Is Canada beginning to disintegrate?

Key Markets report for Wednesday, July 9, 2025

In yesterday’s report I touched upon President Trump’s stated intention to make Canada the 51st state of the United States. It may seem hard to believe that he is serious about this, but Trump himself never suggested otherwise. Although events in Ukraine and in the Middle East have overshadowed the question of Canada over the last few months, the relations between the US government and Ottawa have become noticeably tense.

Discontent in Canada

But Trump is far from being the only challenge to Canada. In ab X thread just yesterday, Canadian podcaster Shaun Newman highlighted Premier Smith’s activism with respect to the future of Alberta and its status in Canada. Smith recently announced that she’d spend this summer touring Alberta to hear from the people of the province. But in addition to listening, she is also bringing her own message to the people, and the message should shake the federal government in Ottawa and Prime Minister Mark Carney to their core. In this short video clip, Alberta’s Premier Danielle Smith stated that,

“Our economy has been under attack for most of the last ten years. Frankly, off and on for decades before that; not by a foreign country or by the world economic forces. No, Alberta’s biggest threat to our prosperity and growth has come from our own nation’s capital.”

Smith continued along the same line, stating that,

“We’re not just losing investment, we’re losing trust. … Alberta has been treated unfairly for decades… We’ve built roads, railroads, power, jobs and prosperity for this country. Yet, we’ve been told to keep quiet and be grateful, while sending $20 billion a year more to Ottawa than we’ve received back in funding each year.

In fact, since 1980, Alberta has contributed $635 billion more in Federal taxes than we receive back. That means, well over half a trillion dollars went directly from Alberta to fund other provinces.”

Smith then listed Alberta’s grievances:

“Ottawa’s Bill C-69 killed several major Alberta pipeline and resource projects. Their West-coast export ban (Bill C-48) specifically blocked Alberta oil access to world markets. Their excessive industrial carbon taxes and the new oil and gas emissions caps are designed to keep our… oil and gas reserves in the ground. And net zero mandates from everything from electricity to vehicles are causing the cost of living to increase, business costs to soar, and are even endangering the stability of our power grid in the dead of winter.

And the effects on Alberta’s economy have been staggering. In just the last ten years alone, more than $500 billion… in global investment capital desperate for our resource sector has disappeared. It walked away from Alberta and Canada. Instead, it’s headed off to Texas, Asia and the Middle East; places that welcome resource development and jobs. That cost Alberta and Canada quite literally hundreds of billions of GDP. Corporate taxes, resource royalties, our health care, education and public infrastructure…”

Smith is preaching to the choir

Having become a relatively frequent visitor to Alberta in the last three years, it’s become obvious to me that Smith’s message will not fall on deaf ears. Many of the people I met there expressed some version of these exact grievances. They were not frustrated as much by the gap between Alberta’s contributions to the Federal budget and what the province received in return as they are with the frustrating red tape imposed by Ottawa, which is suffocating development and making it hard for the businesses in Alberta to develop, generate revenue and create employment.

This is the silent popular discontent which Trump’s government could exploit to their own ends. While Danielle Smith isn’t promoting the idea of Alberta becoming part of the United States (she’s ostensibly pushing for greater sovereignty for Alberta within the Canadian confederation), many Albertans believe their future lies in joining their neighbour to the South.

That’s how Yugoslavia started to disintegrate

The rhetoric coming from Alberta is eerily reminiscent of what we experienced in former Yugoslavia when it began to disintegrate. Yugoslavia consisted of six federal republics and two autonomous provinces of Serbia. The imbalances that fueled the popular discontent, especially in Slovenia and Croatia were the same as those heard today from Alberta: we were contributing much more to the federal budget than we were getting back from it, in effect financing the less prosperous republics. When these issues began to be brought up in official discussions, the reaction from Yugoslavia’s federal government in Belgrade was to crack down on “separatist” movements and attempt to hold the country together by force.

Readers of this newsletter will not be surprised to learn that Belgrade’s chief political patron was none other than the British foreign policy establishment which at the time dominated the “International Community’s” response to the Yugoslavian crisis. This same establishment is now the chief political patron to the government of Mark Carney in Canada.

All roads lead to London

Unless they upgraded their playbook and approach to international relations, we can expect that Ottawa’s approach will be similar to Belgrade’s, campaigns of dirty tricks included. In fact, it appears that they are already doing exactly that. Just yesterday, Canada’s National Post ran a story titled, “Canadian soldiers charged in alleged anti-government terror plot,” with the subtitle that read, “At least three of the four are accused of taking 'concrete actions to facilitate terrorist activity'“

If Canada’s armed forces have become a threat to Canada’s federal government, then the government might have to orchestrate a purge of the armed forces to make sure that the officer core is loyal to the federal government. Once that’s taken care of, Belgrade Ottawa will be in the position to stomp out Alberta’s separatism, by force, if necessary.

It could turn out different this time…

The difference between Yugoslavia and Canada is that the latter shares a border with the United States. While the Americans were involved in the Yugoslavian crisis, they played only a minor role and tended to defer to London for strategy and guidance. If Canada goes the way of former Yugoslavia while Donald Trump is still in office, the Americans will feel compelled to defend the freedom, democracy and human rights of their Albertan brothers and sisters and possibly even give them the ultimate degree of protection of making Alberta part of the United States. For extra protection of democracy and human rights, British Columbia, Saskatchewan, Yukon and Nunavut might need to be liberated as well.

Adding Canada to the Key Markets report

If the events escalate over the coming months, it should be interesting to see how they might impact Canadian dollar, Canadian government bonds and the equity markets. Accordingly, I’ll endeavor to develop a set of trend following strategies for each of these markets. Given that Canada is such an important producer of commodities, I might also add the Goldman Sachs Commodity Index to the report. It won’t be tomorrow, but I’ll do so over the next few weeks.

To learn more about TrendCompass reports please check our main TrendCompass web page. We encourage you to also have a read through our TrendCompass User Manual page. For U.S. investors: an investable, fully managed portfolio based on I-System TrendFollowing is available from our partner advisory (more about it here).

Today’s trading signals

With yesterday’s closing prices we have the following changes for the Key Markets portfolio: