By Michael O’Neill
“The Big Bang Theory was a long-running sitcom about eccentric scientists and a struggling actress. It ended in 2019 after 12 seasons.”
The Israeli version of The Big Bang Theory is far less funny. It’s about pre-emptively eliminating existential nuclear threats from hostile neighbors. The first “big bang” came in 1981, when Israeli jets destroyed Iraq’s unfinished reactor near Baghdad.
That foreshadowed Operation Rising Lion aimed at Iran which began June 12–13. Israeli aircraft hit multiple nuclear, military, and command sites, and reportedly eliminated key scientists and generals.
Iran didn’t take it lying down. Once they got over their surprise, they launched Operation True Promise III, unleashing missiles and drones on Israeli cities, including Tel Aviv and Haifa.
To no one’s surprise, Trump jumped in with his usual blustery flair. He demanded Iran’s surrender and even threatened to assassinate Supreme Leader Ayatollah Khamenei. Khamenei then warned Trump of “irreparable consequences,” which may be a threat to the 50,000 US troops within range of Iran’s missile arsenal.
The Big Bust
The 2025 G-7 Leaders Summit in Kananaskis, Alberta didn’t accomplish a whole lot. For starters, it was really just a G-6 meeting after Trump bailed after dinner on the first day, ditching scheduled meetings with the Prime Ministers of India and Japan and the President of Mexico. Trump’s reasons for leaving were fluid, but the 79-year-old with the diplomacy of a wrecking ball was probably just bored with trying to make nice with a bunch of world leaders who think he is an ass.
The meeting ended without a joint communiqué, which was due in part to Trump’s support for Russia, who Trump claims was unfairly ejected from the G-8 in 2014.
The Big BoC Worry
Bank of Canada Governor Tiff Macklem’s June 18 remarks stated the obvious—US tariffs on Canadian exports—particularly autos, steel, and aluminum—have sharply curtailed shipments, hammered business confidence, and triggered layoffs in trade-sensitive sectors. Macklem estimates over two million jobs are tied to US-bound goods exports, and that employment losses could spread if demand weakens further.
Inflation, however, is murky. Tariffs suppress growth (disinflationary) but also raise input costs (inflationary). Add in supply-chain frictions, Canada’s retaliatory tariffs, and fading carbon tax cuts, and you get a tug-of-war in price signals. Underlying inflation rose slightly in April, prompting the Bank to hold its policy rate at 2.75% after seven cuts this year.
If tariffs persist and the economy deteriorates without stoking broader inflation, the Bank may resume rate cuts. But if cost pressures rise, it will hold steady. Much depends on whether a new Canada–US trade pact materializes.
A new Canada–US trade pact is anything but certain. Trump clearly believes that he has the upper hand, and he regurgitated his Canada–51st state comments on the flight home from the G-7. He threatened “a lot of money” in tariffs without a quick deal, dismissing Carney’s push for something more “complex” by saying, “We need speed.”
The Big “Stupid”
Trump reverted to name-calling to express displeasure with Fed Chair Jerome Powell’s monetary policy, calling him a “stupid person.” That comment was echoed by the “resident stupid” residing in Number One Observatory Circle. J.D. Vance is to Trump what Odie is to Jon Arbuckle in the Garfield cartoon.
Powell is far from stupid, but he may be deaf, at least to the childish retorts from a 79-year-old blustering bag of orange spray tan occupying the Oval Office.
Trump’s insults did not stop him (and his colleagues) from voting unanimously to leave interest rates unchanged at 4.50% today. And, in what Trump may construe as “flipping him the bird,” the FOMC adopted a hawkish bias to their outlook by raising inflation and unemployment forecasts while leaving rate cut projections unchanged at 2 for 2025.
The Big Short
The prospect of soaring US deficits fueled by Trump tax cuts combined with rising recession risks and higher inflation after tariffs take a bite out of consumer discretionary spending has made the greenback about as popular as Trump at a G-7—ok, maybe not that bad. It doesn’t mean it’s the end of the greenback’s reign as the world’s reserve currency, but it does open the door slightly for alternatives. The latest bout of geopolitical drama would normally have sparked widespread US dollar safe-haven demand, but that demand has been tepid. Maybe the US dollar is being viewed as the problem, not the solution.
The Big Loonie Dilemma
The Loonie has jumped aboard the bearish dollar bandwagon and rallied over 7.5% since Trump’s inauguration. The rally, while modestly impressive, still lags that of the US Dollar Index (DXY), which has lost 10%. The short-, medium-, and long-term technical indicators all suggest further gains. However, the elevated risk that a US–Canada trade war drives the economy into a recession cannot be overlooked. The trend may be your friend, but the fundamentals scream “Caution,” and that’s what hedging was invented for.
The current economic Big Bang Theory of unpredictable and volatile markets evokes images of Sheldon Cooper rapping on his neighbor’s door saying, “Penny, Penny, Penny.”
