Leadership

CLOWN modified

Remember what I was telling you about deflation? Hope so. You might just need that knowledge. Soon.

This has turned out to be quite a week. Oil prices rallied just long enough to sucker in the suckers, then plunged again. Target’s in bankruptcy with 17,600 workers punted. House sales in Calgary are down 30%, listings now up 56%. A thousand workers ditched at Bombardier and five hundred more as Sony shuts its Canadian retail ops. Mexx is gone. Suncor is shedding a thousand people. Avon just laid off hundreds in Montreal. Rigs are being idled across the west. And we lost 4,300 jobs last month.

Commodity prices, as I showed you yesterday, have tanked. Oil is half-price compared to six months ago, and all these layoffs suggest the economy is withering faster than manhood in a cold lake. Prices, houses, jobs, incomes – they all end up moving in tandem. That’s what deflationary pressures do. It’s the worst news possible for debtors. Take-home pay can fall, jobs get uncertain and house values fall, but the pile of debt remains just as big.

Our epic borrowing binge and rampant house lust has put most Canadians seriously at risk of anything remotely resembling deflation. Just think of the 20,000 families who got the crappy news today. How many houses hitting the market this Spring will that mean?

As you know, the oil thing is huge up here in Mapleland. That $60 drop in prices will cost Alberta about $12 billion in royalties, should current prices hold. The province will be in deficit this year, and possibly in recession with negative growth. So, no more transfer payments to Ontario. And gone will be the most bubbly housing market in the country, after thousands of families bought real estate at its peak value over the last two years.

Housing starts are down. The trade deficit it up. Soon every province will be in the red and Alberta will have a sales tax. Interest rates can hardly go any lower to stimulate the economy and, besides, all they’ve done so far is encourage a debt binge. Now over-extended consumers are giving us bankrupt stores.

Isn’t it a grand thing that we have sound leadership in Canada?

Standing before a worried Chamber of Commerce audience in Cowtown Thursday, finance minister Joe Owe admitted he’s too chicken to bring down a budget. Slated for the end of February, it won’t arrive now until “at least” April – an unprecedented delay which speaks volumes about what’s going on these days in the Langevin Block – the prime minister’s personal stone bunker.

Like, there is no surplus. Forget it. That wispy little bit of black ink on the national balance sheet has been oiled away by sliding tax revenues. That should be enough to push the dollar down a bit further on Friday.

It also means the feds blew it by announcing over $20 billion in new pre-election spending and tax cuts to take effect this summer. The money-for-kids and income-splitting was designed to suck votes from middle-income families, and is unlikely now to be reversed. With this extra burden on the treasury and the economy stumbling, the national debt will keep ascending – putting more upward pressure on future interest rates.

Hell, even hiking the TFSA contribution limit to $10,000 – which was the centrepiece of the budget originally planned for (I’m told) March 3rd – may now be kaput. Oh, the agony.

Here’s what he said: “Given the current market instability, I will not bring forward our budget earlier than April. We need all the information we can obtain before finalizing our decisions.”

Well, he just got a lot of info. Like a research note from BeeMo senior economist Bob Kavcic pointing out a 5.8% slide in national house sales last month, led by a “25% plunge” in both Calgary and Edmonton. “Cracks,” he says, “appear to be breaking open in Alberta.”

No guff.

Either these are early days of a lengthy mess for over-extended homeowners and a country that gambled on building a condo economy based on low rates and endless borrowing, or it’s just a temporary dip. Either we’re going into the kind of restructuring that whacked the US for six years, or we’ll wake up in a month or two and things will be swell again. Like on TV.

Your government just opted for (b).

Yes, I know. You’re on your own.

265 comments ↓

#1 Adam on 01.15.15 at 7:47 pm

Gotta be first…

#2 John Smythe on 01.15.15 at 7:48 pm

Canadians are stupid.

#3 Oil Is Sticky on 01.15.15 at 7:50 pm

I’m not an expert in stats. But would sure like an answer to my question/statement the other day…..

with modern computer models, how could some consulting service(s) NOT KNOW that oil was going to collapse knowing how many straws were in the ground/water.

I think there was ill intent with oil drop.

#4 Alan Teasdyl on 01.15.15 at 7:51 pm

John – correction…Canadian homebuyers are stupid.

#5 mitzerboy on 01.15.15 at 7:54 pm

saskatchewan land of living skies
and
broke

#6 Forzudo on 01.15.15 at 7:55 pm

Look for even more election promises for the good voters of Ontario and Quebec. I suspect lots of automotive and urban infrastructure projects will get the green light soon.

#7 Paully on 01.15.15 at 7:57 pm

I think all the perma-bulls just had their truck-nuts nicked!

I feel really sorry for all those Target employees getting punted. This is going to reverberate negatively through the country’s economy.

So glad to be renting and not wondering how to make the payments on a million-dollar mortgage!

#8 Mike T. on 01.15.15 at 7:58 pm

quite a day indeed on both sides of the pond

I am not afraid to admit that I am not the most financially literate person at Greaterfool so can someone help out?

I don’t understand what happened in Switzerland that caused the huge 8.7% drop in the SMI.

If anyone feels like explaining it in grade 4 newspaper English this blog dog would appreciate it.

#9 screwed on 01.15.15 at 7:59 pm

Something big is coming down the pike. So much is happening and the volatility in the financial sector is indicative of the speed with which things are about to unfold in a matter of days, maybe weeks.

The SNB giving up the peg to the EUR is a massive, massive move that’s hurting the Swiss themselves which can only mean that keeping the peg over the next few weeks would have hurt them much much more.

Draghi has been jawboning for years now about QE in Europe but he just doesn’t have the power to actually do it. Seems that the time has come where his words will either need to be put into action even if that is against the law OR he will declare that the EUR needs to break up again.

Shit is getting surreal.

#10 Je Suis Charlie on 01.15.15 at 7:59 pm

For sure there will be a crash now, rather than a slow meltdown.

#11 AngryMan127 on 01.15.15 at 8:00 pm

I seriously think things are much, much worse for Canada and Alberta than people think and it really won’t matter much when and if oil prices “recover” to $80

What most people don’t realize goes something like this… just like nuclear weapons don’t actually have to be used to be effective, the Saudis can let oil prices float up: the thread of increased supply is enough to deter capital investment and expenditure. Oil sands extraction IS capital intensive and can’t just be turned on and off. So why invest if you can just be squashed again. The dance is over, Canada in all probability, will now a third tier producer for the next 10 to 50 years.

There has been colossal mismanagement of the Canadian economy, a devastating lack of creativity and courage to effect real change. The coup de grace would be to sell mineral rights while oil is on sale to CNOOC. God forbid.

#12 AngryMan127 on 01.15.15 at 8:01 pm

“threat of increased supply is enough” that would be threat…if you follow my thread. :)

#13 Victoria Real Estate Update on 01.15.15 at 8:02 pm

Excellent post again Garth.

For those of you who may be interested, scroll down to see my latest update of Victoria’s market.

#14 Goldie on 01.15.15 at 8:03 pm

Garth, Dare I say, sounding rather do Doomerish today. Welcome to the fraternity.

#15 markymark on 01.15.15 at 8:03 pm

Thats going to suck no TFSA increase…:(

#16 Happy Renting on 01.15.15 at 8:05 pm

Might as well keep the TFSA limit hike. Aside from blog dogs, few will have the cash to take advantage of it, anyhow!

#17 Waterloo Resident on 01.15.15 at 8:06 pm

Deflation? Just try to buy a used Toyota Corolla and see how that goes.

I like the Corolla design from 2004 to 2008 because it had a low hood and a high roof and a high seating position, so I got a nice panoramic view of the road up ahead. Those older cars made it easy to park a car because you could actually SEE the curbs. Then in 2009 they raised the hoods / dash of the Corolla and make you feel like you were sitting in a bathtub, then in 2014 they did it again, lowering both the roof, and raising the dash, and now you are looking through a gun-slit of a window, and the curbs are impossible to see unless you get out of the car itself. So I look for older used Corollas, ones with LESS than 150,000 kms on them. Guess what: try $11,000 for a 2008 car with 70,000 kms on it.

http://www.autotrader.ca/a/Toyota/Corolla/Sarnia/Ontario/5_22548126_20110429071102967/?showcpo=ShowCPO&orup=29_100_33

The same car would have sold for only $8,000 just 4 years ago, I know because I bought one for $8,000 four years ago. So there you have it = no deflation, instead you are having crazy inflation in the things we need such as food, cars, and the like.

There is a bit of good news though. I found out that Nissan just started selling a new car called the Nissan Micra in June, and I went to a dealership and sat in one: EXACTLY like my old Corolla, nice great view of the road, and the nice thing is you can buy a brand new one for only $9,998 ; that’s less than the cost of an old used Toyota Corolla !!! The model I would get would be an S model and will go for $15,000. But still, you have to ask yourself: Why buy an old broken down piece of junk for $11,000 when you can buy much better NEW CAR for $15,000 ?

So Garth, if you are correct and deflation will soon hit us, and people will be losing their jobs, I see a lot of people trying to unload their extra second or third cars so they can pay their bills, but they won’t be giving those cars away at cheap prices, no, they will try to get ‘new car prices’ for those all wrecks because they will desperately need the money and cannot afford to let go of their stuff for less.

Expect to see dealers selling NEW CARS for $15,000 while the local unemployed will be trying to sell their old clunkers for way more than $15,000.

#18 Goldie on 01.15.15 at 8:06 pm

Btw, I had heard that the lost jobs for bombardier were in the United States and Mexico. Was that wrong? Nevertheless, still a pretty rough day.

#19 mid20millenial on 01.15.15 at 8:09 pm

Well after years of telling people to not overextend on themselves and to keep assets diversified, looks like Garth is going to get a chance to finally say “I told you so”.

Here’s to hoping most of us here, who are most likely smarter, richer, and better looking than the average Canadian, can ride this one out.

See you guys on the other side of the valley.

#20 Fred on 01.15.15 at 8:09 pm

Oh no…this could mean Justin Trudeau could win the next election and be looked upon to get the country back on its feet. This really could be a big mess (taxes and mandatory drama classes)

#21 Randy on 01.15.15 at 8:10 pm

It’s Keynes fault !…………No

#22 espressobob on 01.15.15 at 8:11 pm

” If you’re going through hell, keep going.”

Winston Churchill

#23 Smoking Man on 01.15.15 at 8:12 pm

CAD 5Y benchmark yield touched, are you ready.

1.01%

The overnight Rate 1.00%

Mortgage hunting, go to a broker and play hard… 2.25% for a, 5 year doable.

I’ve been telling you dogs this would happen..

Learn the Herd..

#24 [email protected] on 01.15.15 at 8:13 pm

Target –> downfall most likely due to “American” first and second “Canadian” style management mythology.

#25 For those about to flop... on 01.15.15 at 8:13 pm

We all know that when a politician speaks you have to take what they are saying with a grain of salt.
They act over confident and look like they really believe what they are saying is the truth.
However when I watch Joe Oliver I see a nervous and scared little man who looks like he knows he might one day be used as the scapegoat to this whole economic slowdown.

#26 Dominoes Lining Up on 01.15.15 at 8:16 pm

Here’s another sign we’re circling the toilet bowl when it comes to real estate.

“fee Duck” is a new online auction system for desperate realtors trying to find new clients. Over 100 realtors have signed up in just a couple days.

(By the way, there are now 100,000 CREA realtors across the country, including over 40,000 just with TREB.)

What otherwise could be a positive development for home buyers and sellers smells just like more proof that a race to the bottom has begun.

http://www.cbc.ca/news/business/real-estate-commissions-could-fall-as-new-competition-heats-up-1.2900928

The next thing I am watching for is what happens to those realtors across the country who have, as a promotional gimmick, promised to “buy your house at an agreed upon price” if it does not sell. There’s a few in Toronto whose ads I have noticed.

Here’s one of those:

http://www.getleo.com/Home-selling-system

My guess is such guarantees will evaporate by springtime. We’ll see…..

#27 valleyrenter on 01.15.15 at 8:16 pm

Sir… does this mean that Ann-Margret’s not coming?

#28 polecat on 01.15.15 at 8:18 pm

Well, fan is on high. The winds of S3!+ will be blowing out of the north. The hurt locker is going to be cramped. Good luck to all. Even you smoking man, but you’ll be okay, have a jack for me, I’ll have 2 for you.

#29 Millennial Maestro on 01.15.15 at 8:20 pm

#102 Millennial Maestro on 12.11.14 at 11:30 pm
“The Canadian dollar has also descended to a 5-year low, and sits at just over 86 and a half US cents, off half a penny. Stocks improved, which was no big surprise, since the selling over the past week was more emotional than logical.”
—————————————————————-

Garth,

Look at the VIX today, on a neutral day! It will tell you exactly how emotional and illogical the selling over the past week has been. It will also tell you exactly where we’re heading.

Not a chance. The VIX is no leading indicator. — Garth

——————————————————————

Garth,

The VIX may not be a leading indicator, but a surging VIX is never good for stocks. Tell us more about 5% annual growth in the US and how the Fed will raise interest rates with yields getting killed please!

Also:

#1 johnny d on 12.08.14 at 7:10 pm
Good thing I bought HOD etf back in June.

Double ETFs based on one sector are gambling, not investing. — Garth
————————————————————–

The man just quadrupled his investment in 6 months. I think the same thing will happen to me with HVU, as I started buying at $14 in November and averaged down from there. Believe in HVU, buy HVU and wait!

#30 nonplused on 01.15.15 at 8:20 pm

It’s a temporary blip Garth, everyone can go back to sleep.

Of course temporary could be 2 to 5 years. Lots enough time to bankrupt a lot more than Target.

Everyone talks about how fast shale wells decline and no doubt it’s true. But on the gas side there is still a huge surplus of completed but not connected wells and on the oil side the rigs that are half way done their wells are still drilling. So it’s at least a year before we see production declines.

And now the crazy Russians have turned off the gas supply to Europe that transits the Ukraine, claiming the Ukrainians are stealing much of the gas. They also said they will defend the ruble by selling US treasuries and buying back rubles. Yikes! About the ruble thing I am not too concerned but if the gas doesn’t start flowing within a month European gas storage will be gone and February will be very very cold. I imagine they are already cutting supplies to industrial consumers to save the gas for residential heating. If the sanctions against Russia were an act of war, this retaliation will have far greater affects. Europe is toast. If the Russian gas does not get turned back on soon, the Europeans will have to shutter most of their industry just to preserve their storage gas long enough to keep the lights on and the shower warm until spring. Massive lay-offs are unavoidable unless the gas gets turned back on soon. But I don’t think the gas is going to get turned on, the Ukrainians will just start stealing it again as soon as the pipe is full.

This is the story to watch over the next month or so. There is no alternative to Russian gas in much of Europe besides turning off the heat and power. Germany especially.

#31 Bob on 01.15.15 at 8:22 pm

An oldie but a goodie…

“Only when the tide goes out do you discover who’s been swimming naked.”

Warren Buffett

#32 Exurban on 01.15.15 at 8:23 pm

#16 Happy Renting

I’m not sure if you were being entirely serious, but I agree with you. A higher TFSA limit probably would not cost the government very much revenue.

#33 Stephen on 01.15.15 at 8:25 pm

Cue the CNN ‘end of world’ video clip..

#34 Ray Skunk on 01.15.15 at 8:27 pm

Choppy waters indeed.

Who needs the VIX to measure volatility?

Just check out the comment levels here… 200+ every day this week, even nearly hitting 300.
“Normal” comment volumes are in the 150 range.

Maybe we can get this place listed as an economic indicator.

#35 Slow Canada on 01.15.15 at 8:28 pm

Garth, my man, I look forward to having your sound analysis as a companion through what promises to be a difficult time. Here we go …

#36 North Burnaby on 01.15.15 at 8:28 pm

The death of retailers, everything will go to the Internet!!!

#37 Prairieboy43 on 01.15.15 at 8:28 pm

#22, I like it ” If you’re going through hell, keep going”
Winston Churchill

Read in the Financial Post, Schlumberger cutting 9000 today.
This took a little while to get rolling. Now deflation locomotive is picking up steam. Runaway Wreck!!

#38 Macrath on 01.15.15 at 8:33 pm

#8 Mike T.
I don’t understand what happened in Switzerland that caused the huge 8.7% drop in the SMI.
—————————————————————
David Stockman has a good explanation.

“Behind this vast deformation was, ultimately, a simple proposition. Namely, that central banks were omnipotent, efficacious, purposive and reliable; that everywhere and always they had the “backs” of the gamblers and speculators; and that, above all, the central bank “put” was money good.

Today all that changed. In a word, the Swiss Central Bank was on the verge of printing itself into oblivion. It had to stop pegging the CHF at 120 before the madman Draghi turned on the ECB printing presses and submerged the SNB’s vaults in a deluge of wasting euros that would have soon reached the tops of the Alps.”

http://davidstockmanscontracorner.com/in-praise-of-price-discovery-the-market-is-off-its-lithium/

#39 Adam the Camel on 01.15.15 at 8:34 pm

Governments will keep borrowing until the debt kool-aid is taken away via interest rate hikes. When that happens we will have our Greece moment. Surprise? Canada is just as screwed as the US, only difference is we borrowed to keep our fake economy propped up.

Until then, the baby boomers will continue to buy $600,000 homes and collect fat pensions, while their unemployed kids return from Alberta.

#40 batt519 on 01.15.15 at 8:35 pm

Another solid blog post.
Today’s term is counter party risk. Derivative bombs are going off everywhere.
My suicide portfolio which contains a lot of $ilver is performing exceptionally well. I’m considering a refi of the modest homestead to enter deeper.
We shall see.
Regards.

#41 Refinanced on 01.15.15 at 8:36 pm

Smoking Man, just got 2.49% 5 yr today…maybe should have done 10 year??

#42 Shawn Allen on 01.15.15 at 8:37 pm

Speed, Acceleration and Jerk

Yesterday BigM at 213 responded to 207 as follows

bdy sktrn 207 – Lastly. I’ve got $5k for anyone who can tell me the difference between “rate of speed” and “speed”.

Big M 213

Speed is the distance a thing moves over a set amount of time.

Rate of speed tell you if the thing is going faster or slower.

******************************************
Speed is indeed the distance a thing moves in a set amount of time. Like miles per hour. (Or for Mark, comments per minute).

As Bdy Sktrn alluded that is in fact already a rate. So rate of speed is basically saying rate of rate. But what the heck as long as we all understand it not reason to get our shorts in a knot.

What tells you if a thing is going faster or slower is acceleration. Like if Mark is acceleration his comments at a rate of 1 comment per minute squared.

If acceleration is rising that is, believe it or not, referred to by the official name of “Jerk”, a change in acceleration is felt as a jerky motion. Such as 1 mile per minute cubed. Jerk of course, has no relation to Mark’s comments.

There, I knew those engineering courses of 30 years ago would come in handy at some point.

#43 Refinanced on 01.15.15 at 8:38 pm

Wish we had the US rates.

3.6% for 30 years!

http://www.canadianbusiness.com/business-news/average-rate-on-30-year-mortgage-falls-to-3-66-pct-lowest-since-may-2013-15-year-below-3-pct/

#44 No Canada, No on 01.15.15 at 8:38 pm

Bonds, crude, USD have been warning Canadians, but – no. They rather buy, buy and buy then ever sell. Now think whats going to happy to your sorry house if the “safe haven” (no, there are no such thing) of the universe did this? Swissie joins the chorus with the BANG!

Just take a look at that CHF baby did.
http://finviz.com/forex_charts.ashx?t=ALL&tf=w1

Canada is doomed for coming years with its dumb gambling on housing.

#45 james on 01.15.15 at 8:38 pm

#3 Oil Is Sticky

Exactly how does the fact that a model is implemented on a digital computer make it accurate?

I get the sense you aren’t up on modeling, scientific computing and the like.

All models are wrong; some are useful. Digital computers allow for a great deal of computation to be performed on a great deal of data, but if the underlying model is inaccurate (for whatever reason), speed and data will not help.

Some systems are difficult to model. For instance, we might not have a theory. Alternatively, we might have a theory but no data. Some systems are nasty because of their dynamics. For examples, economic systems are complex and adaptive. Even in weather simulation you have nasty issues with chaos and data quality, even where you have a decent theoretical model.

I agree that people should have foreseen a drop in oil prices due to Bakken and other oil fields ramping up in the USA. There is a bit of an oil field bubble in many ways. However, if anyone has an accurate model that can predict events in economic systems i would love to see it.

#46 Debtfree on 01.15.15 at 8:38 pm

# 30 nonplus Did you know that the average russian is poorer than the average Indian . Not by much but poorer than the poor of India . Putin cutting off europe , which is not the case , will do just fine . Without european money russia would dry up and blow away .

#47 ANON on 01.15.15 at 8:40 pm

Tighten your chinstraps and hold to your hats. Buckle your seat-belts.
One thing is certain: there are, and will be enough dirt cheap good cars and all kinds of dirt cheap houses to last decades. Dunno about the rest of the stuff, but those are is a certainty.

Now, where was the good ole squirrel recipe corner of the blog, again?

#48 No Canada, No on 01.15.15 at 8:41 pm

How everybody’s portfolio doing? :)
Got cash to buy Canada “bigfive” with 50% discount?
http://finviz.com/quote.ashx?t=TD&ty=c&ta=0&p=m

Don’t you wish you’d bought in 2009 when people like you were freaking? — Garth

#49 james on 01.15.15 at 8:41 pm

#11

“There has been colossal mismanagement of the Canadian economy, a devastating lack of creativity and courage to effect real change.”

Is this the Soviet Union? Why do you believe that economies can be ‘managed’?

After the failure of top down command and control systems I figured people would give up on this fantasy.

Governments can meddle (e.g., CMHC), but they cannot ‘manage’ an economy like ours.

#50 Rainclouds on 01.15.15 at 8:42 pm

Wow, Took longer to get his Economics Degree than it did to destroy the Canadian Economy. Gonna get interesting for the current CEO of Canada.

If you are really bored here is the thesis

http://dspace.ucalgary.ca/bitstream/1880/24345/1/1991_Harper.pdf

To Recap: We have a PM who has been a stockroom boy, political hack, and head of the NCC. Has been a professional politician ALL his adult life in several parties Conservative/Liberal/Reform/Reform,Conservative.

The private sector work thingy is thin on his CV.

And JT is a gadfly? Perhaps, but people in glass houses……….

#51 Washed Up Lawyer on 01.15.15 at 8:45 pm

A Maclean’s magazine article comparing a neighbourhood in Ft. McM to three in Toronto as measured by listings to population. Just numbers and no comparison of other factors. Perhaps telling though.

http://www.macleans.ca/economy/realestateeconomy/a-roadmap-to-fort-mcmurrays-tanking-housing-market/

#52 Blobby on 01.15.15 at 8:48 pm

If things dont magically improve on their own.

I predict we’ll see an election before we see a budget.

#53 B Riding Dirty on 01.15.15 at 8:50 pm

Great time to buy a Pawn Shop or a second hand store.

#54 omg the original on 01.15.15 at 8:52 pm

ALBERTA HOUSE PRICES

It is going to be interesting to see to what extent the increase in Calgary listings really flow through to lower house prices.

House prices soar quickly on the upside as its generally a panicky situation – buy now or be forever frozen out of the market.

But people absolutely hate to lose money, so will hold on no matter what. Look at the situation in a place like Halifax for sale listings have soared but prices have hardly moved down at all.

People will trim there luxury expenses (cable, cell phone, two Lexus, eating out 3 times a week), defer payments, build up other debt, even get a second job, rather than have to sell at a loss.

People hang on as prices slowly erode and over time come the the determination that thing will not get better soon and they finally sell.

This sets up the LONG, GRINDING CORRECTION which is what I have long thought we will have in Canada. I am talking 10 to 15 years (talk to somebody who bought a house in southwestern Ontario in the late 1980s).

The only way to get a rapid decrease in prices is through some economic catalyst – like the US had during the GFC.

Will low oil prices be the catalyst for a massive correction of Calgary prices? – maybe, maybe not.

For other markets in Canada the only catalyst that counts is interest rates. Those will not be going up in a meaningful way anytime soon (and by meaningful I mean more that a couple hundred basis points).

So just hang tight for the LONG, GRINDING CORRECTION

#55 Harbour on 01.15.15 at 8:54 pm

#23 Smoking Man

That a boy… lock yourself into a 5 year just before you lose your job. ha ha ha

#56 Republic_of_Western_Canada on 01.15.15 at 8:54 pm

#8 Mike T. on 01.15.15 at 7:58 pm

quite a day indeed on both sides of the pond

I am not afraid to admit that I am not the most financially literate person at Greaterfool so can someone help out?

I don’t understand what happened in Switzerland that caused the huge 8.7% drop in the SMI.

If anyone feels like explaining it in grade 4 newspaper English this blog dog would appreciate it.

More sellers than buyers…

#57 john of c on 01.15.15 at 8:57 pm

I can smell another Harper governemt economic action 2015 the sequel coming on. Well middle class Canadians you gave him his majority he lead you to the trough you drank the cool aid and in the end the 1 per centers will do all the laughing face it your screwed.
The only good news when you realize the card you were dealt at least you can vote him off the island but sadly it will be to late for many.
Garth your future may be to re start xurbia

#58 Freedom First on 01.15.15 at 8:58 pm

Thank you for your Blog, Garth. It is one of the few bastions of consumer and financial protection that is available for free to every citizen in Canada. Sound Financial Principles which are tried and true, yet simple to understand details with instructions on how to implement them into every area of ones life no matter their age, net worth, or position in life. They are fool proof, but only work if they are followed.

Not only does this Blog patiently teach us the Good Financial Strategy, but Garth also describes in easy to understand explicit details the pitfalls of following the Bad financial strategies, and then takes us all they way in describing the Ugliest of the truly Ugly Financial Strategies of the taken for a ride, bent over, and brainwashed into bankruptcy the huddling masses of despair. We are encouraged by Garth to never never ever go there. Though millions do, many are saved. This is not hyperbole, or melodrama, but the truth, and has recently played out the same way things are unwinding in Canada now.

Yes, I have known this since I am a teen. Financially, I am on my own. It is why I always put my own freedom first. Fear, Greed, and Debt, to me, are killers, and real.

I am sad to see the layoffs and what is happening to Canadians already underway, as I have seen it before, and it is really really bad to watch. Evil, as a matter of fact, as people have been played.

#59 Defrauded2 on 01.15.15 at 8:59 pm

#30 Nonplused

I heard about the Gazprom decision elsewhere on the net.

“If the sanctions against Russia were an act of war, this retaliation will have far greater affects”

No question of if… In a sense already is… Most people don’t see it and give out tin foil hats to those who espouse publicly that viewpoint. These events totally ignored by the MSM minions.

Its an economic war in progress and it will effect real-estate in Canada. Sad to say it but in a sense Target is symbolic on so many levels.

So hunker down… or is it Bunker down, its going to be a long cold winter on the northern front. Especially at the REMAX command post.

#60 omg the original on 01.15.15 at 9:03 pm

#5 mitzerboy on 01.15.15 at 7:54 pm
saskatchewan land of living skies
and
broke
——————-

I remember as a young guy growing up in Sask, hearing our premier Alan Blakeney extolling the virtues of the Saskatchewan economy of the late 1970s. We were riding high on potash, uranium, coal, natural gas, oil and agriculture.

“God help us all” he said “if commodity prices all were to turn down at once.” But he concluded that would be a very unlikely possibility.

Well come mid 1980s commodity prices did go into the toilet all at the same time and sent Saskatchewan on a decade worth of bad times.

Only time will tell if this is a repeat or a short blip.

#61 BG on 01.15.15 at 9:06 pm

Target got it coming. They raised big expectations and were not even able to be as appealing as the Zellers they were replacing. Plain stupid.

Still sad for the laid-off employees.

#62 omg the original on 01.15.15 at 9:09 pm

#3 Oil Is Sticky
with modern computer models, how could some consulting service(s) NOT KNOW that oil was going to collapse knowing how many straws were in the ground/water.
———————-

Because nobody can forecast the future. PERIOD, END OF STORY.

Expert opinion on average is no better than chance at forecasting the future.

Those that do get it right are lucky and will get it wrong the next time. Those that get it right twice in a row usually get it wrong for the next five years after.

Right now if you look you will find as many good, really smart guys out there saying prices will go up, as there are saying prices will go down.

#63 Uh Oh Canada on 01.15.15 at 9:15 pm

According to Wikipedia:

Deflation is generally regarded negatively, as it causes a transfer of wealth from borrowers and holders of illiquid assets, to the benefit of savers and of holders of liquid assets and currency.

How can deflation be a bad thing?

#64 Daisy Mae on 01.15.15 at 9:16 pm

GLOBE & MAIL, Jan 15/2015: “The latest challenge to the key Conservative promise came in a Toronto-Dominion Bank report that said Ottawa will be in deficit two years longer than planned even if oil prices rebound significantly from current lows. The price of U.S. crude slumped to a six-year low of $45.89 (U.S.) Tuesday.

The report projected two additional years of budget deficits due to lower oil and the fact that the government announced tax cuts in the fall that will reduce federal revenues by nearly $27-billion over the next five years. The package of tax cuts includes allowing couples with children to split income for tax purposes, a controversial policy that Prime Minister Stephen Harper announced in October even though his party had previously said it would delay the cut until after it erased the deficit.”

#65 I'm stupid on 01.15.15 at 9:17 pm

Like I said over a month ago, it’s a race against time for the Conservative gov’t. If the economy goes bad before the election they can say goodbye to their majority government.

#66 Bertha_B on 01.15.15 at 9:19 pm

Hi Garth,
I’m a long time reader (lurker) of your blog. Just wanted to thank you for all the level-headed advice and insight you give. It has really helped me be more financially aware, and a lot more smarter about my financial decisions…now back to lurking…

xoxo BB

#67 Victoria Real Estate Update on 01.15.15 at 9:20 pm

. . . . . . . . .Single Family Home Prices. . . . . . . . . .
. . . . . . . . . . . . . . Oak Bay. . . . . . . . . . . . . . . .
. . . . . . . . (Percent Below 2010 Peak). . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
0%. . . * . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-1%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-2%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-3%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-4%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-6%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-7%. . . . . . . . . .*. . . . . . . . . . . . . . . . . . . . . .
-8%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-9%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-10%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-11%. . . . . . . . . . . . . . . *. . . . . . * . . . . . . . .
-12%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-13%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-14%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-15%. . . . . . . . . . . . . . . . . . . . . . . . . . . . .*. . .
-16%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
———————————————————————————-
. . .March 10. . Dec.10. . Dec.11. . Dec.12. . Dec.13

(Source: Victoria’s board)

This graph was put together using SFH median price data for Oak Bay (averaged over 3 months to smooth out monthly price fluctuations). By the end of December 2013, SFH prices in Oak Bay had fallen 15.3% below March 2010’s peak level. Note that December 2013 was the last month that median price data was available for separate areas of Greater Victoria.

Similar price declines took place across Greater Victoria by December 2013, for example:

* Victoria: by the end of December 2013, SFH prices in Victoria had fallen 12.7% below March 2010’s peak level.

* Langford: by the end of December 2013, SFH prices in Langford had fallen 20.7% below June 2010’s peak level.
(Source: Victoria’s board)

What have prices in Oak Bay, Victoria and Langford done since December 2013? Well, we know that 2014 was another weak year for real estate across Greater Victoria. On December 11th, 2014 I posted a chart (comment #60) based on Brookfield’s Greater Victoria price data which indicated that prices were 3.6% lower than a year earlier. This data indicates that prices continued to decline across Greater Victoria from late 2013 to late 2014.

2014 was a breakout year to the downside for house prices in Victoria (comment #60) as prices fell to the lowest level since August 2007 (even lower than 2009’s lowest point).
(Source: Brookfield’s index)

Victoria’s board paints a much stronger price picture for Greater Victoria, with their index data showing that SFH prices had fallen only 11.0% from peak to December 2013 and 9.1% from peak to December 2014. Of course the data they secretly generate is considered by many to be highly suspicious and for good reason, considering the local board’s own explanation of the methodology they use to come up with their price index:

“At the heart of (their home price index) is the concept of the “benchmark” home, a notional home that has the most common features of a typical home in a given area. The benchmark home does not represent any actual house, condo or townhouse, but merely provides an identical example to track changes in market value.” – Victoria’s board, March 3, 2014

One must seriously question the ability of their methodology to give an accurate picture of price changes over time. Using a “notional home” (imaginary home) to somehow come up with price changes over time is suspicious, at best. It gives the local board total freedom to be as biased as they want and everyone knows that most R/E agents and R/E boards have a vested interest in keeping house prices high in Canada.

Why didn’t the local board simply continue to allow public access to the valuable median price data for separate areas of Greater Victoria after December 2013? This data was available to the public as prices increased for a decade across Greater Victoria, but was made unavailable to the public after prices began to fall. Note that Toronto’s board continues to publish median price data for separate areas of the GTA on top of publishing their price index.

Median (housing) price data is the most accurate indicator of price changes and is, therefore, widely used across the US. Did Victoria’s board decide to hide this valuable and accurate median price data from the public because it conflicted too much with their own “notional home” price data?

Victoria’s housing bubble remains inflated as prices have not corrected enough to reestablish support from underlying economic fundamentals (rents and incomes). A quick look at house prices in several US markets makes this obvious. It would be easy to argue that prices in the following US cities should be higher than in Victoria, considering that these cities boast warm (summer-like) winter weather and are not located on an island like Victoria is (accessible by ferry or plane only). Indeed, many Victorians flock to these warm US cities to get away from Victoria’s cold and wet winter weather.

Florida:
$124 K, Lehigh Acres, FL (3 beds, 2 baths, 2,256 sq. ft., built in 2005, attached double garage)
$140 K, Jacksonville, FL (4 beds, 2 baths, 2,308 sq. ft., built in 2006, attached double garage)
$137 K, Fort Pierce, FL (3 beds, 2 baths, 2,445 sq. ft., built in 2006, attached double garage)

Arizona:
$103 K, Coolidge, AZ (Phoenix) (5 beds, 3 baths, 2,287 sq. ft., built in 2006, attached double garage)
$121 K, Maricopa, AZ (Phoenix) (4 beds, 2.5 baths, 1,893 sq. ft., built in 2007, attached double garage)
$129 K, Buckeye, AZ (Phoenix) (4 beds, 3 baths, 2,267 sq. ft., built in 2005, attached double garage)

Nevada:
$149 K, Las Vegas, NV (3 beds, 2 baths, 1,801 sq. ft., built in 2005, attached double garage)
$135 K, Las Vegas, NV (3 beds, 3 baths, 1,803 sq. ft., built in 2005, attached double garage)
$154 K, Las Vegas, NV (3 beds, 3 baths, 1,804 sq. ft., built in 2007, attached double garage)

Girls and guys, there is simply no good reason at all to buy a property right now in Victoria’s weak and declining market. Put your buying plans on hold for now and continue to rent (risk-free) and for less than the cost of buying and owning a mortgage (even at today’s rock-bottom mortgage rates). Your family’s future financial stability depends on you staying out of Victoria’s market until prices have fallen more.

Until next time – Cheers!

#68 Harbour on 01.15.15 at 9:24 pm

Remember how we were looking down at our friends to the south on their real estate collapse and saying it’s different here.

Now it’s there turn to look up and watch us collapse

#69 Nobleton Bill on 01.15.15 at 9:25 pm

#23 Smoking Man on 01.15.15 at 8:12 pm

CAD 5Y benchmark yield touched, are you ready.

1.01%

The overnight Rate 1.00%

Mortgage hunting, go to a broker and play hard… 2.25% for a, 5 year doable.

I’m up at year’s end, who’s doing offering 2.25%/5yrs? Ratehub’s showing 2.69%. Banks are at 2.99%

#70 Arfmooocat on 01.15.15 at 9:26 pm

I guess we don’t need TFW’s with people losing their jobs

#71 Koolaid Drinker on 01.15.15 at 9:26 pm

Soon Canada will have more government workers than the private sector. You know how it is working out in Greece.

#72 Tedfiftyfour on 01.15.15 at 9:27 pm

Well Garth, it’s not often you don’t know shit. Could be 5 years could be a few months!!!!!

#73 Smoking Man on 01.15.15 at 9:27 pm

#55 Harbour on 01.15.15 at 8:54 pm
#23 Smoking Man

That a boy… lock yourself into a 5 year just before you lose your job. ha ha ha.
…….

It would have to fire myself. Ha ha ha.

Months ago when most, like 95% on here where having the up go interest rates party.

The one and only, the amazing, the man with vision, the Great Smoking Man said it wouldn’t happen, I even thought the overnight might head down.

I have just stood up and now taking a bow, applause any one?

#74 Smoking Man on 01.15.15 at 9:31 pm

#65 I’m stupid on 01.15.15 at 9:17 pm
Like I said over a month ago, it’s a race against time for the Conservative gov’t. If the economy goes bad before the election they can say goodbye to their majority government.
……

Tell you how Harpo will play the card. The world’s a mess, we got here since 2008, safe and prosperity, tough times ahead, can you realy trust the kid for the next challenge..

Fear will work..

#75 JSS on 01.15.15 at 9:33 pm

As I was driving home from work thinking about the closing of Target and Sony, I drove past the adult video store. Through good times and bad, Source adult video store is still around. And they still rent out VHS.
Great times…

Oh yes, back to topic, yeah I think we’re in for deflation

#76 tee dee on 01.15.15 at 9:36 pm

Seeing stores such as target or mexx closing up here in Canada are starting to show some similarity to the days of my times living in California 2008-2009. seeing stores like macys close up, other shopping plazas of stores having liquidation sales. Seeing every blockbuster location close up everywhere. History seems to be repeating itself, I’m glad I followed my instict last year when I chose to stop looking for property here in Toronto because its shaping up to be the same stuff I witnessed with realestate when I lived in California aswell.

#77 Ret on 01.15.15 at 9:39 pm

A new carbon tax being floated by the Wynne government should just about finish the economy of Ontario off.

http://www.cbc.ca/news/business/ontario-could-see-carbon-tax-wynne-1.2900876

But don’t think that a carbon tax will mean a better environment. Apparently the lungs of Hamiltonians are not a major consideration of the Wynne government.

http://www.insidehalton.com/news-story/5230744-air-pollution-exemptions-pitched-for-steelmakers/

Oh, the hypocrisy of it all.

On another note, talks with GM about the Oshawa plant’s future are in the news. Okay, how much does GM want to shake down taxpayers for this go around?

http://www.theglobeandmail.com/report-on-business/general-motors-makes-no-promises-on-oshawas-future/article22450833/

#78 ANON on 01.15.15 at 9:40 pm

#62 omg the original on 01.15.15 at 9:09 pm

#3 Oil Is Sticky
with modern computer models, how could some consulting service(s) NOT KNOW that oil was going to collapse knowing how many straws were in the ground/water.
———————-

Because nobody can forecast the future. PERIOD, END OF STORY.

____________
No, really, this being The Absolute Master Resource of Planet Earth, and absolutely nobody looks at the price?:
http://futures.tradingcharts.com/chart/CL_/M?anticache=1417968869

Hint: Everybody who has a vague clue as to what oil and credit (or money, as it is colloquially known) REALLY means was watching the symmetrical triangle. Upper limit: increasingly tapped-out consumers; lower limit: increasing extraction costs. Intersection: breakdown.

#79 OttawaMike on 01.15.15 at 9:45 pm

#29 Millennial Maestro on 01.15.15 at 8:20 pm
“as I started buying at $14 in November and averaged down from there. Believe in HVU, buy HVU and wait!”
———————————————————

You might want to read up a bit on those double and triple ETF’s. They are based on derivatives and are not meant for a long period hold position such as you have taken.

There is decay to consider which is the tiny bite that the fund company takes each day for trading the instruments behind the ETF. This is over and above the MER.

HVU is sure thing to buy as planes were hitting the World Trade centre or the Parliament Hill shooter ran loose but they can turn on you very quickly and you need to be watching like a day trader or have good stops.

#80 Bobs ur uncle on 01.15.15 at 9:46 pm

Interesting shift of perspective in a few short months. At the end of September wondering what the effect would be if oil went all the way down to… 80$. Oh what a nice dream that would be now for so many people.

http://www.greaterfool.ca/2014/09/29/big-d/

#81 JSS on 01.15.15 at 9:46 pm

So Mark,
Yesterday you said that the BoC would announce interest rate cut, or some verbage to the effect.

Where are you today?

#82 dienekes on 01.15.15 at 9:47 pm

All I think of when I see whats going on, is the journeyman electrician I trained under drove cab for 5 years in the 80’s because there was no work in Saskatchewan; an electrician.
2016=1982
Will 80’s clothing styles be back as well?

#83 Bobs ur uncle on 01.15.15 at 9:53 pm

SM – you get one slow clap here for the interest rate call – now what do you have for an encore? About the market of course.

#84 Ex-Cowtown on 01.15.15 at 9:53 pm

Oilpatch job losses mount. My nephew works the rigs and says the camp that he works at (150 guys) just got skidded today. Parking lot is a ghost town tonight.

That fast. Welcome to Alberta.

#85 Washed Up Lawyer on 01.15.15 at 9:56 pm

#67 Victoria Real Estate Update:

This Greater Fool Springer Spaniel extends thanks for your efforts.

#23 Smoking Man:

Grateful for your coaching. On my shack in a tony part of Cowtown (small hat – huge herd) I renew the Indenture to the bank on April 1. The 5 years at 3.19 coming to an end.

Location, location, LIQUIDATION.

#86 Shawn Allen on 01.15.15 at 9:59 pm

I predicted hard times for Target, from the very start.

I predicted Target was making a mistake as soon as I heard back in 2011 or 2012 that they would pay $1.8 BILLION merely to take over the leases from Zellers,

as I posted here back in 2013:

#152 Shawn on 12.08.13 at 4:14 pm
TARGET’s Mistakes

When Target bought the Zellers leases for $1.8 billion I calculated that it had paid around $15 million per store – just for the right to keep paying rent at each store – albeit a cheap rent.

I did not see anyone else even question the price paid.

Target then spent an average of about $10 million per store in renovations.

This means they are into each store for an average of about $25 million and they don’t own the stores.

Meanwhile I had calculated that Walmart trades in the neighborhood of $25 million per store and they own their stores in many cases.

It was easy to see, as I said at the time, that Target would not be a low cost operation.

So, no low costs, no low prices, therefore no stampede of customers.

Some things are predictable. (Even before the fact which is the most useful type of prediction).

*****************************************
I predicted from the very start that they could NOT be a low cost operation. I did not however think they would close up. Why close after already spending all that money? The losses in 2015 were probably going to be mostly non-cash losses or due to fixed and sunk costs.

I think the analysis to shut it down is probably flawed.

I mean if it can’t even make an operating profit after considering the lease and capital costs are sunk costs how was it EVER going to make an accounting profit?

Target has displayed colossal mismanagement. Every Board member who approved the entry into Canada should be immediately dismissed. They already canned the CEO and the first executive in charge of Canada.

They are also scum for filing for bankruptcy when the parent is healthy. They should have ginned and beared it at this point.

#87 Smoking Man on 01.15.15 at 10:00 pm

#69 Nobleton Bill on 01.15.15 at 9:25 pm
#23 Smoking Man on 01.15.15 at 8:12 pm

CAD 5Y benchmark yield touched, are you ready.

1.01%

The overnight Rate 1.00%

Mortgage hunting, go to a broker and play hard… 2.25% for a, 5 year doable.

I’m up at year’s end, who’s doing offering 2.25%/5yrs? Ratehub’s showing 2.69%. Banks are at 2.99%
………..

No one right, now but it’s in range. Ask yourself, what to the banks do every year just before the spring market kicks in. Last year when BMO offered a 2.99% Mortgage the bond yield was a full % point higher..

It’s going to be a nasty price increase realtors, a nasty one.

Where is laughingcon?

#88 Ronaldo on 01.15.15 at 10:01 pm

#26 Dominoes Lining Up –

”The next thing I am watching for is what happens to those realtors across the country who have, as a promotional gimmick, promised to “buy your house at an agreed upon price” if it does not sell. There’s a few in Toronto whose ads I have noticed.

Here’s one of those:

http://www.getleo.com/Home-selling-system

My guess is such guarantees will evaporate by springtime. We’ll see…..”

————————————————————
Beware of these promises. Note the *certain conditions apply – ask for details line. There was a realtor in the Okanagan back in late eighties when markets were dead advertising the same thing. A gimmick to get your listing.

#89 Republic_of_Western_Canada on 01.15.15 at 10:02 pm

#38 Macrath on 01.15.15 at 8:33 pm

That character is a sensationalistic nimrod. He creates as much unintelligible noise as the idiot Cramer.

The Swiss took their cue from Saudi Arabia. The Saudis got sick and tired of holding themselves back just to benefit the yanks shale program and irritants in Iraq/n; essentially handing them market share on a silver platter.

The Swiss decided they didn’t want to suffer any more huge artificial purchases of progressively more useless paper either, from Russia or the ECB, to keep their franc cheap.

Especially as they expect Draghi to print to the moon next year to try to get Europeans to spend money they don’t have. CH couldn’t continue the program anyway – there’s not enough blotting paper in the world to soak up the Pacific Ocean.

Swiss exporters are getting nailed as the price the country pays to stop diluting its overall value by buying mountains of overpriced toilet paper on principle.

But it’s no longer a philosophical tradeoff between benefiting exporters vs protecting capital holders. Benefiting their exporters with a too-cheap franc was simply unsustainable. (They probably saw Soros and his ilk snooping around Zurich hotels a little too much too, looking for ways to screw the franc like the pound sterling.)

#90 Shawn Allen on 01.15.15 at 10:03 pm

Predicting Low Oil Prices

If low oil prices had been widely predicted they simply would have fell earlier.

What do people think? That if the low oil price was predicted that everyone could have sold their oil shares before the crash? To whom? Martians?

Investing is a tough game. If people can’t stand the risk then stay away. Be balanced or whatever. But don’t buy oil company shares and then whine that the experts misled you.

Actually this is the main reason a lot of people use advisors, so they can have someone to blame things on when their portfolio takes a dump.

#91 Obvious Truth on 01.15.15 at 10:07 pm

Canada is a mess. No doubt. Curve is screaming recession.

Yields around the globe cratering.

But tips just broke a downtrend. And heard someone say that oil in the 40’s adds 1.3 trillion to the global economy. How’s that for stimulus.

What about India and china. Shanghai up. Sensex a rocket. That’s accounts four almost half the global population and a pile of growth.

Who asked for the stock cheerleaders? Let’s see what happens.

#92 Mark on 01.15.15 at 10:07 pm

“If acceleration is rising that is, believe it or not, referred to by the official name of “Jerk”, a change in acceleration is felt as a jerky motion. Such as 1 mile per minute cubed. Jerk of course, has no relation to Mark’s comments.”

Hargh, hargh, of course the 3rd derivative of displacement is “jerk”. “Jerk” can also mean a delicious Jamaican dish, which unfortunately Canadian consumers probably aren’t going to be able to enjoy as often as they won’t be having a lot of money to take vacations to Jamaica.

If I was in a business that depended heavily on people spending on consumer credit, I’d be crapping my knickers at this point. Mexx, Target, etc., are just signs of things to come. If you thought Dylex and Livent going belly up all those years ago was bad…..

Seeing stores such as target or mexx closing up here in Canada are starting to show some similarity to the days of my times living in California 2008-2009.

I personally saw the melt occurring between 2005 and 2007 in Atlanta, a city I visit once every year or two. Booming, crazy, couldn’t get into even the expensive clubs in 2005. Same clubs were begging for customers 2 years later, and the bus to the airport drove by so many empty storefronts. Atlanta was one of the early cities to see the RE decline.

#93 tee dee on 01.15.15 at 10:09 pm

#26 Dominoes Lining Up

If all this madness goes down in price, Which I hope, I wont even use a realtor, I will most likely try to find something through commission free listings. I have looked at properties this way and I felt its actually better talking to the owner directly.

I would also consider power of sale homes too before going to a realtor. I hate them. there’s been enough realtors that rubbed me the wrong way during my home search days, that I really dont need them I would be able to negotiate a better deal in person directly with the owner instead of two realtors scheming to work out the best deal for THEM.

#94 kabloona on 01.15.15 at 10:10 pm

Warning: Bond rates are going negative
By Matt Egan January 15, 2015: 3:50 PM ET

http://money.cnn.com/2015/01/15/investing/interest-rates-negative-switzerland-ecb/index.html

NEW YORK (CNNMoney)

Investors are so nervous that they are basically willing to lose money when they buy some government bonds.

It’s part of the latest fad in finance that’s all the rage: “going negative.”

The yields on government bonds in Europe and Japan have dipped into the uncharted waters of negative territory. That means buyers of those bonds are essentially taking a loss just to hold onto those assets. They think their money is better off losing a few cents than putting it elsewhere.

“It’s basically a fee for fear,” said Nicholas Colas, chief market strategist at ConvergEx. “Fear of deflation, fear of volatility in other capital markets and general fear of the known.”

#95 Rabi Dmangycur on 01.15.15 at 10:10 pm

Garth:

You are more than probably just simply gifted.

#96 victoria - the original on 01.15.15 at 10:10 pm

I was in downtown victoria today. so many retail shops closing down. I was shocked. People are paying so much on their condos that they don’t have any left over money for hemp pants. I bet walmart is doing well.

I did hear on the radio that re in vancouver is expected to go up by 7 percent. Luck them :-)

(sorry about my typing – some caps are not working)

#97 Brian Romanchuk on 01.15.15 at 10:10 pm

“Upward pressure on future interest rates.”

It seems safe to say that future interest rates will not be a whole lot lower, unless the BoC follows the Swiss down the negative interest path.

Abnormal debts and deficits inevitably lead to higher rates. — Garth

#98 Mark on 01.15.15 at 10:13 pm

“Months ago when most, like 95% on here where having the up go interest rates party.

The one and only, the amazing, the man with vision, the Great Smoking Man said it wouldn’t happen, I even thought the overnight might head down.

Don’t get too full of yourself SM. I’ve been pounding the “rates are going to fall” view for quite a while now as well. Especially policy rates. In hindsight, I’m looking pretty good at this point.

#99 Leo Tolstoy on 01.15.15 at 10:15 pm

The Canadian dollar is going into the 70s boys!

Hang on for the ride!

#100 Smoking Man on 01.15.15 at 10:16 pm

#67 Victoria Real Estate Update on 01.15.15 at 9:20 pm
……..

I like the Vegas Links… Like every other commodity in this world. It’s all about supply and demand.

In Cowtown, I beilive there will be more supply and less demand. Hence you know what’s going to happen.

Hog Town, I see more Cowtown refuges, as well as the 100k or so we get every year. Put pressure on demand. Seams everyone is heading into the 416, to eleviate commuter kaos. No one wants to go to the burbs. Hence no supply.

Every realtor and mortgage broker in hog town will be telling clients. The fixed rate mortgages have never been lower ever. Act now or be priced out forever.

Yup… It’s going to be nuts here. The only spoiler, Wynee. The Carbon tax they are salivating to ram us with..

#101 Republic_of_Western_Canada on 01.15.15 at 10:18 pm


#30 nonplused on 01.15.15 at 8:20 pm
[…]
Russian gas does not get turned back on soon, the Europeans will have to shutter most of their industry just to preserve their storage gas long enough to keep the lights on and the shower warm until spring. Massive lay-offs are unavoidable unless the gas gets turned back on soon.

Really?

Russian gas is a relatively new convenience for most of Europe. Like north sea gas was for england. But coal has been around and burned since they stopped cutting forests for heat back in the 1700’s. Lots of it around – at least a few more centuries. And in Estonia they just burn tons of pulverized oil shale directly.

Nobody is going to get too cold and industry won’t stop either. But the air will get a little bit more stinky from coal smoke. And as soon as they start to get headaches from that smell – like a thousand Trabants during rush hour, they’ll come back to their senses and bring back nuclear power in a big way.

#102 Smoking Man on 01.15.15 at 10:20 pm

#78 Mark on 01.15.15 at 10:13 pm
“Months ago when most, like 95% on here where having the up go interest rates party.

The one and only, the amazing, the man with vision, the Great Smoking Man said it wouldn’t happen, I even thought the overnight might head down.

Don’t get too full of yourself SM. I’ve been pounding the “rates are going to fall” view for quite a while now as well. Especially policy rates. In hindsight, I’m looking pretty good at this point.
……..

Yes you where, I’m starting to like you, but as far as not being to full of myself.

Well that’s not going to happen… It’s part of my shtic, comes with the bad spelling and grammar.

#103 Washed Up Lawyer on 01.15.15 at 10:22 pm

#74 Smoking Man

Oh, and your prediction on how Harper will bluff his pair of deuces against a full hand is bang on.

#104 Smoking Man on 01.15.15 at 10:30 pm

#104 Washed Up Lawyer on 01.15.15 at 10:22 pm
#74 Smoking Man

Oh, and your prediction on how Harper will bluff his pair of deuces against a full hand is bang on.
…….

Well as an example, The Gas Plant Carbonator, safe hands Wynee pulled off the same move. And she only had 7 duce.

#105 whitehorn on 01.15.15 at 10:34 pm

Quite obviously oil is very important to the Canadian economy. There could be a domino effect in the making in terms of real estate; as spinoff jobs, and structurally integrated companies all across the nation. It has been mentioned many people have less than a few months or one pay period in reserve if loss of job. What happens when layoffs start to ramp up in Alberta especially come spring – How will the mortgage payments be made on the overpriced particleboard shacks? Do people hand over their keys to the banks? What is going to happen? Will the gov’t be able to provide some assistance – I forget there is limited funds there as well. Interesting times ahead in Canada.

#106 Washed Up Lawyer on 01.15.15 at 10:35 pm

My education was wasted. Read “Education of a Poker Player” at the age of 8.

Drew to a royal flush on a golf trip to the Okanagan with the guys a few years and did not know how to bet it.

I meant full house not full hand.

#107 realtor are useless and liars on 01.15.15 at 10:43 pm

Look at realtor smokingman spewing his uneducated high school drop out knowledge about the RE bubble in the GTA . Smokingman you are such a clueless realtor that has no understanding of economics. The Canadian Economy is imploding with lending getting tighter and sales falling. Look out below dumb dumb you will not make a single sale this spring.

#108 realtor are useless and liars on 01.15.15 at 10:47 pm

Realtor smokingman is a useless uneducated realtor who hopes the conservatives will increase the sub-prime lending as over one trillion in sub-prime lending isn’t enough for useless realtors to make a living. Hard and financially painful times awaits for you smokingman. It’s going to be a painful year for you and your useless realtor buddies. :)

#109 Al on 01.15.15 at 10:54 pm

Target is closing up in Canada leaving 18,000 unemployed and Ms Wynne, Premier of Ontario, is looking into the government hiring the ones laid off in Ontario!

#110 Republic_of_Western_Canada on 01.15.15 at 10:57 pm

#106 whitehorn on 01.15.15 at 10:34 pm

The mortgage-payers will simply squat in those houses after trying to renegotiate or postpone payments to the banks; until they start to get punted.

After the first waves of newly-created street people, an outcry of fear from the remainder will push for the gub’mint to bail out (over and above CMHC insurance) all those defaulting payments to the benefit of the *banks*. Effectively using future tax revenue and inflated dollars to pay banks for people’s bad financial decisions.

That will have a very serious impact on the velocity of money, prompting the gub’mint to start CQE (Cdn Quantitative Easing). The dollar drops to 10 cents, oilsands become wildly profitable, Suncor buys the rest of Ottawa (beyond PetroCanada) and a consortium of majors sells Toronto to Detroit.

#111 Coho on 01.15.15 at 11:01 pm

Don’t forget we’re at war, too. So, it’s not just over-extended homeowners due for hard times. We’ve been tied at the ankle and dragged through the mud. An arena populated with economic booms and busts and wars. This world is at the same time a battleground and playground for the TPTB…unelected…unaccountable…standing in the shadows…fighting over the planet’s resources…all the resources, including mineral, animal, vegetable, which manifests in human conflict and slaughter.

There is enough wealth created by human toil and plenty of resources that if managed properly and distributed half ways equitably, no person would be wanting. Unfortunately TPTB have other ideas. Greed and fear is driving this world towards a poverty stricken populace living under a global tyranny.

Lots of fun. Pass the granite.

#112 MEANWHILE IN FRANCE on 01.15.15 at 11:03 pm

#30

that doomsday scenario of Russia cutting off gas supplies won’t have any impact. First, there is plenty in storage for at least 6 month if not double that in all gas dependent countries, second, how about LNG? It’s a viable option in 2016, a mere 12 to 15 month away.
Third, as someone else pointed it out already, Russia needs foreign currency more than Austria needs their gas.

I heat my house with 30% gas and 70% wood by the way. Mild winters do help though here in the south of France.

http://theceliachusband.blogspot.fr/2012/03/la-maison.html

#113 Nobleton Bill on 01.15.15 at 11:14 pm

#88 Smoking Man on 01.15.15 at 10:00 pm

#69 Nobleton Bill on 01.15.15 at 9:25 pm
#23 Smoking Man on 01.15.15 at 8:12 pm

CAD 5Y benchmark yield touched, are you ready.

1.01%

The overnight Rate 1.00%

Mortgage hunting, go to a broker and play hard… 2.25% for a, 5 year doable.

I’m up at year’s end, who’s doing offering 2.25%/5yrs? Ratehub’s showing 2.69%. Banks are at 2.99%
………..

No one right, now but it’s in range. Ask yourself, what to the banks do every year just before the spring market kicks in. Last year when BMO offered a 2.99% Mortgage the bond yield was a full % point higher..

It’s going to be a nasty price increase realtors, a nasty one.

It’s a valid perspective your offering, but I would think that in times of ‘elevated risk’, the banks will raise rates to hedge. For example, when the US went into recession, American Express raised there credit card interest rates, because they wanted ‘you’ to pay them first and default on your MasterCard or Visa or car payment….How eager is the bank going to be lending money at 2.25% when the calatoral is losing value?

#114 Franco on 01.15.15 at 11:16 pm

In a market like this, not too many people make money.

#115 Andrew Woburn on 01.15.15 at 11:17 pm

#162 cowtown cowboy on 01.15.15 at 10:59 am

Maybe Pete should ride off into the sunset and let someone younger have a chance….35+years, in their 60’s and STILL working…typical boomer narcissist that can’t take a hint that it’s time to p*ss off.
++++++++++++++++++++++++++++++++++++

Half the people are pissed off at boomers who won’t retire early. The other half are pissed off at retired boomers who are “goofing off” at home instead of shifting boxes at Walmart.

Everybody is immortal until they hit sixty. It is a fundamental twist of human nature that nobody ever really understands that they will be one of these stupid old “greedy” people in a frighteningly few years.

#116 Nobody Special on 01.15.15 at 11:19 pm

“Yes, I know. You’re on your own”

Unless you’re a member of Too Big to Fail.

#117 economictsunami on 01.15.15 at 11:19 pm

First manufacturing jobs as the Loonie flew high.

Zellers, then Target, Sony, MEXX, Smart Set, Jacob, Holt Renfrew and Sears on life support.

Now, well paying oil patch workers, with as many as four spin off downstream jobs per position lost.

Soon, many good paying construction tradesmen looking for work.

The recovery narratives are about as stretched as equity valuations.

No endorsement of Roberts, just good analysis…

3 Things – Employment, Interest Rates & Retail Sales:

http://streettalklive.com/index.php/daily-x-change/2570-3-things-employment-interest-rates-retail-sales.html

Oilfield Services Company Schlumberger Is Cutting 9,000 Jobs

http://www.businessinsider.com/schlumberger-cuts-9000-jobs-2015-1#ixzz3OwyrlOEV

#118 dogman01 on 01.15.15 at 11:21 pm

Ok Target, Mexx and Sony now closing, recession and debt addled consumer.

Which REIT owns the malls? I would think they will have big empty spaces and no rents for quite some time.

RIOCAN?

#119 Obvious Truth on 01.15.15 at 11:25 pm

WUL could remain modest for only so long.

“Small hat – huge herd”

SM has got to you.

Next you will tell us where the 200 day sits on the s and p.

Good luck to you guys in Alberta. This is clearly going to hurt many families.

#120 fisheman on 01.15.15 at 11:26 pm

My property assessment for west side Vancouver, residential/commercial came in for 2015. Up 24% over
2014. Taxes run around $2.00/sq.ft./year for residential
to around $10.00/sq.ft./year for commercial. What me worry? There’s a pot shop opening up beside every Starbucks in this neck of the woods. Just got to figure out how to blow all that smoke up the same vent I use for smoking my black cod & salmon.

#121 villagemoron on 01.15.15 at 11:30 pm

Kabloooie!!!!! – there goes the Canadian economy…

#122 bob on 01.15.15 at 11:31 pm

Thanks for not being overly sensational about the Target closure.

Do you still remember b*tchin about the HMV store that closed on Robson St in Vancouver, only to have Victoria Secret open up shop there?

It is to be expected that the weak die with changing consumer demands. Some gain, others lose.

#123 Millennial Maestro on 01.15.15 at 11:32 pm

#79 OttawaMike on 01.15.15 at 9:45 pm
#29 Millennial Maestro on 01.15.15 at 8:20 pm
“as I started buying at $14 in November and averaged down from there. Believe in HVU, buy HVU and wait!”
———————————————————

You might want to read up a bit on those double and triple ETF’s. They are based on derivatives and are not meant for a long period hold position such as you have taken.

There is decay to consider which is the tiny bite that the fund company takes each day for trading the instruments behind the ETF. This is over and above the MER.

HVU is sure thing to buy as planes were hitting the World Trade centre or the Parliament Hill shooter ran loose but they can turn on you very quickly and you need to be watching like a day trader or have good stops.
——————————————————————-

Mike,

You have the decay part all wrong. The price quoted includes the fee Horizons charges to basically enable you to trade the underlying index. The real decay happens when you hold for a long time and the curve is in contango (and you have a long position) or backwardation (and you have a short position)- that’s when the contract rollover eats away your potential profit. Take a look at the VIX futures. Coupled with the present market sentiment and momentum, you’ll quickly understand what I mean about HVU.

#124 Godth on 01.15.15 at 11:35 pm

#116 Andrew Woburn

There are no guarantees in the world we live in. The universe doesn’t owe us anything. A cornucopia isn’t forever.
Scientists: Human activity has pushed Earth beyond four of nine ‘planetary boundaries’
http://www.washingtonpost.com/national/health-science/scientists-human-activity-has-pushed-earth-beyond-four-of-nine-planetary-boundaries/2015/01/15/f52b61b6-9b5e-11e4-a7ee-526210d665b4_story.html

#125 Ronaldo on 01.15.15 at 11:36 pm

#107 Washed Up Lawyer on 01.15.15 at 10:35 pm

”I meant full house not full hand.”
———————————————

Also known as a ‘Crowded Cabin’.

#126 Smoking Man on 01.15.15 at 11:40 pm

#83 Bobs ur uncle on 01.15.15 at 9:53 pm
SM – you get one slow clap here for the interest rate call – now what do you have for an encore? About the market of course.
…….
BATMAN. 5 YEAR chart… Although the fed as of last year is being the market maker on bad news days..

______-_-
#114 Nobleton Bill on 01.15.15 at 11:14 pm

Bankers like bounces, AL it takes is for one of them to drop there pants to capture market share in the spring market, my guess BMO will be first…

However this year, it will be based on geography, Toronto will enjoy deep discounts, population growth.

Cowtown, there will be a premium.

#127 Pooh on 01.15.15 at 11:40 pm

I always notice that the volume of comments seem to correlate with palpable fear. Interesting graph idea for you Garth…

Reading the comments so fast today I accidently read a Smoking Man.

#128 prairie person on 01.15.15 at 11:45 pm

#57 Victoria should be booming because of the drop in the Canadian dollar but it isn’t. You are right. Shops are closing. Jobs are being lost. Some chains are operating with minimum staff. However, Walmart is not doing well. It’s all about social class. The lower class that buys at Walmart can’t afford Walmart anymore. That is terrifying because there is nowhere else for them to go. Costco is middle class. you have to have a car. You have to be able to afford gas. You have to be able to buy a lot of stuff at once.Costco still seems to be okay. Safeway didn’t survive. Hard to believe but for months before they shut down, their stores were empty. Going into one was like going into a graveyard. Fairways and Thritys seem to be busy. Save On? I never go in there so I don’t know. Salt Spring lost Mark’s Work Wearhouse. Office Depot is gone. X Cargo is gone. If you can’t make money with these low interest charges when can you? Maybe the lesson is that just like in Monopoly, when someone gets all the mone, the game is over. If 1% of the population has all the money, the game is over.

#129 Snowboid on 01.15.15 at 11:45 pm

#26 Dominoes Lining Up on 01.15.15 at 8:16 pm…

“…promised to ‘buy your house at an agreed upon price’ if it does not sell…”

From past experience this ‘promise’ is only good when the market is hot. When it’s on its’ way down the real estate agency will stop at nothing to ensure they don’t lose any money.

It’s a marketing gimmick as you say, nothing more.

#89 Ronaldo on 01.15.15 at 10:01 pm…

That’s exactly right, and when it went wrong for that realtor, his agency and the board stepped up to the plate.

This left at least one set of sellers screwed, in disbelief at the blatant lies coming from the group that had promised this ‘guaranteed buy’.

#130 Milla on 01.15.15 at 11:46 pm

nonplused
” But I don’t think the gas is going to get turned on, the Ukrainians will just start stealing it again as soon as the pipe is full”.

Your comment stinks.

#131 Roxy on 01.15.15 at 11:46 pm

This is kiiiiinda exciting !!!!!!

#132 Leadership | Realties.ca on 01.15.15 at 11:48 pm

[…] Source: http://www.greaterfool.ca/2015/01/15/leadership-2/ […]

#133 Bottoms_Up on 01.16.15 at 12:05 am

Why is it that family tax breaks are the last to materialize under the conservatives? We’ve had Harper for almost 10 years and we’re only now getting to a point where the child benefit is increasing, and income splitting becoming reality. This should have been first on the list of things to do, not last.

#134 Concessionman on 01.16.15 at 12:06 am

Our Hero’s

http://www.huffingtonpost.ca/sean-casey/harper-debt-economy_b_3976972.html

not..

#135 Bottoms_Up on 01.16.15 at 12:09 am

#129 prairie person on 01.15.15 at 11:45 pm
——————————————————-
Exactly. Your boomers are all worried about retirement, thus not spending. They also don’t have the young family pressures to spend.

The young families are barely scraping by, even the middle class and upper middle class. These groups are cutting back where ever they can. It’s no wonder multiple retailers are closing. Without a middle class with money to burn there is no economy.

#136 chris on 01.16.15 at 12:13 am

Hi Garth completely unrelated but do you think the eurocurrency is around in the same form 10 years from now?

#137 Bottoms_Up on 01.16.15 at 12:16 am

#116 Andrew Woburn on 01.15.15 at 11:17 pm
————————————————————-
It is an interesting thought. You can harness the skills and knowledge of a 60 or 65 yr old, but at what point does it conflict with the investment and future of a 25 or 30 yr old? Should someone that is ‘retired’ be allowed to hold a part-time job that could easily go to a 25 yr old with a bit of training…..

#138 Washed Up Lawyer on 01.16.15 at 12:17 am

#119 Obvious Truth:

I did not express myself very artfully. I was not trying to self aggrandize. The “small hat” reference was a reference to the brain size of people generally. The “huge herd” reference was to the size of the herd headed for financial trouble. It was not about my financial situation.

Sometimes blog/comment humour does not work.

#139 Bottoms_Up on 01.16.15 at 12:21 am

#110 Al on 01.15.15 at 10:54 pm
————————————————
if you were hired by Target in the past two years, seriously what were your prospects? These are either people that can do menial tasks, or are well equiped people that should be able to find decent employment elsewhere. Yes the lay offs suck, but for the most part these people will be OK.

#140 Bottoms_Up on 01.16.15 at 12:28 am

#101 Smoking Man on 01.15.15 at 10:16 pm
——————————————————-
Ok SM, how do you suppose we ‘solve’ the climate/global warming crisis?

I just booked a flight to the US, on it it shows my carbon footprint. This is borne out of the fact global warming and climate change is real, and that our emissions are causing it.

What should we do to stop this extensive human impact on our environment?

#141 BlackDog on 01.16.15 at 12:29 am

@Coho #112,

Sadly, I agree. Most dogs here, I suspect, are concerned mostly just about themselves, their investments, their retirement, and don’t see much beyond that…just like TPTB. Oh well, everything ends….mankind included. It sucks though, that we may be the cause of our own demise.

#142 Bottoms_Up on 01.16.15 at 12:34 am

#86 Shawn Allen on 01.15.15 at 9:59 pm
—————————————————-
interesting analysis on both the entrance and exit. In hindsight, they should have significantly undercut Walmart on prices to generate a customer stampede, which may have seen them through this period of low CAN$.

#143 larry1 on 01.16.15 at 12:36 am

Add in some deflationary consumer de-leveraging and let’s see what happens. Hard to imagine Canadian rates rising with deflation looming

#144 NoName on 01.16.15 at 12:43 am

#138 Bottoms_Up

“Yes the lay offs suck, but for the most part these people will be OK.”

perfect example of smlie or die mentality, just get with the program…

http://youtu.be/u5um8QWWRvo

#145 Bottoms_Up on 01.16.15 at 12:45 am

#17 Waterloo Resident on 01.15.15 at 8:06 pm
——————————————————-
Again, anecdotal evidence does not a trend make. How does an $8000 car 4 yrs ago turn into a ‘junk’ $11,000 car today? It doesn’t. It’s obviously a good car…..but here’s also what $11,000 can get you today (’08 Honda CRV 75,000 km):

http://www.autotrader.ca/a/Honda/CR-V/Laval/Quebec/5_22411046_20141125092449213/?showcpo=ShowCPO&orup=21_15_31

I think a CRV offers much more value than a corolla, so what does that say about your $11,000 price on a corolla of the same year and mileage? That’s right, you’re being hosed.

#146 devore on 01.16.15 at 12:48 am

#3 Oil Is Sticky

with modern computer models, how could some consulting service(s) NOT KNOW that oil was going to collapse knowing how many straws were in the ground/water.

How do you know that no one did?

#147 prairie person on 01.16.15 at 12:48 am

The SNB has to pick its poison. It is damned for one set of reasons if it holds the currency peg, and damned for another set if it ditches the peg. Welcome to the world of horrible dilemmas facing modern central banks. -from the Telegraph

Can someone explain why Switzerland is damned if it keeps the peg but damned if it doesn’t? I thoguht that with negative interest rates (depositers pay them interest) all the banks had to do was sit back and wait.

#148 Blacksheep on 01.16.15 at 1:00 am

“Don’t get too full of yourself SM. I’ve been pounding the “rates are going to fall” view for quite a while now as well. Especially policy rates. In hindsight, I’m looking pretty good at this point.”
————————————————————-
Lets be realistic, only dogs entranced by group think actually believed rates were going up any time soon. This why I took an open mortgage a year ago.

#149 Ryan on 01.16.15 at 1:00 am

I know things are a lot worse then you like to let on Garth. You don’t want to sound too much like a doomsday guy. Appreciate your honesty. My take is that the swhtf roughly just after the federal election. There keeping this economy somewhat propped up until than until the bottom falls out.

#150 Carousel on 01.16.15 at 1:01 am

All I can say, it is time to pay the Piper..

#151 No Canada, No on 01.16.15 at 1:02 am

Damn, how to quote? Where there is going to be a normal discussion engine on this blog (disqus for example)

> How everybody’s portfolio doing? :)
> Got cash to buy Canada “bigfive” with 50% discount?
> http://finviz.com/quote.ashx?t=TD&ty=c&ta=0&p=m

> Don’t you wish you’d bought in 2009 when people like > you were freaking? — Garth

I do (didn’t have money at that time anyway)
But it seems like we’re in the beginning of 2008
And that’s not me – that’s crude, bonds and swissie telling
Deals on everything (including houses in toronto and shares of BigFive) are going to be amazing!
Just ask swissie or crude or bond traders how amazing they will be.

#152 Mark on 01.16.15 at 1:03 am

“Can someone explain why Switzerland is damned if it keeps the peg but damned if it doesn’t?

If it keeps the peg, traders will keep trading against the peg, and the speculative excess will be unwound with even greater overall damage to the economy.

The problem with Switzerland running an artificially weak currency is that it elevates the cost of capital to its industry, while creating an artificial environment of suppressed labour prices. Both have the potential of breeding malinvestment or under-investment compared to sticking with market principles which are trying to rebalance the economy accordingly.

Central bank interventionism rarely works in the manner intended. For instance, I constantly point out that lower interest rates are coincident with currency strengthening — the complete opposite of what many posters here intuitively believe, that a higher rate would attract capital. Empirical evidence is quite strong (Japan, Switzerland, USA, and soon enough, Canada!).


I thoguht that with negative interest rates (depositers pay them interest) all the banks had to do was sit back and wait.”

Remember that banks themselves are borrowers as well, borrowing somewhere between 90-95% (or more) of what they lend out. However, if banks are intermediaries in trades that are subject to large dislocations, the bank itself can see its capital depleted if its hedges were not perfectly implemented with solvent counterparties.

The other problem with Switzerland is that a lot of money has come to the country not on the strength of its domestic industry (as we would see in Canada, where we have made substantial investments in long-term industrial output and expansion), but rather, in speculation. Just as quickly as hot money can flow in, hot money can flow out, and the results of such can be profoundly bad for an economy.

#153 Andrew Woburn on 01.16.15 at 1:04 am

8 Mike T. on 01.15.15 at 7:58 pm
I don’t understand what happened in Switzerland that caused the huge 8.7% drop in the SMI.

If anyone feels like explaining it in grade 4 newspaper English this blog dog would appreciate it.
———————-
I will tell you what I know of the basics but there is likely a lot more behind the scenes.

The Swiss franc (CHF) is considered to be one of the most stable and well-managed currencies in the world and is in many ways more desirable safe haven than the USD except that there just aren’t enough CHF to meet current world demand. The lingering reputation of Swiss bank secrecy increases its attractiveness to hot money.

The instability in Europe and other parts of the world created such a demand for CHF that it was rising very fast against the Euro. As the Eurozone is a major market for Swiss companies, they were in danger of losing their ability to sell there. The Swiss Central Bank stepped in and said they would freeze the EUR exchange rate at 1.20. They did this by printing CHF to sell into the market every time it rose too far. This process has gone on for about 3 years and the bank’s balance sheet is now choking on all this printed money.

Meanwhile the Eurozone is spiralling into deflation and it appears that the European Central Bank is preparing to start a program of “quantitative easing” as did the US, UK and Japan. This will be seen as a devaluation of the Euro and cause hot money to run screaming into safer havens such as CHF. The Swiss know they cannot print their way out of this much of a mess so they have decided to bite the bullet and stop holding down the CHF. They are hoping to discourage hot money by charging negative interest of three-quarter of a percent which is pretty brutal in a two-percent world.

An overnight rate boost of 30% must have devastated a lot of traders and bankers who were on the wrong side of forex and derivative contracts not to mention Swiss businesses who have effectively had their prices raised through the roof overnight without warning. It is a wonder that the SMI didn’t fall a lot more.

Although one can see the logic of the Swiss move, there is an unmistakable feel of desperation in the way it was done, especially in such a cautious, square-headed country. They could have announced they were sliding to a new managed exchange rate over a few weeks. One wonders what shoes are still to drop. The Euro Q/E story is logical but it feels like a panic move ahead of something nasty like a default by one of the Eurozone members or more Russian problems.

#154 Smoking Man on 01.16.15 at 1:04 am

#141 Bottoms_Up on 01.16.15 at 12:28 am
#101 Smoking Man on 01.15.15 at 10:16 pm
——————————————————-
Ok SM, how do you suppose we ‘solve’ the climate/global warming crisis?

I just booked a flight to the US, on it it shows my carbon footprint. This is borne out of the fact global warming and climate change is real, and that our emissions are causing it.

What should we do to stop this extensive human impact on our environment?
…..

Nothing wrong with what we’re doing. If you bought the man made climate change bull shit… Your an idiot. Be careful of Florida swamp salesmen.

Been on this planet for 56 years, weather has been the same..

I don’t read much, hard for the machine to program me…Dyslexic thing. So my perspective is what I see with my eyes, and hear with my ears..

I see snake oil sales men, trying to profit from a generation of schooled kids that have been programmed to buy cool aid.

If you own the cool aid, your going to do well.

#155 nonplused on 01.16.15 at 1:08 am

#46 Debtfree

Me thinks you are just making this stuff up. I am sure there are poor people in Russia but there are also oligarchs just like India, the USA, or Canada.

Russia has arguably the second most powerful defense forces in the world and they have outpaced the US in missile technology (both offensive and defensive) and air superiority. The F-35 is a sitting duck for an SU-34.

Europe needs Russia more than Russia needs Europe. They are already signing bilateral agreements with just about everyone else including the Chinese, with whom they also have a border. And Russia has been through a collapse in recent memory, most of them have lived through it. They haven’t forgotten how to live through it. Europeans think if times get bad you rely on the government. Russians know better.

And you display a horrid lack of knowledge of how dependent Europe is on Russian gas supplies. They cannot get through the winter without them. It would be a factor of 2 worse than if Canada shut in what would happen in the US. Turn out the lights. At least Canada is only something around 20% of US consumption. In Europe it’s north of 30% dependant on Russia.

#156 Edith on 01.16.15 at 1:09 am

In an article from the South China Morning Post a few weeks back, it talked about a new take on land banking. Usually it was done by land barons or large corporations.

But now it’s common among wealthy individual Asians. The theory goes that as multiples of more Asians are becoming wealthier, they are having a harder time finding a secure place to invest their money. They limit their exposure to precious metals and are leary of stock markets, particularily the Asian markets.

They have a desire to limit their exposure to Asian real estate or banks. Instead, many are choosing to invest in what is fast becoming a rarer and rarer commodity. Single Family Houses in the safest and friendliest countries. There were 5 cities on the list – Vancouver, Sidney, Melburne, San Francisco and Toronto. They were chosen because of geographical limitations on single family dwellings , safety, the school system, climate (Toronto?) and an established Asian community.

Just like gold, they saw their investment more as an insurance policy rather than one that could generate large annual returns. The average investor had no intention of selling or speculating, it was a long term hold for the land.

They were not making these investments based on the timing of real estate market conditions, general global financial health or local economic fundamentals. When good properties become available they buy. Single Family Houses/Land in prime areas of these cities are growing increasingly scarce so the theory goes.

So, falling oil prices, household debt, rising interest rates and the closure of Target may affect Calgary, Edmonton, Kelowna, Regina and Halifax – it won’t have much of a negative impact on SFH’s in Point Grey or West Vancouver.

#157 Babblemaster on 01.16.15 at 1:12 am

I just don’t understand how anybody, from any walk of life, could possibly think that it’s viable for the government to raise rates under these economic conditions. It they didn’t raise rates the last six years, why in the hell would they raise them now when we’re facing even stronger economic headwinds? Not going to happen.

#158 Rural Rick on 01.16.15 at 1:15 am

#129 prairie person is bang on.
“Maybe the lesson is that just like in Monopoly, when someone gets all the money, the game is over. If 1% of the population has all the money, the game is over.”

#159 Herf on 01.16.15 at 1:15 am

#18 Goldie

Yes, the latest Bombardier layoffs were in Wichita (Kansas) and Mexico. Concerning Wichita, seems orders for Learjets are down. They already laid off 1800 in Canada (Montreal) last July. However, if they don’t start getting more orders for their aircraft, what is to prevent them from laying off more workers in Montreal and/or Toronto? Last I read, orders for their new C-Series jet have been anemic and testing (which is required for certification) and introduction into service of the C-Series were something like one to two years behind schedule.

Which begs the question: when does Bombardier’s Type Certificate Application for the C-Series, expire? This is the permit issued by Transport Canada that allows Bombardier to develop and test a new aircraft. This is a question worth pondering, because under the Canadian Aviation Regulations (CARs) an applicant for a Type Certificate (which is issued once the aircraft has been deemed (i.e. certified) by the government to comply with the applicable airworthiness requirements), only has a limited time in which to develop and certify a new aircraft (five years for a Transport Category airplane, which is the category that the C-Series falls under). If certification isn’t completed within that time, unless the applicant demonstrated AT THE TIME OF THE ORIGINAL APPLICATION that a longer certification period is required, the applicant may have to show compliance to whatever new airworthiness requirements have come into effect since the time of the original Type Certificate Application.

From

http://laws-lois.justice.gc.ca/eng/regulations/SOR-96-433/FullText.html#s-521.28

CAR 521.29 (1) states the following:

521.29 (1) Unless an applicant demonstrates, at the time of submitting an application for a type certificate in respect of an aeronautical product, that a longer period is required for the design, development and testing of the product, and for that reason the Minister approves a longer period, the application is effective during one of the following periods, beginning on the date of the application:

(a) five years, in the case of a transport category aeroplane or a transport category rotorcraft; or

(b) three years, in the case of

(i) an aircraft other than an aircraft referred to in paragraph (a),

(ii) an aircraft engine, or

(iii) an aircraft propeller.

(2) If a type certificate is not issued within the applicable effective period referred to in subsection (1), the applicant may

(a) submit a new application for a type certificate; or

(b) apply for an extension of the effective period of the original application.

(3) If the effective period of an application for a type certificate is extended under paragraph (2)(b), the standards of airworthiness applicable to the aeronautical product are those in force on the date that precedes, by one of the periods referred to in subsection (1), the date of the issuance of the type certificate.

SOR/2009-280, s. 26.

The economic implications of having to show compliance with new airworthiness requirements that may have come into effect since the original Type Certificate Application are potentially enormous, not counting any late delivery penalties owed to customers who have ordered the aircraft. Every part of the aircraft would have to be re-substantiated to show it complies with the latest airworthiness requirements. This means every structural component, the engines, every system, avionics, performance (i.e. operation in flight), lightning, electromagnetic compatibility, human factors, occupant safety – everything. And, since most of the components and systems are designed and manufactured by third-party subcontractors, the Type Certificate applicant would need to go to each of his subcontractors and coax them to re-substantiate or help with re-certifying the subcontractor’s particular piece of the aircraft (do you think they would do it for free?).

I once worked on the design of a black box for an aircraft manufactured by one of the U.S. airplane manufacturers. We were hustling to get our system through its rigorous qualification test program before the customer’s Type Certificate Application expired. At the time, I didn’t understand why their certification deadline was so critical. We had our customer’s engineers up from the U.S. on site at our plant, following us around, breathing down our necks, telling us what to do concerning the design/test of our system and slapping us in the head when something failed. I asked one of the U.S. engineers what happens if we missed their certification deadline. He replied, “The sky falls in”. I asked him what he meant. His explanation was as I have noted above.

#160 Bottoms_Up on 01.16.15 at 1:18 am

#145 NoName on 01.16.15 at 12:43 am
—————————————————-
I think you misunderstood my point. The people working at Target are either newbie employees (first job ever) or capable of working at another conglomerate (ie, they have a perfectly marketable skill). Zellers moved out and people lost jobs. Target is now moving out and people are losing jobs. Are you saying no group is moving in to fill that employer role? Ever? Are you saying the people laid off are not capable of getting another job? Are you saying the economy is at max capacity and there’s no hope for these people? The real issue here is not the Target lay offs, but what was Target paying these people???

#161 nonplused on 01.16.15 at 1:18 am

#59 Defrauded2

Of course I heard about it elsewhere too. I, like everyone else, only have the internet and Carl Sagan’s “bullshit detection kit”. I don’t have secret sources.

#162 nonplused on 01.16.15 at 1:22 am

.#102 Republic_of_Western_Canada

You are in dreamland. Without Russian gas Europe is toast and it will tack them 10 years to fix it.

#163 winterpeg on 01.16.15 at 1:36 am

Sad day for the Target employees. Getting back to basics, did Canada really have the population base for another big chain? Don’t even have it for other chains. I am mystified by the shopping areas that are still evolving. The spot in Winnipeg where Target was built (site of the old arena) was supposed to be part of a development of shops, in an area where there was already a huge mall. And near the Ikea store is a huge tract of land slated for …. more shopping! I guess more stores mean more selection; more competition; keeps prices down? I’m no economist. But, seriously? there’s no imagination in land development, for retail and for residential. Just more malls, more boring condos and expensive houses.
Turn the empty Target stores into …, I dunno… affordable housing?, manufacturing sites? Yah, I know land is zoned a certain way, but let’s think outside of the big box. I mean, if we’re going to pay people crappy wages in retail, we might as well pay them crappy wages in some new manufacturing ventures. (or would off shore wages still undercut us?) Again, I’m no economist. Not much of a shopper either. (Hey, how about giant grow-ops? Medicinal MJ of course. ;) Rant over.

#164 6,000 years and counting... on 01.16.15 at 1:40 am

Re #30 nonplused
==================================
Germany’s gas needs are covered with the Nord stream.
This is strategic move by Putin to drive a wedge between the weak new members and Germany.

On Jan 12 Russia and MasterCard announced the signing of an agreement to use the new Russia SWIFT-alternative system
http://emergingequity.org/2015/01/13/mastercard-to-process-payments-through-russias-localized-system/

As you can see the ducks are lining in a row.

And here in NA they are preparing the population too – see the nomination for the Oscars and the pumping of “American Sniper”

#165 Tiger on 01.16.15 at 1:40 am

10-Year Fixed Mortgage Rates for 3.99% at RBC

http://www.ratehub.ca/best-mortgage-rates/10-year/fixed

#166 GTA person on 01.16.15 at 1:58 am

Can I argue that this surplus in oil was caused by interest rates too low?

#167 r purdy on 01.16.15 at 2:02 am

I’m a renter, and have no debt, and work as an RN. How do I position myself to benefit from these troubles? I try to have a balanced and diversified index portfolio but I’m sweating right now. Everything except the bonds and REITs are wilting. I am well versed in all the maxims about investing. But emotionally I am having trouble coping.

#168 devore on 01.16.15 at 2:11 am

#90 Republic_of_Western_Canada

I wonder how many eastern European families repeated the mistakes of a decade ago and got themselves cheap CHF mortgages? Unwitting FX speculators always get their butts handed to them.

#169 stage1dave on 01.16.15 at 2:27 am

#60 omg

Yeah, lived the 70’s & 80’s in SK, but in addition to collapsing commodity prices in all of it’s exports, we also got saddled with double digit interest rates, (peaking at 22 3/4%, if memory serves) an ammoral provincial gov’t (elected in 1982) that is best remembered for having practically every single cabinet minister indicted on criminal and/or fraud charges; and for spending around 10 BILLION dollars we didn’t have.

(Most of them wound up serving prison terms. What is it about “conservative” politicians & their hangers-on that leads so many of them into conflicts with the criminal justice system? :)

It didn’t help that their ideological & morally challenged twins starting running Ottawa in 1984; massive cuts to the provinces transfer payments followed. A perfect trifecta, if ya will…

Of course, with all that massive debt & no money to pay it austerity became the only option in the playbook. This is an old formula, but still effective as recent history proves. The publics’ anger will be taken out on whoever is in power; or whoever they don’t like…ideologically or politically.

Strangely in retrospect, I remember being quite busy in the 80’s (87 was a bit scary, but that passed) So was everyone I dealt with.

I also remember calculating the mortgage payments out on a 3 BR bungalow in Fairhaven; 60K financed @ 14%…almost the same monthly as 300K @ 3%…hmmm…nuthin changed except 27 years went by!

Well, in 89 we had the 90’s to look fwd to, & we know how that worked out…yikes…hello 2015

#170 nonplused on 01.16.15 at 2:33 am

#113 MEANWHILE IN FRANCE

Let’s wait a month and decide what kind of thing you are smoking. Nobody needs currency. It’s paper. People need commodities and technology. I suspect you be a troll. France is falling apart.

#171 Lillooet, BC on 01.16.15 at 2:33 am

Tell that guy in the picture to quit clowning around.

#172 nonplused on 01.16.15 at 2:38 am

#131 Milla

“your comment stinks”

Of what? Gas they take and don’t pay for?

No economy can survive if fair play rules don’t exist and the Ukrainians have been taking gas under the old Soviet rules since day one. They have to pay for it eventually.

#173 Henry on 01.16.15 at 3:30 am

@148 prairie person – SNB is not damned nor is it dumb… That is a typical british overdramatizing of things by people who are not in a position any more… but used to be.. you know.
That peg was not reflecting reality any more with € sliding and a surpise likely coming at ECB meeting… So they had to loosen. The side effect is a monstrous capitalization loss of anything trading on Zürich exchange as they just got less competitive… Average Suiss are happy though. I can just afford 20% more in French or German supermarket down the road… And balance of my canadian mortgage just shrunk by some 15% overnight:) Good to be paid in CHF and have debt in CAD:)

#174 Max Jones on 01.16.15 at 3:58 am

Finally someone who has a balanced perspective. It’s all just a cycle moving towards equilibrium. $50 oil is the normal. Everyone should just stop thinking short term.

http://www.themalaymailonline.com/money/article/based-on-100-year-average-low-crude-oil-price-is-normal

#175 Max Jones on 01.16.15 at 5:01 am

What is wrong with the media these days. These guys have a story about about Bombardier axing 1000 employees and run a picture of a Boeing B-52 Bomber from the 1950s. Sorry but the American B-52 bomber is not related to the Canadian Bombardier business jets and commercial airliners. Journalists are just so stupid it defies description.

http://www.firstpost.com/world/bombardier-suspends-business-jet-programme-cut-1000-jobs-2049933.html

#176 observer on 01.16.15 at 5:38 am

We are different in Canada. Our crash is going to be ….
wait for it !!!! “EPIC!!”

Government is still in denial, They know that the sh!t is about to hit the fan, but pefer to toss the ignorant under the bus to buy themselves some time.

I never expect the retail sector to get hit so early, predicted march / april. But this thing is going a hyperspeed.

Things to watch.
1) Rating agencies downgrading the Canadian dollar. And it should a currency fall 20 percent should be rated as junk,

2) Even if interest rates go lower, Its too late cause the bank will tighten up lending. Because CMHC will be dead after the second round of the fall. The banks just won’t lend

3) Bankrupcies will bring CMHC to its knees. And the government will try to wash it as

4) with the new approval processes, the banks will evaluate renewal, That mean you may not get your renewak

#177 Matt Gamon on 01.16.15 at 7:17 am

Will the balanced portfolio save you from the coming downturn? Energy and banks are getting hammered, what’s next?

Diversify – most growth assets non-Canada. — Garth

#178 Brian Romanchuk on 01.16.15 at 8:00 am

#148 prairie person
The SNB has to buy euro bonds in order to keep the Swiss franc weak. Although the SNB can create Swiss francs at no cost, they reached the limit of the the euro bonds they want to hold. One plausible theory is that they wanted to get out before the ECB started quantitative easing, as that would drive down the value of the euro, and hence the value of the SNB’s bonds.

#98 Rising rates “inevitable”? Three words: Black Widow Trade.

#179 LOL Canada on 01.16.15 at 8:55 am

We’ll we didn’t lose our jobs today, but tens of thousands did, and those jobs aren’t coming back. This time is different. Between Robots, Automation, and foreign workers working for pennies on the dollar, there won’t be much work left for people in the next 10 years. From retail to lawyers, we are running out of jobs.

https://www.youtube.com/watch?v=7Pq-S557XQU

#180 fancy_pants on 01.16.15 at 9:23 am

Curious to see how the feds get out of this pickle.

Hands tied to raise rates b/c that would completely shut down the economic engine (largely driven by consumers/credit) and it would have the “ill” effect of correcting RE

Lower rates and the dollar goes further into the $hitter and exasperates the Canadian consumer debt problem and RE bubble more.

at least can than formulate committees and pay their economists overtime to determine with great calculation that “nobody saw this coming.

#181 Smoking Man on 01.16.15 at 9:40 am

What 1 million buys you in real estate in various cities,

The first one, in Vancouver is a beauty.

http://www.vancitybuzz.com/2015/01/house-1-million-vancouver-vs-25-cities/

#182 Mark on 01.16.15 at 9:43 am

“1) Rating agencies downgrading the Canadian dollar. And it should a currency fall 20 percent should be rated as junk, “

Ratings agencies acting because speculators have unduly and artificially pushed one of the world’s most fundamentally sound currencies down temporarily? That’s really not how they work.


2) Even if interest rates go lower, Its too late cause the bank will tighten up lending. Because CMHC will be dead after the second round of the fall. The banks just won’t lend

That’s right. Well, the banks will still lend, but just not at the heavy discounting that Canadian mortgage borrowers are used to. This may be viewed as a refusal to lend, but in actuality, is merely a reflection of new market conditions.


3) Bankrupcies will bring CMHC to its knees. And the government will try to wash it as

Exactly, lots of political turbulence. Which is the main/biggest risk in Canadian banks at the moment. Canadian bank stocks may very well move up or down significantly on comments, without the force of law, made by members of government. Or even by political polling numbers.


4) with the new approval processes, the banks will evaluate renewal, That mean you may not get your renewak

If I was a homeowner in negative or slightly positive equity, I wouldn’t worry so much about a lack of a renewal offer. I’d be terrified that the only renewal offer that shows up is at the ‘posted rate’, or perhaps even worse. Because the bank has done an assessment of my credit-worthiness and determined that I probably do not have a good asset in the house they can fall back upon.

#183 Mark on 01.16.15 at 9:46 am

“Will the balanced portfolio save you from the coming downturn? Energy and banks are getting hammered, what’s next?”

I’m thinking the US tech sector/social media sector has to get hammered sooner or later.

Of course, be balanced and diversified, but make sure you actually are.

#184 Mark on 01.16.15 at 9:48 am

“I wonder how many eastern European families repeated the mistakes of a decade ago and got themselves cheap CHF mortgages? Unwitting FX speculators always get their butts handed to them.”

Borrowing in a low rate currency….dumb as dumb goes.

When will people ever learn:

The interest rate is not the ‘return’ of an investment in a currency.

#185 Joey Bigwood on 01.16.15 at 10:07 am

Garth…are you trying to bolster the failing fortunes of the Liberal Party by denigrating the current leadership? Is it at all possible that Mr Oliver or anyone else had any say in the oil price adjustment? You keep saying that Canada has no say in setting interest rates. Why is it the current government that is suddenly failing Canadians in your eyes?

We’re lucky in Canada…..we can withstand the oil shock in many ways due to our diversified economy and multiple revenues streams of taxation.

What you should be worried about are the global ramifications of Obama’s attack on petroleum. There ar over 5 billion people in over 90 countries directly reliant of oil revenue for basic living…food and shelter and their governments ability to deliver services.

The ‘Green Wave’ Obama has tried to set in motion is already causing mass starvation and governments to collapse. What they need in countries like Nigeria is funding for security as crazies start to massacre people on the fringes of militarized zones. Millions in the Sudan are toast…all because of oil prices.

I don’t think it’s quite fair to dump this black swan on Mr Oliver’s desk. This is a global problem with the chief wrecking ball still in the White House for 22 months.

Don’t forget it was the Liberals platform to spend us out of the last recession…which would have made things worse. Bite your tongue Sir…..Et tu Brute’.

The Harper government has added $180 billion in debt. Our economic growth is half that of the US. Our population is epically indebted. Federal spending has jumped and we have the largest cabinet in history. None of that has anything to do with oil – this is just the latest wrinkle. Ten years of Liberal surpluses have been followed by eight years of Conservative deficits. If I were a card-carrying rightist Reform/Con, I’d be unhappy. — Garth

#186 Andrew on 01.16.15 at 10:07 am

What if the fed’s implement a short term gas tax until the oil prices came back up? I know historically short term has become permanent. but if they just kept the gas prices at $1/L here in Alberta at least.

Nobody would really complain, since it’s still much lower than last fall. Make up for the shortfall in oil revenues that way? Then as oil prices rise, the governments take becomes smaller. Steady gas prices of $1/L until the government receives no more extra $$ than the current gas tax.

Not sure how much revenue this would generate but I imagine a lot! Thus no need for the sales tax talk.

#187 slo mo on 01.16.15 at 10:16 am

deflation…….

and the biggest winner on the TSX?

gold and gold shares

Hardly. Gold is just an alternative place to park cash at the moment. Deflationary influences will crush bullion. — Garth

#188 Kris on 01.16.15 at 10:21 am

We’re a country heavily dependent on exports, which are helped by a low C$. It’s not outlandish to expect other export sectors to pick up some slack as our oil revenues take a hit – and thereby offset some lost oil patch jobs.

Besides, rates aren’t going anywhere in an unstable economy – Period. Time & again we’ve seen this proved.

Let’s not forget the effective tax cut due to low gas prices.

All told, may not be doom & gloom, after all.

#189 Kenchie on 01.16.15 at 10:21 am

“Traders Sell Canadian assets as oil bust spreads”

http://www.theglobeandmail.com/globe-investor/investment-ideas/traders-sell-canadian-assets-as-the-oil-bust-spreads/article22466680/

#190 live within your means on 01.16.15 at 10:21 am

#113 MEANWHILE IN FRANCE on 01.15.15 at 11:03 pm

In addition, France has a lot of nuclear power plants.

#191 Incubus on 01.16.15 at 10:23 am

Europe’s stocks await ECB’s QE boost

http://www.ft.com/cms/s/0/8084cc9a-9cc5-11e4-971b-00144feabdc0.html#axzz3OzhddGqr

Bank of Canada should do the same.

#192 Doug, not presently in London on 01.16.15 at 10:26 am

I’m not surprised about the troubles Target stores are having. Not far from my home there was a Zellers store that closed for about 8 months and was turned into a Target store. With all the fanfare and excitement on TV ads you’d think it was the biggest advance in retail in the world’s history. When it opened I saw it had better food selection (good) but less selection of other goods (not so good). Overall it was a step backwards. These executives at Target should have done their homework first before setting up shop in Canada.

On a different note, while many of you worry about the future I’ve decided to put it all behind me and go to Thailand for 6 weeks. My biggest concern now is how much longer I’ll say in Kanchanaburi (location of the actual Bridge over the River Kwai). As for oil, I have absolutely NO IDEA how long the price will stay where it is now, but am still thinking long term. Did I mention that the jet plane I rode here from YYZ on, as well as that train I rode from Bangkok to Kanchanaburi both run on petroleum fuels?

#193 Ronaldo on 01.16.15 at 10:27 am

#183 Smoking Man on 01.16.15 at 9:40 am

What 1 million buys you in real estate in various cities,

The first one, in Vancouver is a beauty.
————————————————————–

What that clearly showed is that RE in Toronto and Vancouver are toast.

#194 Not a Realtor on 01.16.15 at 10:31 am

#183 Smoking Man said:
“What 1 million buys you in real estate in various cities,

The first one, in Vancouver is a beauty.”
—————————————
It’s not the sticks, it’s the land. You know this?

There is no more land in the downtown core or the North Shore for single family homes. Long gone and a quickly dwindling supply. There’s 4 options:
1) Rip an old beater like this down and build new home – expensive but reality.
2) Buy a smaller more affordable Condo in the central core.
3) Move out to the suburbs. There are lots more affordable options just hope you don’t have to commute.
4) Rent.

#195 honeybooboo on 01.16.15 at 10:41 am

Hey Smoking Man.
I’m surprised that with your dyslexia that you don’t see Jesus is Charlie instead of Je suis Charlie.

Honeybooboo

#196 NoName on 01.16.15 at 11:00 am

@ #161 Bottoms_Up

The real issue here is not the Target lay offs, but what was Target paying these people???

I agree with you that people will eventually will get employed one way or another, and that one of today problem we face now days are low wages.
But keep in mind that target didn’t pull out of Canada because good sales it was because stores were empty all the time, I often went to target just to kill some time, air-conditioned in summer warm on winters. I would spend and hour or two in magazine section a week and just read while I was waiting for my older one to finish what ever she was doing near by.
I did talked to the people on the floor, and I can tell you it wasn’t pretty picture while they were employed (Hammer), I can just imagine what will happen when that 70mil severance fund get depleted. 70mil works out to around 4k per employee. 4k is an average family basic budget for a month…
Maybe some “other” retailer will expand in to the vacuum, but it wont be anything of any significance. Other companies will could see sales increase, and poached few employees, but it will be nothing significant, and those lucky one that will be hired by competition I can tell you now that they wont be better paid than they were at target.
I don’t know how accurate Wikipedia is but target acquired 189 stores and after they moved in they kept open only 133 so right there, 1/3 of former sellers work force gone forever.
http://en.wikipedia.org/wiki/Target_Canada

#197 MEANWHILE IN FRANCE on 01.16.15 at 11:01 am

#192 That is true.
If the prez would be just a bit more business orientated and let go of his socialist ideals a bit, it’s a great place

#198 Mark on 01.16.15 at 11:02 am

” Deflationary influences will crush bullion. “

Ummm, guess someone didn’t study the 1930s. Deflation is awesome for the price of gold, as the implication with deflation is that the only extrication from deflation is devaluation.

Also, for miners, deflation lowers their input costs dramatically. A sort of double whammy of lower production costs, and higher demand for the output of the mines.

Mark, you are tedious. I said ‘deflationary influences,’ which is what we will experience. I did not say ‘deflation’ as experienced in the 1930s, as that clearly will not occur. Gold is a commodity and it will perform just as poorly in the next few years as it has in the past. When money gets more valuable, PMs become less so. — Garth

#199 More to oil jobs gone on 01.16.15 at 11:06 am

The RE crash will just pick up speed and get worse

http://www.businessinsider.com/schlumberger-cuts-9000-jobs-2015-1#ixzz3OwyrlOEV

#200 MEANWHILE IN FRANCE on 01.16.15 at 11:07 am

#30 nonplused.
#172 nonplused

not a troll. Just watching the shit show from afar.

re.: Smoking, indeed I have a medical card.

#201 slo mo on 01.16.15 at 11:09 am

Hardly. Gold is just an alternative place to park cash at the moment. Deflationary influences will crush bullion. — Garth
________________________________________

if you are right, then US stocks also get crushed. so do REITs, and anything that isnt a US treasury

can’t have it both ways

Companies make money and their shares reflect this. Gold pays nothing and is 100% speculative. Learn a little. — Garth

#202 TorontoBull on 01.16.15 at 11:09 am

“Diversify – most growth assets non-Canada. — Garth”
But Garth, the TSX is highly correlated to emerging markets prospects. Wouldn’t that fact suggest that you only need to diversify in the US and perhaps Europe?
On another note, its time to wave the white flag on interest rates increases. You will feel so much better I promise :)

The TSX is not correlated to emerging markets. And the Fed will move in 2015. — Garth

#203 Obvious Truth on 01.16.15 at 11:11 am

#139. Wul

True. Correct translation and personality doesnt always come through. Like reading your stuff and perspective from the Fort mac front line.

At the time I wrote futures looked to bounce off the 200. Wondered who was paying attention. Stock bears and doomers were in their caves waiting for a crash.

Hang in there r purdy. Keep learning. Emotions are your enemy in investing.

#204 TurnerNation on 01.16.15 at 11:23 am

Oil whiners: you missed a good tirade.
Kamel towed.

#205 Tell the Truth on 01.16.15 at 11:27 am

Oil has tanked, copper is toast, currency wars, deflation, the BRIC countries plus Europe either in recession or flatlining, Japan still is truly in a recession, geopolitical tension… Oh gold is up.

Let’s concentrate on easy pickins… Like Calgary real estate. And ignore reality, the stock markets are either going down or flatlining.

Stocks are down 2% on the year, and a balanced portfolio is up. I think you need to worry about Calgary houses more. — Garth

#206 Popeye the sailor man on 01.16.15 at 11:47 am

This CBC Article is so full of the standard tripe it just pisses me off now. No wonder new buyers get suckered. I’ve been reading greater fool for years and can see with little effort the manipulation and false meme building systematically pushed on us.

http://www.cbc.ca/news/business/house-hunting-in-canada-why-500k-may-not-be-enough-money-1.2891512

#207 honeybooboo on 01.16.15 at 11:47 am

#194 Doug, not presently in London on 01.16.15 at 10:26 am
On a different note, while many of you worry about the future I’ve decided to put it all behind me and go to Thailand for 6 weeks.
+++++++++++++++++++++++++++++++++
Doug, are you on a trip to find your future wife?
Tell her you are waiting to buy a house so she can have her say on the neighbourhood.

Honeybooboo

#208 Mike S on 01.16.15 at 11:49 am

“Your government just opted for (b).”

Any possibility they will do the budget after the elections?
(I mean early elections of course)

It is a slow (or fast) slide down for the rest of the year. However you think of it, the situation will look worse come October. They must understand this, so I wouldn’t be surprised to get a significant announcement soon

#209 honeybooboo on 01.16.15 at 11:50 am

Re: TARGET.
No worries everyone. I just heard all stores will be opening as Consumer Distributing stores.

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

#210 TorontoBull on 01.16.15 at 11:50 am

“The TSX is not correlated to emerging markets.”
really?!
http://www.theglobeandmail.com/report-on-business/rob-commentary/rob-insight/sptsx-composite-vs-msci-emerging-markets-index/article6379670/?from=6379546

#211 Daisy Mae on 01.16.15 at 11:50 am

#119 dogman01: “Ok Target, Mexx and Sony now closing, recession and debt addled consumer.

Which REIT owns the malls? I would think they will have big empty spaces and no rents for quite some time.”

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

The stores may close. But they’re still responsible for their lease payments.

#212 Daisy Mae on 01.16.15 at 11:57 am

134 Bottoms_Up: “We’ve had Harper for almost 10 years….”

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

Not because Canadians like or admire the man and his 38% ‘majority’ but because he was the lesser of two evils. The Liberals let us down.

#213 slo mo on 01.16.15 at 12:08 pm

Companies make money and their shares reflect this. Gold pays nothing and is 100% speculative. Learn a little. — Garth
______________________________________

companies dont make money in a deflation…

That was funny. — Garth

#214 Banks have great slogans on 01.16.15 at 12:25 pm

Come on Garth You’re Richer Than you Think… ;)

#215 Capt. Obvious on 01.16.15 at 12:53 pm

It is a slow (or fast) slide down for the rest of the year. However you think of it, the situation will look worse come October. They must understand this, so I wouldn’t be surprised to get a significant announcement soon.

Oh, I think that is a slam dunk and have been thinking we’l have an early election since last fall. Steve and co. know what’s going on and know that their best chance for a majority again is to go to the polls as early as possible this year. The budget delay just reaffirms this in my mind.

#216 Simon Cowell on 01.16.15 at 1:18 pm

Stocks are down 2% on the year, and a balanced portfolio is up. I think you need to worry about Calgary houses more. — Garth
—————————
My porftolio is up. Blessed be FXF/the swiss frank.

As for gold it lately behaves exactly as bond, even gained against a strong dollar. Very interesting.

#217 Sue on 01.16.15 at 1:18 pm

#208 Popeye “…CBC…”

I quite agree. I was gobsmacked yesterday evening listening to the CBC World at Six broadcast (Radio 1 news). A long section that was just a faintly rejigged public relations piece about increasing real estate values and how a person sold her previous house herself (using some tools provided by a vendor) and “saved $22,000 towards the new house!”

Plus, of course, a kitchen, to die for! Wall-to-ceiling white cupboard and granite! Granite!

On this subject, Robert Crumb was recently quoted as saying:
“You don’t have journalists over there anymore, what they have is public relations people. That’s what they have over in America now. Two-hundred and fifty thousand people in public relations. And a dwindling number of actual reporters and journalists.”

http://observer.com/2015/01/legendary-cartoonist-robert-crumb-on-the-massacre-in-paris

It feels like the shoeshine boy moment.

#218 Macrath on 01.16.15 at 1:24 pm

#90 Republic_of_Western_Canada

But that`s what the nimrod said, but without mentioning the Saudis or the Russians.

#219 Victor V on 01.16.15 at 1:25 pm

Smaller communities shocked by Target closure, worry about job losses

https://ca.finance.yahoo.com/news/smaller-communities-shocked-target-closure-worry-job-losses-090012502.html

Jake Lacourse is most worried about job losses.

The president of North Bay’s Chamber of Commerce said 170 jobs will be lost when the Target closes in the northern Ontario city of about 70,000.

“In terms of the retail sector, 170 jobs is significant for our community,” Lacourse said. “We need to immediately look at what can we do for those 170 (people) and make sure they’re well-connected with our employment services.”

#220 Mike L on 01.16.15 at 1:29 pm

#168 r purdy –

I know how you are feeling and I even have a Diploma in Financial Trading as well. As a balanced MF and ETF investor myself I feel the same. In fact, I will be chatting with my broker today just for some “shop/feel better talk”.

If it helps you or anyone reading this, ATB has a Compass Balanced Fund (1.1% MER), that I have and is very diversified:

60/40 with: 60 equities being:

CDN Reits 3.7%
Canada 18.8%
US 21.8%
International 12.4%

#221 Victor V on 01.16.15 at 1:38 pm

Unfazed by market swings, Fed sticks to mid-2015 hike scenario

https://ca.finance.yahoo.com/news/insight-unfazed-market-swings-fed-sticks-mid-2015-062157869–business.html

NEW YORK/SAN FRANCISCO (Reuters) – Tumbling oil prices have strengthened rather than weakened the Federal Reserve’s resolve to start raising interest rates around midyear even as volatile markets and a softening U.S. inflation outlook made investors push back the timing of the “liftoff.”

Interviews with senior Fed officials and advisors suggest they remain confident the U.S. economy will be ready for a modest policy tightening in the June-September period, while any subsequent rate hikes will probably be slow and depend on how markets will behave.

While they are hard-pressed to explain why bond yields have fallen so low, their confidence in the recovery stems in part from in-house analysis that shows falling oil prices are clearly positive for the U.S. economy.

Internal models also suggest that a decline in longer-term inflation expectations probably does not signal a loss of faith in the Fed’s 2-percent inflation goal.

#222 Holy Crap Wheres The Tylenol on 01.16.15 at 1:38 pm

#105 Smoking Man on 01.15.15 at 10:30 pm

#104 Washed Up Lawyer on 01.15.15 at 10:22 pm
#74 Smoking Man

Oh, and your prediction on how Harper will bluff his pair of deuces against a full hand is bang on.
…….

Well as an example, The Gas Plant Carbonator, safe hands Wynee pulled off the same move. And she only had 7 duce
__________________________________________
Ive had enough of the Liberals and could never vote them again after the gas plant deal. As for a national vote with J Trudeau Jr not likely as he has absolutely no credibility. Smoking Man I am a little older that your 56 years and I do recall Pearson 1963-1968, Trudeau 1968-1979, Trudeau 1980-1984, Turner 1984, Chretein 1993-2003 and Martin 2003-2006. The only one that had some good ideas was Martin and he was doomed. The Liberal policy basically sucks the lifeblood out of every tax payer. So it basically comes down to as always the lesser of two evils. Oh yes and by the way never, ever should vote in the NDP or where all sunk. Remember Rae days, good fiscal policy!

#223 Holy Crap Wheres The Tylenol on 01.16.15 at 1:41 pm

Beware Statistics and forecasting too far in advance!

A Biologist, a Chemist and a Statistician are out bow hunting. The Biologist shoots at a deer and misses five feet to the left … the Chemist takes a shot and misses
five feet to the right … the Statistician jumps up and yells, “We got ’em.”

#224 Holy Crap Wheres The Tylenol on 01.16.15 at 1:42 pm

Smoking Man is that really you in the picture?
Well at least you’re working!

#225 Shawn Allen on 01.16.15 at 1:45 pm

TARGET and impact on REITs

Daisy Mae said:

The stores may close. But they’re still responsible for their lease payments.

*****************************************
No, because they have filed for creditor protection.

They decided to stiff landlords, lenders and suppliers.

Knowing this was highly unethical (given a strong parent) and to assuage their conscience’s they decided to set a fund from the parent to pay severance.

This should be treated as an international incident. Americans behaving badly in Canada.

The liquidator will now offer up the leases (which have very cheap rent from the Zellers days). New retailers in the space will get some sweet deals. But is there is no new retailers to come in then the REITs are out money.

Retail is just 3% of XRE. Non-story. — Garth

#226 Victor V on 01.16.15 at 1:49 pm

Target pullout leaves condo project in the lurch

http://www.thestar.com/business/real_estate/2015/01/15/target-pullout-leaves-condo-project-in-the-lurch.html

#227 Mark on 01.16.15 at 2:00 pm

“•Retail REITs make up just 3% of XRE. Non-story.”

Actually RioCan alone is 20% of XRE. And there’s the whole matter of contagion — between Target’s closing, and the general downturn in the “consumer” economy, every lease negotiation manager for every chain of tenants in Canadian shopping malls just gained more leverage to use in future negotiations with the likes of RioCan.

REITs are already a bubble on valuations alone, but the likelihood of downwards pressure on rents for years to come makes them even more significantly bubbly-looking. Just like their cousins in RE, residential RE.

RIOCAN is broadly diversified, Canada & US. Not just a retail REIT. — Garth

#228 Panhead on 01.16.15 at 2:03 pm

#97 victoria – the original on 01.15.15 at 10:10 pm
I was in downtown victoria today. so many retail shops closing down. I was shocked.

———————————————————–
I took a young friend from France over to Vic last week as he wanted to go. I was there last summer. Saw a LOT of homeless people this time. Guess you just don’t see them as much in the “tourist months.” Also noticed the large increase in walk-on traffic on the ferries. They never seemed to stop getting on and off …

#229 S. Bby on 01.16.15 at 2:17 pm

#17 Waterloo Resident on 01.15.15 at 8:06 pm
===============================

That ’08 Corolla is overpriced. Also it does not have the optional power windows or CC which to my view are required. However is does appear to be in excellent condition.
Check out vmrcanada for used car values.

I have an ’07 Corolla as a second car (purchased used last year with 73000 km on it) and I have to say I do like it.

#230 Calgary Boomer on 01.16.15 at 2:18 pm

So no one predicted the collapse of oil prices even though there should be plenty of data on oil supply: production, new and old from around the world as well as data on oil demand/consumption. But all the tall foreheads in government, oil industry and financial industry didn’t have any idea this would happen (well, Alberta did base their budget on $70 oil so we’ll give them that but I thought that was just to be conservative).

And yet the same people now know with apparent certainty that low oil is here to stay for a while and it’s almost unanimous that it will be one to two years. And apparently using the same tools for their predictions as they used to forecast the current decline (not).

So if everyone is saying this and agreeing, then you know they are all wrong, or full of it. But what a great excuse to introduce a new tax and slash deadwood! Bring on the panic.

#231 S. Bby on 01.16.15 at 2:26 pm

#146 Bottoms_Up on 01.16.15 at 12:45 am
=============================

I would avoid any used Honda with an automatic transmission. My ’06 CRV auto trans failed at just over 100,000 KM and required a complete rebuild. Weak automatic transmissions are a known flaw with Honda.
Google for more info.

#232 Linda on 01.16.15 at 3:13 pm

For smoking bumwipe and the other mentally defective conspiracy idiots here:

http://www.theglobeandmail.com/technology/science/2014-sets-mark-for-earths-hottest-year-on-record/article22486786/

#233 Smoking Man on 01.16.15 at 3:16 pm

#226 Holy Crap Wheres The Tylenol on 01.16.15 at 1:42 pm
Smoking Man is that really you in the picture?
Well at least you’re working!
……..

Fail…. Few years ago when I went for my Nexis interview, I got a finger print scan.

The US boarder gaurd says, you don’t do much garding, or work.. These are clean prints.

Ha

#234 NoName on 01.16.15 at 3:17 pm

off topic
but very interesting video 1h long, last 29 years on earth viewed from space.

Timelapse on Google Earth Engine
http://youtu.be/EjMsie2FAXQ

#235 Retired Boomer - WI on 01.16.15 at 3:34 pm

Yesterday went to visit my retired buddy in the Capital City ‘Madtown.’ We had the usual good time. 2 financially well off boomers who look around at the stupidity of others.
What amazed us both is we are the true exceptions today. Not “RICH” by any stretch, but debt free, with enough money in diversified balanced investments not to worry about the price of oil or food, or anything else.

It all started years ago (about 30) deciding debt was not in our interests. No, we did not have new cars, or new homes. Those came later, when we could PAY for them.

Our kids though, don’t exactly share those values, but they are learning (slowly) the old guys were right, and times are not THAT much diffused from yesterday.

So my buddy says: “so, you’re down about 10 grand on your investments, aren’t you worried?” I say no, not really as right now turmoil reigns. I own good companies, and good management always wins.” So, it is my belief. Will that always hold true?

How about “good government.” I don’t know about good, but I will speak for wise government. Wise government does not sell out the governed to private interests. Wise government spreads booth the gains as well as the pains across all economic classes reasonably fairly. Asked if we have wise government in the US today, my answer for those who make the laws is “probably not so much.”

Watching our upstairs neighbors, I would have to reach the same conclusions. All things change…

#236 Better discussions on 01.16.15 at 3:39 pm

Tell your web guy to replace the WordPress comments system with http://disqus.com.

It will elevate the blog dog comments here into a discussion forum like no other in Canada, maybe the world.
But seriously, check it out.

Love your work. Thanks

#237 CalgaryRocks on 01.16.15 at 4:03 pm

Disquss = another spyware so that you can be tracked across the Web. No thanks.

#238 Vincenzo Alighieri on 01.16.15 at 4:33 pm

Would appreciate some advice from the blog dogs on here, regarding paying for school at a college in Buffalo.

I am currently taking a M.S.Ed through a program there (while still working full time for the City of Mississauga), and I am wondering: Should I exchange funds from CDN to US NOW, enough to pay my next 3 semesters of tuition (in USD), before the CDN $ falls lower?

I have the option of borrowing for 15 months at 1.99% interest (no, I didn’t qualify for OSAP), which is enough time for me to pay back my tuition amount in full before a rise in my interest rate. But I am wondering if I should act now and borrow the full amount of my future tuition costs at the current CDN to USD rate?

Any help would be appreciated. Also, does anyone know if I can claim a tax benefit for tuition even though it is at a US school?

Regards,
Vincenzo

#239 José on 01.16.15 at 5:02 pm

Garth,

Many analysts are now predicting that rate hikes in Canada are on hold for even longer – more than a year. If this plays out, how will mortgage rates be impacted in Canada?

Fixed-term rates will likely rise when the Fed moves and the bond market reacts. The BoC rate determines only VRMs. — Garth

#240 Milla on 01.16.15 at 5:02 pm

#163 nonplused

“You are in dreamland. Without Russian gas Europe is toast and it will tack them 10 years to fix it.”

Garth, can’t you see that this is an open Russian Propaganda, why do you let it be here?

#241 bdy sktrn on 01.16.15 at 5:06 pm

Retired Boomer – WI
———————————–
all cheese and cheese flavored products banned in WA state town.

GO SEAHAWKS!

http://blogs.vancouversun.com/2015/01/16/washington-state-city-bans-cheese-ahead-of-seahawks-clash-with-packers/

#242 Victor V on 01.16.15 at 5:09 pm

Gasfrac files for creditor protection

http://www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/gasfrac-files-for-creditor-protection/article22488588/

Gasfrac Energy Services Inc. has filed for protection from creditors after the struggling drilling company failed to find a buyer or attract new customers as oil and gas markets sputtered.

Gasfrac, known for its unique waterless rock fracturing technology, said on Friday it filed for court protection under the Companies’ Creditors Arrangement Act. The move comes two months after it hired financial advisers to seek out strategic options, including a sale.

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

Their Linkedin page suggests 200+ employees, but hard to say number impacted as yet.

And this comment posted on the G&M site:

In conjunction with filing for the CCAA GasFrac laid off a handful of employees. These employees (some having been with the company 7+ years) were let go without any severance, not even what’s legally owed by labour standards. The CCAA protects them from having to pay out any severance right away and the representative from Ernst & Young stated that they would all be able to file a claim for severance “hopefully by the end of February” but no word on when any payments would be made. CEO Mark Williamson held a meeting for all employees on Jan 15th stating multiple times that everything is “business as usual”, it’s comforting to know the company is allowed to continue operating and spending while their laid off employees struggle to pay their mortgage given the lack of severance. Hopefully GasFrac’s customers, vendors and competitors see how they treat their employees and refuse to continue doing business with them.

#243 Blacksheep on 01.16.15 at 5:09 pm

Linda # 234,

Feel free to critique these findings. Note this document was penned before the, carbon tax the herd (in BC) then just piss the money away anyhow, era.

Here’s the link:

http://curry.eas.gatech.edu/Courses/6140/ency/Chapter10/Ency_Oceans/Sea_Level_Variations.pdf

From: M. A. Kominz, Western Michigan University, 2001.

“For example, about 20 000 years ago, great ice sheets covered northern North America and Europe. The volume of ice in these glaciers removed enough water from the oceans to expose most continental shelves. Since then there has been a sea level rise (actually from about 20 000 to about 11 000 years ago) of about 120 m.”

Here’s the math:

Glaciers cyclically melted raising the sea level 120 M (393 ft) within the last 20,000 years. 120,000 millimetres divided by 20,000 years = 6 MM rise in sea level, per year.

Here’s why:

“This is just the most recent of many, large changes in sea level caused by glaciers, These variations in climate and subsequent sea level changes have been tied to quasi-periodic variations in the Earth’s orbit and the tilt of the Earth’s spin axis.”

NO OIL was being burnt 10,000 – 20,000 years ago.

Say it with me: Climate change is natural. Climate change is cyclical. Climate change occurred before man walked the earth. Climate change will occur, long after man’s gone.

#244 Victor V on 01.16.15 at 5:11 pm

Toronto design firm shuts down as top leaders join Facebook

http://www.theglobeandmail.com/technology/tech-news/toronto-design-firm-shuts-down-as-its-top-leaders-join-facebook/article22488349/

Derek J. Kinsman, a creative technologist with Teehan+Lax took to Twitter and said “there are 40 world class designers, developers, strategists, [project managers], and a few others who are now looking for work.” Mr. Kinsman later clarified that he was not among those going to Facebook.

#245 TurnerNation on 01.16.15 at 5:25 pm

# of posts is this blog’s Licks (LIX) index.
300th?

This is not a Toyota Corolla blog.

#246 maxx on 01.16.15 at 5:28 pm

#9 screwed on 01.15.15 at 7:59 pm

“Something big is coming down the pike. So much is happening and the volatility in the financial sector is indicative of the speed with which things are about to unfold in a matter of days, maybe weeks.”

Agree….market weirdness is coming in thick and faster than ever. Some days, I feel like the cat sloooooowwwly backing away in Alien.

This is so not a good time to be holding excess debt.

#247 kommykim on 01.16.15 at 5:31 pm

RE:#245Blacksheep on 01.16.15 at 5:09 pm
Climate change occurred before man walked the earth. Climate change will occur, long after man’s gone.

There were deaths before there were cars. Therefore no deaths are caused by cars. CON/GOP logic.

#248 CalgaryRocks on 01.16.15 at 5:34 pm

#246 Victor V on 01.16.15 at 5:11 pm
Toronto design firm shuts down as top leaders join Facebook

http://www.theglobeandmail.com/technology/tech-news/toronto-design-firm-shuts-down-as-its-top-leaders-join-facebook/article22488349/

Derek J. Kinsman, a creative technologist with Teehan+Lax took to Twitter and said “there are 40 world class designers, developers, strategists, [project managers], and a few others who are now looking for work.” Mr. Kinsman later clarified that he was not among those going to Facebook.

If they world class designers how come they didn’t design an app that allows people to take selfies and send them to their friends. Facebook pays billions for stuff like that.

As it is, they’ve abandoned their own company and signed up for a job. Working with the biggest weirdo in Silicon Valley (and god knows there’s a lot of competition for the title out there)

;)

#249 Happy Renting on 01.16.15 at 5:51 pm

#168 r purdy on 01.16.15 at 2:02 am
I’m a renter, and have no debt, and work as an RN. How do I position myself to benefit from these troubles? I try to have a balanced and diversified index portfolio but I’m sweating right now. Everything except the bonds and REITs are wilting. I am well versed in all the maxims about investing. But emotionally I am having trouble coping.

————-

It sounds like your diversification is working, if some assets are stable or gaining in value as others wilt. It is not ideal to have all your assets correlated.

Is your asset allocation suitable for your risk tolerance? You may also feel calmer if you only pay attention to your portfolio when you rebalance, rather than daily/frequently. Work on controlling your emotions with logic and reason. Your last resort is to go to a heavily-weighted GIC portfolio. You’ll avoid losses (in nominal dollars) but will have to earn through employment income nearly every cent you’ll ever spend. That thought stresses me more than market fluctuations do.

#250 stan colimore on 01.16.15 at 6:00 pm

No interest rates increase any time soon, on the contrary – decline.

Loonie going down the drain: 80 cents this year, maybe mid term target: in the low 70-es.

https://ca.finance.yahoo.com/news/morgan-stanley-canada-1-3-192730511.html

Congratulations to the savers and bondholders.

In this environment rates would be north of 5 % if not suppressed by BOC.

And of course there would be no inflation reported despite the plunge of the loonie.

The BoC will not reduce rates. The Fed will increase in 2015. — Garth

#251 Victor V on 01.16.15 at 6:09 pm

#250 CalgaryRocks on 01.16.15 at 5:34 pm

The 40 mentioned in the article are not going to facebook. They have lost their jobs.

#252 jess on 01.16.15 at 6:18 pm

killed himself at a Nevada gun club

Alfred J.R. Villalobos, key figure in CalPERS scandal …
http://www.latimes.com/…/la-fi-figure-in-calpers-scandal-dies-20150114-story….
2 days ago – Alfred J.R. Villalobos, a former state pension fund board member who faced trial next month on federal corruption and bribery charges, has ..

=========

#253 espressobob on 01.16.15 at 6:26 pm

#168 r Purdy

“But emotionally I am having trouble coping”
………………………………………………………………

Sounds like you have a case of ‘investor remorse’? Look at it this way, markets go down and you feel sick to your stomach, BUY! Markets go up and you feel euphoric, take some profit.

If that fails there is a medicine known as alcohol.

#254 Debtfree on 01.16.15 at 6:34 pm

I didn’t know that your old boss shovels his own snow . At least he’s dressed apropreately for the job he’s doing for canada . He should lend it to Joe owe . However for the new shoe tradition , Joe should buy a bigger pair of shoes . Possibly a bigger nose too. I bet they are really looking forward to tabling the budget . F-35s anyone?

#255 Smoking Man on 01.16.15 at 6:35 pm

#234 Linda on 01.16.15 at 3:13 pm
For smoking bumwipe and the other mentally defective conspiracy idiots here:

http://www.theglobeandmail.com/technology/science/2014-sets-mark-for-earths-hottest-year-on-record/article22486786/
……

Oh my god, story direct from MSM. It must be true. I bow to you Linda.

I was a silly Fool, now that I know it comes from the guys who will never investigate building 7, or even ask, hey Ukraine how about the tower tapes, or even the cockpit voice recorders from MH17..

What was I thinking, pass the cool aid please..

#256 Vanecdotal on 01.16.15 at 7:16 pm

#248 maxx

LOL! Almost fell off my chair. I feel the same way lately.

Contrarians = kitty

The cat survives!

#257 BlackDog on 01.16.15 at 7:21 pm

@TurnerNation re: #247, “This is not a Toyota Corolla blog. ”

No kidding. Lets stay focused people!

I attended a university open house with my daughter recently, and saw a presentation by an Environmental Scientist professor who in a nutshell said that one of his goals was to convince his students that global warming was a real, human induced phenomenon, and if not swiftly, and effectively addressed, an inevitable disaster for the blue planet. Just sayin….

#258 Daisy Mae on 01.16.15 at 8:32 pm

#168 rPurdy: “….but I’m sweating right now. Everything except the bonds and REITs are wilting. I am well versed in all the maxims about investing. But emotionally I am having trouble coping.”

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

Enlist an adviser and pay him to do the ‘sweating’?

#259 Doug, not in London on 01.17.15 at 10:49 am

@honeybooboo, post 209:
I’m not here looking for a Thai wife, but if one should sweep me off my feet and whisk me into a church or Buddhist temple and get me married, I’ll only buy a house in a place where prices are still in touch reality like Windsor. Hey, if I were in Windsor right now I would take that shuttle bus through the tunnel to Detroit and go to the auto show, possibly with that fine Thai lady.

Speaking of motor vehicles, I’ve seen a lot more motorcycles than cars here in Thailand. They run on petrol, just like cars, don’t they? Just thought I’d ask, in case many of you back there in Canada are worried about the future of oil.

#260 Setting the Record Straight on 01.17.15 at 1:14 pm

#141 Bottoms_Up on 01.16.15 at 12:28 am
#101 Smoking Man on 01.15.15 at 10:16 pm
——————————————————-
Ok SM, how do you suppose we ‘solve’ the climate/global warming crisis?

I just booked a flight to the US, on it it shows my carbon footprint. This is borne out of the fact global warming and climate change is real, and that our emissions are causing it.

What should we do to stop this extensive human impact on our environment?
**********
What crisis?

#261 Derek R on 01.17.15 at 3:54 pm

#261 Doug, not in London on 01.17.15 at 10:49 am wrote:
Speaking of motor vehicles, I’ve seen a lot more motorcycles than cars here in Thailand. They run on petrol, just like cars, don’t they?

Probably. However while I was in Beijing in 2013, I saw a tremendous number of electric motorcycles. And hardly a single petrol-powered one. It may happen in Thailand someday too.

#262 Setting the record Straight on 01.17.15 at 5:20 pm

#167 GTA person on 01.16.15 at 1:58 am
Can I argue that this surplus in oil was caused by interest rates too low?

***
In part, yes you can. Shale oil bubble same as housing bubble.

#263 Setting the Record Straight on 01.17.15 at 6:58 pm

For smoking bumwipe and the other mentally defective conspiracy idiots here:

http://www.theglobeandmail.com/technology/science/2014-sets-mark-for-earths-hottest-year-on-record/article22486786/


Did you read exactly how much ‘warmer ‘ it was?
Are you sure this year is warmer? ( hint: statistical margins of error)
Do you know what caused the “increase” in the average temperature ?

#264 Faja on 01.18.15 at 11:12 am

Here is what the creative money barons south of the border have conjured up lately. I wonder if this con is playing out here with our own version of sub-prime (sheeple fleecing).http://www.zerohedge.com/news/2015-01-17/pin-meet-housing-bubble-20

#265 vsr on 01.18.15 at 12:32 pm

John Exter was a Vice President of the Federal Reserve Bank in New York, Vice President at First National City Bank, and a member of the Council of Foreign Relations… although there have been claims he did reside in his mother’s basement while developing this model.

His debt risk model predicted investment flow in a period of excessive debt (it’s never been higher) using an inverted pyramid… his model says that, as debt (and risk of default) increases, investment will seek to reduce counterparty risk.

The rising dollar, an indicator of US economic strength to the ill-informed, is actually a sign that the extreme end of the model is near, as wealth seeks to eliminate counterparty risk in a climate of credit default (and no, derivatives do not provide protection from counterparty risk)…

http://www.thebizsense.com/views/files/2013/09/pyramid.600.jpg

you r welcome