Tapering

taper modified

Other than Justin Bieber saying yesterday, “I’m probably gonna quit music,” the best thing about this week is tapering. Yeah, baby.

In case you missed it waiting in line at Costco to buy a gross of Cottonelle for your Armageddon shelter, the US central bank announced Wednesday afternoon it will gradually end the stimulus spending it’s been engaged in for the past three years. I told you it would happen, while all the Depends-wearing doomers, bullion-lickers, Bitcoiners and America-haters who gather here to trade weapons said it would not. Ever.

Tapering means exactly what it says. The Fed will slowly turn off the gush of stimulus spending which has seen it soak up $85 billion a month in government securities and mortgage instruments. This doesn’t mean it will raise interest rates in general (that won’t happen until way more jobs are created), but it does mean bond yields will rise over time and bond prices fall.

As a result of the announcement, stocks went wild. The Dow added 300 points and soared to the highest level ever. Why? Because the tapering thingy is now known, and it’s not so scary. The Fed’s proven it can take the foot off the gas without crashing into the ditch. Now instead of worrying that every piece of good economic news would bring Fed action closer, investors can see positive reports for what they are – evidence the US recovery continues.

And it does. Housing starts are roaring ahead. Housing prices up 13% in a year. Two hundred thousand new jobs a month. Corporate profits exceeding expectations. GDP numbers rosier than forecast. Jobless claims dropping. Consumer confidence rising. It all points to more growth, more bottom-line corporate revenue, and more gravy for investors.

As this pathetic blog has stressed for a long, long time: the States is recovering and we’re blowing. If you don’t think real estate plays a huge part in this, you belong back in the personal tissue aisle.

While Americans have been reducing personal debt, dropping exposure to residential real estate and rebuilding a whacked economy, Canadians have been busy building condos, selling each other inflated homes, amassing epic levels of indebtedness and worshiping real estate until it represents more of the economy than manufacturing or the entire energy sector. Our output is no longer growing, layoffs are big news and the latest job numbers suck. As we all discussed last week, deflation now seems as likely as inflation. That would be bubonic for houses.

So today the average property here costs twice that of the typical US digs. Worse, they have 30-year mortgages with fixed rates. We have to renew at least every five years. And this tapering business means your next renewal is 100% guaranteed to be higher.

Here’s why. By spending obscene amounts of money every month buying bonds and related assets, the Fed created a honking big demand for debt, driving bond prices higher and bond yields lower (they move in opposite directions). With bonds paying diddly, money flowed to securities with a sweeter return, like dividend-paying stocks. So, we got record high bonds and record high equities at the same time.

Tapering means the bond-buying will eventually end (by the close of 2014, perhaps), which will see those prices fall and yields increase. So long as the US recovery continues and corporate profits match, stocks should avoid any 2008-style decline (but temporary corrections will certainly occur).

Higher yields in the debt market are lethal for Canadian real estate, because that’s where the bankers fund their fixed-rate mortgages. And what have Canadians done over the past few years in anticipation of this? Right. Over 80% now have fixed-rate home loans, which will be coming up for renewal at enhanced levels over the next few years. Their only defence then will be to go variable-rate and take the risk of higher costs after 2015 – which is a certainty.

Meanwhile, guess what robust stock markets and rising bond yields mean? You bet. Way better places to put money than in gaseous, wobbly, hormonal residential real estate. The Fed’s move – removing uncertainty, restoring some balance, validating the recovery and doing it without shock – may have set the stage for another leg higher in a bull market now four years old. Why would anyone buy a spec condo at a time like this? Hell, why would you buy one at all?

It was a big day. First of many.

165 comments ↓

#1 Derek R on 12.18.13 at 7:47 pm

Wow, that’s early! In the Maritimes for Christmas I guess? Good for you.

#2 T.O. Bubble Boy on 12.18.13 at 7:52 pm

Great post tonight Garth.

The only negative article I read all day (on the U.S. Economy) was quoting the Sears CEO:
http://www.cnbc.com/id/101280028

Apparently the U.S. has “too many malls”… the op-ed cited one prediction that 10 percent of enclosed malls could fail before 2022, while those catering to affluent shoppers should continue to do well.

Anyway – great call on the Taper, and in your unbiased look at various assets.

Maybe you’ll cover the CPP “debates” between Flaherty and the provinces soon… seems like everyone is ready to screw over Generation X and Y and Z to help out hte broke Boomers.

Maybe we need some more inputs from Dutch prostitutes on pension planning:
http://www.cnbc.com/id/101281478

#3 Invictus on 12.18.13 at 7:55 pm

Harpergeddon: it looks more and more likely that the Langevin Blockheads’ house of cards economy will topple at around the time Canadians head back to the polls. Whic will make room fir Rob Ford’s leadership campaign – always a bright side.

#4 Tri-Guy on 12.18.13 at 7:56 pm

I’m collecting money for the powerball lottery in the states…anyone want in? entry is $5

#5 T.O. Bubble Boy on 12.18.13 at 7:56 pm

Oh ya, and apparently we’re still in a housing bubble.

What were those comments about Realtors getting paid for doing nothing?

Check out this $1.1M listing:
http://www.realtor.ca/PropertyDetails.aspx?PropertyID=13923355&PidKey=865785782

5% commission on that is $55,000 (split between 2 realtors).

$55,000 for taking a blurry picture of a house and selling it to developers to tear down and build a McMansion???

#6 Forzudo on 12.18.13 at 7:57 pm

Yellen will put the brakes on tapering, as of next month.

I hope nobody trusts you with actual money. — Garth

#7 Ken R on 12.18.13 at 8:00 pm

Big day for sure, portfolio benefited handsomely. Thanks for the advice Garth. You provide a great service for a better than Costco price!

#8 Jimmy on 12.18.13 at 8:01 pm

Is that really SM?

#9 baddog on 12.18.13 at 8:05 pm

That is a perfect picture for today’s entry. My side still hurts. Where do you find this stuff??

#10 not 1st on 12.18.13 at 8:05 pm

Garth, your U.S. economic statements are sounding more and more CREB like. The taper has more to do with runaway debt than it does with any sort of sustained good news growth story.

Consider U.S. debt sitting at 16 trillion plus, and also another estimated 3 trillion or more on the Fed’s balance sheet now. In 2008 these numbers stood at 8 trillion and 600 million respectively. So a cash injection of more than 10 trillion dollars into the system and this is what we got?

Just for comparison, 10 trillion dollars is enough to give every man woman and child a walmart gift card for $30,000. Think of what would have happened if they would have done that instead.

What do you have against Costco? — Garth

#11 Bill Gable on 12.18.13 at 8:06 pm

Well?

What has our host been saying, nay, YELLING at punters and I still can’t get some people to listen.

I beg them to at least read this blog, anything.
Blank Stare.

Great Post, sir.

It’s just tragic that more people can’t read.

#12 Chickenlittle on 12.18.13 at 8:08 pm

I’m so glad I don’t have a mortgage. It’s so much easier to come up with $1500 rather than $3000…

#13 Chickenlittle on 12.18.13 at 8:09 pm

I know some women who are shaped like that…

#14 Money talks on 12.18.13 at 8:11 pm

Province wants input on real estate profession

http://www.winnipegfreepress.com/breakingnews/Province-wants-input-on-real-estate-profession-236412161.html

#15 TurnerNation on 12.18.13 at 8:16 pm

Monster Candle today! Santa rally.

Just after the news I saw VIX, Bonds, and Dow drop hard together, and was asking Which one of these does not belong. Answer soon became clear.

#16 bentoverandpayingtaxes on 12.18.13 at 8:17 pm

What Bernake said was that the stimulus program would continue long past a drop in unemployment under 6%…..thats what excited investors today.

http://news.yahoo.com/fed-faces-tough-call-bond-buying-economy-strengthens-051027846–business.html

Lots of well picked Canadian stocks up as much as 5% today ….thats real money. 2014 should be a great year for the best of the TSX…IMHO cyclicals will outperform by a wide margin.

That is not what Bernanke said. He reiterated that the Fed funds rate would not be raised until unemployment hit the target, and perhaps even afterwards. Big diff. — Garth

#17 not 1st on 12.18.13 at 8:19 pm

Canada again at the forefront of the world.

First in the 90s to address our debt and now to address our underfunded CPP, a topic that dozens of first world nations have swept under the rug forever including our neighbor to the south who runs tens of trillions in underfunded programs.

#18 Babblemaster on 12.18.13 at 8:23 pm

“The Fed’s move – removing uncertainty, restoring some balance, validating the recovery and doing it without shock – may have set the stage for another leg higher in a bull market now four years old.” – Garth

——————————————————–

How have they validated the recovery? I think this was just a trial balloon. If it the markets begin to react negatively they’ll step away from “taper” and “swell” the stimulus. They’ll validate the recovery when the stimulus is over and the economy is able to survive for more than just one day.

The Fed would never initiate a policy it soon retreated from. Wrong. — Garth

#19 bentoverandpayingtaxes on 12.18.13 at 8:25 pm

#4 tri-guy….a powerball ticket is only $1.00

#20 not 1st on 12.18.13 at 8:29 pm

How come a prudent country like Canada who acts to resolve its sovereign debt and CPP issues isn’t being cheerleaded around the world? We are the only country on the planet close to actually getting into the black again and the only true AAA+ credit worthy place.

So when countries like europe and U.S. go trillions further into debt to resurrect their ponzi scheme, we do the pragmatic thing and trim spending or raise revenue. Why? Why don’t we work up a few trill and dump it in.

#21 bentoverandpayingtaxes on 12.18.13 at 8:30 pm

“The central bank modestly trimmed the pace of its monthly asset purchases, by $10 billion to $75 billion, and sought to temper the long-awaited move by suggesting its key interest rate would stay at rock bottom even longer than previously promised.

At his last scheduled news conference as Fed chairman, Ben Bernanke said the purchases would likely be cut at a “measured” pace through much of next year if job gains continued as expected, with the program fully shuttered by late-2014.”

Not want you asserted. — Garth

#22 Waxing Prophetic on 12.18.13 at 8:39 pm

Bernanke Believes Housing Mess Contained – Forbes 2007.

How did that one work out?

#23 Musty Basement Dweller on 12.18.13 at 8:45 pm

I am sure that all the “HAM” which has supposedly had the Vancouver market on fire ( according to the real estate agents and my brother) , will look for something with a better return than condos or Richmond mcmansions. I wonder what that will do to prices duh

#24 Obvious Truth on 12.18.13 at 8:48 pm

Couldn’t get past the pic. Not necessary.

#25 Mark on 12.18.13 at 8:52 pm

The rally today is a sign of a huge correction about to start. Shorts covering because they expected more than a token taper. Once the shorts are out, we’re going down fast. Hope everyone has their puts on.

Nobody expected more than this. Such drivel. — Garth

#26 Old Man on 12.18.13 at 8:54 pm

I saw the photo caption and thought it was Rob Ford, ok am going back to my rant room as all the women are waiting for me.

#27 Smoking Man on 12.18.13 at 8:57 pm

It was a big day. First of many.
……

Congrats on your call sir Gartho.

I hate to be the loner cloud on a sunny day, but.

If the people in the USA don’t start working again, come off disability, get off food stamps. Ain’t going to play out like all civilized men would hope.

In Canada look for trade ballance to go positive, with out that. VRM will be all in fashion.

But the biggest threat to Toronto Real estate at the moment is the Wynne Liberals popularity in the polls.

They are completely void of any kind of business decorum, experts at mobing individual decorum.

Not only will companies not invest here,(less they have a single sourced contract, profits guaranteed by tax payers) the exidous has begun.

So while I finally agree with garth on the huge risk to real estate, mine deductive reasoning is some what different.

Shit that was a good post. I’m falling apart, earlier I try to spell Wong, but it came out WRONG. Which made it RIGHT.

Ah weekend is close.

#28 Freedom First on 12.18.13 at 8:59 pm

The Fed Tapering is good news. Surprised me a little bit, as I agreed with Garth that it was coming, I just expected it in Jan. or Mar. 2014. No worries, except for the retail investors, who have been absent from the markets compared to the Institutional investors, and now, of course, with the market surging the retail investors can be expected to charge into this long running Bull market full speed ahead, as per usual, when it has already had massive gains the last few years.

Forgot to mention, in the past couple of months, I have been privy to conversations by several Boomer couples who are currently, using Helocs/loc’s, renovating their houses they live in to sell in the next 1-5 years to fund their retirements. I never said a word. I think many Boomers have this plan, the only thing I don’t know is how many will do this, and when it will begin, possibly in earnest. Also, from what I have seen in my life, many people do not get to choose when they retire, for many different reasons, and another also, when they sell their houses may not be by choice either, also for many different reasons. Balance re-balancing, liquidity, diversity, cash, cash flow, being debt free always works for me.

I know Garth believes another correction is coming, I do too, I have just finished a good re-balancing, so I am ready, and my personal expectation is that though we may have ups and downs for the next several months, trending up, I won’t be surprised to see a big drop next Sept.-Nov. 2014. I just see it as feeding time. Freedom First.

#29 Nemesis on 12.18.13 at 9:07 pm

Today’s other ‘Taper’… [offered without comment]

“You’re going to devastate the capability of the Canadian Forces” – General [Ret.] Rick Hillier, OC, CMM, MSC, CD

[CBC] – Retired generals take aim at Ottawa’s handling of defence cuts: Deep cuts planned for training and maintenance

http://www.cbc.ca/news/politics/retired-generals-take-aim-at-ottawa-s-handling-of-defence-cuts-1.2469381

#30 Steven on 12.18.13 at 9:20 pm

I think that once the implications of this web page is generally understood there will be serious tapering down to nothing of western and may be eastern north american real estate values.
When it comes to guaranteeing and insuring mortgages and real estate values I think the governments and banks will be declaring Force Majeure.
Radioactive waste has no resale value.

http://www.silverdoctors.com/fukushima-98-of-the-pacific-ocean-floor-covered-by-dead-sea-creatures/#more-36232

#31 Bigrider on 12.18.13 at 9:23 pm

When David Dodge, our ex bank of Canada governor goes on BNN today and says quote” CMHC adds stability not risk” do you really think that the religious mania towards real estate will abate anytime soon ?

No chance. Toronto is full of RE humping lunacy.

#32 Sparky on 12.18.13 at 9:31 pm

So if bond prices are down and yields up, does this mean that bonds are a good buy? Paying less for more income?

#33 Soma on 12.18.13 at 9:37 pm

Anyone with even an iota if sense will come to the sane conclusion that printing trillions of American-Tire Greenbacks is not a responsible fiscal move.

But people who should know better (after 2008 crash) will sadly continue to take advise from the bearded seer.

Like he says- This will end badly, very badly indeed.

#34 T.O. Bubble Boy on 12.18.13 at 9:40 pm

@ #20 not 1st on 12.18.13 at 8:29 pm
How come a prudent country like Canada who acts to resolve its sovereign debt and CPP issues isn’t being cheerleaded around the world? We are the only country on the planet close to actually getting into the black again and the only true AAA+ credit worthy place.
———————————————

ok – most of this is true, but you’re exaggerating the financial position.

There are many AAA-rated countries, and most of those don’t have government-back housing bubbles and a one-trick pony economy. Canadians get soooooo little from the resources we’re selling to the world it is just sad. Norway is fully funded to infinity and beyond on the health care and retirement fronts, and we’re sitting here looking for magic beans to solve health care and retirement disasters!!!

#35 jess on 12.18.13 at 9:43 pm

..this is so pathetic usa degrade further

Fraud and abuse in the school voucher system
In one “business management” class, students shook cans for coins on street corners!

http://www.miaminewtimes.com/2011-06-23/news/mckay-scholarship-program-sparks-a-cottage-industry-of-fraud-and-chaos/

..In 2011, Journalist Gus Garcia-Roberts chronicled much of the fraudulent activity associated with the McKay scholarship program. His investigation revealed that at one institution, South Florida Prep, large numbers of students were crammed into rotating classroom locations in dingy strip malls, church foyers and public parks; open use of corporal punishment methods to tame students; 17-year-old drivers with learner’s permits transporting other students to field trips, which resulted in an accident and deaths in one instance; and other sad stories of neglect and abuse.
http://www.ncpolicywatch.com/2013/04/24/school-vouchers-a-pathway-toward-fraud-and-abuse-of-taxpayer-dollars

Textbooks from Bob Jones University and A Beka Book good grief!..”In the District of Columbia, the Washington Post found that vouchers were going to unaccredited schools e.g one organized around “Suggestopedia,” a learning philosophy developed by a Bulgarian psychotherapist that emphasizes stretching and meditation
…read more
http://www.motherjones.com/mojo/2013/12/north-carolina-home-schools-public-vouchers

#36 Obvious Truth on 12.18.13 at 9:47 pm

Anyone balanced made out like a bandit today. Even dreaded treasuries barely budged and Canadians made on the exchange.

Good call Garth.

#37 Smoking Man on 12.18.13 at 9:48 pm

I hate Christmas.

We are boycotting the Family Xmas dinner again.

Get this and no this is not a lie.

Me, The wife and Son’s 2 and 3 are working a soup kitchen for free on that day, part of the 12 steps of a safe landing from oxy cloud surfing. Those who know the 12 steps know of what I speak. No need to inquire or talk about it further.

Wife’s Family is f-ed. Wife has 3 sisters and 1 brother. This year it’s hosted at Nuevo rich sis’s place.

I’m an only child via a few deaths of some sibs, and mom and pop are in the 90’s. Nursing Home.

So it’s Xmas is usually her side every year.

All of us are extremely well off expect for sis 3. Two divorces later, two kids and she’s a raving psycho. She got a bit out of line at a family get together. Nothing to bad but Nuevo sis made a mountain out of a zit. Coming out with alpha.

Nuevo got sis 3 banished from thanksgiving dinner at brothers house, the brother who is struggling in his business, wants to keep options open with the one he thinks has the most loot and the biggest heart. And she’s neither. Just a big property, hubby has toys and debt.

I called Bro up prior to Thanksgiving and said , “Dude why are you not inviting the psycho.” He’s says it’s complicated, and does not want to upset Nuevo.

What, do you have any issues with psycho, he says no.

Then I said, well she’s got 2 great kids and you want to banish them too, the little guy has no dad, what did they duo to you, you dip shit. He uses the word Consequences.

WHAT>>>>That word makes me f-en crazy.

So I said ok then we can’t make it either. He said fine.

This prick has his whole wealth based on my good heart and help. He was out of work for 2 years, worked in a plant, could not find a job, he’s ready to lose his house.

I set him up in my old business, showed him the ropes. Funded him with a what became a forgivable loan. And he chooses her over me. And the kids.

Whatever happened to guy code.

After the soup kitchen. The Smokee’s are going to were else for xmas dinner and inviting psycho and the kids.

Seneca. !!!!!

#38 Alwyn on 12.18.13 at 10:01 pm

Investment decisions are always best considered in light of one’s age, financial circumstances, appetite for and toleration of risk, as well as aversion to the paperwork of record keeping and reporting.

For the risk averse, laddered GICs may be a good option. The word Guarantee is comforting for many GIC holders who sleep well knowing they have return OF capital as opposed to return ON capital.

However, looming increases in nominal interest rates may not leave GIC savers any better off in real terms, if inflation and income taxation have the same discount effect on gross interest earnings.

#39 Infused with Opiates on 12.18.13 at 10:04 pm

2 TOBB – doesnt sound like they want to help broke boomers. From cbc.ca:

“We’re talking about a generation of young people in their twenties, thirties and forties, going into the workplace with part-time jobs, no benefits and limited savings ability. If we don’t act we’ll have a generation of Canadians who will not be able to retire in dignity.”

#40 Yellen on 12.18.13 at 10:12 pm

Bond buying will not end. Now $75 Billion per month. Was $85 billion.

FED Balance sheet now $3.9 Trillion. Without taper it would have been $4.92 Trillion in 1 year. With this taper, $4.80 Trillion

Thats all that was decided and all you need to no. The rest is hot air.

#41 Yellen on 12.18.13 at 10:17 pm

#13 Chicken little:

Reply to your post:

Your Grandma? Did I get it right?

#42 T.O. Bubble Boy on 12.18.13 at 10:18 pm

$CAD still falling… sitting right around the 52-week low of 93.3 cents US ($USD = $1.0715 CAD right now).

Are you ready for 90 cents?

#43 Canadian Watchdog on 12.18.13 at 10:18 pm

Tapering $10 billion a month is three extra months of forward guidance.

Forward Guidance [fawr-werd gahyd-ns]: a last resort policy used by central banks to bewilder stock market participants into believing they're serious about stimulus withdrawal. The idea is to create the impression that stimulus funds are being withdrawn when it is really being extended out further into the future, i.e., kicking the can down the road in exchange for more hopium.

To analogize, it's like telling a kid you're removing the training wheels by showing them you've loosened one bolt. Then telling them to keep pedaling and just pretend the wheels are off.

#44 blase on 12.18.13 at 10:19 pm

Garth,

Cottonelle? Costco’s defining product is the Kirkland brand TP. You gotta get with the program dude.

#45 T.O. Bubble Boy on 12.18.13 at 10:19 pm

@ #39 Infused with Opiates on 12.18.13 at 10:04 pm
2 TOBB – doesnt sound like they want to help broke boomers. From cbc.ca:

“We’re talking about a generation of young people in their twenties, thirties and forties, going into the workplace with part-time jobs, no benefits and limited savings ability. If we don’t act we’ll have a generation of Canadians who will not be able to retire in dignity.”
———————-

All rhetoric… they just want more CPP contributions from workers — i.e. the non-boomers paying for the boomers.

#46 Sir Finance on 12.18.13 at 10:21 pm

Agreed, good post Garth. Ever read The Intelligent Investor by Benjamin Graham? My all time fav.

#47 Nemesis on 12.18.13 at 10:26 pm

“Whatever happened to guy code.”…

It was ‘Tapered’*.

GoodOnYa, SM…

[*But not everywhere… TeeHee!]

#48 economictsunami on 12.18.13 at 10:43 pm

Congrats on getting the taper thingy correct G but this recovery is rather long in the tooth; with many false fits and starts.

Granted America is years ahead of Canada in the deleveraging cycle but their process has merely plateaued and may unfortunately suffer another leg down; with a possibility to overshoot a true bottom.

I’ll give Bernanke kudos for putting a floor under securities and financial services but QE merely squeezed liquidity out of bonds & MBS; into less economically productive sectors.

This diverted liquidity failed to find it’s way into the real economy producing larger multiplying economic spinoffs through velocity of currency.

It is a hard lesson to learn when your economy was once market based and now functions through engineered financial incentives.

An addictive habit, that in the end, is rather hard to kick…

Two interesting reads:

Evans-Pritchard: Farewell QE, you have been a magnificent success:

http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/10526947/Farewell-QE-you-have-been-a-magnificent-success.html

Roubini: What we’re witnessing in many countries looks like a slow-motion replay of last housing-market train wreck: Back to Housing Bubbles…

http://www.project-syndicate.org/commentary/nouriel-roubini-warns-that-policymmakers-are-powerless-to-rein-in-frothy-housing-markets-around-the-world#D1IcikWp4ehE3DXr.99

#49 Troy on 12.18.13 at 10:44 pm

I have bond mutual funds through my employer. Should I add to my position to take advantage of rising yields or reduce my position to avoid falling bond prices?

#50 Dean Mason on 12.18.13 at 10:49 pm

To Sparky #32

The most U.S. and Canada bond yields will reach is 4.10% on the U.S. 10 year and 3.85% on the Canada 10 year.

The 30 year U.S. bond will be at most 4.80% and Canada 30 year at 4.20%.

This is the next 2 to 3 years and this is being optimistic.

We need 300,000 U.S. jobs a month on average for 30 months minimum for this happen plus decent 2.5% to 3.00% annually rising wages and more hours too per week.

This is Europe does not flop again and some other financial crap happens in U.S., China, Asia etc. and slowing down of world real GDP does not happen.

The 4.00% to 5.00% range on medium to long term bonds is a resistance level as these higher rates can’t be handled by the U.S. and Canadian economy.

9% is gone, 8% is gone, 7% is gone, 6% is gone, 5% maybe but not for long, 4% is possible, 3% is coming soon.

#51 Ole Doberman on 12.18.13 at 10:51 pm

Garth I just went all in on gold and bitcoin and am losing my shirt, what should I do now – average down or wait till things come back?

#52 Toronto_CA on 12.18.13 at 10:52 pm

#20 not 1st on 12.18.13 at 8:29 pm

Have you checked out the provincial and municipal finances lately? Ontario, Quebec and BC in particular are not exactly places that look fiscally responsible.

#53 Jsan on 12.18.13 at 10:53 pm

All of this talk about a strengthening US economy reminds me of all of the “Green Shoots” talk 3 or 4 years ago. I don’t buy it! Until the US returns to a manufacturing economy and less of a consumption economy I don’t see much of a change. Obamacare if it ever gets enacted will pull more money out of the pockets of the middle class and this will not help the economy at all.

The US has many brilliant people and many brilliant companies however unfortunately most of those companies manufacture overseas and this will not change. An economy running on service industry jobs just won’t cut it. Add to this the huge wave of retiring baby boomers resulting in less taxes coming into Federal and State coffers and more money leaving via Social Security should equal deeper Federal and State debt. I think the US glory days are behind them.

Canada is toast in many ways. Deep personal debt, ridiculously overpriced real estate plus the same stupid mentality the US went through where many of their citizens treated their houses like ATM machines means we are overdue for a rude awakening. Rising yields and higher mortgages will be the nail in this bloated real estate coffin.

#54 bigtown on 12.18.13 at 11:00 pm

SMOKING MAN has similar family dynamics as mine wherein the wealthy deign themselves overseers of the moneyless side of the fam.

I see now how ordinary me and smoking man families are and feel empowered in upping my charity and loving all the fam. it is painful but we have to overlook our wealthy relatives shortcomings.

#55 Yitzhak Rabin on 12.18.13 at 11:01 pm

Don’t fall for the BS. This token taper was a vanity move for Ben Bernanke’s legacy – he wanted to be seen as winding down the unprecedented monetary policy that he started.

In fact, in the very same press conference he Big Ben said the Fed would increase asset purchases should the economy suffer from the less aggressive policy.

This is exactly what will happen. Interest rates will rise further hurting the US economy. Aggregate debt levels are much higher than 2008 and can’t withstand the higher rates. News just came out that new mortgage applications state-side fell to 13 year lows. The real-estate price recovery has been driven exclusively by hedge funds and institutional investors like BlackRock leveraging up on cheap money. This has run its course.

The tapering won’t last and certainly will not be wound down to zero. In short order you will see permanent QE with asset purchases higher than the $85 billion/month throughout 2013.

I’m quite enjoying this. — Garth

#56 Mick on 12.18.13 at 11:07 pm

US commits numerous acts of misinformation to accomplish its “recovery.” One is including QE in their GDP, to the sound of a trillion a year.

Housing starts up? Yep, and mortgage applications at 13 year low, but let’s not spoil Garth’s US party with such silly facts.

Then of course there’s the jobs, 90% of which are the burger flipping, Wal Mart greeting variety, another inconvenient truth Garth chooses not to acknowledge.

Yep, all is well in America according to Garth, go buy your 25X earnings stocks which are actually 50X earnings when you factor out all the share buy backs.

Sorry Garth, your argument for the US recovery is just too easy to knock over.

I look forward to that. — Garth

#57 Mr. Frugal on 12.18.13 at 11:07 pm

Garth,

You forgot to mention that REITs jumped quite a bit too. That was sure a pleasant surprise! The big question is whether the TSX will continue to lag the S&P 500.

#58 Smoking Man on 12.18.13 at 11:09 pm

Phil get bounced from Duck Dynasty for anti-gay remarks.

Ridiculous.

Someone was wrong who said we are created equal, we are not created equal, we are all individuals and a bit different in out own ways.

Phil is different from Gays and Gays are different from Phil.

Does that make anyone of them more right than wrong.

I accept gays, and am truthfully terrified of lesbians but have no problem with them. I just wont make eye contact. Brush cuts on chicks scare me.

Why are people punished for opinions,

Phil to say and feel the way he feels, so long as it’s honest and the person believes it. He’s not selling a product in stealth.

When you go against the architects of social engineering your doomed.

I don’t agree with Fill’s comments, but I respect him for sharing them honestly.

This world is F-ed

http://ca.eonline.com/news/492342/phil-robertson-suspended-from-duck-dynasty-over-anti-gay-comments

#59 Smoking Man on 12.18.13 at 11:24 pm

My choice,

Xmas dinner, Go to a brag feast, all telling lies how wonderful and great our lives our. How much we cherish each other.

Puke!!!!!!!!!!!!!!

This poorly skilled writer in me, and make no mistake, I’m a writer. Bad one all the same is so looking forward to Xmas with the depraved, the homeless, the unloved.

I’m going to make a few friends. If you can give and receive a fart without judgment, man that’s what it’s all about.

I hate normal people.

I love real stories and sharing them.

Ya, I’m f-ed

#60 Booya!!! You got "Out-Smoked"!! on 12.18.13 at 11:24 pm

#37: SM

“This prick has his whole wealth based on my good heart and help.”

“I set him up in my old business, showed him the ropes. Funded him with a what became a forgivable loan. And he chooses her over me. And the kids.”

Sounds like you were “Out-Smoked”, dude!!

“Whatever happened to guy code.”

Guy code? Sucker!

#61 gtrz4peace on 12.18.13 at 11:26 pm

Garth– Yes the evidence is that corporate America is doing well — but from everything I see now happening in my country, as an American living in Canada, there is very disturbing growing income inequality, and the “good” jobs being replaced by “McJobs” are not going to work.

What’s more, the looney fringe of government cutting unemployment benefits, veteran’s pensions, food stamps for kids are not going to make for a long-term recovery here.

We may disagree, but my husband and I support the economic theories of Robert Reich, and as we see it there can be no recovery unless basic “right and wrong” corporate malfeasance can be dealt with — corporations are not people and money is not speech, etc.

So, it’s just not all as rosy as you paint it — and this is according to the people I know across the US.

It’s not “doomer land” but it’s not “kumbaya” either

#62 Smoking Man on 12.18.13 at 11:28 pm

#60 Booya!!! You got “Out-Smoked”!! on 12.18.13 at 11:24 pm

Ya! Well that was before I lost my mind. Morphed into the character I invented.

Bring it on world.

#63 Shawn on 12.18.13 at 11:28 pm

Green Shoots?

Jsan at 53 said: All of this talk about a strengthening US economy reminds me of all of the “Green Shoots” talk 3 or 4 years ago. I don’t buy it!

*****************************************
Those who bought the U.S. market three to five years ago, on the basis of green shoots have done VERY well.

It could be argued that many of those green shoots are now healthy trees.

The markets are never easy to predict. Those who bought in early 2009 when there was “blood in the streets” did very well. Buy low and sell high.

At some point the U.S. stock market will be too high. It may be now. It’s not the bargain it was in 2009 or 2011.

Some kind of balance is the way to go.

The only asset class that really looks dangerous to me is long-term bonds and especially government and high quality long-term bonds. The yields just seem so small.

No asset is too dangerous however, if used in moderation.

#64 Booya!!! You got "Out-Smoked"!! on 12.18.13 at 11:31 pm

BTW, it’s “OK” to show emotions, Kevin O’Leery!

#65 bentoverandpayingtaxes on 12.18.13 at 11:32 pm

#54 Mr Frugal….REI.un for ex…was a big tax loss position this year…probably a great buy at these prices when the 30 day hold expires.

Industrial materials have to come from somewhere…the TSX has those in spades…a global recovery would see the TSX rocket past the DJIA….interestingly the Baltic Dry is up 200%…China is stockpiling again…..it might ust be a matter of time. IMHO these are the times in ones life that it won’t pay to be too conservative……recovery is a risk off proposition.

The macro always has some surprises…..like whats happened with the Keystone causing CNR and CP to go parabolic…..now a rail bridge across the border to work around the Obamatons position….now TRP is lookng at building new line in Mexico with the turnaround there……surprise surprise…theres money to be made.

#66 recharts on 12.18.13 at 11:34 pm

#45 T.O. Bubble Boy on 12.18.13 at 10:19 pm

All rhetoric… they just want more CPP contributions from workers — i.e. the non-boomers paying for the boomers.
———————–
He he, I hope I will be out of here by then. Considering the restless that the government and its corporations are manifesting when it comes to various pension plans (OPG,Canada Post ,CPP etc etc) I am afraid that the worse is still ahead for this country. Baby boomers will retire year after year and the suckers will be left to pay their pensions and their health care after they bought their over priced houses.
Indeed the next generations are screwed and too bad that some of this people have nowhere to go. Others will just go back from where they come.

#67 Suede on 12.18.13 at 11:35 pm

Taper, Quantitive Easing…where do they come up with all these words? Love it.

Anyway

The Fed is paying banks 0.25% interest on their trillions of deposits (or so I read).

If the Fed paid them 0% or negative interest as may be suggested in parts of the world (Summers)…Would that not force the banks to lend out the money they have on deposit at the Fed?

just saying

Ok back to drawing with crayons

#68 FTP - First Time Poster on 12.18.13 at 11:36 pm

Why is the tapering such a big thing in your mind Garth? It’s the equivalent of Dorothy being $1,000,000 in debt and announcing she’ll reduce her monthly spending by $58 per month…..big deal!

There is no major announcement, its all a con game and to think that “Murrika” the Empire is going to last forever is lunacy. One only needs to look at the whole scale collapse and insolvency of major cities like Detroit (home of Ford, GM, etc), Camden, NJ (former home of Campbells Soup Co) and on down the list to see the decline of an empire.

The only thing that did surprise me about your post this evening is that I didn’t see the “Brought to you by CREA” banner across the top after last nights bashing & generalization of FSBO’s!

The US will be here, and ascendant, long after you are dust. As for buying a house from a DIYer, it’s an idiot move. — Garth

#69 Suede on 12.18.13 at 11:36 pm

Guy Code:
http://uncyclopedia.wikia.com/wiki/Guy_Code

Rules of Shotgun Procedure:
http://www.shotgunrules.com

#70 Jon on 12.18.13 at 11:47 pm

#27 smoking man
If companies wont invest here then why did cisco just announce the opposite. I work for a global national in aerospace controls etc. and they are moving jobs here from the usa. Not so sure your comment is valid….

#71 45north on 12.18.13 at 11:54 pm

Freedom First: I have been privy to conversations by several Boomer couples who are currently, using Helocs/loc’s, renovating their houses they live in to sell in the next 1-5 years to fund their retirements. I never said a word.

using Helocs (home-equity-line-of-credit) to finance home renovations. Yeah I know I’m preaching to the choir but at this stage houses in Canada cost double of houses in the US. Double! The American housing market took a 30% across-the-board drop and I think Canada’s will too. 30% drop! So what kind of reno can you do to overcome a 30% drop? Well I do think that out of a 1000 renos, 100 will increase in value enough to match the cost of the renos.

The boomer couples are going to throw $100,000 into their houses only to find out that they are worth what they are now.

#72 rich young on 12.19.13 at 12:06 am

OK, so the states consumers are recovering. the debt to gdp of the average us consumer is lower than that of the average Canadian. Why is this? It is pretty simple. Just look at a graph of the US DEBT compared to our Federal Debt.

Simply stated: The average American has a much lower cost of living as they suffer from a lower level of taxation. It is clear that the level they are taxed is not sufficient so the “recovery” is false. It is a fake recovery. Chicago downgraded, Detroit bankrupt, Just look at the number of failing munis. Look the FDIC failed bank list. Look at the ballooning Federal Debt and the ever expanding Fed balance sheet. Tell me that if they actually taxed the corporations like they did pre-Reagan that investors would cheer.

Corporate America and the average American is not paying for the services they get so we will see more Detroits and ever growing Federal Debt that makes the average US consumer look healthy on their own balance sheet inside a broke city/state/country. Tell me how this is a US recovery? This is a stock market bubble. This is a farce.

#73 Victoria on 12.19.13 at 12:08 am

@Soma
I bought just before the so-called “2008 crash”. What exactly am I supposed to be learning? My house in GTA now worth about 200K more than when I bought it. :)

#74 Nemesis on 12.19.13 at 12:11 am

@gtrz4Peace/#61

Correct. VeryMixedPicture. ThreeGoldStars.

@SM/#59….

…”…This poorly skilled writer in me, and make no mistake, I’m a writer. Bad one all the same…”…

To paraphrase a certain MapleSyrup financial institution…

“More beautiful than you think*….”

http://youtu.be/XpaOjMXyJGk

[*Much. You too, CatFoodDame. Sometimes it’s Science… but mostly… it’s Art. Which is code for… Heart.]

#75 Nemesis on 12.19.13 at 12:16 am

BonusZen:

GuyCode:

http://youtu.be/Jgc5lQajmQ4

#76 Infused with Opiates on 12.19.13 at 12:25 am

45 TOBB – CPP benefits were desinged to replace 25%
of max income (now about $50k). Contributions were like 2% in the 60s but were raised to just under 10% in 2003. A 45 YO boomer then would pay that for 20 yrs to receive full benefit. At 5% return, that gives about $175k total. Drawing that down at the same 5% for 25 years (til age 90) yields $1K/mo, so I would say those born in 58 gave away all their contributions til age 45 before kicking in for themselves. Just a napkin calc, but you get the idea. Pre-boomers and boomer parents did very well, early boomers OK, mid and late boomers losing out.

#77 NotAGreaterFool on 12.19.13 at 12:27 am

So…the end of an era?

Fixed rates will start to rise and the variable will do so too. I would not be surprised if the variable rate remained as is until 2015 after today’s Fed announcement.

Garth what does this do to Canadian real estate prices and sales volume in next two years? Tighter and more controls from F coming up?

#78 T.O. Renter on 12.19.13 at 12:30 am

Built an extra room off the back of the place(no permits of course) to hold all the excess crap I get at Costco.

Garth….Thanks for the priceless info.

#79 groovin_123 on 12.19.13 at 12:32 am

Being Bernanke’s last crack at bat, the “token taper” was all but guaranteed.

When Yellen fails to step to the plate and reduce the bond purchases, the Bernank can wipe his hands clean and say “Well, I tried….”, even though once history is written it was under his watch that began the dive of the dollar.

They can’t taper it right out, ever – basic math says so. The debt load has passed the point of ever coming back. The manufacturing base has of the US has been completely gutted and is not coming back until the purchasing power of the dollar closes the gap with that of the Yuan. Simple one-liner retorts to my observation aren’t going to change that. The question now is how long can they keep it going? Japan has kept it up for 20+ years.

#80 Son of Ponzi on 12.19.13 at 12:34 am

Happy Times.
And the $17,000,000,000,000 and counting of debt will just go poof.

#81 Son of Ponzi on 12.19.13 at 12:44 am

Well, the runaway train has just slowed down from 85 mph to 75.
Still a runaway train.

#82 Adrian on 12.19.13 at 12:45 am

Taper down to 75 bil a month is nice. But what happens next will be more telling. Will the Fed get cold feet and ramp the taper back up or will it actually continue to reduce its bond and asset buying into the future? We’ll know more next time around, at the next announcement, than we do now.

#83 wallflower on 12.19.13 at 12:51 am

#51 Ole Doberman on 12.18.13 at 10:51 pm

Garth I just went all in on gold and bitcoin and am losing my shirt, what should I do now – average down or wait till things come back?

———–

yer funny!!
share, what else ya got goin’ down?

#84 Just some guy on 12.19.13 at 12:58 am

Ref post 59: Smoking Man

Yes, you are a writer. A good writer reads. You can pick up a lot about the craft. Read Carl Sandburg. Start with Chicago, perhaps his best known work.

#85 Adrian on 12.19.13 at 12:58 am

Other thing is this is QE 3 (Infinity). Other two didn’t work. Will this one?

#86 Ogopogo on 12.19.13 at 1:24 am

I had so much fun today buying the fear before the Fed announcement. I literally spent the entire morning averaging down BMO’s ETF for preferreds, ZPR. Ended up with thousands of dollars in shares below 13.85 in my non-registered Questrade account.

Thank you lemmings and doomers for allowing the rational and savvy to prosper. Taper away, Bernie!

#87 James on 12.19.13 at 1:39 am

Dude, you don’t buy a condo. You buy a sfh duh.

#88 Cici on 12.19.13 at 1:58 am

#37 Smoking Man

Great post, you greatest yet. Now that’s what family should be about. Right on to you for helping out the brother, and for calling him on his greedy, repugnant behaviour. The only thing…maybe you should have helped the “psycho” instead. She may be emotional, and maybe even hysterical, but she’s probably a great person, and at the very least seems to be raising two great kids.
But the best gift you can give to them this season is Smoking Man at his best: the real thing and 100% fully sober.
Enjoy the Holidays :-)

#89 D.D. Corkum on 12.19.13 at 2:12 am

I am so glad that I don’t have to put up with people saying “the Fed will NEVER taper.”

*reads the comments saying its temporary and will come back with a vengeance next month*

Oh… darn. Guess I still have to put up with it.

#90 Son of Ponzi on 12.19.13 at 2:22 am

Correct me if I’m wrong.
But, is there not another debt cliff coming soon?

#91 Andrew Woburn on 12.19.13 at 2:58 am

#30 Steven on 12.18.13 at 9:20 pm
Radioactive waste has no resale value.
http://www.silverdoctors.com/fukushima-98-of-the-pacific-ocean-floor-covered-by-dead-sea-creatures/#more-36232
=================================

Beware of people who frighten you to death in order to sell you silver. This is a well known hoax story.

http://beforeitsnews.com/japan-earthquake/2013/09/hundreds-of-whales-radiated-to-death-near-fukushima-japan-story-being-censored-by-government-2443692.html

This is a report from credible people on the scene from the Woods Hole Oceanographic staff:

http://www.whoi.edu/page.do? pid=83397&tid=3622&cid=94989

Of course the Woods Hole guys might be controlled by the shape shifting lizards who really run the CIA and NSA so here is a report from the Guardian, the people who published Wikileaks and the Snowden story. If you can figure out how they are controlled by any government including their own, please enlighten us.

http://www.theguardian.com/environment/2013/dec/03/fukushima-daiichi-tsunami-nuclear-cleanup-japan

The Guardian story makes it clear that there are major issues here but they forgot to mention the part about North American real estate glowing in the dark.

#92 Tony on 12.19.13 at 3:19 am

Re: #6 Forzudo on 12.18.13 at 7:57 pm

Absolutely right, as we all know when Yellin comes in at the helm the first thing she’ll do is increase bond purchases well beyond the 200 billion dollar a month figure. America is insolvent and if they taper a triple dip recession and the biggest stock market crash on record would be the net result. January will come and go next year Yellin will claim QE to infinity as it’s the only way for states to pay their bills… that is until there’s a run on the America dollar and it all ends there.

Unbelievable. Many deluded people out there. — Garth

#93 Andrew Woburn on 12.19.13 at 3:20 am

#71 Canadian Watchdog on 12.16.13 at 11:38 pm

Basel III isn’t going to fix $20.4 trillion dollars of
derivatives held by Canadian banks. This is where
counter-party risk is hidden, so they look solvant.
==================================

I’m trying to wrap my head around derivative risk. This is what I think so far.

The term “derivative” has been demonised in the popular press but it simply means a contract whose terms are based on an underlying asset such as a commodity, a loan, foreign exchange contracts etc. and they have been around in some form since the first farmer pre-sold his grain to a merchant.

Canada’s biggest bank, the Royal, shows the “notional value” of its derivative contracts to be $8 trillion on its most recent financial statement. $5 trillion represents credit default swaps (CDS). A CDS is essentially an insurance policy issued to a creditor for a term of years that the insurer (aka the counterparty or bank) will pay the creditor if a debtor defaults. The creditor pays a periodic fee based on the notional value of the amount guaranteed.

This is really no different from a fire insurance company guaranteeing to pay out $1 million to a business for the loss of premises. The financial statements of the fire insurance company will show a “notional value” policy in force of $1 million and premium income of say 4% per year. A large insurer will have thousands of such policies adding up to a notional value of billions or even trillions but unless everything burns down at once, they are not exposed to more than a fraction of that amount at any one time and losses are funded by accumulated premium income.

I’m not sure what is meant by “this is where the counterparty risk is hidden”. Note 8 of the RBC statement puts counterparty risk right on the table:

“Credit risk from derivative transactions is generated by the potential for the counterparty to default on its
contractual obligations when one or more transactions
have a positive market value to us. Therefore, derivative-related credit risk is represented by the
positive fair value of the instrument and is normally a
small fraction of the contract’s notional amount.
We subject our derivative-related credit risk to the same credit approval, limit and monitoring standards that we use for managing other transactions that create credit exposure.” I assume that if RBC has to make good on a creditor’s claim they also take over his rights to as debtor’s assets so a 100% loss is unlikely.

I am well aware that insurance company AIG had to be bailed out as a counterparty by the US government but
this wasn’t because they issued derivatives, it was
because they got greedy and stupid and overdid it. I am not really ready to believe Canadian bankers walk on water but they have been managing risk for a long time. I am quite prepared to believe their overall risk exposure is greater than they acknowledge and I absolutely no longer trust auditors, but I’m not seeing a 20 trillion dollar hole in the big banks.

The part I really didn’t like was that RBC’s capital of
$50 billion is only about 5.8% of total assets of $860
billion. Unless I’m missing a big something, that only
gives them less than 1% cushion over the Basel III 5%
minimum capital if anything nasty hits the fan. Anyone else want to take a run at this?

#94 Tony on 12.19.13 at 3:32 am

Re: #15 TurnerNation on 12.18.13 at 8:16 pm

Bonds and the DOW, gold and silver initially fell, the VIX initially rose. Then all Bernanke’s buddies bought up stock like it was the summer of ’29 to prevent a stock market crash on the news.

#95 Tony on 12.19.13 at 3:45 am

Re: #32 Sparky on 12.18.13 at 9:31 pm

Long term bonds are what to buy right now until there’s a run on the America dollar. Corporate profits are nose diving in America and without increased quantitative easing a triple dip recession is guaranteed.

#96 Village Whisperer on 12.19.13 at 3:54 am

So this minimal reduction to $75 billion in QE per month, or $900 billion per year, is tapering?

#97 Humpty Dumpty on 12.19.13 at 5:31 am

G, you forgot to mention that 70% American kids can now have ketchup with their gravy for dinner also…

The BLS tells me the CPI has risen by 473% since 1971. The very same agency also tells me average hourly earnings have risen by 464% since 1971. This means the average worker is earning less than they did in 1971 in real terms. The median wage per worker has lagged CPI dramatically, as the averages have been skewed by those making outrageous compensation in the financial world. Median household income has barely kept pace with inflation even though households were forced to send both parents into the workforce, with the expected consequences of higher divorce rates and children left to fend for themselves or be raised by strangers.

http://www.theburningplatform.com/2013/12/17/keeping-it-real/

CPI can be a thorn….

#98 Raven on 12.19.13 at 7:53 am

Between A Rock and a Softer Place

The large and clearly audible sound we heard emanating from Washington was Barnanke’s sigh of relief. It now appears that good news is doing to the markets what it should, raise expectations, and psychologies, justifying tapering!

The almost symbolic taper, was a test to verify that the markets agreed with the stimulus reduction. The verification was immediate and direct. Emerging markets didn’t swoon. The Dow agreed, making normalization back to market fundamentals looks well on its way to sustainability.

“Every man is a damn fool for at least five minutes every day, wisdom consists of not exceeding that limit”

#99 TurnerNation on 12.19.13 at 8:38 am

What likely happened, Ma and Pa Investor got home last night, saw the Dow up 300 pts and went ape sht.

“Mildred, call our adviser. It’s high time we get back into this market.”

#100 Dual Citizen in Canada on 12.19.13 at 9:05 am

#72 Victoria on 12.19.13 at 12:08 am
If that’s how much it’s, “worth”, that means nothing until you actuall sell and get the money in your hands, then what are you going to do? You need a place to live so here are your choices:
1. Lateral move, which means your $200K profit means nothing
2. Upgrade and get in the same boat as the the others, which means you now owe versus being debt free
3. Downsize, rent, invest your capital gains
4. Head to a cheaper country and live like a king/queen

Nothing is “worth” anything until it becomes liquid by someone else actually paying for it.

#101 sam stall on 12.19.13 at 9:42 am

Easy with the tapering. It was a symbolic act that will be quickly reversed.

Seen the 10 years treasuries yield? If not you better watch it.
http://www.marketwatch.com/investing/bond/10_year

Up from 1.6 this spring to almost 3 %.

It is the bond market that defines the long term rates, not the central banks. Unless they buy all bonds.

Stock market did amazing (although paper gains).
What is also amazing is the misinterpretation and the misleading information and statements in the mainstream media on the current state of the affairs.
One good example is combining asset price deflation and consumers price deflation under one common denominator. Garth does it as well, ‘fear the deflation’ he says.
Deflation of assets that were in bubbles has nothing to do with consumers price deflation. In fact there is consumers price inflation that is significant.

I really badly hope for commodities to be on sale and for the gold to go to 800.

There will, of course, be no reversal. — Garth

#102 Yvonne on 12.19.13 at 9:51 am

What I want to know, Garth, is where you find those crazy pictures.

#103 Canadian Watchdog on 12.19.13 at 9:54 am

#92 Andrew Woburn

A large insurer will have thousands of such policies adding up to a notional value of billions or even trillions but unless everything burns down at once, they are not exposed to more than a fraction of that amount at any one time and losses are funded by accumulated premium income.

Firstly, RBC assumes their creditor has the wherewithal to fulfill the contract, when they themselves have counterparty risk not known to RBC. Secondly, in the case of AIG, bids for MBS went blank, therefore they couldn't even value securities at fair value. Not likely to happen, but it can.

The only reason why risk has been temporarily suspended is because central banks provide repo transactions (cash and a guaranteed bid) to primary dealers (banks). Yesterday the BOC injected a staggering $1 billion dollars for special operations (term repos).

Another day, another bank saved from imploding. This is the new normal. And why central banks will never be able to put large banks back to being fully funded by private capital. This is a whole new ball game being made up on-the-fly.

I am not really ready to believe Canadian bankers walk on water

Then read this: Canadian banks’ Caribbean mystery: Little known about how giants make money in paradise

#104 Westcdn on 12.19.13 at 10:04 am

Finally the September taper arrived, abet 2 months late. I don’t know if this post is a good idea but what the heck, I haven’t written something in a while.
The US bond market took the news well and the US$ rose against other currencies which helps put downward pressure on interest rates. I believe the tiny taper is good news for the US economy and, indirectly, the Cdn one. Slowly rising interest rates are needed to prevent the big bust. However, the cost will be less economic growth (after inflation) – 3% US growth projections looks optimistic to me. I am thinking more like 2% which means a shortage of good paying jobs for a long time. Rising interest rates should take out the excess speculation in equity and real estate markets but result in governments needing more tax revenue. Inflation remains low so I don’t expect interest rates to rise much (1/2% is my guess) after this version of QE ends as the Fed stated a continued stimulus bias for a long time. Now would be a good time to start reducing personal debt or at least put a lid on it. 2014 is shaping up to be a year that surprises to the upside unless you are carrying too much debt. From what I am reading, inheritances are going to be harder to come by.
I wish Ontario good luck with their “enhanced CPP” plan – should get Wynn votes in the next election. Personally, I would rather see a focus on business job creation and putting more money in the wallet of voters. The 1% could really help here by proving some funds to build world class infrastructure. Remember, our success will maintain your place, besides, you can’t take it with you unless lingering till gone suits you. A $40 million lottery win was donated to charity recently – I think funding small businesses was an equal option.

#105 Ronaldo on 12.19.13 at 10:12 am

#70 – 45 North

”The boomer couples are going to throw $100,000 into their houses only to find out that they are worth what they are now.”

Exactly. Couple I know in Vancr purchased an old 1920’s house for around 800g (3 level w/suite in basement) back in 2008 when all the talk around the water cooler was how low the mortgage rate was that the bank had given them. Like 1.75%. The old ”prime minus” deal that the banks have been enticing these young buyers with since at least 2005. Not so much now.

Their plan was to totally renovate since the place has not been touched (except for some minor paint and trim here and there). Everything else including single pane windows and electrical and plumbing is basically original.

When the prices skyrocketed and the place was supposedly valued at 1.2 mil at beginning of 2010, I suggested that it may be time to take his winnings. He looked at me like I was just out of the looney bin and says plans to renovate and resell for 1.5. Wished him good luck.

Now he tells me got an appraiser in to value the place as mortgage coming up for renewal. Asked the guy what he figured it would cost to renovate and the guy told him around $300g or more. He asked if it would be worth his while to do this. Guy told him no, since it was basically a ”tear down” and he would not get his money out of it. He didn’t believe him and last I heard he still has plans to renovate. Total denial. I suspect he will be in for a major shock in the next few months.
Never told me what it was appraised at and I didn’t ask. I suspect not any more than it was valued in 2010. A lot of renos happening in certain areas of Vancr.

#106 Penny Henny on 12.19.13 at 10:16 am

Hey Garth,
I’d bet that you’ve been sitting on that picture for months waiting for a taper announcement.
Check out the lady behind the counter, she’s laughing.

#107 sam stall on 12.19.13 at 10:22 am

There will, of course, be no reversal. — Garth
————————————
Of course there will be, somebody (guess who) will buy under the table some more unaccounted for in their balance sheet.
All things eventually reverse to the mean. And for 10 years treasuries it is not 3 %, it is more like 7 %
Are you buying government bonds Garth? No? I thought so…
There would be reversal in commodities and it ain’t gonna be pretty.

#108 Penny Henny on 12.19.13 at 10:30 am

Serious question for you.
If you think the US is in full recovery mode why do you not think Canada will be going along for the ride?
Albeit a a slower pace.

I have never said ‘full recovery mode,’ but rather stated often the US advance is painfully slow, but incremental and relentless. Some reasons for Canada’s lag are in the post above. — Garth

#109 Ralph Cramdown on 12.19.13 at 10:32 am

“12:45. Restate my assumptions.”

It is apparent that a large number of people need to restate their assumptions, and to re-examine them. US economy going to hell? Dollar collapse? QE to infinity? $3,000 gold? How much money have you lost, or gains have you foregone, based on your assumptions?

http://advisorperspectives.com/dshort/updates/Big-Four-Economic-Indicators.php

If you believe that dark forces are fudging the numbers for industrial production, household income, retail sales, employment and inflation, you’re probably beyond help.

#110 economictsunami on 12.19.13 at 10:36 am

For those who still don’t get Zerohedge, the WSJ reported this story:

CFTC Misreporting Size of Swaps Market, Agency Says:

“The Commodity Futures Trading Commission said Wednesday that technical errors at two so-called swaps data repositories, which collect and supply regulators with transaction data, have led the CFTC to misreport the overall size of the swaps market by undercounting its size. Isn’t it curious how all these “glitches” always work out in the favor of preserving market calm and confidence and away from spooking investors and speculators? Either way, a better question is how big was the so called undercounting? The answer: as large as $55 trillion!”

How can you regulate, that which you don’t have a handle on?

Oh, that’s right, this is your patented excuse every time something financially related blows up in your face.

“We didn’t know.”

The FIRE sector knows they are all systemically integrated and a healthy functioning industry is important to all.

The risk of their business failing is virtually nil but the fortunes to be made by acting bullet proof are truly a siren’s call…

#111 Ret on 12.19.13 at 10:39 am

Enhanced CPP- “Ontario solution” (oxymoron???)

Only a fool would lend this government their retirement funds.

Who will administer this independent pension fund and what will this cost the contributors? The cost of tracking contributors over the next 30 years as those people move across, or in and out of the country, would be huge.

Legions of over paid, unionized, Liberal voting civil servants looking after my retirement funds doesn’t work for me.

Another new social program from the politically and financially bankrupt Ontario Liberals. Not surprisingly this is also supported by the Liberal’s buddies in the dismantling of the Ontario economy, the NDP.

What else is new?

#112 Kris on 12.19.13 at 10:41 am

We’ve heard on this blog that mass layoffs (a la Sears, Potash, BMO etc) may increase amidst a stagnating Canadian economy in the years ahead, forming a vicious circle with increasing rates.

Now if the US is truly recovering, that’s good news for Cdn jobs since we depend overwhelmingly on exports, especially to the States.

Yes, sustaining a mortgage will get tougher in the years ahead, but that’s not enough to puncture this housing gasbag.. if jobs hold steady.

#113 quebec economist on 12.19.13 at 11:03 am

Suggestion for your blog.

You always refer to this blog as ‘this pathetic blog’ at first this is funny, but it soon becomes obvious. I suggest you find a better adjective, here are some suggestion, others probably have better ideas, but its a start.

opinionated blog
intrangiant blog
bearded blog
enervated blog
this blog visited mostly to see the daily photo

cheers,

#114 The American on 12.19.13 at 11:12 am

At #20: Not 1st (boy, you aren’t kidding me with that handle), here’s a couple things to know: 1. Europe is not a country – it is a continent, comprised of several countries. 2. Canada isn’t a prudent country, and hasn’t been for several years; hence Garth’s points of record levels of consumer debt that far surpass even Americans’, and Canadians have significantly less expendable income to repay that debt. Additionally, Canadians aren’t saving at all (big surprise), and it isn’t a shocker to understand the only country on Earth who really believes Canada is doing okay is, well, Canada. You should get out more and ask a few other perspectives, other than the ones you’re eating up through your Government-owned/operated “media” and the CREA. You simply can not base an economy on real estate.

#115 angela on 12.19.13 at 11:31 am

According to this dow chart comparison from 1928-29 and 2013-14 Yellen should increase QE by thye end of March 2014
http://www.mcoscillator.com/learning_center/weekly_chart/a_review_of_analogs/

Don’t get to excited Garth

That’s about the funniest chart anyone’s shown me. I cannot believe how gullible you and, many others here today, are. — Garth

#116 Ralph Cramdown on 12.19.13 at 11:45 am

#108 economictsunami — “CFTC Misreporting Size of Swaps Market”

See? This is the kind of BS I’m talking about. The WSJ reports that “One CFTC official familiar with the matter said the discrepancy could be as high as $55 trillion, though another official said the figure is closer to $10 trillion once regulators cancel out certain transactions to prevent double counting. The CFTC estimates the size of the notional value of swaps market at about $390 trillion under the more conservative method.”

So they’ve been undercounting by between 2.6% and 14%. And Zerohedge barfs out the higher error number with no context, which economictsunami regurgitates here.

Did economictsunami plug the new number into his model and change his portfolio as a result? No. Did I? No. Did anyone? No. So basically this is a complete nothingburger. CFTC notes swaps report methodology error, endeavours to fix it. But the daily beast needs to be fed, so Zerohedge will find scary numbers to mischaracterize and misinterpret every day, and the jackasses who’ve been losing money concentrating on the minutiae instead of the big picture will continue to do so. The rally will continue until morale improves!

#117 angela on 12.19.13 at 11:50 am

That’s about the funniest chart anyone’s shown me. I cannot believe how gullible you and, many others here today, are. — Garth
Yes its just a chart but I guess you don’t believe the notion that history repeats itself given that all charts are treading record territory it just might be “plausible” that we get a bit of a correction otherwise you sound like the realtards screaming house prices only ever go up LOL

I’ve said clearly markets will correct. But the evidence for a crash is non-existent. You are gullible, and misled. — Garth

#118 heineken on 12.19.13 at 11:58 am

Garth

The Fed announced that monthly purchases of U.S. Treasury bonds will be reduced from $45 billion to $40 billion, and monthly purchases of mortgage-backed securities will be reduced from $35 billion to $30 billion.

BIG DEAL. This is nothing in the big picture.

The Federal Reserve will still be recklessly creating gigantic mountains of new money out of thin air and massively intervening in the financial marketplace.

If the fed tapers, interest rates go up. This is the sign that a significant slowdown of economic activity is ahead. If rates go higher, that is going to tighten things up even more. If your job is related to the housing industry in any way, you should be extremely concerned about what is coming in 2014.

See this http://www.zerohedge.com/news/2013-12-18/mortgage-applications-collapse-new-13-year-low

When QE1 & 2 ended the stock market dropped like a rock. What do you think is coming if the fed stops tapering?

Right now , unemployment is increasing, the purchasing power of the dollar has decreased, people on food stamps increases, cost of living is on the rise, the new jobs are in low paying service sector (waitresses, bartenders etc…). 50% of the workers make less than $20,000. Small businesses are closing due to enviro costs, regulations, obamacare, ….. All new jobs are being filled by temp agencies. Home ownership, household income, velocity of money has dropped. Personal debt, health insurance, gasoline, credit, student loans, gap between rich and poor, food stamps, welfare, US national debt, IS ALL INCREASING.

How many wars are the US involved in?

Fortunately, it appears that most Americans/Cdns are not buying into the propaganda.

So I don’t believe the hype. The economy is getting worse, not better. Quantitative easing did not “rescue the economy”, but it sure has made our long-term problems a whole lot worse. And this “tapering” is not a sign of better things to come. Rather, it is a sign that the bubble of false prosperity that we have been enjoying for the past few years is beginning to end.

I don’t know where you read your financial news but
it sure is different than mine.

It sure is. Mine’s correct. — Garth

#119 angela on 12.19.13 at 12:09 pm

Fundamentals ? whats that?the way the BLS reports the unemployment #s is bogus smart people know this .7% eh? so let me get this straight 7 out of 100 americans are not working ?sure ok . if you legalize all crime , you have a 0% crime rate.If the BLS continues to report the way they do you could have a 0% unemployment rate with 330 million americans out of work

Are all the normal people at the mall today? — Garth

#120 eddy on 12.19.13 at 12:16 pm

#42 T.O. Bubble Boy on 12.18.13 at 10:18 pm

$CAD still falling… sitting right around the 52-week low of 93.3 cents US ($USD = $1.0715 CAD right now).

Are you ready for 90 cents?

—-

With bank fees on exchange its already 90 cents.
But consumer products are cheaper in US.

Staples: .ca vs .com

http://www.staples.ca/m325+logitech/directory_m325+logitech_20051_1_20001?ts=1387469215325&ddkey=http:StaplesZipCodeAdd

http://www.staples.com/Logitech-Wireless-Mice-M325/product_SS1062476

for the difference in price and hst on the difference you could buy 2 mice

#121 Daisy Mae on 12.19.13 at 12:21 pm

#114 The American: “….and it isn’t a shocker to understand the only country on Earth who really believes Canada is doing okay is, well, Canada.”

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

That is so very true. So much denial…or it just plain stupidity? Anyway, I quite enjoy your posts. Thanks! And kudos to Garth for his patience and tolerance…

#122 Basil Fawlty on 12.19.13 at 12:35 pm

You were right on the Taper Garth. I did not think they would reduce QE and stand corrected.
Enjoy your day in the Sun and may you have many more.

#123 T.O. Bubble Boy on 12.19.13 at 12:41 pm

@ #99 TurnerNation on 12.19.13 at 8:38 am
What likely happened, Ma and Pa Investor got home last night, saw the Dow up 300 pts and went ape sht.

“Mildred, call our adviser. It’s high time we get back into this market.”
———————————–

hahahaha – ya, just in time for RRSP/401k season!

Not to try and time things, but I have a feeling there will be (at a minimum) a typical 10% correction in the next 6 months.

Time to rebalance.

#124 angela on 12.19.13 at 12:46 pm

Are all the normal people at the mall today? — Garth
Normal ??? yes Garth they are all there consuming themselves to prosperity on credit because that is all north america has left is consumption of Chinese goods real recovery would be like CATERPILLAR showing profits not 12% losses like in this chart
http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2013/12/CAT%20November.jpg

You and the Zero guy make a lovely couple. — Garth

#125 Godth on 12.19.13 at 12:55 pm

Are all the normal people at the mall today? — Garth

Normal? What planet do you think you’re on?
http://www.youtube.com/watch?v=iVo7O349BFk

#126 angela on 12.19.13 at 1:17 pm

Are REITS a good buy now ?are they on sale like they were back in june?

#127 rosie "moving forward" in the knowledge that, "this won't end well" on 12.19.13 at 1:18 pm

Just got back from the mall.

http://i2.cdn.turner.com/money/dam/assets/130913143222-keep-calm-taper-on-620xa.png

#128 heineken on 12.19.13 at 1:24 pm

Three men died on Christmas Eve and were met by Saint Peter at the pearly gates.

“In honor of this holy season,” Saint Peter said, “you must each possess something that symbolizes Christmas to get into heaven.”

The first man fumbled through his pockets and pulled out a lighter. He flicked it on. It represents a candle, he said.

You may pass through the pearly gates Saint Peter said.

The second man reached into his pocket and pulled out a set of keys. He shook them and said, “They’re bells” . Saint Peter said you may pass through the pearly gates.

The third man started searching desperately through his pockets and finally pulled out a pair of women’s panties.

St. Peter looked at the man with a raised eyebrow and asked, “And just what do those symbolize?”

The man replied, “They’re Carols”.

#129 DV8 on 12.19.13 at 1:30 pm

I don’t know where you read your financial news but
it sure is different than mine.

It sure is. Mine’s correct. — Garth
May I ask ? Garth ,you believe the CPI,BLS,US realestate,but not the CREA numbers ?

#130 Son of Ponzi on 12.19.13 at 1:44 pm

First, we had Helicopter Bernanke.
Now, it’s Eiffel Tower Poloz.

#131 Son of Ponzi on 12.19.13 at 1:46 pm

What happened to the Santa Rally this year?

Where were you yesterday? — Garth

#132 Ralph Cramdown on 12.19.13 at 2:14 pm

It would be most helpful if those who post stuff from Zerohedge would also post their portfolio transactions showing us their P&L from trading on Zerohedge information.

Because it seems to me that trading based even partially based on Zeroedge is like waking up every day, dressing and going for a stroll, and paying the first panhandler you see $200 to kick you in the nads.

Also, I notice from cutting random Zeroedge text into google that there seem to be hundreds of copycat sites that just republish all of its crap and not much else. Good luck in your echo chamber, folks. The rest of us are doing our own research and making money. Just give the $200 to the panhandler, already.

#133 happity on 12.19.13 at 2:21 pm

The tiny taper is like a drunk drinking 9 bottles of beer every night instead of 10. Sobriety is an illusion proposed by the drunk.

A USA recovery based on the stock market? There’s the rub, the fallacy that a 27% rise in the stock market reflects a 2.5% growth in the economy.

The recovery is based on productivity, profitability, output, labour growth and consumer spending. The tapering yesterday is the beginning of a protracted process. Give it up. You’re done like bullion. — Garth

#134 tony bologny on 12.19.13 at 2:27 pm

#61 gtrz4peace on 12.18.13 at 11:26 pm

well said from an actual american

#135 Son of Ponzi on 12.19.13 at 2:27 pm

Where were you yesterday? – Garth
At Costco, stocking up on tuna cans.

#136 Ralph Cramdown on 12.19.13 at 2:29 pm

#129 DV8 — “May I ask ? Garth ,you believe the CPI,BLS,US realestate,but not the CREA numbers ?”

It doesn’t matter whether you believe the numbers or not. Trading as if they’re correct, AND the Fed believes them AND the Fed will do what it said it would given those numbers… Moneymaker. Trading as if they’re wrong… money loser.

#137 Bill on 12.19.13 at 2:33 pm

#31 Bigrider on 12.18.13 at 9:23 pm

When David Dodge, our ex bank of Canada governor goes on BNN today and says quote” CMHC adds stability not risk” do you really think that the religious mania towards real estate will abate anytime soon ?

Bigrider you misunderstood Dodge for he meant:

” CMHC adds stability to the Canadian Private Banks and all of the risks of course falls onto the Canadian Taxpayer”

Cheers!!!

#138 Mike T, on 12.19.13 at 3:05 pm

‘Correct me if I’m wrong.
But, is there not another debt cliff coming soon?’

quite correct

however allow me to ask, what has happened at every single debt ceiling ‘crisis’ over the last however long they’ve been having debt ceiling ‘crises’?

NOTHING

are you expecting a different result?

#139 tony bologny on 12.19.13 at 3:15 pm

After soaring home prices and mortgage rates. It was drowned out by the hullaballoo over the Fed’s taper announcement. It came from our favorite bailed-out, taxpayer-owned Fannie Mae and Freddie Mac that purchase mortgages from banks and then either keep them on their books or stuff them into MBAs that they sell with some guarantees. Biggest buyer? The Fed. It has been plowing $40 billion a month into them – to be reduced to $35 billion in January.

The banks love this system because they get the fat fees from originating the mortgage without having to absorb the risks. The GSEs and the Fed run the show. Banks are involved just enough to cream profits off the transaction. It’s not exactly the paragon of a free market.

#140 happity on 12.19.13 at 3:21 pm

The recovery is based on productivity, profitability, output, labour growth and consumer spending.

Unemployment had not improved, corporations are not more profitable and are not investing in better equipment or people, we’d consumers are going back into debt. That is why the fed is keeping interest rates at zero.

The stock market rallied yesterday but the treasury market did nothing, all else is hot blustering.

I give up. This is arguing with a brick. Come back in 2018 and we’ll check the score. — Garth

#141 experienced.optimist on 12.19.13 at 3:50 pm

For those who love charts to make arguments and use as references, here is a website that lists 123 of them, with some interesting conclusions, depending on what you want. Stocks, Housing, Oil, Treasury Yields, World Trade Patterns, etc ,etc enjoy

“Wall Street’s Brightest Minds Reveal THE MOST IMPORTANT CHARTS OF THE YEAR”

http://www.businessinsider.com/most-important-charts-2013-12#

On another front I am one who is still convinced that QE has been juicing stock prices in the US, and although not coming out and outright saying it,Blackstone Group Chairman and CEO Stephen Schwarzman has stated “When you have an economy that grows at 2.5 percent, 2.75 percent, and a stock market that goes up 27 percent, seems somewhat disconnected.” This increase in stock prices does not necessarily mean outstanding job growth. In fact , it is sometimes the opposite. Note that Blackstone is one of the largest housing real-estate owners in the US. They have been buying up huge swaths of previously depressed house south of the border.

http://www.cnbc.com/id/101279083 CEO Stephen Schwarzman interview

http://blogs.marketwatch.com/thetell/2013/12/18/feds-low-rates-may-be-juicing-stock-buybacks-at-the-expense-of-jobs/?mod=MW_home_latest_news

http://blogs.marketwatch.com/thetell/2013/12/17/boeing-delights-wall-street-infuriates-seattle/?link=instory

This last one reminds me of Potash Corp of Saskatchewan, who I believe is on a $2 Billion dollar buyback.

#142 happity on 12.19.13 at 3:53 pm

I give up. This is arguing with a brick. Come back in 2018 and we’ll check the score. — Garth

Claims should be backed with links to facts, not anecdotes or predictive suspicions. Aurgumentum ad hominem is not a fact and just indicates incapability to understand and explain the subject matter.

Opinions are always open to debate, and if not they contain no value, and otherwise could be mistaken to be mere parroting others like the main stream media which like the fed has a very low batting average in understanding the reality at hand.

The posts on real estate are great, but the posts on the economy seldom if ever cover the mathematical eventuality and inevitability of pain caused by unprecedented debt and derivatives. It would only be reasonable and fair to mention such things in balance when stating there is an economic renaissance.

You forgot to mention I have been correct. — Garth

#143 Renter's Revenge! on 12.19.13 at 3:56 pm

There’s no reason to believe the developed world’s economy is not in a “recovery”, but there’s no reason to believe it’ll ever get out of “recovery” mode either, because it’s already “developed”. The population boom is over, the world population is saturating. The people are getting older, they’re not starting careers, buying first homes or starting families like they used to. They’ve got enough stuff, and not enough time to use it all. They’re retiring, slowing down, taking it easy. They’re looking for ways to act more environmentally friendly. None of those things boost the GDP.

The housing bubbles were the economists’ last hope. Those failed, and now there’s nothing left to generate the 5-10% growth that existed while the boomers were growing up. Therefore, the economy will be forever more, “recovering”, asymptotically, towards that mythical 5% growth, 2% inflation, 5% unemployment, or whatever.

#144 angela on 12.19.13 at 3:59 pm

I give up. This is arguing with a brick. Come back in 2018 and we’ll check the score. — Garth
I agree the dow will be at least 30000 and S&P will be at least4000 didn’t you know that historically money printing always increases the stock market look at Japan but i sure wouldn’t want to be in dollars or Yen buy then .Yellen to raise the dow to infinity buy the time shes done her term she supports QE (wall street)

#145 Son of Ponzi on 12.19.13 at 4:18 pm

#138
remember we are paying off the old credit card with a new credit card with a higher credit limit.
And so on, and so.
Kicking the can down the road a little further.
But you will come to the end of the road eventually.
Then the abyss.

#146 Derek R on 12.19.13 at 4:24 pm

#135 Son of Ponzi on 12.19.13 at 2:27 pm wrote:
Where were you yesterday? – Garth
At Costco, stocking up on tuna cans.

Haven’t you heard? That stuff is so radioactive it glows in the dark. Courtesy of Fukushima.

Hope you just meant to use it as emergency lighting.

#147 bentoverpayingtaxes on 12.19.13 at 4:25 pm

Is the nesting instinct overriding common sense? Women rush to real estate.

http://business.financialpost.com/2013/12/18/canada-condo-market/

#148 Ralph Cramdown on 12.19.13 at 4:49 pm

#142 happity — “Claims should be backed with links to facts”

2.1 million more Americans had private sector jobs last month than in November 2012.
http://www.adpemploymentreport.com/2013/november/ner/docs/ADP_NER_History_2013_11.xlsx

That’s from ADP, America’s largest payroll service provider. 1 in 6 US workers are paid by ADP. Any questions?

#149 Rational Optimist on 12.19.13 at 4:54 pm

For those of you saying that there’s something wrong with 27% stock market returns (my guess is what’s wrong with them is really that you’ve missed out on them), remember that economic growth and stock market growth are not perfectly correlated. For long periods, they could even be negatively correlated. You’re not “proving” anything when you compare 2.7% growth with 27% stock price appreciation.

#150 john on 12.19.13 at 5:17 pm

Is the nesting instinct overriding common sense? Women rush to real estate.

http://business.financialpost.com/2013/12/18/canada-condo-market/
—————————————————————–

The RE industry propaganda machine will sell their own children for money. The article is beyond stupid and hoping women are stupid. Then again???

#151 Canadian Watchdog on 12.19.13 at 5:31 pm

Here come REITs dividend cuts…

Massive Dividend Cut Sparks Panic Among Mortgage REITs

Better hope those bond yields fall or this sector will be a 2014 trending loser.

Now why would anyone buy US mortgage REITs? Did you do that, Watchdog? Or are you just trying to manufacture fear? — Garth

#152 Canadian Watchdog on 12.19.13 at 5:55 pm

Now why would anyone buy US mortgage REITs?

Umm, because you would have saved yourself an 8% loss on currency depreciation. Best performing REIT on TSX is CGR. Hmmm I wonder why. Chart

You know what happens to yield pigs, surely. — Garth

#153 rosie "moving forward" in the knowledge that, "this won't end well" on 12.19.13 at 6:17 pm

Who dares doubt the Vampire Squid.

http://investing.covestor.com/2013/01/10-reasons-why-the-us-economy-still-rocks

#154 angela on 12.19.13 at 6:18 pm

#149 Rational Optimist on 12.19.13 at 4:54 pm

You’re not “proving” anything when you compare 2.7% growth with 27% stock price appreciation.

yes you are it proves that they are oversold and you were probably one of the many that lost alot during the crash of 2008 when all smart money was screaming oversold right before it crashed so i sold and waited on the sidelines to buy back in after the crash .You can take profits after 27%i ncrease and wait for a correction like Garth says will come

#155 Big Brother on 12.19.13 at 6:27 pm

Smoking Man, when it comes to family and all your episodes and wild stuff the Blue pill! You won’t feel anything when you go down the rabbit believe me you’ve done it before.

#156 Victoria on 12.19.13 at 6:40 pm

Dual Citizen in Canada –
First of all, it doesn’t matter. My point was that I should have learned something from the “crash” which I didn’t even feel, as my property has appreciated very nicely.
Second of all, I have already downsized to a smaller home and live almost mortgage-free, which my renting friends can only dream about, with all their smart calculations.

#157 H. L. Mencken on 12.19.13 at 7:10 pm

@#150 john on 12.19.13 at 5:17 pm
The RE industry propaganda machine will sell their own children for money. The article is beyond stupid and hoping women are stupid. Then again???

——–

No one in this world, so far as I know – and I have searched the records for years, and employed agents to help me – has ever lost money by underestimating the intelligence of the great masses of the plain people.

#158 Son of Ponzi on 12.19.13 at 8:10 pm

#146
re: using radioactive tuna cans as emergency lights.
See, blog dogs. This kind of advise you’ll never hear from a financial advisor.
Now go out and buy Costco shares.

#159 Son of Ponzi on 12.19.13 at 8:11 pm

Real Estate is the new opiate of the Canadian masses.

#160 Vamanos Pest on 12.19.13 at 11:05 pm

All I know is that I’ve been ~70% equities since mid-2009, and as of June 2013 was up 121% IN FOUR YEARS!!!

I don’t know if it’s a recovery, but I like it.

Investing is so easy. I don’t know why so many of you (above) insist on fighting the trend.

It’s not about being right, it’s about making money.

#161 Doug, back in London on 12.19.13 at 11:45 pm

@Renter’s Revenge!, post #143:
That’s a good summary of what’s been happening, and fully consistent with my observations. The economies of developed countries are moving toward a more steady state mode.

#162 Doug, back in London on 12.19.13 at 11:59 pm

I still don’t get it. About 7 months ago the stock markets dropped on fear of tapering, and now that it’s actually begun stock markets have gone up. It all seems so counter intuitive.

#163 Sgip on 12.20.13 at 4:22 am

DELETED

#164 Son of Ponzi on 12.20.13 at 2:19 pm

Blackberry loses 4.4b.
Shares up.
Now that makes sense.

#165 Chris on 12.21.13 at 10:47 am

Tappering reduces the Feds stimulus from 85 billion to 75 Billion… not exactly stopping the stimulus nor a huge drop.

Also on a side note, the debt ceiling was raised to unlimited spending until Feb awhile back… I dont see them stopping anytime soon. (I think it was Feb)

What will happen with the debt ceiling, thats my biggest question, is that when it crashes again, if they stop? I dont know…. but the economy is a phony

Appreciate the blog, very informative …