointed to it on a map.

In less than 5 months, it has been featured on major news across the globe. Putting it on the map, literally.

The Strait itself can be crossed in as little as 5 hours. That’s 1 percent of the total sailing time (5 hours ÷ 500 hours).

Turns out, it’s the “choke point” of the entire trip.

Today, we’re going to look at another “choke point”. And why I believe the Strait of Hormuz toll charges could be here to stay.

US long range missiles are running low

CSIS, The Center for Strategic and International Studies, discussed the inventory problem in an analysis.

The United States has used about half of the initial inventory for three of these munitions (Patriot, THAAD, and PrSM) and about one-third of the initial inventory for the rest (JASSM, SM-2/3/6, and Tomahawk). Even so, enough remains for any plausible scenario in the war against Iran. The risk comes from potential future wars, particularly with China—but potentially also with Russia or North Korea.

Source: https://www.csis.org/analysis/six-reasons-why-united-states-low-munitions

It takes time to ramp up productions. In the same CSIS report, it estimated it could take 2-4 years for new missiles to be delivered:

The immediate problem is not money, but time. Current deliveries reflect funding before FY 2024, as it takes two to four years for munitions to be delivered once a contract is signed. With time, production will equal demand, but that is several years in the future. Until then, there is a window of vulnerability.

Washington can appropriate all the money it wants. Money does not compress a production timeline.

And that two to four year estimate carries an assumption buried inside it. It assumes the raw materials will be there when the factories are ready.

The absolute choke point: critical minerals

The Strait of Hormuz is the choke point between Asia and the Gulf. Critical minerals are the choke point for the missile supply chain.

BNN Bloomberg recently reported on how heavily defence systems lean on these inputs. A $150 million weapons system does not function if it's missing minerals worth $20,000 to $30,000.

Critical minerals play “an outsized role” in defense systems, Balladon said. A $150 million weapons system won’t work if it’s missing critical minerals that may be worth only $20,000 to $30,000, he said.

The defence sector is particularly reliant on the metal samarium and needs 50 to 100 tons each year, but U.S. capacity is very limited, he said.

Source: https://www.bnnbloomberg.ca/business/international/2026/08/03/us-companies-cut-reliance-on-china-to-build-weapons/

For years, China has slowly builds out a near monopoly over critical minerals supply chains.

Since the 1990s, China has pursued a targeted policy to achieve dominance in relation to REEs and other critical minerals, implementing a national policy to prioritize selected minerals and technologies. China’s then-leader Deng Xiaoping is said to have remarked in 1992 during his trip to southern China to launch his economic reforms that, “the Middle East has oil; China has rare earth elements.”

Source: https://www.thearcticinstitute.org/dig-baby-dig-chinas-mineral-dominance-ripple-effects-arctic/

That was over 30 years ago. Three decades of patience positioning.

In addition to missiles, the New York Times has also reported on how samarium restrictions reach directly into fighter jet production:

https://www.nytimes.com/2025/06/09/business/china-rare-earth-samarium-fighter-jets.html

Iran and Oman are near a deal

Over the past few weeks, instead of negotiating with the US, Iran has been focused on negotiating with Oman.

The narrow section of the Strait sits between Iranian and Omani waters. If those two governments agree to charge a “toll” on ships moving in and out, they can rewrite the economics of the waterway.

Image Credit: Google Map

According to the Associated Press, the emerging arrangement would have vessels enter the Persian Gulf through an Iranian-controlled route and exit through an Omani-controlled one, with service fees collected for providing security and preserving the maritime environment. Two regional officials described the terms.

In case you’re wondering, how can this happen, look up Strait of Malacca. A similar framework is being modelled for Hormuz.

The likely outcome

Iran and China are close. So I’ll say what I think is obvious: China is going to keep that valve tight on critical minerals heading to the US.

Which means even with domestic supply ramping up, the choke hold will take years to loosen.

And frankly I don’t think China cares whether Iran charges toll fee or not.

All they care is to keep getting Iran oil for cheap.

One path from here is a cold war style standoff, with the US Navy continuing to block Iranian vessels moving in and out of the Strait while nothing gets resolved.

But I don’t think that’ll last.

The midterm election is a few short months away. The Iran war is highly unpopular with the American public. Unless the Republican Party is prepared to lose badly, the US may have to “accept” a temporary resolution on the Iran-Oman deal, kick the can down the road, and leave it for the next President to deal with the aftermath.

Who knew that roughly one hundredth of one percent worth of minerals (20k critical minerals ÷ 150M weapons system) could decide whether the world’s most important waterway being imposed with toll fees?

If you like my work, I invite you to share it with others.

Eric Chang

Calgary, Alberta

August 4, 2026

Copyright © 2026 EC Research Group.

No part of this publication may be reproduced, distributed, or transmitted in any form or by any means, including photocopying, recording, or other electronic or mechanical methods, without the prior written permission of the publisher, except in the case of brief quotations embodied in critical reviews and certain other noncommercial uses permitted by copyright law.

The information provided herein is believed to be accurate and reliable, but EC Research Group does not guarantee its accuracy or completeness. The content is for informational purposes only and is not intended to be a substitute for professional financial advice. EC Research Group is not a financial advisor and does not provide personalized financial advice. The views and opinions expressed in this publication are those of the author and do not necessarily reflect the official policy or position of EC Research Group. The content may be subject to change without notice and may become outdated over time. EC Research Group is under no obligation to update or revise any information presented herein.

Investments involve risks, and individuals should consult with a qualified financial advisor before making any investment decisions. Prospective investors should carefully consider the investment objectives, risks, charges, and expenses of any investment before investing.

But there are few who put money where their mouth is.

Jim Chanos is one of the few.

He recently sat down for an interview that I think every investor with AI exposure should watch:

https://www.youtube.com/watch?v=oM7VevsftrY

I want to highlight 3 quotes from the video (there were loads of nuggets in the interview, I highly recommend watching the entire video).

Before I get to those, it’s worth understanding why I pay attention when he speaks.

An impressive career

Chanos has spent four decades doing the unglamorous work of sifting through financial statements, reading footnotes while others chasing the headlines.

His track record:

• Baldwin-United (1982). As a young analyst, he flagged the insurance and annuity company as insolvent while Wall Street stayed bullish. It filed for bankruptcy in 1983, one of the largest failures of its era.

• Boston Chicken / Boston Market (late 1990s). He called out the franchise-financing accounting. The company went bankrupt by 1998.

• Enron (2000 to 2001). His most famous call. He began shorting in late 2000 after noticing declining return on capital, opaque related-party transactions, and aggressive mark-to-market accounting. Enron collapsed into bankruptcy in December 2001.

• Tyco International (2002). Shorted on accounting concerns. The stock cratered as CEO Dennis Kozlowski’s fraud unravelled.

• Homebuilders and subprime names (2007 to 2008). He positioned bearishly before the financial crisis arrived.

In most cases, the consensus was comfortable. The analysts were positive. The stocks looked bullish.

Yet he has uncovered situations after situations by looking at numbers.

The accounting at these companies were telling different stories than the popular narratives at the time.

“No one that is dependent upon Nvidia to exist should trade at a higher valuation than Nvidia itself”

On valuation in the AI supply chain, Chanos made the point that nobody who depends on Nvidia to exist “should trade at a higher valuation than Nvidia itself.”

When a Master speaks, there’s a simplicity to the message.

His point was simple:

If Nvidia chips are the most essential technology powering the AI revolution, then it doesn’t make sense for companies in the AI supply chain to be more valuable than Nvidia, based on valuation multiples.

Nvidia is the gatekeeper of this entire boom. It owns the scarce resource. Everyone else’s business is an extension of Nvidia.

It doesn’t make a lot of logical sense for a company in the supply chain to be trading at a higher valuation than the gatekeeper.

If your revenue depends entirely on securing someone else’s chips, you don’t control your margins nor do you control your timeline.

Yet, that’s exactly what’s happening with many stocks today.

Here are some examples:

“People are making decisions on long-term projects based on spot prices and that’s a terrifying thing”

I love this quote.

Because this is exactly the same problem that got many Vancouver and Toronto real estate investors in trouble over the past few years.

We wrote about the condo bust in Vancouver and Toronto.

Many of those projects were penciled when the interest rate was at record low, around 2%, while rent was at record high.

Spot prices represent the market today.

Long term sustainability of a project has little to do with spot price or the market condition today.

Any seasoned real estate investors will tell you, they underwrite their deals based on several stress tests: Interest rate sensitivity, cap rate softening, higher vacancies, etc.

A data centre is a 10-20 year physical asset. It requires enormous long-term debt to build.

Right now there is a shortage of advanced GPUs, so short-term rental rates for compute are very high.

Data center developers are running their pro formas on those numbers and telling investors great returns ahead.

They are underwriting a twenty year liability using a price that exists only because supply hasn’t caught up yet.

Technology cycles are short. Capacity is being built at record pace. Models are getting more efficient every quarter, which means the same output requires less compute.

When those spot rates normalize, the revenue falls. The debt does not.

Sounds familiar?

It’s the Vancouver and Toronto condo bust story all over again.

“We’re in the period now where everything is being valued as if it has worked or it will work, and that was the problem with ‘99-2000”

This is the definition of a market with zero margin for error.

Current valuations across many AI-related companies don’t price in a base case. They price in the blue-sky case, achieved on schedule, with full monetization, with no competitive erosion.

When a whole ecosystem is priced on the assumption that nothing goes wrong, the repricing doesn’t require a catastrophe.

It only requires a change of psychology.

That’s exactly what happened in 2000.

Investors weren’t wrong that the internet would change everything. They were wrong about timing and valuation.

Few investors today remember the dotcom bubble.

I was too young to invest in the market back then.

What I do remember, is the story my uncle told me:

“Eric, I thought I was going to retire with my stock portfolio. I had to stay working after the dotcom bubble popped.”

It took about 15 years to recover from the dot-com peak. From March 10, 2000 to April 23, 2015 (not adjusting for inflation).

If my memory is correct, my uncle worked an extra 20 years after the bubble popped.

He probably have forgotten telling me his story from years ago, after all, 20 years is a long time.

But it’s something I will never forget.

If you like my work, I invite you to share it with others.

Eric Chang

Calgary, Alberta

July 28, 2026

Copyright © 2026 EC Research Group.

No part of this publication may be reproduced, distributed, or transmitted in any form or by any means, including photocopying, recording, or other electronic or mechanical methods, without the prior written permission of the publisher, except in the case of brief quotations embodied in critical reviews and certain other noncommercial uses permitted by copyright law.

The information provided herein is believed to be accurate and reliable, but EC Research Group does not guarantee its accuracy or completeness. The content is for informational purposes only and is not intended to be a substitute for professional financial advice. EC Research Group is not a financial advisor and does not provide personalized financial advice. The views and opinions expressed in this publication are those of the author and do not necessarily reflect the official policy or position of EC Research Group. The content may be subject to change without notice and may become outdated over time. EC Research Group is under no obligation to update or revise any information presented herein.

Investments involve risks, and individuals should consult with a qualified financial advisor before making any investment decisions. Prospective investors should carefully consider the investment objectives, risks, charges, and expenses of any investment before investing.

Sell the hype and the dream.

Wall Street is great at doing that.

We wrote about the buzz surrounding IPOs and how the entire mechanism is designed to help the insiders to get rich:

https://www.ecresearchgroup.com/p/ipos-are-for-the-insiders-to-get

The founders. The venture funds. The early employees who bought their shares years ago for pennies.

By the time a company rings the opening bell, the real gains have already been captured. Privately. Long before you ever saw a ticker symbol.

An IPO is not the start of the party.

It’s the exit door.

The SpaceX IPO dream

We also wrote the reason I stayed far away from the feeding frenzy here:

https://www.ecresearchgroup.com/p/great-article-are-you-buying-any

Since then, SpaceX stock has rocketed to the moon and back. It went from an IPO price at $135 / share, skyrocketed to over $200 and now it’s down to around $120, below the IPO price.

It took SpaceX’s stock 3 days to reach the moon, an all time high.

That is about the same amount of time it takes for a spacecraft to travel from Earth to the Moon.

Coincidence?

The universe works in mysterious ways.

Next on the launch pad: The AI labs

Markets have short memories.

In a few months, Wall Street will roll out the next shiny object: Anthropic IPO.

Anthropic, the company behind the Claude chatbot, is reportedly eyeing an October listing:

https://www.cnbc.com/2026/07/15/anthropic-ipo-banks-investor-meetings.html

Last week, we discussed an alternative way to participate in the AI boom, with an asymmetrical returns vs. the risks taken:

https://www.ecresearchgroup.com/p/the-ai-race-everyone-sprinting-for

This week, let’s look at what we consider as the opposite: a higher potential risk to lower potential reward.

In other words, an opposite of asymmetrical return: an asymmetrical risk.

First up: an exciting future

Less than 4 years ago, on November 30, 2022, OpenAI debuted ChatGPT.

Since then, you couldn’t sit at a coffee shop and finish a cup of coffee without hearing people talk about AI this or AI that.

After November 30, 2022, on the surface, the world seems very much the same.

Yet, within businesses large or small, at comedy shows, church talks, and wedding vowels, AI has seeped into many aspects of our lives.

As AI adoption becomes widespread, the future will be a very interesting place to be.

AI will be able to help humans accomplish tasks we don’t find enjoyable to do.

It could unlock human creativity few can fathom today.

Innovation is about to exponentially expand.

Diseases that were once untreatable due to cost constraints, AI is now developing new drugs faster and cheaper, giving hope to many people.

Endless entrepreneurial ventures will be launched, offering better solutions for many problems we have today.

The big risks to AI labs?

With the great opportunities ahead, what are the risks lurking on the horizon?

The particular risks I’m following have to do with the AI labs business model.

This is a big one:

Open source AI vs. commercial AI.

Since software came into our modern lives, there have been 2 types of software that are available: open source vs. closed source or proprietary software.

For example, you know Windows, the most popular operating system for PCs today.

It’s made by Microsoft, and they profit by selling millions of licenses to PC manufacturers.

What you may or may not know is there’s a whole world of open source operating systems, with the most famous one called Linux.

There are also variations of Linux, designed for specific needs or preferences. These variations are called forks, because they are “forked” from the original Linux programming codes.

This is the same thing with Microsoft Office (Word, Excel, PowerPoint), a commercial software, or there’s software such as OpenOffice or LibreOffice, which are completely free to download at anytime.

Microsoft won the PC operating system game while AI battle is far from over

Not counting computer servers, or Apple’s Macs, Microsoft is essentially a monopoly in the PC operating system market.

With AI, the battle between commercial and open source is far from over.

That’s because the costs to use these AI models are expensive.

Companies such as Uber have used up their entire year’s AI budget halfway through the year.

While AI has proven effective in some tasks, it can be expensive to use AI for simple, basic tasks that humans excel at.

Companies are now increasingly turning to cheaper solutions: the open source AI models to replace some tasks performed by commercial AI labs: Anthropic, OpenAI, Google, etc.

Many of these aren’t small companies. Reported in the Financial Times: Major companies like DoorDash, Airbnb, and Siemens are adopting Chinese AI tools.

According to data from OpenRouter, a platform that provides all-in-one access to major AI models and tracks their usage, leading Chinese models from DeepSeek and Z.ai have overtaken US equivalents like Anthropic’s Claude and OpenAI’s ChatGPT.

Source: https://finance.yahoo.com/technology/ai/articles/us-companies-realizing-chinese-ai-200146747.html

Buying IPOs are about future earnings

Most popular IPOs are about their growth trajectory.

If a company can grow faster than the high valuation placed during the IPO, the stock can be attractive.

The problem with these AI labs?

Open-source AI models consistently undercut them in price.

Not to mention, because of their open-source nature, many of these AI models can be “forked” into countless specialized AI models designed for specific purposes.

Open source is not inferior, it’s only behind by 4 months

One reason why Microsoft has a commanding lead on Windows and Office is that their open source competitors: Linux, OpenOffice or LibreOffice is not as well designed for everyday user.

By creature of habit, most people will not switch to open-source software to save a few bucks if it is less convenient to use.

Compare this to AI models: open-source AI models aren’t “inferior”. They may be “inferior” if we compare their performance today against the top commercial models (referred to as the frontier models).

But the difference is simply time.

If we compare many of today's open-source models to the frontier models from a few months ago, they are neck and neck.

This is the key difference: open-source software didn’t threaten Microsoft, but the open source AI models pose the biggest risk to AI labs.

Would you buy a stock when their competitive advantage is only 4 months?

Warren Buffett refers to this as the “economic goodwill”.

The “economic goodwill” isn’t something that shows up on the balance sheet.

Economic goodwill is the true, intrinsic value of a company’s invisible assets, like brand reputation, customer loyalty, and intellectual property.

These could also be referred to as the company’s “moat”.

For example, Apple’s economic goodwill is enormous. Their biggest asset is their brand. Not to mention their distribution network, supply chain network, etc.

Their brand and their network make it extremely difficult for another competitor to compete.

That’s what makes a company such as Apple a great long term investment.

With these AI labs, their biggest asset - their frontier models are only competitive for 4 months.

Yes, 4 months.

I rest my case

To be clear, I think these AI labs are going to fundamentally change the lives as we know it.

I also think they could be around for years to come.

I’m simply evaluating these companies through a lens of risk versus reward.

The trillion dollar question I have for you to consider:

How much are you willing to pay for a company when their IP is only competitive for 4 months?

P.s. I said trillion because based on current valuations, Anthropic and OpenAI are valued around a trillion dollars each.

If you like my work, I invite you to share it with others.

Eric Chang

Calgary, Alberta

July 21, 2026

Copyright © 2026 EC Research Group.

No part of this publication may be reproduced, distributed, or transmitted in any form or by any means, including photocopying, recording, or other electronic or mechanical methods, without the prior written permission of the publisher, except in the case of brief quotations embodied in critical reviews and certain other noncommercial uses permitted by copyright law.

The information provided herein is believed to be accurate and reliable, but EC Research Group does not guarantee its accuracy or completeness. The content is for informational purposes only and is not intended to be a substitute for professional financial advice. EC Research Group is not a financial advisor and does not provide personalized financial advice. The views and opinions expressed in this publication are those of the author and do not necessarily reflect the official policy or position of EC Research Group. The content may be subject to change without notice and may become outdated over time. EC Research Group is under no obligation to update or revise any information presented herein.

Investments involve risks, and individuals should consult with a qualified financial advisor before making any investment decisions. Prospective investors should carefully consider the investment objectives, risks, charges, and expenses of any investment before investing.

Between ChatGPT (OpenAI), Claude (Anthropic), and Gemini (Google), their AI chatbots currently represent around 91% of the web visit share.

Their race reminded me of the Calgary Stampede’s Chuckwagon Race.

2026 Calgary Stampede

This past Sunday, July 12, was closing day for the Calgary Stampede.

Every July, this city swaps its office towers for cowboy hats and turns into one big party for ten days straight: rodeo, rides, pancake breakfasts, music performances. This year, the Stampede is estimated to generate $721 million for the Alberta economy, making it one of the largest events of its kind in North America.

I was invited to watch the Chuckwagon Race on closing night.

Let me tell you, I have never been a rodeo person. Being up and close to the track, watching the drivers and the outriders wheel their horses into position and then explode off the line, I finally understood the buzz.

Wagons thundering, dust everywhere, all for winning the race.

Sitting behind me were a few guys betting a few bucks on each heat (each round). I didn’t know anything about Chuckwagon Races, but I could tell they pretended like they knew what they were doing.

That didn’t matter. Between the yelling and the action, I was hooked.

AI’s “Chuckwagon Race” Reward vs. Risk

Right now, the race between the 3 AI companies is even more intense.

The winner of the Chuckwagon Race, Jamie Laboucane, took home $98,800 in earnings.

The stakes for the AI race?

Trillions.

Who’s going to win?

It’s anyone’s guesses.

While Mr. Laboucane took home the title of the championship and bragging rights with a $98,800 prize, the economics of the Stampede’s Chuckwagon Race crossed my mind.

I can’t imagine the years of experience and effort Jamie invested into taking the title of the championship.

Not to mention the tremendous risks taken on over the years of preparing towards this one moment.

Meanwhile, the Calgary Stampede is able to generate significant revenue from providing the infrastructure for hosting the event.

I recognize that most of the rodeo participants didn’t do it for the money. But I’m using it to illustrate a point.

What’s my point here?

Laboucane and his team took on all the risk: the years of training, the horses, the danger, the wear and tear, all of it. And for their trouble, the champion walked away with just under $100K.

The Calgary Stampede doesn’t race. It owns the track, sells the tickets, rents out the concessions, and collects on every single heat, no matter which wagon crosses the line first.

The racers take the risk. The Stampede takes the dough.

Canada’s lower risk way to play the AI race: Nuclear power

The Calgary Stampede provides the infrastructure for the Chuckwagon race.

In the AI race, the infrastructure is data centers, computer chips, and electricity.

Canada is not in the race to out-build the AI labs. We aren’t the wagon that wins the heat. But we can own a piece of the track - with a much lower risk.

Canada has 2 advantages in the nuclear game:

1. The CANDU (Canada Deuterium Uranium) reactor

2. Canada is the world’s second-largest uranium producer

Reactors need fuel. Data centers need power. A lot of power.

Canada happens to sit on both the technology and the raw material.

Higher electricity demand is expected regardless of who wins the AI race

Just like it doesn’t matter who wins the Chuckwagon race, the Calgary Stampede wins no matter what.

Regardless of who wins the AI race, electricity demand will continue to rise as compute demand increases significantly. More and more people and companies are adopting AI into their daily lives and their business operations.

Everyone is watching the horses. Few are watching the track.

Trillions are rushing into the AI race, meanwhile, few are looking at the boring infrastructure such as nuclear power.

As we have written extensively about finding asymmetrical reward vs. risk opportunities, this is another great example of a prime setup.

If you like my work, I invite you to share it with others.

Eric Chang

Calgary, Alberta

July 14, 2026

Copyright © 2026 EC Research Group.

No part of this publication may be reproduced, distributed, or transmitted in any form or by any means, including photocopying, recording, or other electronic or mechanical methods, without the prior written permission of the publisher, except in the case of brief quotations embodied in critical reviews and certain other noncommercial uses permitted by copyright law.

The information provided herein is believed to be accurate and reliable, but EC Research Group does not guarantee its accuracy or completeness. The content is for informational purposes only and is not intended to be a substitute for professional financial advice. EC Research Group is not a financial advisor and does not provide personalized financial advice. The views and opinions expressed in this publication are those of the author and do not necessarily reflect the official policy or position of EC Research Group. The content may be subject to change without notice and may become outdated over time. EC Research Group is under no obligation to update or revise any information presented herein.

Investments involve risks, and individuals should consult with a qualified financial advisor before making any investment decisions. Prospective investors should carefully consider the investment objectives, risks, charges, and expenses of any investment before investing.

This week, let’s look at why I told people close to me that the “bailout” was coming, several months before Carney made the announcement.

I didn’t have a crystal ball. All I needed, was a calculator.

8% of total employment

Construction employment represents almost 8% of total employment in Canada. Residential and non-residential are split roughly evenly. (Source: CIBC Economics)

Eight percent.

That’s not a small number. That’s one in every twelve working Canadians tied, directly or indirectly, to something getting built.

Now ask yourself a simple question: What happens to an economy when one in twelve jobs starts to disappear?

No incentives to develop new condos

The math for a developer today is brutal.

I know, because I have been developing real estate for the past few years.

And I wasn’t even operating in the most challenging segment of real estate: Condo development.

The months of condo inventory keeps on rising. And while inventory piles up, the average condo price continues to drop.

Credit: Move Smartly

Why would any rational developer break ground on a new condo project in this environment?

They wouldn’t. And they aren’t.

New condo starts plummets over 68%

The numbers here are staggering.

New condo apartment construction has plummeted in markets such as Toronto and Vancouver. The rolling 12-month total of starts fell to 10,583 units in July, down 60% from a year earlier and 68% below the mid-2023 record (August 2025 figures).

Can it go lower? According to RBC economists, yes it can.

The bank points out that in Toronto, condo pre-sales lead new starts by roughly 18 months. Pre-sales over the trailing 12 months dropped to just 2,160 units in July. Do the math forward and starts could collapse another 80% (Source: Better Dwelling)

This isn’t a slowdown.

We’re talking about the pipeline emptying out.

What are construction workers going to do after existing condo projects are completed?

This is the part Carney wants to say out loud.

The cranes you see in the sky today are finishing projects that were financed years ago. Those projects have a finish line.

So what happens the day after the last unit is handed over?

What happens to all those trades, contractors, machine operators, truck drivers?

On top of that, there are countless of consultants, loan brokers, commercial bankers, lawyers, realtors… all rely on taking on new condo projects to put food on their tables.

Who’s going to do any work in a condo market with rising inventory and falling prices?

The construction unemployment rate has already been trending higher

If the condo market stays depressed for the coming months and years, the construction unemployment rate is about to go higher.

Much higher.

The timing makes it trickier. This isn’t a new problem. The construction unemployment rate has been trending higher since 2023.

And here’s something that may be keeping the Prime Minister up at night:

Even as we enter summer, the busiest building season of the year, the season when good weather should have crews working flat out, the unemployment rate for construction workers is already sitting higher than the same stretch in previous years.

If it’s already elevated during the good weather, what does it look like when winter comes?

It doesn’t take much for construction unemployment to push to 10% by coming winter.

The downturn in Toronto and Vancouver real estate markets is about to take Canada into a prolonged recession

Unless the real estate market stabilizes.

That’s the whole ballgame.

We’ve got 8% of employment leaning on construction. We’ve got housing starts collapsing. We’ve got a workforce with nowhere to go once current projects wrap up. And we’ve got an unemployment trend that’s been pointing the wrong direction.

Connect those dots, and the picture shows itself.

This is why I expected the “bailout” to happen. It was never really about rescuing developers who bet wrong on a project. It was about what sits underneath those developers, and what sits underneath the people they employ.

“Bailing out the developers” is only the beginning.

Trust me, that’s not the end of “Operation Bail Out.”

That’s the First Act.

I believe we’re only in the first half of “Operation Bail Out,” it means we can see a glimpse of light at the end of this real estate downturn.

I’ll save the Second Act for a future newsletter.

If you like my work, I invite you to share it with others.

Eric Chang

Calgary, Alberta

July 7, 2026

Copyright © 2026 EC Research Group.

No part of this publication may be reproduced, distributed, or transmitted in any form or by any means, including photocopying, recording, or other electronic or mechanical methods, without the prior written permission of the publisher, except in the case of brief quotations embodied in critical reviews and certain other noncommercial uses permitted by copyright law.

The information provided herein is believed to be accurate and reliable, but EC Research Group does not guarantee its accuracy or completeness. The content is for informational purposes only and is not intended to be a substitute for professional financial advice. EC Research Group is not a financial advisor and does not provide personalized financial advice. The views and opinions expressed in this publication are those of the author and do not necessarily reflect the official policy or position of EC Research Group. The content may be subject to change without notice and may become outdated over time. EC Research Group is under no obligation to update or revise any information presented herein.

Investments involve risks, and individuals should consult with a qualified financial advisor before making any investment decisions. Prospective investors should carefully consider the investment objectives, risks, charges, and expenses of any investment before investing.

In my private circle, I’ve been telling people for months that the Canadian government would eventually step in to prop up real estate. My guess was sometime in 2027. I had no way of knowing exactly when.

Turns out it’s happening sooner than I thought.

Before we get to Vancouver, let’s rewind to a quieter announcement back in March. Because the “bailout” already started with a different government.

Ontario's 2,200 unit condo "bailout"

Back in March, Ontario’s Building Ontario Fund partnered with a private investor, High Art Capital, to launch a fund built to buy blocks of unsold GTA condos and convert them into rental housing. The target: 2,200 units, including roughly 550 designated as affordable.

Source: https://storeys.com/gta-rental-affordable-housing-initiative/

At the time, this barely made a ripple in the news cycle. The GTA was sitting on nearly 3,900 completed, unsold condo units at the end of 2025, more than double the year before and five times the level from 2023.

Carney "bailing out" Vancouver developers

Fast forward to last week. Prime Minister Mark Carney and BC Premier David Eby announced a plan to convert vacant condos in the Vancouver region into affordable, rent to own housing.

Source: https://www.cbc.ca/news/business/carney-vancouver-condos-affordable-housing-bailout-9.7247279

The number of units targeted? 2,200.

I find it almost comical. Carney copy and pasted Ontario’s exact playbook for Vancouver, right down to the unit count. Same number. Different province. Same underlying problem: developers sitting on completed inventory nobody wants to buy at the price they need to sell at.

Here’s the thing. While “bailing out developers” makes for a punchy headline, it’s not actually the real story.

The real bailout is happening somewhere else entirely.

Blanket appraisal: the big banks' tool to offload bad assets onto owners

To understand the real bailout, you need to understand something called a blanket appraisal.

A blanket appraisal lets a bank calculate your mortgage using the original purchase price you agreed to years ago, not the actual value of the unit today. For pre-construction condos, where buyers sign years before the building is even finished, that gap can be enormous.

Here’s the math, using a real world example from Sorbara Law:

Original purchase price: $600,000
Current appraisal price: $500,000

With a blanket appraisal: Loan to value based on the original $600,000 price. Deposit required: $120,000.

Without a blanket appraisal: Loan to value based on the current $500,000 appraisal. Deposit required: $200,000, meaning the buyer needs an extra $80,000 in cash just to close.

See what happened there?

Without the blanket appraisal, the buyer either walks away or scrambles for $80,000 they may not have. With it, the deal closes. The bank clears out the construction loan the developer owes them. The developer gets paid. Everyone pretends the condo prices are still 2022.

Except the buyer is now holding a mortgage larger than what their unit is actually worth.

That’s not a bailout for the buyer. That’s the bank moving its risk off its own books and onto someone else’s shoulders, someone who often doesn’t fully understand what just happened.

Canada’s banking regulator, OSFI, has taken notice. In private meetings with major lenders, OSFI warned that this practice could breach the Bank Act’s 80 percent loan to value rule on uninsured mortgages once prices actually fall, which is exactly what’s been happening in the GTA and Metro Vancouver.

How the big banks get bailed out

Follow the money, not the headline.

Developers don’t build condos with all of their own cash. They build with construction loans, financed by many of the same big banks writing those blanket appraisal mortgages on the other side of the deal.

When a developer can’t sell enough units to pay off that construction loan, the bank has a problem. A big one. It shows up on their balance sheet, hit their earnings, and in turn they will reduce their capacity to lend.

Less lending, less business all around.

When that happens, the economy slows down rapidly.

Now here comes the government, helping to buy 2,200 unsold units in Ontario, then another 2,200 in Vancouver.

Where do you think that money actually goes?

It goes to the developer, who uses it to pay down the exact construction loan sitting on a bank’s books. The loan clears. The bank’s exposure disappears. Nobody has to explain to shareholders why a chunk of the loan portfolio just went sideways.

The developers are only the intermediaries.

The real bail out is for the big banks.

If you like my work, I invite you to share it with others.

Eric Chang

Calgary, Alberta

June 30, 2026

Copyright © 2026 EC Research Group.

No part of this publication may be reproduced, distributed, or transmitted in any form or by any means, including photocopying, recording, or other electronic or mechanical methods, without the prior written permission of the publisher, except in the case of brief quotations embodied in critical reviews and certain other noncommercial uses permitted by copyright law.

The information provided herein is believed to be accurate and reliable, but EC Research Group does not guarantee its accuracy or completeness. The content is for informational purposes only and is not intended to be a substitute for professional financial advice. EC Research Group is not a financial advisor and does not provide personalized financial advice. The views and opinions expressed in this publication are those of the author and do not necessarily reflect the official policy or position of EC Research Group. The content may be subject to change without notice and may become outdated over time. EC Research Group is under no obligation to update or revise any information presented herein.

Investments involve risks, and individuals should consult with a qualified financial advisor before making any investment decisions. Prospective investors should carefully consider the investment objectives, risks, charges, and expenses of any investment before investing.

Rates set the cost of everything we do. They decide whether a project pencils out, whether a building cash flows, and whether an owner should sell. When rates move, the whole game changes.

We’ve been writing about the higher interest rate environment for a while now. You can catch up here:

• https://www.ecresearchgroup.com/p/higher-interest-rate

• https://www.ecresearchgroup.com/p/1-has-its-advantage

• https://www.ecresearchgroup.com/p/middle-east-is-only-1-front-of-the

If you've followed along, you already know where I stand. The era of cheap money is over.

Today I want to walk through why rates are climbing, and why I think they may stay higher for longer than most people expect.

How 3 different interest rate durations affect real estate

Here’s something people may not realize. The “interest rate” is not one number. The yield curve is really three different stories, and each one touches real estate in a different way.

The short term rate, or the front end of the curve, drives construction. Construction financing is usually tied to short-term interest rates and moves closely with central bank policy. When the central bank moves, construction loan moves with it.

The middle of the curve, what traders call the belly, reflects rates around the 5 year term. That is a common length for commercial mortgages and for Canadian residential mortgages. This affects the cost of holding real estate asset. The lower the rate, the more cash flow a property generates. The higher the rate, the tighter the squeeze on the same building.

The long end of the curve is usually tied to government debt between 10-30 years in duration. In the US, residential borrowers can choose a 15 year or a 30 year mortgage. The 30 year option is what created the “lock-in” effect the past few years. Millions of US homeowners took out mortgages at extremely low rates during the pandemic. Now they are stuck. Sell the house, and they trade a 3 percent mortgage for something far higher. So they don’t sell. Inventory dries up, and the whole market gums up.

Three Forces Pushing Rates Higher: Front-end

Apollo, a global asset management firm with roughly $1 trillion US under management, shared a chart on what is pushing interest rates higher in today’s environment.

Source: Apollo

The key insight is this. Rates are rising at every maturity, but for three different reasons. Understanding which force operates where matters, because it tells you the pressure is structural.

Start at the front end. Short dated yields anchor to the central bank rate and to the market’s expectation of where that rate eventually settles. Both have drifted up. Inflation is proving stickier while the US economy holds up well.

Now, some of the biggest banks are no longer talking about cuts at all. Bank of America and Deutsche Bank are now forecasting the Fed to raise rates in September, with Bank of America expecting three rate hikes totaling 75 bps in 2026: https://www.reuters.com/business/bofa-forecasts-75-bps-rate-hikes-2026-labour-market-resilience-new-fed-chair-2026-06-22/

No more cuts. Hikes may be coming ahead.

AI buildout creating pressure on higher rates

The belly of the curve is influenced by expectations for growth and inflation, but heavy corporate bond issuance can add upward pressure to yields and credit spreads. And lately, the hyperscalers (AI companies) have arrived as a force of their own.

The capital intensity of the AI buildout has turned the largest technology companies’ balance sheets into prolific bond issuers. They are terming out data center and compute spending in the intermediate maturities where the belly lives.

When the highest quality names flood that part of the curve with record amount of debts, yields rise for the market to absorb the supply. There’s too much debt hitting the market at the same time.

The AI story everyone is celebrating in the stock market may be pushing up the cost of borrowing for everyone else, including real estate developers who has nothing to do with AI.

Now the long end

The US Treasury continues to issue heavily to fund persistent deficits. The supply of new government debt keeps coming, and it is not slowing down.

On the other side, the Fed has stepped back as a buyer.

So long rates rise to compensate investors for holding debt the central bank no longer wants. Less demand, more supply, higher yields. The big money printer is no longer running at full speed.

The bottom line is that while these forces overlap, but each is currently exerting the greatest pressure on a different part of the curve, pushing rates higher: sticky inflation at the front, hyperscaler issuance in the belly, and a supply and demand imbalance at the long end. Different causes, same outcome: higher rates.

For real estate operators and developers, this is a more challenging environment to navigate. Construction costs more to finance. Holding costs more to carry.

The higher rate environment may stay around longer than the optimists hope.

Not to mention, the fallout from the war in the Middle East is only starting to show up. Those price increases are still trickling through the supply chain.

Time to be extra careful as real estate investors today.

If you like my work, I invite you to share it with others.

Eric Chang

Calgary, Alberta

June 23, 2026

Copyright © 2026 EC Research Group.

No part of this publication may be reproduced, distributed, or transmitted in any form or by any means, including photocopying, recording, or other electronic or mechanical methods, without the prior written permission of the publisher, except in the case of brief quotations embodied in critical reviews and certain other noncommercial uses permitted by copyright law.

The information provided herein is believed to be accurate and reliable, but EC Research Group does not guarantee its accuracy or completeness. The content is for informational purposes only and is not intended to be a substitute for professional financial advice. EC Research Group is not a financial advisor and does not provide personalized financial advice. The views and opinions expressed in this publication are those of the author and do not necessarily reflect the official policy or position of EC Research Group. The content may be subject to change without notice and may become outdated over time. EC Research Group is under no obligation to update or revise any information presented herein.

Investments involve risks, and individuals should consult with a qualified financial advisor before making any investment decisions. Prospective investors should carefully consider the investment objectives, risks, charges, and expenses of any investment before investing.

Several readers wrote me messages after last week’s newsletter:

https://www.ecresearchgroup.com/p/elon-musks-ipo-game

“Great article. So are you buying any?” - Reader Nadine R.

“Great article on IPO you sent out. You left me hanging! So does that mean your planning on buying in on IPO on June 12th?” - Reader Ryan O.

I didn’t mean to leave anyone hanging.

The short answer: I didn’t buy the IPO.

As to why, we’ll unpack it in today’s newsletter.

We wrote about looking for Asymmetrical opportunities before

A quick refresher on what Asymmetrical means.

Using a seesaw as a visual, we’re looking for a tilted seesaw, where the potential reward outweighs the underlying risk.

What are asymmetrical returns?

These are the Holy Grail of investing. The unicorns.

An asymmetric trade or asymmetric payoff is when the outcome of a trade has more profit than loss or risk taken to achieve the profit. Or, the upside potential is greater than the downside loss.

Asymmetry of a trade may be when the downside is limited, but the upside is unlimited.

Or, if we are speaking of an asymmetric outcome, the upside profit was greater than the amount risked.

Source: https://asymmetryobservations.com/definitions/asymmetry/asymmetric-returns/what-is-an-asymmetric-return/

We also shared an example of asymmetrical reward vs. risk in real estate here:

https://www.ecresearchgroup.com/p/theres-a-reason-theyre-lowering-rates

So when a reader asks if I’m buying the IPO, the real question I’m asking myself is simpler: Is the seesaw tilted in my favor?

Let’s look at three concerns.

Concern #1: Sky high valuation

At roughly $1.77 trillion against 2025 consolidated revenue of about $18.7 billion, the stock trades at around 100x sales.

After the IPO pop, the valuation only got more stretched.

Today, SpaceX’s valuation is approximately $2.52 trillion, putting the stock at around 135x sales.

Think about what 135x sales actually means.

You’re paying 135 dollars for every single dollar of revenue that walks in the door, and that revenue isn’t even profit yet.

At that price, investors aren’t valuing a business. They’re valuing a story about the future, decades out, and assuming almost none of it goes wrong.

Concern #2: It’s not profitable. The AI unit is burning through cash

In 2025 SpaceX reported a loss from operations of about $2.6 billion despite roughly $6.6 billion in adjusted EBITDA, and Q1 2026 showed a $1.9 billion operating loss on $4.7 billion revenue.

Elon consolidated xAI/X into SpaceX. The AI unit spent $7.72 billion in Q1 2026 alone and posted a $2.47 billion operating loss in that quarter.

The AI unit invested/spent more in a single quarter than the entire company brought in as revenue for that same quarter.

This is the part that troubles me. When you fold a cash-incinerating AI business into the crown jewel, you don’t make the business stronger.

So now the rocket company has to keep feeding the AI furnace. And every dollar shoveled into that furnace is a dollar that isn’t being returned to the people buying in at 135x sales.

Profitable companies can survive a bad year. Companies burning billions a quarter survive only as long as someone keeps funding the burn. Those are two very different risk profiles.

Concern #3: Key-person risk

The biggest risk of all: SpaceX’s extreme rich valuation is entirely dependent on Elon Musk.

He is a genius. There’s no doubt about it.

Unfortunately, a genius is no different than any other human. They are mortal.

There’s no succession plan that replaces a founder the market treats as irreplaceable. That’s the whole problem. The premium investors are paying, in large part, is a bet on one man’s life.

When the thesis can’t survive without a single human being, that isn’t a moat. It’s a single point of failure.

Priced for perfection

I have nothing against SpaceX or Elon Musk.

What I am against is overpaying for an investment.

When an asset is priced extremely high, it doesn’t leave a lot of room for surprises.

Any business owner will tell you, there’s always surprises when it comes to running a company.

Sometimes there are mistakes the company makes.

Sometimes it has nothing to do with the company itself such as a black swan event. A highly unpredictable occurrence that lies far beyond the realm of normal expectations, carrying a massive impact.

When an asset is valued like SpaceX, it’s no longer driven by fundamentals. It’s driven by investor speculation.

This is the exact opposite of an asymmetrical opportunity.

More like asymmetrical risk to a unit of return earned.

It doesn’t mean an investor can’t make a return from the asset. As long as there’s another investor willing to pay an even higher price, it can continue to rocket higher (no pun intended).

This is called the greater fool theory.

In finance, the greater fool theory suggests that one can sometimes make money through speculation on overvalued assets (items with a purchase price drastically exceeding the intrinsic value) if those assets can later be resold at an even higher price.

Source: https://en.wikipedia.org/wiki/Greater_fool_theory

The question I have for you: Who is the fool, and who’s going to be the greater fool?

If you like my work, I invite you to share it with others.

Eric Chang

Calgary, Alberta

June 17, 2026

Copyright © 2026 EC Research Group.

No part of this publication may be reproduced, distributed, or transmitted in any form or by any means, including photocopying, recording, or other electronic or mechanical methods, without the prior written permission of the publisher, except in the case of brief quotations embodied in critical reviews and certain other noncommercial uses permitted by copyright law.

The information provided herein is believed to be accurate and reliable, but EC Research Group does not guarantee its accuracy or completeness. The content is for informational purposes only and is not intended to be a substitute for professional financial advice. EC Research Group is not a financial advisor and does not provide personalized financial advice. The views and opinions expressed in this publication are those of the author and do not necessarily reflect the official policy or position of EC Research Group. The content may be subject to change without notice and may become outdated over time. EC Research Group is under no obligation to update or revise any information presented herein.

Investments involve risks, and individuals should consult with a qualified financial advisor before making any investment decisions. Prospective investors should carefully consider the investment objectives, risks, charges, and expenses of any investment before investing.

https://www.ecresearchgroup.com/p/ipos-are-for-the-insiders-to-get

The buzz hasn’t slowed. If anything, it’s getting louder.

SpaceX’s initial public offering (IPO) is scheduled for this Friday, June 12.

SpaceX small float

Most of the headline on the IPO has been around the initial valuation - $1.77 trillion.

A mind blowing valuation, potentially placing the company as the 8th largest publicly traded company in the world.

Here’s the part many non-professional investors skip right over: the size of the float.

SpaceX isn’t selling much of itself to the public. Not even close. And that single detail tells you almost everything about how this is designed to play out.

Trust me, Elon has engineered the entire aspects of SpaceX’s IPO.

It’s his master plan, and he is about to enter the history books as a result.

What is a float and how may it affect stock prices?

A float is simply the slice of a company’s shares that is actually available for the public to buy and sell.

Not every share trades publicly. Founders, early employees and insiders usually hold the bulk of the stock. Whatever is left over for everyone else is the float.

Here’s why it matters: when the float is small, a little bit of demand goes a long way.

Think of it like a neighborhood where only one house out of twenty ever comes up for sale. When a wave of buyers shows up at the same time, that single listing can get bid up far beyond what the home is really worth. Scarcity does the heavy lifting.

We’ve seen that during COVID.

Population migrations resulting in dramatic property price increases in Alberta and Maritimes.

A thin float works the same way. Small supply, the same demand to buy, and the price can shoot higher on relatively little money.

Much much higher.

Elon is a master of attention

Elon Musk understands something most CEOs miss: a stock price is also a marketing tool.

He knows that a pop in SpaceX’s share price on day one will generate massive media coverage, plus a frenzy across social media.

Free advertising, paid for by the crowd’s own excitement.

Now layer the numbers on top.

SpaceX is reportedly floating only about 5% of the company. The historic average for an IPO has been closer to 30%, according to Jay Ritter, a ​University of Florida professor.

Read that again. One sixth of the typical supply.

Then comes the second act: the lock up.

According to the company’s IPO prospectus, early investors will be allowed to sell up to 20% of their holdings beginning on the second full trading day after SpaceX reports its first earnings following the close of the second quarter. There’s a performance sweetener built in too. Investors can unload an additional 10% if the stock trades at least 30% above its IPO price on five of the ten trading days after that earnings release.

Source: https://global.morningstar.com/en-nd/stocks/how-spacexs-tiered-lockup-aims-help-post-ipo-trading

Read between the lines and the structure becomes obvious. A tiny float at the open creates instant scarcity. The staggered lock up keeps that scarcity going. The result is a feeding frenzy that runs from the IPO straight through to the first earnings report, right around the time many long time SpaceX investors finally get their chance to cash out.

For most non-professional investors, the playbook is predictable. They see the headline. They see the stock symbol flashing green. And they chase.

Green means GO, right?

We’ve seen this movie before:

In crypto.

In precious metals just a few months ago.

In meme stocks during the pandemic.

First Trillionaire in history

A $5 trillion valuation on IPO day? Jim Cramer, a CNBC talking head, claims that’s very possible.

SpaceX builds rockets. If SpaceX’s stock rockets to the moon, no pun intended, it would make Elon Musk the first trillionaire in history.

And that milestone is its own kind of rocket fuel.

A record breaking stock produces record breaking headlines. Record breaking headlines pull in more investors. More investors push the stock higher still. Around and around it goes, each turn feeding the next.

A trillion dollar man would be a global headline for weeks. Every one of those headlines is another invitation for the late crowd to pile in.

Whatever your thoughts about Elon Musk, and people have plenty, we all have to agree on one thing: when it comes to capturing attention, the man is a genius.

This coming week will be one for the history books.

If you like my work, I invite you to share it with others.

Eric Chang

Calgary, Alberta

June 9, 2026

Copyright © 2026 EC Research Group.

No part of this publication may be reproduced, distributed, or transmitted in any form or by any means, including photocopying, recording, or other electronic or mechanical methods, without the prior written permission of the publisher, except in the case of brief quotations embodied in critical reviews and certain other noncommercial uses permitted by copyright law.

The information provided herein is believed to be accurate and reliable, but EC Research Group does not guarantee its accuracy or completeness. The content is for informational purposes only and is not intended to be a substitute for professional financial advice. EC Research Group is not a financial advisor and does not provide personalized financial advice. The views and opinions expressed in this publication are those of the author and do not necessarily reflect the official policy or position of EC Research Group. The content may be subject to change without notice and may become outdated over time. EC Research Group is under no obligation to update or revise any information presented herein.

Investments involve risks, and individuals should consult with a qualified financial advisor before making any investment decisions. Prospective investors should carefully consider the investment objectives, risks, charges, and expenses of any investment before investing.

There is something magnetic about watching a private company step into the public spotlight.

Right now, three of the biggest names in technology are lining up to go public: SpaceX (parent company of Starlink), OpenAI (Chat GPT), and Anthropic (Claude AI). SpaceX alone is eyeing a valuation near $1.75 trillion. The financial press is buzzing. Everyday investors are getting excited.

But before you get swept up in the excitement, let me share what the history books actually say about buying into IPOs.

Because the story is not what most people think.

What is an IPO?

IPO stands for Initial Public Offering. It is the process by which a private company sells shares to the public for the first time.

For the founders, early employees, and venture capital investors who have been holding equity for years, an IPO is a liquidity event. It is their moment to convert paper wealth into real money.

For the public investor, it is a chance to buy in on a company they believe in.

That asymmetry matters. And we will come back to it.

The mechanics work like this: investment banks underwrite the offering, setting an offer price before the stock begins trading. Institutional investors, hedge funds, and insiders get access to shares at that offer price. By the time the stock opens on a public exchange, retail investors are buying in the secondary market at whatever price the stock has already moved to.

The insiders (early investors, founders, employees) get in at the ground floor. IPO insiders get in on the 70th floor. Everyone else try to catch the escalator up after that.

We saw record numbers of companies going public before the dot-com bubble burst

The late 1990s were a gold rush.

Every week, another internet company went public. Valuations had little to do with earnings or revenue. They were powered entirely by narrative and momentum. The word “dot-com” attached to any business was enough to send a stock soaring on its first day of trading.

Between 1995 and 2000, the US IPO market exploded. Hundreds of companies flooded the public markets. Many had no path to profitability. Some had no revenue at all. It didn’t matter. Investors were chasing the story.

Then the music stopped.

When the bubble burst, the laggards were holding the bag. The insiders had already cashed out. Retail investors were left with worthless paper.

This time we’re seeing potentially record amounts of capital raised from IPOs

This time, these companies actually have real product, revenue and strong business models.

SpaceX, OpenAI, and Anthropic are all expected to go public in the coming months. In inflation-adjusted terms, SpaceX alone would rank as the second-largest IPO in history, just behind Saudi Aramco. All three together would exceed the entire dot-com IPO wave of 1995 to 2000.

But there is a problem that most people are not talking about.

That much new equity supply hitting in a few months creates a math problem: the money has to come from somewhere. Most of it will come from existing holdings. Passive funds will be forced buyers once these names join the indexes, which will happen much faster than usual, given recent index rule changes. That means mechanical selling pressure on whatever many funds currently own, which is mostly the same large-cap tech stocks everyone else owns.

Source: https://paulkedrosky.com/the-coming-mega-ipo-flow-funding-problem-of-2026/

In other words, the very act of these companies going public could trigger a rotation out of the stocks most investors already hold. The excitement of the new is funded by selling the old.

IPOs are for the insiders to get rich

Here is the uncomfortable truth Wall Street or Bay Street will not tell you.

The IPO process is designed, first and foremost, to reward the people who were already there. Founders. Early employees. Venture capital firms. Private equity. They have been waiting years for this moment. They got in from the ground floor. The IPO is their exit.

The offer price is set by investment bankers working for the company. Shares at that price go to institutional clients first. By the time you log into your brokerage account to buy, the price has already moved.

You are not getting in early. You are getting in after the insiders have already locked in their gains.

IPO stock prices can be extremely volatile and are often impacted by structural characteristics such as a small float, lock-up periods, and limited operating histories. The headline market capitalization is simply the share price multiplied by total shares outstanding, while the float-adjusted market capitalization reflects only the shares actually available to public investors after excluding founder, insider, and other strategic or control holdings. A company can debut at a $1 trillion-plus valuation yet float only 5 to 10 percent of its shares, resulting in a relatively small number of shares available for trading and potentially amplifying price swings.

Source: https://www.edwardjones.com/us-en/market-news-insights/stock-market-news/market-pulse/dont-let-mega-ipo-buzz-cloud-your-judgment

Pre-IPO investors often have lock-up periods restricting them from selling for a set time. When those lock-ups expire, early investors may exit. That selling pressure lands on the public investors who bought in at the peak of the excitement.

You are the liquidity they needed.

IPO performance

The data tells a consistent story.

On average, these stocks experienced a 24% price increase on the first day of trading compared to the security underwriters pricing (the offer price), helping to support the excitement associated with high-profile IPOs. However, the stock price declined by an average of 1.4% on the first day when compared to the day's opening price as shown. This is more aligned with what individual investors could experience trying to buy shares on the first day.

Source: Edward Jones

Read that again. The insiders got in at the offer price and saw a 24 percent pop. By the time you could buy, you were already down.

It gets worse from there.

These stocks, on average, underperformed the S&P 500 over the subsequent three-month period, as the IPO companies declined 2.8% on average while the S&P 500 increased 3%. This underperformance persisted over the first year of trading, suggesting that the short-term IPO enthusiasm does not necessarily translate into longer-term outperformance.

Source: Edward Jones

The buzz fades

The same pattern we have written in previous issues applies here. Smart money got in early. They will be selling into your excitement.

The best investors are not the ones chasing the loudest headlines. They are the ones who know when to wait.

So ask yourself this: are you investing in these companies, or are you funding the exit of the people who already did?

If you like my work, I invite you to share it with others.

Eric Chang

Calgary, Alberta

June 2, 2026

Copyright © 2026 EC Research Group.

No part of this publication may be reproduced, distributed, or transmitted in any form or by any means, including photocopying, recording, or other electronic or mechanical methods, without the prior written permission of the publisher, except in the case of brief quotations embodied in critical reviews and certain other noncommercial uses permitted by copyright law.

The information provided herein is believed to be accurate and reliable, but EC Research Group does not guarantee its accuracy or completeness. The content is for informational purposes only and is not intended to be a substitute for professional financial advice. EC Research Group is not a financial advisor and does not provide personalized financial advice. The views and opinions expressed in this publication are those of the author and do not necessarily reflect the official policy or position of EC Research Group. The content may be subject to change without notice and may become outdated over time. EC Research Group is under no obligation to update or revise any information presented herein.

Investments involve risks, and individuals should consult with a qualified financial advisor before making any investment decisions. Prospective investors should carefully consider the investment objectives, risks, charges, and expenses of any investment before investing.

The facilitator is among the top 50 AI token users of Perplexity AI in the world.

If you’re not familiar with what AI tokens are, here’s an explanation with the help of AI:

When you type a message to an AI, it doesn’t read your words the way you do — instead, it chops your text into tiny chunks called tokens, which are usually short words, parts of words, or punctuation marks (for example, “unbelievable” might become un + believ + able).

The AI then processes all those little pieces to understand what you said and write back to you. Tokens matter because the AI can only hold a limited number of them in its “brain” at once (called the context window), and when you’re building apps with AI, you pay based on how many tokens are used — so think of them like the AI’s version of counting words, just in a slightly chunkier way.

Being in the top 50 globally for token usage means this person is operating at an entirely different level with AI than most people in the room. Including me.

That was a humbling realization.

Looking for work at McDonald's

During a recent trip through Asia, I ran into two American students traveling to Mongolia. I asked them what they thought about AI, given that they were studying Computer Science at the University of Florida.

Computer Science is arguably ground zero for AI’s impact on employment. AI has shown it is exceptionally good at writing code, because programming follows a text-based structure that large language models (LLMs) are built to handle.

Their answer? A joke, with a hint of anxiety:

We’ll be working at McDonald’s.

They said it with a laugh. But there was something underneath it. A generation entering the workforce, watching their chosen field get restructured in real time.

Ex-Square employee sharing the truth about the AI 4,000 jobs layoff

On a stop in Seoul, South Korea, I met someone who used to work for Square.

Credit: Eric Chang - Gwangjang Market

Square made headlines a few months ago as one of the first major companies to announce a mass layoff attributed directly to AI.

CEO Jack Dorsey posted this on X:

we’re not making this decision because we’re in trouble. our business is strong. gross profit continues to grow, we continue to serve more and more customers, and profitability is improving. but something has changed.

we’re already seeing that the intelligence tools we’re creating and using, paired with smaller and flatter teams, are enabling a new way of working which fundamentally changes what it means to build and run a company. and that’s accelerating rapidly.

i had two options: cut gradually over months or years as this shift plays out, or be honest about where we are and act on it now. i chose the latter.

repeated rounds of cuts are destructive to morale, to focus, and to the trust that customers and shareholders place in our ability to lead.

Source: https://x.com/jack/status/2027129697092731343?lang=en

Square let go of roughly 4,000 people. Around 40% of the entire company.

I asked Lilian, the ex-Square employee, what actually happened on the ground. His answer surprised me.

His team was outperforming their KPIs. They were bringing in revenue. Hitting benchmarks. And they were still cut.

What made it puzzling: several of his laid-off colleagues were later rehired. Not as employees. As contractors.

That detail stuck with me.

My speculation: Mass layoffs before government changes the law

I take Dorsey at his word about the morale risk from repeated rounds of cuts. Meta has been through that cycle multiple times over the past few months. The damage to culture is real.

But that still does not explain why Square brought some of those same people back as contractors shortly after letting them go.

As someone who connects dots for a living, I believe there’s more to the story.

Jack Dorsey is a visionary. I believe he is positioning ahead of a regulatory wave that most CEOs have not seen coming yet.

There is a fundamental legal difference between employees and contractors. In many jurisdictions, that difference is enormous.

In Germany, the Dismissal Protection Act (Kündigungsschutzgesetz) requires employers to prove a role is genuinely eliminated, not just restructured. Works Councils (Betriebsrat) must be consulted before any termination. Mass layoffs require a Social Plan negotiated with the works council, legally binding the company to severance formulas, retraining support, and outplacement services.

In France, individual dismissals require a formal pre-dismissal meeting, a mandatory waiting period, and written justification. Large companies must create a PSE (Plan de Sauvegarde de l’Emploi), a state-reviewed job protection plan that includes retraining, redeployment, and severance. The government labor authority (DREETS) must approve it. If it is rejected, the layoffs cannot proceed.

My speculation: Dorsey acted now, while the window was open. Laying off 40% of the company as employees, then rehiring a portion as contractors, gives Square maximum workforce flexibility without running into stricter employment protections that are almost certainly coming because of AI job displacement.

It is not just about AI and morale. It is about getting ahead of the law.

AI will change the workforce completely

What I saw in Chicago was a wake-up call.

I thought we had a reasonable grasp on AI at our company. We have an internal AI team. We have been experimenting with different use cases. I felt ahead of the curve.

That was before Chicago.

After Chicago, I am recalibrating.

What is coming will not be a gradual transition. It will restructure entire industries faster than most people are prepared for.

That being said, don’t believe everything you’re reading in the headline.

The reality on the ground is more complex than a simple headline showing 40% mass layoffs.

Stay tuned as I share more on the impact of AI to macro economics, global power, and investing in the newsletters.

If you like my work, I invite you to share it with others.

Eric Chang

Calgary, Alberta

May 27, 2026

Copyright © 2026 EC Research Group.

No part of this publication may be reproduced, distributed, or transmitted in any form or by any means, including photocopying, recording, or other electronic or mechanical methods, without the prior written permission of the publisher, except in the case of brief quotations embodied in critical reviews and certain other noncommercial uses permitted by copyright law.

The information provided herein is believed to be accurate and reliable, but EC Research Group does not guarantee its accuracy or completeness. The content is for informational purposes only and is not intended to be a substitute for professional financial advice. EC Research Group is not a financial advisor and does not provide personalized financial advice. The views and opinions expressed in this publication are those of the author and do not necessarily reflect the official policy or position of EC Research Group. The content may be subject to change without notice and may become outdated over time. EC Research Group is under no obligation to update or revise any information presented herein.

Investments involve risks, and individuals should consult with a qualified financial advisor before making any investment decisions. Prospective investors should carefully consider the investment objectives, risks, charges, and expenses of any investment before investing.

Most media coverage tends to focus on the physical war. The missiles. The strikes. The body count.

A war is fought on multiple fronts.

Physical war is only 1 front.

The US may seem to be winning part of the physical war. Their military capability is not in question.

As for the other battlefields, the winners have yet to be decided.

Iran’s stubborn proposal to end the war

If you have been tracking the US negotiations on ending the Iran war, you may know by now that Iran hasn’t given in on their terms.

It is the US that has consistently shown flexibility: negotiating, extending deadlines, signalling willingness to compromise.

Iran has not promised to end their nuclear program. They have not agreed to turn over the enriched uranium as demanded by the US.

Iran’s foreign ministry spokesman has recently said:

“Iran's nuclear enrichment rights cannot be negotiated.”

Source: https://www.aljazeera.com/video/newsfeed/2026/5/18/iran-says-nuclear-enrichment-rights-cannot-be-negotiated

Instead, Iran has leveraged the war to demand compensation for war damage. And now, they are claiming full control over the Strait of Hormuz.

Prior to the war, Iran only threatened to shut down the Strait. Now they are claiming ownership of it.

They have escalated their position, not weaken it after the US and Israel carried out significant bombings against them.

Iran is playing the long game. They are extending the timeline of this war deliberately, while opening up a new front entirely.

We wrote about Iran’s long game during the early part of the war.

You can read it here:
https://www.ecresearchgroup.com/p/middle-east-is-complicated

War on debt

The war in Iran is pushing some foreign governments to sell off US Treasuries.

Part of the reason is necessity: foreign governments sell US Treasuries to buy their own currencies back, reducing supply and defending exchange rates. Japan is a clear example.

I was visiting Japan a few weeks ago. The yen had depreciated since the war started. Everything felt a little cheaper as a result.

Source: Yahoo Finance

China has also been reducing their US Treasury holdings, dropping to the lowest level since 2008.

This is the other battlefield Iran is betting on.

Iran may not win a military confrontation directly against the US. The US has the strongest military in the world.

But Iran does not need to win militarily. Their advantage is time. And using the US debt load against the US.

As higher oil prices push inflation up, and as foreign governments reduce their US Treasury purchases or even selling off some of their US Treasury holdings, the supply of US Treasury increases on the open market. That pushes interest rates higher on US debt.

The war is being fought on the US debt, not just on the ground.

“30-year Treasury yield tops 5.19%, highest since before the financial crisis”

Source: https://www.cnbc.com/2026/05/19/treasurys-yields-inflation-traders-fed-interest-rates.html

That was the headline on a CNBC article published today.

When the bond rate moves higher, it doesn’t stay contained to Wall Street. Mortgage rates, auto loans, and corporate debt are all connected to the Treasury rate.

The war is about to get more expensive.

Not to Iran. The damage to many of their military assets is largely done.

But to the rest of the world.

Because US Treasuries are considered one of the safest investments on earth, rising yields there act as a floor that pulls every other rate higher. Government bonds. Corporate bonds. Borrowing costs everywhere.

The ripple goes global.

Printing money to buy US Treasuries

Here is what could come next.

We may see the Fed and the US Treasury start printing money to buy their own debt, in an attempt to push interest rates back down.

They won’t call it money printing, of course. They never do.

Last time, they called it “Quantitative Easing.”

This time, expect a new term. A new label for the same mechanism.

The problem with that solution is a familiar one: money printing leads to higher inflation down the road. The only scenario where it does not is a recession, where the overall economic demand collapses fast enough to offset the new supply of money.

So the question becomes: higher inflation, or recession?

Either outcome is a difficult environment for anyone near or in retirement who relies on income from investment such as bonds.

Many investors are watching the news on the Middle East.

But the more consequential battle may be the one happening quietly in the bond market.

Which front of the war are you watching?

If you like my work, I invite you to share it with others.

Eric Chang

Chicago, Illinois, USA

May 19, 2026

Copyright © 2026 EC Research Group.

No part of this publication may be reproduced, distributed, or transmitted in any form or by any means, including photocopying, recording, or other electronic or mechanical methods, without the prior written permission of the publisher, except in the case of brief quotations embodied in critical reviews and certain other noncommercial uses permitted by copyright law.

The information provided herein is believed to be accurate and reliable, but EC Research Group does not guarantee its accuracy or completeness. The content is for informational purposes only and is not intended to be a substitute for professional financial advice. EC Research Group is not a financial advisor and does not provide personalized financial advice. The views and opinions expressed in this publication are those of the author and do not necessarily reflect the official policy or position of EC Research Group. The content may be subject to change without notice and may become outdated over time. EC Research Group is under no obligation to update or revise any information presented herein.

Investments involve risks, and individuals should consult with a qualified financial advisor before making any investment decisions. Prospective investors should carefully consider the investment objectives, risks, charges, and expenses of any investment before investing.

The S&P 500 went from being down roughly 10% to recovering all its losses and then reaching an all-time high. In a matter of weeks.

I study markets through the lens of a risk manager. It’s how I approach most things: Real estate development and asset management, entrepreneurship, etc.

That means I focus on asymmetrical opportunities, the ones where the reward significantly outweighs the risk. It also means I don’t act on every single opportunity that shows up.

I only move when the risk-adjusted reward is genuinely favorable.

Right now, that calculation has flipped. What I’m seeing today isn’t opportunity. It’s gambling.

Michael Burry says the market today feels like "the last months of the 1999-2000 bubble"

Image Credit: CNBC

Michael Burry is the eccentric hedge fund manager who diagnosed the rot inside the US housing market years before anyone else did. He made a legendary bet against mortgage-backed securities and walked away with hundreds of millions while Wall Street burned.

If you haven’t seen The Big Short, watch it. If you’ve already seen it, watch it again. The film does an excellent job translating a deeply complex financial collapse into something every investor can understand.

I revisit it every few years. Not for entertainment, but as a reminder of what happens when reckless leverage gets unwound.

Watch it again, then tell me what you think of some of the behaviors showing up in the market today.

CNN's Fear and Greed Index did a complete 180

Image Credit: CNN

At the end of March, the index was sitting at “extreme fear.”

Today, we’ve crossed into “greed.”

We haven’t hit “extreme greed” yet on the index itself. But if you look at the options market, extreme greed is already there.

On May 9, SPX call options reached a record of $2.6 trillion in underlying value

Let me explain what that means.

A stock option is an instrument that lets a speculator bet on the direction of a security without owning it outright.

A “call option” gives the buyer the right to purchase the underlying security at a set price. But not the obligation, and not the actual ownership.

The result is a leveraged bet on where the underlying security is going, at a fraction of the cost of buying the real thing.

On May 9, call options on the S&P 500 index reached an all-time record, representing $2.6 trillion in underlying value. All in a single day.

It’s a record we have NEVER seen before.

Naturally that caught my attention. But what made me stay alert is the parabolic move in the options market.

Image Credit: The Economist

Look at the chart. Ask yourself a simple question: does this look like a healthy market recovery? Or does it look like a massive bet in the market right now?

There is an old saying on Wall Street: Sell in May and go away

The idea is simple. Summer markets tend to underperform. Traders go on vacation. Trading volumes are lower. The momentum that drives markets in the spring often fades.

Will that happen this year? No one knows for certain. We may see a selloff in the coming weeks, or we may not. Markets can stay irrational longer than most people expect.

But here is what I can say with confidence: the more speculative a market becomes, the more painful the eventual correction.

The party at the nightclub is still going. The music is loud and the drinks are flowing.

Few ever thinks about the morning while they’re still on the dance floor.

Go watch The Big Short, and let me know what you think!

If you like my work, I invite you to share it with others.

Eric Chang

Seoul, South Korea

May 12, 2026

Copyright © 2026 EC Research Group.

No part of this publication may be reproduced, distributed, or transmitted in any form or by any means, including photocopying, recording, or other electronic or mechanical methods, without the prior written permission of the publisher, except in the case of brief quotations embodied in critical reviews and certain other noncommercial uses permitted by copyright law.

The information provided herein is believed to be accurate and reliable, but EC Research Group does not guarantee its accuracy or completeness. The content is for informational purposes only and is not intended to be a substitute for professional financial advice. EC Research Group is not a financial advisor and does not provide personalized financial advice. The views and opinions expressed in this publication are those of the author and do not necessarily reflect the official policy or position of EC Research Group. The content may be subject to change without notice and may become outdated over time. EC Research Group is under no obligation to update or revise any information presented herein.

Investments involve risks, and individuals should consult with a qualified financial advisor before making any investment decisions. Prospective investors should carefully consider the investment objectives, risks, charges, and expenses of any investment before investing.

Last week we wrote about Canada’s launching a Sovereign Wealth Fund.

This week, we’re going to compare Canada to other parts of the world. Because a quiet but significant trend is emerging across developed countries. One that I believe represents the next version of Capitalism. Call it Capitalism 2.0. Or Socialistic Capitalism.

Whatever you call it, the implications for investors are enormous.

Government's increasing involvement in the financial markets

As many of my long-term subscribers know, I have been in real estate for many years, running a moderate-sized real estate portfolio and real estate development business in the multifamily asset class based in Alberta, Canada.

Over the past few years, the role the Government of Canada plays in the Canadian housing market has expanded significantly.

Policies and initiatives through Canada Mortgage and Housing Corporation (CMHC) have been enacted to incentivize development of Purpose Built Rentals. Through high leverage (up to 95% Loan to Value), extended amortization (up to 50 years), and the Government’s increasing purchases of Canada Mortgage Bonds, representing close to 50% of new issuances in 2025, the government has effectively positioned itself as a price-setter (interest rate) in the mortgage market.

The Government of Canada announced on November 21, 2023 that it will begin purchasing up to C$30 billion of Canada Mortgage Bonds annually, commencing in 2024. In the 2024 calendar year, the Government of Canada purchased a total $29 billion of the $58 billion of fixed-rate Canada Mortgage Bonds primary issuances. The Government of Canada has indicated that it will continue to participate in all offerings of fixed-rate 5-year and 10-year Canada Mortgage Bonds proposed for 2025 and that it will target the purchase of 50% of such fixed-rate Canada Mortgage Bonds issued in 2025, although the amount it purchases of a particular new issuance may be more or less than 50% of that issuance

Source: https://assets.cmhc-schl.gc.ca/sites/cmhc/finance-investing/canada-mortgage-bonds/list-outstanding-cht-debt-issues/pdf/series-126b-luxembourg-circular.pdf

The launch of Canada’s Sovereign Wealth Fund is another step in this same direction. While I welcome the strategic intent of using capital to create tactical advantage for Canada, it represents yet another expansion of government into territory that was previously market-driven.

To be fair, Canada is not alone in this.

A refresher on Socialism

James K. Glassman, a senior fellow at the American Enterprise Institute, wrote an article as far back as 1999 raising the alarm about what happens when governments begin taking ownership stakes in private companies. This was before the Obama-era bailouts of Detroit automakers. Before recent developments where the US government took equity positions in select private companies, including Intel.

His warning is worth reading carefully:

Ownership of stock by the government raises deep and troubling issues.

[...]

I do not want to sound overly dramatic, but, by definition, the plan is a step toward the dictionary definition of socialism: government ownership of the means of production.

Thus, Congress must first answer this question: Should the federal government have an ownership stake in private corporations?

Source: https://www.aei.org/research-products/testimony/government-investing-in-the-stock-market/

That question was intended to be a debate in 1999.

Today, it’s now widely accepted and even celebrated by the President.

A President who represents a Party that has championed free market in recent memory.

The Center for Strategic and International Studies has also reported on the significant shift in U.S. industrial policy, noting the expanding footprint of federal equity investments in strategic companies. You can read their full analysis here: Understanding Federal Equity Investments in Strategic Companies.

The US government now holds direct equity stakes in private companies it deems strategically important. That is a meaningful shift from the past.

Japan has gone to the extreme in practicing Socialistic Capitalism

Before you brush off what’s happening in Canada and the US as minor, let me show you the extreme end of the spectrum. I’ll use a country I’m currently visiting as the example.

Since 2010, the Bank of Japan (BOJ) began purchasing Japanese Exchange-Traded Funds (ETFs), these are investment products similar to mutual funds that invested in domestic Japanese companies.

The BOJ has a reported book value of 37 trillion yen (around $243 billion) in ETF holdings on its balance sheet, with an estimated market value of 70 trillion yen to 80 trillion yen. This amounts to roughly 7% of Japan’s stock market capitalization.

Source: https://cetex.org/news/the-boj-must-define-a-strategy-for-its-etf-holdings-not-just-its-sales/

Bank of Japan currently owns roughly 7% of the entire Japanese stock market.

That also represents roughly 80% of Japan’s entire exchange-traded funds.

Read that again:

The Bank of Japan owns roughly 80% of the Japanese ETF market!

And that’s before factoring in the Japanese Government Pension Investment Fund (GPIF), which holds roughly 73 trillion yen in Japanese companies. That’s another 6% of the entire Japanese stock market.

Image Credit: GPIF

Combined, the Japanese government controls roughly 13% of its entire domestic stock market. A market that, without this intervention, could function very different.

What's the problem?

History has shown us what happens when socialism takes hold: highly inefficient capital allocation, followed by economic decline.

Now, Capitalism 2.0 isn’t pure socialism. But it introduces the same core problem. When government steps in as a perpetual asset buyer, asset prices detach from their fundamentals. The price discovery mechanism breaks down.

Price discovery is the continuous, market-driven process of determining the fair value of an asset through the interaction of buyers and sellers.

When one buyer has essentially unlimited resources, and that buyer is the government, the market stops functioning as a truth-telling mechanism.

Asset prices stay inflated. Not because of genuine demand. Because of policy.

Make no mistake: this is not healthy in the long run.

It took the Japanese government owning roughly 13% of its entire stock market to keep a fragile market from collapse. That’s a market that was previously on life support, brought back to life through intervention.

The longer investors grow comfortable with the idea that government will always bail them out, the more it encourages reckless speculation. Risk is mispriced. Bad decisions get rewarded. And the eventual correction, when it comes, is far more painful than it would have been without all the artificial support.

That’s a topic we’ll unpack in future issues.

For now, the question worth sitting with is this: If price discovery is compromised, how do you know what anything is actually worth?

If you like my work, I invite you to share it with others.

Eric Chang

Tokyo, Japan

May 5, 2026

Copyright © 2026 EC Research Group.

No part of this publication may be reproduced, distributed, or transmitted in any form or by any means, including photocopying, recording, or other electronic or mechanical methods, without the prior written permission of the publisher, except in the case of brief quotations embodied in critical reviews and certain other noncommercial uses permitted by copyright law.

The information provided herein is believed to be accurate and reliable, but EC Research Group does not guarantee its accuracy or completeness. The content is for informational purposes only and is not intended to be a substitute for professional financial advice. EC Research Group is not a financial advisor and does not provide personalized financial advice. The views and opinions expressed in this publication are those of the author and do not necessarily reflect the official policy or position of EC Research Group. The content may be subject to change without notice and may become outdated over time. EC Research Group is under no obligation to update or revise any information presented herein.

Investments involve risks, and individuals should consult with a qualified financial advisor before making any investment decisions. Prospective investors should carefully consider the investment objectives, risks, charges, and expenses of any investment before investing.

Last week, the Prime Minister announced the creation of Canada’s first national sovereign wealth fund.

According to BNN Bloomberg:

The federal government will initially contribute $25 billion into the fund, which Carney says “will grow through asset recycling and reinvestment, creating even greater opportunities for future generations.”

Source: https://www.bnnbloomberg.ca/business/politics/2026/04/27/pm-carney-announces-canadas-first-national-sovereign-wealth-fund/

Purpose of sovereign wealth fund

A sovereign wealth fund is a government-owned investment fund designed to grow national wealth.

The most well-known examples are Norway’s Government Pension Fund Global, Abu Dhabi Investment Authority, and Singapore’s GIC. These funds have one shared objective: deploy capital strategically to generate long-term returns for the nation.

Think of it as a country investing for its retirement.

The best-run sovereign wealth funds operate quietly in the background, compounding returns across decades. They buy stakes in infrastructure, real estate, technology companies, and resource projects around the world.

For example, Norway’s Government Pension Fund started with 2 billion NOK (approximately US$300 million to $320 million at the time) in May 1996. It has since grown to over $2.2 trillion US today.

The underlying logic is simple. A government with surplus capital can put it to work, just like any disciplined investor would. The returns benefit future generations, not just the current one.

Sovereign wealth fund funding

Here’s where it gets interesting.

Historically, sovereign wealth funds were built on budget surpluses and resource revenues. Norway’s fund, arguably the most successful in the world, was seeded entirely from oil revenues. Abu Dhabi’s was funded the same way.

The formula is straightforward: earn more than you spend, invest the surplus, and let compounding do the rest.

Most financial advisors or personal finance coaches would outline a similar playbook for building personal wealth:

1. Pay down non-business debt (consumer debt)

2. Invest the surplus

3. Compound wealth from investments

The keyword in step two is surplus.

Last time I checked, Canada has been running a budget deficit for around 10 years.

Source: Government of Canada

I find it a bit ironic to start a sovereign wealth fund while running a significant deficit. Can you imagine the famous personal finance personality Dave Ramsey telling his radio show listener:

“Don’t worry about paying down your debt. Start investing for your retirement.”

That’s not a wealth-building strategy. That’s a leveraged bet.

To be fair, not every sovereign wealth fund was launched from a position of surplus. Some governments chose to build their funds through borrowing or asset monetization. But those come with higher-risk.

Logic behind launching Canada’s sovereign wealth fund

Here’s where Carney lean into his investment banking background.

A sovereign wealth fund typically allocates majority capital into equity investments.

It invests as an owner, taking equity positions in projects and companies. That ownership stake is not just about returns. It’s also about what that ownership unlocks.

Using real estate investing as an example. A property investor puts in a 20% down payment, that’s the equity, and a bank lends the remaining 80%. The bank is willing to do this because real estate is considered low-risk collateral. The leverage amplifies the investor’s return on equity.

Now apply that same logic to a Government of Canada-backed sovereign wealth fund.

When the federal government is the equity owner of a project, banks and institutional lenders look at that investment very differently. The implied backing of a sovereign nation dramatically reduces perceived risk. That translates into lower borrowing costs, better terms, and higher leverage capacity.

This creates a situation where the equity returns out perform the underlying debt. Potentially resulting in a better outcome compared to managing personal finance and investments.

Carney spent years at Goldman Sachs and then the Bank of Canada and Bank of England. He understands capital structure better than most politician in the country. This announcement has his fingerprints all over it.

Whether it ultimately benefits Canadians depends on execution, investment discipline, and the kinds of projects the fund chooses to back.

That’s a different question.

I’m cautiously optimistic, however, I’m not oblivious by the fact that Government of Canada has made many poor investment decisions in the past.

Many due to political agenda over actual merits of investments.

If you like my work, I invite you to share it with others.

Eric Chang

Tokyo, Japan

April 28, 2026

Copyright © 2026 EC Research Group.

No part of this publication may be reproduced, distributed, or transmitted in any form or by any means, including photocopying, recording, or other electronic or mechanical methods, without the prior written permission of the publisher, except in the case of brief quotations embodied in critical reviews and certain other noncommercial uses permitted by copyright law.

The information provided herein is believed to be accurate and reliable, but EC Research Group does not guarantee its accuracy or completeness. The content is for informational purposes only and is not intended to be a substitute for professional financial advice. EC Research Group is not a financial advisor and does not provide personalized financial advice. The views and opinions expressed in this publication are those of the author and do not necessarily reflect the official policy or position of EC Research Group. The content may be subject to change without notice and may become outdated over time. EC Research Group is under no obligation to update or revise any information presented herein.

Investments involve risks, and individuals should consult with a qualified financial advisor before making any investment decisions. Prospective investors should carefully consider the investment objectives, risks, charges, and expenses of any investment before investing.

It wasn’t.

Historically, Iran has threatened to close the Strait during diplomatic tensions, conducting military exercises to demonstrate their ability to mine or block the narrow passage. That’s the playbook they’ve used in the past. Rattle the cage. Make headlines. Watch oil prices flinch.

But the reality this time was different.

Iran turned the Strait into a toll booth, charging select countries a reported $2 million per tanker to pass through. It was a shakedown, not a blockade. A “perceived closure” while the Strait technically stayed open-ish:

https://www.axios.com/2026/04/09/iran-us-strait-of-hormuz-khamenei

Now it’s the US’s turn. The US Navy is currently blockading the Strait of Hormuz.

That is a fundamentally different situation.

We moved from a managed disruption to an actual closure. And the numbers tell you exactly how much that matters.

A 10% reduction in world oil supply, which is roughly what the toll booth arrangement produced, was manageable. The IEA Member countries could have temporarily released 400 million barrels of oil reserves to cover it:

https://www.iea.org/news/iea-confirms-member-country-contributions-to-collective-action-to-release-oil-stocks-in-response-to-middle-east-disruptions

Now we’re looking at a 20 to 25% reduction in daily supply from the blockade standoff.

With global consumption estimated at 106 million barrels per day, that’s a shortfall of 21 to 27 million barrels every single day.

No country is going to deplete their entire strategic reserve to cover that.

Iran has the “upper hand” right now

Here’s what most of the media hasn’t told you.

The US and Trump set the deadline on the ceasefire. It was supposed to expire Wednesday, April 22.

Iran simply refused to show up. US Vice President JD Vance was supposed to be making his way to Pakistan for another round of negotiations. The Iranians ghosted him. No call. No meeting. No response.

When someone ghosts you, there’s only one interpretation: they are not interested.

Perhaps JD Vance hasn’t experienced modern dating.

The US has since backed off, claiming the ceasefire will extend indefinitely. Meanwhile, Trump continues posting on social media every day. The Iranians continue to give the cold shoulder.

One side is broadcasting. The other side isn’t listening.

So what happens next?

Contrary to the “unpredictable” persona Trump has cultivated, in some ways he is entirely predictable.

His patience has a short shelf life.

I believe he is buying time right now, specifically to allow more US troops and assets to position in the Middle East.

We wrote about the likelihood of a ground deployment here: https://www.ecresearchgroup.com/p/watch-what-they-do-not-what-they

His likely next target is Kharg Island.

Kharg handles roughly 90 percent of Iran’s crude exports. Trump has already dropped hints publicly:

“Maybe we take Kharg Island, maybe we don’t. We have a lot of options.”

Source: https://www.cfr.org/articles/kharg-island-irans-oil-lifeline-and-a-tempting-u-s-target

That’s one way to get someone to call you back after being ghosted. Cut off the power and gas to their house.

What to do as investors?

I’m mostly sitting still.

We’ve been conditioned to believe that action creates results. That’s true for many situations:

• Starting a business

• Buying assets at depressed prices

But this moment is different.

The market has recovered at the fastest pace in 100 years. Meanwhile, the risks underneath this recovery are not decreasing.

They are increasing. Every week, the geopolitical picture gets more complicated. Every day the blockade continues, the supply math gets worse.

And yet, the market seems to have forgotten that risk exists.

That’s what a bubble feels like from the inside. Everything looks fine. Prices keep climbing. The situations are deteriorating, but the market shrugs. Until one day, it doesn’t.

A bubble gets its name for a reason. Eventually, it bursts.

For now, I am doing what many smart money is doing: holding an outsized position in cash and cash-like investments. Waiting for the market to finally catch up to reality.

Everything unfolding in the Strait of Hormuz only makes me more bullish on gold over the long term.

We are looking at higher inflation ahead.

We are looking at a potential slow down in global economy from oil supply constraint.

The disconnection between risk and reward won’t last forever. It never does.

If you like my work, I invite you to share it with others.

Eric Chang

Calgary, Alberta, Canada

April 22, 2026

Copyright © 2026 EC Research Group.

No part of this publication may be reproduced, distributed, or transmitted in any form or by any means, including photocopying, recording, or other electronic or mechanical methods, without the prior written permission of the publisher, except in the case of brief quotations embodied in critical reviews and certain other noncommercial uses permitted by copyright law.

The information provided herein is believed to be accurate and reliable, but EC Research Group does not guarantee its accuracy or completeness. The content is for informational purposes only and is not intended to be a substitute for professional financial advice. EC Research Group is not a financial advisor and does not provide personalized financial advice. The views and opinions expressed in this publication are those of the author and do not necessarily reflect the official policy or position of EC Research Group. The content may be subject to change without notice and may become outdated over time. EC Research Group is under no obligation to update or revise any information presented herein.

Investments involve risks, and individuals should consult with a qualified financial advisor before making any investment decisions. Prospective investors should carefully consider the investment objectives, risks, charges, and expenses of any investment before investing.

For the past few weeks, I’ve been writing about the disconnect between reality and the stock market.

If anyone is keeping score, I’m getting a goose egg for anticipating a bigger market correction (15-20%) than what we’ve experienced since the start of the Iran-US-Israel war.

I’m not quite ready to throw in the towel yet.

Asymmetrical reward to risk

If you’ve been reading my newsletter for a while, you may know about my career in real estate.

When I meet new people, it’s easier to introduce myself as a real estate investor or developer.

After all, that’s what I’ve done over the past few years: develop infill multifamily buildings, acquire older real estate assets, and implement value-add strategies: Fix management. Bring rent on par with market. Renovate units to modernize them.

While those are visible from the outside, few people see the risk management work happening behind the scenes, as we dynamically adjust our strategies and approaches based on market conditions.

We aim to structure our real estate projects with an asymmetrical reward to risk profile.

What does asymmetrical reward to risk mean?

It means we’re looking for a combination of real estate asset, strategy, and market that gives us a higher potential return for the same amount of risk taken. Same construction build. Same price. But with a more favorable outcome over the holding period.

Here’s a real example.

We exited 3 projects over the past year. Two of those decisions came down to location.

We were monitoring new inventory being constructed in those neighborhoods. More supply creates future pressure on rent. More competition when those buildings complete.

We exited one project and rolled the capital into a different project in a superior neighborhood.

The cost of the build? The same.

But the premium neighborhood comes with higher lot prices, which naturally limits the number of new projects coming online over the next few years.

Because we rolled equity gains from the first project into the second, the higher lot premium didn’t change our total capital contribution.

With that maneuvering, we effectively lowered our risk while maintaining the same reward.

The reward: A multi-family asset that we anticipate to perform well over the 10 year hold period.

The risks: Anticipating a lower vacancy as there will be less comparable rental units competing for the same renters.

Same reward. Significantly lower risk.

That’s what asymmetrical reward to risk looks like for our investors.

Asymmetrical risk to reward

If you’ve been reading our recent newsletters, you know I’ve been extra cautious.

As a risk manager, my job is to identify potential risks and spot mispriced opportunities.

For every unit of risk we take on, I ask: what’s the associated payout?

When the downside risk to upside reward is highly unfavorable, we get conservative.

That’s exactly where I’ve been the past few weeks.

The downside risks have drastically increased since the war started. The upside reward remains relatively limited.

The upside for the global economy and stock market hasn’t changed.

The downside? There’s plenty.

Many traders are betting the war will be over soon. They’re buying up stocks. The result is a short-term short-covering rally, with hedge funds rushing in and the S&P 500 rocketing back close to its previous high.

Could this be an all-clear signal?

Possibly.

But I’d much rather wait for a bit more clarity before taking on more risk.

I’m not alone in this thinking. Famed hedge fund manager David Einhorn, who manages approximately $2.85 billion US in assets, recently wrote the following in his latest investor letter:

“It probably won’t surprise anyone that we are again putting capital preservation at the top of our priorities. With so little downside priced in, we are willing to risk missing out on a possible recovery to position ourselves to play more offense, should one of the downside scenarios materialize.”

Source: https://www.cnbc.com/2026/04/14/david-einhorn-signals-caution-as-his-hedge-fund-greenlight-prioritizes-capital-protection.html

That phrase: willing to risk missing out.

That’s where I am right now.

Will I change my mind?

Absolutely.

When there’s more certainty on the war. Whether there’s a resolution or a clear path to ensuring oil supply won’t be disrupted.

If the market breaks out of its previous high and holds, my conservative thesis is no longer valid. I’ll adjust back to looking for the market to move higher instead of playing defense.

But for now, the short squeeze dynamic is worth understanding clearly. Here are two articles worth reading:

• A short-covering rally has stocks on shaky footing. Here’s what could happen next:

https://www.marketwatch.com/story/a-short-covering-rally-has-stocks-on-shaky-footing-heres-what-could-happen-next-33acd56d

• Short Sellers Squeezed Hard as Avis Shares Rocket 150%:

https://finance.yahoo.com/markets/stocks/articles/short-sellers-squeezed-hard-avis-191835924.html

The second article is particularly interesting.

In an economy that’s slowing down with skyrocketing oil prices, does anyone genuinely believe more people will be booking rental cars?

I don’t think so.

Yet the stock has gone up more than 300% in the past month.

The risk manager in me is screaming:

Wowzers! Watch out!

I’m willing to miss a little upside to avoid getting caught in the downside.

If you like my work, I invite you to share it with others.

Eric Chang

Calgary, Alberta, Canada

April 14, 2026

Copyright © 2026 EC Research Group.

No part of this publication may be reproduced, distributed, or transmitted in any form or by any means, including photocopying, recording, or other electronic or mechanical methods, without the prior written permission of the publisher, except in the case of brief quotations embodied in critical reviews and certain other noncommercial uses permitted by copyright law.

The information provided herein is believed to be accurate and reliable, but EC Research Group does not guarantee its accuracy or completeness. The content is for informational purposes only and is not intended to be a substitute for professional financial advice. EC Research Group is not a financial advisor and does not provide personalized financial advice. The views and opinions expressed in this publication are those of the author and do not necessarily reflect the official policy or position of EC Research Group. The content may be subject to change without notice and may become outdated over time. EC Research Group is under no obligation to update or revise any information presented herein.

Investments involve risks, and individuals should consult with a qualified financial advisor before making any investment decisions. Prospective investors should carefully consider the investment objectives, risks, charges, and expenses of any investment before investing.

You could say we know how to push each other’s buttons.

To outsiders, our family dynamic might look hostile.

But when it comes down to it, we would do anything for each other.

There’s usually a gap between what people say and what they do.

My family may say things to provoke each other, but our actions point in the complete opposite direction.

The same principle applies to how I watch markets and geopolitics.

Watch what they do, not what they say

Since Trump was re-elected, I’ve been paying increasing attention to what he does versus what he says.

I came across this interview with Firas Maksad of the Eurasia Group on CNBC that laid out what he sees Trump’s next move in Iran:

https://www.cnbc.com/video/2026/04/02/president-trump-may-try-to-take-control-of-irans-oil-in-mid-april-eurasia-groups-firas-maksad.html

The core of Maksad’s argument, at the 2:45 mark:

Every time the President has chosen to deploy military assets, whether it was in the 12 day war against Iran some year and half ago, or whether it was against Muduro in Venezuela and the lead up to this war, he’s actually use those military assets once they’re in theater.

And on how to interpret the administration’s mixed signals:

There’s a clear discernible strategy here in terms of communication. […] I think it’s in the interest of the administration to try and manage oil prices, manage the markets, keep them under control in order to prosecute this war longer and further degrade Iran’s military capabilities. So if we see a lot of back and forth in terms of the administration’s signalling, it’s part of that strategy of actually trying to manage the markets. It’s not necessarily indicative of where the President is going. I’m watching the military deployment much closer than I’m actually watching and indexing what the President is saying.

That last line is the one to take point.

Watch the troops. Not the tweets.

Tonight at 8pm Eastern

Source: Google Maps

I believe the United States will try to buy time by either doing small scale bombings or making claims that Iranians are negotiating and push for a delay for another week.

This is all in preparation for a ground invasion.

In the same interview, Maksad noted that most US troops en route will arrive mid-April.

That timeline matters.

I’m watching for increased market volatility reflecting further stress and fear from investors.

As of now, it is hard to believe a conflict of this scale has not already had a more visible impact on financial markets. Historically, it would have.

We wrote about the importance of holding more liquidity during moments exactly like this one:

https://www.ecresearchgroup.com/p/do-these-when-the-market-feels-overwhelming

https://www.ecresearchgroup.com/p/cash-is-trash-but-liquidity-is-king

45% in highly liquid cash-like positions

Lance Roberts, Chief Investment Strategist at RIA Advisors, manages over $1 billion in assets under management.

In a recent interview, he shared that one of their model portfolios is currently positioned as follows:

• 20% cash

• 25% short-term treasuries

You can watch the part he talks about their liquid positions in the interview here:

https://youtu.be/37Sjc0OXKKw?si=47XkYIvWcBNm9kAe&t=4793

Combined, that’s 45% in highly liquid, capital-preserving positions.

This is not a retail investor hiding under the mattress.

This is a professional with over a billion dollars at stake, choosing patience over risk.

That choice speaks louder than any pundits on financial media.

Again, watch what they do, not what they say.

If you like my work, I invite you to share it with others.

Eric Chang

Calgary, Alberta, Canada

April 7, 2026

Copyright © 2026 EC Research Group.

No part of this publication may be reproduced, distributed, or transmitted in any form or by any means, including photocopying, recording, or other electronic or mechanical methods, without the prior written permission of the publisher, except in the case of brief quotations embodied in critical reviews and certain other noncommercial uses permitted by copyright law.

The information provided herein is believed to be accurate and reliable, but EC Research Group does not guarantee its accuracy or completeness. The content is for informational purposes only and is not intended to be a substitute for professional financial advice. EC Research Group is not a financial advisor and does not provide personalized financial advice. The views and opinions expressed in this publication are those of the author and do not necessarily reflect the official policy or position of EC Research Group. The content may be subject to change without notice and may become outdated over time. EC Research Group is under no obligation to update or revise any information presented herein.

Investments involve risks, and individuals should consult with a qualified financial advisor before making any investment decisions. Prospective investors should carefully consider the investment objectives, risks, charges, and expenses of any investment before investing.

“Dow surges 1,100 points, S&P 500 posts best day since May as hopes grow for end of Iran war”

That’s the headline on CNBC today.

A nice big UP day after being down for most of last week and the month of March.

If the market is giving you motion sickness, I hate to be the bearer of bad news:

It’s not over yet. Better get used to it.

I grew up in an emotionally unstable environment

It’s hard to explain to people who don’t know what that environment is like.

The closest example may be the Hispanic soap drama.

Yes, TV shows are dramatized. But the reality of my upbringing isn’t far behind.

What does that have to do with investing?

I consider it my training ground.

That environment prepared me for the ups and downs of emotions. It helped me develop a wider emotional range than most people.

And more importantly, it taught me how to detach emotion from fact.

How to make difficult decisions while keeping the noise at bay.

That skill is worth more than any asset itself.

A common response to dramatic emotions

Most people are familiar with the fight or flight response.

Something sudden happens. The body reacts.

But there’s a third response that rarely gets talked about. And in my experience, it’s the silent destroyer of wealth:

Freeze.

Based on my observations of many investors over the years, freezing can be just as dangerous as panic selling.

Now, to be clear: this is not about right or wrong.

We don’t truly know how we’ll respond to any situation until we’re in it.

I’d love to proclaim I’m immune to freezing. I’m not. I’ve experienced it myself.

But awareness is the first step.

If you’re feeling paralyzed by the current market conditions, here are two tips from my own hard-earned lessons.

Tip #1: When you notice you’re frozen, consider this action

Take some capital off the table, for now.

Most investors get paralyzed by the binary: buy or sell.

When the information is overwhelming and the emotions are running hot, freezing becomes the brain’s way of coping. A way to defer the decision until later.

The problem?

The market doesn’t wait.

And that delay is often what does the most damage to a portfolio.

The shift I’d invite you to make: move away from “all or nothing” thinking toward “making room and slowing down.”

Instead of forcing yourself to decide right now whether to sell an investment, consider selling a smaller portion.

Professionals call this raising cash.

Taking some capital off the table, or selling a small % of portfolio to “raise cash,” it gives us room to breathe and allow the logical part of our brain to kick in.

We wrote about how powerful liquidity is during times of volatility. You can read it here: https://www.ecresearchgroup.com/p/cash-is-trash-but-liquidity-is-king

There’s a lot of psychology behind why we get stuck between buying and selling. Our own minds work against us.

But once you know what’s happening, you can sidestep the default programming.

Taking even a small amount off the table gives us room to breathe. It allows the logical part of our brain to re-engage.

Tip #2: Ask yourself this one question

Once you have some breathing room, once the limbic system has had a moment to reach homeostasis, the frontal lobe can do its job again.

That’s when I ask myself one important question:

Would I invest in this today, given everything I know right now?

Simple. Powerful. Often uncomfortable.

Because here’s the trap most people fall into: sunk cost fallacy.

The sunk cost fallacy is the irrational tendency to hold an investment based on how much time, money, or effort you’ve already put in, rather than its current merits.

It’s the “I can’t sell now, I’m already down” thinking that keeps people holding bad positions far too long.

Asking “would I invest today?” cuts through all of that.

It resets the question to what actually matters: the present reality, not the past decision.

Fair warning: you may not like the answer.

But that’s usually exactly the answer your portfolio needs.

Have you noticed your emotions with your investments lately?

It’s worth reflecting on.

Investing is emotional for most people. Because money is emotional for most people.

But it doesn’t have to be.

Money is a tool. It’s energy. It moves.

And the investors who can observe their emotions without being controlled by them, those are the ones who act when others freeze.

If you’ve been feeling the weight of this market lately, I hope these two tips give you something to work with.

The volatility isn’t going away.

But your response to it? That’s something you can train.

If you like my work, I invite you to share it with others.

Eric Chang

Calgary, Alberta, Canada

March 31, 2026

Copyright © 2026 EC Research Group.

No part of this publication may be reproduced, distributed, or transmitted in any form or by any means, including photocopying, recording, or other electronic or mechanical methods, without the prior written permission of the publisher, except in the case of brief quotations embodied in critical reviews and certain other noncommercial uses permitted by copyright law.

The information provided herein is believed to be accurate and reliable, but EC Research Group does not guarantee its accuracy or completeness. The content is for informational purposes only and is not intended to be a substitute for professional financial advice. EC Research Group is not a financial advisor and does not provide personalized financial advice. The views and opinions expressed in this publication are those of the author and do not necessarily reflect the official policy or position of EC Research Group. The content may be subject to change without notice and may become outdated over time. EC Research Group is under no obligation to update or revise any information presented herein.

Investments involve risks, and individuals should consult with a qualified financial advisor before making any investment decisions. Prospective investors should carefully consider the investment objectives, risks, charges, and expenses of any investment before investing.

The Federal government has recently released its plan on public service job cuts across departments.

According to BNN Bloomberg:

The Canada Strong Budget 2025, released in November, outlined a plan to reduce the size of the federal public service by 28,000 positions by 2029, including 16,000 full-time equivalent (FTE) positions eliminated.

Nearly 15,000 full-time equivalent positions will be cut in federal departments over the next three years, as part of the federal government’s plan to find $60 billion in savings by 2029.

Source: https://www.bnnbloomberg.ca/business/2026/03/23/heres-where-15000-federal-public-service-jobs-will-be-cut-over-3-years/

We wrote about the “good times” won’t last

About a year and a half ago, we wrote about the dramatic increase of Federal employees over the past decade.

This chart showed the trend:

Source: The Hub

You can read it here: https://www.ecresearchgroup.com/p/reading-tealeaves

That bloat was one of the biggest driving forces behind the real estate gains in cities like Ottawa for many years.

We predicted the tailwind would end with a change of government.

We anticipated a different government in Ottawa at the time.

But when the problem of a bloated government becomes large enough, not even the Carney government can look the other way.

Well operated businesses monitor their KPIs

Peter Drucker, the father of modern management, once said:

What gets measured gets improved.

KPIs, or Key Performance Indicators, are simple tools with a profound impact on any organization or individual seeking to make progress.

A health coach would encourage their clients to track their sleep, diet, and exercise.

A financial advisor would help their clients track their total debt, income, net worth, and annual portfolio returns.

As citizens, we should expect the same discipline from the people spending our tax dollars.

Unfortunately, few governments or leaders want to be measured against anything that holds them accountable.

Since they are not going to do it for you, I will introduce one simple KPI worth tracking.

139 Canadians per Federal Employee

The metric is simple:

The number of Canadians for every Federal employee.

The lower the ratio, the less efficient the government.

It means it takes more Federal employees to provide services for the citizens.

On the other hand:

The higher the ratio, the more efficient.

139.

That is the number to remember.

Between 2015 and 2017, the Canadian Federal government was able to function effectively with 139 Canadians for every single Federal employee.

Since then, the efficiency has quietly collapsed.

The ratio fell from 139 all the way down to 111.

A 20% decline in efficiency, with no measurable improvement in the quality of life for Canadians.

I put together a table illustrating what a bloated government looks like from the lens of Federal payroll numbers:

Think about that for a moment.

More employees.

Bigger government.

Larger deficits.

And the average Canadian is no better off than we were in 2015.

Trending in the right direction

By 2029, the Federal government is projecting a reduction of 28,000 employees from the payroll.

Accounting for slower population growth, the ratio could improve to approximately 129 Canadians per Federal employee.

Still short of the 2015 benchmark at 139.

But at least the trend is finally moving in the right direction.

Here is an interesting data point for comparison.

The United States government operates with 2.4 million Federal employees serving a population of 342 million.

That puts the American citizen to Federal employee ratio at 143.

In other words, the US Federal government currently runs more lean than Canada does, significantly more.

That should give every Canadian taxpayer pause.

The cuts being announced are a step in the right direction.

But a step is not a destination.

139 is the number we want back.

Watch it closely.

Better yet, forward this newsletter to your MPs.

Hold them accountable.

Until we get back to 139.

If you like my work, I invite you to share it with others.

Eric Chang

Calgary, Alberta, Canada

March 24, 2026

Copyright © 2026 EC Research Group.

No part of this publication may be reproduced, distributed, or transmitted in any form or by any means, including photocopying, recording, or other electronic or mechanical methods, without the prior written permission of the publisher, except in the case of brief quotations embodied in critical reviews and certain other noncommercial uses permitted by copyright law.

The information provided herein is believed to be accurate and reliable, but EC Research Group does not guarantee its accuracy or completeness. The content is for informational purposes only and is not intended to be a substitute for professional financial advice. EC Research Group is not a financial advisor and does not provide personalized financial advice. The views and opinions expressed in this publication are those of the author and do not necessarily reflect the official policy or position of EC Research Group. The content may be subject to change without notice and may become outdated over time. EC Research Group is under no obligation to update or revise any information presented herein.

Investments involve risks, and individuals should consult with a qualified financial advisor before making any investment decisions. Prospective investors should carefully consider the investment objectives, risks, charges, and expenses of any investment before investing.