The dollar

RYAN  By Guest Blogger Ryan Lewenza

What a difference a few months can make. It appears that the Federal Reserve (Fed) and President Trump may finally be on the same page about the US economy and interest rates. Recall that President Trump criticized Fed Chairwoman Janet Yellen during the election campaign for keeping rates low for “political reasons”, and even went so far as to malign government unemployment statistics as “phoney”. My favourite Trump quote on the US unemployment rate is “5.3% unemployment — that is the biggest joke there is in this country. The unemployment rate is probably 20%, but I will tell you, you have some great economists that will tell you it’s at 30, 32. And the highest I’ve heard so far is 42%.”

Well fast forward a few months, and President Trump now residing at 1600 Pennsylvania Avenue, he seems to have changed his tune on the employment statistics, recently taking credit for the large increase in new jobs. This was also echoed by his press secretary Sean Spicer who tweeted: “Great news for American workers: economy added 235,000 new jobs, unemployment rate drops to 4.7% in first report for @POTUS Trump.”

Frankly, I could care less about President Trump’s apparent flip-flop, since after all, that’s what politicians do, but I do care about where US interest rates are headed as this has implications for our dollar and how we position client portfolios.

This week the Fed hiked its benchmark rate by 25 bps to a range of 0.75% to 1%. This marks the third rate hike over the last two years and they are not done yet. With the US unemployment rate at 4.7%, indicating near full employment, and inflation starting to rise, the Fed is fulfilling its mandate of full employment and stable prices so we should see further tightening over the next few years. Given this outlook, we see the potential for short-term weakness in the Canadian dollar over the next quarter or two.

Stepping back, the Canadian dollar is driven by two key factors – oil prices and the interest rate differential between Canadian and US bond yields. Below we illustrate this important relationship between CAD/USD and the differential between Canadian/US bond yields. Note the high correlation of 0.98 between these two variables.

With the Bank of Canada on hold for the foreseeable future and the Fed clearly in tightening mode, US bond yields should rise faster than Canada yields thus resulting in a widening interest rate differential in favour of the US dollar. As such, we see the potential for short-term weakness in CAD, with it possibly declining back down into the low $0.70s.

Fed Rate Hikes Are Negative for CAD

Source: Bloomberg, Turner Investments

However, from a longer term perspective we believe any short-term Canadian dollar weakness would be a buying opportunity as we see the potential for the CAD to recover later this year and into 2018. Using a sports analogy, the CAD looks like the New England Patriots in the recent Super Bowl with weakness in the first half followed by strength in the second half of the game.

Oil prices are incredibly important for the CAD which can be seen in the chart below with a very high 0.95 correlation between the CAD and WTI oil prices. This is why the CAD is referred to as a “petrodollar”.

I’m calling for oil prices to strengthen this year, more likely in the back half of the year, as demand hits new record highs and we see more a balanced global oil market. We see the potential for WTI to rise to US$60/bbl by the end of this year. If this plays out, then we could see a higher CAD later this year and into 2018.

Higher Oil Prices Are Positive For CAD

Source: Bloomberg, Turner Investments

Based on these important drivers we constructed a financial model to help forecast the CAD. Given our expectations for oil prices and Canada/US bond yields, we see the CAD recovering from the lows of $0.70s in the H1/17 to roughly $0.80 in H2/17 and into 2018.

Our Model Points to H2/17 Recovery for CAD

Source: Bloomberg, Turner Investments

Ok, so what’s the plan, Stan? We continue to recommend a healthy 20% net USD exposure in portfolios given our outlook for CAD and the fact that the USD acts as an important portfolio diversifier and shock absorber. If the CAD were to drop into the low $0.70s/high $0.60s, we may consider reducing our USD exposure in anticipation of a recovery in CAD later this year and into 2018.

Ryan Lewenza, CFA,CMT is a Partner and Portfolio Manager with Turner Investments, and a Senior Vice President, Private Client Group, of Raymond James Ltd.

106 comments ↓

#1 TurnerNation on 03.18.17 at 2:07 pm

Some say Gartho is using a Robowalker for Bandit’s daily ablutions.
I doubt it, the furry fellow also needs breeding and tax advice. Which comes from a human master.

#2 Figmund Sreud on 03.18.17 at 2:35 pm

I’m calling for oil prices to strengthen this year, …
__________________________________

Well, … possibly! Still, a closing paragraph from recent story, for what is worth:

“For more than two years, the industry has believed that higher prices are possible without extreme reductions in inventories. Great expectations were placed in an OPEC production cut to rescue the industry from a weak oil market.The fallacy lies in thinking that the problem stems from a simple imbalance between production and consumption and is unrelated to a fragile and debt-dependent global economy. …

The story:

Oil Prices Plunge: Over-Reaction or Turning Point?
http://www.artberman.com/oil-prices-plunge-over-reaction-or-turning-point/

F.S. – Comox, BC.

#3 moneydriven on 03.18.17 at 2:41 pm

Thanks Ryan

In previous post you and Garth said that higher us rate means higher us bond then higher cad bond and finally higher fix mortgage regardless of what bank of Canada does ie stay put.

We had three us rate increase yet Canadian fix mortgage rate is almost at the lowest rate ever (maybe .2 higher than bottom)

Why is the rate not pushing through and does it mean no meaningful mortgage rate hike till bank of Canada does something? If us raises 1.5 in next two what does that mean for cad mortgage rate

#4 Smoking Man on 03.18.17 at 2:54 pm

Just wait and see what happens to the CAD after the Trudeau budget.

Just followed a link from Gerald Butts tweet to a maclains article. This goof ball is a full on commie rubbing his hands together in anticipation of he and his minions come to eat the rich.

Last warning to my rich buddies on bay street. Convert to any currancy the commies are coming.

#5 OttawaMike on 03.18.17 at 2:57 pm

Ryan,

You couldn’t care less. Not you could care less. By saying you could care less means there is more room for you to care less than you already do.

It’s OK. It’s a common literary error.

#6 IB on 03.18.17 at 3:00 pm

Dear Blog dogs,

A couple of what if scenarios for your comments:

1) if you were saving 100k USD per year, would you start to invest (baLanced as Garth suggests) or just convert USD to CAD when/if the CAD hits low 70s as today’s blog states?

2) same savings as above: would you buy a house (as per 90 rule) or just keep saving the USD and rent?

Thanks.

#7 I'm Not Poloz on 03.18.17 at 3:13 pm

Stephen Poloz’s dirty little secret is that he wants a very low Canadian dollar to boost exports. The CAD should be at 80 cents U.S. when oil prices were in the high 50s a few months ago.

However, Stephen Poloz talked down the Loonie because truthfully, he wants and aims for a0.50 US Loonie.

Poloz claims that a 50-cent Loonie will boost exports. Poloz told Rebel Media last year that Canadians should accept a 68 cent Loonie, while Morneau who lives in Bayview (where the teenage daughters of wealthy fathers spend at least $30,000 on the latest handbag from Holt Renfrew & the trophy wives spend over $10,000 for lingerie) told indebted student Canadians that they should work for free for work experience.

Poloz +Morneau expect Canadians to work for free under a 50-cent Loonie!

#8 Karma on 03.18.17 at 3:28 pm

Bwahahahah

““Trolls can be incredibly obsessive,” Ms. Buckels says. “It makes me wonder – do they have jobs?” The image you have of trolls as anti-social misfits living in their mothers’ basements is not too far off the mark.”

http://www.theglobeandmail.com/opinion/why-trolls-love-to-pick-on-women/article34336855/

#9 work for free for work experience on 03.18.17 at 3:36 pm

Poloz told Rebel Media last year that Canadians should accept a 68 cent Loonie, while Morneau who lives in Bayview (where the teenage daughters of wealthy fathers spend at least $30,000 on the latest handbag from Holt Renfrew & the trophy wives spend over $10,000 for lingerie) told indebted student Canadians that they should work for free for work experience.

Work for free is the worst work experience by definition.

It teaches you that you are worthless, replaceable part of the machine, existing at the mercy of others.

Slave indoctrination for life or for a lucky few a kick start to never work for anyone ever again.

#10 Ryan Lewenza on 03.18.17 at 3:39 pm

Moneydriven “Why is the rate not pushing through and does it mean no meaningful mortgage rate hike till bank of Canada does something? If us raises 1.5 in next two what does that mean for cad mortgage rate.”

There have been a few small rate increases in Canadian mortgage rates over the last few months but yes they remain very low. The most common 5-year fixed mortgage rate is priced off the GoC 5-year yield which has jumped from a low to 0.5% to roughly 1.2% currently. Given this I’m actually surprised the banks haven’t hiked mortgage rates more. But to your question, mortgage rates should start to move up in the H2/17 and 2018 as US bond yields move up and Canada follows along. The movement in US bond yields is more important than Bank of Canada rate changes since most mortgages are 5-year fixed which trade off the GoC 5-year yield. Long/short, they should rise over the next year or two. – Ryan L

#11 domain on 03.18.17 at 3:42 pm

Ryan.

Can you explain why the USD took a dive when the Federal Reserve raised interest rates?

#12 Karma on 03.18.17 at 3:44 pm

“Frankly, I could care less about President Trump’s apparent flip-flop, since after all, that’s what politicians do, but I do care about where US interest rates are headed as this has implications for our dollar and how we position client portfolios.”

**Couldn’t care less…

#13 Thanks for sharing on 03.18.17 at 3:59 pm

I notice your firm does quite a bit of short term predictions and uses such in decision making for client portfolios. It is safe to say your firm’s approach is tactical? Opposite to The Coach Potatoe portfolio

Was as Larry Berman seminar the other day. He stating an interestign stat– he reviewed all his short term calls spanning the breadth of his career , including his years as senior analyst at CIBC. His correct total?………62%. He went on to say that- ‘…..this means i was DEAD wrong 38% of the time’. Lol. Which begged the question, why bother tactically?

with that said , his BMO Tactical Dividend D fund has been fantastic. Kudos

historically the dollar ranges from .95 to .65. I adjust whenever we reach the two extremes

#14 Figmund Sreud on 03.18.17 at 4:10 pm

This week the Fed hiked its benchmark rate by 25 bps to a range of 0.75% to 1%.
_______________________________

At times, … it’s simply prudent to have a closer look at what Fed chairman Janet Yellen may just be really doing, … and why?

Yellen’s Effed up Attack on Working People, Sad
http://www.unz.com/mwhitney/yellens-effed-up-attack-on-working-people-sad/

F.S. – Comox, BC. [ … where RE seasonal madness just re-started! ]

#15 Ryan Lewenza on 03.18.17 at 4:29 pm

Domain “Can you explain why the USD took a dive when the Federal Reserve raised interest rates?”

Two reasons. First the hike was completely priced in so no surprise. Second and more importantly their outlook was dovish as they reiterated they would be gradual. This was reflected in the Fed “dot plot” which shows their long-term rate outlook. This didn’t change much so they are keeping with their gradual approach, which lead to USD weakness. Markets are always move on expectations and with a more dovish outlook USD sold off. – Ryan L

#16 Entrepreneur on 03.18.17 at 4:35 pm

So Trump added 235,000 jobs to the U.S., unemployment rate down 4.7%, WOW, and I hope he keeps it up. So why isn’t Canada skipping along too.

Is it something to do with fair trade not free trade? Trump may not be a politician but he is fighting for the people in that nation. And he has a lot of work to do.

Is anyone fighting for jobs for Canadians?

#17 Brian Ripley on 03.18.17 at 4:41 pm

“Frankly, I could care less about President Trump’s apparent flip-flop, since after all, that’s what politicians do.” Ryan

I’m pretty sure that Trump’s lying is not an example of what “politicians do” nor is it an “apparent flip-flop”.

Trump cannot help himself from being the way he is. I watched his press briefing with Angela Merkel and the tension was thick enough to cut. Although Trump almost stuck to the tele-prompter 100% of the time in his prepared remarks, it is his extemporaneous speech that gives him away as a pathological liar; the examples of which are numerous and which we have all seen over the last nearly 2 years… or if you want dig back further in time, Trump has a long history of lying.

To excuse Trump’s infidelity to the facts as “that’s what politicians do.” is missing an important part of trying to analyze what may or may not occur in 2017-18. And it is demeaning to politicians who take public service seriously. I am not making an ideological observation. Lying, flip-flopping and changing one’s mind are not the same activities.

Here’s a prediction for you. Sometime in 2017-18 we are going to see an image of Trump similar to the famous ones of Napoleon I, with his “hand in his waistcoat” https://en.wikipedia.org/wiki/Hand-in-waistcoat

Why do I think this… watch the press briefing with Angela Merkel and notice at least 3 times Trump “adjusts” his jacket closure with a little pout on his lips as if to say “I just inflated myself to a higher position than you” I think he is just itching to go all out Napoleon.

And what’s worse is that Trump is demanding that his “team” repeats his nonsense lies – VP Pence being the smarmiest of them all.

Can we really make economic/financial predictions with any certainty with Trump at the helm?

Observations of the here and now are probably more useful for trying to plot a path forward or at least to re-examine our investment risk.

Yesterday I posted a mashup of realtor @Hutchyman work on WestSide Vancouver single family detached sale prices that are happening now and that are +/- 25% below the peak prices set in July 2016.

http://www.chpc.biz/history-readings/guessing-game

I’m guessing that we will see a similar change in events for the Toronto market and any other overblown commodity and financial bubbles – not just in Canada, but globally.

My risk management: I can’t buy Trump’s promises. Butter is off the table, guns are on.

#18 Yanniel on 03.18.17 at 4:56 pm

Very insightful Ryan. Thanks.

On the topic of rising interest rates: once the FED is done with the current hike cycle, do you think is wise to scale down the preferred shares allocation? Preferred shares will benefit from rising interest rates, but in the abscence of it, wouldn’t a 20% portfolio allocation to preferreds be too much?

Have nice Saturday and again, thank you.

Yanniel.

#19 Ponzius Pilatus on 03.18.17 at 5:05 pm

The graph freaks are out in full force.
And I also wonder how good can free advice be.
Throwing the dogs a few bones, then reeling them in?
Not that there is anything wrong with it.

#20 FernandL on 03.18.17 at 5:23 pm

#9 Karma on 03.18.17 at 3:28 pm

Bwahahahah

““Trolls can be incredibly obsessive,” Ms. Buckels says. “It makes me wonder – do they have jobs?” The image you have of trolls as anti-social misfits living in their mothers’ basements is not too far off the mark.”

http://www.theglobeandmail.com/opinion/why-trolls-love-to-pick-on-women/article34336855/

—————-
Reminds me of one of the outspoken posters here.

#21 Tudval on 03.18.17 at 5:25 pm

This must be the worst attempt at journalism that I tried to read. Gave up after a couple of paragraphs. A fat thumb down.

#22 AK on 03.18.17 at 5:27 pm

“Given our expectations for oil prices and Canada/US bond yields, we see the CAD recovering from the lows of $0.70s in the H1/17 to roughly $0.80 in H2/17 and into 2018.”
——————————————————————-
You are very optimistic. Personally, I don’t believe the bush league loonie will hit $0.80 while the Libtards are in power. Once the Conservatives take over at the end of 2019, then it will have a chance on going higher.

#23 Nick on 03.18.17 at 5:28 pm

Maybe you can explain that there is nothing “FEDERAL” about the Federal Reserve and it’s a privately owned bank manipulating the economy.

With that fact stated, Trump’s statement doesn’t seem so far off does it.

#24 Leo Trollstoy on 03.18.17 at 6:12 pm

CAD$ won’t weaken. It’s also correlated to Canada’s economy and our economy is strengthening.

Debt in Canada may increase but won’t matter. Payments are low. Canada is creating tons of jobs. Everybody can pay. Easily. Thank the BoC. For both.

#25 crowdedelevatorfartz on 03.18.17 at 6:24 pm

@#25 FernandL
“Reminds me of one of the outspoken posters here.”
********************************************
But I havent posted yet………

#26 crowdedelevatorfartz on 03.18.17 at 6:28 pm

@#26 Tub Valve
“This must be the worst attempt at journalism that I tried to read. Gave up after a couple of paragraphs. ”
*******************************************

Apparently not only math is hard but reading comprehension is also a struggle. ADHD?

#27 Leo Trollstoy on 03.18.17 at 6:34 pm

#20 Entrepreneur on 03.18.17 at 4:35 pm
Is anyone fighting for jobs for Canadians?

Already done.

http://www.cbc.ca/beta/news/business/statscan-jobs-february-1.4019031

#28 Armando on 03.18.17 at 6:42 pm

Agree completely. CAD will definitely go up in H2/17 and into 2018, unless it doesn’t of course. Just in the remote case that Garth and his luminaries are wrong, I’ll avoid CAD until the current down trend reverses.

#29 Economystical on 03.18.17 at 7:07 pm

Ryan, my friend, you also need more zen from economystics.

The B-J plan to raise capital gains taxes does not work if there are no capital gains. Well how do you get capital gains if there are no new companies selling cutting edge Blackberries prior to Apple stealing the business with an identical product? It is simple my unlearned (in the art of economystics) friend, you depreciate the dollar through low interest rates and inflation. That way all assets, even gold, appreciate in nominal terms and you can tax them.

It is no coincidence that capital gains inclusion rates are going up at the same time as the BoC intends to devalue the dollar. By using this method, even gold, which just sits on the shelf, becomes taxable.

That is the beauty of economystics. By simply devaluing the dollar and imposing more onerous capital gains taxes you can effect a capital tax without calling it such. The people will be fooled. Only 1 in a million will know what’s happened to them.

Folks, the situation is really that glorious. Not only is the government coming after a larger portion of your income, and increasing the GST (although they are calling the increase a “carbon tax”, brilliant), they are now coming after your after tax assets through something they call a “capital gains tax”. So here’s how it works:

First, they tax your income.
Second, they tax your spending.
Third, if anything is left they tax your property.

The end goal is simple. 100% taxation of everything you earn or own, to be redistributed in the economystical utopia. (But not before economystical gurus such as myself slice off a huge piece of the pie for themselves. Hey I got to eat too, and not that baked cereal and processed milk you folks eat.)

Ryan, I can train you in the art and religion of economystics (for a small fee). It will set your free to see the world through a more comforting lens. For many years I suffered from the same condition you do, where I stubbornly believed that 1+1+1=3 without fail. Now, I am cured. I realize the correct equation is 1(x+y)^z/(t1-tn)+1e^i(x/y)+1(z+jx^i+z^2(n-1)=infinity.

Believe, and you will be free. Flat broke, but free.

I think I missed an integration in the formula. I’ll check and get back to you.

#30 Ponzius Pilatus on 03.18.17 at 7:42 pm

#18 Euro Observer on 03.18.17 at 4:16 pm
#13 domain on 03.18.17 at 3:42 pm
Ryan.

Can you explain why the USD took a dive when the Federal Reserve raised interest rates?

————————

It was recognized as a confirmation of immediate inflation expectations. Gold and oil jumped. Funny that CAD is seen as co-related to oil, so CAD actually jumped while it should have tanked due to diverging directin of rates for USD – up and CAD ‘loonie’ – down.

At some point CAD will decouple from oil, and then Oh, boy, then…
———————
No use trying to explain the unexplainable.
There are forces out there, way beyond old fashioned economic theory.
Time for an economic Einstein.

#31 Ponzius Pilatus on 03.18.17 at 7:50 pm

Ryan,
Have the feeling that the blogdogs are smarter than your regular clients.
Having lots of money often has no correlation to the size of the investor’s brain.

#32 SWL1976 on 03.18.17 at 7:53 pm

#26 Tudval

This must be the worst attempt at journalism that I tried to read. Gave up after a couple of paragraphs. A fat thumb down.

————

Your refund is being submitted via electronic transfer

#28 Nick

Maybe you can explain that there is nothing “FEDERAL” about the Federal Reserve and it’s a privately owned bank manipulating the economy.

—————

Lest we forget their main agenda of skimming the world’s wealth while perpetuating and inciting war via the American war machine all whilst propagating the myth that freedom can only be achived through war

It’s far too tuff of a pill for most to swallow. Especially those who earn there living through finance and finacial insitutions

#33 acdel on 03.18.17 at 7:53 pm

Trump quote on the US unemployment rate is “5.3% unemployment — that is the biggest joke there is in this country. The unemployment rate is probably 20%, but I will tell you, you have some great economists that will tell you it’s at 30, 32. And the highest I’ve heard so far is 42%.”
——————————————————–

Finally, someone who gets it! Thanks Ryan, dam, I never thought this day would arrive about the true unemployment rate in the U.S. and the debt and lookout!

#34 Andrew Woburn on 03.18.17 at 7:56 pm

#28 Nick on 03.18.17 at 5:28 pm
Maybe you can explain that there is nothing “FEDERAL” about the Federal Reserve and it’s a privately owned bank manipulating the economy.
==================

Privately owned other than its management is appointed by the Federal Government and its profits are paid to the US Treasury. Also it was brought into being at the request of the senior US banking community in the early 19th Century after they had barely avoided a major crisis and feared they couldn’t survive another one on their own.

Other than that, don’t let facts get in your way. Trump doesn’t.

#35 BS on 03.18.17 at 7:58 pm

#10 work for free for work experience on 03.18.17 at 3:36 pm

Work for free is the worst work experience by definition.

Working for free may be “the worst” work experience but it is better than no work experience. They both pay the same. One may help land you a job that does pay and the other is a liability on your resume.

#36 Leo Trollstoy on 03.18.17 at 8:40 pm

Other than that, don’t let facts get in your way. Trump doesn’t

That understanding is why he won the General Elections

#37 mike from mtl on 03.18.17 at 8:42 pm

With the Bank of Canada on hold for the foreseeable future and the Fed clearly in tightening mode, US bond yields should rise faster than Canada yields thus resulting in a widening interest rate differential in favour of the US dollar. As such, we see the potential for short-term weakness in CAD, with it possibly declining back down into the low $0.70s.

/////////////////////////////////////////////////

Which is exactly what I would have thought, BoC will hold (perhaps even lower) within the foreseeable future. No chance in this decade rates (posted or otherwise) will increase to any alarming rate.

Good thing I’ve been lowering my polozpeso exposure. Been working great so far.

#38 Ricky on 03.18.17 at 8:46 pm

Thank you to everyone that gave me great advice what to spend my inheritance on:)
Love
Ricky poo:))

#39 Retired on a Gulf Island on 03.18.17 at 9:03 pm

Great contribution!

Please keep us updated on your assessment of US/Can$.

Most of my equity portfolio is in the US equity market. Just comparing the Dow and the TSX for any period it appears to me that the US market vastly outperforms ours.

Would love your thoughts on why we should/not just invest in ETFs in the US rather than Canada.

#40 greyhound on 03.18.17 at 9:17 pm

You guys all attending realestatewealthexpo.com in Toronto? Brad Lamb & CHRISTINA EL MOUSSA the
“TV Flip Star!”
How much longer can this continue?

#41 Smoking Man on 03.18.17 at 9:44 pm

#37 Ponzius Pilatus on 03.18.17 at 7:42 pm
#18 Euro Observer on 03.18.17 at 4:16 pm
#13 domain on 03.18.17 at 3:42 pm
Ryan.

Can you explain why the USD took a dive when the Federal Reserve raised interest rates?

————————

It was recognized as a confirmation of immediate inflation expectations. Gold and oil jumped. Funny that CAD is seen as co-related to oil, so CAD actually jumped while it should have tanked due to diverging directin of rates for USD – up and CAD ‘loonie’ – down.

At some point CAD will decouple from oil, and then Oh, boy, then…
———————
No use trying to explain the unexplainable.
There are forces out there, way beyond old fashioned economic theory.
Time for an economic Einstein.
.

It was a wierd day. I’m not buying it was priced in.
So we sell usdad the second the fed confirms what we all knew would happen at 2pm.

Come on Ryan tell the truth. You don’t know what was in play. Neither do I

But I will find out …. cost me huge.

#42 acdel on 03.18.17 at 9:45 pm

How is this going to help all the unemployed, underemployed in the current and future?? Interesting times ahead…

http://www.cbc.ca/news/business/job-automation-federal-government-1.4031206

Massive amount of jobs being created out there,ha,ha,ha!!!

#43 Self Directed on 03.18.17 at 9:50 pm

#45 Ricky on 03.18.17 at 8:46 pm
Thank you to everyone that gave me great advice what to spend my inheritance on:)
Love
Ricky poo:))
………..

I think the boomers invented the saying… “don’t spend it all in one place!” My Dad would say that about my allowance. Funny how that rule doesn’t apply if you’re spending it on a house.

#44 Wrk.dover on 03.18.17 at 9:55 pm

235,000 jobs needed every month for population increase and attrition.

several years at half that rate, followed by a few months at that rate gives full employment.

Uhuh uhuh.

#45 Smoking Man on 03.18.17 at 10:11 pm

Just know this lovers of free speech, capitalism. Freedom. Risk takers.

There is a sinister evil force out there that lives in a fantasy world thinking it’s doing good cause it’s not very bright. They got to your kids.

Look at them buying million dollar homes and begging to be carbon taxed,

#46 WUL on 03.18.17 at 10:17 pm

Rebalance your investments. Raytheon, Lockheed Martin, Boeing and Ruger. Pres. Strangelove’s budget. EPA, Health, Social, Public Lands, Nat’l Parks etc. all slashed. $54 B to that 5 sided building. War footing. I know which swamp is about to be drained. Kim Jong “Bubba” Un’s.

Meanwhile, back in Toledo, OH, to those awaiting the Job Fair at the factory with the weeds growing through the factory floor and dust blowing through the broken windows to land on 50 year old equipment and machinery, suck it up. You were lied to. No matter. You don’t matter.

#47 work for free for work experience on 03.18.17 at 10:34 pm

#42 BS on 03.18.17 at 7:58 pm

#10 work for free for work experience on 03.18.17 at 3:36 pm

Work for free is the worst work experience by definition.

Working for free may be “the worst” work experience but it is better than no work experience. They both pay the same. One may help land you a job that does pay and the other is a liability on your resume.

Adds the valuable certified obedient slave degree for the resume.

More importantly creates monetary value for free for the smart entitled takers.

#48 Smoking Man on 03.18.17 at 10:47 pm

Went to an open house in the on 37th street on Shlong Branch.

When I walk in the agent is getting bitch slapped by a buyer. Pissed that she did not accept a bully offer. She’s had 12 this week. Final bids due on Tuesday.

She said if you where my client I would do same for you. I’m bound by contract to do the best for my clients.

The guy leaves swearing his head off. I ask her what is this shit hole that is listed for 899k going to go for.

She said I have no idea. People are crazy. I cold not afford this house and I sell 20 properties a year.

She knows my house. I asked her what it would go for. She said 1 million to 1.5

I don’t have it in me to crush a greater fool.. I will not sell it to the highest youthfull bidder. I’ll sell it to the oldest bidder downsizing that can take the hit when it comes next year.

#49 TurnerNation on 03.18.17 at 11:01 pm

Too bad these guys are not a REIT!
Really sticking it to the Serfs.
(My landlord is part of XRE.TO)

http://www.cbc.ca/news/canada/toronto/parkdale-tenant-protest-metcap-living-management-1.4027753

“Parkdale tenants protest rent increases by MetCap Living Management
Tenants say rent increases are driving lower income people out of Parkdale.

MetCap Living Management, which owns 19 buildings in Parkdale, has been accused of making quick renovations and hiking rent after tenants move out.”

#50 Smoking Man on 03.18.17 at 11:04 pm

RIP Chuck. You filled my ear buds many times.

#51 Ace Goodheart on 03.18.17 at 11:14 pm

Oil’s ‘eff’d. Shale will do it in. That and the inability of the USA to control all the little rogue states that have made their banana republic status on selling cheap oil.

If Canada’s dollar value is tied to oil prices, we are not going to do well.

Need another staple industry

#52 Faster than a speeding Tesla on 03.18.17 at 11:28 pm

#55 Smoking Man on 03.18.17 at 10:47 pm

Went to an open house in the on 37th street on Shlong Branch.

When I walk in the agent is getting bitch slapped by a buyer. Pissed that she did not accept a bully offer. She’s had 12 this week. Final bids due on Tuesday.

She said if you where my client I would do same for you. I’m bound by contract to do the best for my clients.

The guy leaves swearing his head off. I ask her what is this shit hole that is listed for 899k going to go for.

She said I have no idea. People are crazy. I cold not afford this house and I sell 20 properties a year.

She knows my house. I asked her what it would go for. She said 1 million to 1.5

I don’t have it in me to crush a greater fool.. I will not sell it to the highest youthfull bidder. I’ll sell it to the oldest bidder downsizing that can take the hit when it comes next year.

..

So will it be Ecuador or a schlong branch renter?

#53 Cheap Houses on 03.18.17 at 11:35 pm

5% unemployment is about as believable as the MSM having a 95% chance Clinton would win POTUS.

90 million Americans are “Not Counted” by the Govt statisticians and 70 million are on food stamps.

But keep believing what you want Ryan.

#54 Pete on 03.18.17 at 11:36 pm

Euro Observer # 11, 14 ,18 ,21

You are bang on.

#55 Gh on 03.18.17 at 11:38 pm

Great post Ryan.
I love the perspective and forecast on where you feel the dollar and oil are going.

Why are you so confident in oil’s rebound in second half of year? Is it because you believe OPEC will hold the line on cuts or other? Do you have believe the US shale frackers won’t pick up the extra volume?

#56 something to think about on 03.18.17 at 11:45 pm

http://www.zerohedge.com/news/2017-03-15/canada-flagged-recession-bis

#57 Stock Picker on 03.18.17 at 11:57 pm

I think every foreigner planning to invest in Canadian real estate is happy with the idea that $C will continue to weaken. Currently we giving foreigners a great deal . One million C$ is only $600,000 US….and Chinese Yuan equivalent. Brits get a gold star at 2-1…..we look like a banana republic …..Brits pay $500 thousand for a million dollar home. But…there are few Brits coming to Canada.

So if you’re coming from Beijing…..we’re really on sale as the $C falls further. Way to go Trudeau. Tax the crap out of Canadians so they can’t afford housing or babies….but roll out the red carpet cheap for untaxed foreign nationals. It’s not a level playing field by any stretch of the imagination.

I don’t go for the shotgun approach to investing I pick stocks…and use the stupidity of Ottawa to my advantage. My top US diversification play is Priceline PCLN ….bought at $1284 US…..now $ 1755 US. Now that beats the balanced guys out of the water . In Canadian terms it’s a home run.

#58 Koshy Alex on 03.19.17 at 12:06 am

“I’m calling for oil prices to strengthen this year, more likely in the back half of the year, as demand hits new record highs and we see more a balanced global oil market. We see the potential for WTI to rise to US$60/bbl by the end of this year”

http://www.arabianbusiness.com/saudi-arabia-set-debate-6-levy-on-expat-remittances-660204.html

http://www.arabtimesonline.com/news/expats-must-pay-medicines-collect-5-remittances-sent-expatriates/

These links shows how much trouble these rich middle east countries are in financially, if they see higher oil prices in future they will never attempt to do something like this.

Oil Crash 2.0 is coming this year and this will crash a lot of things including stocks and Canadian housing. Pumping credit to grow economies can go only so far, it creates bubbles and ultimately it pops. All this demand hitting new highs is done by pumping more credit into the system, how long can we do this. This is simply not sustainable.

#59 The Wet Coast on 03.19.17 at 12:12 am

When prices were going crazy in Vancouver it was tsk, tsk. Now that average voters can’s afford average houses in Toronto it’s going to be a crisis. The closer to the next federal election this gets the greater the crisis. It was that way with T2’s daddy, and it’ll be that way with him.

#60 Leading Indicators on 03.19.17 at 12:33 am

1. The Beige Book
https://www.federalreserve.gov/monetarypolicy/beigebook201703.htm

2. The Conference Board
https://www.conference-board.org/data/

3. Federal Reserve
https://www.federalreserve.gov/data.htm

4. Consumer Price Index
https://www.bls.gov/news.release/pdf/cpi.pdf

5. Producer Price Index
https://www.bls.gov/news.release/pdf/ppi.pdf

6. U.S. Census Bureau
https://www.census.gov/economic-indicators/

7. Employment Cost Index
https://stats.bls.gov/news.release/pdf/eci.pdf

8. National Association of Realtors
https://www.nar.realtor/research-and-statistics

9. Bureau of Economic Analysis
https://www.bea.gov/

10. Department of Labor
https://www.dol.gov/ui/data.pdf

11. Productivity and Costs
https://www.bls.gov/news.release/pdf/prod2.pdf

#61 macroman on 03.19.17 at 3:53 am

Ryan, hate to be a nitpicker but it is the third rate hike in 8 years, not 2.

How can you reconcile stratospheric indices with ultra low IR if the economy is robust? If the economy was robust in real terms, inflation would go KaBoom! Phoney Baloney and the economy is just bust.

Therefore your oil at $60 in 2H17 will be $30.

This financialization Ponzi is going to wreck so many families. Don’t fan the flames…

#62 Wrk.dover on 03.19.17 at 7:29 am

Tax revenue #’s should pack up US growth #’s, but don’t.

#63 On a train on 03.19.17 at 7:41 am

Going 300 km/h on a train in Germany.
Relatively small country with 80+ million people. Infrastructure is the bomb despite near total annihilation less than 100 years ago.

Canada is almost 150 years and what is the excuse for the poor quality of housing and infrastructure?

There’s no concept of any kind in Canada. When German houses are still standing and appreciating in 100 years, the hubbles in Canada will have been torn down twice and replaced with multi plexes or high rises because there’s no land?

Invest in the US or Europe but stand to lose big in Canada over the next decades. The looting in Canada has peaked.

#64 maxx on 03.19.17 at 7:52 am

#6 IB on 03.18.17 at 3:00 pm

“Dear Blog dogs,

A couple of what if scenarios for your comments:

1) if you were saving 100k USD per year, would you start to invest (baLanced as Garth suggests) or just convert USD to CAD when/if the CAD hits low 70s as today’s blog states?

2) same savings as above: would you buy a house (as per 90 rule) or just keep saving the USD and rent?”

Not enough input. Depends on your age, for one.
You’re in a beautiful situation and I personally would not pad the pockets of realtards nor government coffers with a house purchase at this point in time. That would be pouring your safety net of potentially decades of living expenses into a sub-standard re investment due to the price cancer we currently have- imho.

I keep repeating this, but even though rates are stupid low, cash-value is at an all-time high: harder than ever to make and just as difficult to hang onto.

#65 David McDonald on 03.19.17 at 7:52 am

Thanks for the analysis. I have been perplexed by the multiple small recoveries of the Canadian dollar given the divergence of US Canada rates. The upcoming Canadian budget should trigger a drop to 70 cents.

#66 Monetary Policy Report on 03.19.17 at 7:58 am

Bank of Canada (Jan. 2017):
http://www.bankofcanada.ca/wp-content/uploads/2017/01/mpr-2017-01-18.pdf

U.S. Federal Reserve System (Feb. 2017)
https://www.federalreserve.gov/monetarypolicy/files/20170214_mprfullreport.pdf

#67 Cyrilix on 03.19.17 at 8:15 am

Ryan,

I can’t believe you’re pricing in oil at $60 with all the tracking expansion going on. Do you think they will control their supply? Nope, they are all looking out for themselves.

#68 Ryan Lewenza on 03.19.17 at 9:29 am

Yanniel “On the topic of rising interest rates: once the FED is done with the current hike cycle, do you think is wise to scale down the preferred shares allocation? Preferred shares will benefit from rising interest rates, but in the abscence of it, wouldn’t a 20% portfolio allocation to preferreds be too much?”

Yes I agree with this, or you would adjust your preferred holdings to be more weighted to perpetuals which benefit from declining rates. We’re very bullish on the Canadian pref market given 1) we see rates moving up and 2) the Canadian pref market has a 70% weight to fixed resets which benefit from rising rates. But once the Fed stops hiking and rates peak then you want to be more in government bonds and less preferred shares. – Ryan L

#69 Ace Goodheart on 03.19.17 at 9:34 am

RE: #64 Stock Picker on 03.18.17 at 11:57 pm:

We do have a small problem with foreign investment in Canadian real estate.

I know this sort of comment gets “flamed” on here but it is true nonetheless.

Here is what happens, in a nutshell:

-we have mortgage laws that give easy access to mortgages if you are not a Canadian Citizen. And we have massive rises each year, double digits, in certain real estate markets.

So what people are doing is just buying houses, holding them for a year and then selling them.

This works because what you are doing, as a non Citizen, is borrowing money from a Canadian bank, to purchase a house. Then you wait a bit, and re-sell the house, to another Canadian bank, and take the bank’s money and run.

All real estate is now is just banks buying houses from other banks. Sure, there is an actual human on the title, but the banks own the houses. A million dollar house, with 100K down and a 900K mortgage, is owned by a bank. If a person buys that house, and pays a million five and puts down 250K, then that house has just been bought, from one bank by another bank.

The bank’s money flows overseas and the bank is left with the house (which they have to sell to another bank to get their money back)

Any increase in interest rates will immediately collapse this system, but so far, we do not have increases here in Canada. This makes us vulnerable as a foreign buyer cash machine.

#70 Ryan Lewenza on 03.19.17 at 9:35 am

Cyrilix “I can’t believe you’re pricing in oil at $60 with all the tracking expansion going on. Do you think they will control their supply? Nope, they are all looking out for themselves.”

WTI is currently in high $40s and I’m targeting $60 – not an incredibly aggressive call. We’ve been in an oversupplied oil market for almost two years. OPEC now seems bent on getting a more balanced market hence the 1.8 million cut. I think we’re going to go from an oversupplied market to a more balanced market this year hence call for higher oil prices. US fracking will help to cap upside, but not send oil prices materially lower IMO. – Ryan L

#71 traderJim on 03.19.17 at 9:47 am

#43 Leo T

There are still people out there ‘fact checking’ Trump’s tweets.

Some people never learn hehehe

#72 Ryan Lewenza on 03.19.17 at 9:49 am

Gh “Great post Ryan. I love the perspective and forecast on where you feel the dollar and oil are going. Why are you so confident in oil’s rebound in second half of year? Is it because you believe OPEC will hold the line on cuts or other? Do you have believe the US shale frackers won’t pick up the extra volume?

First thanks. Second it’s a combination of the oil market going from an oversupply to a more balanced market and OPEC’s apparent desire to see higher oil prices. Global oil markets have been in a daily oversupply of roughly 2 million barrels over the last few years. This has started to come down recently, in part due to OPEC cuts. Their production cuts go to June and I think there is a chance that they extend them, especially if WTI is in the low $40s coming up to June meeting. Also I believe OPEC is moving from trying to keep oil prices low to hurt the frackers and take back market share, to now wanting higher oil prices. I believe people focus too much on US frackers which account for roughly 4 million barrels per day. Total daily supply is above 90 million so frackers represent roughly 5% of total daily supply. Yes they definitely have an impact on global oil markets, but OPEC, Russia etc have a much larger impact on global supply and in turn prices. – Ryan L

#73 traderJim on 03.19.17 at 9:53 am

After debate #3 Hillary tweeted one of her usual self-aggrandizing comments about how she just won all 3 debates. I guess she thought she won because she had a better grasp of “the facts.”

Media were furiously ‘fact checking’ every utterance in real time and long after.

A week later, no one could remember one single ‘fact’ Hillary mentioned, nor a single policy she was in favour of.

But everyone knew Trump wanted to ‘MAGA’, make America safe, and create jobs, whatever way possible.

Now, Joe Democrat still doesn’t get it, but political strategists do. Every election from now on will be full of Trump tactics.

#74 Ryan Lewenza on 03.19.17 at 10:08 am

Cheap Houses “5% unemployment is about as believable as the MSM having a 95% chance Clinton would win POTUS. 90 million Americans are “Not Counted” by the Govt statisticians and 70 million are on food stamps. But keep believing what you want Ryan.”

Yes I will continue to believe in government statistics and you can continue to spew conspiracy theories perpetuated by Trump with no actual facts or basis. The 90 million people not counted include high school and university students, people with disabilities and cannot work, people over the age of 65, homemakers etc. Unless you believe all high school students and people with disabilities should be forced to work then the 90 million statistic you cited is not accurate. For further analysis debunking yours and Trump’s claim that 90 million people are uncounted please read this. – Ryan L

http://www.politifact.com/truth-o-meter/statements/2015/aug/31/donald-trump/donald-trump-says-us-has-93-milion-people-out-work/

#75 Ryan Lewenza on 03.19.17 at 10:16 am

Retired on a Gulf Island “Great contribution! Please keep us updated on your assessment of US/Can$. Would love your thoughts on why we should/not just invest in ETFs in the US rather than Canada.”

Too much risk and since we live in Canada we need Canadian dollars. For a Canadian to have all their money invested in USD ETFs that’s taking on a huge amount of currency risk. The USD is strong right now, but it won’t always be this way. So have a healthy exposure (20%) but don’t overdue it and take on undue concentration risk. – Ryan L

#76 Tony on 03.19.17 at 11:45 am

Re: #74 Cyrilix on 03.19.17 at 8:15 am

I hear the same stupid thing from my brother and of course I tell him the biggest issue is cheating among the OPEC members. Given the dire state of the world economy it’s just a question of how much? Who cares about fracking it’s cheating and the state of the world economy that leads to cheating to the nth degree unlike in the past when the world economy was stable.

#1 Issue: Temptation To Cheat, this is 2017 not 1990.
#2 Issue: Fracking

#77 crowdedelevatorfartz on 03.19.17 at 11:45 am

@#70 On a train
“Relatively small country with 80+ million people. ”
++++++++++++++++++++++++++++++++++++
And there in lies the rub.
A country the size of Germany (360,000 sq kms) is comparable in size to the Isle of Newfoundland(110,000sq kms) and Labrador( 290,000 sq kms) with a total population of less than a million people
Taxes, close trading partners, established trading routes developed over hundreds if not thousands of years.
350,000sq km Germany with 80 million people vs 9,985,000 sq km Canada with 35 million people…….

Apples to oranges

#78 Asiakid on 03.19.17 at 12:37 pm

I usually read the posts every few days judt to get some background. I realized this stuff is inherently biased and filled with conflicting advice at times but, overall, I think there is more good info then bad info. But reading about this oil thing going to 60+ is a whole other level of improbable.

The basic issue is that oil for the frackers in the us is on demand. Any time the value goes up more frackers come online to put burden on that equilibrium price. Even if u assumed opec played fairly the reality is that opec doesn’t have enough sway to control the mkt, the last few months they been holding production but price has maintained or even dipped at times. The math is simple, too much ready supply too little demand to truly thwart global supply.

But let’s entertain the idea that it’s not the supply that will behave to go to 60 but the demand. Why? How would demand go so high at such a high rate that it Wud not only outstrip supply at its present rate of increasing fulfillment but to do so for it to reach – and sustain – at 60+. That’s judt basic gut check economics. Us oil is now leaner than before thanks to the training from one. We know trump will likely reduce pollution and other restrictions for us oil which will reduce additional costs…. And u still see this as somehow oil up 20 percent vs now.. Even when us oil is not fully up yet….?

#79 Fed-up on 03.19.17 at 12:54 pm

The only thing I have to say about oil prices, is when a commodity has to be manipulated in order to keep the price at a certain level and you’re trusting OPEC nations and Russia to make that happen,

#80 Fed-up on 03.19.17 at 12:55 pm

… I wouldn’t put a whole lot of my faith and confidence into a situation like that.

#81 take it easy on 03.19.17 at 12:58 pm

#81 Ryan Lewenza on 03.19.17 at 10:08 am

Cheap Houses “5% unemployment is about as believable as the MSM having a 95% chance Clinton would win POTUS. 90 million Americans are “Not Counted” by the Govt statisticians and 70 million are on food stamps. But keep believing what you want Ryan.”

Yes I will continue to believe in government statistics and you can continue to spew conspiracy theories perpetuated by Trump with no actual facts or basis. The 90 million people not counted include high school and university students, people with disabilities and cannot work, people over the age of 65, homemakers etc. Unless you believe all high school students and people with disabilities should be forced to work then the 90 million statistic you cited is not accurate. For further analysis debunking yours and Trump’s claim that 90 million people are uncounted please read this. – Ryan L

http://www.politifact.com/truth-o-meter/statements/2015/aug/31/donald-trump/donald-trump-says-us-has-93-milion-people-out-work/

http://www.cnbc.com/2016/12/02/95-million-american-workers-not-in-us-labor-force.html

#82 TurnerNation on 03.19.17 at 1:29 pm

Well if anyone doubts the Internet has been fully weaponized. Blog safely. Click no bait.

(The technology of Radio was given same treatment at the time, from Wikpedia:
“Among the most famous, or infamous, adaptations is the 1938 radio broadcast that was narrated and directed by Orson Welles. The first two-thirds of the 60-minute broadcast were presented as a news bulletin and is often described as having led to outrage and panic by some listeners who had believed the events described in the program were real.”


And today we have:

“The “Firehose of Falsehoods” propaganda model … is a technique allegedly used effectively by Vladimir Putin’s Russia, taking advantage of the internet and social media to overwhelm the populace with a machine gun spray of false news, inflammatory accusations, and conspiracy theories. It doesn’t matter if the information conflicts, it doesn’t matter if any of it is backed by reliable sources — sheer volume is all it takes, because the average person has a limited capacity to sift through it.”

The Average person it says. Don’t forget the 50% of people below average. Ergo 60-70% of population automatically is taken in . So easily.

#83 rknusa on 03.19.17 at 1:30 pm

your prediction of a higher CAD I would expect assumes higher interest rates in Canada in 2018 as interest rates are expected to keep rising in the US for the next two years bringing the fed rate to 3%

don’t think so with this real estate bubble, Canada will sit tight with a low 70 ‘s dollar in an attempt to protect middle class wealth and prevent the same hollowing out of the manufacturing sector from any petro dollar

they can have the best of both worlds with higher oil prices and a lower dollar by keeping rates lower than the US, can always appeal to US if accused of currency manipulation that they are trying to prevent a financial crisis if the re bubble pops with force

#84 dosouth on 03.19.17 at 1:32 pm

It is amazing however that when oil drops (Brent, Dubai or West Texas), the price at the pump does not. Yes from refining to the pump takes time but utterly amazing that when it goes up by $1 the change at the pump is immediate!?

The dollar will tank as the rates diverge from the U.S. All this is controlled by people and places above your or my pay grade. Other than history, which lately has not been a good barometer, the dollar will do what the people (other than us) decide it will do. At best it is just a guess.

#85 down and out on 03.19.17 at 2:10 pm

Smoky look at southern western Ontario .Leamington marina has room for that new Sea Ray and within walking distance of new home and bank containing excess cash from the 1.5 million your house got you after buying the boat and home . Airports nearby to get you out when the sun is not shining here . Coders needed for auto sector . Just get off the couch .

#86 NS Guy on 03.19.17 at 3:06 pm

The Boy Wonder’s 2017 Schedule:

– fly to Euro and sign a free trade deal
– meet with Syrian refugees
– meet with the LGBTQ community
– have secret meeting with Chinese delegates
– approve pipeline
– make speech about the ill effects of global warming
– fly to Washington to make nice to the big guy and schmooze with Ivanka
– meet with Bill Morneau to give him permission to balloon the deficit to $30 billion a year
– have consultations on legalizing weed
– figure out how to sign the TPP without the Donald
– give speech telling unemployed Canadians that they have to upgrade their skills to compete in the new economy
– cancel the promise of electoral reform
– go to hair stylist, attend photo op, let average Canadians take selfies, give speech saying he understands the middle class
– meet with Syrian refugees
– meet with LGBTQ members
– go to Liberal fund raiser
– go on cross-Canada tour listening to average Canadians, tell them what they want to hear
– tell Poloz it’s OK to keep interest rates low, he likes a low Canadian Peso
– fly to Mexico to talk about how great NAFTA is at exporting jobs from his country to their country, go to hair stylist, go to photo op/press conference, let average Joe-Bag_O Donuts take selfies
– meet with Morneau to work on tax-everything that moves budget
– make speech saying that the promised Infrastructure projects will have to be delayed a few more years
– meet with LGBTQ community
– attend Liberal fundraiser
– attend Chinese-Canadian business luncheon
– make speech saying that Canadian record-high home prices in Canadian cities is a sign of a healthy economy
– make speech saying that record-high bank profits is a sign of a healthy economy

#87 bdwy sktrn on 03.19.17 at 3:15 pm

containing excess cash from the 1.5 million your house got you after buying the boat and home
———————–
an 81 footer plus slip, diesel, mtce and haulout for one year will use up all of the 1.5m.

thinking of buying 1/2 of a 500-800k boat in the carribean in a few years . how many winters could a person tolerate in tropical waters?
after that it’s the Mediterranean for a few more years.
for now it’s the 16′ beater in howe sound.

#88 Leo Trollstoy on 03.19.17 at 3:30 pm

#88 take it easy on 03.19.17 at 12:58 pm

95m ppl aren’t in workforce cuz theyre either old or teens. Big deal. You expect all 8 year olds to be working alongside 88 year olds?

#89 Doghouse Dweller on 03.19.17 at 3:31 pm

#89 TurnerNation

No doubt about it ! The industrial complex psychologists have brainwashing refined to perfection.
Like repeat some obvious BS often enough and it becomes truth .
I use to wonder why they repeated the same commercial over and over to the point of ad nauseam.
One more Bloomberg Markets show and I`m off to get a CHIP Reverse Mortgage. Highly recommended by some senile old broad nobody has ever heard of.

#90 Dr.Ramesh on 03.19.17 at 3:33 pm

Question gentleman, I’m a dr looking for an investment advisor to hire, how much money does Raymond James have to invest at this current moment? The women at the bank keeps telling me the banks are the only safe place for my money
Thanks

Raymond James Canada has $33 billion under management. Turner Investments manages almost $600 million of that. But pick a fee-based advisor for that person’s merits, not just the corporate affiliation. All IIROC member firms provide at least $1 million in individual investor insurance – whether a bank-owned brokerage or an independent like RJ. — Garth

#91 A Reply to #95 Leo Trollstoy on 03.19.17 at 5:15 pm

Just a minor technical note: The age range for the 94.2 million not in the labour force (as of Feb. 2017) is 16 years and up.

#92 IHCTD9 on 03.19.17 at 8:17 pm

#136 The Dude on 03.18.17 at 4:07 pm
#129 Terrence

Our $CDN dollar is slowly turning into monopoly money, inflation is about to sky rocket, banks are giving you zilch on your savings, intrest rates are at all time lows * projected to go lower & u wonder why housing is booming? Its the best inflation hedge & people feel comfortable with investing & getting a return on TANGIBLE ASSETS Garth! Another laughable blog thanx Garth

—————————————

Exactly. Not to mention a wave of millennials looking for a home they can live in or rent out while they travel, and most new jobs being located in city centers. That isn’t talked about here. Plus, Canada ranks in the highest livability surveys, is an attractive tourist destination, and hedge against climate change. Add in the encouragement of house ownership through government intervention. The worst investment strategy was preached here unless you already had a huge nest egg. He just doesn’t get it. Take a look at the cost of new condos in Vancouver and Toronto to get a sense of what young people are up against and can expect for their lives. Their expectations have been lowered immensely. It is a condo economy now much like the big cities around the world. Land is coveted no matter what. Garth can’t see this for whatever reason. It’s laughable. He preached the wrong advice as a lead gen for his business over the last 8 years. Owners are much further ahead of renters just in the last 2 years alone, let alone the last 8 since this blog started. Renters are stuck with increasing payments and the opposite has been true of owners. While it looked responsible, the advice here was just the opposite!
——–

Qty:1 GTA shack – 1.5 million mort. pmt. = 7900.00/mo
25 years interest payments avg. of 4.0% – $867,000.00
25 years propert tax – $75,000.00
25 years insurance – $50,000.00
25 years maintenance – 50,000.00
1 major 2.5 decade renovation update to enable sale – 100,000.00
Total input – 2.64 million.

$7900.00/month invested for 25 years at 6.5%
Total invested – 2.378 million
Total portfolio value – 5.815 million
ROI – 3.44 million

To make the same, the GTA shitshack will need to go for well over 6 million. That’ll put you at par. The housing costs listed above are ultra conservative.

If a crap shack in the GTA commands over 6 million in 25 years in this Country, everyone will instead live on 150′ luxury yachts, as this would be both way cheaper, and offer more living space and a bigger lot…

#93 att on 03.20.17 at 7:00 am

credibility is shot with “could care less”only a few sentences in
get garth’s other underling to proofread to make you sound smarter?

#94 att on 03.20.17 at 7:05 am

ok come on, “Using a sports analogy, the CAD looks like the New England Patriots in the recent Super Bowl with weakness in the….”

Are we farming out our blog writing to the local high school?

#95 Mick on 03.20.17 at 9:08 am

“as we see the potential for the CAD to recover later this year and into 2018.”

… CAD goes into the ground me boy :)

…where do you get this stuff ? just tell me for I need to avoid that place :)

#96 Mick on 03.20.17 at 9:10 am

We see the potential for WTI to rise to US$60/bbl by the end of this year.

– dream on :); unless inflation skyrockets.

If this plays out, then we could see a higher CAD later this year and into 2018.

– it won’t

#97 Vancouver Brit on 03.20.17 at 12:20 pm

Might be a bit late to the party here but anyway, quick question.

I currently hold a large % of my portfolio in VUN, an unhedged US stock market holding (i.e. a weak CAD helps this ETF). Recently this has performed very well due to the strong USD, but I’m concerned it will be hindered when the CAD rebounds.

The alternative option is to hold VUS, which is the same holding but hedged to the CAD. If I switch some to this ETF it will nullify the effect of the rebounding CAD.

I’m curious if there is a way to actually benefit from the strengthening CAD as opposed to simply reducing your exposure to USD that will increase your returns rather than just protecting them? I’d like to take advantage of the weak CAD as much as possible.

#98 The Technical Analyst, CSTA, CPD on 03.21.17 at 3:01 pm

As a FOREX trader, I’m selling my USD as fast as possible for CAD.

CAD has been incredibility resilient in the face of low oil prices AND rising US interest rates. You can also chart USD/CAD and see the USD is clearly in a head-and-shoulders pattern. I see no reason to hold USD at this time.

Guess we shall see who is right at the end of 2017. The seller of USD or the 20% holder of USD.