Deal with it

CHILD SIGN modified

Remember the summer of 2013? Of course you do. Rob Ford smokes crack! Cory Monteith dies! The Royals get a new baby! The Obamas get a new puppy! Alberta goes underwater (the first time)! Mike Duffy cheats!

In financial news, the Fed shocked markets by announcing it would eventually end its stimulus spending. Gone would be a massive bond-buying program that had pumped $85 billion a month into the once-flaccid (I know the feeling) US economy.

So what happened? Stocks markets tanked. Investors wailed. REITs, bonds and preferreds went on sale. Bond yields spiked. And this pathetic blog brimmed with doomers saying (a) it’ll never happen because the US will collapse without the cash and (b) anyone with investments will soon croak.

A year later the stimulus was gone. Eighty-five billion to zero, in a methodical, measured fashion. Stock markets restored, as did the value of fixed-income assets. Companies made money, the US economy charged ahead and over 200,000 jobs a month were created.

I mention this because we’re in a new 2013 moment. US interest rates are about to rise for the first time in six years. It’s a big event – just like the withdrawal of government stimulus. It marks a major milestone on the path leading away from the mess in 2008-9. This is what recovery looks like.

And in response? Markets tank. Investors wail. Fixed income stuff goes down. And the doomers try to convince you that rates will never go up because the US would collapse if they did. Plus, you’re going to lose all your money.

Sound familiar? It should. And the outcome will be the same.

Over the course of the next couple of years the Fed will do exactly what it has signalled. Rates will inch ahead steadily and methodically, until what is now just 0.25% becomes 2% – an eight-fold increase – eventually on its way to the historically-normal Feds level of 3%. After a bout of moaning and flailing, everybody will accept this and move on. Those who bought equities or preferreds when they were being dumped and unloved will look smart. They always do.

Incredibly as it sounds, the Fed actually knows more about the strength of the US economy than people in this blog’s comment section. Central banks understand the time to started tightening monetary policy, making money a little more expensive, is before inflation flares or a wage-price escalation happens. In the past 14 months over 3.2 million jobs have been added in the States, which is why cheapo Wal-Mart just gave half a million employees a raise. There’s now competition for workers.

So the certainty of higher rates has spiked the US dollar. In turn that trashed the loonie today (now in the 78-cent range), drove oil way under fifty bucks and finished off gold. Just imagine what will happen if the Bank of Canada reduces its key rate two months before the Fed starts hiking. The flow of capital out of C$-denominated assets will turn into a flood. By September iPhones could cost a thousand bucks. Oh, the agony.

This is why the Bank of Canada won’t. Unless it’s run by a complete fool. A 75-cent dollar will help some exporters, for sure, but will jack the prices of all imports adding to the cost of living, and come when families are already squeezed by debt payments.

Worse, a second rate cut here would only drive the sheeple into another borrowing frenzy. Major lenders are already doing everything possible to rope in the horny. Witness the 1.99% CIBC teaser rate special, or RBC’s five-year, off-the-cuff 2.05% mortgage. No wonder the eggheads at the IMF are once again raising the alarm over our collective stupidity.

The International Monetary Fund, which says houses cost 7% to 20% too much, warns that household debt levels in Canada have shot above those in other countries, that our real estate industry is basically unregulated, and dangerous lending practices are turning mainstream. As this blog has pointed out recently, there’s an explosion in uninsured mortgages as house prices race past $1 million. Buyers unable to scrape together massive downpayments (at least 20% of a seven-figure purchase price) have been borrowing them, usually from subprime lenders often charging double-digit rates.

These are the reasons the Bank of Canada will not cut a second time (unless Stephen Poloz has lost it) and why Canadian rates will actually be higher a few months after the Fed moves. There’s no choice.

Sane people would conclude there’s far less risk in financial assets these days, than in a house. But I think they may be in short supply. The sane people, I mean.

241 comments ↓

#1 Yogi Bear on 03.10.15 at 6:40 pm

A year later the stimulus was gone. Eighty-five billion to zero, in a methodical, measured fashion.

Uhh, a bit disingenuous don’t you think? The $85 billion of new monthly stimulus is gone. The $3.5 trillion worth of new treasuries and MBS are still sitting on the Fed balance sheet.

The money is in the economy. — Garth

#2 None on 03.10.15 at 6:43 pm

I hate buying in just before a dip. I wish I could take back last week. :/

#3 Peter Pan on 03.10.15 at 6:44 pm

Garth, or anyone else here, I decided to put my money into a diversified portfolio. I checked some of Garth’s old posts to get a feel for the asset allocation.

In general Garth recommends about 18% in preferred shares. Is there a further breakdown for this part of the portfolio (only using etfs)?

My wife’s uncle always recommends to sell in May and walk away. I actually looked into it, there is aparently a 34 year track record for this pattern. So is it a good idea to sell the equity part of the portfolio in May and to get back into the market end of October?

#4 Randy on 03.10.15 at 6:45 pm

I wanted to see some deflation….but unfortunately it’s the Cdn Dollar that deflated.

#5 Happy Renting on 03.10.15 at 6:50 pm

Thanks for putting it in perspective, Garth. I love the feeling of “looking smart” for buying when the majority panics unnecessarily.

#6 Yogi Bear on 03.10.15 at 6:51 pm

Also:

Incredibly as it sounds, the Fed actually knows more about the strength of the US economy than people in this blog’s comment section.

I’m sure the same could be said about the Bank of Japan. That still doesn’t mean the Bank of Japan or Fed knows enough (or cares enough) about their respective economies to make prudent, long-term fiscal decisions. Like CEOs focused on quarterly earnings (taking on debt to buy back share at elevated valuations seems like a smart move, right?), the central banks are experimenting. Hopefully they don’t screw us all.

In the past 14 months over 3.2 million jobs have been added in the States, which is why cheapo Wal-Mart just gave half a million employees a raise. There’s now competition for workers.

There are less Americans employed today than there were before the crash. You can’t blame that on demographics – the boomers are just starting to hit retirement age. You can’t ignore the brutally low participation rate and if you think Wal-Mart is increasing pay because of competition for un-skilled labour I don’t even know how to respond to that.

Take a look at Walmart’s quarterly performances over the past 5 years. There is a trend and management has made a strategic decision about how to remedy the situation. This has absolutely nothing to do with a shortage of minimum wage labour.

#7 Reality check on 03.10.15 at 6:53 pm

FIRST! Worth a shot lol

#8 Paul on 03.10.15 at 6:54 pm

Mike Duffy
Is innocent till proven, Oh never mine

#9 Waterloo Resident on 03.10.15 at 6:54 pm

“Canada’s Real Estate Crisis: The China Syndrome”
https://www.youtube.com/watch?v=tctS_vAxNOg

That video sort of explains why we are all so very screwed. Even if you don’t own your own home, you are going to be taxed to death once our housing bubble pops.

Hey they are selling Hydro One. Oops, when that thing get privatized our electricity rates are going up 10 times what they are now.

If you are paying $100 per month in electricity now, imagine how much its going to hurt when you get your bill and its $1,021 per month ??
SCARY when you think about it.
Just might have to put a solar panel in my back yard to save money, it will be cheaper to do it that way than to pay the private sector for their electricity.

Ontario was warned that they do not have a revenue problem, they have a SPENDING PROBLEM. So what does Premier Kathleen Wynne do? She’s going to try to generate more revenue , not cut spending, by selling off Hydro One. I have a feeling that is not very smart for us in the long run.

What she is doing is like a high-income Crack Addict who spends all his free money on Crack, and then when an expert tells him that it’s not a income problem, its his spending on Crack that’s his problem; instead of stopping his buying of Crack, he instead goes and tries to sell off his shirt and pants and shoes, things that he needs every day just to survive. That’s exactly what Ontario is doing right now by selling off the things we need, like our public utilities
= STUPID is as Stupid Does.

#10 David Foster on 03.10.15 at 6:54 pm

Not really looking to get this published as a comment, just wish to suggest you to read a little of another guy’s blog I follow. VERY interesting guy with a look at the world that few have … http://armstrongeconomics.com/armstrong_economics_blog/

.. todays posts aren’t too informative but look around or visit over the next few days and it may open your eyes to the sovereign debt crisis that will hit hard this fall.

cheers!

#11 GoldBug#777 on 03.10.15 at 6:56 pm

Oh Garth, ever the stock market hopeful. Do you write your blogs while watching Jim Cramer too? There’s countless black swans at the edge of crashing this market- I call them gray swans because everybody has now heard about them, but they haven’t yet hit the markets in full. Here’s an incomplete list:

* Japan Abenomics is failing miserably. Japan is still one of the world’s largest exporters, and its JGB market is massive on a global scale. Are you willing to bet against Kyle Bass on this one? (youtube it)

* China GDP is going down down down, and wages are going up up up.

* China real estate bubble / credit bubble is starting to crash. You think that won’t have global ramifications?

* Greece… need I say more?

* Ukraine – Today US “confirmed” Russia has been sending military aid to rebels, so now US is ready to send military aid to Kiev. Ukrain is a proxy cold war with Russia. You think Putin’s bear won’t cause a few bleeding scratches?

* Russia – 50% currency collapse already, but worst part is China is backing Russia’s decision with Ukraine. You would too if you had a 30 year 400 Billion dollar oil deal.

* Switzerland – 1 swiss frank = 1 US dollar. How’s that for another currency collapse (I didn’t even mention Ukraine’s).

* South America – it’s imploding: Argentina debt default, Venezuela is nothing short of in socialistic collapse, Brazil’s Real FX chart looks like a pretty scary roller coaster.

* Canada – 20% currency collapse against USD, Oil crash = Alberta crash. You know this story well enough.

* Then there’s the Middle East *hit show. Too much insanity to summarise in 2 lines, but things aren’t looking better there.

* Portugal, Spain & Ireland are watching what happens to Greece, if Greece Grexits, the rest of the PIGS will be tempted to as well.

* Germany GDP is in the toilet

* France is another Socialistic insanity with Holland at the helm. Too many new stupid policies to list here.

* OPEC cartel is starting to show signs of dissidence

* Baltic Dry index is in nothing short of a collapse!

* Central Banksters the world over have unmanageable balance sheets, who’s going to bail them out in the next global crash? IMF w/SDR’s?

* Nasdaq is having another IPO bubble like it’s 1999. Snapchat worth $19 Billion?? hahahahaha
I could go on… but hey, look the US stock market is up! LOL!!!!!!!!!! Won’t last my friend, won’t last… we have a sky high pile of match sticks the world over, eventually somebody is going to light one of them, then the US stock market will burn to the ground, and no matter how much you are diversified, you will feel it as much if not worse than you did when you diversified your stock portfolio in 2008.

Somebody with a portfolio like that, who ignored guys like you, barely felt the bump. But, it’s academic. No 2008 re-run coming. — Garth

#12 bdy sktrn on 03.10.15 at 6:58 pm

Incredibly as it sounds, the Fed actually knows more about the strength of the US economy than people in this blog’s comment section.
————————————–
i know you don’t really believe this.

after all we have mark, and a dr. of herdomonics.

#13 BG on 03.10.15 at 6:59 pm

I’ve started to accumulate some cash in my young corporation and I’m not sure where to invest it considering it’s taxed differently compared to personal income.

I want to keep it in the corporation to defer personal taxes and leverage the Dividend Tax Credit as much as possible.

Where do you incorporated blog dogs invest your corporation money?

#14 BigEasy on 03.10.15 at 7:04 pm

Garth,

iPhone 6 Plus 128GB $1,229 CDN on Apple Store

#15 zedgt87 on 03.10.15 at 7:07 pm

Lol Garth, your so far off here.

You can’t tell for sure that ‘everything is awesome’ in America’s Economy. Of course your certain of it yourself and you clearly suffer from confirmation bias on that front.

Since QE ended there is tons of evidence that we are staring down a full blown recession. Of course you are blind to any evidence of the such and quote a ‘strong’ jobs report which is normally a lagging economic indicator. What say you to the plunge in factory orders, or how about the collapse of the baltic dry index? What about the surging USD. Point is, all of these things happened the last time we had a credit bubble pop and they are happening right now. OF course though, the famous word apply here right? This time its different? flooding economic markets with money and artificially forcing rates to near zero for 6 years will end differently this time right?

but wait, everything is awesome because america added 295k jobs and stocks haven’t cratered (yet). /sarcasm

Doomers never quit. And have never been correct. — Garth

#16 Mellennial on 03.10.15 at 7:08 pm

Trying find that “Rule of 90” article where Garth actually shows how to calculate net worth. Please help.

#17 crowdedelevatorfartz on 03.10.15 at 7:11 pm

my flaccid “portfolio” needs adjusting…….

#18 TurnerNation on 03.10.15 at 7:15 pm

Lol CNBC tv was flashing the Oil going to $20? Headline today. Must mean a double bottom.

#19 TJ on 03.10.15 at 7:16 pm

First!!! I should sell my house?

#20 Forzudo on 03.10.15 at 7:16 pm

The high value of the U.S. Dollar, as compared to the Canadian Dollar, and soon to the Euro, will however mean that U.S. corporations will have to look to domestic sales more than international sales.

Plus there is always the competition from foreign suppliers, working from bases in Yen or Euros.

#21 ILoveCharts on 03.10.15 at 7:17 pm

It’s finally happening. The sky is falling in Vancouver.

http://www.vancitybuzz.com/2015/03/glass-falls-off-trump-tower-prompting-west-georgia-closure/

#22 Trojan House on 03.10.15 at 7:19 pm

From cheap-o Walmart’s corporate website:

“Current and future associates will benefit from this initiative, which ensures that Walmart hourly associates earn at least $1.75 above today’s federal minimum wage, or $9.00 per hour, in April. The following year, by Feb. 1, 2016, current associates will earn at least $10.00 per hour. ”

Let the spending begin! Widescreens and Benz’s for everyone! Perhaps the 3100 people just laid off at Target in the US will apply at Walmart? Thank goodness for the recovery!

http://news.walmart.com/news-archive/investors/2015/02/19/walmart-announces-q4-underlying-eps-of-161-and-additional-strategic-investments-in-people-e-commerce-walmart-us-comp-sales-increased-15-percent

A job’s a job. A raise is a raise. Do not mock others. — Garth

#23 Babblemaster on 03.10.15 at 7:27 pm

“Incredibly as it sounds, the Fed actually knows more about the strength of the US economy than people in this blog’s comment section.” – Garth

—————————————————

Sure they do. That’s why they managed things so well that’s why 2008-2009 happened.

They managed fine. We survived, learned and have advanced substantially. — Garth

#24 David on 03.10.15 at 7:29 pm

The risks of tightening too soon outweigh the risks of tightening too late. Inflation can be dealt with relatively easily, lost output cannot.

The U.S. hit just over 4% unemployment at the end of the millenium before there was any noticeable rise in inflation.

So why must they raise rates now? What kind of damage are you honestly expecting from inflation if we wait longer?

An irrelevant question, as neither one of us matters. Rates will rise. Deal with it. — Garth

#25 Babblemaster on 03.10.15 at 7:32 pm

“The International Monetary Fund, which says houses cost 7% to 20% too much, warns that household debt levels in Canada have shot above those in other countries, that our real estate industry is basically unregulated, and dangerous lending practices are turning mainstream.” – Garth

——————————————————

Even if housing were to come down 20%, people that have held off buying in the last few years will still have lost out on incredible gains.

Hardly. Financial asset returns have trumped real estate. More to come. — Garth

#26 Marco in van on 03.10.15 at 7:34 pm

I’m down in SFO on a hiring drive as I need to grow my employee base by a further 100 people. Hired about 10 people in Van with Hr capping their salary bands about 40% lower than the same jobs and experience in the valley.

To hire in Van i do some trolling on linkedOut (TM) and get a bunch of entitlement as to their salary needs due to their cost base (RE being the highest).

In the valley, I pay skilled head hunters and the market for the top performers is hot. I have to lump in sign on bonuses and other guarantees. I NEVER heard any mention of entitlement due to anything else than their skill and the competitive opportunities they have as an alternative.

So in Vancouver I have to pay people more because of their cost base and in San Francisco because of the market competition.

So in Van, I hire recently arrived immigrants who are keen and rent (yes they rent, they are from Europe, India AND China) and leave behind the “locals” who are mortgaged to the hilt, desperate and while Canadian are ALSO representative of the same ethnic subgroups.

As an aside, I can tell you from first hand evidence that immigrants do NOT equal new buyers… They equal unpretentious, hard working, keen, capable and mobile.

The pub chat also tells me that 60+% of them want to get through the 5 years it takes to citizenship as quickly as possible working in valuable positions for US headquartered companies to get the fast path to the L1 visa to move to the Silicon Valley.

Executive summary: high real estate costs reduce competitiveness of the labor force and thus work to depress wage income growth that is the lifeblood to sustain long term RE prices… You can’t borrow your way for ever, and the more your wages go to repaying mortgages, the less there is to keep a consumer economy going to create the services based jobs to employ the people who need to pay their mortgages… Get it?

#27 Obvious Truth on 03.10.15 at 7:35 pm

It’s becoming clear now that there may be no good outcome to the economic situation canada finds itself in.

It feels like a darned if you do or darned if you don’t situation.

Don’t think its the swan bird we need to worry about. It’s loons in our own backyard.

The policy responses will be interesting.

#28 tkid on 03.10.15 at 7:38 pm

A lot of people waiting for a repeat of 2008 have forgotten its cause; Lehman Brothers went bankrupt and the Feds refused to bail them out. As a result, the other banks/investment companies refused to loan each other money and it took this long for the Feds to get things back to normal.

In order for another 2008 to surface, the Feds would need to refuse to bail out another huge bank/investment company, and the Feds are not about to repeat that mistake. It won’t matter why the b/ic fails, what will matter is how the Federal Reserve reacts to it.

#29 Funky on 03.10.15 at 7:39 pm

Polozt has already lost his way. We’re losing customers.

“This is what recovery looks like” you say. You guys are the best.

#30 Diaz on 03.10.15 at 7:43 pm

Im a fan of your blog… However sometimes I read you say things you don’t really have proof of. You incorrectly predicted the BoC would keep the rates untouched, and now you’re saying the Fed will increase rates starting soon. Janet Yellen has said in multiple occasions a rate hike will take time and has called for “patience”. Stock markets reacting to rate hikes are just a bunch of speculators.

I guess the question is, how are you so sure the rate hike will happen, and soon?

I said I did not expect the BoC to move, and it was clearly a mistake that it did. As for US rates, they will certainly be increasing this year. — Garth

#31 devore on 03.10.15 at 7:51 pm

Incredibly as it sounds, the Fed actually knows more about the strength of the US economy than people in this blog’s comment section. Central banks understand the time to started tightening monetary policy, making money a little more expensive, is before inflation flares or a wage-price escalation happens.

It’s rather amusing that the internet economics experts continually lambast the fed for reacting too late and too much, they are now incredulous that the fed dares to lead for once, with small measured increments.

You just can’t win with these guys.

#32 HD on 03.10.15 at 7:52 pm

#3 Peter Pan on 03.10.15 at 6:44 pm

My wife’s uncle always recommends to sell in May and walk away. I actually looked into it, there is aparently a 34 year track record for this pattern. So is it a good idea to sell the equity part of the portfolio in May and to get back into the market end of October?

No.

http://canadiancouchpotato.com/2012/05/25/why-isnt-everyone-beating-the-market/

Best,

HD

#33 saskatoon on 03.10.15 at 7:53 pm

two things:

1.) rates will continue to be reduced if necessary to keep the party going until the federal election

2.) job numbers in the US look good on the surface…but take a look at the labour force participation rate, and the drastic numbers of people “leaving” the american workforce

#34 JG on 03.10.15 at 7:55 pm

just heard on CBC NN that a home sold in Vancouver for 54+ million to guess who? Yep, some guy from mainland China. My point? While I agree with Garth that HAM is not the problem in Vancouver, the media “hints” at it. This isnt the first time CBC mentioned “a buyer from mainland China”. If I bought it I wonder if they would say “a buyer from Alberta”?. You can’t blame some poor souls for thinking HAM is the problem. They hear it every day in the news. Just sayin’.

#35 Trojan House on 03.10.15 at 7:55 pm

Not mocking anyone. Your example is rather weak, in my opinion, which is what I was trying to point out. Giving a small raise to jobs that pay at, or just above poverty level unfortunately does not indicate a recovery.

Neither does adding 60,000 waiters and bartenders.

We can’t all be you. — Garth

#36 ILoveCharts on 03.10.15 at 7:55 pm

Marco in van: I think everyone in YVR who works in text needs to read your post. Very insightful.

#37 devore on 03.10.15 at 8:00 pm

#9 Waterloo Resident

If you are paying $100 per month in electricity now, imagine how much its going to hurt when you get your bill and its $1,021 per month ??

That’s quite the fear mongering you got going there. No one anywhere in the world is paying $1000 a month for household electricity. Canada is not that special.

SCARY when you think about it.

The only thing scary is that you might actually believe what you’re saying.

#38 devore on 03.10.15 at 8:03 pm

#18 TurnerNation

Lol CNBC tv was flashing the Oil going to $20? Headline today. Must mean a double bottom.

I wouldn’t base any decisions on what they’re saying on CNBC. Just scan it to get a sense of what the herd is doing, then do the opposite.

Oil isn’t going to $20.

#39 waiting on the westcoast on 03.10.15 at 8:05 pm

I think I am doing better than the Fed… ;-)

I suck at predicting the BoC though…

People think that a 2% rise isn’t that big of a deal. As the US increases its rate and more confidence is found in the US economy by the rest of the world, it will take a larger spread for us to maintain our dollar and will will likely see even higher increases in rates in Canada over time. So we might have a 3% rise in that window. Even 2% will mean a 50% increase in interest payments… Enough to send housing down significantly over time.

#40 H on 03.10.15 at 8:06 pm

The Fed also knows there is virtually no inflation.

It knows the majority of the jobs created were crap. Real crap.

It also know that temp jobs when you have TWO like many people do are counted TWICE in the beautiful headline numbers.

Garth, straight up you have been wrong on rates for a LONG time. This particular case you are exceptionally wrong.

Take a peak and the Dollar index. If you think the Fed is going to be cool with that shoot to the sky while 21 other currencies are being devalued you are seriously not reading the numbers anymore.

The Fed will NOT move for a long long time.

Your are correct. Not until June, at least. — Garth

#41 Cow Man on 03.10.15 at 8:08 pm

# 22 Trojan Horse

Garth said: ” A job’s a job. A raise is a raise. Do not mock others. — Garth”

When Target folded my neighbour a retired PhD, and former Government of Canada employee said, “Maybe now some of them will get good jobs”. Just how disconnected are the haves from the have nots?

#42 devore on 03.10.15 at 8:10 pm

#34 JG

just heard on CBC NN that a home sold in Vancouver for 54+ million to guess who? Yep, some guy from mainland China. My point? While I agree with Garth that HAM is not the problem in Vancouver, the media “hints” at it.

The number of Canadians who are able to compete for $54M houses can be counted on one hand. It’s a story about nothing.

#43 Not a Jingoist on 03.10.15 at 8:11 pm

Real Estate is heating up in Vancouver.
And so is the temper of the Immigrant haters.

GO HAM, GO!

#44 PM on 03.10.15 at 8:11 pm

So focusing on real estate. Rate hikes will lower prices but also lessen buying power due to decreased leverage.

How are those of us that put off home buying in favour of equity investing for the past few years going to fair? Will prices drop more than borrowing value so we be able to afford more house than today? Or do we just manage to stay above water?

What does a buying opportunity look like? What’s the equation here? Obviously debt levels and other indicators show instability but what pricing index do we use to calculate home value? How do you tell when the time is right? Or righter, I suppose.

#45 Talk is cheap on 03.10.15 at 8:12 pm

Ok, talk is cheap, let’s get down to business.

What are we buying and at what price?
Let’s discuss what matters 10-20 years from now.
I’ve got cash…

#46 John on 03.10.15 at 8:14 pm

You are right! No 2008 rerun. This will be 10x worse and there will be no bounce. When the richest man in the world edmund Rothschild says we are in the most dangerous times since WW2 and the 19 year head of the fed alan greenspan says the market is a tinder boxin search of a flame! Get Out of this market! Event in April- big one end of Sept! Anyone in this market is a 100% lunatic, who fails to understand our debt based monetary system and the implications of an unbacked exponential function. How can you quote the lying msm? When baltic dry is an all time low, factory orders are an all time low, lumber ATL, Dr.copper ATL, iron ore ATL, ect ect.

As predicted. Damn, I’m good. — Garth

#47 Adriano on 03.10.15 at 8:15 pm

BUY ALL THE THINGS!!

#48 Talk is cheap on on 03.10.15 at 8:19 pm

nope your all wrong the markets are crashing especially in USA ..

#49 Freedom First on 03.10.15 at 8:19 pm

I live in Alberta, formerly from the east and have lived in 3 other Provinces. So, speaking of sanity. Well, I have been giving ear to the ground reports on what was happening in Alberta before it became mainstream knowledge, and the msm, RE industry, etc., was trying to hide it, and people on this Blog called me a liar because if the layoffs I was reporting were happening they would have already heard about it. Now, back to sanity. The millionaire next door types are still their usual calm selves just living and enjoying their lives, while the leveraged to the nutz people are losing it. You can see it. Negativity and anger due to financial stress are easy to see and very ugly, and public displays of it are becoming common. I have seen it all before, so it is nothing new to me, but it is still a bit shocking to see the younger people who are in trouble experiencing what I would now classify as “terror’. Even more shocking is finding out that they did not even know this could happen. House prices always go up and they would always have a job. Surprise! Being financially solvent is not just important, it is life and death.

#50 H on 03.10.15 at 8:23 pm

Here is a better way to deal with it Garth.

When did the fed seriously raise last time? What were the conditions?

Perhaps was there a very old guy in front of congress speaking of irrational exuberance? Does that ring a bell?

You see at that time you could get stock picks from the guy bagging your groceries. Housing prices were going to the stratosphere. Entire cities were being built in the us with millions of homes nobody even owned. You could buy ANY house and sell it for more later.

At that time a solid several years of crazy growth was occurring, and THEN the fed said, hmmm we need to cool this.

So fast forward to today. I know your belief of “emergency rates” and “neutral rates” are behind the thought. But what you are missing is the new “neutral” is not where it was pre crisis.

Don’t believe me? Than go ahead and explain to me in PLAIN English how you assess negative yields on a risk/scale. You cant cause there is not even financial tools available today to analyze this.

And as for the fed masterfully working in 2008 and 09. I shall direct you to the transcripts now becoming available to the public of that time. They were in pure PANIC mode Garth.

#51 pete on 03.10.15 at 8:23 pm

#9 Waterloo Resident on 03.10.15 at 6:54 pm

Selling off public assets is the CONs number one game move. The only difference is the CONs sell the assets to their buddies for pennies on the dollar like the 407 or the selling of the sky done for $25 million. The CONs are the biggest POS and most anti free markets and anti Canadian party in Canadian history. The free trade sell out deals by harper and BM ( don’t even want to say that Bastard CON name) alone have forever ruined Canada. True Canadian scum.

#52 Vanecdotal on 03.10.15 at 8:26 pm

#26 Marco in van

+++

Way to perfectly articulate what many of us are experiencing and noticing wage / career wise here in YVR.

I would add a lot of this wage suppression effect is playing out not just in the private sector, but in heavily taxpayer subsidized industries as well. I. e. is some cases, local taxpayers are subsidizing their own “wage suppression”. Disturbing really.

#53 Trojan House on 03.10.15 at 8:26 pm

We can’t all be you. — Garth

Not sure what you mean by that.

Of course not. — Garth

#54 M on 03.10.15 at 8:27 pm

The Big White North showed over and over that they love the housing binge MORE than anything else.
This is the reason for which they WILL LOWER rates when housing tanks.

…the fact that later mr market will either push CAN$ to 30 cents US or interest rates north of 7% will be irrelevant for only a black smoking whole will be to be admired.

.. and no, feds will not raise anything. US $ does very well for now since everybody else does so bad. We will see more US fed EASING in a few months (for they’ll say that the US pesso is sooooo strong :) )

one doesn’t need to be a doomer to see it for what it is.

Some stocks will do VEEEEERRRRYYYYY good indeed.

#55 Leo Trollstoy on 03.10.15 at 8:28 pm

My wife’s uncle always recommends to sell in May and walk away. I actually looked into it, there is aparently a 34 year track record for this pattern. So is it a good idea to sell the equity part of the portfolio in May and to get back into the market end of October?

Uncle is wrong. Time in the market beats timing the market. Easily.

#56 Godth on 03.10.15 at 8:30 pm

#11 GoldBug#777 on 03.10.15 at 6:56 pm

I hear what you’re saying but I think you’re drinking the kool-aid with regards to the Ukraine and Russia.

Breedlove’s Bellicosity: Berlin Alarmed by Aggressive NATO Stance on Ukraine
http://www.spiegel.de/international/world/germany-concerned-about-aggressive-nato-stance-on-ukraine-a-1022193.html

Here’s an oldie but a goodie in terms of US foreign policy and the Ukraine specifically. If you follow what these two scholars say with further research, well, I don’t think you’ll be led astray.
https://www.youtube.com/watch?v=S9674pRBm6g

#57 Oil Is Sticky on 03.10.15 at 8:33 pm

In financial news, the Fed shocked markets by announcing it would eventually end its stimulus spending. Gone would be a massive bond-buying program that had pumped $85 billion a month into the once-flaccid (I know the feeling) US economy.

FALSE – the Fed is still issuing bonds. It’s just not called QE.

—–

Companies made money, the US economy charged ahead and over 200,000 jobs a month were created.

FALSE – companies made money by firing tens of thousands of employees and buying back their own stock. Govt employee stats are completely bogus and everyone knows it. There is no point in listing the many reasons why they are bogus.

——-

US interest rates are about to rise for the first time in six years. It’s a big event – just like the withdrawal of government stimulus. It marks a major milestone on the path leading away from the mess in 2008-9. This is what recovery looks like.

FALSE – while it’s not technically false, Yellen yelling out a 0.25% increase in interest rates – one time this year – will by comparison increase the average mortgage by a couple of Starbucks lattes a month. In other words, a non “interest rate increase” event. And the recovery is phoney. For every guy that says “We are busy as heck !!”, there are 5 other guys that got a pink slip, reduction in hours, reduction in wages or some other “loss” of income. Plus you have to ask yourself, how much of this recovery is investment in Fighters, Submarines, Destroyers, Tanks and other death businesses which require TAX DOLLARS to pay for. So in other words negative to the economy not positive. You can’t borrow a trillion dollars from half the people to pay the other half then call it a recovery.

That was so breathtakingly incorrect, I just don’t know where to start. — Garth

#58 John on 03.10.15 at 8:38 pm

These guys dont make ‘predictions’ they make the market do whatever they want it do. These are not blog guys talking. Rothschild family net worth is estimayed at 500 trillion. Wow some people are going to get a real punch in the financial face!
http://horne.vplp.org/2015/03/lord-rothschild-warns-investors.html?m=1
http://horne.vplp.org/2015/03/alan-greenspan-warns-of-explosive.html?m=1

#59 cefd on 03.10.15 at 8:39 pm

And don’t forget the chinese buying up all the premium RE in Vancouver.

http://www.vancouversun.com/business/Priciest+Metro+Vancouver+homes+draw+buyers+from+China/10875651/story.html

America-haters. Chinese-haters. Not the finest night for this blog. — Garth

#60 Snowboid on 03.10.15 at 8:40 pm

#37 devore on 03.10.15 at 8:00 pm…

Waterloo Resident has historically provided wildly exaggerated claims.

First it was the $ 500K Toronto home in 2011 that would be worth $ 10 million in 2017, or the under $ 10K foreclosures the same year in Phoenix.

Then insisting ‘cops’ are more important than doctors to prevent death.

Or the tale of his 2006 Corolla and how it appreciates thousands of dollars a year, while Porsche Carreras can be purchased for half what they are worth, then going on to say the Porsche would have been a better deal!

When his trolling invokes serious responses he asks the wise professor: “Why does everyone have so much ANGER in them these days? Its truly mysterious.”

To which our leader responded: “Just a hunch, but your posts may provoke it. — Garth”

#61 Oil Is Sticky on 03.10.15 at 8:44 pm

#9 Waterloo Resident on 03.10.15 at 6:54 pm
“Canada’s Real Estate Crisis: The China Syndrome”
https://www.youtube.com/watch?v=tctS_vAxNOg

That video sort of explains why we are all so very screwed. Even if you don’t own your own home, you are going to be taxed to death once our housing bubble pops.

——

We are already taxed to death in BC. The transit tax vote is going to enshrine that idea in stone over the next couple of months when 60 to 70% of the public votes NO.

#62 boss hog on 03.10.15 at 8:44 pm

I don’t totally agree with your response to my post last night but I respect your opinion and what you are doing. Quick question: Althouse, Cody, Crawford or Lewis? Or was that after your time?

#63 cefd on 03.10.15 at 8:46 pm

“America-haters. Chinese-haters. Not the finest night for this blog. — Garth”

Where did i say i hated anyone? I am merely pointing out fact. A Fact you vehemently deny.

Van prices are the result of Van residents being idiots. They are not the result of a Chinese idiot. — Garth

#64 Keith in Calgary on 03.10.15 at 8:46 pm

I you fill the bathtub to overflowing you can turn off the tap, and the effect will remain the same.

That is what happened with quantitative easing. There are now trillions of dollars floating around in cyberspace looking for a yield, and as there is no yield anywhere but in the stock market scam, they don’t need to print anymore, as the damage is done.

Rates……..the FED only talks abut raising rates to scare the market, because they cannot afford to do so. We will not see 2008 interest rates again for 20 years.

#65 charles on 03.10.15 at 8:46 pm

It was explained how to short the market a couple of weeks ago. Then how to do it on borrowed money.
It doesen’t get any better.

#66 DaveinSylvanLake on 03.10.15 at 8:47 pm

If the Fed raises rates, the bond market goes bye-bye.
With regard to the economy, debt servicing ability becomes harder and the velocity of money keeping the stock market afloat, slows and leveraged positions become exposed.
Care to place a friendly wager Garth?
If the Fed raises rates later this year I’ll cut your grass, if they don’t, you cut mine.

#67 Vancouverite on 03.10.15 at 8:48 pm

Garth,

Wonder what would it take for Finance Minister Joe Oliver to intervene in the housing market? (eg. reduce limit CMHC mortgages from $1 million to $600K instead)

http://business.financialpost.com/2015/03/10/why-finance-minister-joe-oliver-isnt-intervening-in-canadas-housing-market/

Why Finance Minister Joe Oliver isn’t intervening in Canada’s housing market

“On Tuesday, the IMF issued yet another report urging the federal government to tighten its reins on the financial system and spread more of the mortgage-lending risks among the private sector, citing new concerns over high house prices and huge consumer debt”

“Mr. Oliver’s reaction on Tuesday was similar in tone and brevity to previous calls for further intervention. “We will take further action if appropriate,” he told the Financial Post. “However, we do not see the need for a major change at this time.””

#68 Doug in London on 03.10.15 at 8:48 pm

Wow, I remember the summer and fall of 2013 all to well. It’s when Boxing Week came early and preferred shares, REITs, and utility stocks were ON SALE!!!!!! Oh, equities and preferreds are on sale again you say? That’s odd, I thought the next statutory holidays to come were Good Friday and Easter, not Christmas and Boxing Day.

#69 Oil Is Sticky on 03.10.15 at 8:50 pm

That was so breathtakingly incorrect, I just don’t know where to start. — Garth

——

Any non-govt website examples of accurate numbers would be appreciated for all your blog readers. Please. Even just one website that posts accurate factual numbers that contradict your statement.

And where are the America haters? I absolutely love the USA. People in the US are much friendlier than Canada I have found. Just got back from Boston yesterday. Like most places in the world right now, its the govt people do not like not the people.

#70 Mark on 03.10.15 at 8:55 pm

On what planet has the economy come anywhere near ‘recovering’? Where are the inflationary pressures? Where are the wage increases? Where are the pricing pressures?

The narrative that the economy is doing well enough to warrant policy rate hikes might seem like a nice message to parrot by the permabulls, but is not rooted in evidence.

#71 Karma on 03.10.15 at 8:55 pm

Poor Garth, fending off the doomers like there is no tomorrow!

Keep up the good work, Garth. Put them doomers in their place.

Truly, the writing is on the wall about the Fed hikes. There isn’t even a discussion going on in the MSM about any other option. The debate is between June or September. Yellen has the fortitude to end “Greenspan’s Put” once and for all.

#72 Hot Albertan Money on 03.10.15 at 8:58 pm

A year later the stimulus was gone. Eighty-five billion to zero, in a methodical, measured fashion.

No new money that is. The Fed is still reinvesting the proceeds from the bond buying program

#73 Brian Ripley on 03.10.15 at 8:58 pm

“Rates will rise. Deal with it.” — Garth

I simplified my “real” long Bank of Canada bond chart that also has an overlay of the TSX Real Estate Index.

http://www.chpc.biz/real-interest-rates.html

If the pattern repeats – the inflationistas might drive real estate up even more.

But will the pattern repeat?

The real estate index is already starting from a very high point historically.

If Garth is correct about rising rates (rates rising nominally) and if CPI continues falling (deflation) which pushes the “real” rate higher, then fundamentally real estate prices should drop as investor preference for yield (dividend paying stocks?) grows.

The fly in the ointment is a continuation of the tulip bulp mania for single family dwellings being bulled higher in an environment where the Canadian national sales numbers have been flat for 4 years:

http://www.chpc.biz/6-canadian-metros.html

#74 Johnnyfish on 03.10.15 at 8:59 pm

Corporate America is making money. People, middle class people , human beings are not. Increasingly [email protected]#tier jobs, lower wages, end of over time, longer hours, reduced benefits, and the vanishing pension is not exactly a formula for successful living. The same formula exists up here. It sucks. In 1977 I was a kid working part time in a unionized environment. Owned a car, monthly wage increases, full benefits, Christmas bonus, and most importantly people were happy working. It’s all gone , and I pray for our kids.

#75 Hot Albertan Money on 03.10.15 at 8:59 pm

These are the reasons the Bank of Canada will not cut a second time (unless Stephen Poloz has lost it) and why Canadian rates will actually be higher a few months after the Fed moves. There’s no choice.

I get why the Fed will raise the rates, because the US economy is stronger. But since Canada is in the tank, why would we raise rates? Just to keep the pace with the States? This is what I don’t get

(Sorry for the double post, but forgot to ask)

#76 zedgt87 on 03.10.15 at 8:59 pm

It is very telling that Garth insults everyone who disagrees with him.

Sadly, they keep returning. — Garth

#77 Ole Doberman on 03.10.15 at 9:06 pm

There is NO way in hell Bernanke will raise rates knowing full well the catastrophe that would cause the debt markets. 18 trillion UD debt and counting, not to mention the 156 trillion world debt.

The bond market crash would ring in the real Great Depression. You heard it here first.

-Doberman

Bernanke is gone. The bond market fully expects the Fed to tighten this year. — Garth

#78 Godth on 03.10.15 at 9:06 pm

Congress’s Poison-Pen Letter to Iran
http://www.newyorker.com/news/amy-davidson/congress-letter-iran-nuclear-negotiations-netanyahu

The USA has officially gone insane. WAR! Here there everywhere, one massive failure at a time. Full spectrum dementia.

#79 Smoking Man on 03.10.15 at 9:08 pm

Element 15 is all I’m saying.

I need to move fast, as we debate rates and real estate. UCC sends me a strong message, NEOCONS AND RUSKIES are preparing for an all out Nuke war…

Total madness, I’ve sent out an urgent distress call to Nectonite for back up, someone has to stop this shit.

The crap I do for you animals.

Humans.. Is all I’m saying.

#80 Vanecdotal on 03.10.15 at 9:08 pm

#64 Vancouverite

Good question.

“Mr. Oliver’s reaction on Tuesday was similar in tone and brevity to previous calls for further intervention. “We will take further action if appropriate,” he told the Financial Post. “However, we do not see the need for a major change at this time.”

I think what he actually meant to say is “we do not see the need for a major change until after the election”…

#81 Ole Doberman on 03.10.15 at 9:10 pm

Van prices are the result of Van residents being idiots. They are not the result of a Chinese idiot. — Garth
———————————————————–

Garth I have to disagree here – what kind of banks would lend the avg family making 72k a year a million bucks for a house. HAM places the bigger role here.

#82 Nobleton Bill on 03.10.15 at 9:12 pm

“RBC’s five-year, off-the-cuff 2.05% mortgage.”

I can’t find it, does anyone know what/where he found that?

#83 Kidd on 03.10.15 at 9:13 pm

“RBC’s five-year, off-the-cuff 2.05% mortgage”
Can’t find it on their website, Where Can I sign up? haha

#84 Holy Crap Wheres The Tylenol on 03.10.15 at 9:14 pm

#274 JimH on 03.10.15 at 6:09 pm
————————————
Nope and don’t care either!

#85 Karma on 03.10.15 at 9:22 pm

#35 Trojan House on 03.10.15 at 7:55 pm
“Not mocking anyone. Your example is rather weak, in my opinion, which is what I was trying to point out. Giving a small raise to jobs that pay at, or just above poverty level unfortunately does not indicate a recovery.

Neither does adding 60,000 waiters and bartenders.”

100% disagree with you.

Firstly, that’s about $1bn extra dollars annually for the lowest rung of the economic ladder. That’s money that will be spent immediately, most likely, which will help the neighbourhoods of where those people live. In February 2016, Walmart’s minimum wage is going to $10 per hour. Which is a significant jump for those on the lowest rung of the ladder.

Secondly, Walmart is the market leader. It sets the pace. It will cause other companies in the retail industry (and other low-waged services) to do something similar. It won’t change everything, but it will undoubtedly push up wages across the industry by some measure. This is a good thing.

Thirdly, you and others may think 60,000 waiters and bartenders isn’t an important figure, but to me it looks like demand for entertainment and casual dining is going up. That sounds like disposable incomes are rising, or that people are feeling comfortable enough to spend some money treating themselves. Or it could mean people are spending frivolously like before the financial crisis. But it’s likely the former since, as Garth said, 3.2 million people with more cash in their pocket than when Bernanke was the Fed Chair… And that’s what matters.

#86 quebec econ on 03.10.15 at 9:22 pm

‘the Fed actually knows more about the strength of the US economy than people in this blog’s comment section.’

I resent that last comment. I do believe the US is moving along nicely and agree that a hike is imminent. Yellen and Ben have done an amazing job with the forward guidance and I always enjoy listening to the QA period after Fed statements…They are both brilliant individuals, never I have I heard a slip of logic from them, amazing people.

On the other hand, Poloz is a goof. I don’t know how he managed to get the job, probably from lack of quality economist in Canada (Carney was brilliant) I probably should have applied. LOL. Poloz is from the 70s, how can you not respect ‘forward guidance’, for the average (or greater) fool it could seem like a ridiculous concept, but from economic theory it plays a essentiel role in providing information to minimize volatility. In the world today this information minimal stability is a necessity to make financial decisions.

Personnaly I think Poloz should loose his job and don’t let him go back to EDC, its doing much better since he left!

#87 Smoking Man on 03.10.15 at 9:24 pm

#76 zedgt87 on 03.10.15 at 8:59 pm
It is very telling that Garth insults everyone who disagrees with him.

Sadly, they keep returning. — Garth
……

Ha garth never insults me, it’s called hedging, Him Dorothy and Bandit may need a ride on my space ship shortly.
Everyone is welcome..

Now Mark, we already have a robot on the ship, you can join us provided you don’t talk or type.. It’s a long flight back to Nectonite, and I’ll probably be out of booze by the time we pass the moon, so it’s for your own good.

I get cranky sobar. Understand.

#88 Trojan House on 03.10.15 at 9:26 pm

Of course not. — Garth

Unfortunately Garth we can’t all be like you – part of the one percent crowd. Just make sure you pay your taxes.

And anyway, perhaps I work at Walmart.

#89 Hot Albertan Money on 03.10.15 at 9:28 pm

Last one I promise…

If the Fed will raise the rates in June, why did the markets move so much today?

Because investors believe the Fed will raise its rate in June. — Garth

#90 omg the original on 03.10.15 at 9:29 pm

A BUNCH OF OTHER THINGS THAT WOULD NEVER HAPPEN

Humans have a really hard time seeing past their current reality.

So we really have a difficult time seeing believe that the further will be any different than today.

Thus we have the majority of people thinking that interest rates will be ultra low for years (and maybe even forever).

Here are a few examples of things in my lifetime that would NEVER CHANGE.

Late 1970s – oil will NEVER see $20/bbl again – by the mid 1980s it was sub $10.

1979 – the oft mentioned “Death of Equities” cover of Business Week – stocks had a dismal 1970s and of course that would continue forever. The Dow in 1979 was sub 1000 – not a bad level to have bought in at.

Early 1980s – interest rates were over 15% and some forecaster were calling for 20-25%. Nobody could ever believe they were going to steadily decline for the next 20 years.

1980 – inflation had been running at 7-12% for much of the 1970s/early1980s and the economy was stagnant – hence stagflation was viewed as the new normal. Inflation would steadily decline until by the early 1990s the “new normal” was 2% inflation. The economy had a roaring 1980s and 1990s. So much for “stagflation”.

Not so long ago $100 and even $200/bbl oil was a given forever into the future. The world was running out of oil – again. Now we are awash with the stuff.

Let’s not even bother to get into the “forever” 15-20% revenue growth expectation for internet companies during the dot.com era. How’s that Nortel stock doing?

Now we have several years of ultra-low rates and people are suckering themselves into believing this is the new normal.

Anyone that truly believes this is the “new normal” into the future are really putting themselves at a HUGE disadvantage.

#91 Mr. Monday Night on 03.10.15 at 9:31 pm

Lots of hyperbole tonight…30¢ dollar, $1,000/month hydro bill, $20 oil…guess we’re headed down Cyprus Blvd.

Anyone going to call the seizure of Canadian deposits from the banks? Anyone?

#92 quebec econ on 03.10.15 at 9:31 pm

…in that last comment (above) I had a flash.

For the last 15 years Poloz has been at EDC (export development corporation). The only logical move to explain why he lowered rates was to weaken the dollar, which most economist will agree was not needed at the moment. Maybe in his 15 years at EDC he had developped a yearning for lower currency to help most of EDC’s clients (including oil sands)…It all make sense Poloz was strongly biaised to help exporters and reduce rates without understanding the implication for ‘non-exporting’ business.
Common Garth you have some smart people leaving comments (btw: I know I can’t spell worth a rat’s ass in English…i work in french)

#93 zedgt87 on 03.10.15 at 9:34 pm

It is very telling that Garth insults everyone who disagrees with him.

Sadly, they keep returning. — Garth

At least you openly admit your confirmation bias. I guess you basically want this comment section to be nothing more than your echoing chamber.

Think we’re way past that. — Garth

#94 SWL1976 on 03.10.15 at 9:36 pm

I love your optimism Garth, and do hope you are right…

But my research, observations, and intuition tell me otherwise.

#95 SWL1976 on 03.10.15 at 9:45 pm

#88 omg the original

A BUNCH OF OTHER THINGS THAT WOULD NEVER HAPPEN

Humans have a really hard time seeing past their current reality.

So we really have a difficult time seeing that the future will be any different than today…

————————

You are correct. Things are about to get very, very different from today and many people cannot see it, and even laugh and poke fun at the warnings

#96 Millmech on 03.10.15 at 9:48 pm

Can someone explain to me how people can howl in outrage at being priced out of an overpriced market by “smart” foreign investors, if these investors were so smart would they not wait out the correction like any smart investor and buy low and sell high.The smart ones are selling now!

#97 omg the original on 03.10.15 at 9:49 pm

SERIOUSLY, POLOZ IS NOT THE PROBLEM

Its always easy (and might I add simple-minded) to call public figure idiots. I do not know Poloz but do appreciate the hard place he finds himself in.

The guy has inherited a ticking time bomb, brought to us by the political decisions made over the past decade to encourage a hot housing market. While Mark Carney became a rock star by navigating Canada through the abyss of the GFC, he also laid the foundations for a massive uptick in housing.

So against that pressure he has to;

1) – make sure the Canadian economy does not crater – this in the short-term requires a strong housing sector.

2) – keep the dollar from falling to 70 cents.

3) – keep interest rates low.

Poloz’s problem is that keeping rates low will keep the housing juggernaut alive. But in the face of US rate growth keeping Canadian rates low will topedo the Canadian dollar and import inflation on offshore goods.

Carney understood well the old civic servant adage of not worry too much about f’ing-up just get out before the SHTF.

#98 Ms.X on 03.10.15 at 9:49 pm

“#9 Waterloo Resident

If you are paying $100 per month in electricity now, imagine how much its going to hurt when you get your bill and its $1,021 per month ??

That’s quite the fear mongering you got going there. No one anywhere in the world is paying $1000 a month for household electricity. Canada is not that special.

SCARY when you think about it.

The only thing scary is that you might actually believe what you’re saying. ”
In 2008/2009 we were renting in Wellington NZ where our electricity bills were on average 800 to 1000 NZ $ a month in winter . We were still cold. Lights off in rooms not in use 1 heat pump etc. Pretty frugal energy users. No insulation . People there wear their coats inside during winter and think it’s normal. Energy companies were always reporting profits for their shareholders.

#99 Pump and dump on 03.10.15 at 9:50 pm

#87 Smoking Man on 03.10.15 at 9:24 pm

If your ship was manufactured by BBD I suspect you won’t get far off the planet.

#100 tundra pete on 03.10.15 at 9:51 pm

Do your homework. Trigger events have come together in the U.S. Once shuttered factories are spewing out quality goods with top drawer technology. Hipsters running big factories at top efficiency from their device. Quality products creating many skilled positions with decent pay. Hence the stock markets reactions. Millions of jobs created although some prefer to doubt the stats. Certainly not a Starbucks or fast food job creation misconception.

Decades worth of cheap natural gas and crudes (not toxic bitumen) that will power this rennasaince for a long time. All this coupled with a highly efficient system of transport than can move goods to consumers with eco- friendly,time sensitive schedules.

Don’t bet against the U.S. Best put some money into it. Oh yeah, I just suggested 10 ideas of what you can profit from.

#101 Dave on 03.10.15 at 9:53 pm

The bull market in the US just celebrated its 6 year anniversary, the S&P is up over 200% from the bottom. This has been an incredible run fueled by the Fed reserve, but now they are taking the punch bowl away.

Too many people get confused – the stock market does not directly track the GDP or strength of an economy. Stock markets simply put a valuation on companies ability to increase/maintain profits. Over the long term markets always go up – so trying to time the market is a bit of a fools game. However, once the Fed starts to tighten – markets can no longer withstand the frothy valuations.

#102 Kilt on 03.10.15 at 9:53 pm

The explosion in subprime mortgages – any factual numbers on that, or is it just rumor. I’ve heard an increase of 25% YOY, but if you are starting from a low number a 25% increase isn’t significant, nor is a 1 year comparison.

Kilt.

#103 Willy on 03.10.15 at 9:53 pm

A 75-cent dollar will help some exporters, for sure, but will jack the prices of all imports adding to the cost of living, and come when families are already squeezed by debt payments.
___ ___ ___

Prices have already increased in grocery stores and retail as a result of our currency depreciating over the past 3 months. Worse is yet to come. Once the inventory purchased with the 80 cent dollar hits the shelves we will see yet another spike. Many firms hedge by purchasing USD goods with USD forwards booked 3-6 months in advance. This creates a timing difference between the depreciation of the CAD and real price increases. The real price spikes will hit this summer. Later this fall we may see another spike, just before Xmas should CAD%$ hit 75 cents in the late spring.

That $1,500 bucks saved on lower petrol will evaporate into thin air.

#104 Saskie to SoCal on 03.10.15 at 9:57 pm

Its amusing to read the doomer comments here predicting a crash in the US economy. I recently moved to LA from Saskatchewan (I know, lucky me!) and – what can I say – opportunities abound! Not only am I earning 125% for every USD dollar I earn over the CAD (so glad I got my money out before the CAD tanked) but there are so many jobs that don’t involve digging out resources and exporting them!

So much innovation here! None of the tall poppy syndrome you see in Canada. They are building a high speed rail line between San Diego and San Francisco for $68 billion! Nobody even blinks. So much wealth here.

Our investments have returned 95% over the past year. All individual stocks (I know, not Garth’s style), but all diversified and winning.

This place is shifting from recovery to growth. Stores and restaurants are teeming, lots of new construction and renovations going on, tourism is up. People are optimistic and spending. The economy has rebounded for real. Interest rates WILL rise.

#105 Stephen Harper on 03.10.15 at 9:59 pm

Wow – what a night! Keep all the hate coming kids. Once C-51 is passed, I’ll have my secret police round you all up.

#106 Smoking Man on 03.10.15 at 10:00 pm

This is why THE FED will spike rates, because they said they would.

Fundamentals as Robot Mark said don’t support it, today’s economic news was a disaster.

The White House, Obama is worried about the high dollar, especially because every industrialized country is in a currency war. Hoping to boost exports and keep deflationary pressure off.

But Obama does not run the show, The Neocons do.. The NATO commander, love something, runs his own show.

Credibility is everything, Yellen is a closet NeoCon…

Rates are going up down south, just once.

Ahhhh credibility…

Oh and after Canada makes law the spy bill… You will never here me say the word NeoCon again…

Old enough to remember Chilly…

#107 Waterloo Resident on 03.10.15 at 10:02 pm

That picture of the kid being carried away by the bird; reminds me that I’ve got to try HANG-GLIDING this summer. I think that would be fun. Only problem is that I’m afraid of heights, so the moment I took off I would pass out and… well… it wouldn’t end pretty.

I have no idea if interest rates are going up or not, but usually the market is the better judge of what’s going to happen 6 to 9 months from now, so just look at the charts and they will tell you where we will be in a few months time from now (6 to 9 months).

Look at these 3-year charts of 5 year treasury notes and 10 year treasury notes and ask yourself does either of them appear as if we are going to have rising rates anytime soon? :

http://stockcharts.com/h-sc/ui?s=$FVX&p=D&yr=3&mn=0&dy=0&id=p85780948287

http://stockcharts.com/h-sc/ui?s=$TNX&p=D&yr=3&mn=0&dy=0&id=p85780948287

You look at those and make up your own conclusions.

( I just asked a professor of economics that I know, what would happen if Hydro One was sold to the private sector. I was told that an extreme rate rise would kill demand and that would be counter-productive for the investors, so even a 100% sale of Hydro One to the private sector would result in no more than a 20% to 25% rise in rates for the first 5 years, so my fears are way overblown, and that’s good news. )

#108 estrella on 03.10.15 at 10:03 pm

It’s all gonna be okay everyone. http://www.theglobeandmail.com//report-on-business/rbc-ceo-david-mckay-bullish-on-canadian-housing/article23397854/?cmpid=rss1&click=sf_globe

quick quote:
David Mckay from RBC:
As for single-family homes, he said there has been a shortage of new homes built in key markets such as Vancouver and Toronto, and new land is not being released into construction.

“A lot of the price inflation that you’re reading about in the Canadian housing market is largely driven by lack of supply in single-family homes, strong household formation, strong immigration numbers – so demand is still there,” Mr. McKay said.

However….

And McKinsey Global Institute found that the Canadian household debt-to-income ratio was the world’s second highest, next to Greece, between 2007 and mid-2014. It added that debt burdens are higher today that they were for U.S. consumers prior to the housing collapse there.
But Mr. McKay reminded his audience that, due to Canadian government guarantees on mortgage insurance, bank balance sheets are protected from property losses of less than 25 per cent.

For RBC’s uninsured mortgage portfolio, he said the average equity holding is 45 per cent, protecting the bank from a housing market that is showing no signs of stress.
Truly a laughable article. I highly recommend for a good belly laugh.

#109 Willy on 03.10.15 at 10:03 pm

A lower dollar will only boost a value added sector that has been decimated (particularly in Ontario down between 30-40%) over the past decade. Even if our value add sector hits capacity riding a 75 cent dollar don’t expect a big drop in unemployment or lots of high paying jobs.

Last time I looked the US auto-makers were making for the exits in Canada. Don’t expect this trend to halt with the low dollar either. The soulless urban sprawl we call the GTA and most of southern Ontario is no longer competitive or attractive to value add investment in plant. Worst grid-lock in North America, outrageous housing prices, lower quality of life and an expensive workforce.

#110 Freedom First on 03.10.15 at 10:10 pm

#90 omg the original

Great post!

#111 Willy on 03.10.15 at 10:11 pm

Saskie to SoCal on 03.10.15 at 9:57 pm wrote:

… Not only am I earning 125% for every USD dollar I earn over the CAD (so glad I got my money out …

__ __ __ __

Don’t get too cocky, it was amazing how quiet many Canadians earning USD’s became the CAD hit $1.10 a few years ago. Our petrol dollar is down and out right now but this can all turn on dime. Oil is finite and $50 a barrel oil is an abberation. China is still putting more cars on the road each year than exist in all of Canada!

#112 Marco on 03.10.15 at 10:16 pm

@Ole Doberman

“Garth I have to disagree here – what kind of banks would lend the avg family making 72k a year a million bucks for a house. HAM places the bigger role here.”

I think the cheap lending that was done just after 2008 when house prices in Van started to drop toward 500,000, plays a large part in today’s market. Many of these local house owners are simply selling to each other. Between 2000 and 2003 it was around 300,000 avg.
Boomers holding on to property for 20-30 years-plus who sell to one another and so on and so on. In desirable areas, way above 1 mil. like West Van, North Van and West side you’re going to see foreign buyers but not all, there are local and nationwide wealthy investors as well. Besides some of these areas have always been over the top expensive.
As well as bank of Mom and Dad who leverage their own home to help with a downpayment.
I personally think we will start correcting like in 2008 toward the 500,000 avg. mark, and there won’t be anymore ammunition to stop it this time.

#113 Smoking Man on 03.10.15 at 10:16 pm

#99 Pump and dump on 03.10.15 at 9:50 pm
#87 Smoking Man on 03.10.15 at 9:24 pm

If your ship was manufactured by BBD I suspect you won’t get far off the planet.
……..

Let it go Man, even Drunkin aliens are wrong a few times a decade..

#114 Retired Boomer - WI on 03.10.15 at 10:17 pm

#57 Oil is Sticky

I am not sure of what you’ve been smoking, or dropping, but it full of non-facts.

The best run companies in America pay regular dividends, and most increase them regularly by a hell of a higher percentage than you, or I get (got) in our paychecks.
Oh, and you might get some capital gain via stock price appreciation as well.

The U.S. retires, and replaces bonds everyday. (You might have noticed those 6-7-8% Bonds issued 30 years ago are being replaced with much cheaper ones today.

Yellin (probably) will increase rates this year. How much, how fast, how far, your guess is as bad as mine.

MY job is to keep my money earning money. I do that with a mix of things. Some days I get rewarded, some days I get handed by behind. Overall though, I beat inflation by 3-4% on average. Some years I do MUCH better than that, other years well not so good! I can sleep at night knowing I don’t give a dam about paying tomorrows’ bills. They ARE covered! Life is DARN Good!!

Hope your life is feeling the same or better. Regards!

#115 april on 03.10.15 at 10:19 pm

#81 – some of these people buying million dollar homes have a huge deposit or cash from a previous home sale. It’s not all foreign buying.

#116 angela on 03.10.15 at 10:24 pm

“Incredibly as it sounds, the Fed actually knows more about the strength of the US economy than people in this blog’s comment section. ”

I find that hard to believe.

#117 palebird on 03.10.15 at 10:27 pm

#74 “Corporate America is making money. People, middle class people , human beings are not. Increasingly [email protected]#tier jobs, lower wages, end of over time, longer hours, reduced benefits, and the vanishing pension is not exactly a formula for successful living. The same formula exists up here. It sucks. In 1977 I was a kid working part time in a unionized environment. Owned a car, monthly wage increases, full benefits, Christmas bonus, and most importantly people were happy working. It’s all gone , and I pray for our kids.”

I have heard these stories before. I will tell you mine.In 1977 I worked in a non-unionized environment, owned a car, no benefits, no increases unless I changed jobs (and I did more than a few times) and no Christmas bonus ever. I worked northern Sask, Alberta, BC and the NWT. I finally decided I was tired of working so hard for so little and went to school in Toronto for several years. Then back at it only in the east this time. And then overseas for years. And back to Canada. Still no union, several cars, some benefits, no bonus and few increases unless I twist some arms.But the jobs I take pay what I demand so why do I need an arbitrary increase? I don’t fear for the future, I welcome it, let’s go. It is what you make it. As far as working for a pension well I wish people luck and hope all the sacrifices they made for that pension were worth it.

#118 TurnerNation on 03.10.15 at 10:38 pm

Do not embark Smoking man’s powered space-craft!
It’s a trap into a Forex trading seminar.

Instead we are awaiting the spaceship taking us to Planet TurnerNation – located in the Garthosphere – where stern risk managers and a dying Amazonian tribe in desperate need of an intensive breeding program to revive their dying race – await.

Share the preferred punch. I’m ready

#119 Smoking Man on 03.10.15 at 10:40 pm

What I’m getting out of these posts, the herd is pissed at something, they’re not quite sure what it is.. School system took care of that..

But it’s encouraging, hence bill c51.

Whats freaking out the machine, and freaking em out big time.

The antivaxers, MSM pumping like crazy in teacher decorum, you must vaccinate your children. 40% say F you.

Seams the wild West of free speech on line is now taken hold.

Jesus Christ… A real democracy may brake out…

Machine says find its leaders and nuturelize them.. Bill C 150.

Happens every time me jack sit down for a serious talk.

#120 Pump and dump on 03.10.15 at 10:40 pm

#113 Smoking Man on 03.10.15 at 10:16 pm

Let it go Man, even Drunkin aliens are wrong a few times a decade..

+++++++++++

I will let it go on two conditions. (1) You apologize to the blog dogs to whom you pumped and dumped that dog of a stock and (2) You reserve a seat for me on the ark alongside Garth, Dorothy, Bandit and the Tin Man.

#121 OttawaMike on 03.10.15 at 10:40 pm

If it is any consolation to Canadians, the IMF did say in the latest report that RE prices will not crash in Canada but decline in an orderly fashion.

#122 cramar on 03.10.15 at 10:42 pm

Well Garth, the CBC National just did a feature on a Chinese national buying a Vancouver property for $52M. Another person said essentially HAM is also investing heavily in Van. commercial RE.

Buying a mega property might not increase the average house price, but it is sure reinforcing the perception that HAM is responsible for buying up Vancouver.

Just like you. — Garth

#123 Marco on 03.10.15 at 10:43 pm

@John

Yep the Baltic dry index. Telling.

http://www.cbc.ca/news/business/baltic-dry-index-drops-to-lowest-level-since-1986-1.2940711

#124 Deal with it | Realties.ca on 03.10.15 at 10:47 pm

[…] Source: http://www.greaterfool.ca/2015/03/10/deal-with-it-3/ […]

#125 Andrew Woburn on 03.10.15 at 10:48 pm

Some thoughts on why the Fed may indeed begin to raise interest rates despite the fact that they “can’t”.

1. They said they would. Mr. Poloz has just had a humiliating lesson in why credibility is important to central banks.

2. There is still debate as to whether QE really did anything or was just a clever (and needed) confidence trick. Either way there are no longer any benefits to ZIRP. There is a body of expert opinion that prolonged QE is actually deflationary in misallocating capital to unproductive speculative assets, creating business uncertainty and removing investment income from prudent long term investors.

3. Whatever the need was for ZIRP it is creating long term hurt for the very important insurance and pension sectors at no further gain to the economy. It is also not very good for the banking business.

4. If everybody already knows bonds will fall as interest rates climb it can hardly be a devastating shock to the market. Bonds go up and down all the time. That is why bond traders exist.

5. It seems likely that every frightened offshore dollar is already roosting in the buttonwood tree on Wall Street. Is there really going to be another massive inflow for half a percent? From where?

6. The current rise in the USD dollar is curbing exports and raising imports which tends to lower the USD. This will tend to offset USD gains from hiking interest rates.

7. Nobody at the Fed is running for election. They are independent precisely so they can administer the kind of medicine to the economy that politicians can’t. Remember Paul Volcker and his devastating rate hikes?

8. The Fed is there primarily to serve the banking system. I suspect QE was a bit of a smokescreen to shore up the sagging banks. The Fed buys bonds by essentially running an overdraft at a commercial bank. The commercial bank shows the overdraft as an asset on its books of the the highest quality (a deposit at the Federal Reserve) for the purpose of calculating the adequacy of its capital. The more QE, the higher the level of commercial bank capital. It could be that QE and ZIRP were byproducts of getting the banks’ capital back into shape and now are not needed.

#126 45north on 03.10.15 at 10:52 pm

Waterloo Resident: Hey they are selling Hydro One. Oops, when that thing get privatized our electricity rates are going up 10 times what they are now.

it sounds like Wynne is going to sell
http://www.ottawacitizen.com/news/national/Wynne+says+hasn+made+final+decision+Hydro+sale+despite+report/10876906/story.html

this is betrayal!

There is a traditional of public ownership of the electrical plant in Ontario. For my whole life electricity generation and electricity distribution in Ontario has been a government agency. It was a mistake to close the coal-fired electrical plants and cancel the natural gas-fired plants on the Oak Ridges Moraine. So rather than own up to its stupid decisions, the Liberal Government will sell Hydro One. When people complain about electricity the Liberal Government will say “wait a minute it’s privatized now, take up your complaint with the private company”.

When Wynne says she hasn’t made a final decision it could mean anything. Anything at all.

Waterloo Resident: saying that electricity rates will go up 10 times is just silly. Don’t over-play your hand.

#127 Policy wonk on 03.10.15 at 10:52 pm

BoC will have no choice but to lower rates…..
The loonie tanks, real estate stays stable…what’s next?

Well….then…..

Foreigners plow in to buy up everything, and Feds jack property taxes through the roof to cover various shortfalls….The new tax will be called an ecotax or global warming property conservation tax in order to get the sheeples to drink the koolaid

#128 Nagraj on 03.10.15 at 11:06 pm

#70 Mark
“On what planet has the economy come anywhere near recovering?”

I couldn’t agree more.
It looks to me like the US is heading into a Recession, and I think Canada may already be in Recession.
It wouldn’t be at all out of the question for the Fed to hike at precisely the wrong time.

Maybe what’s at issue here with all this disagreement with GT’s take on the US “Recovery”, is a kind of generation gap as to how one reads stats. BLS stats for the internet generation carry no more authority than MSM. “Businessman”, “elected official”, “market analyst” . . . are not necessarily complimentary terms . . .

The recent BoC rate cut was indeed a mistake, so was not raising rates earlier. Who’s to say we won’t see mistake after mistake after mistake.

#129 jonah on 03.10.15 at 11:07 pm

Pathetic Walmart and it’s pathetic “raze” of $1.00. Rich political playing with poor people “taxed” income and pathetic conservatives are veiling veils while putting a veil on murderous deal of 36 billion in arms with ISIS.

Crooks and Scums now run the country, they design
financial model for masses so they can fail them. They entangle them in interest rates and monetary values giving value to success controllable through their instruments. Such is the democratic society, we have now been introduced to new form of slavery.

That was creepy. — Garth

#130 Musty Basement Dweller on 03.10.15 at 11:07 pm

#25 Babblemaster on 03.10.15 at 7:32 pm
“The International Monetary Fund, which says houses cost 7% to 20% too much, warns that household debt levels in Canada have shot above those in other countries, that our real estate industry is basically unregulated, and dangerous lending practices are turning mainstream.” – Garth

——————————————————

Even if housing were to come down 20%, people that have held off buying in the last few years will still have lost out on incredible gains.
==========
Wow seriously Babblemaster? Show us ome real life examples (doesn’t matter what city) with the math please comparing buying and selling costs in the last few years vs investing at 7% (which is very easy to get)

#131 Christopher Lackey on 03.10.15 at 11:08 pm

Apparently every goof with a PC out there is brushing off their resume to apply for future central bank openings judging by the staggering number of armchair quarterbacks out there mocking the central bankers of this world, who are judged mostly based on what appear to be reality-show parameters. They’ve only got so many levers to work with, people. I know their actions are debatable but they do not magically decide for the economy to function to each one of us’s own individual satisfaction – unfortunately no person possessing such power exists.

I am curious if such feverish speculation around central bankers’ actions + words was always baked into the market like it is now.

But the tin-foil hat crowd can lay off the meme that the impending global economic collapse was engineered by central banks abetting the private banks. We are eons past the point where all of the assets of banks were backed up by hard assets.

#132 Don Derc on 03.10.15 at 11:09 pm

Wow…what did I walk into (insert catfight meow here) – can I buy you bloggers the next round? Great stuff.

It appears that Canada’s real estate future, as odd as it sounds, may rely on global events more than we care to admit…or understand. I think that Garth’s support of US investments also showcases the short game process. Buy and hold are now for the one percenters.

I just hope I get my hands on the paddle everyone is using on Garth’s rump tonight. Prediction: Translink plebiscite vote 55% yes – because we can be easily swayed…

#133 Dim Sum of all parts. on 03.10.15 at 11:12 pm

Garth,
Please keep up the good fight.
These anti jingoistic, anti immigrant, anti freedom, anti HAM haters should not be allowed to use your blog as their platform.

#134 Jean Claude Vandammecouver on 03.10.15 at 11:12 pm

That was so breathtakingly incorrect, I just don’t know where to start. — Garth

LOL!!!

#135 Smoking Man on 03.10.15 at 11:13 pm

#120 Pump and dump on 03.10.15 at 10:40 pm
#113 Smoking Man on 03.10.15 at 10:16 pm

Let it go Man, even Drunkin aliens are wrong a few times a decade..

+++++++++++

I will let it go on two conditions. (1) You apologize to the blog dogs to whom you pumped and dumped that dog of a stock and (2) You reserve a seat for me on the ark alongside Garth, Dorothy, Bandit and the Tin Man.
……

I can’t totally apologize for pump and dump, I pumped, but haven’t dumped. Ok 1/2 apology.

Everyone is welcome on my spaceship. Even you. But mark has to keep his mouth shut. Message is OK, delivery, like nails on black board.

#136 Dwight Redburn on 03.10.15 at 11:16 pm

Just hold 25% Gold, 25% XIC, 25% XBB, and 25% Cash in a high interest savings account and y’all be fine! It’s the permanent portfolio.

#137 4 AM Sunrise on 03.10.15 at 11:22 pm

#26 Marco in van

It’s for ear-to-the-ground gems like these that I keep coming back to this blog.

#138 Cici on 03.10.15 at 11:32 pm

Oh Garth, I love you and this blog, but just how do you put up with some of these comments and commenters?

You must have the patience of a saint, the tenacity of a bloodhound, the loyalty of any other faithful dog, and an amazing sense of spirit, drive and dedication towards saving the rest of us…by the way, thank you for everything!!;-)

#139 Then now on 03.10.15 at 11:38 pm

They were wrong then… Are they wrong now???

http://youtu.be/INmqvibv4UU

#140 sovereigninternational on 03.10.15 at 11:38 pm

“So the certainty of higher rates has spiked the US dollar. In turn that trashed the loonie today (now in the 78-cent range), drove oil way under fifty bucks and finished off gold.”

One thing you are right about Garth (I’ll spare you this time you’ve been trashed enough on US recovery tonight) is that Gold got finished off today. Loosely translated the gold is hitting/or reached the bottom. Not a gold bug response in the comments among blog dogs. The signs are lining up. Gold is where the US stocks were in 2009. Any metal in the ground is almost free. Starting to pick up my 2020 100 baggers this week. first SSO.TO/PAA.TO/EDR.TO/K.TO/LYD.TO/DNR.TO/AKG.TO/AGQ.V/AG.TO/MGT.TO/LYD.TO/AUN.V/GPR.TO all on sale in cheap C$. Any gold bugs left with more suggestions?

#141 cramar on 03.10.15 at 11:42 pm

#122 cramar on 03.10.15 at 10:42 pm
Well Garth, the CBC National just did a feature on a Chinese national buying a Vancouver property for $52M. Another person said essentially HAM is also investing heavily in Van. commercial RE.

Buying a mega property might not increase the average house price, but it is sure reinforcing the perception that HAM is responsible for buying up Vancouver.

Just like you. — Garth

————–

Hey don’t shoot the messenger. I am only reporting what was on CBC.

#142 Pete -Hooooorey!!! on 03.10.15 at 11:42 pm

Hooooorey!!! with CAD $$$ so cheap – US dollar holders like the chinnese just got a 30% price cut on Canadian housing…. and it’s more coming I hear when US rates jump like crazy?

hahaha -don’t bet on 50% Canadian real estate increase just yet – it might take 2-3 years…

#143 Pump and dump on 03.10.15 at 11:56 pm

That’s that, Smoking Man.

Farewell.

#144 Nosty, etc. on 03.11.15 at 12:01 am

#79 Smoking Man on 03.10.15 at 9:08 pm — “. . . NEOCONS AND RUSKIES are preparing for an all out Nuke war … I’ve sent out an urgent distress call to Nectonite for back up, someone has to stop this shit. Humans.. Is all I’m saying.”

People are strange, unlike Jim Morrison who always played the straight man. You are correct, of course. This withdrawal method may have something to do with it.

BTW, notice Venezuela? The only reason sanctions were imposed was . . . “The coup has been thwarted. Venezuela prevailed!” Lotsa high stakes poker being played thruout the world.

#145 Mexican in Vancouver on 03.11.15 at 12:11 am

Garth,

I respect your comments on RE, it all makes sense. But, I don’t get why you keep insisting the FED will raise rates without any consequence to the markets. The FED is scared to death about raising them, as it will collapse equities, bonds, RE, send the dollar to the moon and eventually create a recession. IF they don’t raise them, then they are also scared of loosing credibility as they have been signaling they will raise them.

In other words, don’t believe they know what they are doing, they don’t, they are very scared how far this ponzi scheme has come and now is time to deal with the consequences. Michael Campbell on his radio shows called this “the age of consequences”, I like it.

Don’t believe in the headline unemployment, look closer and 40% is waiters, participation rate is lower, etc.

We are due for a debt bubble implosion, fall of 2015 will be interesting. Read Martin Armstrong, it gives a much deeper view of what mainstream media wants you to believe. Don’t drink the FED Kool-aid.

Bst luck to all of us, I love this blog by the way.

Hasta la vista

#146 Andrew Woburn on 03.11.15 at 12:21 am

Everybody knows that the US is lying about job creation and that nothing is happening but a few fast food and mall store jobs. So how come Nuveen Asset Management is telling its wealthy clients that job creation since the GFC is mainly in high and mid income jobs?

Nuveen is just some shitty little company with $200 billion under management. They got the chart from Haver Analytics and Deutsche Bank’s research group. Obviously these guys are too dumb to read really authoritative sources like Zero Hedge. See for yourself at page 11.

http://www.nuveen.com/Home/Documents/Viewer.aspx?fileId=58103

#147 Blogbitch on 03.11.15 at 12:24 am

I used to read the posts on this blog, look at the number of comments, scan the first few and then move on. Little did I know about all the entertainment value to be had! From the doomers, to the provocateurs, to the downright creepy, the comments section has more entertainment value than an episode of “This Hour has 22 minutes.”

“The US is our neighbour, our ally, our trading partner, and our friend, and sometimes we’d like to give them *such* a smack.” – Rick Mercer

#148 bobdog on 03.11.15 at 12:28 am

I think this blog should require registration such as “login with Facebook” or “login with Twitter” or “login with Google+”. its become a flood of annonomous drivel.

People will think twice about flaming when they are properly logged in and monitored. Can you say NSA?

I think there is a service called disqus.com

Check it out. Far less stress.

#149 Joe Calgary on 03.11.15 at 12:31 am

Just came home from vehicles and violins car show in Calgary. Spoke to lambo salesman about prices of the new Huracan, won’t consider trading my gallardo until they depreciate the 150ish. Anyway he says 70% of his sales are to Chinese students. Lol HAM is 100% fact, Garth can say what he wants. These ppl have no reason to make this stuff up. I’ve known them for yrs.

#150 Happy Renting on 03.11.15 at 12:31 am

#125 Andrew Woburn on 03.10.15 at 10:48 pm

I really liked your list. Well thought out and well-reasoned.

#151 Vanecdotal on 03.11.15 at 12:38 am

#125 Andrew Woburn

+1

Great points, as usual. Way to get the sub-40 generation googling “Volcker Rate Shock”. Which would be an unfamiliar concept to to most Millenials and Gen Xrs, one they would be wise to fully comprehend.

#152 Andrew Woburn on 03.11.15 at 12:49 am

Don’t they know it’s just marketing. You know, mind share. I mean, how you could you ever sell real estate in a place like this?

“Chinese regulators have fined US consumer goods giant Procter & Gamble nearly $US1 million ($A1.30 million) over claims a type of Crest toothpaste can whiten teeth.

The Shanghai Administration of Industry and Commerce said on Tuesday a television ad for Crest brand toothpaste featuring a popular Taiwan talk show host used “excessive” digital enhancement to make her teeth appear whiter.”

http://www.businessspectator.com.au/news/2015/3/11/china/china-crest-ad-loses-sparkle-fine?

#153 Lillooet, BC on 03.11.15 at 1:04 am

The best thing Poloz can do is increase the prime rate by 0.5% ASAP.

Heard at the water cooler today:

“Rob Ford to sell the underwear he was wearing in crack video on eBay.”

#154 Musty Basement Dweller on 03.11.15 at 1:36 am

Reading through a lot of articles on Mr Polozs rate cut he’s taking a lot of heat, probably rightly so. He’s not looking like a wizard on this one. Most of us are getting screwed with the crappy loonie and looks like that will continue. Sounds like he was trying to be cool and do what his European counterparts were doing with the rate cut. Problem is there is a world of difference in our situation in Canada .oops. Duh

#155 Don on 03.11.15 at 1:42 am

#135 Smoking Man on 03.10.15 at 11:13 pm

#120 Pump and dump on 03.10.15 at 10:40 pm
#113 Smoking Man on 03.10.15 at 10:16 pm

Let it go Man, even Drunkin aliens are wrong a few times a decade..

+++++++++++

I will let it go on two conditions. (1) You apologize to the blog dogs to whom you pumped and dumped that dog of a stock and (2) You reserve a seat for me on the ark alongside Garth, Dorothy, Bandit and the Tin Man.
……

I can’t totally apologize for pump and dump, I pumped, but haven’t dumped. Ok 1/2 apology.

Everyone is welcome on my spaceship. Even you. But mark has to keep his mouth shut. Message is OK, delivery, like nails on black board.
*****************************

About Mark – Agreed.

#156 Babblemaster on 03.11.15 at 2:18 am

#130 Musty Basement Dweller

You want a real world example? OK.

Let’s consider a young couple that wanted to buy a detached single family home in Toronto in 2009. They could have been bought in that home in Toronto for $400,000 back then. I know a couple that did just that. With only approximately $20,000 down. I can’t delve into all the details like closing costs etc. because I don’t know them, but that isn’t necessary for this example. Now, today, in 2015, I think it’s safe to say that their house is now worth at least $800,000.

So, they bought in 2009 for $400 K, a house that would cost them at least $800 K to buy today. They only initially invested $20 K down to do that. If they had chosen to rent, as I advised the young man, and wait to buy, that same house would cost them an extra $400 K to buy in 2015. And, if they had invested their $20 K deposit at 7% per year they would only have a gain of maybe $10 K (assuming the returns were tax free). So, I’m sorry, but a $400 K return beats $10 K any day.

You could also consider that the rent for such a house, in the interim, would have been less than the carrying cost of ownership. However, even if the difference was invested and achieved a tax free annual return of 7%, it still wouldn’t come near $400 K.

Conclusion: Buying in 2009 was definitely a better move financially than waiting to buy in 2015. If you’ve been waiting for housing to correct before buying, then you’ve lost out BIG time.

First, average Toronto houses have not doubled in value in six years. You made that up. Second, you do not factor in closing or selling costs, property taxes, insurance, financing costs or market risk. Third, my comment was about average house performance versus that of an average balanced portfolio. You can pick one leveraged house in one part of one city to prove me wrong. I can pick one stock over the same period that proves you very wrong. There is no one strategy suitable for everyone, so stop pushing it. — Garth

#157 Ryan on 03.11.15 at 2:18 am

Re: Devore

“That’s quite the fear mongering you got going there. No one anywhere in the world is paying $1000 a month for household electricity. Canada is not that special.”

Tell that to my mother-in-law who pays $1,000+ during the cold months out in Caledon to heat her house because the firewood is too wet. When I moved from BC to ON I was flabbergasted at the cost of electricity. We watch pump prices creep higher while WTI drops and don’t say a word, why don’t you think this could happen with electricity?

#158 jane 24 on 03.11.15 at 3:13 am

According to a recent paper from Oxford published by the papers, 40% of middle class jobs that are data or analysis based will not exist in 20 years due to advances in the thinking ability of computers. Jobs that will go are likely to include insurance, lawyers, accountants for example. Expensive educations will be worth nothing. Even teaching is heading for the scrap pile apparently as computers can do it better and cheaper.

Another recent paper in the UK news said that up to 40% of manual jobs will go in the next 20 years due to better automation. Examples given were retail, manufacturing and service.

Since we can’t all be hairdressers, who apparently are safe as you can’t stick your head in a machine, where will the jobs of 2035 come from? What will our children do to earn their crust to pay for their million dollar house?

This is a huge elephant in any room and I worry that since govts are always short-term oriented, no-one except me is worrying about it.

We may be looking at a future of super rich and mainly poor. First World economies will go backwards for many.

I was recently in Vietnam and those folk work so much harder than we do for their money. They sleep in their businesses so they don’t miss a customer. Half of my friend’s BA Com graduating class in Hanoi have started up their own businesses already. Born entrepreneurs.

The doomers may have an eventual point Garth, eventual death by capitalism.

#159 Nov54 on 03.11.15 at 4:17 am

Kinda seeing it like zedgt87 tonite, Garth.
How do you like your blog dogs?
Hey Spike? Hey Spike?….AAAHHH SHAADDUP!

#160 TurnerNation on 03.11.15 at 7:10 am

Another one. I guess they too are awaiting the Fed…….

Thailand cuts interest rates. The central bank unexpectedly cut its benchmark rate to 1.75% from 2%, after consumer prices fell for the first time since 2009.
….

That Finland is FINISHED guy is right?

“Finnish meatballs are just called “balls” now. A processed meat giant was forced to relabel its “52% meat” product.”

http://qz.com/359769/the-processed-meat-scraps-most-of-us-call-meatballs-are-now-officially-just-balls-in-finland/

#161 pbrasseur on 03.11.15 at 8:00 am

Good post Garth, you’re right about the US economy, you’ve been right all along (and so have I :-) )

Yes the FED will raise, this is unavoidable as it is necessary, for the economy to remain healthy you simply cannot keep emergency interest rates forever. So it’s only a matter of when, things could get delayed by events elsewhere in the world but it will happen.

We should expect some increased volatility in the equity markets and for other assets but this will be temporary and in fact will likely be yet another buying opportunity for true investors (vs speculators/day traders).

Meanwhile the decoupling between the Canadian and US economies is becoming more obvious every day. Given the size of our economy we can’t counter balance what’s happening in the US, all we can do is take it in and hope it will won’t hurt too much, but IMHO risks of a severe correction have increased greatly, the drop in oil prices in particular and consequent drop in the CAD has removed much of the small margin we had left. These are interesting times to say the least!

#162 waiting on the westcoast on 03.11.15 at 8:39 am

US economy keeps growing…

As mentioned in previous posts, my businesses on both coasts are up significantly YoY for the past two years. Averaging 20% per year. While I would like to take credit, it really is the overall rise in the economy. Really felt the drop in 2008-09 and the malaise in 10-12.

My teams are pushing for more money. This is the second time (first was last year) in a long while. One of my GMs said “what about cost is living increases…. Need new GM. ;-)

#163 young & foolish on 03.11.15 at 8:46 am

“We may be looking at a future of super rich and mainly poor. First World economies will go backwards for many.”

Ha, that was the norm for most of human history. We don’t want to go back there!

The more that Millennials stay in their parents’ basements, eschew risk and have owning a condo as their life’s goal, the more the 1%-99% will become reality. Without risk, there is scant reward. — Garth

#164 frank le skank on 03.11.15 at 8:50 am

A lot of victims in the comment section……all the poor helpless souls being victimized by the government and the solution is to wallow in self-pity.

You’ve been given the answer to being successful in the current economic landscape but don’t have the patience or confidence to execute. The funny thing is that these people will also be the first to complain when others who have listened reap the benefits.

Good luck finding your get rich quick scheme that has no risks and where no effort is required. When you do find it, be sure to gloat in the comment section of Garths website.

#165 Rabbit One on 03.11.15 at 8:50 am

>#156 Babblemaster

Garth is right. Extreme leverage example.(5% down, 95% borrowed)

If $400K invested in diversify portfolio at first part of year 2009 (market bottomed in March), without large maintenance cost, it should be now close to $800K.
With much much lower risks than 5% down R/E purchase.

#166 waiting on the westcoast on 03.11.15 at 9:01 am

#149 Joe Calgary on 03.11.15 at 12:31 am

“Spoke to lambo salesman about prices of the new Huracan, won’t consider trading my gallardo until they depreciate the 150ish. Anyway he says 70% of his sales are to Chinese students. Lol HAM is 100% fact,”

70% represents how many lambos… 10, 20. A drop on the bucket of all cars sold. Same in housing.. . is there offshore/out of country money buying some high priced homes? Of course. Does that make the whole market? No.

I remember articles about how Japan was going to own the US as they bought up high profile assets in the eighties. 1 – they didn’t buy up everything. 2 – they often overpaid as locals weren’t willing to pay those numbers for the same assets.

#167 waiting on the westcoast on 03.11.15 at 9:14 am

#164 frank le skank on 03.11.15 at 8:50 am

Very true…

#158 jane 24 on 03.11.15 at 3:13 am
“According to a recent paper from Oxford published by the papers, 40% of middle class jobs that are data or analysis based will not exist in 20 years due to advances in the thinking ability of computers. Jobs that will go are likely to include insurance, lawyers, accountants for example…. …Another recent paper in the UK news said that up to 40% of manual jobs will go in the next 20 years due to better automation.”

Is you went back to the 80’s when I graduated high school, many of the careers is today were the crafts of specialized PhDs and many rote jobs were eliminated.

While I agree that there will be significant change to the workforce, it may be a return to more creative and craftsman oriented work. That or, gasp, we actually don’t have to work and spend our lives on projects of interest: exploring, studying, playing, etc.

#168 Musty Basement Dweller on 03.11.15 at 9:22 am

How special, the RBC CEO says to a US audience “we feel good about Canadian housing” then later explains don’t forget in Canada the government (ie us taxpayers) covers the bank for the first 25% of losses. Nice.
Don’t you love to be backing this insanity of a Starbucks barista buying a condo in Vancouver with nothing down.
Arggh

http://www.theglobeandmail.com/report-on-business/economy/housing/rbc-ceo-david-mckay-bullish-on-canadian-housing/article23397854/

#169 Obvious Truth on 03.11.15 at 9:22 am

With the U.S. dollar rising and rate cuts in many countries (Canada included) would it be fair to say that inflation is inevitable and they will have to reverse course. Or at least moderate.

Let’s ask Brazil. They once complained of the U.S suppressing the dollar.

Policy will be the answer. Not central banks. Easy money is ending.

#170 Randman on 03.11.15 at 9:22 am

“They managed fine. We survived, learned and have advanced substantially. — Garth”

Really Garth!!..Bernanke was telling everyone 6 months before the collapse..there is no housing bubble, nothing to worry about

So he was either a clueless idiot or an outright liar….

Take your pick!

We survived? Tell that to the thousands that lost everything! ..the non 1%

Now, who lost everything? Only those who panicked in the GFC, listened to folks like you, and sold at the bottom. They might have lost 40% or 50% of the value of equity-based mutual funds, but certainly not 100%. Those with a balanced portfolio saw a maximum 20% decline, which was reversed by a 23% gain the next year. Stop being a drama queen. — Garth

#171 Rainforestrider on 03.11.15 at 9:33 am

Real estate bubble popping here in Port Alberni on Vancouver Island. Forest Industry jobs were replaced with Fort Mac jobs a few years ago. Many guys cashed in on the boom and went up north. Lots of new houses built. Last night doing driving lessons with my kid I couldn’t believe the number of houses for sale and particularly the newer ones.

#172 H on 03.11.15 at 9:36 am

I was thinking about this last night. As most people are totally unaware of the USDX index it. This is the index which comprises a BASKET of currencies relative to the USD. It also effects the REAL price of oil. It also effect the competitive nature of US exports.

While there are many who believe the simplistic view that “US rates have to rise” or “we need to get back to normal”

I want to show you just ONE graph. This is the last 5 years graph of the USDX. As you can see the last 3 months. A chimp could understand the implications of this to the US economy.

Raising rates will cause this chart to go the stratosphere, essentially bankrupting the us export industry. The fed is watching this very carefully right now and so should you.

http://930e888ea91284a71b0e-62c980cafddf9881bf167fdfb702406c.r96.cf1.rackcdn.com/data/tvc_fce053f0a4557b2f26129fb5069a08de.png

#173 fancy_pants on 03.11.15 at 9:39 am

#129 jonah on 03.10.15 at 11:07 pm

jonah, I would ask the other shepherd if modern day ninevah survives.

all in fun folks. except smokin man. he is paid by the post.
I stare at code all day. this is my reprieve. kidding, enjoy the nerd job.

#174 Italians love real estate on 03.11.15 at 9:45 am

Why are people who are cautious or negative on the equity markets at this juncture , especially as the indices reach new highs being labeled as ” doomers”. Afterall the equity market has delivered at least two jaw dropping declines in excess of 50% over past 15 years so such an experience seems repeatable.

Yet those who have been bleating on and on for past 10 years about a correction in GTA housing prices do not get same label? This is light of the fact that it simply has not happened.
In fact , quite the opposite , the Bulls on housing are labeled as naive and practically stupid as they continue to be in the winning side of the trade ??

I think everyone needs to step back and really take a breather in this one

Now where did I say to invest only in the equities markets? Extremism weakens your argument. No investor with a balanced portfolio has come remotely close to a 50% annual loss and, in fact, has averaged 7.4% in annual gains over the last decade, which included the biggest market decline since the 1930s. The entire premise is to enjoy growth and mitigate risk. — Garth

#175 Yuus bin Haad on 03.11.15 at 10:17 am

Way to stir the pot, Garth! Just like the old days – YAHOO! (®)

#176 4 AM Sunrise on 03.11.15 at 10:21 am

#158 jane 24 on 03.11.15 at 3:13 am
What will our children do to earn their crust to pay for their million dollar house?

My best friend and I were discussing this very topic and we identified a point of hope: a handful of today’s kids have found ways to make money off of this newfangled social media thing. Let’s watch Junior explain to the parents what a “Social Media Coordinator” is.

The kids are also doing a lot of stuff in cloud computing, and apps, too.

I’ve heard of a few formerly directionless hipsters and post-Medieval Studies refugees who have found their way into “digital museum studies” and good-paying jobs afterwards. Yeah, I hear you people laughing, but it’s nice work if you can get it.

Outside of IT, I guess there’s plenty work available in caring for the swelling ranks of wrinklies entering retirement homes.

Banks will always need tellers and account managers (read: “sales staff”). There’s no way a machine can successfully flirt with and charm a customer into buying an overpriced mutual fund.

I don’t know if any of these jobs will pay for a million-dollar house, but at least they’ll keep the kids off of the bread lines.

#177 Holy Crap Wheres The Tylenol on 03.11.15 at 10:36 am

#144 Nosty, etc. on 03.11.15 at 12:01 am

#79 Smoking Man on 03.10.15 at 9:08 pm — “. . . NEOCONS AND RUSKIES are preparing for an all out Nuke war … I’ve sent out an urgent distress call to Nectonite for back up, someone has to stop this shit. Humans.. Is all I’m saying.”

People are strange, unlike Jim Morrison who always played the straight man. You are correct, of course. This withdrawal method may have something to do with it.

BTW, notice Venezuela? The only reason sanctions were imposed was . . . “The coup has been thwarted. Venezuela prevailed!” Lotsa high stakes poker being played thruout the world.
_____________________________________________
Well Nosty a war is coming whether we want it or not! Its the circle of life, or should I say death.
Fun fact!
Since 1495, no 25-year period has been without war.
Since 1815 there has been more than 210 interstate wars.
Lock and Load!

#178 Kris on 03.11.15 at 10:41 am

#88 Trojan House.

Garth, ad-hominem attacks only make a person look desperate and intellectually bankrupt – You have no need to take such potshots @ Trojan House.

If I read him right, Trojan is hardly “mocking” the wage earners. Quite the contrary, he’s pointing out how the corporations and one-percenters tout their token gestures as saviours.

Having said that, Trojan, bear in mind that minimum wage was/is one of defining issues for Democrats vs Republicans south of the border. It may not mean a jackpot to individuals, but it shaves billions of the top rung – So it’s usually an indicator of strong political will, or strong economic trends – Else, the one-percenters would never shave their shortterm profits voluntarily.

The guy deserved a shot for minimizing the importance of a job or an increase in compensation to people in low-wage positions. It is unbecoming, and that needed to be emphasized. — Garth

#179 Julia on 03.11.15 at 10:42 am

What will our children do to earn their crust to pay for their million dollar house?

First of all, I think kids need to learn about personal finances, spending, saving, debt and *GASP* budgeting. Unfortunately kids learn from what they see and their parents are not setting a great example for the most part.

#180 Doug in London on 03.11.15 at 11:12 am

@Italians love real estate, post #173:
Yes, the bulls of real estate really made it big during the housing correction in the 1990s, or more recently during the corrections in the United States and Ireland. If I was looking for a place to put my money, it would be what’s on sale now like REITs, preferred share ETFs, utility stocks, high yield bond funds, or oil and gas ETFs. I would avoid anything that has had a big run up in value like the plague.

#181 The American on 03.11.15 at 11:19 am

WAIT. Who is Cory Monteith?

#182 Smoking Man on 03.11.15 at 11:19 am

#176 Holy Crap Wheres The Tylenol on 03.11.15 at 10:36 am
#144 Nosty, etc. on 03.11.15 at 12:01 am

#79 Smoking Man on 03.10.15 at 9:08 pm — “. . . NEOCONS AND RUSKIES are preparing for an all out Nuke war … I’ve sent out an urgent distress call to Nectonite for back up, someone has to stop this shit. Humans.. Is all I’m saying.”

People are strange, unlike Jim Morrison who always played the straight man. You are correct, of course. This withdrawal method may have something to do with it.

BTW, notice Venezuela? The only reason sanctions were imposed was . . . “The coup has been thwarted. Venezuela prevailed!” Lotsa high stakes poker being played thruout the world.
_____________________________________________
Well Nosty a war is coming whether we want it or not! Its the circle of life, or should I say death.
Fun fact!
Since 1495, no 25-year period has been without war.
Since 1815 there has been more than 210 interstate wars.
Lock and Load!
_____________-_

Problem is this war will be different, NEOCONS in charge, Obama Who?

http://www.veteranstoday.com/2015/03/09/breedloves-bellicosity-berlin-alarmed-by-aggressive-nato-stance-on-ukraine/

#183 Detroit is FINISHED on 03.11.15 at 11:24 am

http://business.financialpost.com/2015/03/11/detroits-rebirth-as-americas-great-comeback-city-hits-roadblock-as-taxes-kill-homeowners-dreams/

#184 Yogi Bear on 03.11.15 at 11:25 am

The money is in the economy. — Garth

Oh really?

http://imgur.com/a9Ay5JE

Really. — Garth

#185 Holy Crap Wheres The Tylenol on 03.11.15 at 11:32 am

They are back!
http://www.ctvnews.ca/canada/cbsa-confirms-terror-arrest-in-toronto-1.2274369?hootPostID=34595d80bb4b50b3c0131e04f25812a8

#186 Alberta is FINISHED on 03.11.15 at 11:35 am

Oil inventories are UP again. Oil headed lower and should hit the new normal $30 in time. Alberta is FINISHED. The shutting down of the oil sands will happen in an orderly manner. Alberta is FINISHED.

#187 Mike in Toronto on 03.11.15 at 11:36 am

#179 Doug in London

Seems like anything that pays dividends will get hammered as rates go up.

If there are declines, as before, they will be reversed. Meanwhile the dividends flow uninterrupted. Isn’t that why you bought those assets? — Garth

#188 Yogi Bear on 03.11.15 at 11:43 am

#86 quebec econ on 03.10.15 at 9:22 pm
Yellen and Ben have done an amazing job with the forward guidance and I always enjoy listening to the QA period after Fed statements…They are both brilliant individuals, never I have I heard a slip of logic from them, amazing people.

I’m with you bro. I for one, would like Bernanke to fly a helicopter over my house and rain cash on me.

#189 Alberta is FINISHED on 03.11.15 at 11:45 am

Look at the Canadian dollar crash. The CONs are biggest stealing, wasting and self absorbed party in canadian history. The CON voters are some of the most ignorant, backward thinking and self hating Canadians. **************Breaking on BNN***** the next big drop in oil prices will be in April or May when the oil storages land and sea will be all full and the excess oil hits the markets and depresses prices. (someone here already mentioned that and seems to be ahead of the curve good job)OIL going to $30 at least.

#190 long time lurker here on 03.11.15 at 11:49 am

Apple has already raised the Iphone price by $100 and Mac Book Pro price by $400. Our CAD stinks now.

Forget about the stock market and RE. Time to buy TTC tokens. Since 1990, it has went up 300%. It’s 100% guaranteed to go up in the next 10 years as well. lol

#191 Holy Crap Wheres The Tylenol on 03.11.15 at 11:51 am

#163 young & foolish on 03.11.15 at 8:46 am

“We may be looking at a future of super rich and mainly poor. First World economies will go backwards for many.”

Ha, that was the norm for most of human history. We don’t want to go back there!

The more that Millennials stay in their parents’ basements, eschew risk and have owning a condo as their life’s goal, the more the 1%-99% will become reality. Without risk, there is scant reward. — Garth
___________________________________________

When asked at what age a young adult should be financially independent, 84% of millennials responded by age 25 or younger.
Six of 10 millennials expect to be better off financially than their parents.
But some millennials report their parents are still footing the bill for various expenses, including their cellphone bills (12%), car insurance (8%), health insurance (7%) and rent/mortgage (7%).

Link? — Garth

#192 onpar on 03.11.15 at 11:52 am

Garth,
Is there preferred share exposure to somebody invested in TD e-series CDN/US/Int’l funds?

#193 Holy Crap Wheres The Tylenol on 03.11.15 at 12:11 pm

The EU’s Stalinesque “4 Year Plan”
Soviet math of yore: the five year plan is really the “2 plus 2” plan
5 years = 2 years plus 2 years. Ha!

http://www.acting-man.com/?p=36307#more-36307

#194 gut check on 03.11.15 at 12:19 pm

Honestly, right now… I’m sitting here having a panic attack (for real.. can barely type) because everywhere I turn I’m had by the short and curlies.

Can’t buy a home. Can find almost nothing decent to rent and even when I do there are all these caveats – the latest fun times being premium prices for a parking spot and now even for balconies. Almost nowhere includes utilities anymore.

So I content myself with less and less for my money (going through a divorce at the moment) and move farther and farther from where I want to be but think I’ve got something. Even the approval process is like I’m asking for a kidney from them. Finally I find something but MORE news… I can’t have it for the first of the month. Upgrades need to be done.

this is the second unit I’ve run into with this issue. If I take this place it means that I spend a huge sum on storage, more risk to my belongings, have to find somewhere to stay and there’s no where for free -I will lose business revenue, too.

Or.. back to the humiliating drawing board. Oh yeah, and I don’t even have a car during the day right now.

sry.. just venting.
even if I were fully invested in the best performing assets out there I would still be in this sh&tstorm.

Eff this housing speculation and what it has wrought. Seriously. What a way to have to live, as if housing was a mate and you had to groom yourself impeccably and do a tap dance just to find a warm bed.

#195 Leo Trollstoy on 03.11.15 at 12:20 pm

Forget about the stock market and RE. Time to buy TTC tokens. Since 1990, it has went up 300%. It’s 100% guaranteed to go up in the next 10 years as well. lol

This man is a mad genius.

#196 Peace Love Unity Respect on 03.11.15 at 12:25 pm

Theres no such thing as HAM? http://news.nationalpost.com/2015/03/10/bc-real-estate-boom-wealthy-chinese-buyers/

The wealthiest people in Vancouver can’t even speak english.

Many Canadians don’t. Take your intolerance elsewhere. — Garth

#197 Peter on 03.11.15 at 12:25 pm

When Moneysense contributors are saying a 950,000 dollar home, a 40 minute drive from downtown Vancouver is “reasonable”, there’s some serious mass delusion occurring.

http://www.moneysense.ca/property/best-deals-in-real-estate-2015-vancouver

#198 Down with the ship on 03.11.15 at 12:50 pm

Guys, you can’t blame Garth for aggressively rejecting race-realism on this forum. He’s a pseudo-public figure and in this country you can’t even have a whiff of “intolerance” on you otherwise you’re finished. I just assume he’s a logical and perceptive and knows the score, but has the longer view in mind when replying to us. Just don’t even bother.

Don’t bother because it’s destructive, pointless and diminishing. This blog will not sink to the lowest common denominator, despite the best efforts of the doofuses who read it. — Garth

#199 Babblemaster on 03.11.15 at 12:53 pm

#165 Rabbit One

If $400K invested in diversify portfolio at first part of year 2009 (market bottomed in March), without large maintenance cost, it should be now close to $800K.
With much much lower risks than 5% down R/E purchase.

—————————————————-

Yes. All true. However, the couple in the example did NOT have $400K to invest. I think they could barely scrape the $20K down payment. I believe they had to do something creative to manage it and the closing costs. Garth says I’m making it up that this house doubled in value, but I’m not. I’ve checked the listings, and similar houses in that neck of the woods (Vaughn) do go for over $800K. Regarding Garth’s comment about ignoring taxes, etc., I stated that the rent for such a house would have been less than the carrying cost of ownership. However, even if the difference was invested and achieved a tax free annual return of 7%, it still wouldn’t come near $400 K increase in price.

Of course, 5% down on a RE purchase seemed risky at the time, but it paid off big. And even if prices were to come down 20%, (i.e. $160 K in this case) it still would have been better to buy in 2009.

#200 Ponzif on 03.11.15 at 12:57 pm

When Moneysense contributors are saying a 950,000 dollar home, a 40 minute drive from downtown Vancouver is “reasonable”, there’s some serious mass delusion occurring.
————
For me “Moneysense” has always been an Oximoron.

#201 fancy_pants on 03.11.15 at 12:59 pm

The International Monetary Fund, which says houses cost 7% to 20% too much

it was doom and gloom back in 2009 and prices have risen well over those percentages since then. Until someone changes the rules, not much will change but since those who create the rules also desire to keep the bubble hot, little will change.

I hope Garth is right and we see rates go UP next time they spin their wheel of fortune

#202 Nagraj on 03.11.15 at 1:01 pm

#129 jonah
“Crooks and Scums now run the country”

You’re not alone.
Lotsa people are just as angry as you are.
And more will be.
I hope things get better for you soon.

#193 gut check
“everywhere I turn I’m had by the short and curlies”

Patience is a virtue.

G&M dinglenuts headline today (ROB “Insight”): “Prentice blames Albertans for their woes. And he’s right.”

Now that’s really creepy.

#203 april on 03.11.15 at 1:08 pm

#201 – 2009 home values increase due to government intervention.

#204 gut check on 03.11.15 at 1:08 pm

#202 Nagraj on 03.11.15 at 1:01 pm

#193 gut check
“everywhere I turn I’m had by the short and curlies”

Patience is a virtue.

___________________________________

I’m kinda beyond fortune cookie wisdom at the moment, but thanks for reading me woes, at least. :)

#205 jess on 03.11.15 at 1:13 pm

underwater

“By the numbers, the area of Louisiana bayou under threat houses half the country’s oil refineries, 40 to 45 percent of the nation’s wetlands, a port vital to 31 states and a watershed vital to seven, and two million people.”
http://www.outsideonline.com/news-from-the-field/Louisiana-And-Our-Nations-Future-Are-Sinking.html
========================
Mark Carney defends climate change economic study
Former Conservative MP calls study into economic risks of global warming ‘green claptrap’

CBC News Posted: Mar 11, 2015 12:55 PM ET Last Updated: Mar 11, 2015 12:55 PM ET

Carney said the insurance industry would bear the brunt of the costs of extreme weather and could lose money on its oil and gas investments if a global agreement to curb climate change results in many fossil fuel assets being unusable.

#206 Holy Crap Wheres The Tylenol on 03.11.15 at 1:14 pm

When asked at what age a young adult should be financially independent, 84% of millennials responded by age 25 or younger.
Six of 10 millennials expect to be better off financially than their parents.
But some millennials report their parents are still footing the bill for various expenses, including their cellphone bills (12%), car insurance (8%), health insurance (7%) and rent/mortgage (7%).

Link? — Garth
___________________________________
Attached link,

http://www.benefitscanada.com/news/millennials-not-saving-enough-for-retirement-63624?utm_source=EmailMarketing&utm_medium=email&utm_campaign=Daily_Newsletter

The same story says these kidults are spending an average of 65% of income on shelter. Yikes. — Garth

#207 Poutchli on 03.11.15 at 1:22 pm

Oliver says there is no housing bubble.
His confidence is impressive.

http://www.reuters.com/article/2015/03/10/canada-economy-housing-idUSO8N0TI00W20150310

#208 Mike in Toronto on 03.11.15 at 1:29 pm

“If there are declines, as before, they will be reversed. Meanwhile the dividends flow uninterrupted. Isn’t that why you bought those assets? — Garth”

Declines hopefully don’t last longer than a housing dip.

I need to find an advisor who can factor in a desire to “buy low” in RE, without calling his buddies in Re/Max to line me up for “it’s never been a better time to buy!”

#209 That Guy on 03.11.15 at 1:53 pm

#26 Marco
“So in Vancouver I have to pay people more because of their cost base ”

The talent must not be very good or very senior if that is their justification for compensation.

The ‘LinkedIn’ phone was ringing off the hook in advance of the New Year with unsolicited offers to chat based on referrals (so much for the XMas lull). In every case I heard the same thing from the CTO, the YVR market for senior engineering talent is tapped out with folk fleeing state-side for better pay while those that remain being quickly snagged by the bigger US players here in town.

The rising greenback has made for an interesting situation for anyone with the skills and experience. The end result of those chats -> from above avg pay for YVR to pay that rivals SFO, no move needed.

#210 CalgaryRocks on 03.11.15 at 1:55 pm

#198 Down with the ship on 03.11.15 at 12:50 pm
Guys, you can’t blame Garth for aggressively rejecting race-realism on this forum.

Outside money buying properties that the locals cannot afford happens all over the world.

We do it to Latin America. Other people do it to us.

Sucks but what can you do. We are a global economy. Can’t just enjoy the benefits without any of the negatives.

On a positive note, individuals are more empowered nowadays, given that more and more jobs require nothing more than a laptop and an internet connection.

#211 Ponzif on 03.11.15 at 1:55 pm

#204
“fortune cookie wisdom”
————
Good one.

#212 Armando on 03.11.15 at 2:24 pm

I know that Garth is not a fan of us supposedly “gloom and doomers”, but I don’t have any more confidence in the US Fed than I do in the Poloz Poodles. The idea that a bunch of central planning bureaucrats have any idea what is going to happen in the economy is ludicrous, and no the Fed does Not have a good forecasting track record. As others have pointed out with lots of numbers and details – a balanced US portfolio of stocks and bonds is priced to deliver around 1% per year nominal returns over the next decade. While valuation levels are most definitely not a predictor of short term returns, they are very good (90% accuracy) at predicting returns in a 10-12 year time frame. Bottom Line: While a balanced portfolio may outperform the Canadian housing market, it may not do much of anything else!

#213 Peter on 03.11.15 at 2:35 pm

“For me “Moneysense” has always been an oxymoron.”

And yet, some writers offer much the same advice as Garth when it comes to having broadly diversified, cheap ETFs in your portfolios. It’s…confusing.

Luckily, I avoided home buying throughout my young adult life and paid cash for my education. I may not be able to afford a home in Vancouver but at least I won’t be shackled to it, and it’s mortgage, into retirement.

#214 Protea on 03.11.15 at 2:43 pm

Good article in the Vancouver Sun about how a Medical Specialist cannot afford to live in YVR and it talks about livability fast dissappearing in Van.

http://www.vancouversun.com/business/Barbara+Yaffe+With+lack+affordability+Vancouver+fast+losing+livability/10874990/story.html

#215 Italians love real estate on 03.11.15 at 2:51 pm

From # 174 Garth’s response to me

“Now where did I say to invest only in the equities markets? Extremism weakens your argument. No investor with a balanced portfolio has come remotely close to a 50% annual loss and, in fact, has averaged 7.4% in annual gains over the last decade, which included the biggest market decline since the 1930s. The entire premise is to enjoy growth and mitigate risk. — Garth”

I know that you have never suggested an all in strategy in the equity market. I also know that you advocate for balance and diversification among all financial assets.

My point is that those who take a bearish stance on financial assets of any kind are being labeled as doomers and uninformed yet those with same bearish stance on RE are thought of as prescient and informed.

I simply want to understand why the double standard?

#216 Sisco on 03.11.15 at 2:57 pm

Incredibly as it sounds, the Fed actually knows more about the strength of the US economy than people in this blog’s comment section.

Good one, that made me laugh, I love the sarcasm. I read this blog everyday and I am always amazed at how smart some people think they are in this comment section. Don’t bet against America.

#217 Holy Crap Wheres The Tylenol on 03.11.15 at 3:02 pm

#189 Alberta is FINISHED on 03.11.15 at 11:45 am

Look at the Canadian dollar crash. The CONs are biggest stealing, wasting and self absorbed party in canadian history. The CON voters are some of the most ignorant, backward thinking and self hating Canadians. **************Breaking on BNN***** the next big drop in oil prices will be in April or May when the oil storages land and sea will be all full and the excess oil hits the markets and depresses prices. (someone here already mentioned that and seems to be ahead of the curve good job)OIL going to $30 at least.
___________________________________________
Here ya go guys. My connection in Oklahoma told me this last fall. He said they are seriously considering floating tankers with crude / refined in the gulf until hell or high water. The EIA reported that across the U.S., total crude oil working storage capacity was 521 million barrels as of last September, and as of March 6, approximately 320 million barrels of that volume was being used. While the Weekly Petroleum Status Report currently lists crude oil inventories at 444 million barrels, the EIA states that about 120 million barrels of this is in pipelines, on ships, or oil that is locally stored and has not entered the supply chain.)
What is more interesting is that oil transport via train and tanker truck is up significantly. Another fun fact is that the pipelines that brought oil to Cushing OK have now reversed in the last few years. Pipe line capacity is also a killer right now, it has to go somewhere and they can not shut down production! Yet!
http://www.eia.gov/petroleum/supply/weekly/

#218 Hot Albertan Money on 03.11.15 at 3:03 pm

Link? — Garth

You weren’t replying to me, but here’s a related article I posted here a few days ago under your “Subprimal” post (March 3, 2015 @ 10:39am)

Baby boomers are putting their retirements at risk by spending too much on their adult children. With real wages stagnant and unemployment among those age 16 to 24 running above 12 percent, large numbers of households continue to dole out cash to children no longer in school, covering rent, cell phones, cars, and vacations.

http://www.bloomberg.com/news/articles/2015-03-05/parents-risk-retirement-to-support-millennial-kids?hootPostID=d7351bd41287753aab8ba294719adf99

#219 Nerf Herder on 03.11.15 at 3:03 pm

As Australia is in the same boat, it’s always fun to see how their guys are spinning it.

The banker doth protest too much, methinks….

http://www.theaustralian.com.au/business/banks-dispel-housing-bubble-fears/story-e6frg8zx-1227257588192

#220 Holy Crap Wheres The Tylenol on 03.11.15 at 3:11 pm

Re-oil, were going to see more of this unless they build pipelines.
https://www.youtube.com/watch?v=mXaLDzJtvxE
and this today,
https://www.youtube.com/watch?v=Bz4VQV5hIBI

#221 LazyJason on 03.11.15 at 3:14 pm

Re: #196 Peace Love Unity Respect

So were you outbid on this house? If so, then what’s the issue? It’s free market at its best.

I’m also guessing that if you were to sell your home, it would go to the highest offer regardless of what ethnicity the purchaser is.

#222 poor man's leveraged investment on 03.11.15 at 3:19 pm

#199 Babblemaster

“If $400K invested in diversify portfolio at first part of year 2009 (market bottomed in March), without large maintenance cost, it should be now close to $800K.
With much much lower risks than 5% down R/E purchase.

—————————————————-

Yes. All true. However, the couple in the example did NOT have $400K to invest. I think they could barely scrape the $20K down payment. ”

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

This is actually one of the most appealing aspect for the public to buy real estate: it is virtually the only leveraged investment one can have access with the smallest existing liquid asset.

One would never get $400K to invest in stocks, ETFs with $20K – regardless of the proven market performance statistics.

The real comparison is “if $20K invested in diversify portfolio at first part of year 2009… ”

More proof people have absolutely no idea what constitutes risk. — Garth

#223 devore on 03.11.15 at 3:29 pm

#157 Ryan

The point was, no average household, living in a normal house, with normal insulation, in a normal location is going to be paying $1000 a month for power every month, no one’s power costs are about to raise 10 times as claimed.

Stop with the hysteria.

Instead of paying a fortune in heating bills, your mother should put that money into insulation and energy efficiency, or move out of the mansion she clearly cannot afford.

#224 sixtyfourk on 03.11.15 at 3:42 pm

The Wall Street Journal is reporting that the Bank of Japan is directly purchasing equity ETFs to support the Tokyo stock market:

http://www.wsj.com/articles/boj-helps-tokyo-stocks-to-soar-1426065432

Garth can slam the “Zerohedge nuts”, but this is the Wall Street Journal.

Anyone who thinks the Fed isn’t doing the same thing in the US (either directly or indirectly) is naive.

How can you evaluate the price of an asset (stock) when a Central Bank is purchasing them directly with created money?

#225 YYC on 03.11.15 at 3:55 pm

#186 Alberta is FINISHED on 03.11.15 at 11:35 am

Just so we’re clear, are you of the opinion that Alberta is finished?

#226 TRT on 03.11.15 at 4:11 pm

Pray a correction in housing does not happen.

50 cent loonie will mean no disposable leftover income for you.

Meanwhile, Express Entry with 1000+ job offers per week goes full steam ahead.

#227 Yogi Bear on 03.11.15 at 4:21 pm

#224 sixtyfourk on 03.11.15 at 3:42 pm
The Wall Street Journal is reporting that the Bank of Japan is directly purchasing equity ETFs to support the Tokyo stock market:

http://www.wsj.com/articles/boj-helps-tokyo-stocks-to-soar-1426065432

Garth can slam the “Zerohedge nuts”, but this is the Wall Street Journal.

Anyone who thinks the Fed isn’t doing the same thing in the US (either directly or indirectly) is naive.

How can you evaluate the price of an asset (stock) when a Central Bank is purchasing them directly with created money?

The Fed might not be, but:

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

“Plunge Protection Team” was originally the headline for an article in The Washington Post on February 23, 1997,[3] and has since become a colloquial term used by some mainstream publications to refer to the Working Group.[4][5] Initially, the term was used to express the opinion that the Working Group was being used to prop up the markets during downturns.[6][7]

#228 NoName on 03.11.15 at 4:21 pm

@#220 Holy Crap Wheres The Tylenol

I remember reading this back in 2009, when oil by rail was in its infancy, kind of, charges per barrel for pipeline were around 17$ and rail was a way cheaper. I red something similar in 2013 that cost transporting oil by rail got close to 15 per barrel same year

http://www.teamstersrail.ca/TCRC_News_April_9_2009_1.htm

#229 jess on 03.11.15 at 4:24 pm

Treasury Urged to Scrutinize Foreign Real Estate Buyers for Money-Laundering Risk

By STEPHANIE SAULMARCH 10, 2015
…”The request, contained in a letter sent to the Treasury Department’s Financial Crimes Enforcement Network, asked for the repeal of a 2002 temporary exemption from provisions of the Patriot Act that had been granted to the real estate industry

see- The New York Times, Towers of Secrecy, which documented how wealthy international buyers, including politicians and those who have been the targets of government inquiries, had used shell companies to purchase luxury New York condos.

#230 straight six on 03.11.15 at 4:31 pm

houses are 7-22% over valued..
meaning this latest sale on Vancouver’s Drummond Drive should have gone for about 35-40 mil.. and not 51.8
West side RE, otherwise known as ‘tear downs’, just jumped another mil on this news.

https://www.google.ca/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&uact=8&ved=0CB4QqQIwAA&url=http%3A%2F%2Fnews.nationalpost.com%2F2015%2F03%2F10%2Fbc-real-estate-boom-wealthy-chinese-buyers%2F&ei=VKIAVfu3I8HxoATPrIDAAQ&usg=AFQjCNEd8P_-Cp6tBFwNtWc6-_GLo-mwdg&bvm=bv.87920726,d.cGU

#231 KommyKim on 03.11.15 at 4:38 pm

RE:#224 sixtyfourk on 03.11.15 at 3:42 pm
The Wall Street Journal is reporting that the Bank of Japan is directly purchasing equity ETFs to support the Tokyo stock market:

I couldn’t read the entire article because I’m not a WSJ subscriber, but why would the BOJ be buying millions of dollars in ETFs instead of buying the stocks directly? It makes no sense.

#232 Millmech on 03.11.15 at 4:39 pm

#199
Just imagine what their net worth would be if they had bought Regeneron up over 2600% since 2009.This is just one stock that has done well,many others out there that outperform real estate.

#233 Chris on 03.11.15 at 5:02 pm

From #206

http://www.benefitscanada.com/news/millennials-not-saving-enough-for-retirement-63624?utm_source=EmailMarketing&utm_medium=email&utm_campaign=Daily_Newsletter

The same story says these kidults are spending an average of 65% of income on shelter. Yikes. — Garth

I think you read the link wrong, 65% said shelter was in their “top 3” expenses. Maybe the rest are homeless, living with parents, have some very nice roommates, or just don’t budget rent?

#234 Oil Is Sticky on 03.11.15 at 5:17 pm

#114 Retired Boomer – WI on 03.10.15 at 10:17 pm
#57 Oil is Sticky

I am not sure of what you’ve been smoking, or dropping, but it full of non-facts.

————–

Your cherry picking. There are thousands of publicly traded companies. Many have gone private. Didn’t HP or IBM just fire 10,000 people? I’m not going to sit here and list the hundreds of companies that have fired millions of workers and bought back their own shares to bring their PE down but its big.

Yes the Fed is retiring bonds….but the fact is they are still adding to their book. It’s still getting bigger not smaller.

Lastly…..we have been told “rates are rising” for almost three years now. When Yellen raises rates 0.25% this year and 0.25% next year…..divide that by 5 years and show me this “moon shot” of interest rate increases over a 5 year period.

#235 Musty Basement Dweller on 03.11.15 at 5:26 pm

Don’t bother because it’s destructive, pointless and diminishing. This blog will not sink to the lowest common denominator, despite the best efforts of the doofuses who read it. — Garth
==============
Well said Garth. And.. how refreshing it is in this day and age to hear a straight shooter (calling us doofusses).
Keeps me coming hear,along with some of the more intelligent doofusses.

#236 Oil Is Sticky on 03.11.15 at 5:37 pm

Mark Carney defends climate change economic study
Former Conservative MP calls study into economic risks of global warming ‘green claptrap’

CBC News Posted: Mar 11, 2015 12:55 PM ET Last Updated: Mar 11, 2015 12:55 PM ET

Carney said the insurance industry would bear the brunt of the costs of extreme weather and could lose money on its oil and gas investments if a global agreement to curb climate change results in many fossil fuel assets being unusable.

———–

Yes the global warming continues. Oh wait !!

http://www.huffingtonpost.ca/2015/03/11/ice-chunks-cape-cod-winter_n_6850134.html

#237 aL pacino on 03.11.15 at 6:27 pm

#43 Not a Jingoist on 03.10.15 at 8:11 pm
Real Estate is heating up in Vancouver.
And so is the temper of the Immigrant haters.

GO HAM, GO!

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

You’re moron…capish

#238 Retired Boomer - WI on 03.11.15 at 7:47 pm

#234 Oil is Sticky

Believe what you wish. Yes, the US Debt is increasing, so is our GDP. As a percentage of value, is it larger or, smaller than 6 years ago? How is Canada doing?

Yes, IBM, and numerous other companies have sacked workers of late. Some have closed, others moved to foreign soil, others returned.

In my broad portfolio it is all covered. Sometimes it goes up, sometimes it goes down. Overall, it seems to return to me more than my house, my savings account, or my hobby. I am lazy, I am not worried. Not my first rodeo here. There will be good times, three will be crap times.
Seen it since 1951 – wanna throw in something ‘new’ ?

#239 Entrepreneur on 03.11.15 at 11:39 pm

The show must go on even when the audience have disappeared.

Rule of 90…Under “GarthFAQ”…”The principle that you shouldn’t have more than (90 – Your Age)% if your net worth invested in residential housing. And that includes the roof over your own head.”

Also, go to 20140721 “What are you worth?” It explains The Rule of 90 by Garth Turner. Maybe someone else can type in the website jargon to get to it. Thanks.

#240 Doug in London on 03.12.15 at 11:34 am

So, where’s this stock market correction I’ve heard all the bellyaching about lately? After a pitifully small pullback stocks, preferred shares, and REITs have been climbing up again. Damn, I’m disappointed! I was hoping for some early Boxing Week sales!

#241 Doug in London on 03.12.15 at 11:38 am

@Oil is Sticky, post 236;
We should follow the example of the Florida Environmental Protection Department and not use the terms global warming or climate change. That way the problem of climate change will magically disappear, even in a flat state where there is already a problem of flooding at high tide which will likely get worse.