Rock bottom

rock

Cathy works in the same ugly tower where the Vancouver Sun lives. “I know they’re hurting financially – conversations abound of cutbacks and layoffs,” she says, “downsizing space (which we happily took over) and their printing facility declaring bankruptcy (I believe). But apparently there is no shame in covering up what may be a sham from real estate agencies, mortgage brokers and their still-fat advertising budgets.”

What got her knickers in a knot this week was what she calls “a pathetic attempt to get Vancouverites horny over some crack shack real estate that has, supposedly, hit rock bottom.” Sure enough, the Sun gave front-page treatment to “10 Vancouver homes at rock-bottom prices”, happily turning itself into a real estate flyer.  Does this mean the Van market has hit bottom? Or just the newspaper? And would you pay $635,000 for this?:

635

Not Cathy. “I refuse to buy property in a sinking and rotting market,” she says, while lamenting, ”all our friends and family getting casually saddled with insane mortgage levels, zero savings for the future, or consideration of diversification.”

Meanwhile in Toronto, Tracey asked me to share the following with you. “This developer is dropping the prices on existing condos almost $100,000,” she reports. And, verily, it is so. Empire Communities is firesaling its latest waterfront project, ‘Beyond the Sea’, even as it struggles to market a new mega-tower just down the street. The units are in the third tower of a sprawling development which must have looked like a slam-dunk when started years ago.

But no longer. Now it’s all about cash flow. And while Toronto realtors may publish numbers showing condo sales reviving, I think this speaks for itself…

BLOW OUT

Speaking of the condo scene in godless Toronto, developers are definitely being squeezed by bankers who don’t want to end up with millions in financing on a dog project. ‘Every deal is now looked at individually,” says a developer-executive with enough confidence to visit this pathetic blog. “It’s no longer, ‘just sell 70% and go ahead.’”

The bankers won’t touch a construction loan without 25% pre-sale deposits from purchasers, and big money from the developer himself. That amount is divided by the average selling price of suites to determine how many units have to be sold before a loan is seriously considered. And this is precisely why a bunch of people who bought unbuilt condos will never move in.

By the way, the same exec offers this comment, itself a poignant commentary on what comes next: “We opened a new community in northern 905 (mostly singles and some semis), had a 3 hour line up on Saturday and sold 50 homes (with 2 year closings) to a United Nations of new Canadians who don’t appear to read or be concerned about your blog!!”

Speaking of people with a low opinion of moi, there was no shortage Wednesday afternoon when the US Fed surprised me (and most of Bay Street and Wall Street) by wimping out. The central bank will not be starting its ‘tapering’ this month as expected, because it doesn’t like the most recent US economic data. Many people (me included) think this is a mistake, since markets were cool with the big move, which would formally signal the end of a crazy-low period of interest rates. After all, the cost of money has to normalize sometime, since the crack cocaine of cheap rates has done things like turn the Vancouver Sun into a housing pimp.

So what now? Well, my advice to go variable with your mortgage and not to lock into a five-year fixed loan was spot on. As I said, it looks like things may back off a quarter point in the next week or two. And remember all the moaning and wailing on this blog when REIT and preferred shares prices retreated 15% from all-time highs? Lost was the fact that they pay fat distributions, and should be held for income, not capital growth.

In any case, I told you it was temporary and prices would gradually restore. This is not exactly what I had in mind…

XRE

Values surged right after the Fed announcement. So I sure hope you sucked when the others blew. What else do you need to know about investing?

167 comments ↓

#1 Garth you should close your blog.2013-09-18 on 09.18.13 at 8:54 pm

Your blog speaks to people with brains. Your discourse assumes there is logic in all this. As we have seen today there is no logic, neither brain. Just greadiness and fixed markets.The market will never react to common sense, it is driven by greadiness and fear. You hope that the people will get it, you assume that the people are disciplined and focused. None of them is true and your efforts are in vain. On top of the two problems mentioned before add the fact that most of the buyers are like animals, they react to restrictions and force, no autodiscipline.

#2 Ben Bernanke on 09.18.13 at 8:54 pm

I’ll tell you a secret: I understand nothing in money!
Whenever I have to decide something important such as today, I ask my fortune teller for her advice!
Isn’t it cool!!!

#3 Mr. E on 09.18.13 at 9:02 pm

Garth;

I took your advice and diversified into some REIT and Preferred ETFs. I now keep a picture of you beside my bed, and the wife and I give it a smooch every morning… I may need to get a new picture of you, we’ve almost worn the ink off this one. :)

You need help. — Garth

#4 Marco from van on 09.18.13 at 9:03 pm

A number of guys I know hit payday when their BC company was acquired by a major us player (otherwise they would have remained a small fish in a huge ocean).

All are buying new homes because they “hear” the market’s UP… And while they have enough cash to buy outright, they ALL mortgaged to the hilt to get into McMansions and MASSIVE debt.

Their salaries and income remained the same and I know the stability of employment is now vastly reduced as the business becomes completely accountable to the new management. You can hear the rumblings of displeasure as the sense of entitlement is chipped at daily.

I took my cash and am adding it to my diversified portfolio… I now am financially secure at my burn rate for over 20 years and if i don’t need it i have a great retirement fund, enough to put both my kids theough college (ivy league to masters degree) and enough yield to cover my yearly rent 3 times over.

This will not end well at all…

Financial education is so lacking…

#5 Victor V on 09.18.13 at 9:05 pm

#129 Shawn on 09.11.13 at 12:54 pm

ALL YIELD IS NOT CREATED EQUAL

Victor V just above says:
XRE is yielding 5.24% — Garth you have been repeating recently that preferreds and REITs were looking “juicy”, but this is getting too good to pass up!

*************************************
Some of that is return of your own money… What if you get 5.24% for many years but in the end the building is worthless (Elliot lake Mall). The yield would ultimately go to zero in that case?

How is depreciation not a real expense at some point?

Beware of REITs bearing “gifts” of your own money

===================

I said buy and loaded up under $15. You said ‘beware’.

Hope the blog dogs didn’t listen to your helpful ‘advice’.

#6 Al on 09.18.13 at 9:05 pm

So, pump and dump eh? Is this the end stage of a bubble? Or are we living through, and mainly denying, the end of the western world’s economic rule? Trading paper vs. actually manufacturing a quality product, it’s sad. Sense of entitlement and plain old stupid has ruined us.

#7 dienekes on 09.18.13 at 9:07 pm

You can be sure Goldman Sachs made out like bandits today. But I suppose everyone did.
A bunch of people will claim they saw this one coming ( no tapering) they are full of shit

#8 Smoking Man on 09.18.13 at 9:08 pm

As The Great Gartho franticly re writes his intended sermon for tonight.

I say what a Great Friggen Day.

At about 10am today the bets were booked, I’m not taking trading, Betting FOMC Tapering. We make personal bets with each other on big news announcements and stat’s. We bet 5 bucks a pop and we are all millionaires, winner take all. It’s more about bragging rights, very important at hedge funds, trading floors.

Everyone had their numbers down, I wasn’t disclosing mine till every one was in. Last time they tried box me in, I nailed it with an exact number.

Smoky what’s your number?

I said Zero, Nada, Zip was almost tempted to say, rather than 85B 100B. They burst out laughing only because I have won like 10 in arrow this year. In fact I have never lost at these bets, or remember losing. They where happy, finally someone was going to beat smoking man is how the chatter went. Chirping me all the way to 1:59:55, then all eyes laser beamed on BBG terminals, except for me.

My eyes where on my Galaxy3, In the course of the day I had loaded up on 50 contracts, wanted to do 200, chickened out. Selling USDCAD I was even. 30 seconds to go before lift off, the price was gyrating faster that Miley Cyrus’s ass. Up 5k down 5K up 10K down 10 K . Then all I saw was a black rapidly growing line going straight down.

All hell broke lose in our building…..Under my breath, scream Ya Baby Ya!!!!!!!!!!!!!
Not for the 50gs, I just made, but winning the bet.

In spite of being a great code smith on a floor. It still doesn’t bring any prestige, In the character ambitious traders need to project, I’m one small notch above the guys who clean the toilets. It is what it is.
I Don’t blame them I would do the same 25 years ago, they are young and very smart, knowing the loudest mouth alpha with a good book eventually gets the keys to the gulf stream. You can’t be seen hanging with the help. It’s a law of some kind.

If they only know that smoky was in the building.

I have a strong suspicion some know me. In fact I think I have way more fans that 23. The fact that my blog shows up on first page when you Google smoking man, tells me something. And I never post on it. That’s funny.

They still bet against me, even when I gave it up on.

#85 Smoking Man on 09.18.13 at 9:18 am

Never bet against The Smoking Man, even God learned his lesson.

Now I made one call that I might be eating crow over next year, 2014 Ka Boom Real Estate. That call was killed by helicopter Ben.

#9 Londoner on 09.18.13 at 9:08 pm

How about some love for London?!

#10 Dinglenuts on 09.18.13 at 9:09 pm

I hit refresh for an hour and a half and I like to party

#11 bond bust on 09.18.13 at 9:13 pm

Taper or Not Taper… It really does not matter.

The bond market unravel will continue.

The market force will chew them and then spit them out to the history garbage bin, just as it did to Greenspan.

#12 Koshy Alex on 09.18.13 at 9:13 pm

“Why I’m Bullish on the American economy and why you should be, too”, ………..if you care

http://www.nytimes.com/2013/09/19/business/economy/fed-in-surprise-move-postpones-retreat-from-stimulus-campaign.html?hp&_r=0

As U.S. economy stalls, Fed reverses course on stimulus policy

http://www.theglobeandmail.com/report-on-business/federal-reserve-to/article14397253/

Now even I am bullish on the great US recovery, as long as they plan to print money to infinity, sorry expand their central bank’s balance sheet to infinity I think we don’t have anything to worry, welcome to the new economy ::))

#13 TurnerNation on 09.18.13 at 9:15 pm

“United Nations of new Canadians.”

Must be HUM: Hot Unidentifiable Money.

Also, for an update, paging GTA Girl to this blog?! Biggarider you seen her around?

#14 takla on 09.18.13 at 9:15 pm

garth a blog or two back i commented that we will see if the bernack cuts back on stimulas{i doubted it} as all things economy wise are NOT as what is partrayed by the media and those paying lip service to the government hacks.Sooooo is it QE to infinity??Can i take this opportunity to say I told you so???Are we to assume that at some point going foward we will be into massive inflation in combo with surging interest rates?

#15 lee on 09.18.13 at 9:15 pm

$448,000 is still way too much.

#16 Chickenlittle on 09.18.13 at 9:21 pm

“Things might back off a quarter point..”
Sad day for all of those who locked in at the “last” of the lower rates, eh?

This whole situation is weird and people who insist on buying now are on crack.

#17 Jimmy on 09.18.13 at 9:27 pm

FIRST!! to buy GTA V

#18 Chickenlittle on 09.18.13 at 9:29 pm

One more thing:
I guess this just destroyed the myth that investing is like gambling, but buying RE is not…

If I had just bought and locked in I’d be pissed right now.

#19 Nosty in SmokySyrupLand on 09.18.13 at 9:30 pm

#164 Julie the Vlad on 09.18.13 at 2:10 pm — “Apparently the “science” is in a state of “flux” which is Govt speak for bullshit.”

You may be on to something there. Science defunding is in vogue. Dumb down the sheeple with more false flags!

#147 Donald Trump on 09.18.13 at 4:42 pm — “Anyone else heard about it and understand what is going on ?” — Speaking of mass shootings by reading the headlines, see if there is a common thread running between these links — here (shades of 9-11), here, here, Here, here and here. One way or another, depop’s in full swing. Any method will do, as long as it’s effective. Furthermore, mutiny in the US Forces? They don’t want another war in Syria, as it ups the stakes with Russia and China.

SMan — Take a look at the pic — is this where the Universal Consciousness Consolidator is? Plus — Here’s a couple 4 U! — CryptoCode.

#148 Adrian on 09.18.13 at 4:50 pm — “The American economy — I’m sorry to say, looks more and more like that of the Soviet Union all the time.” — Which sank like another wet fart.

#20 Victor V on 09.18.13 at 9:31 pm

Empire doing a heck of a job fleecing the sheep via twitter:

https://twitter.com/Empire_Living/status/380143168181657600

https://twitter.com/Empire_Living/status/380141862251532288

#21 DaleFromCalgary on 09.18.13 at 9:31 pm

Uncle Ben didn’t taper because the U.S. economy is not recovering and never was. The U6 unemployment rate (true unemployment, not the U3 rate the mass media quote) is still at depression levels, food stamps and fake disability claims are at an all-time high, and the dead-cat bounce in housing was due to speculators buying rental properties, not genuine recovery.

Calgary condos still advertising like mad. University City project, which was discounting units before the Great Flood, is now almost sold out since it is high and dry at the base of Nose Hill. Family rentals now at zero vacancy. Calgary realtors got lucky and will be able to duck the bullets for another year or so.

I was in High River last week. The laughably named Hampton Hills suburb (actually built on a swamp below the level of the Highwood River) still has large pools of water since the land can’t drain naturally. The nearby hamlets of Cayley and Aldersyde have signs advertising lots “High and dry!”. It will be interesting to see how many High River citizens decide to move to Okotoks, which is mostly up on the plateau.

#22 East Van on 09.18.13 at 9:32 pm

The US economy is:

63% Military Industrial Complex
19% Wall Street Fraud
8% Hollywood/Porn
7% Alcohol/Guns/Casinos
3% Other

The Fed will not stop printing money until the party stops again like in 2007/2008.

#23 Old Man on 09.18.13 at 9:36 pm

This will be my final warning, as life is nothing but an illusion in regards to Real Estate or anything else in your walk in life, so pay attention as the script for this play was taken for 911, and moving forward into a darkness, and make no mistake. I will give you a quote from a man with a vision that was nothing less than a prophet if you will, and there is no mistake.

” Who controls the past controls the future. Who controls the present controls the past.” This was none other than – George Orwell – and who were they that has control over the message? I know who they are, and believe nothing that you see on the mass media, so think for yourself in life, and do not be deceived by bs that is everywhere.

#24 I Heart Money on 09.18.13 at 9:36 pm

What happens when the next recession hits and rates have no where to go? I think I’m going to liquidate my diversified, balanced portfolio, buy gold and head to the hills to wait out the zombie apocalypse.

#25 William of the North on 09.18.13 at 9:36 pm

@dienekes,

http://www.europac.net/media/video_blog/taper_or_not_taper

Garth…you should watch this; it might help you out.

#26 att on 09.18.13 at 9:41 pm

Garth, I am a big fan of yours but I have to point out the REIT chart you showed is a bit disingenuous. XRE may have gone up almost 2% today, but it is still down almost 15% from 3 months ago when it took the tumble. If in fact you believe REITs will reach their previous point 3 months ago, people should still be encouraged to buy.. it isn’t too late… not even close.

Buy for yield, and in the correct weighting. — Garth

#27 T.O. Bubble Boy on 09.18.13 at 9:47 pm

I’ll bet that most of insiders on Wall Street were on the right side of the market this afternoon.

After all, EVERY MARKET IS MANIPULATED:
http://www.ritholtz.com/blog/2013/09/banks-are-manipulating-gold-and-silver-markets/

Are there any normal people reading this? — Garth

#28 Obvious Truth on 09.18.13 at 9:47 pm

As I said no inflation no taper. In fact the Chairman basically told reporters and big bank economists that they can’t read.

Love the backpedaling and and the money managers saying they are positioned for this.

Facts:
Binge book told you economy was weak and fed was concerned.
The chairman said rates moves were wrong at an impromptu Q and A.
Fed wont be dictated to by hedge funds. (Today hurt but they haven’t covered yet)
No inflation to speak of. Spread too high and unwarented considering low inflation. You won’t get 2% above inflation in the ten year.

Rebalancing however worked. You didn’t need to do all this reading to see that some parts of the market were on sale.

Let the covering begin. Money managers may need to chase this thing right to the end of the year.

#15 lee. You’re right but condos are more boring than houses. I bought a cond that size for 90 000 in 95. Parking and locker incl. They could get close to that again.

#29 Obvious Truth on 09.18.13 at 9:50 pm

#15. Sorry that was in 99. Same condo was double in the 90’s crash.

#30 Dan from Calgary on 09.18.13 at 9:52 pm

Love the read Garth. I did bet some money on HVU.TO today, thought I might make something. My balanced portfolio looks like shining sunlight today though, so in the end… it’s all about risk.

Still renting my great Mission gig with all new furnishings, heated and secure parking, in-suite laundry, and all the kitchen gizmos going. I think I might get why people think they have to buy it, but I read! I’ve stopped having this conversation with people, it ends badly. I still think we have a Jim Lambstown on the go though, and the Kool-Aid is a plenty. Anyway, long US and short Calgary after the story I read about Alberta’s increasingly Alberta-locked gas. TFSA well used and no interest free savings account, $5 per transfer to other accounts, people do this for 1%?

My post tonight is about what you use for the blog. I like the look and would be surprised if it was WordPress, and happy if it was! I started my own today to voice my opinion on something very unrelated to financial planning, I guess maybe you inspired me a little. What do you use?

Cheers for all the good advice, look forward to your read every night (but Saturday). I’m impressed you keep up the pace!

#31 Freedom First on 09.18.13 at 9:53 pm

Unusual. No tapering and the stock markets are at record highs at the same time. Fed loses credibility. Also unusual, spike in markets and in gold just minutes before Fed speech. Fed loses more credibility. Myself. I bought and sold nothing the last few weeks. Capital appreciation, asset appreciation, and dividends still sound and paying nicely. Gotta love it, balance, diversity, dividends, liquidity, cash flow, cash, income streams, no debt. Works from when you enter puberty. Some people learn this from being taught. I had to learn from my teens because I was left on my own, through no one’s fault. We have to play the cards we are dealt. I am very grateful how things worked out.

I don’t kiss your photo every morning Garth, like that one couple said today, but I understand it. You are and have continued to help/save many people in spite of being harassed/mocked/ridiculed every step of the way. Imagine Garth, some people kissing your photo, and others throwing darts at it. Both acts make me feel all warm and fuzzy, in a good way. Thanks for being a voice of truth in an untruthful world Garth. Anyone who thinks I am a brown noser, that is okay, I have always believed in what Garth teaches, I just love the fact that he kicks a$$ publicly. Gotta love it:)

#32 NOK on 09.18.13 at 9:53 pm

XRE.to is up 1.4% today but still down 15% from the high. The chart with no scale on the y-axis is a little misleading.

Those not worried about capital loss are clueless. Capital depreciation is always important – if you had to liquidate for an emergency you would come out in the red. I’m not saying you should be concerned about every small move in price but you should be concerned if you’re down 15% in a few short months.

Remember the yield, and why you bought it. In a well-diversified portfolio where REITs hold a 6 per cent position, why all the gnashing? Other assets have moved higher at the same time. Get a grip. — Garth

#33 economictsunami on 09.18.13 at 9:53 pm

Four years on and the ‘recovery’ continues to stagnate. Extraordinary monetary policy (at current levels) appears to have hit a wall; due in no small part to demographic shifts in western economies.

Previously, low rates were seen as enough of a economic tonic. Then the concept of QE was seen as pushing the tide of money away from safe havens into riskier assets but as the tide goes out, it must also return.

Observe what took place in Japan when the BOJ attempted to take their foot off of the extraordinary monetary policy accelerator; several times.

Japan presently is embarking in QE on steroids, massive physical stimulus and expected labour policy reforms.

The fact that many CBs feel the continued need for highly interventionist policies should be very telling to you.

Financially, definitely don’t fight the Fed but see the real economy as it is, not simply as you wish it to be…

Analysis: Ageing could weaken central banks, spur rate volatility…

http://www.reuters.com/article/2013/09/18/us-demographics-policy-analysis-idUSBRE98H05020130918

The Federal Reserve Has A Demographics Problem — An Aging Society Is Making Monetary Policy Less Effective

http://www.businessinsider.com/monetary-policy-hindered-by-demographics-2013-9#ixzz2fIbQpkuO

#34 T.O. Bubble Boy on 09.18.13 at 9:56 pm

By the way, what kind of azz-backwards world do we live in where the Fed says that the economy is too weak to stop with ’emergency’ measures, and investors suddenly want to own MORE of the companies that are all apparently on life support without stimulus.

What companies? — Garth

#35 Roy on 09.18.13 at 10:02 pm

Is that a dead body with the crackshack? Only a little unsightly LOL

#36 Poste Haste on 09.18.13 at 10:12 pm

Condo’s – rat traps in the sky. For the life of me I will never understand why some will pay dearly for a 500sq.ft box with a view of an adjoining building. I wonder what will be of Toronto in 5 years – will all those godly Condo’s be the butt of all jokes. In 2005 I couldn’t figure out how people were able to carry mortgages that appeared to be a spiral to nowhere – 8 years later and counting and I finally have come to the conclusion that everyone but me got a $100K cheque to be used towards a home purchase – what other sane reason can there be ?? When my 28 year old BIL just bought a new home in Georgetown for a cool $525K – this surely must be the point of total madness…

#37 ValleyBoy on 09.18.13 at 10:13 pm

Hey Garth,

First off thanks for writing an awesome blog on real estate. For I can see that housing will crash in the next couple of years from your blog and agree. It actually opened my eyes up and got me to start looking into alternative media. But sorry I gotta call you out here

from your change up blog
As I told you last week, Wednesday’s a biggie. The world’s most important beard, Ben Bernanke, will hold a presser to announce (the betting goes) Washington will start turning off its gushing tap of stimulus spending. It’s a key moment. It signals (a) the era of crazy-cheap interest rates is over, probably for the duration of your lifetime, (b) America’s back, (c) the crapstorm of 2008-9 is finished, (d) the doomers were wrong, again and (e) those left with piles of silver bars in their root cellar will be really, really sorry.

“The betting goes” and what you believed with your amazing US recovery that so far has like 4 to 5 trill into it since 08. And silver did go up, so would you say your a greater fool on the US economy? Again sorry to offend you if I do, but you do set yourself up once in a while, Not that often thou. Also you mentioned the S&P corporations were making record profits, I read an article and 80 percent of those corps were banks. That doesn’t seem to be a good thing your banks leading the way by a long shot.
http://blogs.wsj.com/moneybeat/2013/07/23/few-companies-shouldering-most-of-sp-500-profit-growth/

The article says 4 per cent of corps yielded 35 per cent of profits. How is that surprising? As for the US, nothing changed today. Recovery intact. — Garth

#38 As on 09.18.13 at 10:18 pm

when the US Fed surprised even me … because it doesn’t like the most recent US economic data…

The fed knows what most don’t. If you actually looked at the data instead of the headlines their non-move was obvious. Money printing going since 2009 and no real recovery.

#39 -=jwk=- on 09.18.13 at 10:21 pm

Still asking $400/sf (down from $480/sf, 16.6%) for condo jammed into a one lane street, with the ku-thunk of the all night queen st streetcar out front, no water access without frogger’ing it across lakeshore blvd and non-stop construction across the street for ten+ years ultimately blocking any water view you would have had. when we lived in the W06 we used to drive by the site all the time (it was once a house and a auto repair shop, now it is 1000+ units) and wonder how they could call it ‘lakeside’ and get way with it. hint: its not by the lake

#40 Piccaso on 09.18.13 at 10:27 pm

Hot air can’t bust a housing bubble that doesn’t exist

http://www.ottawacitizen.com/business/Gary+Lamphier+bust+housing+bubble+that+doesn+exist/8929807/story.html

#41 allan rusin on 09.18.13 at 10:31 pm

Recovery intact. — Garth

US dollar down. US stocks least up, Europe , Asia and commodities most up.

Recovery?

Absolutely. Slow but relentless. — Garth

#42 T.O. Bubble Boy on 09.18.13 at 10:31 pm

By the way, what kind of azz-backwards world do we live in where the Fed says that the economy is too weak to stop with ‘emergency’ measures, and investors suddenly want to own MORE of the companies that are all apparently on life support without stimulus.

What companies? — Garth
———————————-

Whichever ones Mr. Bernanke believes will ruin the “fragile” recovery if he turns the tap off.

If the Fed doesn’t feel that the economy requires $85B of extra cash each month, it would have announced something else today.

It’s not about corporations, but consumers. Bond-buying will bring rising US mortgage rates lower. — Garth

#43 Smoking Man on 09.18.13 at 10:34 pm

The article says 4 per cent of corps yielded 35 per cent of profits. How is that surprising? As for the US, nothing changed today. Recovery intact. — Garth

I think there are 49 million Americans living below the poverty line that would disagree with that statement.

But screw them, they drank the cool aid.

For investors and gamblers. rock and roll time baby……

#44 allan rusin on 09.18.13 at 10:36 pm

Bond-buying will bring rising US mortgage rates lower. — Garth

Temporarily. Until it all blows – US dollar, bonds, stock market. You know it well Garth, It is coming in the next 2-3 years.

#45 JSS on 09.18.13 at 10:44 pm

#2 Mr. E on 09.18.13 at 9:02 pm
Garth;

I took your advice and diversified into some REIT and Preferred ETFs. I now keep a picture of you beside my bed, and the wife and I give it a smooch every morning… I may need to get a new picture of you, we’ve almost worn the ink off this one. :)

You need help. — Garth

======================

I too am aroused from Garth. As a man, his good advice makes me feel sexy.

#46 FATHER on 09.18.13 at 10:45 pm

garth your awesome.

#47 Smoking Man on 09.18.13 at 10:47 pm

To the non livers of BATMAN

I give you the Canadian bond market

http://www.bankofcanada.ca/rates/interest-rates/canadian-bonds/

#48 omg on 09.18.13 at 10:50 pm

Used to be that the chair of the Fed was to be seen as rational, competent and above all not reacting to short-term blips in economic numbers. Ben has made a bit of a mess on this. He looks foolish implying tapering will start and then surprising the market.

This time he surprise to the “good” so everyone is happy.

As for the Fed having better economic numbers than everyone else, they don’t – don’t forget how badly they misread the indicators showing how ugly things were during the financial crisis. Hell, even Jim Cramer had a better handle on how bad it was.

Again, it just goes to show how easily the market can crush you just when you think you got it figured out. I wonder how many little guys out there with their trading accounts got masticated with their bets that the market would plonk on news of tapering.

#49 Basil Fawlty on 09.18.13 at 11:05 pm

Maybe this helped to change The Bernanks mind on tapering the money printing. The recovery is a sham.

The US Census Bureau recently released these figures showing a steady decline in US median income.

2007: $55,627
2008: $53,644
2009: $53,285
2010: $51,892
2011: $51,100
2012: $51,017

#50 SofaKing on 09.18.13 at 11:07 pm

US FED did not tighten because the economy is hurting but because the F-35 fiasco is costing over $1.5 Trillion!!

What started out 10 years ago as a $300 billion contract for a fourth generation fighter is now the biggest blunder is US history.

It still can’t fly under instrument flight rules that a simple Cessna can.

It can’t fly in rain or near thunderstorms without causing its software to malfunction.

It can’t drop bombs!

It needs to be escorted by 3rd generation fighters because it lacks defense capabilities!

Basically, you’d think Microsoft developed it but the sad reality is HArprites are pushing this lemon on the Canadian tax payers.

A bit off topic but wtf, it also explains why the US needs endless printed money for their “toys”

We Canadians are also being

#51 Smoking Man on 09.18.13 at 11:16 pm

Vladster great links today as always.

my last post getting a bit looped, what else is new

replace “non livers” with “non Believers”, and look at it on monday.

#52 The Prophet Elijah on 09.18.13 at 11:18 pm

#27 T.O. Bubble Boy on 09.18.13 at 9:47 pm

I’ll bet that most of insiders on Wall Street were on the right side of the market this afternoon.

After all, EVERY MARKET IS MANIPULATED:
http://www.ritholtz.com/blog/2013/09/banks-are-manipulating-gold-and-silver-markets/

Are there any normal people reading this? — Garth
———————————————————-
Obvious. Gold and miners started inching up an hour before the announcement, while the USD started to tank. Was obvious the proverbial “fly on the wall” texted their friends etc.

#53 snake on 09.18.13 at 11:21 pm

BlackBerry lay off up to 40% of workforce

http://business.financialpost.com/2013/09/18/blackberry-may-lay-off-up-to-40-of-workforce-report/?__lsa=6873-1651

while in Vancouver

1)Assistant to Sales Manager (Olympic Village) $2 per lead

http://vancouver.en.craigslist.ca/van/ofc/4071426622.html

2)Real Estate Brokerage offers INTERNSHIP program for students part time

http://vancouver.en.craigslist.ca/van/mar/4054185912.html

#54 Kilt on 09.18.13 at 11:21 pm

I’d pay 650,000 if it comes with the tarps.

And why is it that people who do crack to live in houses that I can’t afford to buy?

Kilt.

#55 The Prophet Elijah on 09.18.13 at 11:22 pm

“I’ll bet that most of insiders on Wall Street were on the right side of the market this afternoon.”

And speaking of Wall Street scum, funny how a year later Facebook stock is hitting all time highs after it was assaulted after the IPO. All control and manipulation.

#56 Smoking Man on 09.18.13 at 11:23 pm

#52 The Prophet Elijah on 09.18.13 at 11:18 pm

Defiantly. Insiders in NYC knew,

but a skilled charts men can spot that.

should have gone 200 contracts.it was obvious.

so should have you.

#57 Smoking Man on 09.18.13 at 11:26 pm

#50 SofaKing on 09.18.13 at 11:07 pm

Perfect

#58 Bob Rice on 09.18.13 at 11:26 pm

So what does today’s announcement mean for house prices? Is the “correction” put on hold, accelerated, or staying the course? should have gotten a degree in economics…

#59 Cory on 09.18.13 at 11:29 pm

I wish I could pull up my posts from past here where I said I don’t believe the Fed can taper. Its obvious interest rates were headed higher if so and nobody, governments included, could stand higher rates at this point and who knows if or when anyone can.

I didnt sell any REITS or REOC. You’re right that theyre for income not so much capital gains. Follow what Buffet says, “if you cant hold a company stock for ten years then you shouldnt hold it for ten minutes”

#60 snake on 09.18.13 at 11:38 pm

1)Condominium Financing

http://www.torontorealtyblog.com/archives/condominium-financing/9775

2)Rent My Condo! By The HOUR

http://www.torontorealtyblog.com/archives/rent-my-condo-by-the-hour/9762

#61 The Prophet Elijah on 09.18.13 at 11:42 pm

If the Fed doesn’t feel that the economy requires $85B of extra cash each month, it would have announced something else today.

It’s not about corporations, but consumers. Bond-buying will bring rising US mortgage rates lower. — Garth
———————————————————
Bernanke today refused to commit to any taper later in the year, as he previously suggested – this is what sent the chill down the markets spine and shot gold up $50+.

There was no ‘chill.’ What drivel. — Garth

#62 dienekes on 09.18.13 at 11:44 pm

William of the north
I think peter schiff makes sense, i think these things are odvious to everyone. But i also think everyone fails to note the power the US has to support its dollar. If its required, all out war. Where else are you going to put your money, Russia? China? The US dollar will always be the reserve currency. Gold? The US will make sure it implodes in value.
I am shocked though that Bernacke did not take advantage of the market expectations and taper. I think Schiff is right, he has now let the jeanie out of the bottle, and rates will continue to rise no matter how much the fed buys.
Im new to all this anyway. Im talking out my ass

#63 Donald Trump on 09.18.13 at 11:56 pm

I halve real-igus-zly fallowed Tobacco mans ad-vice…

Now I halve 2 shed all my blondz….and option brew- netz….only read/hedz left…

#64 timmy on 09.18.13 at 11:57 pm

The Vancouver Sun is OK–if you are at a grade 8 reading level and don’t have the ability to think critically. With the horrible sensationalist crap they churn out, it is surprising they still are in business. I guess they pay their journalists–I mean the people who write articles– so poorly that they are left with a very low caliber.

#65 Julie the Vlad on 09.18.13 at 11:58 pm

I’m waiting for Garth to amuse us all by saying the US is recovering.

Speaking of no recovery, our married couple cousin is so broke with the corn flakes box townhouse they bought in Garrison in Chilliwack, they need to rent it out so they can find a $550 a month hole they can afford to rent.

Meanwhile we are renting a 5 bedroom house for $1500 a month with no property tax or maintenance costs.

#66 Blacksheep on 09.19.13 at 12:03 am

Vlad, Smoking / Old Man,

https://www.youtube.com/watch?v=5fbvquHSPJU

#67 Cici on 09.19.13 at 12:04 am

#31 Freedom First

Well put, and I agree!

Thanks a billion (even if I never make it to a million) for all of you wisdom Garth!
I’ll keep saving and trying, and will not pile what I do have into overvalued real estate.

#68 willworkforpickles on 09.19.13 at 12:21 am

To lower interest rates now would be foolish and should not happen with this real estate market that needs plenty more cooling off.
Will small business fare better in an ever escalating real estate market where fewer and fewer dollars (even now) are left to spend inside the doors of small businesses….
Then again will small business be better off in a market cooling down from rising interest rates followed with more joblessness?
Is the latter which will speed up an economic correction the lesser of 2 great evils here?
Backyard barbecue horror stories are already on the rise.

#69 GTA Girl on 09.19.13 at 12:22 am

Turner Nation, I’m still hear and reading.

Word on street in Vaughan is that a few of the condo projects sold well near the new subway station. However, most are all friends ‘family’ flippers. Hoping for payday when subway is finished. One day…maybe. Years from now they’ll look into the shenanigans of the subway build and it will be another gas plant for whomever is in power.

Vaughan is now in grips of casino mania. And jump to add a large cluster of condos in and around Vaughan Mills. Stupid idea, you say? Damn straight it is. Especially when the ones around there are full of renters who are paying less than what it costs owners to own.

The white belt between Vaughan and King is quietly slithering its way to approval. More sprawl coming.

If its a rainbow of new Canadians buying, as that developer above says….he might also add that many of them obviously can’t read…period

#70 GTA Girl on 09.19.13 at 12:24 am

Meanwhile they keep adding balloons to the developer signs every Saturday…kids think the circus is in town.

They aren’t wrong

#71 willworkforpickles on 09.19.13 at 12:32 am

I have inwested in Wiser’s Distilleries – Go Wiser’s Deluxe.

#72 Observer on 09.19.13 at 1:24 am

8 As on 09.18.13 at 10:18 pm

when the US Fed surprised even me … because it doesn’t like the most recent US economic data…
==============

It is expected, the feds cannot taper, it has to ride the beaten up pony until it dies. Its O-bull-sh-it speaking recovery blah blah blah. There is no recovery just a bunch of part time jobs created because companies are getting rid of Full time work due to Obama care.

This goes the same for canada , the banks will keep up the BS until the bubble turns into a big-black-hole then we can have a Eventfull BIG Bang instead of a small bubble bursting!

#73 Tony on 09.19.13 at 1:35 am

Re: #58 Bob Rice on 09.18.13 at 11:26 pm

Unemployment in America will never drop below 6 and a half percent even if by some unforeseen miracle growth picks up in America. More will then look for work thus pushing the unemployment rate back upwards. It means mortgage rates at the longer end will fall at least one quarter of one percent in the near future up in Canada.

#74 KommyKim on 09.19.13 at 1:39 am

RE: #30 Dan from Calgary on 09.18.13 at 9:52 pm
Love the read Garth. I did bet some money on HVU.TO today, thought I might make something.

Beware of contango. Don’t hold for the long term. Much better to buy an inverse VIX ETF and buy when the VIX spikes and sell soon after. Or better yet, leave these types of bets to the SmokingMan.

#75 Van guy on 09.19.13 at 1:49 am

That was quite the pop before the big news from the fed. The markets already knew something before the pop. REITs up just under 2% today while the miners saw 9%.

So what’s going to happen to RE with rates edging lower? Probably going to be another sticky year :(

#76 Solent gip on 09.19.13 at 3:47 am

There’s a lot of man no o man no action going on here tonight. Garth’s having threesome without his knowledge. So much guy love gt must feel he’s back on the thick of things with Stephen Harper

Google pm secretary who used to live above harper family garage. For years

His name ray Novak

He now has number two job in Canada

Choke on it Harper

Ok
O
O

#77 Devore on 09.19.13 at 4:21 am

#55 The Prophet Elijah

And speaking of Wall Street scum, funny how a year later Facebook stock is hitting all time highs after it was assaulted after the IPO. All control and manipulation.

You’re right, prices should never change. But then that would be control and manipulation too. We see what we want to see.

#78 rob who rebalanced thanks to... on 09.19.13 at 4:28 am

Hey Garth

While the doomer and gold bug comments do get tiring after a while it was them that first alerted me to a big sale in REITS!!!

Thanks to them I was able to add to my holdings (in this case individual stocks which I know you don’t recommend) at a big discount. For example True North Apartments (TN.UN) is down 25%

Again thanks

Rob

#79 drydock on 09.19.13 at 5:51 am

Taper, taper,
it’s all vapor.

#80 randman on 09.19.13 at 6:30 am

Today’s FOMC announcement was a tacit admission by the Fed that the economy is not nearly as strong as it appears to be using certain widely lauded data points (consumer confidence, housing starts, etc.)
The unintended consequences (side-effects) of today’s Fed decision will be far reaching, and likely quite disastrous. However, we must play the cards we are dealt and trade the market that is in front of us.

I agree

#81 randman on 09.19.13 at 6:42 am

You could almost feel the rush as the Fed induced heroin money injection took hold of the markets….no tapering….we are riding this baby to the end..just like Slim Pickens in Dr Strangelove!

#82 A on 09.19.13 at 6:42 am

@ #7 dienekes
Your brain is full of shit if you DIDN’T see it coming. You should have known when “everybody” expected it.

There were plenty of hints dropped when Summers pulled from the FED position….i.e. that the FED would now remain dovish.

Summers could not win confirmation, and knew it. Nothing deeper. — Garth

#83 bigrider on 09.19.13 at 7:01 am

The S&P is in an extended topping process that will unleash the strongest bear market since the lows of 2009. The decline will be rapid and leave many in disbelief. The bottom will be reached sometime in 2014/2015. The retracement will be 75 to 80% of the gains since March lows of 2009.

The movie above has played out before.

Meanwhile ,we wait for what seems to be, at this point anyway, the fabled GTA housing price correction.

#84 Ralph Cramdown on 09.19.13 at 7:08 am

#62 dienekes — “I think peter schiff makes sense”

The great thing about Peter Schiff is that he runs money through his Euro Pacific companies. So we don’t have to watch him bloviate and wonder if he’s right, we can watch how he bets and see if he’s right when it matters.

US Equities?
http://goo.gl/yAYa7F
FAIL

International Value?
http://goo.gl/dz0lTH
FAIL, but only this year. Before that, he was competitive.

Latin America?
http://goo.gl/n6ExAD
WIN

International Bond?
http://goo.gl/X8bp80
WIN

If after seeing this you still want Schiff and his buddies to manage your money, here’s how:
http://www.europac.ca/services/mutual_funds

N.B. I just compared US based funds like-for-like. If you’d given him your loonies a year ago, your performance would have been a bit better due to currency rates.

#85 PJ on 09.19.13 at 7:29 am

I knew that the Fed would not taper until the new year. Holiday sales are too important.

Perhaps no ”normal” people read the following (I don’t, but that doesn’t mean I’m normal).

http://www.ritholtz.com/blog/2013/09/banks-are-manipulating-gold-and-silver-markets/

But to think that a normal person should believe Bernanke, any made up government stats published by meanstream media presstitutes that the US is recovering, or worse, that printing money would be the solution to a healthy US recovery, well that’s just insanity.

#86 Ralph Cramdown on 09.19.13 at 7:29 am

#32 NOK — “Those not worried about capital loss are clueless. Capital depreciation is always important – if you had to liquidate for an emergency you would come out in the red. I’m not saying you should be concerned about every small move in price but you should be concerned if you’re down 15% in a few short months.”

There’s a name for this. It’s called the risk premium. Some of us are getting paid to take it, and others are paying (in the form of negative real returns on their GICs and short government bonds) to avoid it.

Yes, some of my positions are down 15% in a few short months. But overall my portfolio is up, nothing has cut its dividend or distribution on me lately, and a few have raised them. When things are looking really great, I’ll sell you my stocks and buy your bonds.

#87 KG on 09.19.13 at 7:37 am

“The central bank will not be starting its ‘tapering’ this month as expected, because it doesn’t like the most recent US economic data.”

Good use of the words “as expected”, the sentence makes sense both ways.

#88 P. Winterton on 09.19.13 at 7:52 am

>>As for the US, nothing changed today. Recovery intact. — Garth

Not a person who values deep research or analysis, are you, Garth?

Because someone disagrees with you does not render them vacuous, intellectually wanting or shallow. The US is recovering. Yesterday’s delay in tapering changes nothing. — Garth

#89 jerry on 09.19.13 at 8:02 am

Bill Gross of PIMCO suggested bond wars ahead in response to the Fed’ poor communication of the taper back in the spring. Yields shut up. Cowboys and vigilantes went on the loose.

Yesterday Bill Gross was happy happy happy! Trying to find new ways to pat himself on the back.

Did the bond market once again “intimidate anyone”??

#90 Steven on 09.19.13 at 8:06 am

Does this mean the Van market has hit bottom? Or just the newspaper? And would you pay $635,000 for this?:

The short answer is No! Knock off 2 zeros and may be otherwise no way. After paying $6350.00 for the property one would need all the spare cash one could muster just to fix it up and make it presentable and liveable with out going broke. A house after all is just a place to live.

#91 economictsunami on 09.19.13 at 8:44 am

Some of the better analysis I have read recently:

Lessons From Japan: Why Economies Take Longer To Recover From Banking Crises…

http://www.economywatch.com/features/japanization-economic-recovery-banking-crisis.19-09.html

A recovery from a banking crisis, precipitated by the deflating of wealth effect asset bubbles, (ie US housing) their ‘recovery’ appear very different from that of garden variety recessions.

Japan’s situation is not exactly the same but it does rhyme…

#92 CrowdedElevatorfartz on 09.19.13 at 8:46 am

@#8 timmy

Total agreement. The Vancouver Sun and The Province are the embodiment of sensationalist drivel posing as ‘news”.
A typical issue greets the reader with blaring headlines about some non issue ( this means an ‘news story” that wont offend its advertisers, the govt or anyone else with money).
Followed by cheesy photos of a dog or a kid or “joe sixpack” complaining about something REALLY earth shatteringly important like cigarette butts on the sidewalk.
Next comes the advertising section. Endless reams of breathtaking testimonials about houses, condos or cars……yawn. Followed by, more advertising.

And if you ask most people what they like about newspapers? The number 1 answer….. “crosswords”

The only thing more annoying that these newspapers are the lapdog media on tv OR Canada Post dumping more junk mail than real mail in my mailbox.

They all deserve to go away.

#93 Ralph Cramdown on 09.19.13 at 9:21 am

#37 ValleyBoy

Stop reading the WSJ! It’s bad for ya!

Let us examine what the genius John Shipman is saying.

“Twenty companies — 4% of the index — are on track to produce nearly 35% of total earnings”

Boy, that sounds really serious. Quiz time: What percentage of the entire S&P 500 market cap is taken by the largest 20 companies?

He also says: “Thomson currently sees second-quarter profits growing 3.3% when all is said and done.” Just repeat that to yourself over and over, because it’s the most important thing in the article.

Answer: 29%

#94 seren on 09.19.13 at 9:35 am

Just a observation/comment about Ross Kay numbers on web site

August 2013 – 37,413 Audited Properties Sold
August 2012 – 36,349 UnAudited Properties Sold

August 2013 versus August 2012
-audit shows an increase of 2.9%

Since the numbers of 2012 are unaudited, they too could be inflated. Assuming those numbers are inflated from 2012, then the year over year increase would actually be higher. Unless these shady practices of inflating numbers have only been started recently.

Now that the FED has kept everything the same, not sure the catalyst is there to precipitate a proper market correction. This market has everything to do with the interest rates. Despite how many rules are put in place by Canadian government policies, I don’t believe anything will change dramatically without interest rate movement.

It will happen and this won’t end well but that could be some time yet before that happens. Its unfortunate because many people with good sense who want to buy a house at reasonable price are squeezed out of the market.

#95 GeorgeG on 09.19.13 at 9:51 am

I guess the underlying fundamentals have to be considered. First us boomers have discovered downsizing and, in some case, the relaxed lifestyle (typical marketing hype) in the boonies. The desire to move into smaller, cheaper RE is not a tide that floats the boat all that well. Second, boomers will soon enough fade from the housing market altogether. Third, the real earning power of the middle class has been stagnating and now receding; ultimately, the loss of a productive manufacturing economy and increased emphasis on low jobs to revenue ration resource extraction enterprises will kneecap the financial viability of home ownership. Hot markets like Toronto rely on jobs in adventitious industries with no direct productivity and can (see 2008) evaporate overnight. The con-do market is particularly regenerative being propped up by employees of companies who derive much of their revenue from heat in the condo market. No job – no condo, and vice versa.

#96 Victor V on 09.19.13 at 10:10 am

XRE up nicely again this morning.

http://ca.finance.yahoo.com/q/bc?s=XRE.TO&t=5d&l=on&z=l&q=l&c=

Went ex-dividend yesterday so cash coming at month-end too. Life is good.

#97 Ralph Cramdown on 09.19.13 at 10:12 am

Woohoo! Flaherty announces a national* securities regulator.

* Not for dissemination outside BC and Ontario

#98 Musty Basement Dweller on 09.19.13 at 10:15 am

For those that think the decline of the real estate market in some Canadian cities is primarily dependent on interest rates you haven’t been doing enough homework. Start with reading this blog regularly (minus the comments) then investigating the points raised to your own satisfaction.

Granted, interest rates increases will speed up the process. But anyone with half a brain who does some homework can see where this is all heading in Canada and it’s down.

#99 Djumbe on 09.19.13 at 10:31 am

National securities commission coming soon?

#100 HD on 09.19.13 at 10:34 am

Not sure if someone posted this already but it is a great read.

Gen Y people out there must read.

http://www.huffingtonpost.com/wait-but-why/generation-y-unhappy_b_3930620.html

Best,

HD

#101 @98 Mustly Basement Dweller on 09.19.13 at 10:43 am

You are wrong, dead wrong! Nothing form what has been said here worked.
Interest rates bumped recently, that pushed the suckers into buying …now that the scare tactic worked the rates will be pushed back (this is perfectly possible since the bond are retreating) and the banks will reverse the rate bump and we are back to square one.

F and his monkeys knows very well that if he pushes this forward and tries to tweak the market even more it will indeed go into trouble.

So …I am ready to bet with you that nothing is going to change for another year. We will be here at the end of 2014 with the same problem but just higher prices for everything due to inflation

#102 Spaccone (blablabla) on 09.19.13 at 10:55 am

#98 Musty Basement Dweller 09.19.13

Real estate values do rely on rates, though not interest rates, the Italian immigration rate into Canada and Canadian birth rate of those of Italian origin.

PS. What the heck is going on with XRE! Thank God I upped my allocation to 15% for now.

#103 World View on 09.19.13 at 10:56 am

Hey Grath,

I respect your opinion on Canadian Real Estate. But I think it is time to admit that US economy is NOT recovering “on its own”. It looks like it needs a lot of help from the Fed.
Maybe the money managers will just play along and buy stocks and push markets higher. But that does not mean the US “economy” is recovering. Just like higher housing prices in Canada does not indicate that Canadians are wealthy.

Of course it is. — Garth

#104 Nemesis on 09.19.13 at 11:02 am

FugedAbout AllThingsTaper… Finally, some ‘RockBottom’ Zen truly worthy of SaltyDogs!… Bonus Quote’OTheDay, too!

“I clipped his toenails, I did his hair, I tinted his beard, I waxed his chest, I massaged his feet.” – Jessica Bennett (who couldn’t pry loose her fiance’s kidney, but did manage to abscond with the ring)

[CBC] – Estranged couple squares off over $16K engagement ring

http://www.cbc.ca/news/canada/british-columbia/estranged-couple-squares-off-over-16k-engagement-ring-1.1860480

#105 Mixed Bag on 09.19.13 at 11:07 am

#8 Smoking Man on 09.18.13 at 9:08 pm

“I have a strong suspicion some know me.”

Well sure, you left enough clues, and with Big Brother’s post, I found your fb page.

#106 Daisy Mae on 09.19.13 at 11:10 am

#41 allan rusin “Recovery intact. — Garth”

US dollar down. US stocks least up, Europe , Asia and commodities most up. Recovery?”

Absolutely. Slow but relentless. — Garth

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

Why can’t people understand this? The USA isn’t going to bounce back overnight….it’s going to be a long slow haul.

#107 economictsunami on 09.19.13 at 11:25 am

So many reasons why the Fed didn’t taper but chief among them was apparently the FOMC much rather prefers the measurements of Core PCE inflation over unemployment:

Core PCE Inflation Falls To Second-Lowest Level Ever…

“Core personal consumption expenditure (PCE) data in today’s GDP release showed that inflation fell to 0.8% in the second quarter of 2013 from an upward-revised 1.4% in the first quarter.

The lowest level on record for Core PCE inflation is 0.7%. That was in the first quarter of 2009, in the fallout of the financial crisis and the ensuing recession. Core PCE also touched 0.7% twice in the early 1960s, which is about as far back as the data go.”

http://www.businessinsider.com/core-pce-inflation-falls-to-second-lowest-level-ever-2013-7

Of course the rest of us must grapple daily with the true cost increases of all goods/ services.

Under a tighter credit regime and personal balance sheet deleveraging, this leaves less discretionary income to cycle through out the real economy…

#108 Agio on 09.19.13 at 11:26 am

It’s comforting in a morphine induced haze kinda way to know that in my absence from this, the most illuminating of blogs to see that all the bat crap crazies and rich folk (apparently this is a top 1.8% only blog) are still posting regularly.
This blog is like the kitten I so dearly loved then drowned to avoid having to pay a vet to get the cute little guys claws clipped.

#109 Donald Trump on 09.19.13 at 12:02 pm

#19 Nosty in SmokySyrupLand

While I liked Groucho…never did like Karl (Marx that is)

May be useful to reflect on what he said back then, in 1800’s, because thats exactly the plan( ala manifesto) unfolding now.

I heard a quote recently attributed to Marx, whereby the Communist realized that they couldn’t take over the world in one feel swoop, but they had to create this dichotomy.

They took over key countries (Russia China etc)militarily. The rest of the world they allowed to build up a “democracy” ,a middle class and Marx even noted technology would be good bait. Next step is to then weaken it ,in essence pull the rug out and observe the abyss, which is exactly what we are seeing now.

In the end, equality is achieved via the LOWEST common denominator ruled by an elite. Neo Con is another term for Trotskyites

More Later

#110 Tonino, Nonno Nicola's Grandson on 09.19.13 at 12:18 pm

#83 Big Rider

“Meanwhile ,we wait for what seems to be, at this point anyway, the fabled GTA housing price correction.”

You are 100% correct Big Rider. The fabled house correction in Toronto is just that, a fable, a fairy tale that those who yearn for realistic houses prices pray for at night. It ain’t gonna happen Big Rider, so saith my sagacious grandfather Nonno Nicola. As for the beared mystic oracle who has furiously, on a daily basis, called for this GTA correction in SFHs since 2008, well what can I say but 5 years later prices keep a climbing, or as Nonno says, “la terra, they no make it no more”.

#111 TEMPLE on 09.19.13 at 12:30 pm

#108 Agio on 09.19.13 at 11:26 am

This blog is like the kitten I so dearly loved then drowned to avoid having to pay a vet to get the cute little guys claws clipped.

I’m not sure if this is just a bad, tone deaf joke, or if you have an actual problem. Either way, this kind of crap really bothers me. Shame on you.

TEMPLE

#112 Old Man on 09.19.13 at 12:38 pm

I just love the photo caption which was done very well, but there is something missing, so will insert my byline if you will. Remember The King.

#113 Agio on 09.19.13 at 12:50 pm

TEMPLE of the caps, I know I should feel ashamed and be more sensitive to the feelings of sensitive caring folks such as yourself and any kittens that may be reading this blog but I’m a sociopath. I’m aware of my problem and am in no way seeking help.
How about that Bernanke huh?

#114 Joe on 09.19.13 at 12:51 pm

The FED is in the endgame they have no solution.
It’s called the shell game.
Garth speaks of the system as though it should make sense and is on the up and up, it’s not, the Libor rigging and other unethical banking practices are rampant.
Conspiracy and proven are different subjects and should be treated so.

#115 Retired Boomer - WI on 09.19.13 at 12:59 pm

REIT Index Fund blew up $3.95 per share today on the Feds backing off on the Taper. Who Knew? Nice kicker

In fact all my stock as well as intermediate term bond funds gained. WTF??

Somehow, this does NOT feel quite right? What am I missing?

#116 pbrasseur on 09.19.13 at 1:11 pm

So the FED didn’t move. Makes me glad for all the speculators out there who were trying to time interest rates and the bond market…

But if I were a bond (or preferred stock) trader I’d see this as a selling opportunity not an indication to buy!

The recovery is indeed slow, but as Garth puts it it is relentless. Rates will follow, it’s only a matter if time.

Want yield? Buy stocks of great companies that pay dividend. Common stock dividends increase over time, bond yields do not.

#117 Yitzhak Rabin on 09.19.13 at 1:14 pm

No mention of the “rapidly building consensus” on gold going down to $1000/ounce. Watch it slowly move up to its all time high.

All along I said on this pathetic blog that the fed would not taper, and the next change would be to increase QE.

The market’s memory is about 2 years so people probably forgot the fed used to talk about an “exit strategy” from their bloated balance sheet. This summer is was whether to merely slow the rate of asset purchases and they couldn’t even do that.

Now it owns 30% of all US Treasuries and 45% of outstanding MBS. Would you buy those instruments if the Fed sells them? They are completely trapped.

If interest rates rise anyway they will be in a real world of hurt and lose “control” of the bond market.

The US economy is not recovering but only getting more screwed up with more land, labour and capital being misallocated thanks to the Fed’s crackpot policies.

This is what happens when you have an institution setting the cost of money the way the Soviet Union set the price of bread.

#118 Old Man on 09.19.13 at 1:17 pm

#108 Agio – shame on you, as be it a kitten or a puppy one needs to show a bit of love. One needs not a Vet for clipping the toe nails, but a pet clipper tool to bind with your pet to show you care. A pet needs to be fussed over, and for the men that are married have a tip. It will be chocolates, flowers, and breakfast in bed once a week and this will give her bragging rights to tell her lady friends what a wonderful husband she has in life. Right ladies?

#119 Ralph Cramdown on 09.19.13 at 1:25 pm

#106 Daisy Mae — “Why can’t people understand this? The USA isn’t going to bounce back overnight….it’s going to be a long slow haul.”

This recession and recovery has gored the oxen of a lot of intellectuals, and some of them are having trouble admitting that their theories haven’t held up to reality.

The US Republican party and its voter base seem to be manipulated by a small number of very rich people who want lower taxes. You can bet they don’t have much of THEIR wealth in gold, nor are they buying and selling ahead of news on the stock market. Their only standing orders to their brokers are ‘buy’ and ‘buy more.’

The internet used to be full of smart people, born as it was out of universities, government and research institutions. Now everybody’s on it. Somebody posted here the other day and linked to http://thelibertymill.com/ which links to most of the biggest loony bin economics and fear-mongering sites on the net. Yup, it’s all going to hell, and for three easy payments of four hundred dollars, they and their sponsors will sell you the magic beans that will save you and your family during the coming tribulations.

#120 not 1st on 09.19.13 at 1:50 pm

Garth, its time you faced reality. The risk of the U.S double dipping is now as high as a recovery. Just cause you have witnessed past recoveries doesn’t mean one is in the cards this time. You keep preaching that about real estate all the time.

The U.S. has never had this much debt, this much stimulus and this much loss of jobs and manufacturing and carried 2 or 3 wars on at the same time. There is a lot of headwind on it now. To get the real story go talk to a cab driver or a waitress in an american city instead of parsing stats from your computer.

Nice to finally know your macroeconomic sources. Explains much. — Garth

#121 Smoking Man on 09.19.13 at 1:51 pm

#119 Ralph Cramdown on 09.19.13 at 1:25 pm#
106 Daisy Mae — “Why can’t people understand this? The USA isn’t going to bounce back overnight….it’s going to be a long slow haul.”

…………..

What everyone fails to see is what part is coming back and what part counts.

Globalization was invented by the very rich so they could move their all over the world. Thayer have incredible power now, govt don’t play ball, they just take their ball to another park.

Workers that are benefiting from this are in 3rd world countries, in industrialized countries workers prospects are going from bad to worse.

I crack up when MSM pumps the sunshine, hopefully getting the working class spending and taking out loans.

They’re as broke as the morally of the US Government.

They have weapons, they don’t care that the NSA is listening.

US is on a one way street to the cliff.

#122 nancy on 09.19.13 at 1:57 pm

The title of your blog describes a snapshot of my daily life.

#123 Whiskey Tango Foxtrot on 09.19.13 at 2:02 pm

Gold up 4.7% today

The front page of the web newsie did not say anything along the lines of

“The entity formerly known as Syria is now a liquified, smoking crater”

So, qu’est-ce qu’il fou?

Is this just the world’s BSDs doing their thing to steal the money of the idiot gold bugs?

#124 snake on 09.19.13 at 2:08 pm

What’s on Tonight Real Potential (New Series)6 p.m. & 9 p.m., HGTV

Sarah Richardson (Sarah’s Cottage) hosts this new series in which the designing diva takes potential homebuyers through three houses, each with a deeply flawed room that could sour the deal. Then, using her skills and connections, she renovates the offensive space and tries to make a sale.

http://newsletter.canadawide.com/TVWeek/tvw190913.html?utm_source=MagMail&utm_medium=TV+Week&utm_campaign=TV+Week+eNewsletter+190913

http://www.ottawacitizen.com/homes/Seeing+Real+Potential+fixer+uppers+Sarah+Richardson+launches+series+HGTV/8933164/story.html

May this what she is taking about when it says deeply flawed room that could sour the deal. Then, using her skills and connections, she renovates the offensive space and tries to make a sale ?

http://calgaryrealestatereview.com/2013/09/16/redux-toilets-full-to-the-brim/

What homes used to cost across Canada

http://www.shawconnect.ca/Money/Galleries/What_homes_used_to_cost_across_Canada.aspx#!05b1e8c985a2d10cb5c782780f720ddb_53e7606891e5a6d57c8b90ced5f20248_toronto

#125 Entrepreneur on 09.19.13 at 2:13 pm

#68 Willworkforpicles on small business be better off in a market cooling down from rising interest followed by more joblessness?

Debt is fueling the economy, but is is not looking at the whole picture. Debt ties a person down in that his/her spending power is limited. It is directed to mainly to a mortgage and bills not much to daily existence. Housing is just a short term fix for the economy.

Small business is the fuel for the economy. We want people inside our stores and able to spend. Everybody is running for a high price house and little to spend. People need money in their pockets, hear that jingle, and the buying power will come back.

Right now there is no jingle, no music, no spending for the small business. We are out of the picture in this show.
Until the housing corrects, incomes can go to other avenues then slowly small business can grow.

#126 Ralph Cramdown on 09.19.13 at 2:16 pm

#117 Yitzhak Rabin — “This is what happens when you have an institution setting the cost of money the way the Soviet Union set the price of bread.”

You should discard your copy of Правды and read what’s going on in the real world. Verizon sold $49 billion of BBB bonds, Apple sold $17bn of AA+, the issue of which was 3x oversubscribed. Sprint sold $6.5bn of BB- junk. Investors are lining up to lend their money at these rates rather than deploying it elsewhere. If the price of money was too low, wouldn’t they instead be buying gold, land, equity or collectibles?

#127 happity on 09.19.13 at 2:16 pm

“So what now? Well, my advice to go variable with your mortgage and not to lock into a five-year fixed loan was spot on.”

What???

Weren’t you saying a few months ago to lock in long term even 10 year because this is the lowest ever and rates will rise?

Selective memory challenge?

If you missed locking in for 10 at 3.69%, why would you lock in for five at 3.89%? But go ahead. — Garth

#128 JimH on 09.19.13 at 2:16 pm

#106 Daisy Mae — “Why can’t people understand this? The USA isn’t going to bounce back overnight….it’s going to be a long slow haul.”
#119 Ralph Cramdown
“This recession and recovery has gored the oxen of a lot of intellectuals, and some of them are having trouble admitting that their theories haven’t held up to reality.”
===================================
Good posts! Right on!

Geeze Louise! The doomer/gloomers and the “no US recovery” types are throwing their ‘taper tantrums’ aren’t they!

I seriously doubt that any of them have bothered to make the effort to read the full text of the Fed’s FOMC statement:
http://www.marketwatch.com/story/text-of-fomc-statement-on-fed-decision-2013-09-18

Yes, there is a slow and steady recovery underway in the USA: has been (with fits and starts) since 2009.

The Austrians and the gold-bugs and the deniers have all been wrong and will continue to be wrong on that score.

For the record, I strongly believe that the key line in the Fed’s statement is this:

“Taking into account the extent of federal fiscal retrenchment, the Committee sees the improvement in economic activity and labor market conditions since it began its asset purchase program a year ago as consistent with growing underlying strength in the broader economy.”

The US House of Representatives has been hell-bent on a policy course that consists of of deep fiscal retrenchments coupled with tax cuts. That course of action was exactly what was first tried to ‘correct’ the Great Depression, with the results you know. It seems to me that what most scares the Fed are the possible negative effects of deep fiscal retrenchment at this critical time in the recovery.

There is absolutely no doubt that QE1 and probably QE2 were necessary. IMHO, QE3 really isn’t having much impact at this point, although all members of the Federal Reserve Board except one lonely holdout still want to see it stay in place.

I would love to be enlightened as to exactly how the doomers and recovery deniers have profited from their perma-bear position over the last 2 years????

#129 torontorocks on 09.19.13 at 2:30 pm

I’m sitting here….coding. I’ve just coded some code that allows me to predict the future movements of a batman and oh, that’s a head and shoulders…I saw that on seeking alpha.com….we’re millionaires, hiding in the shadows, coding. we make $5 bets because as millionaires, its ironic. we can afford to lose $50MM but we lose $5. whos gonna be up? whos gonna be down. my grade 4 teacher can go to h3ll saying I’d never be anything….and here I am, master coder. no degree, I google all my programs and get paid millions while PhD’s in mathemetics envy me and make penits. and that’s just from work. my algorythms can see into the future…I don’t day trade, I tomorrow trade…

I’m the Smoki..*

“GET OFF THE COMPUTER TERMINAL AND GET ME A COFEEE AND STOP PRETENDIN YOU’RE TRADING”

effing head trader always hassling me for being smart….

#130 Stew on 09.19.13 at 2:49 pm

The Zimbabwe stock market did the same thing..skyrocketed! BUT..”its different here” the dollar will last forever, it will NEVER collapse and JUNK will keep going up and we will all be happy and merry!..until it all collapses. BECAUSE EVERYTHING LASTS FOREVER!!

Garth: “The dollar will never collapse”.. L O L

Zimbabwe. Is that your best shot? — Garth

#131 TurnerNation on 09.19.13 at 2:56 pm

Saw it hit the wire this morning – someone pulled F’s finger.

#132 Old Man on 09.19.13 at 3:07 pm

We need to put life in context, as all that we own be it $millions or less in assets; we are all renting when all is said and done. I want you to follow my logic, as what is important in life is the journey to be kind, and do some good deeds, and have a heart for the poor, and do your best to befriend those that need help in life with friendship or financial support.

Death is a bitch, as that is when reality hits, as your lease in life becomes null and void, so it is what you do on the journey in life that really counts with a kind heart to lift up others who are down. Now at Xmas time there might be a widow all alone who lives down the street or nextdoor, so invite her for dinner with your family for example.

#133 daystar on 09.19.13 at 3:16 pm

#127 happity on 09.19.13 at 2:16 pm

If you really do wish to play “I gotcha” to inflate your ego esteem or whatever, to wit, it seems to me shows a lack of maturity and growth on your part displayed by the want or need to attempt, try picking a position you can actually win. Even there, its a boring read because most already know this end game, comparable to watching a losing position in chess reach its predictable conclusion.

#134 Musty Basement Dweller on 09.19.13 at 3:33 pm

#101 @98 Mustly Basement Dweller on 09.19.13 at 10:43 am
You are wrong, dead wrong! Nothing form what has been said here worked.
Interest rates bumped recently, that pushed the suckers into buying …now that the scare tactic worked the rates will be pushed back (this is perfectly possible since the bond are retreating) and the banks will reverse the rate bump and we are back to square one.

F and his monkeys knows very well that if he pushes this forward and tries to tweak the market even more it will indeed go into trouble.

So …I am ready to bet with you that nothing is going to change for another year. We will be here at the end of 2014 with the same problem but just higher prices for everything due to inflation
========================
Ok @98 you’re on. I guess we’ll have to take the bet offline. In all honesty I would put about $5k on a 30% correction in Vancouver over the next 5 years.

You’ll have to send me the cheque to a beach in Colombia or Cuba though, because as of 6 months ago I am outta here on this boooolshit called the Canadian Real Estate game. And yes I love my kids but they are going to have to take care of themselves now.

And I’ve never been happier than now, to get to watch this stupidity from the sidelines.

Granted it’s been a good ride but it’s over with the bozos running the show and the ones binging on debt, and the math involved.

With all due respect just give your head a shake on it if you “investing” in a house in Canada right now. Buy it for some other emotional reason, but not as an investment.

#135 jess on 09.19.13 at 3:42 pm

Wednesday, September 18, 2013
Britain’s Shadow Tax System revealed: savage new report
The UK’s satirical political magazine Private Eye is carrying a new special report by investigative journalist Richard Brooks, on how Britain has, at high speed, been turning itself into ever more of a global tax haven for multinational corporations, helping them ever more easily strip income out of taxpayers’ pockets elsewhere. The investigation, in partnership with BBC’s flagship Panorama programme, has already cost one senior government official his position.
http://taxjustice.blogspot.ca/2013/09/britains-shadow-tax-system-revealed.html
=

The Simple Reason for the Long Downturn: Housing Bubble Burst
Dean Baker
Truthout, September 16, 2013
The Huffington Post, September 16, 2013

http://www.cepr.net/index.php/op-eds-&-columns/op-eds-&-columns/the-simple-reason-for-the-long-downturn-housing-bubble-burst

usa’s net exports are negative do they lower the value their currency?

#136 Big Angry Bear on 09.19.13 at 3:43 pm

The banks will continue to fund as there is no alternative scenario that is appetizing. They know they will be bailed out as they are too big to fail. Keystrokes on a computer somewhere up there way above the laws of the land will ensure the madness continues. Our money is backed by guns not gold. When it ends it will end badly (as all endings are bad or they simply don’t end)

Where did all these angry, financial sociopaths come from? — Garth

#137 Donald Trump on 09.19.13 at 3:54 pm

Quote
my grade 4 teacher can go to h3ll saying I’d never be anything….and here I am, master coder

===================================

Cut the teacher some slack…I mean….they had you for 10 consecutive years and you still didn’t get the hint?

#138 Van bubbleheads on 09.19.13 at 3:56 pm

Whoever said United Nations in their post hit the nail on the head. Its completely disqusting that Canadians cannot afford realestate in their own country which is a result of our governments policies.

The only thing keeping realestate on life support is mostly international money. Most Canadians are like myself, live in Canada, have a job in Canada, and are having a hard time living month to month let alone thinking about purchasing a home.

I’ve watched the prices rise in Van since 86 and although there has been a significant drop in price since 08 we are still in nosebleed territory.

I work at a University and have seen for some time our students unable to find jobs. As a result, most former students are going on to a Masters or getting a 2nd or 3rd degree or a PHD.

It’s not rocket science to figure out when people with high levels of education cannot find employment even menial employment we are in serious trouble, even with all our oil.

In closing, it’s always a buyers market, if you don’t like the price simply don’t buy and further don’t screw your fellow man by overbidding. Greedy sellers and sleasy realtors will soon get the message.

#139 Macho Man Randy Savage on 09.19.13 at 3:58 pm

#129 torontorocks on 09.19.13 at 2:30 pm
I’m sitting here….coding. I’ve just coded some code that allows me to predict the future movements of a batman and oh, that’s a head and shoulders…I saw that on seeking alpha.com….we’re millionaires, hiding in the shadows, coding. we make $5 bets because as millionaires, its ironic. we can afford to lose $50MM but we lose $5. whos gonna be up? whos gonna be down. my grade 4 teacher can go to h3ll saying I’d never be anything….and here I am, master coder. no degree, I google all my programs and get paid millions while PhD’s in mathemetics envy me and make penits. and that’s just from work. my algorythms can see into the future…I don’t day trade, I tomorrow trade…

I’m the Smoki..*

“GET OFF THE COMPUTER TERMINAL AND GET ME A COFEEE AND STOP PRETENDIN YOU’RE TRADING”

effing head trader always hassling me for being smart….

—————————–

Laughing so hard at your post – had I not looked at your name, I thought it was Smoking Man writing it!

Easily the best post of the day!

#140 jess on 09.19.13 at 4:02 pm

…that ratings methodology are uninfluenced by conflicts of interest….?

http://www.dispatch.com/content/stories/business/2013/08/04/sp-back-to-inflating-ratings-data-show.html

#141 Canadian Watchdog on 09.19.13 at 4:19 pm

Never have I seen such ridicule by MSM et al of the Fed's actions (or inaction) and credibility. Everybody knows something is deeply flawed when central banks are using forward guidance as way to build a consensus — just to deter that same consensus away from its profligate 'on the fly' monetary policy. Alas, everyone is beginning to realize, the emperor really does have no clothes.

I found this wonderful piece on the net, that, in my view, explains what central banks are facing:

Inactive Inertia – the phenomenon of not choosing a good option because we let a better option slip away. Anticipated regret. A fear projection of how we think we will feel after a certain event. People tend to feel more regret over actions in the short term but inaction in the long term. So, we will feel temporarily bad for doing something that doesn’t work out, but we will feel very bad in the long run for not acting when we should of. So, when taking the path less chosen, if its hard you might feel regret for ever having gone down that path, but ultimately you will be vindicated because, you indeed go down that path. Lost possible selves. People we could of been had we chosen differently.

Indeed. As Milton Friedman once said, to paraphrase: "a good system is one that doesn't rely on a few men pushing the right buttons." How can a few men choose the right decision on behalf of seven billion people in a time where information and individual choices are so diverse? What's at stake in exchange for stability in the short term? And what are the unintended consequences in the long-term?

Perhaps the biggest consequence widely being discussed is the on-going transfer of wealth from young savers to elderly, whose assets have been and continue to be inflated by central banks. Why would central banks even believe such policies intended to deliver a 'trickle down wealth effect' would even work when all bankers, financiers, investors and entrepreneurs know that economic growth comes from savings? By their logic, elderly folks would have to die quickly, leaving more inheritable wealth for their children. Is this the master plan? A deadbeat society of angry unmotivated children banking on their parent's inheritance, or death?

For all you parents and grandparents reading, I invite you to watch the following Bloomberg interview with Duquesne Capital's chairman, Stan Druckenmiller, explaining by the numbers how, what he calls, "generation theft" is robbing wealth from the young over to the elderly, so much so, that as a FX vigilante whose made multi-millions from arbitraging currencies, has decided to devote his time to visiting collages to deliver his message to students. Video

As for the Fed's tapering, which I stated many months ago was a nothing more then a short-term blip to increase government debt; I expect the bond markets to call the Fed's bluff anytime within over the next three quarters, forcing them to increase monthly purchases.

 

 

#142 Spiltbongwater on 09.19.13 at 4:28 pm

Where did all these angry, financial sociopaths come from? — Garth

Perhaps if they were on the take from SNC Lavalin, they would not be such angry, financial sociopaths. They would be politicians, most likely if they were on the take from SNC Lavalin, and we know how happy they can be. Now back to work so Pamala Wallin et al can steal some more of my hard earned tax dollars.

Are you a bitter, entitled, resentful, condoless Gen Y with too much education, or just pretending? — Garth

#143 28yearoldyuppie on 09.19.13 at 4:36 pm

Garth can you comment on these articles?
I’ve got a gut feeling, they may be bogus.

http://www.prweb.com/releases/2013/9/prweb11139066.htm

http://www.huffingtonpost.ca/2013/08/28/condo-market-crash-canada-conference-board_n_3830313.html?utm_hp_ref=canada-business

Please and thanks,

and also, give us more tips on diversified portfolio investing… thank you!!!

#144 daystar on 09.19.13 at 4:40 pm

Fellow bloggers/readers, I have to confess, I’m not a rocket scientist. As a DIY investor and untrained economist, I sometimes bomb. But… I sometimes get it right and that counts for something.

When Verizon sold $49 billion worth of bonds last week, unknown it seems to some of us for some reason, they became the marketplace. This, btw, smashed the old record of $17 billion from Apple in April of this year. When $49 billion worth of treasury bonds comes up for sale over 3 days from one entity, what does this do to the minds of U.S. central bankers who are trying to keep yields low by being their own treasury bonds best customer? That’s right, it keeps them in the game.

Btw, a 10 billion a month taper is 5 months of buying power to make up for the Verizon sale by itself. Again, I’m not a rocket scientist but it doesn’t take rocket science to measure the impact of Verizon’s bond sale on Bernanke’s announcement yesterday. Nor, does it take rocket science to predict what the fed announcement would be a week after Verizon’s sale. After all, who do we really think was Verizon’s biggest bond buyer despite what the headlines say?

Like I say, I’m not a guru, not an economic wiz kid, not guided by other galactic planetarian’s with better tech than us lowly humans or have some extra sensory super chipped brain. But readers, it doesn’t take this to connect the dots. Bernanke was quite simply Verizonized and there isn’t much else to say about it other than the fact that the U.S. is in recovery much as doomer cheerleaders wish to suggest otherwise.

Housing is up 12% yoy. Energy production is soaring:

http://www.businessweek.com/news/2013-09-19/u-dot-s-dot-fuel-use-slipped-in-august-as-crude-output-surged-api-says

The U.S. is out drilling the rest of the world combined and has been for several years now, a fact that must be painfully hard to ignore for gold bugs:

http://www.wtrg.com/rotaryrigs.html

Agricultural production is booming as a consequence of negative artic oscillations leaving their mark (look at July 2nd):

http://droughtmonitor.unl.edu/12_week.gif

Corn is the market crop commodities base their prices on and this year, a record is predicted. This means more ethanol blended gas at the pumps, less pressure for imports and crude production in the U.S. is nothing short of renaissance to describe it. The changes energy production has had on trade deficits is hard to ignore, down 10% from a year ago. How can shrinking trade deficits mean a non recovery? Quick answer: its can’t.

There are surprises going on in the U.S., post GWB economic bungles. One of them is wind generation, now responsible for nearly 4% of electrical generation, much of this growth coming through hard times. The trends there are positive:

http://en.wikipedia.org/wiki/Wind_power_in_the_United_States

There are U.S. government policies that are poised to not only challenge the tech U.S. manufacturers have today and create a manufacturing renaissance tomorrow, but eliminate trade deficits and it will leave a lasting impact for decades to come. We’ll feel it by 2016:

http://blog.cleantechies.com/2012/08/29/american-fuel-efficiency-standards-set-to-rise-dramatically/

The jobless rate in the U.S. is trending down, not up, down 2.5% from its 09′ highs. It ain’t sexy, but there is job growth:

http://www.tradingeconomics.com/united-states/unemployment-rate

Markets are up. Real estate is up. Net worth is up. Consumer spending is up. Energy production is up. Manufacturing is up:

http://www.reuters.com/article/2013/09/16/usa-economy-idUSL2N0HC15420130916

Consumer confidence is feeling it from higher interest rates and payroll tax increases but things continue to improve:

http://www.bloomberg.com/news/2013-09-13/consumer-sentiment-in-u-s-falls-to-lowest-since-april-1-.html

Unemployment is down and this is in the face of government spending cuts. I, I, I just don’t get it. we’ve got bloggers thinking the U.S. is comparable to Japan here. Lets get real, its night and day!

http://www.cnbc.com/id/101038748

I’ve seen it all too much before (even with myself on occasion, cough hack choke). People like to believe their own hype! I don’t know what kind of data gold bugs watch but its not the same stuff this DIY pseudo economist watches. Its not rocket science. We don’t have to watch corporate earnings reports from the large caps to know what’s going on here. The U.S. is in recovery, the fed got Verizonized and the rest the narrative is largely predictable. Look for the U.S. to do well economically next year and brace for higher rates set by treasury yields as it happens. Government deficits remain a major problem but its not the end of the world (or merely the dollar) just yet.

I see Japan as the dark horse of doom beginning in 2015, the number one threat to world economics but already this comment has too much volume and rant on another time. Good day, all.

#145 Canadian Watchdog on 09.19.13 at 5:03 pm

Ha ha ha.. In another very odd move today (one that will never be reported on MSM), being the third time over the last three months since 2011, the BoC daily operations shows that instead of injecting liquity (SPRA), the bank is actually trying to withdraw liquidty (SRA), implying that Poloz is trying to fend off investors rushing into bonds who are taking yields down.

Rest assured that if central banks keep fiddling with yields against the free market, they may one day soon find themselves in a very uncomfortable place.

#146 Spiltbongwater on 09.19.13 at 5:07 pm

Are you a bitter, entitled, resentful, condoless Gen Y with too much education, or just pretending? — Garth

Gen X to be more precise. The rest sounds about right.

#147 HAWK on 09.19.13 at 5:15 pm

#106 Daisy Mae on 09.19.13 at 11:10 am

==================================

How do you propose a meaningful “recovery” where for every $1 in incremental debt, you may be getting 20 cents in “growth”,…………if that?

The Debt Ceiling has already been revised quite a few times, is this supposed to be open ended then?

It is time to reduce Big Government all over N. America, absolutely, unconditionally, immediately. Well unless, our aspiration is to be Greece.

#148 anon on 09.19.13 at 5:31 pm

Sorry to say it Garth but you’re not living in the mainstream. IN an age of rock bottom birthrates, low wages, youth unemployment, and massive immigration (or if you prefer, temporary permanent workers) the curtain call of the “canadians” occured many years ago already.

The new economy belongs to the new Canadians, not your sons and daughters, who likely won’t have any grandchildren, at least ones that look like you.

Chew up the planet, leave nothing behind for your heirs, complain that there are no grandchildren to visit. Is it really your right to lecture the “stupid house horny young”?

All they want is a taste of the ashes that used to be Canada. While the “New Canadians” feast.

If you’re mainstream, I want out. What a loser attitude. — Garth

#149 Donald Trump on 09.19.13 at 5:36 pm

#138 Van bubbleheads on 09.19.13 at 3:56 pm

I work at a University and have seen for some time our students unable to find jobs. As a result, most former students are going on to a Masters or getting a 2nd or 3rd degree or a PHD.

==================================

Very simple:

Like “Real Estate never goes down, not making anymore”…the adjunct mantra was “GO GET AN EDUCATION”.

Both are inflated bubbles to take advantage of debt.

University is simply a means to extort funds for (4) years minimum and actually part of the social engineering regimen to build up high hopes and expectations.

Many in our family born in Canada that have degrees cannot find jobs and are either working outside of their field or going overseas.

Besides, a person from overseas can easily come over and grab the job with our loose requirements.

#150 anon on 09.19.13 at 5:48 pm

#148 anon on 09.19.13 at 5:31 pm

Who said anything about me being the loser? Its your people who are the losers in this. I’m merely profitting handsomely in destroying what you people had.

Canada belongs to me and my people, the people formerly known as Canadians have been disgraced, displaced, and erased, not me.

I merely empathize with them, while their own ancestors (who wil be known as boomers until time stops) have foresaken them.

#151 Evangeline on 09.19.13 at 6:05 pm

#117 “No mention of the “rapidly building consensus” on gold going down to $1000/ounce. Watch it slowly move up to its all time high … All along I said on this pathetic blog that the fed would not taper, and the next change would be to increase QE”

Are you a fan of Peter Schiff, because that is exactly what he says, and has been saying for a long time.

#152 Old Man on 09.19.13 at 6:09 pm

Now for those that send your kids to University for a higher education in life will tell you the secret of getting an A, and this is within context of Real Estate or Investments in life, as all is connected within the human condition. Your kids must go to the Professor at his private office, and call bs on him or her, and rant about your theory; they love this all for a debate with passion that you show as intellectual development in life for a challenge.

There is not a Professor in the world who will not give you an A by taking him or her into debate in private over an issue with passion that you disagree with, as that alone is part of an education, as the rest of the students will not ever attack a Professor about his views in class, and your son or daughter will get an A.

#153 eddy on 09.19.13 at 6:51 pm

Re: education. My pet peeve is school board tax tied to property tax. I have no children but have paid at least 25K over the years to school boards. I lived across the street form a High School, it had a great sports field and track- fenced and locked after hours so I couldn’t even use it. Is that fair? In Ontario Premier Mike Harris once said he wanted to remove education from the property tax base, but it never happened.

#154 Bob on 09.19.13 at 7:10 pm

Just as you predicted, more US mortgage workers laid off. This time it is Wells Fargo:

http://www.cnbc.com/id/101048530

#155 Ralph Cramdown on 09.19.13 at 7:42 pm

#154 eddy — “My pet peeve is school board tax tied to property tax.”

My pet peeve is people collecting (or soon to be collecting) pay-as-you-go CPP and OAS while complaining about school taxes. If you’ve been here long enough, you were given the opportunity of an adequate education regardless of whether your parents were rich, poor, owners or renters. Alter kockers were given a basic retirement regardless of whether they’d paid. That’s the deal.

#156 Donald Trump on 09.19.13 at 7:48 pm

#153 Old Man on 09.19.13 at 6:09 pm

==================================
actually NO…..

Unless one is in some hard core field where BS is not accepted(ie Sciences/Math/Engineering, most Profs are Marxist where one better get the hint to cater to the Profs’ interpretation of reality or will not get an “A”.

I caught a whiff of the edu Kool – Aid years ago….thank God.

#157 Daisy Mae on 09.19.13 at 7:59 pm

#120 Not 1st: “To get the real story go talk to a cab driver or a waitress in an american city instead of parsing stats from your computer.”

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

You’re kidding, right? LOL

#158 Nemesis on 09.19.13 at 8:08 pm

“Nice to finally know your macroeconomic sources. Explains much.” — TestyGarth

Shame on you, AuldPol – dissing TaxiDrivers & FoodServers.

You should [and do, I suspect] know much better than that.

Eric certainly did…

Here’s your parable:

http://youtu.be/pnYEdazOc7s?t=3m32s

[3:32>07:20]

NoteToSaltyDogs: Yes. I really do have an eidetic memory… although, generally speaking, it’s HighlyCompartmentalized.

#159 Derek R on 09.19.13 at 8:12 pm

#154 eddy on 09.19.13 at 6:51 pm wrote:
My pet peeve is school board tax tied to property tax…In Ontario Premier Mike Harris once said he wanted to remove education from the property tax base, but it never happened.

Just be glad it didn’t, eddy. If it had you’d have ended up paying even more tax for that education you don’t want to use.

Why? Because education has to be funded from some tax and if it isn’t funded from property tax, it’s going to be funded from income tax or sales tax, or some other tax. And as it happens property tax is the cheapest to collect and most likely for everyone to pay their fair share.

What does that mean? It means that if the education budget is $10,000,000, you’ll need to raise something like $10,200,000 in property tax, $110,000,000 in in income tax, or $12,000,000 in sales tax in order to pay for that budget because of the cost of collecting the tax and the cost of the shortfall caused by people evading or avoiding the tax.

So you’re getting a good deal with the property tax. If you hate it so much you want to vote for pols that will change it, go ahead. But it’s gonna cost you.

#160 vic_guy on 09.19.13 at 8:13 pm

Still some crazy lending in Victoria. I didn’t realize cash back was still available ? Anyhow, somebody is still lending money. I wonder if the rates are high(er) as that seems conspicuously absent … hmm.

Mortgage Options! 1 Application to 45 Lenders.
* Renewals
* Refinancing for Reno’s
* Consolidation
* Self Employed – Relaxed Lending Guidelines
* Purchase with 5% down & ADD $40,000 onto Mortgage for renovations (conditions apply)
* 5% Cash back
* Reverse Mortgage (55 yrs +)

http://www.usedvictoria.com/classified-ad/40-Year-Mortgage-No-Income-Qualified-Mtg_18991304

#161 retired Boomer - WI on 09.19.13 at 8:16 pm

#132 OLD MAN

Best advice I have read here in quite awhile.
Like your advice best of ALL!!

#162 Derek R on 09.19.13 at 8:21 pm

#154 eddy on 09.19.13 at 6:51 pm wrote:
I have no children but have paid at least 25K over the years to school boards. I lived across the street form a High School

Whoah, just realised the significance of this bit! You lived across the street from a High School? You do realise that that added $50K minimum to the price of your house. People with children would have paid that premium to be that close to the school. Sounds to me like $25K in tax was a steal. You still ended up $25K ahead when you sold.

#163 daystar on 09.20.13 at 3:35 am

#150 Shawn on 09.19.13 at 5:46 pm

I think I might have let the world know here on this blog last week. If I didn’t, I was definitely thinking this ahead of the announcement and I’m pretty sure I’m not alone. As for your referencing the Verizon $49 billion dollar bond sale effecting the U.S. fed decision to hold off on tapering as non sequitur arts, I strongly beg to differ.

#164 daystar on 09.20.13 at 3:42 am

#150 Shawn on 09.19.13 at 5:46 pm

I think what you’ve missed is that most in the industry made predictions about tapering months ago. Verizon made these predictions dated by changing the environment before the fed announcement. If you would have asked the same people what the fed would do after Verizon, you would most likely have heard a different story. Again, not rocket science and nothing seer about it.

#165 Doug in London on 09.20.13 at 11:10 am

@Rob who rebalanced, post #78:
You’re not the only one. I don’t know why ANYONE would want to buy gold when REITs have been on sale for the last 3 months. My favourites are XRE, CAR.UN, and RMM.UN. If they go back up in price I may rebalance and sell some off. As I described before, it’s a case of investing like an engine with a governor. When the speed drops appreciably, the governor opens the throttle a lot, possibly fully open. When the speed recovers, it closes the throttle again and settles at an equilibrium position.

#166 M on 09.20.13 at 11:57 pm

“Speaking of people with a low opinion of moi, there was no shortage Wednesday afternoon when the US Fed surprised me (and most of Bay Street and Wall Street) by wimping out”

Garth baby, it might’ve surprised you but it did not surprise me :)
QE ad infinitum… that’s why the gold bugs are indeed right.
U know why commie system fell Garth ? Because they were printing baby (with no China to fill up the racks). Nothing to do with “tza people”. Those went out in the street when economy (crappy as it was) turned crappier still.
In any case, housingwise, you were, are and will always be bang on. The extra printing will ensure a 90 degrees landing slope. For housing. And everything else. I’m loaded banks, metal and recently some jap ETN at 3X. That Abe-boy gov is lying about Fukushima and print money; that’s all it’s doing. Banks will do well for 2-3 more years, then watch out BMO and Scotia for fireworks. Call me nuts now but save this msg for later.
And bring on the babes mano. You and I have similar tastes on that one :)
Keep up the good work. Kudos !

#167 M on 09.21.13 at 12:00 am

Garth baby, don’t you DARE close your blog !!!!!!!