The change

401-KEELE modified

Location: Keele Street & 401, Toronto

Jennie asked me how she should borrow, now that her mortgage has come up for renewal. “They’re offering 2.4% for a variable-rate,” she said, “over three years. Or I can get a fixed one for 2.96%, for five years? Whaddya think I should do?”

That was easy. Lock in, Jen, I said. In 2019 you’ll look like a flipping genius.

How defeated all those people must feel who drag their sorry, doomer bottoms here day after day to tell us Canada is just like Japan, that rates can’t go up or the country will collapse, that the US economy’s in tatters or real estate in 416 or YVR will go up forever. Nothing’s been going their way lately, and things fell apart completely on Wednesday.

For months this pathetic blog’s been telling you the American economy’s in renaissance, that rates have but one direction in which to travel, and the peak for housing prices is already in the rear view mirror. The evidence is everywhere, so you might as well get ready.

Jobs are sprouting at the rate of more than 50,000 per week in the US – a pace in place now for six months. Over a million new positions have been created in that time (while Canada added a few new drywallers and condo marketers), dropping the unemployment seriously below ours. No wonder consumer confidence has jumped. This week it hit the highest level in seven years.

House prices are still rising – 9.3% annually across the States right now – down from the torrid 13% rate of a few months ago, thanks to higher mortgage rates. But that’s a good thing, as the recovery was so rapid bidding wars have erupted in most major cities, raising bubble fears.

Corporate profits are vastly exceeding projections. They’re up about 11% so far in 2014, and to date 77% of all big S&P companies reporting quarterly earnings have trumped analysts’ expectations. More importantly, sales are also up and, as you know, it’s all kept stock market values in record territory for the entire year. The market has not had a 10% correction since 2011.

And this week came word the American economy grew by 4% in the second quarter. That’s elephantine. It blew past the most optimist economists. It proved the 2.1% decline in the first three months of the year was directly attributable to the Winter from Hell. And it made idiots of those who looked at an aberrant number and concluded the US was sliding into a depression rivaling theirs.

Of course, economic growth, rising profits, more jobs and surging consumer confidence pretty much guarantee inflation. And that means higher rates.

But don’t stop there. Let’s bring in Janet. As the most powerful woman in the world, Mrs. Yellen just about guarantees that Jennie’s decision to lock in her mortgage (she listened to me) is brilliant. Janet Yellen is the boss of the Fed, the US central bank, which has just decided for the sixth time to reduce its stimulus spending, which we affectionately know as QE.

Your will recall the doomers coming here last year to say that America could never reduce its government bond-buying program because it was hooked on printing money and would crater without it. Pshaw. Too much bullion-licking. The Fed has relentlessly and predictably trashed the stimulus program by tapering back since last December. Where they bought $85 billion a month in bonds a year ago (to lubricate the economy and keep rates low) it will now be $25 billion. By Thanksgiving it will be zero.

What does that mean? Well, this, for starters:

BONDS modified

Bond yields rose on the news, and will likely continue. The five-year Canada bond popped its weasely little head back above the 1.5% level, and I’d say will be about a full percentage point higher by this time next year. On the Fed news, US Treasuries reacted, with the price falling and yields rising. That makes sense. After all, demand for bonds in the US has now fallen by $65 billion a month, so why wouldn’t prices fade? And there’s more slack to come.

So here’s the deal. The US economy has been powering ahead even as government support is scaled back. Jobs are erupting, as are profits and attitudes. The Fed knows this will lead to inflationary pressures, which means there’s a 100% chance its stimulus spending will soon end entirely. The bond market smells it, and is already reacting.

Higher rates will likely throw some water on equity markets, while higher yields will knock back the prices of fixed income assets like bonds, preferreds and (by association) REITs. Finally. For a few months now, almost all financial assets have been looking expensive, so any dip would be a welcome reprieve for those with cash.

Then, in 2015, the Fed will raise its own key rate. I’ll leave you to imagine what that will bring.

Just be happy you didn’t buy a pre-construction condo.

169 comments ↓

#1 Crowdedelevatorfartz on 07.30.14 at 5:07 pm

I hope those interest rates don’t “Bury” Erin……………

#2 Happy Renting on 07.30.14 at 5:11 pm

Have cash, will be watching for the sale. :)

#3 Stoopid Idiot on 07.30.14 at 5:12 pm

http://usawatchdog.com/dangerous-housing-market-manipulated-ponzi-style-boom-fabian-calvo/

Dangerous Housing Market-Manipulated Ponzi Style Boom-Fabian Calvo

Real Estate expert Fabian Calvo says boom bust housing crisis is on the way. Calvo explains, “There are a lot of outlier indicators that show the run-up to another big boom in housing prices. If you look back and consider my theory of the ‘pump and dump’ in March of 2012, when I said housing prices would shoot through the roof, housing prices are up over 26%.
We are entering one of the most dangerous periods of the housing market with the manipulated, Ponzi style booms similar to what we say in Dow Jones and the stock market.”

Fabian Calvo? Seriously? — Garth

#4 Omg on 07.30.14 at 5:16 pm

Of course there will be all kinds of reasons put forward here as to why all the evidence for continuing US recover is flawed, cooked or just plan lies.

Funny how those same doomers will accept without question any number that shows a bit of weakness.

Discount the US at your peril.

#5 Exiled on 07.30.14 at 5:18 pm

To Sir Turner: Awaiting for your counter strike:

#6 Andy on 07.30.14 at 5:24 pm

As I asked in last article “Erinomics” as well,
If Fed increases rate, is Canada obliged to follow suit? Can someone pls tell me?

We will. — Garth

#7 Tony from Calgary on 07.30.14 at 5:29 pm

“How defeated all those people must feel who drag their sorry, doomer bottoms here day after day to tell us Canada is just like Japan, that rates can’t go up or the country will collapse, that the US economy’s in tatters or real estate in 416 or YVR will go up forever. Nothing’s been going their way lately, and things fell apart completely on Wednesday.”

Wait, what?

I’m a huge doomer and I’ve been coming here to say rates will absolutely go up and that 90% housing corrections are possible (even in the 416 or YVR) if we use history as our guide.

Are you lumping my kind of (deflationary) crazy in with the house floggers / hyperinflationists now Garth? That’s just offensive.

– TFC

PS – the whole developed world is going the way of Japan eventually… demographics and debt, dontcha know. And the US is in tatters – it’s just the most attractive tattery horse in the glue factory. Better to be in USD than Euro, Rubles, Yuan, Yen, Rupees, Dinars, Pesos, Baht, etc. etc. Heck, even better to be in USD than gold!

#8 Son of Ponzi on 07.30.14 at 5:32 pm

#255 Taber on 07.30.14 at 4:46 pm
And here is the bylaw: “the owner is responsible for part of the water delivery pipe and for the entire sewer pipe that connect his property to the public system.” i wonder how many homeowners know this!
——————
Yep, not something the RE sales person will tell you.
I, also found out the hard way.

#9 DocInWaitingRoom on 07.30.14 at 5:32 pm

Even a 1 % increase is 5k on 500k mortgage a year. With salaries stagnant dropping jobs and layoffs should be fun for those renovators and jokeville buyers. Add in the property tax increases and inflation over past year and things will get fun when the real estate data comes just in time…

#10 Piano_Man87 on 07.30.14 at 5:37 pm

As I asked in last article “Erinomics” as well, If Fed increases rate, is Canada obliged to follow suit? Can someone pls tell me?

We will. — Garth

Can you explain why? I’m curious to know.

#11 Victor V on 07.30.14 at 5:45 pm

http://m.theglobeandmail.com/report-on-business/economy/housing/five-year-mortgages-holding-firm-but-just-wait/article19841876/?service=mobile

…economists are still expecting five-year fixed mortgage rates to creep up, they just don’t know exactly when. Mr. Alexander now expects five-year bond yields to creep back up to about 1.95 – where they were at the end of 2013 – by the end of this year. He then sees them rising by about 90 basis points next year, largely during the second half of the year.

#12 Smoking Man on 07.30.14 at 5:46 pm

Ha, Garth why don’t you through up the one year chart…

Andy, Canada won’t till we get wage inflation, which requires a tight Labour market..

#13 Son of Ponzi on 07.30.14 at 5:47 pm

It all makes sense now.
Interest rates will start climbing and the Banks will no longer finance Pre-sales.
That’s why the developers are marketing in China.
Cash will once again be king.
So it was written and so it shall be done.

#14 Shawn on 07.30.14 at 5:52 pm

With U.S. recovering…

One might consider buying shares in the U.S. homebuilders or the U.S. banks or ETFs of these.

Remember 3 or 4 years ago when all the doomer talk was that the big U.S. banks were still “technically” bankrupt, even after the bailouts? Most doomers have gone quiet on that score.

They also thought the U.S. government was bankrupt. Hilarious.

#15 Ben on 07.30.14 at 5:56 pm

Garth – I hear Carney has refused to come out of the bathroom all day at the BoE. He rushed in when the US growth figures hit and keeps demanding more rolls.

#16 pinstripe on 07.30.14 at 5:56 pm

In the USA, one in three people have a collection agency on their tail.

Many people were put to work where their role is a Collection Agent.

Yes, the US economy is growing.

That’s right. By 4%. — Garth

#17 Montellino on 07.30.14 at 6:02 pm

Would we ever be in a position where Canadian variable rates would remain low for a prolonged period of time despite us following US on the fixed rates?

Unlikely. Central banks closely correlate rates to ensure exchange rate stability. — Garth

#18 mitzerboy on 07.30.14 at 6:03 pm

thanks garth I needed to hear the truth/facts …

oh oh Saskatchewan be careful…too late

#19 asp on 07.30.14 at 6:03 pm

No rush: ” … the Fed thinks that the downside risk to the economy is getting smaller, but that it still has room to keep rates low in order to push improvements in the labour market.”

Note that Janet sees the downside as smaller, not negative.

http://www.ft.com/intl/cms/s/0/cb40ba3c-1813-11e4-a6e4-00144feabdc0.html

#20 Rainclouds on 07.30.14 at 6:06 pm

In Boston for a week, construction everywhere. Walk past the new millenium residential tower going up downtown, 60 stories, completion 2016. And yes there are trains in the basement (orange/green subway lines) connecting residents.

Real estate prices in beantown still less than dampcouver and they actually have a diversified economy and a catchment of over 6 million.

Gotta shake your head at the insanity in canada. Sooo glad i bailed…

#21 Sheane Wallace on 07.30.14 at 6:14 pm

Spot on on corporate profit, Dow will go way up.

Whatever they report as growth is due to inflation.
Just understate inflation and deep depression converts magically into growth. At the expense of the savers and the people on fixed income.

Internal US market is doomed, growth is due to inflation as the jobs are low paid service jobs.

Don’t bet against american corporations, correct.
But american market is doomed.

I appreciate the intend but presenting inflation as growth is simply wrong.

But of course, I am not paid to make statements in that regards, if I am I would be much better then these automated comment posting machines on Internet.

Did you know that on Mainstream media blogs the majority of the comments are computer generated?

Now you know.

That sure sounded desperate. Say, are you automated? — Garth

#22 Retired Boomer - WI on 07.30.14 at 6:15 pm

Well, BRING ON the higher rates already. I could use some “higher interest rates” on those dollars that have been treading water in short term holdings.

I could use a break on the price of some stocks, and funds as well. Took some profits off the table a couple of weeks ago, plumped up the check book, and have some idle investment dollars looking for a new home. Yeah, a 10% equity price correction wouldn’t break MY heart here.

As for recent “new buyers” of RE, good luck suckers. Ya took your chances now pay your dues! This Boomer say those 8.75% and higher rates years ago, and we might someday return to normal, whatever the hell THAT might mean.

Here we fight over raising the stupid gas tax from the .18 fed level it has been stuck since 1993. Too bad gas PRICES weren’t stuck there. We need a $1 a gallon increase so we can share the pain our Canadian neighbors pay now.

WI price currently $3.47 a US gallon (3.89 liters for those who can’t do math). $4.47 would not break the bank, might even sell a few more KIA’s. Nothing wrong with using a little less non-renewable gasoline is there?

Whether global warming is real, or BS I won’t say, but I do know when cheap gasoline is gone, it IS gone!

May as well raise taxes too, as long as people spend money like its going out of style, let the politico’s grab a bit more of it!! You surely shouldn’t be trusted with it!!

#23 Italians love real estate on 07.30.14 at 6:18 pm

I guess we will have to see if pre construction buyers if condos will be remorseful as Garth predicts.

Seems to me I have heard that prediction before, here on this blog for the past 6 years or so.

You might be right this time but if not I am sure the mantra will continue.

In any event the love affair with the Universal Torontonian obsession continues unabated

#24 Sheane Wallace on 07.30.14 at 6:19 pm

I will bet that these 4 % will turn out to be 1.5 or 2 which will still be decline of 1% for the first half of the year basis without counting the inflation, the food inflation in US is above 10 % for the first half of the year!

#25 Josh Renning on 07.30.14 at 6:20 pm

When it comes to bond yields and interest rates, we are closer to Japan levels than ever before.

20 years ago Canada was at 10.00%+ mortgage rates and even in 2000 during the last economic boom times we were at 8.25% mortgage rates.

The numbers don’t lie and if we see 5.00% 5 year mortgage rates they will not last long. Down they will go again when the economy weakens and slips into a recession or worse.

Doomer drivel. — Garth

#26 Sheane Wallace on 07.30.14 at 6:21 pm

The revised decline for the 1st quarter is 2.9 % not 2.1%

Not any more, as if anyone cares. — Garth

#27 Son of Ponzi on 07.30.14 at 6:22 pm

Talked to [email protected] today about my GICs.
She said: Keep them liquid. Interest rates will be rising.
Garth and [email protected] are in sync.
All is good, blog dogs.

#28 harden on 07.30.14 at 6:24 pm

“while Canada added a few new drywallers and condo marketers”

#29 Sheane Wallace on 07.30.14 at 6:29 pm

That sure sounded desperate. Say, are you automated? — Garth
….
I might be but quality is much higher…

#30 David in Calgary on 07.30.14 at 6:33 pm

Quote from Laurie Itkin DailyWorth:

“That’s why I feel sad when I read articles about the large numbers of millennials who are shunning the stock market and keeping their money in cash. It’s a mathematical fact that you can’t grow your money by keeping it in a mattress or in a bank account earning close to zero percent. But according to a recent Wells Fargo study, only half of millennial women agree that the stock market is the best place to invest for retirement and only nine percent are saving at least one-tenth of their income.”

Read more: http://www.dailyworth.com/posts/2791-how-to-become-a-millionaire-on-your-own/#ixzz38zerZUic

#31 JustMe on 07.30.14 at 6:34 pm

http://www.marketanthropology.com/2014/06/bubble-bubble-toils-troubles.html

In an effort to keep interest rates low during and directly following WWII and avoid another chapter of the near-view Great Depression, the Fed purchased all available short-term US Treasuries and virtually all long-term US Treasuries from the market starting in April of 1942.

the market climate in the 40’s is described as being so sensitive and suspect of the Fed and Treasury’s very visible hand, that the entire equity market rally (150+%) from the April 1942 low through the cyclical high in 1946 was viewed with great skepticism and likely to end with another pronounced economic contraction.

What happened in 1946 when the Fed and Treasury stepped away from their extraordinary support of the Treasury markets? Similar to the air pockets experienced with the Fed pauses in QE I and QE II, the equity markets swiftly revalued expectations. From our perspective a similar fate awaits the current equity market rally,

In the mid to late 1940’s when inflation started strongly pulsing through the system, Treasury investors largely ignored the data for the sake of the safe haven shores of the Treasury market.

Although a contraction in the US equity markets has so far failed to materialize, we do expect one to gain traction as the Fed steps further away from their extraordinary measures this fall. Similar to expectations in the mid to late 1940’s, we anticipate that investors will continue to support the Treasury market even in the face of inflation

In the meantime, we continue to like long-term Treasuries and the commodity markets relative to equities – headlined by the precious metals sector that should receive a disproportionate bidding as inflation seeps and the equity markets stumble.

#32 Josh Renning on 07.30.14 at 6:36 pm

Interest rates, bond yields and mortgage rates falling by 60% to 80% in 20 years is what happened and is not made up fiction or bad news trying to scare people.

I can’t help it if people can’t handle the truth and today’s economic reality.

80% lower rates. Riiight. Please step away from that keyboard, sir. — Garth

#33 Landlord on 07.30.14 at 6:41 pm

Hi Garth,
With rising rates is it good for Canadian Bank Stocks because they will have wider spreads on their lending rates?

No. — Garth

#34 Retired Boomer - WI on 07.30.14 at 6:45 pm

People ask, “Will the good times continue?” I think what were the ‘good times’??
They were all OK in my memory, short term pain, short term euphoria.

No times have EVER stood still for very long. What we saw is eventually repeated, not quite exactly, but it rhymed.

So, where are we going next? Stay Tuned!

#35 Smoking Man on 07.30.14 at 6:53 pm

I’m with Garth on the 4% yet it will be revised down.. Don’t matter…

When your starting from such a low point.

How many trillions did it take lol…

Mind you, my last trip to Vegas in may, it was very busy.. Like 2005 and 2006.

Re garth statement Re over night, currency analogy..

Garth, where does Prozac want are dollar…

I stand firm.. No overnight spike even if USA manages to do it.. We are already. 5% above them anyway.. They got some catching up to do…

#36 WallOfWorry on 07.30.14 at 6:53 pm

There is no doubt that there is some recovery in progress. However Garth..I would be careful to call victory. The 1st quarter GDP was -2.9% (call it 3) and the 4% posted today nets out to slightly positive. So…if 4% is elephantine why did the market not rejoice? If you dig into the numbers you will see increase in inventories to the tune of 1.7% of that 4. Also…you cant deny that the job growth is in lower paying service jobs…the fact still remains that the middle class is getting squeezed. Also…in terms of the wealth effect from QE…it is the upper class who are mostly invested in the market…the retail investor is sitting mostly in cash and hasn’t enjoyed the stock market gains. Just saying….

#37 Smoking Man on 07.30.14 at 7:01 pm

O oh Argentina just defaulted, bank I am Portugal 5 billion dollar loss….

Wonder what’s going to happen to the above chart when the Canadian safe haven bond market opens in the am..

Sorry basement dwellers..

#38 Mark on 07.30.14 at 7:04 pm

Let’s not kid ourselves, declines in Canadian RE are going to continue for years as we’re only a year into such. BoC policy rates are, at worst, on hold, and most likely are going down. The only way that rates are going up in the next 4-5 years in Canada is for spreads to expand against RE-specific collateral.

The US ‘recovering’? What a joke. Most of the GDP “growth” was simply due to inventory build.

Jobs. Profits. Sales. Confidence. House values. Productivity. Fed policy. Fell free to explain away all US indicators. I’m fascinated. — Garth

#39 armpit on 07.30.14 at 7:08 pm

Folks….inflation had already begun. It is slow moving, and creeping upwards. When it gains speed, it will be damn hard to slow it down. It may take years to stop it, and then lower it (as in the 80’s).

By then the housing market will correct. The million dollar question is….how much?

#40 Josh Renning on 07.30.14 at 7:14 pm

When someone does not like the truth they call them names and then sensors them.

It is the same old thing over and over.

When you are truthful, I will listen. — Garth

#41 Josh Renning on 07.30.14 at 7:19 pm

5 year mortgage rates were 11.75% in 1992-1993 and now in 2014 they are 2.89% for 5 year mortgage rates.

This a 75.40% decline in 5 year mortgage rates 11.75%-2.89%=8.86%/11.75%=75.40%.

I know when people act like they don’t understand but they do understand.

Rates are not going to 1%. — Garth

#42 Blobby on 07.30.14 at 7:22 pm

Hi.

So, I understand that the US will be raising their rates soon, and that the bond market will be pushing up fixed rates in both countries.

And I understand that to stop exchange rates getting completely off-whack, Canada pretty much needs to do what America does.

BUT – What I dont get is what happens when all this happens, if (when?) it causes property prices to drop (which due to people being over leveraged will negatively effect Canadas economy as a whole) – correct?

So wouldn’t then in Canada, we’d need to force our base rate back down again to stop our economy from going into the toilet.. But we wont be able to, without causing our exchange rates to go out of whack…

So then we’re stuck with rising rates nuking our property market (and presumably our economy due to the amount of debt people are in?)..

What happens to our economy up here at this point? What can the feds do? They wont be able to lower rates without the US doing the same?

Are we screwed? How could this end up being anything other than a huge crash/bang/wallop? (especially if the BoC can do nothing about it realistically?)

Rates will rise gradually but relentlessly. House prices will stagnate and eventually decline. Over-leveraged people will have to sell, pushing values lower in many markets. Surely this is predictable, since asset values and aggregate debt cannot be allowed to rise steadily when incomes are not. — Garth

#43 Andy on 07.30.14 at 7:26 pm

Sheane Wallace
#21

Are you spending evenings with Rob Ford to suggest that all these well articulated comments are automated?
Are you ok bro?

#44 Bob Copeland on 07.30.14 at 7:26 pm

I love your writing Mr. Turner. I have to ask if you consider the full time jobs that are being replaced by part time service jobs in the states? Are you aware of the 90 million people “not looking for jobs” that are not counted in that unemployment number? Do you think about the $1 Trillion dollars handed out through 84 federal welfare programs when you say America is coming back? Have you factored in that Pelosi says welfare is the best stimulus program and that every $1 creates $1.84 in GDP? Shouldn’t we subtract that amount? Do you consider the 90 thousand illegal children being brought in THIS year? (Govt numbers) How many schools do we need to fund with bilingual teachers, free breakfast, free lunch, free book rental etc.? One for every 600 kids paid for by homeowners through property taxes.
Do you think about the interest payment on our debt that at .02% is over $450 Billion dollars a year? What will happen when interest rates goes to just .04% a year? Print more $ creating inflation, borrow more to add to the debt or raise taxes? Do you realize only 85 million people pay $1 or more in federal taxes now? That’s 85 million supporting 312 million.
I smile and shake my head when a MSN reader thinks everything’s great in America.
I’m actually glad I raised my 6 kids and am now 65 years old. I really don’t want to see America in 20-25 years. So sad.

Yes, actually things are much better than in recent years. Not perfect or democratically pleasing, but better. And it will continue. — Garth

#45 Millenial on 07.30.14 at 7:31 pm

So, Garth, do you see a strengthening US dollar vs the CAD dollar over the next year?

Probably. — Garth

#46 T.O. Bubble Boy on 07.30.14 at 7:31 pm

while Canada added a few new drywallers and condo marketers

Ladies and Gentlemen… your taxpayer-funded ECONOMIC ACTION PLAN!

#47 marnic on 07.30.14 at 7:32 pm

#38 Mark:

The US ‘recovering’? What a joke. Most of the GDP “growth” was simply due to inventory build.

Come on man, knowing that requires scratching the surface; Garth’s a busy guy…

Consumer spending accounts for 7o% of the US economy, and increased at 2.5% in the quarter. Durable goods sold at the fastest pace in five years. See, I can cherry-pick better numbers than you. Try to make your points without being ad hominem. You’d look less like a dick. — Garth

#48 Millenial on 07.30.14 at 7:37 pm

#1
I hope those interest rates don’t “Bury” Erin……………

—————————————————————–

LOL. Erin might be just fine. Reasonable chance her condo will never even get built, and she’ll get her money back (or at least most of it).

#49 Condo Minion on 07.30.14 at 7:44 pm

Hmmm. Argentina hours away from bond default.

http://www.bbc.com/news/business-28558121

What’s up with that?

They should just get some CMHC insurance. Those guys will give it to anyone.

What’s the difference between a millennial hipster condo speculator and a third world semi-dictatorship that exports crappy products and people?

Problem solved, Argentina – just get your Merkel-kicked soccer butts to your nearest RBC Latinamerica branch and fill out the paperwork.

#50 Blobby on 07.30.14 at 7:50 pm

Rates will rise gradually but relentlessly. House prices will stagnate and eventually decline. Over-leveraged people will have to sell, pushing values lower in many markets. Surely this is predictable, since asset values and aggregate debt cannot be allowed to rise steadily when incomes are not. — Garth

Agreed.. But wont this completely nuke our economy up here (judging by debt stats, and how many people are over leveraged?)

With the government not being able to do anything about it?

#51 Macrath on 07.30.14 at 7:50 pm

Fell free to explain away all US indicators. I’m fascinated. — Garth
———————————————
I`ll take a crack at it. I`ve been to all the doomer sites lately.

jobs — hamburger flippers the rest have given up and are collecting food stamps.

profits —- all due to share buy backs, inflated prices and channel stuffing

sales—– mostly autos with sub-prime 8 year auto loans and underwater lease extensions

confidence — over 35% of US consumers are in debt collections and mired in credit card debt, confident they will never have to pay the repo-man.

productivity — increased due to massive ongoing layoffs

House values– temporary spike as speculators buy up large blocks of for-closures

Fed policy— they failed completely and have to taper to save face. Stockman has the whole story.
http://davidstockmanscontracorner.com/

Oh yea! and the world at war -Libia,Gaza, Syria, Iraq,Afghanistan,Somalia,Yemen,Ukraine and a bunch more about to erupt.

Don`t worry be happy- hurray ~if you have any savings left interest rates are finally going up!

#52 Nemesis on 07.30.14 at 7:56 pm

#TheChange

http://youtu.be/LJPe90HVMHY

[NoteToGT: Oh, snap! You were talking about econometric aggregates, not Menopause. Right? My bad.]

#53 Bob Copeland on 07.30.14 at 8:10 pm

Maybe your right.

“You can always count on Americans to do the right thing – after they’ve tried everything else.” – Winston Churchill

Let me add: socialism doesn’t work.

#54 Smoking on 07.30.14 at 8:13 pm

http://youtu.be/gxBsv-ng7YU

This just blew mind… Wow…

Remember my vision and rant about 7s

UCC at work…

Vladimi, links please…. I beat you to this one…

#55 JimH on 07.30.14 at 8:39 pm

Smoking Man & etc.

Answer to your query is in yesterday’s comments.

#56 Bob Copeland on 07.30.14 at 8:43 pm

What I hate more then anything Mr. Turner is you always end up right. Darn it’s puzzling. I know your wrong! Lol

#57 Bob Rice on 07.30.14 at 8:45 pm

“As I asked in last article “Erinomics” as well,
If Fed increases rate, is Canada obliged to follow suit? Can someone pls tell me?

We will. — Garth”
______________________________________________Canada is still (and will always be) an appendage of the US of A. So ya, rates will go up in the 51st state.

Money flows to where it will receive a higher return. Low-rate countries either enact barriers or suffer outflows. Figure it out. — Garth

#58 zee on 07.30.14 at 8:47 pm

Garth you have said this many times but rates have only gone lower. what is different this time

Read the post. — Garth

#59 GARTH VADAR on 07.30.14 at 8:58 pm

Garth, the world is not out of the woods yet. Not by a long shot.

Garth who?

It never was, nor will be. But life is good for those who know what to do. — Garth

#60 Smoking Man on 07.30.14 at 9:02 pm

#55 JimH on 07.30.14 at 8:39 pm

You never ANSWERed, I’ll ask again CSIS, CIA, NBA, MOSSAD, FBI, DHS, or just a hasbra…

That plane can climb to 40k feet on a light load. I’m an x pilot, was an engineer at an aircraft company, long time ago. I designed and built radio control aircraft as kid.. I’m
an aviation junky…. Flown ultra lights to twin commanchies, had an IFR ticket… Back in the day.

The higher up you go, the closer you get to the stall speed. That’s what limits your altitude. Lighten the plane by removing bombs, and boom booms. You can go a lot higher.

Did you look at the cockpit panel.. Can you explain, the line of straight bullets on the wing….

Tell your bosses they suck.. Idiots…

My rate just went up… 1000 an hour…

This topic is over. — Garth

#61 Mike on 07.30.14 at 9:11 pm

And now we wait for the inevitable revisions :)
http://www.businessinsider.com/gdp-revisions-2011-to-2013-2014-7

#62 Son of Ponzi on 07.30.14 at 9:17 pm

Money flows to where it will receive a higher return. Low-rate countries either enact barriers or suffer outflows. Figure it out. — Garth
————————
Agreed. But Zolop may just let the CAD go down the shitter to protect the housing market and manufacturing.

#63 I'll retire when I die on 07.30.14 at 9:24 pm

Who do they think they are foolin,
with a 375g package of bacon!

#64 randman on 07.30.14 at 9:25 pm

“Yes, actually things are much better than in recent years. Not perfect or democratically pleasing, but better. And it will continue. — Garth”

Bob copeland #44

Garth you didn’t respond to any of his excellent points….
just voicing your opinion unbacked doesn’t cut it!

Read the post. — Garth

#65 Son of Ponzi on 07.30.14 at 9:41 pm

Gotta give it to Garth.
His prognostications about the US economy have been pretty spot on.
Having said that, I’m still worried about all the debt floating out there.
The piper is still waiting to be paid.

#66 SWL1976 on 07.30.14 at 9:46 pm

Garth, thanks for all that you do by teaching financial literacy to those who care to learn.

I don’t have facts, charts, or numbers, but I do feel things are different this time. The world is a mess right now simple as that, and humanity is not coming together to deal with the real issues we face to avoid a global financial, ecological, and social nightmare

I wish we had more answers and could collectively put our thoughts together to find a way out of this global mess, its never too late to turn things around, but our leaders do not give much hope

Everyone has to play their part

#Tony from Calgary

I got a chuckle out of this

PS – the whole developed world is going the way of Japan eventually… demographics and debt, dontcha know. And the US is in tatters – it’s just the most attractive tattery horse in the glue factory. Better to be in USD than Euro, Rubles, Yuan, Yen, Rupees, Dinars, Pesos, Baht, etc. etc. Heck, even better to be in USD than gold!

Thanks Nosty for all your links and another point of view for world news

#67 Stats on 07.30.14 at 9:46 pm

I truly do enjoy this site Garth, and I agree 100% that house prices are going one way and that is down but Garth buddy you say that the realty stats are bogus but then you turn around and completely believe the Governmental and corporate stats like they are carved in stone and I for one firmly believes this world has gone to sh*t and I no longer trust anyone’s stats anymore for it is all manufactured and I truly hope for your sake Garth you don’t get burned by all these fake stats.

Good luck Garth and pray that I am wrong!

#68 Robert Ford on 07.30.14 at 9:49 pm

Hi Garth,
With rising rates is it good for Canadian Bank Stocks because they will have wider spreads on their lending rates?

No. — Garth
——————————–
Garth, can you please elaborate why higher rates are no good for bank stocks? Should one switch to insurance companies due to the inverse relationship between interest rate and long term liabilities of insurance co? Thanks

#69 stop lying on 07.30.14 at 9:50 pm

BoC sets its own rates. As seen by the fact we raised rates since 2008 while the US didn’t. BoC wants a lower dollar. Easiest way to get that is to do nothing when the US raises rates. We may eventually raise ours too but as Garth pointed out we are creating literally no jobs, so the BoC would be crazy to raise rates as long as that is happening.

#70 JuliaS on 07.30.14 at 9:51 pm

In the US the job growth failed to keep up with population growth. In addition, 100% of job growth since 2000 went to immigrants:

http://c7.nrostatic.com/sites/default/files/CIS%20Report%20On%20Employment%20Gains%20And%20Losses.pdf

Transition from full time to part-time is increasing thanks to Obamacare. Incomes are stagnant or falling month to month.

When it comes to corporations “growing”, so do the P/E ratios. Nothing to see there.

2015 for the rates to climb? Sure! With blog-a-day, who’s going to remember that prediction.

#71 JimH on 07.30.14 at 10:08 pm

#14 Shawn
… “One might consider buying shares in the U.S. homebuilders or the U.S. banks or ETFs of these…”
===================================
Won’t argue with you, Shawn; but a word of caution.
The US “homies” that I dabble in are: TOL, DHI, PHM, KBH, LENB, HOV and BZH. There are others, I know, but I have a rather smallish brain.

Pull up a 6 month daily chart on these puppies, and you’ll immediately see some issues. The main problem is that here in the US, many investors thought that the rebound in housing meant that we would rapidly make up for the declines that started in 2007. (Folks love to described what happened here as a “crash”. In reality, most of the USA suffered a slow and steady decline that has just recently started to turn around.)
Anyway. Go back a bit to weekly charts of say, BZH; Yes, I know… “Beazer Homes”. (What kind of moron….)
Or try TOL; Toll Brothers, or PHM; Pulte Homes, or DHI, D R Horton, and go back past 2000 (AD).
Geez! By December, 2000, these guys were all in orgiastic up-trends while the tech bubble was, well, deflating with great enthusiasm.

The tech bubble was pretty well all pooped out by the time Santa arrived in 2002.

Note that the homies just went on bubbling up like a groom on his honeymoon throughout all this agony until May of 2005, when the smartest money decided they’d had enough.

Note the date: May 2005. This was the end of the USA’s housing bubble from an investor’s viewpoint. The bottom, again, from an investor’s viewpoint, came in Q3 2011.

We had a good ride up until Q2 2013, when many realized we weren’t out of the woods yet! Nobody told the homies, and they went right on into high production mode, and then realized that buyers had learned a thing or two. Most of the increase in RE sales of existing homes was by very patient vultures, and the market wasn’t quite yet ready for another plunge. (RE boards, associations and builder marketers throughout the US have been very, very careful not to flood markets with foreclosed properties, by the way. They may be more transparent, but they’re not stupid.)

Lately, TOL, DHI, PHM, KBH, LENB, and BZH have been punished by the markets, but these are my best candidates to do well as US housing improves.

My strategy is to watch for higher highs and higher lows in stocks that have great fundamentals (rising earnings, good cash flow and increasing revenues).

Be care ful! These are volatile puppies.

#72 Josh Renning on 07.30.14 at 10:17 pm

Let me know when we have 8% to 10% mortgage rates and 8% to 9% Canada, U.S. etc. government bond yields?

It is just like lotto 649, imagine! I never said rates were going to 1%.

The damage is already done for interest bearing investments.

#73 Garth is an idiot on 07.30.14 at 10:17 pm

Times like this, you are actually a contrarian for betting that interest rates will continue to go even lower. Normally, the public like Garth gets it wrong all the time. If it appears to be so obvious, it usually will not happen. Good luck, Garth! We will see the interest rates trending lower for the foreseeable future. You won’t ever see interest rates spike in your lifetime.

I’ll take that bet. — Garth

#74 Freedom First on 07.30.14 at 10:22 pm

Lovely post Garth. All good news.

I am blown away by what I hear from conversations in my face to face world, and comments on your Blog too Garth. About the interest rates going up. Well, there is so many people who think that Daddy Government can, or will, keep rates down because it would cause too much pain to their citizens in debt, or to the economy. This is such a common, but distorted way of thinking, and truly naive. What is common throughout history, even worldwide recent history, is that the reality is that the herd gets slaughtered. Now, this can be from a large variety of reasons, including rates going up, housing crashes, and stock market crashes to name only a few.

To increase ones chances of not making yourself vulnerable to a self induced financial suicide, I think it is really good to be invested in a broad variety of assets in different asset classes, have cash, a wide scope of liquid assets, as many income streams as possible, and obey Garth’s RE formula. Personally, I believe controlling the feelings humans get of fear(panic) and greed(RE lust is only 1 example), which can lead to doing nothing(cash under the mattress is only 1 example), or to getting into massive debt, among many other financial quicksands.

From what I see, what Garth teaches covers it all. But feel free to tweak his teachings a little bit, I do, but not anywhere near enough to neuter myself.

#75 KommyKim on 07.30.14 at 10:34 pm

RE: #46 T.O. Bubble Boy on 07.30.14 at 7:31 pm
while Canada added a few new drywallers and condo marketers

Ladies and Gentlemen… your taxpayer-funded ECONOMIC ACTION PLAN!

Yup. The three arrows Harper’s action plan look just like a house:
http://www.canadiandesignresource.ca/officialgallery/wp-content/uploads/2009/10/Canadas-Economic-Action-Plan.jpg

#76 KommyKim on 07.30.14 at 10:39 pm

RE: #57 Bob Rice on 07.30.14 at 8:45 pm
Money flows to where it will receive a higher return. Low-rate countries either enact barriers or suffer outflows. Figure it out. — Garth

And that may be exactly what the Canadian government wants: a lower CAD dollar to help boost exports by keeping domestic rates low as the US rates rise.

#77 Bottoms_Up on 07.30.14 at 10:56 pm

Garth, thanks for addressing the renewal advice, we’re up soon so likely will be taking it.

Been in the housing market for 5 yrs now, and haven’t made a dime. That’s the power of 5% down and 35 yr amortization, maintenance and selling costs.

#78 Macrath on 07.30.14 at 11:00 pm

Europe’s bond yields lowest since 15th century Genoa

http://www.telegraph.co.uk/finance/economics/10999086/Europes-bond-yields-lowest-since-15th-century-Genoa-on-deflation-Russia-risk.html

As noted here, Europe is fighting deflation. And it’s not America. — Garth

#79 CAPITALISM or FASCISM on 07.30.14 at 11:06 pm

CAPITALISM

an economic system characterized by private or corporate ownership of capital goods, by investments that are determined by private decision, and by prices, production, and the distribution of goods that are determined mainly by competition in a free market

FASCISM

a political philosophy, movement, or regime (as that of the Fascisti) that exalts nation and often race above the individual and that stands for a centralized autocratic government headed by a dictatorial leader, severe economic and social regimentation, and forcible suppression of opposition

To the people who still believe we live in a free market!

The message below is for you:

I cannot believe how incredibly stupid you are. I mean rock-hard stupid. Dehydrated-rock-hard stupid. Stupid so stupid that it goes way beyond the stupid we know into a whole different dimension of stupid.

You are trans-stupid stupid. Meta-stupid. Stupid collapsed on itself so far that even the neutrons have collapsed. Stupid gotten so dense that no intellect can escape.

Singularity stupid. Blazing hot mid-day sun on Mercury stupid. You emit more stupid in one second than our entire galaxy emits in a year.

Quasar stupid.

#80 Basil Fawlty on 07.30.14 at 11:10 pm

“Jobs. Profits. Sales. Confidence. House values. Productivity. Fed policy. Fell free to explain away all US indicators. I’m fascinated. — Garth”

I don’t believe you are fascinated at all Garth. I would say you just plain ignore information that does not fit your consensus view of the US economy. There are negative factors associated with all your indicators above, but you write them all off as the ramblings of “doomers”, or “bullion lickers”.
For example, why is real estate so strong, when home ownership rates are at a 19 year low? The jobs being created are mainly parttime, as fulltime work disappears, while longterm unemployed do not show up in the labour statistics. The labour particpation rate continues to fall in the US. Why do you ignore this?

I’m an investor, not a social engineer. And doing well. — Garth

#81 Singaporean Investor on 07.30.14 at 11:10 pm

Vancouver real estate market is like the RE market here in Singapore. It’s way too desirable, it can never go down. It will continue be desirable by people from all over the globe.

Your IP says Vancouver. Nice try. — Garth

#82 Kenchie on 07.30.14 at 11:14 pm

#74 Garth is an idiot on 07.30.14 at 10:17 pm

“We will see the interest rates trending lower for the foreseeable future. You won’t ever see interest rates spike in your lifetime.”

First of all, which type of interest rates are you talking about? (i.e gov’t bond yields, BoC prime rate, 5-yr fixed rate, etc?)
Secondly, you make this prognostication on the day that the GoC 5-yr bond went up 6.3 basis points doesn’t help your credibility.
Thirdly, are you really planning to bet against the Federal Reserve? (Forget about small fry’s like Garth… no offence, Garth)
Fourthly, given that the BoC is mandated with keeping inflation in check, wouldn’t you be concerned when two straight months of CPI growth is above the 2% target?

#83 Godth on 07.30.14 at 11:22 pm

Pretty graphs…
Our Marginal Economy
http://www.washingtonsblog.com/2014/07/marginal-economy.html

Hugs and kisses part 1
http://www.washingtonsblog.com/2014/07/totalitarian-future-part-one.html

Trick or treat part 2
http://www.washingtonsblog.com/2014/07/totalitarian-future-part-two.html

I’m long in tinfoil. — Garth

#84 Ole Doberman on 07.30.14 at 11:28 pm

Garth if inflation is going to rise isn’t it time to back the truck up on gold as a hedge. Remember when it shot up from $100 to $900 late 70’s?

Plus I hear this talk at KWN that China is looking to back their currency with gold for confidence.

I dunno.

Inflation will be tame, but structural. Gold is dead money. — Garth

#85 Andrew Woburn on 07.30.14 at 11:30 pm

To me it is no surprise that the US economy can grow while unemployment is high. Major US corporations are global and depend less on Americans for their earning power. Third world markets, full of young people who want what we’ve got, are rising in importance. Sixty years ago Asia was an economic backwater. Sixty years from now Africa won’t be.

The simple if brutal fact is that low-skill Americans are sliding down the global economic pole and their declining buying power doesn’t really matter that much any more to global shareholders of nominally American companies.

The real question is whether global corporations will gradually drift away from the US if the American government maintains its aggressive approach to forcing US law onto other nations as in FATCA or the $9 billion fine of a French bank. Just as China’s bullying is pushing its neighbours into military alliances, US trade actions seem to be pushing other countries into finding ways to bypass US courts and financial institutions. At what point will Fortune 500 companies find it easier to operate from Switzerland or Singapore?

#86 Shawn on 07.30.14 at 11:36 pm

Home Builders

JimH at 72, thank you for the detailed response.

I own Toll Brothers and have followed it for several year (Bought at $22, then $18, then $22 etc…) Bought some today.

I never (ever) look at charts. (I shield my eyes when a chart comes along) I do look at fundamentals and I try to sell high and buy low (like today).

#87 Shawn on 07.30.14 at 11:38 pm

Homes are expensive…

And it’s culturally frowned upon these days for a family to take in a lodger (roommate) to help with the expense. What if the culture changes?

#88 kILlaBoY50 on 07.30.14 at 11:38 pm

I guess we’ll see. Just as one bad quarter of negative growth may not signal disaster, one quarter of great growth may not be the start of a trend either.

#89 Garth Hater on 07.30.14 at 11:39 pm

Garth,

I have never seen more economically illiterate and outright naïve person than you. It is pathetic. US recovery? Jobs improving? Corp earning higher? FED tapering? It puts a new meaning in “cant see the forest behind the trees” statement. Keep watching Cramer, Bloomberg and msnbc. They explain everything.

You get F in basic economics but because you (I believe accidently) get Canadian housing market right I will make it F+.

Cramer? You need help, bro. — Garth

#90 [email protected] on 07.30.14 at 11:40 pm

your future:

the new world order creates chaos
(we are now there)

the new world order then imposes war
(it’s soon on our doorstep)

The new world order authoritarianism turns to fascism and takes over the entire world
(coming soon to planet Earth)

God goes to war against the new fascism world order (as a loving God should)

God wins
(because God created everything so God can never ever be defeated)

God sends all of the followers of satan’s fascism new world order to hell
(one way or another I’m gonna find ya I’m gonna getcha getcha getcha getcha one way or another I’m gonna win ya I’m gonna getcha getcha getcha getcha)

God then sends hell and satan into oblivion
(na-na-nah-na, na-na-nah-na, na-na-nah-na, na-na-nah-na, hey, hey, hey, goodbye)

#91 Retired Boomer - WI on 07.30.14 at 11:56 pm

We seem to have a Garth vs. anti-Garth split here tonight. WTF? Garth’s advice has been great for the investor’s here.

Does everybody else WANT to buy a house? Go ahead, what’s stopping you? Oh, debt, fear, greed those dam “feelings.”

Wasn’t there a bad song called “feelings” a couple of decades back? Yeah, play that 45

#92 Yitzhak Rabin on 07.30.14 at 11:57 pm

While you do your touchdown dance on the 2-yard line to celebrate the US “recovery”, many things continue to deteriorate.

The wage of the average American just fell down to where it was in 1989 on an inflation-adjusted basis. Margin debt is hitting record highs. Corporations are leveraged to the stratosphere on short-term, low rate debt, and 1 in 3 American adults has debt in collections.

The Fed’s next major move, if they stop this round of QE, will be an even larger dose of QE once the markets crash.

Since hindsight is now limited the past 2 years only these days a brief history lesson:

QE1 ($800 billion) ended on March 31, 2010 = 3 month later S&P 500 dropped by 12.6 percent.

QE2 ($600 billion) ended on June 30, 2011 = Stocks down 16.7 percent in 3 months.

After the end of “Operation Twist” we had QE3 that was $85 billion a month all of last year.

I wonder why QE didn’t work all those other times? Remember that in late 2008 people were talking about the Fed raising rates in six months, that was almost 6 years ago.

Statistically the US is overdue for a recession. Few talking heads realize the implications of a recession hitting now when interest rates are already zero, and the Fed balance sheet is enormous as is.

Stocks are up though, so who cares right?

Really sorry about your gold. Bummer. — Garth

#93 Gee on 07.31.14 at 12:05 am

Hi,
Just learned that the 5 year fixed rate is lower if it is a cmhc insured mortgage vs if it is not. Seems wrong that the system punishes those who have a higher downpayment, by increasing the interest costs. Is it worth it to put down a lower downpayment, pay the minimum CMHC premium, and have a better 5 year fixed rate?

#94 High Plains Drifter on 07.31.14 at 12:09 am

I have bought two pre-builts, the second buy was so I could sell the first and at least get a chance to spend half the profit. Buying first and into a rate dropping period are the real leg up. Now your in the game and your forward thinking acumen and superior deception making will further distance yourself from failure. A vibrant local economy such as Alberta’s will push you higher. I love the fact the Bank of Canada has a one rate is good for all. One interpretation is “I have done enough”. That is an “H” in the real world. By the way the United States Of America is a huge country and beautiful but not terribly truthful or modest or humble but great people to gamble with.

#95 aaron on 07.31.14 at 1:04 am

Well I bought a house in Lawrence Park more then 20% down. I’m good.

#96 waiting on the west coast on 07.31.14 at 2:00 am

As someone who misjudged or on the large ramp in Vancouver real estate prices, I probably don’t have significant credibility on what’s in store for Canada’s markets/economy.

I can tell you that the businesses I own are discretionary services and are leading indicators for the economy. My businesses are growing on average over 20℅ per year in the US for the last two years.

When the US economy slowed down in mid to late 2008, we saw signs in Q4 of 2007 in terms of drops in inbound call volume and jobs booked. Currently, I am seeing significant increases in new customers and new orders on both the west and east coasts. I am bullish on the US.

What I do see for Canada is a choice. Either save the internal economy but let the dollar slide back to very low levels or support the dollar and accept a restructuring/recession.

The reality is that Canada did not need to do any easing in 2008/09 as we barely felt the recession. People here whined while I was watching my businesses drop 30% of revenue over 2 years. I saw a myriad of once booming restaurants and shops in the US boarded up very fast. Nothing came even close in Canada.

We still need to feel the pain or look forward to much higher prices on travel and foreign goods.

#97 Read again on 07.31.14 at 2:18 am

Read through the bc rental agreement. Perhaps it’s just my albertan perspective but I fail to understand why any landlord would sign the part of the rental agreement following a fixed term tenancy that would give power over to the tenant , especially when it indicates right on the next line that the tenant and landlord can agree that when the term is over that the tenant moves out. It doesn’t mean that he has to move out, if the landlord actually likes the tenant and would like him to stay on with a new contract. It is just , as a landlord, why would you commit to such arrangement that suits the needs of the tenant but holds nothing good for the landlord. Why obligate yourself as a landlord to this tenant after a fixed contract expires. Makes no sense to this albertan. You initially gave the impression that in residential contracts that it is the exception and not the rule in Ontario or bc for landlords to terminate a contract after in has run its course. The argument is weak and defies common sense. If it is true, and I doubt that it is, it flies in the face of most american state tenancy laws and alberta law. If it is so, as you state , then I apologize. Ontario and bc landlords have a right to be wrong, especially when they clearly have a legal option that is the same as alberta , just as easy to implement and would cover their behinds perfectly well.

#98 Setting the Record Straight on 07.31.14 at 2:35 am

“This is exactly what I have been saying: the GDP drop in Q1 was a weather phenom and the US economy has been steadily rebounding since. Today the Fed will announce the 6th drop in QE, on its way to zero by the end of October. Yes, rates will be rising in 2015, and bond yields sooner. Ready? — Garth”

Watch a recent interview of David Prince on BNN. He closely watches data on railcar loadings, retail sales, new mortgage and refinancing applications, and some other items.

What I took away from the interview is that he had trouble reconciling the data he watches with the US GOVT GDP number.

#99 Sockeyemoon on 07.31.14 at 2:58 am

Whoa – is this the same Mark Carney?

“Bank of England Governor Mark Carney last month announced a loan-to-income cap and an affordability test in an effort to rein in runaway prices. Starting in October, no more than 15 percent of mortgages granted by U.K. lenders should amount to 4.5 times the borrowers’ income. ”

http://www.bloomberg.com/news/2014-07-30/londoners-cashing-in-flee-to-suburbs-as-home-rally-wanes.html

#100 Thirsty Student on 07.31.14 at 3:16 am

DELETED

#101 TRT on 07.31.14 at 3:37 am

Andy:

Smoking man is correct.

We will not raise rates when the US does. That’s why our dollar fell 2¢ against the USD. If we were going to increase our rates in lockstep, our CDN wouldn’t have moved.

Poloz vacations with exporter Execs.

Jen: go variable, 3 yrs. Please.

#102 sunnybatra on 07.31.14 at 3:37 am

DELETED

#103 Londoner on 07.31.14 at 4:12 am

I wouldn’t write off a short term rate cut by the BoC just yet. Don’t forget that, while tapering, the US is still undertaking a quantitative easing program and that doesn’t include the rolling over of maturing debt. This still leaves the BoC plenty of opportunity to cut rates until the Fed starts to reduce it’s balance sheet. Let’s see what the Canadian GDP and unemployment numbers tell us. Forget about the CPI for now.

#104 Londoner on 07.31.14 at 4:16 am

“…the peak for housing prices is already in the rear view mirror.”

You forgot your usual “100% probability” clause.

#105 Temporary Foreign Prime Minister on 07.31.14 at 5:22 am

So let me get this right:

The U.S. self-imploded under the Bush/Republican reign, yet recovered like gangbusters under Obama/Democrat oversight.

Would someone kindly tweet Ezra Levant and Sarah Palin so they, once and for all, shut the hell up.

#106 Charles Ponzi on 07.31.14 at 5:45 am

About 77 million Americans have a debt in collections, a new report finds. That amounts to 35% of consumers with credit files or data reported to a major credit bureau, according to the study released Tuesday by the Urban Institute and Encore Capital Group’s Consumer Credit Research Institute.

#107 Green Shoots on 07.31.14 at 5:47 am

The only thing that keeps the American economy from collapsing outright and face first in this debt crisis is more debt. And it’s not just America: China, Japan, UK, they’re all on the same path, while Europe, once deflation sets in, will have to follow suit or break into smithereens.

So many America-haters on this blog. They sure lost this bet. — Garth

#108 Ferrari321 on 07.31.14 at 7:23 am

Greater fool editing team …?

Higher rates will likely throw some water on equity markets, while higher yields will knock back the prices of fixed income assets like bonds, preferreds and (by association) REITs.

So? — Garth

#109 Cdn Flier on 07.31.14 at 7:41 am

True story. A friend’s teenage daughter saw him on the computer. She said “Dad, is Facebook like Instagram, but for old people?”.

I think it’s time to offload FB shares.

#110 Effluence greasy on 07.31.14 at 8:06 am

#64 randman — “Garth you didn’t respond to any of [Bob copeland #44]’s excellent points […]”

What’s the point in responding? They’re all a bunch of small-time observations. Here’s the big picture:
http://www.advisorperspectives.com/dshort/updates/Big-Four-Economic-Indicators.php

Based on that picture, is America getting better, or worse? 200,000+ net new jobs per month says America is getting better, and that’s a number you can’t explain away by saying inflation is underreported. Are most of the gains going to the top 1%, and shareholders? Yep. But as an investor who doesn’t live in America, I say unto you: “So what?”

#111 Jim on 07.31.14 at 8:13 am

Garth,

What will war with Russia do to house prices?

Worry about things that might actually happen. — Garth

#112 T.O. Bubble Boy on 07.31.14 at 8:18 am

As we start trending down the other side of this bubble, look for more stories like this one on suspicious fires in under-construction homes:
http://www.cp24.com/overnight-fire-destroys-three-leslieville-homes-1.1940026

#113 takla on 07.31.14 at 8:24 am

Garth this is the 2nd/3rd time you’ve gone out on a limb and crowed the virtues of the “recovering U>S economy,last couple times you had to tuck em between the legs and admit the u.s in reality was stalling.We have numerous examples of the u.s manipulateing stats and massageing numbers to create illusion over the yrs,this time no different.
The middle class is tapped,the largest {babybommer} demographic portion of society is downsizeing and cutting consumerism,costs of all consumer goods are riseing ubove the gov stated inflation numbers and peoples purchaseing power is being diminished continuously month by month.
toss your charge card for a month or two and and set a meager budget for yourself{like the 80% have to} and see how that works out for you
A constantly expanding world economy is wishfull thing on a finite planet….first consumer goods get increaseingly more expensive… then…look out below

The US is absolutely growing, and my tail remains proudly erect. — Garth

#114 Josh Renning on 07.31.14 at 8:41 am

To #63 I’ll retire when I die

If you are really pissed off about 375 gram packages of bacon at $3.99 to $4.99, then Fusion supermarket has 500 gram packages of bacon at $2.99 each.

No, I do not own this store or work for them. I am no way affiliated or associated with them.

Shop around as the gougers are pretty much almost everywhere.

#115 St. Ferdinand on 07.31.14 at 8:57 am

GDP is a Keynesian spending algorithm. It has as much to do with economic reality as globlaoneywarming does with climate. The real economy does not include gov’t, deficits, defence spending, or anything to do with ‘public’ spending including gov’t-crown corps. GDP is at least 50% a ‘guess’, and the mandarins keep changing the calc. Now IP or stupid songs from Pery are added – a big fat infill to juice up the #’s.

Employment is at 60% – a business model that can’t succeed [40% of that # are gov’t parasites with pensions].

Debt – personal, corp and gov’t – are all at record levels.

Wages – stagnant.

Real inflation in the real non-Fed world – 5%.

Yet markets and house prices go up ?

All due to one factor – 0 real rates. That game cannot last forever.

I would not put your hat on the GDP peg. Someone might accuse you of being a warmist as well.

Economic scolding from a climate change denier. Wow. — Garth

#116 oh dear on 07.31.14 at 8:59 am

Totally agree ….If the Canadian economy softens AND the U.S rates are on the rise ..The Canadian housing bubble may finally burst. Pre-construction condo ? O dear !

#117 Rational Optimist on 07.31.14 at 9:06 am

#98 Read again

I missed your conversation about B.C. laws. But you state: “You initially gave the impression that in residential contracts that it is the exception and not the rule in Ontario or bc for landlords to terminate a contract after in has run its course.”

In Ontario, the Residential Tenancies Act states: “If a tenancy agreement for a fixed term ends and has not been renewed or terminated, the landlord and tenant shall be deemed to have renewed it as a monthly tenancy agreement…”

Further, “An agreement between a landlord and tenant to terminate a tenancy is void if it is entered into, (a) at the time the tenancy agreement is entered into…”

In Ontario, a fixed contract protects the tenant, not the property owner. It defies common sense, but a lot of our laws do here. If, as a property owner, you sign a tenant to a fixed contract lasting a year, in a year’s time that tenant automatically becomes a month-to-month tenant. There is no way to avoid this fact (one narrow exception is if a property owner has an agreement with a school to provide housing for their students…). The tenant has the power to terminate the contract, no the landlord.

#118 young & foolish on 07.31.14 at 9:11 am

“The simple if brutal fact is that low-skill Americans are sliding down the global economic pole and their declining buying power doesn’t really matter that much any more to global shareholders of nominally American companies.”

— I believe this is correct, and potentially dangerous

Regarding RE … follow the trend ….. the world is still urbanizing, big time, and large cities around the world are facing housing challenges. Result: Housing (whether owned or rented) will remain expensive relative to incomes in principal cities.

You have it backwards. Economics determines population migration, not the other way around. All will change when debt becomes oppressive, or expensive. But then, you are young & foolish. I forgive you. — Garth

#119 JimH on 07.31.14 at 9:23 am

Great post, Garth! Thanks!

Your analysis is spot on for the simple reason that it’s based on reality.

There is no doubt that we can expect to see a trend towards higher US Treasury yields for the rest of the year and into 2015. Despite the substantial rate differential between US treasuries and those in the Eurozone that attract investors to the former, with increased tapering the Fed will no longer be the major buyer and the overall supply relative to demand will rise. Also, the slow but steady growth of the US economy will affect demand. The fly in the ointment lies in how well or poorly the Europeans do in their struggle with deflation, as this will also impact demand for US Treasuries.

As for the reality of the US recovery, those who have assumed it to be an illusion and have acted accordingly have lost out big-time. When ideology trumps sound analysis, this is what usually happens either way.

I have always thought that news, policies and numbers by themselves are by and large irrelevant: what is important to me is how the markets react to those items, and that price is the only thing that pays!

#120 JimH on 07.31.14 at 9:45 am

#86 Shawn
“… I never (ever) look at charts. (I shield my eyes when a chart comes along) I do look at fundamentals and I try to sell high and buy low (like today)…”
—————————————————
I understand where you’re coming from! Some folks get carried away with technical analysis.

I find that charts give me a useful snapshot of market psychology over various time frames, and also to reveal underlying trends

As for TOL, they are getting beaten down and are expected to report earnings Aug. 20th. I’ll wait until then at best. I am largely in cash at the moment, having taken profits late June and into early July as I have summer commitments.

Good luck!

#121 Macrath on 07.31.14 at 9:48 am

Former Top US Auditor David Walker:

How can you be so negative about the economy? There are lots of signs that things are improving. The stock market is near record highs.

The stock market? I quit believing in the efficiency of markets a long time ago. The stock market is not the appropriate bellwether of the state of the economy. So yeah, the stock market is at a record high but on the other hand, gaps are growing between the haves and have-nots. People on fixed income are getting killed because they can’t get a reliable return on investment. Prices are going up faster than what the government tells you because they don’t consider food and energy in the index. Last time I checked you can’t live without food and energy.
——————————–

People are not America- haters they just believe they are being hoodwinked by the 1% (the real owners) and they are probably correct in that assumption.

I would also add that a lot of the 99% `s problems are self inflicted. Many think that paying 29% interest on credit cards is normal or inevitable while the bank`s dish out ZERO on savings. Too many entitled financial zombies running around and TPTB like it that way.

Didn’t you get the memo? We’re the 1%. — Garth

#122 Bottoms_Up on 07.31.14 at 9:52 am

#119 Rational Optimist on 07.31.14 at 9:06 am
————————————————
That’s correct, the only ways an Ontario landlord can be rid of a tenant (other than going to court to have them evited) is by moving into the residence themselves, or by selling it.

#123 Bottoms_Up on 07.31.14 at 9:55 am

#111 Cdn Flier on 07.31.14 at 7:41 am
—————————————-
LOL! The youngest person on my facebook is 25, and the oldest 70.

#124 Holy Crap Wheres The Tylenol on 07.31.14 at 9:55 am

#37 Smoking Man on 07.30.14 at 7:01 pm
O oh Argentina just defaulted, bank I am Portugal 5 billion dollar loss….
Wonder what’s going to happen to the above chart when the Canadian safe haven bond market opens in the am..
Sorry basement dwellers..
_____________________________________________
Smoking Man this is Argentina’s third default in the last 25 years.It doesn’t hold a candle to that looser nation of Greece. Greece is now the largest debtor after its distressed debt exchange worth $273 billion at the height of the euro-zone crisis in 2012. Russia’s $39 billion default in 1998 is the third largest in history.

#125 Bucketshop on 07.31.14 at 10:02 am

Garth…you live in a fantasy world. I agree with you on much of your housing related commentary….but you’re waaaay off when it comes to economic prognosticating my friend….

Equity markets dipping today after the Fed decision to doggedly taper. Just as I said. — Garth

#126 Macrath on 07.31.14 at 10:18 am

Didn’t you get the memo? We’re the 1%. — Garth
——————————————–
Maybe Ralph Cramdown and blogdog Carney but the rest of the kennel most likely wards of the SPCA.

#127 Doug in London on 07.31.14 at 10:41 am

@Ferrari321, post #110:
Last year when The Fed announced they would start tapering markets panicked and preferred shares, REITs, and electric utility stocks went on Boxing Week sales that went on for the last half of the year. Now that tapering is well under way and expected to finish (read no more quantitative easing) the value of those investments has recovered nicely. Why? Beats the hell out of me, I’ve given up trying to predict what will happen next. Nowadays my crystal ball is used only for a paper weight. So what if those above mentioned investments drop in price? It would mean they are on sale again so BUY MORE!

Markets usually overreact to the unexpected. It was a classic case of such last July. — Garth

#128 Prove Me Wrong on 07.31.14 at 11:37 am

In Canada, there has NEVER been a housing correction without a commensurate recession.

The obvious question: Who sees a recession on the horizon?

#129 Hmmm... on 07.31.14 at 11:40 am

Its FUN…. when real doomer and real estate doomer go head to head….

#130 Mister Obvious on 07.31.14 at 11:50 am

#96 S

“Anyway, awesome writing. You should give courses.”
——————————

He does. This is it. Free too!

You’ve got a lot of catching up to do.

#131 Tony on 07.31.14 at 11:53 am

The Chicago PMI looked good today, obviously the 4 percent second quarter GDP figure was 100 percent baloney. Like some people said before America will end up like Japan only worst. Sell me all your long term bonds I’ll buy all of them.

#132 Long Time Lurker on Here on 07.31.14 at 12:17 pm

Corporate profits are vastly exceeding projections. They’re up about 11% so far in 2014, and to date 77% of all big S&P companies reporting quarterly earnings have trumped analysts’ expectations.

Read through some of the responses here. I am confused. On one hand, we are talking about record profits and economic recovery. On the other hand we are talking about stagnant salary and unemployment.

Unemployment is something I am not sure of. But stagnant salary? I know someone making 95k sorting mails at canada post. Fresh grads are being offered 65k-70k. 10 years ago, 60k salary was the dream. Nowadays, even 100k is not cutting it. Every time I hear so-and-so got a new job, it always comes with a crazy 6 figure salary.

#133 Gold Dude on 07.31.14 at 12:19 pm

Inflation will be tame, but structural. Gold is dead money. — Garth
———————————————————

Ok Garth here is a question for you and don’t feel bad when you can’t answer it – but why did gold rise for 10 years 2001 – 2011?

$250 to $1900 that’s the biggest % gainer investment in centuries.

If I’d just watched 31% evaporate I wouldn’t care too much about what happened a decade ago. — Garth

#134 Kilby on 07.31.14 at 12:37 pm

Just saw on the CBC news that a UK firm stated that 1 in every 44 Toronto residents is a millionaire. I wonder what the number would be with houses taken out of the equation?

Interesting stock market numbers today…..

#135 Sheane Wallace on 07.31.14 at 1:04 pm

Equity markets dipping today after the Fed decision to doggedly taper. Just as I said. — Garth
Are you advising on timing the markets?
Let’s distinguish between practical investment advises and marketing of active portfolio management, please.

1. Long term investors should not time markets. Any correction would be temporarily, if one truly believes that stock markets is going up which it will, then just hold and re-balance.
2. US ‘grows’ domestically in nominal terms, not in real terms. The corporations with international exposure grow. Not the domestic markets. Inflation is grossly understated hence the unrealistic growth numbers.
Referring to CPU as to ‘the inflation’ is practically a lie. You are saying it does not matter, I say it does. Will see in 5 years.

I told you five years ago this was coming. It’s here. — Garth

#136 Baili in BC on 07.31.14 at 1:08 pm

#80 CAPITALISM or FASCISM

That Sir, was a thing of beauty. I could almost see the spittle fly.

Well done!

#137 Andy on 07.31.14 at 1:18 pm

#134
“I know someone making 95k sorting mails at canada post”
” Every time I hear so-and-so got a new job, it always comes with a crazy 6 figure salary.”

Are you talking about Canada bro? If so, I would say the following to you.
If something sounds too good to be true, it probably is

#138 Victor V on 07.31.14 at 1:22 pm

http://m.theglobeandmail.com/globe-investor/inside-the-market/market-updates/at-midday-tsx-tumbles-169-points-amid-earnings-disappointments/article19873242/?service=mobile

The U.S. Federal Reserve indicated Wednesday that it will keep short-term interest rates low “for a considerable time” after it ends its bond purchases, likely in October. The Fed is expected to start hiking rates mid-2015, but stronger than expected economic growth in the second quarter has investors concerned that the Fed could raise rates sooner.

#139 uber doomer gloomer on 07.31.14 at 1:40 pm

Hey Garth,
haven’t Variable rates always out performed locked in rates in the long run ?

Normally. Are these normal times? — Garth

#140 Shawn on 07.31.14 at 2:05 pm

Number 80 Capitalism or Fascism states:

To the people who still believe we live in a free market!

******************************************
Your quote said that capitalism features:

prices, production, and the distribution of goods that are determined mainly by competition in a free market

Put some emphasis on mainly…

But yes, markets in North America are certainly not totally “free”. They are heavily regulated in many respects.

Some of us still manage happy and comfortable lives of wealth accumulation within that system.

Can we take it that you are not among us?

#141 Flawed on 07.31.14 at 2:06 pm

“But the economy is booming”.

Really?

That’s why they just talked about the demise of Big Box stores and I just booked a flight down south to investigate our “leaving of public sector only Canada” and the agent said that travel by plane is WAY down in Canada and the USA.

#142 Flawed on 07.31.14 at 2:07 pm

The U.S. Federal Reserve indicated Wednesday that it will keep short-term interest rates low “for a considerable time” after it ends its bond purchases, likely in October. The Fed is expected to start hiking rates mid-2015, but stronger than expected economic growth in the second quarter has investors concerned that the Fed could raise rates sooner.

************************************

What happened to the 2014 rise in rates – deferred by the booming economy apparently.

Nobody suggested the Fed would move this year. — Garth

#143 Flawed on 07.31.14 at 2:09 pm

#134
“I know someone making 95k sorting mails at canada post”
” Every time I hear so-and-so got a new job, it always comes with a crazy 6 figure salary.”

Are you talking about Canada bro? If so, I would say the following to you.
If something sounds too good to be true, it probably is

*************************************

If it’s a public sector job it’s probably true. That is why private sector workers are so broke. 60% in taxes to pay for said public sector workers.

#144 not 1st on 07.31.14 at 2:15 pm

So Garth, should one be out of REITs until this all blows over?

Maybe you should buy more. — Garth

#145 Smoking Man on 07.31.14 at 2:21 pm

Garth I know you want this topic dropped.

But just need to read enforce how MSM works, 3 days ago when it was evident that MH17 was a false flag. Shot down by Ukraine.. I predicted MSM would drop the story like a hot potato…

For two days now I scan the headlines, main pages.. MH17.

NOTHING…….ZERO

Now know this…. There will be no real estate correction in Canada unless the guy who controls MSM decides one is due…..

#146 Vamanos Pest on 07.31.14 at 2:32 pm

I don’t understand the end-game of a doomer. If it all comes crashing down, how’s your gold going to taste? Because if we ever see an economic collapse, I’m not giving you food for gold. I might give you food for whiskey, or tools, or something of immediate value because of it’s usefulness, but I just don’t understand how something is going to help you survive economic disaster because it’s shiny.

In the meantime, as long as fiat currency does have value, and people will trade goods and services for it, I want lots of it. So I guess I’ll just stick with my boring balanced diversified portfolio (which is kicking some serious ass, btw) and try to figure out what to do with all this “worthless paper”.

#147 eddy on 07.31.14 at 2:42 pm

#8 Son of Ponzi on 07.30.14 at 5:32 pm

#255 Taber on 07.30.14 at 4:46 pm
And here is the bylaw: “the owner is responsible for part of the water delivery pipe and for the entire sewer pipe that connect his property to the public system.” i wonder how many homeowners know this!
——————
Yep, not something the RE sales person will tell you.
I, also found out the hard way.

—–
Unbelievable! This story should be a warning to every homeowner. I only know Toronto where (I think) you own the drain to the ‘mushroom’ or clean-out on your lawn ( the city usually owns about 5 feet of your front lawn). That The City of Montreal pulled off this slight of hand is beyond belief. And I thought Toronto City Hall was a nightmare. Next we’ll be shoveling the streets for them.

If anyone missed it-
http://www.montrealgazette.com/news/montreal/homeowner+massive+hole+over+sewage+pipe+break/10073376/story.html

#148 omg on 07.31.14 at 2:53 pm

21 Shawn Wallace

Did you know that on Mainstream media blogs the majority of the comments are computer generated?
——————

If true that explains the quality of comments on Yahoo Finance – somebody must have walked away and left the setting on “IDIOT” mode.

#149 David Lee on 07.31.14 at 2:59 pm

Best line in the article from Brandon Yan:

“Let’s leave it to the rich white dudes to decide what’s racist, right?”

http://www.theglobeandmail.com/life/home-and-garden/real-estate/in-vancouver-race-undercuts-the-discussion-on-affordability/article19873510/

#150 TurnerNation on 07.31.14 at 3:07 pm

Kaputs and Treasury Blondes today.

#151 omg on 07.31.14 at 3:13 pm

#44 Bob Copeland

I smile and shake my head when a MSN reader thinks everything’s great in America.
I’m actually glad I raised my 6 kids and am now 65 years old. I really don’t want to see America in 20-25 years. So sad.
————————-

Bob, Bob, Bob, shame on you. You are 65 so should know better.

Every generation thinks things are the worst they have ever been and that there is not chance of things getting better.

Do you think during:
– WW1 people thought things were good or would get better,
– or how about post 1929,
– or how about the dust bowl in the prairies in the 1930s,
– how about WW2,
– the cold war in the 1950s/60s,
– S&L crisis in early 1990s,
– dot com melt down and 9/11 in early 2000s.

So shit happens, we all thinks its worse than anyone has ever had it before and it will never get better. Its human nature.

But the world always goes on and things always do get better.

Until shit happens the next time – then we will again think its the worst thing that has ever happened.

#152 Mr. Frugal on 07.31.14 at 3:18 pm

I put all of my money into Cheese Mine stocks. My financial planner says this is a Gouda Investment.

#153 The real Kip on 07.31.14 at 3:21 pm

Buy ammo!

#154 Suede on 07.31.14 at 3:21 pm

It’s about time that the Equity back to school sale is starting!

Gold
Dow
Russel 2000
Oil

Everything must go! lol

#155 The real Kip on 07.31.14 at 3:23 pm

Don’t cry for me Argentina! Hahaha!

#156 DON on 07.31.14 at 3:45 pm

#147 Smoking Man on 07.31.14 at 2:21 pm

Garth I know you want this topic dropped.

But just need to read enforce how MSM works, 3 days ago when it was evident that MH17 was a false flag. Shot down by Ukraine.. I predicted MSM would drop the story like a hot potato…

For two days now I scan the headlines, main pages.. MH17.

NOTHING…….ZERO

Now know this…. There will be no real estate correction in Canada unless the guy who controls MSM decides one is due…..
8***********************************

Agreed on MH-17…. and the msm.

But the real estate slide is already upon us…no one takes notice of the smaller waves that come before the tsunami. Too many people buying crap with the equity from their houses. So many new cars on the road, young and old seem to be rich. or just in debt.

I only scan the MSM FOR THEIR IDIOTIC OPINIONS. ALWAYS GOOD TO KNOW WHAT STUPID AND NUTTY ARE THINKING.

#157 Panhead on 07.31.14 at 3:53 pm

Somebody gonna get a hurt real bad …

#158 DON on 07.31.14 at 4:12 pm

#111 Cdn Flier on 07.31.14 at 7:41 am

True story. A friend’s teenage daughter saw him on the computer. She said “Dad, is Facebook like Instagram, but for old people?”.

I think it’s time to offload FB shares.

***********************************

Yup the Millennial s are considered to be old now – at least from the perspective of the following generation. Older but not yet on firm footing with their comprehension of realty. Like every generation that thinks they are better than the last. Human nature is truly the cause of most human problems.

Hell 70’s beards made it back, even 70’s clothes for women…thank the higher power that men’ 70s clothes have yet to come back. And please no 80’s HAIR or Clothes.

#159 Big Ed on 07.31.14 at 4:13 pm

Hey Garth,
in case no one has told you today.
You Are a jerk

Way too late. — Garth

#160 Nomad on 07.31.14 at 4:42 pm

Started riding the Canadian real-estate debt-orgy using something else than the big banks. Instead of buying a single asset (a single house), I buy a bit of them all:

– Genworth Canada
– Home Capital

Genworth declared strong earnings. Stock shares up 6% since yesterday. Peter Hodson from i5Research likes both of those.

Home Capital declared strong earnings. Return on equity up 23%. Increased their dividend 12%. Andrew McCreath from BNN was loving HCG on Twitter yesterday.

Watch this on BNN today: http://www.bnn.ca/News/2014/7/31/Genworth-MI-Canada-Home-Capital-Group-buoy-Canadian-housing-optimism.aspx

#161 Hmmm... on 07.31.14 at 4:58 pm

Sell Gold as soon as possible. Feds QE is almost over…Inflation nearly negligible… Will surely drop to around $800’s by mid-2015.
Get out when you can.

#162 Macrath on 07.31.14 at 5:01 pm

#137 Sheane Wallace
Are you advising on timing the markets?
————————————————-
When you hear a freight train coming ,hear the horn, feel the rumble and smart guys like Garth are telling you that trains can be dangerous. Do you stay on the tracks or get the hell out of the way ?

http://tinyurl.com/ol2q3eg

#163 Nomad on 07.31.14 at 5:07 pm

DOW is down 317 points.
I hope you had your shopping list ready.
The only thing that was green today is OpenText.
I ran around the market and bought myself some treats.

The most delicious treat is those dividends that trickle in betwen today and the 7th. Pays 1/3 of my rent.

Fear is the mind killer.
Or the retirement killer.
Do it. Sell your GIC, buy XIC and CBO.

#164 crowdedelevatorfartz on 07.31.14 at 8:47 pm

@#161
Big Ed

My, how eloquent.

Pray tell, how was repeating the 3rd grade?

#165 Willy2 on 08.01.14 at 7:52 am

– How long does Mr. Turner continues to believe the garbage that’s coming out of the US ?
– How does Mr. Turner reconcile rising interest rates & higher growth ? The US has some $ 57 Trillion in debt and then rising interest WILL hurt the US economy.
– US is moving towards bankruptcy and foreigners are bailing out (=reducing their buying of T-bonds). See the TIC report from the FED.

Stop reading those doomer sites. You brain is addling. — Garth

#166 Willy2 on 08.01.14 at 3:54 pm

Mr. Turner,

My brains are NOT addling (see #167). The US is moving towards Hyper-Deflation and not inflation. Don’t worry, in both cases gold & interest rates will rise. In that regard I partially agree.

It’s on the way to hyper-nothing. — Garth

#167 Willy2 on 08.01.14 at 4:02 pm

Here’s another reason why the US is heading for disaster. In the 1970s, 1980s, 1990s median US Household income rose (on avarage). From 2000 up to late 2007 that same median Household incomce was (on average) flat. But after 2007 median Household income fell.

So, where ‘s the money for increased spending supposed to come from ? Borrowing more money ? In an environment with rising interest rates ?