Buckle up

Are you ready? Interest rates start trekking higher this week. T2 lowers the tax boom days later. And meanwhile economic turmoil and political uncertainty mount.

Just the time to jet off to Saint Martin with your spawn for March Break, on a $15,000 holiday with financing provided by Visa!

Seriously, most people are in a financial fog, staggering along unaware of the intense change that’s enveloping us. The borrowing continues along with the concentration of wealth in a single asset, and the naïve belief things in retirement will somehow take care of themselves. So, GreaterFool would like to provide you with some things to worry about, ruining your week.

The cost of money
It starts going up Wednesday. Financial markets are pricing, 100%, a rate increase by the Fed. It’s the second in four months, and looks like it will be the first of three this year. The US central bank rate will by then be vastly higher than ours, and the Bank of Canada will follow suit as surely as trouble follows Trump. In the meantime, our fixed-rate mortgages will reflect the change and a year from now you’ll wish you paid more attention.

The era of cheap funds is over. Kaput. No more deflation talk. No dreaming of negative-rate loans. No monetary crisis, US currency collapse, soaring gold or anything else the doomers promised you. It was all fake. The world about to unfold is one in which savings rates will barely budge, but borrowing costs will soar. And, by the way, when the Fed pops on Wednesday there’ll be no big stock market reaction. That was fake news, too.

The trouble with oil.
We’re back into the $48-per-barrel range, a drop of 10% of so from a few weeks ago. Bummer, since crude is our biggest export and Alberta’s economy runs on the stuff. The reason is supply, not demand. Encouraged by Trump, the frackers and horizontal drillers have been goosing production with the number of rigs in operation at a two-year high.

Stockpiles of US crude are at a record level while production has jumped to over nine million barrels a day. (In contrast, Canada turns out just 3.7 million barrels, two-thirds of that from the oil sands.) If the rig count keeps rising the US gets closer to energy self-sufficiency, and we get closer to torpor. Thank goodness Alberta is being run by socialists. Simple. Everyone can just get a cheque.

Brexit. It’s back.
When UK electors chose to stick a banger in the EU eye and vote themselves out of the free trade deal, markets were horrified. They got over it. Since last summer’s referendum the British market has been a great investment – up about 16%. The pound was pounded, however, and now everyone’s waiting for PM Theresa May to actually pull the trigger and begin the disentanglement process.

This is when the trouble starts, say analysts. Expect a ‘hard Brexit’ which means disruption and job loss, especially in the key financial sector. Making matters worse are those pesky Scots. That country is headed for another referendum on independence – its second in three years. That means the UK could actually take itself out of Europe, then break up. Yikes. The local government this week started the legal process for a new Scottish-not-British vote to be held by next Spring. Polls suggest it would win this time, paving the way for an indy Scotland to join the EU just as the Brits split.

Britain’s Parliament just voted to begin Brexit. No turning back now.

The Deplorables rise
Populism, as everybody’s calling it, is redrawing the political landscape. First Brexit, then Trump, now the Netherlands, then France and perhaps Germany. The Dutch vote on Wednesday, and the hard-right, anti-immigration guy is expected to lose – but he sure has stirred the pot, as shown by riots there in recent days. In France Marine Le Pen looks to be the next President, which will mean the end of Burkinis and another blow to globalism.

Free trade, open borders and the efficient movement of people, capital and jobs is at the heart of the social unrest sweeping through society. The genie’s out of the bottle. The world will probably get harder, less tolerant and more expensive as a result. Free trade has made it way easier for companies to outsource labour, cut costs, reduce prices and earn more. Borders, walls and tariffs will repatriate jobs, increase overhead, jack prices and fuel inflation. This is one reason Trump’s being called the Inflation President, and why the Fed is pre-emptively plumping rates. Wonder how many Ds voted for that?

See? It’s all connected. So you can worry about things you cannot control, or have a balanced portfolio and go hug your dog.

166 comments ↓

#1 Mandingo on 03.13.17 at 6:35 pm

Looks like your Buddy Ryan’s prediction on $70 oil really $#!T the bed.

#2 john on 03.13.17 at 6:38 pm

If you look at drilling rig count in USA in a longer timeline, things look very different.

https://www.investing.com/economic-calendar/baker-hughes-u.s.-rig-count-1652

Wait and see when Trump starts a new war, as every American president does. Imperialist pigs.

#3 turn of the tide on 03.13.17 at 6:40 pm

Garth,

As interest rates are rising in the US and then here at home, how are bond prices and yields supposed to react?

VAB.TO has lost almost 6% since end of September. Will we see a bounce back or more money flows into equities versus bonds therefore VAB keeps on dropping?

I’d love to understand this relation between bonds prices and interest rate moves.

Many thanks! Good luck everybody!

#4 TCContrarian on 03.13.17 at 6:41 pm

“The trouble with oil.

We’re back into the $48-per-barrel range, a drop of 10% of so from a few weeks ago. Bummer, since crude is our biggest export and Alberta’s economy runs on the stuff. The reason is supply, not demand. Encouraged by Trump, the frackers and horizontal drillers have been goosing production with the number of rigs in operation at a two-year high.” -GT
************************************************

Or…
at $48/barrel, oil is almost +100% what it was a year ago, and is now in a corrective phase before it begins the next leg up (towards $100/barrel).

What, oil drops a few bucks and everyone hits the ‘panic’ button, again?

— recency bias?

TCC

#5 HK Style on 03.13.17 at 6:42 pm

Is everyone here still cheering the so-called collapse of the Vancouver RE market?

Good, because once again, all the bears will be wrong – for the 9th year in a row.

Vancouver condo and townhouses are on fire, which will give move up buyers the equity to re-inflate the detached market. Christy’s homebuyer program seems to be working as planned.

Back in the summer, I said that the BC foreign buyers tax will be just like Hong Kong’s experience – the market flatlined for a bit, and then took off upwards again, for multiple years. It looks like Vancouver is following the same trajectory.

All this talk of Chinese capital controls is garbage – they have done nothing to stem the flow of Chinese capital looking to park legitimate and ill-gotten gains in Canadian RE.

Whenever bloggers here herald the collapse of the RE market or the ‘guaranteed’ interest rate hike, they jinx themselves – and events turn out opposite to what they predicted and wanted.

#6 HK Style on 03.13.17 at 6:45 pm

It starts going up Wednesday. Financial markets are pricing, 100%, a rate increase by the Fed. It’s the second in four months, and looks like it will be the first of three this year.

Total and utter jinx….

Oh, and for those of you sitting on the sidelines thinking that rising rates will pop the market, just remember ever little tick up means buyers rush out and flood the market for 4 months before their pre-approvals dry up…

If there are three increase this year, that means strong sales and rising prices for over a year….

#7 Daniel on 03.13.17 at 6:45 pm

Sigh. No Garth, Marine Le Pen is not going to be the president of France. They have a runoff system for president. She may win the first round, but in the second round she polling to lose by a margin in the high teens.

#8 Contractor on 03.13.17 at 6:50 pm

In case you missed my post yesterday. I’m ticked and must repeat…
***************

You have been greatly misinformed!

Perhaps nobody knows how to quantify it or data is skewed to tell a false story.

But Canada’s housing market bubble is a result of foreign money! It’s not 5%!!! It’s a lot greater!

Go out and talk to the contractors building the homes(I’m in the business) to see what they say. Just in the last few months for example Indian investor’s just put 50% down on 60 homes in one subdivision! This is common across Canada now…I talk with those in the business…

I recommend a 25% foreign ownership tax across Canada and 50% in major cities. Canadians should not suffer in they country they’re living.

This is the truth!

#9 Victor V on 03.13.17 at 6:52 pm

Why so few are worried about likely Fed rate hike this week

http://www.bnn.ca/why-so-few-are-worried-about-likely-fed-rate-hike-this-week-1.695034

“I think a March rate hike is a fait accompli,” said Sung Won Sohn, an economics professor at California State University, Channel Islands, who expects four rate increases in 2017. “The more important question is: How many more hikes they will give us for the balance of the year?”

If the Fed is no longer unsettling investors with the hint of a forthcoming rate increase, it marks quite a change from the anxiety that prevailed after 2008, when the central bank cut its key rate to a record low and kept it there for seven years. During those years, any slight shift in sentiment about when the Fed might begin raising rates — a step that would lead eventually to higher loan rates for consumers and businesses — was enough to move global markets.

#10 Evelyn on 03.13.17 at 6:52 pm

Go Trump go first!!!

#11 Erick on 03.13.17 at 6:56 pm

Marine Le Pen elected in France is a long shot.
The presidential election in France is different from other countries: there are two rounds.
The two best candidates at the first round qualify for the second round.
So, most probably, Marine Le Pen will qualify for the second round, but will ultimately be beaten by the other candidate (Emmanuel Macron according to the polls) qualifying for the second round (“union sacrée from left to right against facism as they will call it”)

#12 prairiegopher on 03.13.17 at 6:57 pm

Suddenly, baby Castro looks obsolete, bet everyone is happy they have a selfie to forget about all the mayhem that is about to unleash. Heck, we won’t even be able to fire up a dubie to take away the pain.

#13 crowdedelevatorfartz on 03.13.17 at 6:58 pm

….and with any luck Trump will be forced to eat his latest twitter bs session and apologize to Obama.
Oh Right.
The Donald is never wrong and never apologizes.

But his staff are sure kept busy making excuses……

#14 CL on 03.13.17 at 6:59 pm

We prepared our portfolios for interest rate increases and inflation in January 16 when the world was ending. We didn’t sell before the U.S. election we were waiting to buy but the drop and recovery was too fast. Of course, we were called crazy but if the reflection of our portfolios today is crazy then call me whatever you want! The world is not bad if one has prepared and adapted as always.

#15 Realtors in a panic on 03.13.17 at 7:04 pm

#5 and 6 HK Style

Realtors are getting desperate and angry in Vancouver as sales and prices are way down. Why so mad? Lol we know why you are so mad…..lol suffer realtor

#16 Victor V on 03.13.17 at 7:05 pm

Ross Kay weighs in on a potential Toronto foreign buyer tax: http://www.howestreet.com/2017/03/13/should-ontario-have-foreign-buyer-tax/

#17 Capt. Serious on 03.13.17 at 7:06 pm

I’d love to understand this relation between bonds prices and interest rate moves.

Interest rates up, bond prices down. Long duration bonds go down a larger multiple in relation to the interest rate change than short duration bonds.
* Generally true. There are some exceptions, beyond the scope of this blog.

The interweb is your friend:
http://www.finiki.org/wiki/Conventional_bonds

#18 Ret on 03.13.17 at 7:06 pm

“The Dutch vote on Wednesday, and the hard-right, anti-immigration guy is expected to lose – ”

There are 28 parties running. Not one of the parties is expected to have the needed 76/150 seats.

http://www.cnbc.com/2017/03/13/dutch-election-wilders-holland-vote-netherlands-everything-you-need-to-know.html

#19 pathcontrolmonk on 03.13.17 at 7:09 pm

#10 Evelyn –

The only thing more pathetic than a sanctimonious Canadian constantly telling everyone how much better Canada is than the US, is a mouth breathing Canadian who lusts after orange-faced American politicians.

#20 Po, sho nuff on 03.13.17 at 7:14 pm

Bankers losing their jobs?!
They’re lucky they’re not losing their heads.

#21 I'm stupid on 03.13.17 at 7:16 pm

Don’t get high on your own supply!

I sat with a realtor at a party on the weekend. We got to talking about Gta house prices. The realtor owns 4 properties, primary residence that was paid off then mortgaged to get down payment for the 3 rental homes. We got into a heated debate, I of course used facts and basic math to make my points about how this will not end well. The realtor used unicorns and pixie dust to justify prices. At one point I said that BMOs economist called this a bubble. The response was “well how much money does he make”. So I said I should listen to you then with your 6month sales course because that makes you an expert and that a PHD in economics is just a waste of time.

I then did an estimate in my head on the spot of the current market value of all 4 properties and said your 4 properties are work around 3.5million so every 1% decline will represent a 35k loss but the debt will remain. Let’s see how you feel in a few years when it’s declined 15% and your net worth is almost zero. I can bet you’ll remember this conversation!

I promised my wife I’ll never talk Realestate at a function again!

#22 bsallergy on 03.13.17 at 7:17 pm

Portfolio balanced, now need to get dog to hug.

#23 Dave on 03.13.17 at 7:20 pm

RE “Thank goodness Alberta is being run by socialists. Simple. Everyone can just get a cheque.”

Better than the goofballs that ran things before–betting the farm on big oil and failing to diversity the economy, not contributing to the Heritage Trust Fund, given big oil companies some of the lowest lease rates in the developed world and then running a deficit after years of 100/barrel oil

#24 Ricky on 03.13.17 at 7:21 pm

#15-tony
Thank you for your response sir
Uranium – what etfs or stocks would you advise to buy when oil drops to 44$?
Platinum certificates- I looked online and see the Scotia bank sells them, anywhere else you would advise to purchase?
Thanks tony
Ricky

#25 Old Salt on 03.13.17 at 7:22 pm

15 grand for a week in St. Maarten… Wow.

Spent 6 weeks there last winter aboard my boat. Fresh baguettes daily, many high end dinners in Grande Case, a few lo-lo ribs for lunches, daily happy hours. 4k max.

And your dog can join you at the table for dinner. Drives the tourist kids wild… “Why didn’t we bring our dog on vacation too!”

Forget the visa. Get a sailboat.

#26 AK on 03.13.17 at 7:24 pm

“It’s the second in four months, and looks like it will be the first of three this year.”
——————————————————————-
Some are calling for 4 this year.

#27 Sebee on 03.13.17 at 7:28 pm

Your dog will give you a hug because you feed him. He’s just using you.

https://www.theguardian.com/commentisfree/2017/mar/13/dogs-best-friend-least-honest-friend

#28 Dave on 03.13.17 at 7:30 pm

Of course they’ve done nothing to stem the flow of Capital from China. Trudeau has just massively increased immigration targets for Canada and has sent McAllum to suck up to the Chinese–I mean be an ambassador. I wonnder what they have on him?

What ‘massive increase’? — Garth

#29 meslippery on 03.13.17 at 7:33 pm

Free trade, open borders and the efficient movement of people, capital and jobs is at the heart of the social unrest sweeping through society.

——————————————–
Could not agree more, replace good paying jobs with
benifits with low pay jobs.
People are saying enough..

It was predicted in 1992 That giant sucking sound.

https://www.youtube.com/watch?v=Rkgx1C_S6ls

#30 Sierts on 03.13.17 at 7:33 pm

Seen from the outside something is fishy about your housing boom/bubble.

if supply is so short, demand so high to produce astronomic prices – why is your construction industry not booming?

And to touch the eternal theme:
If foreigners are willing to pay your inflated house prices, why are you Canadiens not happy for the money, that will stay in Canadien’s hands, when the bubble is burst?
I can’t believe, that there are so many stupid foreigners with big money to spend at your doorstep.
People, who make millions, be it from business or from corruption can not all be so braindead, to not notice, that you reached “peak housing”.

From your point of view, I’m a foreigner.
if I wanted to invest outside of Paraguay at the moment, I would choose Argentina, Bolivia or even Venezuela.
(countries, that are touching rock-bottom or just trying to raise again.)
Buy or build a house in South America costs about ten to twelve years worth of rent. (after tax and costs)
In Canada the actual “worth” of houses seems to be higher than 20 years of rent…

So, which foreigner, who got all his marbles together, would invest in a Country, that is broke, buying into a mega bubble?

*going back to the last row, eating popcorn and watching the drama evolve*

#31 Smoking Man on 03.13.17 at 7:35 pm

A great Patriotic Canadian and future best selling author being forced out of the country by the lefy cult of insanity.

You’re lose…T2. And my buds at cap markets..Im going to miss you guys and gals.. I realy liked being your vba bitch. Getting paid to do your hobbie. It was good.

But it’s time to run…..

#32 TurnerNation on 03.13.17 at 7:35 pm

I recall with fondness the days when this pathetic weblog would give practicums on Udder cream usage.

TO Semi appreciated by 1m. Correction…so what.

http://www.blogto.com/city/2017/03/sold-bloordale-house-price-jump-380-margueretta-street/

Take this Bloordale house at 380 Margueretta St., for instance. When it was on the market last spring, it was listed at $789,000. That proved a bit low even though the place needed some major upgrades, and it ultimately sold for $1,126,000.

It was re-listed at the end of February for $1,449,000, which was a conservative but not ridiculous price to start the bidding at. Just a few days later, it closed for $1,850,001 — about what you’d expect these days.

#33 Honey Oil Tycoon on 03.13.17 at 7:40 pm

#12 prairiegopher on 03.13.17 at 6:57 pm
Suddenly, baby Castro looks obsolete, bet everyone is happy they have a selfie to forget about all the mayhem that is about to unleash. Heck, we won’t even be able to fire up a dubie to take away the pain.

Ha ha ha!
That’s doobie.
I like ‘baby Castro’, I have my own name for him, but it’s not politically correct, so it could get deleted.
Let’s say it brings to mind the way he enunciates and rhymes with Maggie T.

#34 Ex-Cowtown on 03.13.17 at 7:40 pm

Not sure why populism gets such a bad rap. Fundamentally it’s just regular Joe’s and Jill’s who’ve had enough of unelected elitists wanting to tell them how to live their lives.

So let’s make a list of countries where the elites have done a great job.

There’s ????

and ????

and ???

and ???

ahh… never mind.

Now how about a list of places that ruling elites screwed it all up?

The Mayan Empire

The Soviet Union

Yugoslavia

Zimbabwe

Haiti

Hitler’s Germany

Czarist Russia

Venezuela

Cuba

Obama’s USA

and on and on… Elitism… What could possibly go wrong?

#35 the Jaguar on 03.13.17 at 7:46 pm

“Free trade, open borders and the efficient movement of people, capital and jobs is at the heart of the social unrest sweeping through society. The genie’s out of the bottle.”

Service has sure suffered as a result of the above. Had to call my phone provider today and the call centre for the company I deal with is now partially based in the Philipines. The person I spoke to was well intentioned, but had a limited grasp of english with a heavy accent. I did my best to be patient, but had to get off the phone and call back for another responder . No disrespect intended, but offshoring jobs sometimes results in a poorer service level. Costs are reduced for big companies, but jobs are also lost. This is really a no brainer. People are pissed off . The genie really is out of the bottle, Garth. And the only surprise is why it took as long as it has.
The next phase will be bio-metrics and robotics. Those will kill more jobs, even in those countries where the jobs were shipped. The factories will be relocated to politically and industrially safe countries where machines will do most of the ‘labour’. You don’t have to pay a machine wages or benefits. Smart young people will get the training required to be a part of that scenario. Meanwhile, the crabs will just keep trying to climb out of the pot.

#36 analytical breakdown on 03.13.17 at 7:49 pm

Garth is still on the globalism cool-aid, which is obviously more disruptive than smoking pot.

“Free trade has made it way easier for companies to outsource labour, cut costs, reduce prices and earn more.”

Great result, what’s not told is that it was achieved with the help of unprecedented money printing that distorted the global economy, screwed up among others the Canadian real estate and forgot to share the more earnings , the huge majority of people did not see raise for 2 decades in exchange of cheap shirts.

Oh wait, the Chinese and Vietnamese dudes made more money.

Who cares? How does it matter to me?

Obviously Garth has the answer: “See? It’s all connected. So you can worry about things you cannot control…”

Spoken like a true politician.

The alternative would have been of course the total collapse of the economic system and modern society, as we all remember.

Compared to that it is really not such a big deal that the great global globalism also managed to create unprecedented number of refugees with local wars, which required a whole new meaning of “the efficient movement of people”.

The icing on the cake is that Garth’s favored candidate, Hillary Clinton, as secretary of state in charge while this unprecedented number of refugees were created, calls deplorable everyone who has any problem with this, hoping to win the presidency.

Just a couple of hours ago the Turkish PM announced that an other 2-3 million people will take part in a new round of “the efficient movement of people”.

It will likely cause more of that what Garth’s twisted logic calls “the anti-immigration guy … sure has stirred the pot, as shown by riots there in recent days.”

It is his fault obviously that “the genie’s out of the bottle.”

If only the anti-immigration guy would stir less, the entire world would keep prospering under total global surveillance, creating more billionaires than ever before.

Obviously the anti-immigrant guy who never run a government is who turned the beautiful idea of globalism into an other crack-pot ideology like Communism.

Now drop the bias and read the words again. You might learn something. — Garth

#37 Grantmi on 03.13.17 at 7:55 pm

#5 HK Style on 03.13.17 at 6:42 pm
Is everyone here still cheering the so-called collapse of the Vancouver RE market?

Good, because once again, all the bears will be wrong – for the 9th year in a row.

Vancouver condo and townhouses are on fire, which will give move up buyers the equity to re-inflate the detached market. Christy’s homebuyer program seems to be working as planned.

Back in the summer, I said that the BC foreign buyers tax will be just like Hong Kong’s experience – the market flatlined for a bit, and then took off upwards again, for multiple years. It looks like Vancouver is following the same trajectory.

All this talk of Chinese capital controls is garbage – they have done nothing to stem the flow of Chinese capital looking to park legitimate and ill-gotten gains in Canadian RE.

Whenever bloggers here herald the collapse of the RE market or the ‘guaranteed’ interest rate hike, they jinx themselves – and events turn out opposite to what they predicted and wanted.

#6 HK Style on 03.13.17 at 6:45 pm
It starts going up Wednesday. Financial markets are pricing, 100%, a rate increase by the Fed. It’s the second in four months, and looks like it will be the first of three this year.

Total and utter jinx….

Oh, and for those of you sitting on the sidelines thinking that rising rates will pop the market, just remember ever little tick up means buyers rush out and flood the market for 4 months before their pre-approvals dry up…

If there are three increase this year, that means strong sales and rising prices for over a year….

You’re an idiot!!

#38 Grantmi on 03.13.17 at 7:59 pm

Fraser Valley numbers in BC are PLUNGING!!!

http://www.fvreb.bc.ca/statistics/Package201702.pdf

Grand Totals Feb-17 Feb-16 % change Jan-17 % change
Sales 1,396 2,387 -41.5% 976 43.0%
Average Price $ 617,359 $ 688,301 -10.3% $ 626,498 -1.5%

#39 Nonplused on 03.13.17 at 8:02 pm

Europe is done. You can’t combine socialism with open borders. Socialism 100% depends on their being plenty of jobs for people who are paying in and relatively few recipients drawing out of the system. With open boarders, a country like Germany will draw in financial immigrants by the millions (as we have seen) because being on the dole in Germany as a worst case scenario is hugely better than what they had before. However unless there is a similar increase in high paying jobs for the immigrants to take, the state becomes overwhelmed.

Immigration policies should always be based on what’s good for the country, not on what is good for people coming from other countries. If we need immigrants because our unemployment rate is too low and good jobs are going unfilled, then we should have immigration. If our unemployment rate is high and too many people are on welfare, immigration should be low or non-existent. If we don’t get that, soon everyone will be working for peanuts, millions will be on welfare, and tax revenue will be non-existent.

I think that is why things like the GST and Carbon taxes are becoming increasingly popular with governments. (And now soda taxes of all things). They tax the poor directly. The strategy seems to be, at least in Europe, allow vast immigration to drive down wages and then shift to consumption taxes.

The end of socialism is always the same. Sooner or later you run out of other people’s money.

#40 IM in C on 03.13.17 at 8:15 pm

Interest rates here in Canada will NOT be going up this week, or any other week this year or next

#41 Smoking Man on 03.13.17 at 8:18 pm

Finally the lefty loons are going down….

https://youtu.be/YrLk4vdY28Q

#42 Chaddywack on 03.13.17 at 8:19 pm

@37 Grantmi

Seems to show that things are trending upward price-wise again!

Good thing for people wanting to sell in the Vancouver area as it shows it’s a sellers market.

#43 The Great Gazoo on 03.13.17 at 8:21 pm

“In the meantime, our fixed-rate mortgages will reflect the change and a year from now you’ll wish you paid more attention.”

5 year Canada bond yield broke through 1.30% today, hasn’t been that high in a couple of years . Higher mortgage rates on the way. Been helpful for those preferred shares too – good call Garth and team.

http://www.marketwatch.com/investing/bond/tmbmkca-05y?countrycode=bx

#44 ANON on 03.13.17 at 8:22 pm

No more deflation talk

If you say so… ;)

#45 Smoking Man on 03.13.17 at 8:27 pm

MSM privlage to control the herd is officially over.

It was the russans.

Bahhaha.

#46 Timmy on 03.13.17 at 8:30 pm

Re#37 Fraser Valley Numbers Plunging:
Seems like they have much further to go, come on, who would pay 800K for a house in Langley? A grinding hour commute from Vancouver. How would even want to live there?

#47 The Wet Coast on 03.13.17 at 8:40 pm

When I lived in the US I got hooked on FOX news. So nice we have it here in Canada too…for a fee. Bill O’Reilly is a great unwind from this blog.

#48 MF on 03.13.17 at 8:41 pm

19 pathcontrolmonk on 03.13.17 at 7

Right about Canadians mocking the US. Wrong about Trump.

This blog constantly has comments bemoaning Government policies that have screwed us all over like ZIRP, CMHC, 40 year mortgages…basically the creeping socialism stifling businesses. But when the Americans vote against all of that people like you cannot comprehend it.

Why?

MF

#49 MF on 03.13.17 at 8:47 pm

#33 Ex-Cowtown on 03.13.17 at 7:40 pm

It’s because the radical modern left elite has demonized anyone who disagrees with them through social manipulation (newspapers, TV, colleges and universities). Basically brainwashing.

MF

#50 MF on 03.13.17 at 8:53 pm

#144 crowdedelevatorfartz on 03.12.17 at 2:51 pm

1973 oil embargo as a start.

MF

#51 jay on 03.13.17 at 8:58 pm

B.C Government has found a solution to housing affordability in B.C. http://www.scmp.com/comment/insight-opinion/article/2040613/61-sq-ft-flats-hong-kong-why-not-just-bury-us-coffins-and-be

#52 Trojan House on 03.13.17 at 8:59 pm

“…vote themselves out of the free trade deal…”

Wrong. They voted to get their sovereignty back from unelected politicians in Brussels making decisions not in the best interests of Britain.

#53 White Trash, Mentally Defective Trump Supporter on 03.13.17 at 9:03 pm

The CBO supposedly says today that Trump care will cost 24 million Americans their health care by 2026, and 14 million by next year.

http://www.theglobeandmail.com/news/world/us-politics/14-million-would-lose-coverage-under-trump-backed-health-bill-congress-analyst/article34289560/

FAKE NEWS!!! That’s what I say. Those people will be exercising their FREEDOM!!! not to get sick.

The budget savings will allow more tax cuts for high earners who will then CREATE JOBS!!!

We’ll have money to build MORE WALLS!!!!!

AMERICA IS BECOMING GREAT AGAIN!!!!

#54 Entrepreneur on 03.13.17 at 9:09 pm

It is time to think of the people within the nation/borders and I would like to see my taxpayer money to support within these lines.

I would like to see our communities come back to life and see families that are content with dreams.

On the Earth we have nations for a reason, bring it back and keep it the way it was (to a certain extent).

Can always trade but make it fair trade not free trade. Give the people of a nation a fighting chance.

#55 anlytical breakdown on 03.13.17 at 9:13 pm

#35 analytical breakdown on 03.13.17 at 7:49 pm

Now drop the bias and read the words again. You might learn something. — Garth

Had you applied the same principle for the words, there would be nothing to drop.

Maybe there is a lesson somewhere there, too.

#56 Andrew Woburn on 03.13.17 at 9:15 pm

Don’t you just love the way everything is getting faster and easier?

Now you don’t have to waste time on porn sites looking for malware. It comes pre-installed on your phone! Can’t beat that.

“At least 36 high-end smartphone models belonging to popular manufacturing companies such as Samsung, LG, Xiaomi, Asus, Nexus, Oppo, and Lenovo, which are being distributed by two unidentified companies have been found pre-loaded with malware programs.”

http://thehackernews.com/2017/03/android-malware-apps.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+TheHackersNews+%28The+Hackers+News+-+Security+Blog%29&_m=3n.009a.1448.ub0ao09enu.uy4

#57 Rexx Rock on 03.13.17 at 9:17 pm

It doesn’t matter if the Us raises rates.Canadians will still enjoy a variable 5 year rate less than 2%.We will be like Japan there is no turning back.UK and EU same boat.

#58 Smoking Man on 03.13.17 at 9:20 pm

49 MF on 03.13.17 at 8:53 pm
#144 crowdedelevatorfartz on 03.12.17 at 2:51 pm

1973 oil embargo as a start.

MF

I don’t want to take away from your thunder young lad. You’re doing good..

A rare moment in your generation. Good thing the teachers never got to you…

What maggot kicks down head stones from really good hearted chartable pepole.

I would go on but being i might br branded a racist by calling out lnsanity . Not worth it.

Keep up the good fight..

#59 BobC on 03.13.17 at 9:20 pm

Everything seems to be negative news and yet I’m smelling opportunities galore. I don’t think now is the time to bury your head in the sand and wait it out.
We have to remember more millionaires we’re created during the ’30’s depression then any other time.
My 40% safe etf’s are killing me here in the states.
Garth could you shift gears once in awhile and point out what you see as opportunities? I’d bet your ice cream store ROI % is 3 times your portfolio returns.
Help some of the young non millionaires that follow you.

#60 Marius on 03.13.17 at 9:24 pm

https://thinkprogress.org/trumps-policies-will-wreck-coastal-property-values-before-sea-level-rise-does-b3ac326ebfb6#.rz80c7u2d

#61 oncebittwiceshy on 03.13.17 at 9:40 pm

Chaddywack on 03.13.17 at 8:19 pm
@37 Grantmi

Seems to show that things are trending upward price-wise again!

Good thing for people wanting to sell in the Vancouver area as it shows it’s a sellers market.

Sorry buds, you’re reading wrong or perhaps it isn’t copied well. In any case those are 2017 numbers first ………. 10% price drop…..so far.

#62 SunShowers on 03.13.17 at 9:40 pm

“Free trade has made it way easier for companies to outsource labour, cut costs, reduce prices and earn more”

Yep, and all along the way, nobody thought to stop and ask if this was a good thing for the nation as a whole. Nobody asked if it was fair or sustainable that the rich can capture nearly all the gains of globalization, while externalizing the costs, leaving the poor and the middle class to pick up the tab. It was just assumed that whatever is good for the upper crust of society is good for everyone.

We’ve known since the 80s that Trickle Down is a farce, and yet we’ve allowed open borders and free trade to play Reaganomics with the global economy. Now we have a Plutonomy (Citigroup’s words, not mine) and a massive wealth gap that threatens to grow ever wider as the economic landscape begins to once more resemble gentry and rabble.

If this doesn’t reverse, prepare for pitchforks.

#63 dr. talc on 03.13.17 at 9:41 pm

The Bolsheviks who took over eastern Europe used to enter peoples apartments and houses and tell them they had too much space. Other families, they did not know, were then moved in with them. The Bolsheviks are still operating today under different names.

HGTV has a show called ‘Tiny Houses’ or whatever.
I envy you if you’ve never seen it.
It’s garden variety propaganda

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

Agenda 21 Programming Tiny Houses and Micro Apartments

#64 -=jwk=- on 03.13.17 at 9:46 pm

@ #30
So, which foreigner, who got all his marbles together, would invest in a Country, that is broke, buying into a mega bubble?

one who has tons of illegal cash, and wants a simple-you-cant-be-turned-down visa process, easy access to citizenship, free high quality public schools, native english speakers, long term governments, stable yet flexible banking system, and daily direct flights to major chinese cities. None of which exist in Venezuela at the moment. So. Pretty much anyone with a brain would choose Canada over any country you mentioned…

The money the Chinese spend in Canada is useless. It doesn’t exist. They can’t get caught with it. Spend it or lose it. So what if they pay 1M for a house in Toronto that winds up being worth $300k? They own a house in Canada, outright, which they got for free. They don’t care about the losses!

#65 ronh on 03.13.17 at 9:47 pm

Something to discuss at the coffee shop:

http://www.zerohedge.com/news/2017-03-13/banking-secret-neither-economists-nor-laypeople-know-%E2%80%A6-which-makes-fatcats-richer-wh

#66 millmech on 03.13.17 at 9:50 pm

#6
You are correct about them continuing to buy on every rate increase but extrapolate those increases out for the next five to seven years and see if they can afford a renewal at 7%-10%.
The buyers who over extend themselves to get into the market who can barely afford the mortgage and are financing the rest of their lives on credit will be in for a rude awakening when renewal time comes up.
How can you afford to pay 10%-20% down on a $500,000-$750,000 mortgage?

#67 Andrew Woburn on 03.13.17 at 9:57 pm

Feeling Trumped?

This drug brings fast relief.

https://www.impeachara.com/

#68 domain on 03.13.17 at 9:59 pm

I’m sticking to my expectations of a reasonable rally for Gold after this rate hike, which the market expects to be close to 100%. A common misperception is that the price of Gold is inverse to interest rate directions, but it’s price is far more complex than just interest rates.

There is far too much uncertainty right now, and the market is largely ignoring it, with the expectation of earnings catching-up to valuations being the story, along with the Trump trade.

But there has to be a correction coming soon with the blow-off top in the Dow, never-mind the one in TO real estate, or Canadian real estate in general. And with cheap money fuelling stock buybacks in the past, will rising interest rates end that story as well? Global credit tightening from all corners, that will precede the market decline.

Now, REITs – maybe I will buy some of those if they drop by 40% from where they are now, but I would like to find out which ones are more-heavily in residential investment as opposed to ones heavily concentrated on commercial retail outlets.

The present risks seem to be well-identified as Garth has pointed out here, but I wonder what unexpected event will upset the apple cart?

#69 Smoking Man on 03.13.17 at 10:05 pm

The lefts admittance to the campfire marshmallow roast, brothers in Starbucks.

You need to be insane to join that gang.

I’m going with JD induced alien plasma flier vacatons in vegas.

#70 conan on 03.13.17 at 10:11 pm

If robots and AI are going to devastate jobs then Trump’s policy of bringing back the jobs makes a lot of sense.

Normally I am a globalist, but if jobs are going to be nuked then what he is doing is not that dumb.

BTW managed bond funds are better if you expect interest rates to rise.

#71 The Great Gazoo on 03.13.17 at 10:12 pm

“The trouble with oil.”

Where do I begin.

“Encouraged by Trump, the frackers and horizontal drillers have been goosing production with the number of rigs in operation at a two-year high.”

True but we live in a world that consumes 97.5 million bbls/day, see link to IEA’s latest monthly oil report. No need to read anything, simply check out the nice world oil demand chart.

https://www.iea.org/oilmarketreport/omrpublic/

Point is that US shale/tight oil production is only a small portion of world supply as discussed more below. Given world oil demand is growing by over 1 million bbls/day annually, the world is going to need every drop of this oil.

“Stockpiles of US crude are at a record level while production has jumped to over nine million barrels a day. (In contrast, Canada turns out just 3.7 million barrels, two-thirds of that from the oil sands.) “

True enough, the US produces around 9 million bbls of which shale oil is roughly half, see link to the following US EIA field report.

https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=WCRFPUS2&f=W

Part of the reason US stockpiles having been growing is that traders were holding oil in floating tankers and are now cashing in their chips because the oil market has moved into backwardation from contango. Estimates are that floating storage is getting close to the bottom, but hard to know for sure when they will stop transferring to US land based storage or simply empty out. Point is this is a TRANSFER within the world – there is no net increase from this component.

“If the rig count keeps rising the US gets closer to energy self-sufficiency, and we get closer to torpor.”

Not at chance. The US consumes 20 million bbls per day – yes TWENTY and produces around 9 million bbls/day, see Table 1 in the link below.

https://www.eia.gov/petroleum/supply/weekly/

Estimates suggest at best production in the US may grow by 1/2 million bbls per day in 2017. Even in the boom boom days of $100 per bbl oil (and easy access to money), US production at best grew at 1 million bbls per day. You can bet that producers drilled some of their best locations and are now moving down the list.

US self-sufficiency in the foreseeable future is a myth propagated by pathetic blogs like this. I realize you used the words, “gets closer to”, but it will not even get close.

The media is overly focused on US inventories, yet world-wide inventories are falling, see quote from IEA report referenced above.

“OECD total oil stocks fell nearly 800 kb/d in 4Q16, the largest fall in three years”

And that was before OPEC and non-OPEC producers agreed to cut production by 1.8 million bbls per day, with excellent compliance from OPEC members I might add – Russia not so much but they are only in for 300k bbls/day anyway.

http://www.teletrader.com/opec-output-cut-compliance-at-98-5/news/details/37977132?ts=1489452702812

Oh by the way, the IEA estimates that world-wide oil demand will grow by 1.4 million bbls per day in 2017 and all expectations are the demand will grow by over 1 million bbls/day for the next few years.

In summary, you simply can’t look at what’s happening in North America and make a believable forecast for what will happen to oil prices – which as you well know is a world-wide commodity. Might help shed some light for me on why you’ve been suggesting that housing prices were overpriced for the last 8 years. Just not seeing the bigger picture Garth?

In the near-term we could see some downward pressure on oil prices but in the medium and longer term oil prices should improve and with it the Alberta and Canadian economy.

Ryan’s call for $60 (as I recall) later this year still holds in my view.

#72 Smoking Man on 03.13.17 at 10:13 pm

Butts finally bought my book.

Feb 13th progress

#73 Leebow on 03.13.17 at 10:21 pm

So many like totally awesome investment ideas today! Will Snapchat go up 200% or 300% what’s the blog consensus?

#74 Ace Goodheart on 03.13.17 at 10:37 pm

We might be a wee bit out of luck here in Canada. Yes the USA can raise interest rates. Canada cannot. We do not have the tax base to pay the added interest on our provincial and federal debt. There is nowhere to get the money from. We are already taxed more than we can pay.

Looks like we’re resigned to currency devaluation and out of control hard asset appreciation.

#75 Jobs are automated where the jobs are on 03.13.17 at 10:42 pm

70 conan on 03.13.17 at 10:11 pm

If robots and AI are going to devastate jobs then Trump’s policy of bringing back the jobs makes a lot of sense.

Normally I am a globalist, but if jobs are going to be nuked then what he is doing is not that dumb.

Big leaps in automation create wealth for the future, far more than anything else.

Jobs are automated where the jobs are.

That’s the name of the game.

#76 Jobs are automated where the jobs are on 03.13.17 at 10:55 pm

You don’t bring the jobs back to employ people, you bring the jobs back to deploy robots.

Only robots can create the wealth to pay for people to do nothing but their hobbies.

That will last until AI reaches singularity.

At that point people who can play the cutest pets for AI will only survive.

#77 AB Boxster on 03.13.17 at 10:58 pm

#71 The Great Gazoo on 03.13.17 at 10:12 pm

—————————-
Good analysis on oil.
As the IEA has been warning, global investment in oil exploration is at a dangerously low level due to low prices.
As they have warned:
‘Traditional concerns related to oil and gas supply remain – and are reinforced by record falls in investment levels. The report shows that another year of lower upstream oil investment in 2017 would create a significant risk of a shortfall in new conventional supply within a few years.’

In short, the world is setting itself up for a massive spike in energy prices in the near future, because there is not enough exploration happening today. Shale is a stop gap but cannot replace declining conventional supplies.

So short term, oil prices may not move much.
But within 3-5 years, as worldwide demand continues to increase, and there are no reliable reserves to replace current production declines, things may be very different.

Too bad the brilliant progressive leaders of the world can’t see past their social engineering programs or the election cycle, to understand the basic laws of supply and demand.

#78 WUL on 03.13.17 at 11:03 pm

Two Wows. One on topic and one off topic.

First which is on. Ignore Goldman Sach’s calls on oil. Manipulative bullshit. Rely on Ryan and The Great Gazoo.

Off topic Wow. The Pens and Sid’s spin through the Prairies and the tilts with the Oilers and Flames. Spectacular hockey. Not since Foster and Ward “high above centre ice in the Gondala broadcasting to the ships at sea” have I seen the like.

Oh, real estate sales in Cowtown are “hellza poppin”. Banner months Feb and Mar for sales numbers. Optimism which may be misplaced. Possibly recreational pharmaceuticals. Time will tell.

#79 will on 03.13.17 at 11:08 pm

“Populism, as everybody’s calling it”

Well, I for one am not calling it that.

-love

#80 AB Boxster on 03.13.17 at 11:12 pm

75 Jobs are automated where the jobs are on 03.13.17 at 10:42 pm

Big leaps in automation create wealth for the future, far more than anything else.
———————-

Yes but the real question you ignore is ‘wealth for who’?

Today’s automation is focused not on just efficiency or replacing mundane tasks, but on replacing workers, many of them knowledge workers.

Much of the new technology will be replacing highly paid white collar workers as much as it replaces lower skilled labour.

Why does the world need accountants when software can handle it all?
Why do lawyers need to know historical case law when it is all on-line and referencable in milliseconds?
Why will the world need investment advisors when the roboadvisor can adjust and rebalance your portfolio coninuously?

Yes wealth will be created, for some.

But the potential social and economic upheaval from the massive job losses, for all classes of workers, is the issue not being addressed.

Oh, well. Lets just let it happen, and see how it goes.
Globalism has worked out so well, right?

#81 Lee on 03.13.17 at 11:13 pm

Anyone,

Did I hear Ross Kay say all economists don’t know squat when it comes to the housing market? And did he say tsunami in describing what’s going to happen to Toronto in July? Can’t be the same Toronto I know?

#82 SunShowers on 03.13.17 at 11:37 pm

#76 Jobs are automated where the jobs are
Big leaps in automation create wealth for the future, far more than anything else.

You don’t bring the jobs back to employ people, you bring the jobs back to deploy robots.

Only robots can create the wealth to pay for people to do nothing but their hobbies.

————————————–

I actually can’t tell if this is satire or not (decades of internet use have damaged my sarcasm detector beyond repair. Google Poe’s Law, you’ll know what I mean). But just in case it isn’t satire:

The wealth created by automation can only be claimed by 2 groups:

1) People who own the machines (business owners)
2) People who already have enough income to meaningfully invest in the aforementioned businesses.

Now, would you care to explain how the wealth accumulated by these two (comparatively small) groups will be distributed so that the VAST majority of people who don’t fit into groups 1 or 2 aren’t left unemployed, destitute, and pitted against each other fighting tooth and nail for the small and ever-shrinking pool of jobs that have not yet been automated? Thanks.

Bonus points: Once you have an answer, please explain why it has not yet been applied to remedy the spate of wage depression and wealth inequality we’re seeing now due automation and globalization, and what needs to change in order for it to be. Thank you!

#83 Oil is dead like coal on 03.13.17 at 11:39 pm

Oil will as valuable as coal is today . Its just a matternor time. Tesla os creating the future with no gas needed. Oil consumption will go down not up. Alberta is finished.

#84 TRT on 03.13.17 at 11:45 pm

Don’t know if this gets posted but here goes.

Globalism could have been done in a proper way. But nope. The greed of a few (financial industry, multinationals and 1% wealthy {not 1% income earners}) wanted an acceleration of the policies. This left many people behind; Job losses and out of control house prices.

The debt people are taking on is a response to housing their families when the floodgates have been opened. there are 1million plus 10 year visa holders from China alone. And no, the wealthy don’t work 9-5; they live off investments and travel.

So where from here? Well globalism is in for a rude awakening. People are going to revolt and there is no turning back. Expect some big wars in the next 2 decades. This experiment will be tried again in a few decades and hopefully the greed of the aforementioned groups don’t screw it up again.

For your part, try to be a little more transparent for the sake of at least Canada’s future.

#85 TRT on 03.13.17 at 11:47 pm

And people: Quit with the robot and self driving BS. These things are at least a half century away. If ever.

Ever wonder why the MSM runs these stories. Don’t. Be. Fools.

#86 TRT on 03.13.17 at 11:50 pm

And regarding vancouver real estate. Every single residence that was less than $1 million one year ago is higher in price today!

So much for the correction. Only thing that corrected is $3 Million+ HOMES.

#87 Ponzius Pilatus on 03.13.17 at 11:54 pm

#34 Ex-Cowtown on 03.13.17 at 7:40 pm
Not sure why populism gets such a bad rap. Fundamentally it’s just regular Joe’s and Jill’s who’ve had enough of unelected elitists wanting to tell them how to live their lives.

So let’s make a list of countries where the elites have done a great job.

There’s ????

and ????

and ???

and ???

ahh… never mind.

Now how about a list of places that ruling elites screwed it all up?

The Mayan Empire

The Soviet Union

Yugoslavia

Zimbabwe

Haiti

Hitler’s Germany

Czarist Russia

Venezuela
Cuba
Obama’s USA
and on and on… Elitism… What could possibly go wrong?
—————
Garth, this idiot is taking up far too much space.
Time to ban posters with low IQ.

Careful what you wish for. — Garth

#88 TRT on 03.13.17 at 11:54 pm

#45 Smoking Man on 03.13.17 at 8:27 pm
MSM privlage to control the herd is officially over.

It was the russans.

Bahhaha.
———————–

They are done!

People complaining about Trump haven’t seen nothing yet. Wait until the 2 million people in the USA illegally start heading North next year.

We will see then how big Canadian hearts are.

#89 Ponzius Pilatus on 03.14.17 at 12:03 am

#39 Nonplused on 03.13.17 at 8:02 pm
Europe is done. You can’t combine socialism with open borders. Socialism 100% depends on their being plenty of jobs for people who are paying in and relatively few recipients drawing out of the system. With open boarders, a country like Germany will draw in financial immigrants by the millions (as we have seen) because being on the dole in Germany as a worst case scenario is hugely better than what they had before. However unless there is a similar increase in high paying jobs for the immigrants to take, the state becomes overwhelmed.

Immigration policies should always be based on what’s good for the country, not on what is good for people coming from other countries. If we need immigrants because our unemployment rate is too low and good jobs are going unfilled, then we should have immigration. If our unemployment rate is high and too many people are on welfare, immigration should be low or non-existent. If we don’t get that, soon everyone will be working for peanuts, millions will be on welfare, and tax revenue will be non-existent.

I think that is why things like the GST and Carbon taxes are becoming increasingly popular with governments. (And now soda taxes of all things). They tax the poor directly. The strategy seems to be, at least in Europe, allow vast immigration to drive down wages and then shift to consumption taxes.

The end of socialism is always the same. Sooner or later you run out of other people’s money.
————
Another idiot who has no clue what he’s talking about.
Ban,ban and Ban.

#90 Ponzius Pilatus on 03.14.17 at 12:09 am

—————
Garth, this idiot is taking up far too much space.
Time to ban posters with low IQ.

Careful what you wish for. — Garth
———–
No problem.
Go ahead.

#91 Pete from St. Cesaire on 03.14.17 at 12:13 am

Now, would you care to explain how the wealth accumulated by these two (comparatively small) groups will be distributed so that the VAST majority of people who don’t fit into groups 1 or 2 aren’t left unemployed, destitute, and pitted against each other fighting tooth and nail for the small and ever-shrinking pool of jobs that have not yet been automated?
——————————————————-
Learn about the Georgia Guidestones. Then read the last line of the 7th verse of Kipling’s “The Gods of the Copybook Headings”. That’s their plan for us. What’s your plan for them?

#92 BobC on 03.14.17 at 12:37 am

83 Sunshowers

Somebody needs to design the kiosk in the fast food restaurant. Then somebody else has to write the software. Then somebody else has to manufacture it. Then another person has to install it. By gosh somebody else may have to be hired to service and repair it. Seems like a lot of jobs created to replace one obsolete job of asking if they want fries with that and ringing it up.
Just saying.

#93 crowdedelevatorfartz on 03.14.17 at 1:32 am

@#90 Ponzi Pilates
“Ban,ban and Ban.’
********************************************

Pray tell.
What does a 1973 underarm deoderant commercial have to do with stupid posters?

https://www.google.ca/url?url=https://www.youtube.com/watch%3Fv%3DrmHnt7BmOxA&rct=j&frm=1&q=&esrc=s&sa=U&ved=0ahUKEwiHzeCPotXSAhUCyWMKHdhDDtAQtwIIFzAA&usg=AFQjCNFYBr25Se5Q18-vy2W8abxmBZ_KrA

#94 crowdedelevatorfartz on 03.14.17 at 1:47 am

@#50 MF
“The 1973 oil embargo as a start’
********************************************

Well if you mean joining in with the Americans, Brits and Canadians as supporters of Israel in the “73 war thus incurring the wrath of oil producing Arab states.
The result was mostly feel good propaganda.
On both sides of the oil embargo conflict

But dont take my word for it….
… from the Amsterdam University Press article dated 2004.
page 255.
And I quote

“In many respects, The Netherlands came through the oil crisis rather well.
The embargo soon proved ineffective, in the sense that Dutch oil imports
at the end of 1973 were no more seriously depleted than those of other
Western countries…….

That took about 5 minutes of searching…….

#95 Tough Times Ahead? on 03.14.17 at 2:59 am

Your Blog over the past week warns that we are headed for some tough economic times.

I agree.

I do not think it will be a slow process; rather, more like an economic shock within the year.

With near instantaneous information, people will react quickly even if asset sell off’s take time.

You need only look at how fast and furious YVR RE lost its value, how quickly Alberta’s oil sector plummeted, etc.

Rather than years as it used to be, we are looking at 12 months or less for hard to liquidate assets losing value quickly.

#96 Bloke in the UK on 03.14.17 at 3:54 am

Scotland won’t get independent membership of the EU. Its economy and deficit, taken alone, would disbar it. More importantly, though, are the Spanish (having trouble with the Catalunyans and the Basques, who want independence and membership of the EU), the Italians (having trouble now and again with the industrialised Lega Nord, which would love to be independent of southern Italy) and even the Belgians – a proto-country welded together from two separate groups of fat little socialists – half French, half Flemish. The Flemish would love to cast off their Francophone countrymen.

Those three countries see Scottish independence, followed by Scottish membership of the EU, as a huge threat to their own control of their own more or less autonomous regions. They’ll all veto Scottish membership, and it only takes one country to do it.

Plus Cersi Sturgeon had all her sums done with oil at USD110. As Pres Trump ramps up shale oil production and technology crushes the production price the Scots are going to have some problems.

Scotland’s a wonderful place. I love it; lived there for 20 years. But the Nationalists are economic illiterates and socialists who would, I’m pretty sure, compare well with your Albertans.

#97 traderJim on 03.14.17 at 4:22 am

#90 Ponzius

Why do lefties always want to ban hearing anything they disagree with?

Sounds pretty fascist to me.

#98 Tony on 03.14.17 at 4:30 am

Re: #24 Ricky on 03.13.17 at 7:21 pm

U.TO it also gains in value when the Canadian dollar falls. It falls somewhat when the stock market in general falls. Why it does that I have no explanation as it shouldn’t it’s a pure play on the metal itself. Commission is slightly higher than buying an ETF.

Fission Uranium Corp. FCU:TSX

Platinum seems to be the metal everyone forgot and I don’t see interest rates going much higher.

#99 traderJim on 03.14.17 at 4:38 am

#86 TRT

I’m with ya on the self-driving stuff. Won’t be 50 years, but it isn’t coming in 2 or 3 as the promoters are saying.

I’m still wondering who’s pushing it? I personally wouldn’t like to have my ability to control the vehicle taken away, which I think is the only possibility in the end, as people who don’t have self drive will be said to be messing up the self drivers, or some such excuse to remove any possibility of driving your own vehicle.

Imagine government being in charge of getting that done…what a nightmare.

And who is liable when there is an accident?

What happens when an ambulance is coming? Does the vehicle know how to move over when it hears it, and also judge if the car beside it is doing the same? I doubt it.

Even without the nearly infinite number of problem scenarios, it all sounds very Orwellian to me. Just one more step in the big nanny state we are erecting.

I’ll keep control of my life, thanks and drive a great big truck with a huge cup holder for my giant sized, sugar laden slurpee.

#100 pBrasseur on 03.14.17 at 6:42 am

Looks like your Buddy Ryan’s prediction on $70 oil really $#!T the bed.

:-) That’s why you need a «balanced portfolio», apparently it cures everything, even hemorrhoids

#101 DoomandGloomer on 03.14.17 at 6:44 am

Click here to see the graphic summary of Canada’s political and economic situation:

https://www.google.ca/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&ved=0ahUKEwj08MzM59XSAhXJx4MKHaSGBBUQjRwIBw&url=https%3A%2F%2Fdrawception.com%2Fgame%2FWfaW1ORY4H%2Fostrich-gets-head-stuck-in-ground%2F&psig=AFQjCNFK5wCynFveG9EMvZymraODoZtOXg&ust=1489574440223906

#102 Ace Goodheart on 03.14.17 at 6:44 am

#1 Mandingo:

“Looks like your Buddy Ryan’s prediction on $70 oil really $#!T the bed.”

Ryan’s too bullish. He’s going to get burned. Doesn’t recognize an overvalued security when he sees one. Relies too much on charts and graphs.

#103 Ace Goodheart on 03.14.17 at 7:02 am

#3 turn of the tide on 03.13.17 at 6:40 pm:

“I’d love to understand this relation between bonds prices and interest rate moves.”

When you are buying a bond ETF, you are not buying individual bonds. Rather you are funding the efforts of a consortium, of sorts, to buy and sell bonds of a particular index or a particular type. It is never really possible to determine what the ETF holds, or what the holdings are worth, because bonds are not bought and sold on a market like stocks, so they are not easily valued.

What is happening right now is there is a general consensus that interest rates are going up, and this is depressing the sale price of bond fund ETFs.

My idea is that the sale price of these ETFs is being depressed below the asset value of the fund. This is due to all the scare tactics and fear that the media is putting in everyone’s head about the end of the bond “bull market” and “bond market crashes” and the like. This is all a load of garbage. There is no bond market and bonds are for the most part fixed income securities with fixed redemption values and fixed redemption dates.

I have been buying bond ETFs based on my understanding that, as with all market sell offs, this one is being done by uninformed people, who are relying mostly on media hype for their information and who have not done their research.

#104 A Reply to #3 turn of the tide on 03.14.17 at 7:25 am

“. . . Lower market interest rates [lead to] higher fixed-rate bond prices [which lead to] lower fixed-rate bond yields [which lead to] higher interest rate risk to rising market interest rates. Because of this relationship, it is particularly important for investors to consider interest rate risk when they purchase bonds in a low-interest-rate environment.”
— U.S. Securities and Exchange Commission

https://www.sec.gov/investor/alerts/ib_interestraterisk.pdf

#105 Eurovision on 03.14.17 at 7:31 am

If Russia, China or whoever, confronted a race, religion or country in NA, the effects would be very similar to Europe in a few decades. Prob Why Trump wants a massive wall, Mexico could be in the cross hairs.

#106 Mishuko on 03.14.17 at 7:37 am

Not to sound xenophobic over any specific race or culture but I think there should be some sort of discrimination against who we really let into our country. Will they accept our values (maple syrup, poutine and beaver tail love) over theirs but realize they can still practice their own?

I’m a bit disheartened by our general acceptance of “refugees”. I think it’s a privilege to enter any country and we must respect that. Illegals regardless of how or where they come from should be sent back to their originating country (not the channel country) and send the tab back too. If those countries refuse to cover their expense they need to be witheld any financial / military / humanitarian assistance.

Then we have those that are genuinely attempting to get in through the channels already established. Atleast they are trying to do it properly and I have nothing against that.

Then again I’m just an idealist.

#107 Another Deckchair on 03.14.17 at 7:41 am

@21 I’m Stupid:

What I do now is silently say “thank you” to all those who spend their money keeping the economy going – from those who spend every last penny soup-up their Ford F150s, to those shopping for household stuff, to those keeping the bars and restaurants in business.

So, maybe say a silent “thank you” to those who do not think the same way as you do; differences make life interesting and keeps the world moving.

#108 paulo on 03.14.17 at 8:22 am

nope still shorting ryans call for $60/bbl oil not happening
the world is awash in oil and will likely remain so for the next few years – range bound 45-55/bbl with a bias to the short side, frick and frack state side will bring new production well in excess of projected demand increases
unfortunately this doesn’t bode well for our friends out Alberta way, but our cowboys and cowgirls are the best and toughest in the world, and will make it through riding high in the saddle

#109 TurnerNation on 03.14.17 at 8:29 am

Get out your checkbooks.
Toronto police budget is the largest line item on the property tax bill.

Why: highest paid force in Canada; they also bill the city for greater than 24hrs of policing per day, due to 2 hours of shift overlap (that’s right they have a way to bill for more hours than exist in a day); they get 2 paid court days each month regardless they attend or not; gold plated benefits for them and family – including uniform dry cleaning. Pension etc.
In the event they stand accused of serious crime or matter this means keeping job – with full pay & benefits.

But, this is not enough:

http://www.cp24.com/news/toronto-police-in-crisis-over-understaffing-and-low-morale-union-claims-1.3323168

“The understaffing of police divisions and declining morale within the force has hit a “crisis point” following the release of the Transformational Task Force’s report in January, said Toronto Police Association President Mike McCormack.”

#110 Dan.t on 03.14.17 at 8:42 am

#21 I’m stupid
First, until Canadians go outside their city, town and country they might have something else to talk about other than Real Estate but don’t enable it by bringing it up at parties because it’s pointless.

REAL ESTATE ONLY GOES UP and is the best investment ever. That is a whole countries belief and unfortunately most don’t see all the incentives and actions taken by Canadian government to inflate and encourage unaffordable accommodation in the country. All they know, buy a house, do nothing and make at least a few hundred thousand or more- easy money, who cares about debt.

It is funny watching from outside Canada and extremely sad since insane rents and housing prices are not good for an economy unless supported by incomes. (Which they are not).

But the reason for writing this is because I actually sent a message to the people at BetterDwelling site to ask if they can find out how many realtors own 2nd, 3rd and 4th houses, townhouses or condos and they said that info is not available.

Talk about a conflict of interest and I wonder how that messes up supply demand and encourages speculation or what kind of a role they play in this market.

If you are in the business you see listing before anyone else, if they are undervalued in a hot market, simply buy and flip it, or hold it. Is that allowed? Doesn’t matter, it’s most likely done by a huge percentage of Realtors directly or indirectly.

Government wants to crack down on any little infringement you make and regulate everyone but when it comes to REAL ESTATE all bets are off. Do what you want, minimal fines or slap on the wrist, lie, cheat, put asians on the front lawn, deceive the public with marketing tricks, hide stats, pump real estate “news” as NEWS but paid for by the Real estate boards, it’s virtually unregulated when compared to any other industry in Canada.

Imaging a broker front running a big buy order or an investment advisor guaranteeing you a 100% ROI. See how fast they lose their jobs. Real Estate- nothing a slap on the wrist and a “please don’t do it again”.

Obviously no one cares about the price of housing in Canada since nothing is done about it and there is really no out cry. Of course no one says anything because the boomers are still the biggest drivers (or have the millenials taken over yet) and voters and decision makers in Canada and don’t want anyone to mess with their massive equity gains.

Solution, young people and those sick of it need to stop participating in the insanity or have to demand change but that is totally un-Canadian. Just take it and like it I guess.

It’s all good as long as bank of mom will foot you the down payment an the bank says you can afford that 520K condo or townhouse on your 50K salary. No worries it’s only money and debt (and taxes, and strata fees and maintenance cost). In 5 years just flip it for double the price.

oh, and BAN foreign ownership or tax empty accommodations 50% or more.

#111 Another Deckchair on 03.14.17 at 9:14 am

#102 paulo

What’s the depetion rate on a conventional oil well – 5%/year? On a fracked hole in the ground – around 40%?

So, oil consumption continues to climb, and current producing wells decline, and drilling (likely) not enough to curb the decline.

When do the consumption curve and production curves cross?? What happens then?

#112 What on 03.14.17 at 9:17 am

Oh right….now I remember….fracking oil has diminishing returns, wells are running dry….it takes 85% of the profits to pay the interest on loans to get these things going and now with interest rates going up….two words hahaha hahaha. Good luck to you all USA sycophants.

#113 Stock Picker on 03.14.17 at 9:29 am

In Holland polls have Wilders ahead by a comfortable margin . The local version of the CBC is pulling out all the stops to paint him a Nazi demon rising from the grave….kind of our CBC and the Hate Harper Campaign. People in Europe have valid reasons to be concerned with what the egg heads have in mind. Trudeau, don’t forget , considers himself among those lofty leftist turds….( Obama told him so, and sent Biden up to reinforce the bromance when Obama got bounced) stating that Canada is a post national country with a future inside a framework of global governance and a need to face “an ageing population” …..which is nonsense….and only true in the sense that young people can’t afford children anymore. I say lower taxes and let young people here have more babies, problem solved.

Low taxes sure beef up the birth rate in Texas…people have Texas sized families…..four to six. The cost to live in Texas is half what we pay in Canada. liberal rhetoric is not appealing to people in our western civilization…and they’re voting the Merkels and Trudeaus and Obamas of the world out. It’s simple. Roger Daley said it baby…”I won’t be fooled again”.

Meanwhile…..thx Garth for bringing the CPD to my attention….that was a correlation I hadn’t considered. I backed the truck up at $11.47…. and it’s $14.05 today.

I gave back with CAE at $14……$20 today…..I hope you took a bite.

But….capital flight and educated professionals are flooding out of Canada. CBC isn’t covering it but you can’t walk the sidewalks of Dallas at lunchtime without hearing ….”eh”. Don’t bet on Trudeau or sell the people of Holland short.

#114 Herb on 03.14.17 at 9:57 am

#63 dr. talc,

you may not know this, but there was a bit of a war from 1939 to 1945 in which much of Eastern Europe and the Soviet Union actually was destroyed and many people became homeless or were displaced. Thus, assigning available living space to those homeless or displaced was not the matter of Bolshevik devilment you would love to portray, but a matter of human and political necessity.

And your tiny house/apartment is liable to become a matter of economic necessity, with the demand for affordability and sustainability of housing being met by just such a supply, unless you make everyone rich enough for a McMansion.

Try another wingnut propaganda point.

#115 IHCTD9 on 03.14.17 at 9:59 am

Or…
at $48/barrel, oil is almost +100% what it was a year ago, and is now in a corrective phase before it begins the next leg up (towards $100/barrel).
______________________________________

The magic 100.00/ bbl. That’s the question of the next decade. Oil consumption keeps going up despite economic slowdowns, and even as global uncertainties abound.

The US may well have the highest proven extractable reserves in the world now according to a new Scandinavian study. Will other large declining fields receive technology that will allow further price competitive extraction (like the US)? How are shale oil possibilities looking in the Middle East? Will Brazil ever tap the massive deep water deposits off their coast? What of Artic oil, one of the last places left ripe for energy exploration. Lot’s of potential out there.

Too many possibilities to make any kind of informed judgment though. I will say: if Tumponomics catches on the world over, there will be no 100.00/bbl for a long, long time.

#116 Buddy O' Pal on 03.14.17 at 10:11 am

#98 Ace

My thoughts (and actions) exactly. Trump got elected and there have been a few good job reports. Nothing fundamentally changed. There are too many deflationary headwinds and the ‘trump bump’ and subsequent rallies are all based on speculation. Nothing’s actually happened yet.

#117 Rich Young on 03.14.17 at 10:14 am

MY WIFE IT GETTING IMPATIENT … every month the radio in Calgary rings that things will improve in 6 months. Now they are saying at the end of this year. This is a joke and what is a further joke is Real Estate listings are down, sales are up, prices are steady. We continue to rent but my wife is about to lose it! We have owned 2 homes during our marriage and sold both. She wants a 3rd and wants this one to be a beauty! Shaking in my boots in Calgary. Soon as we buy the market is sure to tank.

#118 Fish on 03.14.17 at 10:16 am

PLEASE don’t underestimate the government, they will tax us on everything, I remember my grand dad telling me they used to hide the radio, because the tax man came around.

#119 Ktown on 03.14.17 at 10:22 am

http://www.zerohedge.com/news/2016-03-04/ridiculous-joke-abandoned-rotting-vancouver-house-listed-72-million

This is interesting

#120 KLNR on 03.14.17 at 10:22 am

@TRT
And people: Quit with the robot and self driving BS. These things are at least a half century away. If ever.

______________________________________________

Don’t be so sure. If I were a truck driver i’d be looking for a new career path. That industry will be fully automated within the next decade.
AI is advancing rapidly.

#121 IHCTD9 on 03.14.17 at 10:29 am

Garth, this idiot is taking up far too much space.
Time to ban posters with low IQ.

___________________________________________

Stalin used to say stuff like this. Except when Stalin whipped out the ban stick, you were shot and thrown in a hole.

#122 Ponzius Pilatus on 03.14.17 at 10:33 am

#103 paulo on 03.14.17 at 8:22 am
nope still shorting ryans call for $60/bbl oil not happening
the world is awash in oil and will likely remain so for the next few years – range bound 45-55/bbl with a bias to the short side, frick and frack state side will bring new production well in excess of projected demand increases
unfortunately this doesn’t bode well for our friends out Alberta way, but our cowboys and cowgirls are the best and toughest in the world, and will make it through riding high in the saddle
——————
The Canadian disease: Hanging in the saddle until energy prices rebound. Christy Clark has it, too.
In the meantime, invest heavily in stocks and RE.
How about making things that other countries want?
Building a country wide apprenticeship program?
Stop our dependance on service jobs that fuels reliance on cheap immigrants?
Etc.
Oh, forgot: we’ll always be the best in Hockey.

#123 Ponzius Pilatus on 03.14.17 at 10:39 am

#121 KLNR on 03.14.17 at 10:22 am
@TRT
And people: Quit with the robot and self driving BS. These things are at least a half century away. If ever.

______________________________________________
Don’t be so sure. If I were a truck driver i’d be looking for a new career path. That industry will be fully automated within the next decade.
AI is advancing rapidly.
————–
Not gonna happen.
Road rage is becomming a national past time.
No more yelling, honking, beating or shooting drivers.
I’ll stick with my stick shift.

#124 cramar on 03.14.17 at 10:44 am

13 crowdedelevatorfartz on 03.13.17 at 6:58 pm

….and with any luck Trump will be forced to eat his latest twitter bs session and apologize to Obama.
Oh Right.
The Donald is never wrong and never apologizes.

But his staff are sure kept busy making excuses……

———–

Trump learned well from his sleaze-bag lawyer Roy Cohn:

“Cohn also showed Trump how to exploit power and instill fear through a simple formula: attack, counterattack and never apologize.”

https://www.washingtonpost.com/investigations/former-mccarthy-aide-showed-trump-how-to-exploit-power-and-draw-attention/2016/06/16/e9f44f20-2bf3-11e6-9b37-42985f6a265c_story.html

#125 Ponzius Pilatus on 03.14.17 at 11:12 am

Christy Clsrk pledges action for workers forced to wear high heels.
———–
This is what I’m talking about.
Complete lack of focus and leadership.
Same goes for Trudo.

#126 IHCTD9 on 03.14.17 at 11:14 am

#83 SunShowers on 03.13.17 at 11:37 pm
___________________

If you took an economy and built walls around it, then laid off 40-50% of all the workers inside and replaced them with robots, what would the first problem be?

Well, on the economic front, almost no one would have a job, so no one would be able to buy the products produced by the robots. Henry Ford recognized this same type of problem a long time ago with respect to his employees being wealthy enough to buy the products they produced. His solution was to pay them enough to buy his products over time. The robot owners would be out of business real quick if sales were 0.

I’m not sure how this will play out – but if it does work, then folks have found some way to buy the products produced by the robots, via new income, and/or via dirt cheap prices. Either that or the robots turned out to be much less of a job destroyer as they were originally thought to be.

#127 traderJim on 03.14.17 at 11:23 am

#114 stock picker

Much as I am enjoying the world finally get sick of corrupt, incompetent (except when it comes to lining their own pockets and those of their biggest contributors) bureaucrats, I’m not sure about Wilders.

I watched some video of him and he did sound like an outright racist to me, opposed to all immigration (I only saw one clip, but I was not impressed).

Now, European nations are facing massive immigration, so I can see how tensions get higher there and maybe people are going overboard.

We in NA are truly lucky geographically in being able to better control our borders. While a handful of people scrambling across the Manitoba border is making national news here, imagine Germany with over a million undocumented immigrants per year. Wow.

Trump, on the other hand, despite attempts to paint him as a racist is clearly just a guy like most of us who thinks immigration is a good thing, but it should be legal, we should not let in people who might be remotely connected to terrorist ideologies, and I think everyone would be happy to deny entrance to a Salvadoran who has face tattoos and a violent criminal record and clear ties to violent gangs. (You can see it on their face if you don’t believe me)

Peace loving Salvadorans welcome.

Le Pen I also am not sure about. Media says she is racist of course, but you can’t trust media and I’m too busy building a house to look into it to find out the truth. Anyway, the conventional logic says she will lose badly in round 2, so it seems irrelevant.

I’m still betting Trump builds a wall (‘it’s only a fence!’ his completely useless detractors will cry) and then offers a path to amnesty for all illegal aliens who have not committed any OTHER crime than enter the country without going through the proper channels.

Making illegals legal is good for everyone, and Trump’s a smart guy.

#128 self driving cars a few years away on 03.14.17 at 11:50 am

Millions will be unemployed

https://techcrunch.com/2017/03/13/reports-intel-buying-mobileye-for-up-to-16b-to-expand-in-self-driving-tech/

#129 self driving cars a few years away on 03.14.17 at 11:57 am

What some of you don’t understand that maybe some consumers will choose not to buy one but corporations will fire all their truck driver , bus drivers , taxis , and every other paid for driver will be gone. Millions of jobs gone and it’s coming very soon.

#130 A Reply to #98 Ace Goodheart on 03.14.17 at 12:04 pm

Wow! There’s so much to unpack in your comment. I don’t know that I have the time or energy to reply to everything.

You wrote, “When you are buying a bond ETF, you are not buying individual bonds . . . It is never really possible to determine what the ETF holds, or what the holdings are worth, because bonds are not bought and sold on a market like stocks, so they are not easily valued.”

Click the link below for the (audited) Annual Financial Statements (Dec. 31, 2015) for Vanguard ETFs. The Schedule of Investment Portfolio for the Vanguard Canadian Aggregate Bond Index ETF (VAB.TO) reports the coupon rate, maturity date, par value, average cost and fair value of each and every bond in the fund (see pp. 4-13).

https://www.vanguardcanada.ca/individual/mvc/loadImage?country=CAN&docId=5727

You wrote, “. . . [T]he sale price of these ETFs is being depressed below the asset value of the fund. This is due to all the scare tactics and fear that the media is putting in everyone’s head about the end of the bond ‘bull market’ and ‘bond market crashes’ and the like. This is all a load of garbage. . . .”

Your last sentence sums up your analysis quite nicely.

You wrote, “. . . as with all market sell offs, this one is being done by uninformed people, who are relying mostly on media hype for their information and who have not done their research.”

I certainly hope there aren’t too many uninformed people out there.

“A lie can travel halfway around the world while the truth is putting on its shoes.” — Mark Twain

#131 Ole Doberman on 03.14.17 at 12:31 pm

#118 Rich Young on 03.14.17 at 10:14 am

MY WIFE IT GETTING IMPATIENT … every month the radio in Calgary rings that things will improve in 6 months. Now they are saying at the end of this year. This is a joke and what is a further joke is Real Estate listings are down, sales are up, prices are steady. We continue to rent but my wife is about to lose it! We have owned 2 homes during our marriage and sold both. She wants a 3rd and wants this one to be a beauty! Shaking in my boots in Calgary. Soon as we buy the market is sure to tank.
———————————————————
My mortgage broker friend says the reason houses remain sticky is people are holding out and under the delusion they’ll get the price they bought for 5 years ago.

It makes sense since everyone is waiting that extra 6 months for oil to recover – but this is typical, and could explain the massive explosion in the rental market.

How long will this last, who knows, but understand your frustration.

#132 Guy in Calgary on 03.14.17 at 12:58 pm

Bonds down, yields up, mortgage rates up, equities up, prefs up, gold who cares, bitcoin who knows, houses stay sticky.

That’s my prediction.

#133 Ponzius Pilatus on 03.14.17 at 1:04 pm

#128

While a handful of people scrambling across the Manitoba border is making national news here, imagine Germany with over a million undocumented immigrants per year. Wow.
——————
wow, for sure.
Never fails to amaze me the lack of knowledge of Canadians of European affairs.
It’s just a five hour flight away.
Go in see for yourself. What have you got to lose?
Your ignorance?
Btw. German employers seem quite happy with the quality of the Syrian immigrant workers.

#134 potatoface on 03.14.17 at 1:20 pm

Garth

You interestingly overlook the nationalist movements which will rise from the ashes in Canada once these Euro movements take place……beware the PEI Liberation Front…..I hear they have stocked up with potato guns

#135 IHCTD9 on 03.14.17 at 1:30 pm

#133 Ponzius Pilatus on 03.14.17 at 1:04 pm
______________

LMAO!!

#136 Nemesis on 03.14.17 at 1:32 pm

#BollywoodTributeTo… #NearSeptuagenarian,Or… #OnlyHisBarber… #KnowsForSure…

https://youtu.be/bV2GklFBaT8

#137 Tudval on 03.14.17 at 1:33 pm

#1Financial markets are pricing, 100%, a rate increase by the Fed.

If they are pricing it, they don’t have to price it again when it actually happens, right? Except they’ll be looking at the future and nobody can predict that. You say 2 hikes, I say 1, others say 3 or none. Who will prove right or lucky?

#2 “crude is our biggest export” Not mine or anybody I know in Ontario. As if the last couple of years were not enough proof that Ontario’s economy has nothing to do with Alberta’s and perhaps even Toronto’s has nothing to do with Ontario’s. In fact with Trump’s approach to balanced trade, Ontario may see more room to grow exports if the Americans don’t buy as much oil.

We are talking real estate, right? A better theory I was reading recently is that the big cities are seeing more influx of people just as the manufacturing and resource base of the country/province is shrinking. At least for a while.

#3 Currencies not collapsing? Not the USD at the moment, but many others are eroding pretty fast and once the Feds end their tightening cycle (which can happen pretty soon) the USD will join in with the others. I mean, alternating periods of loose monetary policy with those of big deficits can’t really boost confidence in the long run. What is needed is productivity, business investment, technological advances => consumer demand and positive demographic trends and we are not seeing much of that at the moment.

#138 Josh in Calgary on 03.14.17 at 1:37 pm

#83 SunShowers,
It’s interesting how talk of economy always leads to talk about socialism vs. capitalism. I’ll take on your question:

First of all you say that it’s inevitable that increased automation will lead to wealth accumulating in the hands of the few (business owners and their investors). This is probably true and is underway right now. The end point has been explored in many sci fi movies and looks somewhat like the hunger games or that Matt Damon movie where the poor masses have to be kept separated from the ultra rich by force. This hardly seems like a desired result which leads to your question about what the alternative scheme would be.

There’s lots of revived talk about guaranteed income. Basically the government would tax the crap out of the automated production and then pay everyone a guaranteed amount that would cover necessities. You would need fewer people so hopefully over the generations you would have less people. The end point of that would probably be something like Huxley’s “The Brave New World”. It seems like a Utopian society where people spend all of their time at leisure, but there are troubles with that in the end too. The problem with that is you have to be content with the state having complete control of everything or it doesn’t work and we’ve all seen that fall apart too.

The reality will likely fall somewhere in between. Capitalists will be forced to come to terms with sharing the wealth somewhat or you will have no one to sell your products to and people without anything tend to focus on things like revolution.

#139 Ace Goodheart on 03.14.17 at 1:38 pm

#130 A Reply to #98 Ace Goodheart on 03.14.17 at 12:04 pm

Yes I agree, just go and look at the financial statements for the ETF and determine what the holdings are worth. However bond ETFs are in the business of buying and selling bonds, along with holding bonds. So the financial statement is a “snapshot”.

Also the other problem is bonds are not sold on markets like stocks. They are sold through brokers. So the price of a bond changes depending on how many you buy (the more you buy, the cheaper the price). That is why I buy all my bonds through ETFs, but I purchase my stocks directly on the markets. If I want to purchase a bond, I have to purchase a lot of it (usually at least $25,000 CDN to get a reasonable price). So instead I just use the appropriate bond ETF to purchase an index of bonds, rather than individual bonds.

My view of bond ETFs right now is they are priced incorrectly and are selling at a discount (often a ridiculously cheap discount). It would appear to me they are being sold off. This appears to be an “anticipatory sell off” based on negative news (The Globe just ran an article regarding the apparent collapse of the “bond market” (or whatever that means) and there have been other very negative articles about bonds in general). This sort of news causes people to dump their bond funds. No one checks the fundamentals.

If people are looking at fundamentals, then I would like to know why people are lining up to purchase shares of snap chat (the company loses over half a billion US dollars per year and has never been profitable) while dumping perfectly good bond funds that do make money and that contain investment grade corporate debt (ie, the kind of debt that banks purchase). It is like treating securities trading like slot machine betting.

At any rate, I continue to believe that bond funds are undervalued right now and are a screaming buy. And I continue to purchase their units, as many as I can and as often as I can.

#140 OIL on 03.14.17 at 1:55 pm

where’s the bottom? she’s in free fall……TSX rebound a yr ago was because of her.

TSX now flat for the year, ready to go red…..

#141 turn of the tide on 03.14.17 at 1:59 pm

Thanks Ace, Captain and other part of the bond/bond ETF discussion for your posts, I appreciate it.

#142 jess on 03.14.17 at 2:05 pm

deplorable schemes fake deals buyer and seller in on the deal or sometimes the same person

Donald fired Preet who is investigating russian dirty money
location location location

https://www.youtube.com/watch?v=cKJiEae7TYw

#143 Lega Nord not a factor on 03.14.17 at 2:14 pm

Lega Nord in Italy, in the 2013 General Election, garnered 4.1% of the electoral vote and is mostly a N. Italy “centric” party (10.2% in the 2009 EU Parliament vote).

Here is the welcome their leader, Salvini, received in Naples the other day:

http://abcnews.go.com/International/wireStory/italys-northern-league-seeks-inroads-south-amid-protests-46064803

Mercifully and for now, it would seem Italian tolerance of/appetite for Right Wing Populists is low (for the exception of the N. Italian provinces, but even there, Lega Nord does not have a majority vote).

#144 tkid on 03.14.17 at 2:31 pm

Who ordered the *&^%ing snow?

#145 IHCTD9 on 03.14.17 at 3:05 pm

#75 Ace Goodheart on 03.13.17 at 10:37 pm
We might be a wee bit out of luck here in Canada. Yes the USA can raise interest rates. Canada cannot. We do not have the tax base to pay the added interest on our provincial and federal debt. There is nowhere to get the money from. We are already taxed more than we can pay.

Looks like we’re resigned to currency devaluation and out of control hard asset appreciation.

_______________________________________

It’s a tough call for them. It’s essentially a choice between higher interest costs while ensuring a stable currency and their ability to borrow more in the future, OR – maintaining the low interest costs while napalming the currency and making it harder and more expensive to borrow in the future.

If I had to guess – they will raise/maintain rates before they kill the currency. Our government is hooked on debt, tax revenues have bee insufficient for decades – debt is now officially financing the Canadian Welfare State.

Devaluing the currency and killing bond sales amidst a stale economy and drastically falling revenues is starting down a road that ends in issuing debt in a foreign currency and official third world status.

IMHO, it seems easier to match the Fed raises and cut spending with the money going into the higher interest payments. That’s paying the piper in classic form.

But with T2 and his gender neutral band of ding-dongs, who knows what they’ll come up with?

#146 common sense on 03.14.17 at 3:08 pm

After watching the wild moves in USD/CDN today and oil, can’t imagine what tomorrow will bring.

Time to break out the popcorn and enjoy.

Stay away from tall buildings on Bay Street for a while…

#147 meslippery on 03.14.17 at 3:25 pm

#72 oil market has moved into backwardation from contango.

————-
Maybe I dont get backwardation.

http://www.cmegroup.com/trading/energy/crude-oil/light-sweet-crude.html

#148 Nemesis on 03.14.17 at 3:31 pm

#YouCan’tMakeThisStuffUp… #TuesdayMischief,Or… #”JustAMinute,HoneyI’mOnThePhone”?…

[CBC] – Ottawa-based sex toy maker settles privacy lawsuit for $5M

…”The company in the case, Standard Innovation Corp., produces a line of vibrators that can be controlled by a user or a partner through a downloadable app and a smartphone.

The lawsuit claimed the app collected data on use of the vibrator, including the date and time of each use as well as vibration settings, without the user’s knowledge. The suit also alleged the data and the user’s personal email address were transmitted to company servers in Canada.”…

http://www.cbc.ca/news/business/we-vibe-lawsuit-settlement-1.4023172

#149 JaketheSnake on 03.14.17 at 3:34 pm

Note to Garth, Smoking Man, LaughingCon, James, Doug, Ryan, etc…

I am currently writing a screenplay about the GreaterFool blog, the personalities that populate it as well as the events (in the Canadian real estate industry, the wider economy and events on this blog) that have shaped the GreaterFool community over the past 8 or so years. This will include the following character developments:

-Smoking Man’s progression as the premier cyber antagonist/troll within the GF community and the wider internet, his swashbuckling, ballsy, autodiadactic penetration of the Forex market that made him the drunken multi-millionaire smokestack he now is, his one-of-a-kind persona and writing style, and finally, his slow, inevitable descent into the morass of insanity that ultimately befalls all men who defiantly and unflinchingly stare head-on into the abyss
-Garth’s progression from business commentator and innovator to failed politico to real estate permabear to celebrity real estate writer to infamously chiseled, wavy-haired, hog-riding, hairy-chested, aging sex symbol. (The plot will extrapolate into the future and feature Garth as a populist tribal real estate warlord ruling over Caledon, ON after the big collapse, with a harem of Amazonians who snuff out any competition to his fiefdom)
-James as chief provocateur to Smoking Man, only multiple rungs lower on the intellect ladder, with heart of a lion and knuckles of a street fighter
-LaughingCon as premier court jester and town crier rolled up into one, chief antagonist of realtors with a vocabulary limited strictly to eight venerated words
-Doug and Ryan will make guest appearances as Garth’s questionably loyal henchmen / enforcers

The plot is still a work in progress. I have the main trajectory and narrative in place, I just need to flesh it out. I don’t want to reveal too much on here for fear that another blog dog may steal the ideal and run with it.

As soon as I’m done I ‘m heading to L.A. to pitch it to the big movie studios. If none of them bite I will have to resort to crowdfunding on this blog, so any dogs with deep pockets I kindly ask you to keep an eye out for my future pitch on here — especially you, Garth and Smoking Man.

I just need of a title for this movie — I welcome your input, blog dogs. Just post a comment below.

JaketheSnake
PhD Real Estainment

#150 conan on 03.14.17 at 3:44 pm

Re: #86 TRT on 03.13.17 at 11:47 pm

“And people: Quit with the robot and self driving BS. These things are at least a half century away. If ever.”

Check out this puppy, it does not care about speed bumps… and this is the product that they are allowed to show.

https://www.youtube.com/watch?v=-7xvqQeoA8c

#151 TurnerNation on 03.14.17 at 4:02 pm

Any correction in Van/AB/GTA will be bought. Variable rates would have to hit 4-5% before any difference is felt.

Millennials at work asking me how the company RRSP matching works, and the Home Buyers RSP withdrawal procedure. Nothing to their names but raw ambition and appetite for risk. Recency, affected is in effect.

They just want to Buya Da House!!!!

#152 The Great Short..... on 03.14.17 at 4:08 pm

is………

the tsx

:)……..now red for the year. lower lows, lower highs……looking good!!–would be REAL good if she can break current support

#153 X on 03.14.17 at 4:13 pm

True Dat!

http://www.torontosun.com/2017/03/14/its-time-for-a-tax-revolt-in-canada

#154 John of Grant on 03.14.17 at 4:23 pm

#114 Stock Picker
It’s simple. Roger Daley said it baby…”I won’t be fooled again”.

————————

I think you mean Roger Daltrey.

#155 SunShowers on 03.14.17 at 4:51 pm

#93 BobC on 03.14.17 at 12:37 am

Somebody needs to design the kiosk in the fast food restaurant. Then somebody else has to write the software. Then somebody else has to manufacture it. Then another person has to install it. By gosh somebody else may have to be hired to service and repair it. Seems like a lot of jobs created to replace one obsolete job of asking if they want fries with that and ringing it up.

————————-

Many of those jobs already exist. Fast food chains already have people to design their restaurants, in house technicians to install and maintain their current hardware and software, etc. These jobs won’t scale up much at all. If a chain lays off 40% of its sales staff due to automation, these existing jobs do not get 40% harder or require 40% more coverage. The amount of extra slack they’d need to pick up would be negligible, maybe resulting in a few new hires. That’s one of the good (or bad, depending on context) things about automation. Very tiny manual alterations can create massive change when scaled up. Something something productivity gains.

Literally the only jobs that would be created would be software engineers to write the software needed to allow existing hardware to become functional enough to cut out the middleman (people). This would require a team of a few hundred software engineers at most, which would replace a few million frontline service jobs.

Seems like a fair tradeoff, right?

#156 common sense on 03.14.17 at 4:59 pm

#150 Jake

Titles?

Garth’s Daily Masochism

Drunks, Egos, Liars and a few wise men

1094628984 Reasons to Rent

Balance and Misery

#157 Renter's Revenge! on 03.14.17 at 4:59 pm

#150 JaketheSnake on 03.14.17 at 3:34 pm

“I just need of a title for this movie — I welcome your input, blog dogs. Just post a comment below.”

How about “Heart of Darkness”?

#158 Raise.t.o-lived.b.c on 03.14.17 at 5:56 pm

JaketheSnake

Let’s see this movie. Heck I’ll actually buy a book if you write it

#159 Wrk.dover on 03.14.17 at 6:29 pm

John Waters to play Smoking Man?

#160 Reply to #139 Ace Goodheart on 03.14.17 at 9:39 pm

Here’s my take on bonds: Bonds are selling at a premium (not a discount) to par value because market interest rates are about as low as they can get. (Just look at the fair values of the bonds in VAB.TO and compare them to their par values.) Bonds right now are expensive (not cheap). As market interest rates rise, bond prices will fall.

The Financial Industry Regulatory Authority just issued (Mar. 6, 2017) an investor alert as to what an interest rate hike could do to your bond portfolio. Here’s the link:

http://www.finra.org/investors/alerts/duration-what-interest-rate-hike-could-do-your-bond-portfolio

The U.S. Securities and Exchange Commission issued an investor bulletin warning investors of interest rate risk in a low-interest-rate environment. Here’s the link:

https://www.sec.gov/investor/alerts/ib_interestraterisk.pdf

#161 Ace Goodheart on 03.14.17 at 11:21 pm

#161 Reply to #139 Ace Goodheart on 03.14.17 at 9:39 pm:

The fair value of a bond isn’t a mystery. It’s just the par value + whatever interest is left still to be paid. That’s all they’re ever worth. They represent nothing more than a sum of money to be repaid on a certain date + interest.

That won’t change.

What changes is credit quality. Right now if you are collecting say, 9% interest on a debt, it is probably a crappy debt (ie, junk). There was a time when a GIC paid upwards of 20%.

I don’t think rates will rise anywhere near the point to imperil bonds. There seems to be a lot of fear out there as to what could happen to interest rates. We have to all remember, low interest rates are a symptom of money printing. They are delayed currency devaluation. Raise rates, and you print money. Keep them low, and you devalue your currency. Governments are not going to do either of those things right now. Rates will be played with slightly, but that is probably all we will get.

If we do see a massive rise in interest rates, combined with a massive devaluation of currency, then the place to have your money is in hard assets. They will be the only thing that maintains value.

#162 A Reply to #162 Ace Goodheart on 03.15.17 at 8:10 am

You wrote, “The fair value of a bond isn’t a mystery. It’s just the par value + whatever interest is left still to be paid. That’s all they’re ever worth. They represent nothing more than a sum of money to be repaid on a certain date + interest.”

Your comment is just flat-out wrong. The fair value of a bond is the price it would trade at, if sold. A discount bond trades below its par value because its coupon rate is lower than the market interest rate, but a premium bond trades above its par value because its coupon rate is higher than the market interest rate. A bondholder is paid the par value if the bond is held to maturity or if the bond trades when the coupon rate equals the market interest rate (all other things held constant).

#163 Ace Goodheart on 03.15.17 at 1:39 pm

#163 A Reply to #162 Ace Goodheart on 03.15.17 at 8:10 am :

“Your comment is just flat-out wrong. The fair value of a bond is the price it would trade at, if sold. A discount bond trades below its par value because its coupon rate is lower than the market interest rate, but a premium bond trades above its par value because its coupon rate is higher than the market interest rate. A bondholder is paid the par value if the bond is held to maturity or if the bond trades when the coupon rate equals the market interest rate (all other things held constant).”

True, but the actual value of the bond (maybe I am using the wrong words with “fair value”) is the bond’s par value + any unpaid interest. That is what the instrument is worth. They trade at below this value, always. You will not find a bond, for sale today, that trades at higher than the sum of the par value and the unpaid interest at the coupon rate.

So you are looking at the coupon rate on the same bond as a new issue, issued today, versus the coupon rate on the already issued bond that is being sold. And just comparing the difference. As I said, they always trade at a discount to what they are actually worth, and never trade at over that amount.

To get to the point where the bond is actually worth less than it was purchased for, we are going to need a significant increase in interest rates. Ie, not a quarter of a percentage point. We are going to need like around 3-4% in the next five years. Do the math on any bond ETF and you will see what I mean.

If bonds really do get whacked, it is because our currency has been devalued. They represent deferred cash payments with interest. So the only way they are worth less is if cash is worth less. They are susceptible to inflation.

#164 Ace Goodheart on 03.15.17 at 1:58 pm

#163 A Reply to #162 Ace Goodheart on 03.15.17 at 8:10 am

Oh and bond funds aren’t the problem right now. They are really just getting hit hard, in a ridiculous situation where they are likely one of the more stable investment vehicles.

The problem we have right now, is in Ontario we have real estate prices that defy all fundamentals and continue to rise up into unheard of levels. We do not have the numbers to support this. We also have a stock market that is valued at a price to earnings level that appears to be too high.

So what do people do? Sell their bond funds and purchase over priced houses and stocks (because bonds are going to crash and burn, and housing and stocks are both sure things).

If Toronto RE does crash (which it is now very likely to do) it will not be because of an interest rate hike. It will be the “goldilocks” theory coming to work: It simply is no longer possible for a middle class person to purchase even a condo in Toronto anymore. If there are 236,000 people in all of Canada who fit into Trudeau’s 54% eat the rich tax bracket, then how many of these folks live in Toronto and want to buy a place to live? Even these people could not afford a house anymore.

Over valued stocks, massively over valued, bubble priced houses, governments so far in debt they can never balance their budgets. Interest being one of the largest fiscal expenditures of Provincial and Federal Governments.

And people are worried about bonds taking a beating? The only item that might still be worth something when all this nonsense goes through the wash….