The gamble

PLANTS modified

The latest data (out on Tuesday) shows that Canada’s petroleum sales took a 11.9% dive in January. Ouch. It’s the seventh monthly decline, and the worst yet. This helped to drag down the whole of manufacturing sales, which sucks when a 78-cent dollar was supposed to save us. (Wednesday update: loonie now in the 77-cent range.)

Meanwhile oil just won’t quit. It’s flirting with $42 a barrel, and the momentum’s to the downside. Nobody will be much fussed to see it slide into the thirties. The reason is simple – too much supply, overwhelming demand. US production continues to escalate, even as the rig count drops. The pipes are full. The storage farms are filling. There’s never been this much. That whole thing about peak oil is so old. Americans have doubled their output in recent years. Suddenly the world’s swimming in the stuff – which is big news since oil is our No.1 export. Even being so cheap, sales are falling.

The impact in oily places is about what you’d expect.

Calgary house sales are down by a third, prices are wobbling and it’s taking sellers a lot longer to find buyers. But the impact in Fort Mac (lots more layoffs announced this week) is withering. Sales plunged 66% year/year in February, and were trashed 53% in January. This week there are about 930 properties for sales (in a town where the average house costs $200,000 more than in the GTA), and yet last month only 48 sold.

Down the road, Grand Prairie saw a 37% plop in sales while Lloydminster deals fell by almost half. In Edmonton, sales last month declined 17% over 2014 levels.

But all this is likely just the start. It takes many months for the impact of layoffs, reduced payrolls and family disruptions to ripple through a local economy. Most sellers start out with an optimistic ask and start reducing it after sixty or 90 days on the market. If oil prices remain in the zone (seems more than likely), then the summer ahead could be a dry one indeed for those who need to exit.

OIL

As mentioned yesterday, denial is the river running through Toronto and Vancouver, fueled now by the bankers’ latest mortgage war. Yesterday this alarmingly pathetic blog broke the news that BeeMo would drop its five-year rate to 2.79% on Tuesday. It did. Down twenty bips. It took only a few hours for TD to match it, which meant a thirty-point decline. No doubt all of the majors will be in play by Friday.

It’s historic. A fixed-rate fiver has never been offered by the mainline banks at this level before, and comes as a direct result of the environment created by the goofs at the Bank of Canada. The results of the January central bank drop are already coursing through the marketplace as citizens rush to gobble new heaps of debt. In the first two weeks of March average GTA prices were 10% higher than a year earlier, and the average detached 416 digs now sells for $1,099,239.

Just what I told you yesterday. Lower rates. More borrowing. Higher prices.

So today mortgages have never cost less and houses have never cost more. The direct connection should be lost on nobody. Real estate has not appreciated because it’s inherently more valuable, and will retain that value, but because debt got cheaper. So it stands to reason that when debt costs more, houses will be worth less. This is the fat gamble every buyer is taking.

Wednesday afternoon at 2 pm the Fed makes one of its closely-watched announcements. Analysts will hang on each phrase that bosslady Janet Yellen releases, to see if key words (like “patient”) remain from previous statements, or is dropped and replaced. The betting now among economists is this: (a) absolutely US rates will rise in 2015. (b) This will start on June 17th or certainly in September. (c) By the end of the year rates will be either a half-point or three-quarters of a point higher.

This is a big deal because the Fed rate has been at a quarter point now for six years. Changing it is a bold new step in monetary policy and will likely usher in two years of gradual tightening until the benchmark is between 2% and 3%. And Fed-watchers say Yellen is determined to reduce the central bank’s role in goosing the economy, in favour of just being the benign shepherd (how’s that for a mixed barnyard metaphor?). In fact, says Bloomberg:

“Beginning in June, and for the first time since 2008, officials would be making rate decisions meeting-by-meeting, based purely on the data in front of them, rather than committing themselves to keeping borrowing costs low.”

Now whether the people snorfling 2.79% mortgages to buy $1 million houses like it or not, Canada will end up following suit. It won’t be immediate. It may not be before the October election. But it will happen, because without a response here, the dollar’s endangered. Maybe the Swedes can diddle with their rates and survive, but Canada – linked at the hip to the American economy – doesn’t have that luxury. As with every other Fed move in the past, the Bank of Canada will eventually comply.

So if you’re loading up on cheap debt, have a plan to survive renewal in 2020. Seriously.

263 comments ↓

#1 TurnerNation on 03.17.15 at 5:57 pm

Hmm Treasury Blonde prices are on fire again.

#2 Leroy Washington on 03.17.15 at 6:01 pm

Canadians are a horrid, filthy lot. They will be separated from their money very soon. Long live USA!!!

#3 pathcontrolmonk on 03.17.15 at 6:02 pm

Happy ST Patricks Day!

#4 Investx on 03.17.15 at 6:05 pm

Another prediction of higher rates!
Let’s see if we’re right this time.

#5 zedgt87 on 03.17.15 at 6:05 pm

The house of cards is collapsing. This one will be a dozy

#6 Sal on 03.17.15 at 6:06 pm

Thanks, as always, for bringing a smile with your mental imagery!! I suspect it will still take a couple of years before the higher interest rates drive down the prices. After all the ones buying today, will have five years to hang on before their loan renewals, while the ones who bought last year will have four years and so it goes.

#7 Blacksheep on 03.17.15 at 6:08 pm

Obvious # 261, Re: Blacksheep # 237

“You could fit 50 million people between Mississauga and windsor along the 401 and south to the lakes.”

“That’s likely a low number.”
———————————————
Sure…but why would you want to?

The word ‘desirable’ was used with extreme prejudice.

In fact, the only reason I’m north of the 49 th at all, is a lifetime of accumulated business contacts. In other words, you couldn’t pay me to live there. Many others feel the same way.

#8 Mark on 03.17.15 at 6:09 pm

“Singapore Airlines reports the following traffic highlights in Feb-2015:
•Passenger numbers: 1.4 million, -1% year-on-year;
•Passenger load factor: 75.2%, -1.6 ppts;
◦East Asia: 77.7%, -0.6 ppt;
◦Americas: 69.9%, -7.4 ppts;
◦Europe: 69.3%, -5.4 ppts;

◦South West Pacific: 84.9%, +5.2 ppts;
◦West Asia and Africa: 71.1%, stable;”

Sure smells like North America and Europe are the economies falling off the cliff. Not on the verge of ‘revival’ as would be implied by all the people claiming that the cause of the oil glut is accelerated production in the USA, and even more delusionally, “energy independence”. Air travel is always a good indication of the health of the economy, and the numbers at that one higher-end airline alone show its falling off a cliff.

Not sure how tightening monetary policy is supposed to “help” an extremely weak economy that is probably in recession at this point. It just doesn’t make sense to me.

IMHO, look for fireworks tomorrow. Buckle up, because the bump could be extremely bumpy, either way.

#9 Yogi Bear on 03.17.15 at 6:10 pm

If you want to see what the worst case scenario for real estate elsewhere in Canada could possibly be, watch Ft. Mac.

#10 BlackDog on 03.17.15 at 6:11 pm

I am so happy my better half and I did not buy a house when we moved from Brantford to Ottawa 3 years ago due to a manufacturing plant closure there (where spouse was employed).

Thanks Garth.

Your astute messages which I had been listening too, before we sold and moved, helped keep us from making the same mistake we made buying our first house in Hamilton in 1989. Where were you then?

#11 BlackDog on 03.17.15 at 6:12 pm

to not too….grrrr….hate typos.

#12 Pierre Lapointe on 03.17.15 at 6:14 pm

This is all good news for Quebec. The decreasing dollar will help Quebec revive our manufacturing industry, so we should see our economy do much better in the coming years. And because of that, our housing market will increase in value. It is already much lower than in other big Canadian cities, so we can expect big increases in housing prices, notably in Montreal and Quebec city. So if you are thinking of buying here, now is a fantastic opportunity!

#13 Ole Doberman on 03.17.15 at 6:16 pm

Annnnd 1st!

Garth the Fed won’t raise rates cause of the already strong dollar, and the carnage it will cause it other parts of the world, we are stuck until the whole system implodes.

Any thoughts on this theory?

#14 Yitzhak Rabin on 03.17.15 at 6:18 pm

It is important to review what happened the last time the Fed raised rates from 2005-2006. The USD was in free fall, the national debt at $8.4 trillion, and base money at $830 billion. The rate hikes quickly accelerated defaults on the most marginal debt, which effictively took down the entire over-leveraged financial system.

By 2009 rates were at 0%, and the biggest money printing experiment in US history was fully underway with QE1. The difference from 2006 to 2009 was what north is to south.

Now the USD is soaring, national debt is at $18.15 trillion, and base money around $4 trillion, and the public and private sector are even more leveraged and dependent on low interest rates.

If rate hikes do occur, the consequences will be worse the the 2008 financial crisis and if you think that is bad, just wait until you see their “solution” this time.

Rates will rise slowly, methodically. Stop with the drama. — Garth

#15 seeing it from both sides on 03.17.15 at 6:19 pm

Ah haaa…..no wonder real estate is so expensive here.

http://news.nationalpost.com/2015/03/17/beat-it-new-york-vancouver-the-best-place-to-live-in-north-america-according-to-mercer-ranking/

#16 Zed on 03.17.15 at 6:20 pm

Enought already with those “emergency low rates”.

Normalize the whole system and bring back those 3%+ rates from the central banks

#17 JSS on 03.17.15 at 6:21 pm

How does increase in interest rates affect Canadian bank profitability?

#18 Nabatts on 03.17.15 at 6:22 pm

Big fan, but sorry Garth. Rates are not moving up soon.

#19 Kit Schicker on 03.17.15 at 6:25 pm

First!

#20 Zed on 03.17.15 at 6:26 pm

Canadian chartered banks have really no skin in the game to offer those low rates, CMHC is insuring everything.

They must know, if somebody can know or should know, that in the next few years the rates from the central bank will not be dramaticly way above.

The banks have to be able to finance themselves at those low rates from people willing to lock in 5-year GICs at very low rates too.

#21 Matt from Calgary on 03.17.15 at 6:28 pm

Hi Garth, big fan! Yes I live in Calgary, but no I don’t own (I rent a beautiful penthouse overlooking the river) for a fraction of what it would cost to buy. I have a diverse portfolio (60% growth, 40% fixed income) including some REITS and the rest in ETF’s. Neither my wife or I are in oil and gas (sales & a Dr.). My question is, with the US Fed raising rates this year, what will happen to the fixed income portion of my portfolio? For example, the XTR’s, XPF’s and CHB’s? I assume to see a decline in share price, but what about my attractive 6% combined yield? Thanks for the help!

#22 good times. on 03.17.15 at 6:29 pm

Good thing we bought back in 08 in Toronto. Not much more to go on this mortgage. Min monthly payment of 980 and we are laughing.

#23 ILoveCharts on 03.17.15 at 6:29 pm

I bought a car the other day. They had a big board in the dealer showing the sales of the month and which were purchased by cash vs finance. I was very surprised at the split – perhaps 50% were cash purchases (mine included.) That seems inconsistent of the stories of Canadians loading up on debt. Mind you, this was in Richmond.

#24 SoCal on 03.17.15 at 6:32 pm

Absolutely rates are going up here in the US. The economy is expanding rapidly. Everyone is hiring and stores and restaurants are overflowing. Lots of domestic travel, too. We will be going to Europe this year, seeing as the USD is almost at parity with the Euro. When we walk the dog, we see a new house being built on almost every block.

There is absolutely no reason for rates to remain so low.

#25 waiting on the westcoast on 03.17.15 at 6:33 pm

But my debt servicing ratio is low! And I have a high net worth! Seriously – PhDs are teaching this to economics majors in Canadian universities…

Oh wait, as rates rise, my ratio gets blown out of the water and my net worth goes down with the collapsing price of my single asset strategy (how is that for a maritime disaster metaphor).

#26 H on 03.17.15 at 6:35 pm

Garth, Garth..Garth.

The USD just finished an assent which happens to be the fast an most pronounced in…hmmm 40 years.

The effects of that massive move are just now starting to show up in the inflation numbers. (sorry now referred to as deflation)

The fed has a DUAL mandate. Yes or no. Answer is yes.

What is it?
1) Full employment
2) Price Stability

Right now the Fed has NO more bullets. So, they raise, or even suggest they will what will happen.

1) USDX goes parabolic
2) “disinflation” which is code word changes to the real word. DEFLATION.
3) Mass layoffs begin from the remaining companies like oh…Boeing lose to competitors like oh…Airbus.

And then the Fed will have to fix the next mess with a .75% interest rate.

Garth, the road is littered with bodies of the forecasts who got it wrong. All someone has to do is read the data.

That is what the Fed is doing now. Not reading bloomberg.

Everyone, save the world-class economists commenting on this blog, have already factored a rate increase in. — Garth

#27 mark on 03.17.15 at 6:38 pm

I dunno about the oil thing, given all the EIA production numbers are only estimates. They were shown as optimistic when the actual numbers came out for the Bakken. EIA said up by 27kbpd in Jan, yet when the actual numbers came out production was down 34kbpd.

Where else is production already declining while we’re being told in advance it is up?

I’m sure we’ll know in about 6 months after thousands more are tossed out of work.

#28 Joe2.0 on 03.17.15 at 6:38 pm

Recent poolside conversation in sunny Mexico.

Alberta-Seeing a huge slow down in the oil patch, friends are being layed off and forced to sell homes.

American- with the weakness of your dollar I can buy a million dollar home in Vancouver for 700k.

American-with the recent drop in your bank rates economists are projecting a 65cnt dollar.

Amercian-your government has really screwed you over.

Alberta- yup

#29 waiting on the westcoast on 03.17.15 at 6:39 pm

#6 Sal on 03.17.15 at 6:06 pm
“…while the ones who bought last year will have four years and so it goes.”

Home prices will drop due to the new buyer not being able to purchase at the same price level. Followed by people exiting due to fear of losing equity, etc. Watch the charts in the US or Ireland to see how it slipped during the GFC. Might not be as fast or bold for us but it will start a slide.

#30 Kuato Lives on 03.17.15 at 6:39 pm

CNOOC just slashed 14% of North American jobs. Around 340 people affected.

http://www.wsj.com/articles/cnoocs-north-american-unit-slashes-13-of-workforce-1426616581

#31 mitzerboy aka queencity kid on 03.17.15 at 6:39 pm

I really don’t like the idea of celebrating about a religious guy that drove the snakes aka pagans out of a place…but a party is a party rite ?

ps… I wood have been one of the snakes driven underground learning from master grant about money

#32 james on 03.17.15 at 6:39 pm

#15

The Mercer rankings are for companies placing employees on assignment. The factors that they take into account are weighted accordingly.

I would love to see them try to justify the average family in Vancouver not being able to afford to purchase more than 2% (or whatever it is) of dwellings by traditional ratios.

#33 waiting on the westcoast on 03.17.15 at 6:41 pm

#8 Mark on 03.17.15 at 6:09 pm

Re: Singapore Airlines

Maybe it’s Singapore that is struggling and it’s citizens not flying to North America…

#34 The real Kip on 03.17.15 at 6:43 pm

Janet Yellen is nothing more than a talking head. Idiots hang on to every word for “guidance”. Watching them attempt to manage their gasbag stock market is like watching a cheap vaudeville show.

The BoC will lower rates again before the election in an anything goes WWF style tag team match to form the next government in Ottawa. Why buy now? Interest rates here will likely be lower in a few months.

#35 Usa rates on 03.17.15 at 6:52 pm

What were USA mortgage rates when the problem in 08 09 started? We are at 2.79% today.

#36 Obvious Truth on 03.17.15 at 6:55 pm

Da Nile is a very dangerous river to navigate.

If you’re on that river it’s likely to late. It’s hard to know where it’s safe to get off.

#37 Mincus E. Stoneham on 03.17.15 at 6:55 pm

The consensus is that rates will rise slowly, and some deniers out there, possibly doomsayers who are seemingly wanting things to be murky say rates can not raise because if they do, the stock markets will go South by Southwest.

Has any analyst out there thought that perhaps rates will rise on time but at a higher velocity? That side of the conversation has been very quiet. Out of the three scenarios a)No rate rise b) slow and calibrated rate rise c) Faster rate rise than everyone else is talking about, What chance is there of “C” happening?

It’s time to explore the total scenarios to be prepared for and not caught offside instead of just a) and b). Of course I’ll probably be laughed at for this viewpoint but I propose it forward for discussion.

#38 Suede on 03.17.15 at 6:55 pm

Why will US rates rise? Because their economy is hot.

How do we know their economy is hot? Prices for 3 weekend nights in Las Vegas are through the roof, and that just in USD.

Vegas and Disneyland =leading economic indicators.

4 years ago. $400pp to stay at Encore

Today, $900pp. When you convert to CDN, even more Ouch.

#39 Herf on 03.17.15 at 6:57 pm

“Meanwhile oil just won’t quit. It’s flirting with $43 a barrel, and the momentum’s to the downside. Nobody will be much fussed to see it slide into the thirties.”

The Alberta stuff is already below $30.00:

http://www.bnn.ca/News/2015/3/16/US-crude-prices-touch-6-year-low-on-oversupply-fears.aspx

Interesting comment by O’Leary in the above clip: once you run out of places to store oil, what is the next pumped barrel(s) of oil worth? $0? Something greater than $0, but at a substantial discount from the going rate? Or do the producers start paying somebody (anybody) to take it off their hands?

“. . . the goofs at the Bank of Canada. . . .”

Presumably, they are “P and the Peckerettes” ?

#40 Terrier on 03.17.15 at 6:58 pm

I said before … the housing market will implode not because the interest rate hike but anemic economy and continued and steady layoffs.

#41 The gamble | Realties.ca on 03.17.15 at 7:01 pm

[…] Source: http://www.greaterfool.ca/2015/03/17/the-gamble-2/ […]

#42 Paul on 03.17.15 at 7:03 pm

The rates are low for some folks. Listed a house in the gta today, seller has been of work for 6 months the first mortgage is 50% higher due to refinancing than when they bought and Small second blood sucking rate 29%.
The grind has started!

#43 Larry Miller MP on 03.17.15 at 7:04 pm

Stay the hell where you came from, if you don’t like this blog.

That’s all I’m sayin’, Garth is on the right track.

#44 LL on 03.17.15 at 7:05 pm

Lapointe # 12

….”The decreasing dollar will help Quebec revive our manufacturing industry”….

Manufacturing industy??? Which one???
Half population in Quebec works for government!

#45 Oil Is Sticky on 03.17.15 at 7:06 pm

#276 Tax me i’m Canadian on 03.17.15 at 5:35 pm
It’s not just translink, it’s every crown corporation from Coastal health, B.C ferries, ICBC, BC hydro they’re all slopping at the trough. It’s so easy to google, the C.E.O.’s and their executive teams are all making more money than our own Prime Minister. Compensation for the public sector is way out of balance when compared to the private sector. Not only do they earn multiples of the average taxpayer, we must not forget about their rich pension and severance packages.

——

Every govt in history has eventually destroyed itself. This time will be no different except 1. It will be broadcast live on your i-phone and 2. it will happen to many many govts around the world at “about” the same time instead of over centuries.

#46 Jetfixer on 03.17.15 at 7:06 pm

@ #8 Mark

“Singapore Airlines reports the following traffic highlights in Feb-2015:
•Passenger numbers: 1.4 million, -1% year-on-year;
•Passenger load factor: 75.2%, -1.6 ppts;
◦East Asia: 77.7%, -0.6 ppt;
◦Americas: 69.9%, -7.4 ppts;
◦Europe: 69.3%, -5.4 ppts;
◦South West Pacific: 84.9%, +5.2 ppts;
◦West Asia and Africa: 71.1%, stable;”

Cathay Pacific is reporting an increase in load factors for North America and Europe at 12.7% and 8.2% respectively. Maybe there is other factors affecting Singapore Airlines numbers?

http://centreforaviation.com/news/cathay-pacific-pax-numbers-up-12-with-85-load-factor-in-feb-2015-cargo-volume-up-29-426924

#47 Bubble guy on Cbc right now on 03.17.15 at 7:06 pm

Bubble burst the topic for tonight on Cbc…. 7 pm Amanda lang show

#48 MSM-free Zone on 03.17.15 at 7:13 pm

“……It may not be before the October election…..”
_________________________

Having out-sourced and off-shored most of Canada’s manufacturing sector over the last decade, I’m sure the Harpocrite ReformaCons are desperately praying for any kind of ‘terrorist’ distraction between now and October, having witnessed their one-trick resource extraction economy now circling the toilet as well.

#49 Smoking Man on 03.17.15 at 7:18 pm

Attention teachers, here world renowned scientist, it’s a one minute clip..

I now you need to follow the curriculum, but better to know what damage you do to kids.
Holly crap, show this to your wife.

https://www.google.ca/url?sa=t&source=web&rct=j&ei=BLUIVaOpKdi2yATylIC4Dg&url=http://m.youtube.com/watch%3Fv%3De9yUXVzs0Qw&ved=0CCgQtwIwAA&usg=AFQjCNGfn8e-CfcAR5dwhvlypJFlul4Ocw&sig2=Sar1n2m9AQ-pWcBCxirgog

#50 nonplused on 03.17.15 at 7:18 pm

Conventional oil production already peaked in 2006, almost exactly when forecast to by Hubert and others.

http://news.nationalgeographic.com/news/energy/2010/11/101109-peak-oil-iea-world-energy-outlook/

However unconventional oil like the tar sands and shale has not peaked. Shale oil in particular is going gangbusters in the US. But the rub is that tar sands and shale oil extraction will never be a cheap to produce as conventional oil because the energy return on energy invested (EROEI) is much lower.

Everyone is still trying to keep a happy smile on their face, but at $43 WTI Alberta is heading towards insolvency and so is the US shale patch. Just today Nexen let over 300 people go from their downtown office alone, which represents something like 30% of their downtown employees. If you follow the north american news, hardly a day goes by without an announcement of budget cuts and lay-offs. It gets uglier every day.

Eventually all this cost cutting will reduce oil supplies and prices will migrate back towards $80 WTI or maybe $100, but it could be some years before this happens due to the large number of wells still waiting to be tied in and the high storage inventories.

OPEC will not make serious cuts because they do not see the sense in reducing their own production if it only results in subsidizing US shale oil production. Russia will not cut for the same reason, although I expect similar capital cutbacks there which will tend to lower production over time.

Commodity prices tend to be set on the margin, and shale oil and tar sands are the marginal producers right now. It looks like there will be enough oil to meet demand for some time to come due to these 2 new supplies, but it will not be at $45/bbl. However, I think it will be some years (2-5) before the current supply glut gets worked through.

At that point the service sector (drilling rigs and frac companies, as well as pipe, sand, cement, etc. for neophytes) will be decimated, the unconventional oil companies broke and in receivership, and many of the former oil workers will have moved into other work. Thus when supply and demand come into balance and head towards scarcity again, it will take a year or 2 for the industry to react, forcing oil prices temporarily back above $100.

#51 MrHulot on 03.17.15 at 7:18 pm

The Decline of Vancouver

Finally someone has put this growing problem into words that is understandable and paints a very accurate picture.

Here is the conclusion…capitalized for effect.

“We’ve reached an almost criminal point of misinformation and POLITICAL CORRECTNESS. Picture an elephant in the room. This elephant has a large bed sheet poorly covering half it’s body. Most in the room say “hey look it’s an elephant.” Property owners say “no, we can’t be sure it’s an elephant, there’s a bed sheet covering part of it”. Politicians say “we can’t be sure it’s an elephant, we need to study it more”. And developers say “we did a survey and concluded it’s a hamster.”

More of the same. To what end? Deal with the world you live in. — Garth

#52 MrHulot on 03.17.15 at 7:19 pm

Sorry…here is the link

http://sofard.tumblr.com/post/113616107456/the-decline-of-vancouver

#53 Vanecdotal on 03.17.15 at 7:20 pm

We are so very soon past the point of BOC rates having any further significant impact on the housing market (up or down) for the simple reason the federal government has no dry powder left to try to reign this monster credit bubble in and create a soft landing with monetary policy alone.

– Creditworthiness is already becoming a huge problem, just the tip of the iceberg. When there’s no one “eligible enough” left to lend to, regardless of rates, at the same time feds are working behind the scenes to lowly and methodically unwind CMHC, does anyone actually believe the banks will keep lending to anyone with a pulse?

– CMHC will be tinkered with as the most obvious route, I suspect right after the election. Whoever is in power would likely see this as the most direct course of action without any further need to diddle with monetary policy. They will be quietly trying to unwind the government’s risk exposure to these mortgages, without alerting the public.

Frankly it’s a great question that should be put forth to all the candidates. What are your immediate plans re: CMHC to protect the taxpayer from the possibility of massive defaults in the short-to-mid-term upon being elected?

Love to see that on the televised debate.

#54 Vanecdotal on 03.17.15 at 7:21 pm

“lowly” should be slowly, der.

#55 Fuzzy Camel on 03.17.15 at 7:21 pm

Hugo Salinas Price

“I think we are going to see a series of bankruptcies. I think the rise in interest rates is the fatal sign which is going to ignite a derivatives crisis. This is going to bring down the derivatives system (and the financial system).

There are (over) one quadrillion dollars of derivatives and most of them are related to interest rates. The spiking of interest rates in the United States may set that off. What is going to happen in the world is eventually we are going to come to a moment where there is going to be massive bankruptcies around the globe.

What is going to be left after the dust settles is gold, and some people are going to have it and some people are not. Then the problem is going to be to hold on to what you’ve got because it’s not going to be a very pleasant world.”

Garth, this Billionaire is dropping a lot of buzzwords here. He is in the know. Keep an eye on Prem Watsa. Fairfax has hundreds of billions of dollars in CPI derivatives. If deflation sets in, someone pays out, specifically, the big 5 banks. The big 5 banks have been foolishly selling all sorts of CPI & interest rate derivatives, to a liability of roughly $18 Trillion they are on the hook for.

If Yellen raises those rates, housing will be vaporized and so will our bank accounts.

Dramatic? Or you haven’t researched this. Stop being so arrogant.

Stop being so stupid. — Garth

#56 Fred on 03.17.15 at 7:21 pm

Foresight is 2020 ;)

#57 Freedom First on 03.17.15 at 7:24 pm

Whatever Janet from another planet says tomorrow will get some people wetting their plants, that’s for sure. Calgary, Edmonton, Grande Prairie, Fort MacMoney, all in oil country, watching helplessly as oil closes in on $40 a barrel with no bottom in sight. This is affecting all of Canada, oil country is merely the eye of the hurricane. The wetting the plants sign reminds me of what happens when RE crashes, it is like people all around you get diarrhea at the same time. It is ugly to watch and smells really bad, and all a person can do is stand clear, don’t get any on you, and keep quiet, as people who know you are not being hurt by the carnage get real angry. One of the ugly traits of human beings, they can’t stand to see someone else do better than them. This is why people on Garth’s Blog value their anonymity, as we are not high profile people like Garth, who has already notified the RCMP of who to go after if he is killed. Garth’s words, not mine.

#58 earthboundmisfit on 03.17.15 at 7:27 pm

@48 MSM-free zone
“Praying for a terrorist distraction”? I wouldn’t put it past the Harperoid to manufacture one.

#59 MSM-free Zone on 03.17.15 at 7:29 pm

#8 Mark on 03.17.15 at 6:09 pm
__________________________

Funny you should mention the airline analogy.

The turbofan engines on most commercial passenger jets require an idle speed of at least 60% just to be self-sustaining.

Aside from an economy based solely upon a bloated housing market and faltering resource extraction, I see nothing that would make the Canadian economy self-sustainable anymore.

#60 Smoking Man on 03.17.15 at 7:29 pm

If Yellen removes the word patients, and your long USDCAD you’ll have a good day.

#61 Retired Boomer - WI on 03.17.15 at 7:33 pm

Things are looking rather “green” here. We could use a little rain, California could use a deluge.

After 18 years the washer finally took a dump. About $370 to repair, or $600 to replace (with an inferior model designed to last approximately 8 years). To the mortgaged indebted, the ‘new’ replacement with warranty might seem the better bet. To the old dog, who says the unit needs nothing except this item, and regular maintenance it is merely an operational cost.

Perhaps that explains why he still listens to a 1958 Seeburg 201, a Hallicrafters S-107.

Yes, you can’t fix stupid, but it is sure fun to watch. The oil show has sure been a hoot. Four years ago they were predicting $200 oil. It is currently under $44. Where does the bus stop next? Higher interest, and associated borrowing costs would be welcome. It chokes the idiots, and could fatten up my wallet.

Somebody has to pay up for the washing machine, that Maytag repairman will not be lonely this week.

#62 M Molko on 03.17.15 at 7:39 pm

So, if these rates are so low, if you have the money why wouldn’t one take out a mortage at 2.79%, invest it, and in five years when they ask to renegotiate just give it all back, keeping the interest which (should have, according to everything else you talk about) gained at 4-6%. This gives me a 1.21 – 3.21% gain on free cash.

#63 jess on 03.17.15 at 7:39 pm

“The United States urged countries on Tuesday to think twice about signing up to a new China-led Asian development bank that Washington sees as a rival to the World Bank after Germany, France and Italy followed Britain in saying they would join.”

the $50 billion AIIB.
http://www.reuters.com/article/2015/03/17/us-europe-asia-bank-idUSKBN0MD0B320150317
=======

..”The private sector has to be part of the solution as well. Oil, gas, and mining firms are increasingly disclosing their contracts with governments. This gives everyone a chance to scrutinize the behavior of corporate and public officials.”

At the event, three recipients of the World Bank’s “Integrity Awards” were honored: the Royal Canadian Mounted Police, whose cooperation in an investigation resulted in World Bank sanctions and legal action; a senior financial management specialist whose vigilance in reviewing a project prompted corrective actions in the audit and treasury functions of the local government in China; and a person working in Timor Leste who unveiled fraud and corruption affecting $44 million dollars of World Bank-financed contracts.

“Inspired by these examples, the World Bank Group is more committed than ever to continue the fight against corruption — and that will be a critical part of our work to end extreme poverty and to boost shared prosperity,” said Kim.
http://www.worldbank.org/en/news/press-release/2013/12/19/corruption-developing-countries-world-bank-group-president-kim

#64 Daisy Mae on 03.17.15 at 7:43 pm

“….Meanwhile oil just won’t quit. It’s flirting with $43 a barrel, and the momentum’s to the downside. Nobody will be much fussed to see it slide into the thirties. The reason is simple – too much supply.”

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

So…please tell us again WHY our pump prices are so high? Thanks.

#65 Andrew Woburn on 03.17.15 at 7:43 pm

#216 Mister Obvious on 03.17.15 at 11:21 am
#92 Andrew Woburn
“Canada’s rental unit landscape witnessing a resurgence – The Globe and Mail”
—————————-
What puzzles me: where will the droves of people come from who are suddenly willing to “throw their money away on rent”?
=======================

From the people who lose their houses or are now too scared to buy anything. That’s what happened in the US.

#66 Nemesis on 03.17.15 at 7:45 pm

“So if you’re loading up on cheap debt, have a plan to survive renewal in 2020. Seriously.” – HonGT

#PlanB… #OnlyInExtremeEmergencies…

https://youtu.be/xBymfQU2x7g

#67 BG on 03.17.15 at 7:47 pm

#12 Pierre Lapointe on 03.17.15 at 6:14 pm
This is all good news for Quebec. The decreasing dollar will help Quebec revive our manufacturing industry, so we should see our economy do much better in the coming years. And because of that, our housing market will increase in value. It is already much lower than in other big Canadian cities, so we can expect big increases in housing prices, notably in Montreal and Quebec city. So if you are thinking of buying here, now is a fantastic opportunity!
—————————————————————

Garth, I hope you charge for this kind of advertisement.

#68 Vanecdotal on 03.17.15 at 7:50 pm

To clarify my previous post, I don’t meant to say that interest rates will have “no” effect on the housing market going forward, rather that they will become the “gravy” on top of more immediately relevant variables that have “suddenly” become much more relevant (and personal) to those who are all-in on highly-leveraged in RE.

Other more pressing factors, i.e. creditworthiness and CMHC rule changes will become the primary driving market forces (independent of wherever rates are) by mid 2016 imho.

#69 Linda on 03.17.15 at 7:51 pm

I’d think lower oil prices would also help manufacturing – if operating costs drop (lower energy costs) then presumably the cost of making an item would drop. Or at least, not rise. Plus is not the low loonie supposed to inspire those with funds to buy Canadian?

Still, people have had lots of time to accumulate stuff. Maybe everyone is tired of buying (except for housing) & yes, maybe the lower interest rates on offer will tempt the unwary to buy, buy, buy that house/condo they’ve lusted for. Like Garth I do not see a happy ending for this dance. Yet there will still be those who make out like bandits because they see opportunity where others see only risk.

#70 Realtor#007 on 03.17.15 at 7:56 pm

Just face it, high RE prices are here to stay, nobody is rocking this boat after the oil plummet or Canada will join the third world.

#71 waiting on the westcoast on 03.17.15 at 7:59 pm

#46 Jetfixer on 03.17.15 at 7:06 pm / @#8 Mark
“Cathay Pacific is reporting an increase in load factors for North America and Europe at 12.7% and 8.2% respectively. Maybe there is other factors affecting Singapore Airlines numbers?”

Thanks for killing my theory… ;-)

#72 Washed Up Lawyer on 03.17.15 at 8:00 pm

#50 nonplused

I like your analysis. Thanks for your efforts.

For some strange reason I thought back to an earlier era (mid 80’s) when a bunch of us were being called to the bar while working at a large law firm in Calgary. The day after the bar call the newly minted lawyers would announce they had bought a new car. Most often it was a BMW.

One day the most beloved new associate announced that he too had bought a car. A ’67 Valiant. Probably the millionaire next door by now. He had grown up in relative poverty in the Kitchener Waterloo area. He said that at Christmas time, his family exchanged glances.

Goodness, I am turning into an old fogey with these dumb stories.

#73 Randy on 03.17.15 at 8:02 pm

The bubble is deflating. Is another QE coming ? http://www.cnbc.com/id/102512859 Need a new Bubble portfolio Garth.

Schiff is a gold merchant. — Garth

#74 bob on 03.17.15 at 8:02 pm

I agree with everything you say Garth,
but how many years have we said interest rates were going to rise? Since 2009?

You’d think phrases like “absolutely” would be removed from your blog by now…

I mean, seriously, if BoC can reduce rates in a shock move, why can’t they do it again, or even, stay pat for another, oh, I don’t know, 2 years?

#75 mitzerboy aka queencity kid on 03.17.15 at 8:02 pm

what do you get
when you cross poison ivy and a 4 leaf clover ?

a rash of good luck

thankz garth for the money and fun blog that likes dogs

#76 Nagraj on 03.17.15 at 8:12 pm

How long could the BoC delay following a Fed rate hike?

I would think the FOREX would punish the Loonie mercilessly and immediately if there’s any perception of a delay.

The BoC is legally mandated to counter sudden jumps in the exchange rate. (To keep the price of lettuce relatively stable?). A delay could keep BoC currency traders awfully busy. [Any data on foreign currency reserves?]

Jes sayin: how can you have a housing bubble, debt bubble, rising unemployment, a falling currency, and not end up with price instability?

#77 LL on 03.17.15 at 8:14 pm

BG # 67 about #12

…..”So if you are thinking of buying here, now is a fantastic opportunity!”…

Maybe he is a real estate salesperson!

#78 Capt. Obvious on 03.17.15 at 8:14 pm

@#51 MrHulot

Property owners say “no, we can’t be sure it’s an elephant, there’s a bed sheet covering part of it”.

The bad new is that it’s not an elephant. It’s a tiger.

#79 everythingisterrible on 03.17.15 at 8:17 pm

Looking on the bright side, Hopefully the low dollar will breath a little life into some BC Sawmills and Canadian forestry product export as a whole.

#80 Daisy Mae on 03.17.15 at 8:22 pm

#57 Freedom First: “Garth, who has already notified the RCMP of who to go after if he is killed. Garth’s words, not mine.”

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

Garth is merely the messenger.

#81 Smoking Man on 03.17.15 at 8:25 pm

It’s unfortunate most of you have never gone Bankrupt. It’s amazing how resourcesfull you become.

You just learn to deal with shit, real fast, and that makes you strong. Very strong.. It’s not somewhere you want to stay to long.

But it’s the best lesson to develop skills to become a zillionaire.

I went bust first go around. Was about 30 with a young family.

Problem is unless it’s you’ve gone through it, you live in fear. It’s the fear of the unknown. Once you’ve been there, you’ll risk take.

You need to be addicted to risk to make a lot.

If you do it right, you build a huge stack, then you get safe, if it’s in your nature.

In my case.

I’m either going to die broke, or filthy rich…

In all honesty, I have no idea which of the two when the time comes.

And don’t care….. Either way.

Is that not crazy….

#82 Ray Vasquez on 03.17.15 at 8:32 pm

A mortgage broker told me that the lowest 3 and 5 year fixed rate, closed mortgages are 2.29%, 2.39% today.

He is telling me that 1.95%, 2.05% 3, 5 year fixed rate closed mortgages are coming soon, in about 2 months.

Is this true or is this a bunch of hot air?

#83 Millencolly Millenial on 03.17.15 at 8:37 pm

I think I’m going to read you blog every day religiously, then after every article I’ll say something like “Garth, or Gartho, I’m not an economist, neither do I have and run and investment firm, neither was I part of parliament, but I know more than you do.” Ya… That’s what I’m gonna do. By the way Garth. I think you’re right and agree with a lot of the things you say!

#84 Andrew Woburn on 03.17.15 at 8:41 pm

#110 Godth on 03.16.15 at 9:32 pm
The central banks are acting in coordination and achieving remarkable things. Australia (for ex.) is completely in lockstep with Canada, misery loves company. The boss at the BIS is so proud of the vassals.

Dollar Imperialism, 2015 Edition
http://www.counterpunch.org/2015/03/06/dollar-imperialism-2015-edition/
========================

The idea that the dollar as reserve currency gives America huge leverage just won’t die no matter how little evidence is ever produced. This economically illiterate article co-written by a French Marxist professor is no different. Here’s a clue where the authors were coming from:

“Liberating the world from the burden of the dollar, and from the hot and cold wars waged in its interest, will of course not relieve us from the world’s true, insidious disease: capitalism.”

Like many, including most thoughtful Americans, I am disturbed by US use of financial, technological and military power to bully the world. Nevertheless, the dollar is the preeminent currency because other people want to use it, not because the US makes them. The high dollar is causing nothing but grief for the US right now. This kind of article full of half truths and garbled economics is the sort written by goldbugs desperate for a collapse of the dollar.

The authors manage to insert both these statements in the same paragraph:

“For six years the Fed has flooded the world with dollars, giving $4.5 trillion of free money to banks and investors” and then, “it’s astounding that so few of these new dollars have actually reached the US real economy”.

Well it would be less astounding if the authors were aware that none of those dollars actually went anywhere and they are still sitting on the Fed’s balance sheet. The net effect of QE was to drive down interest rates not to give “free money” to anyone. If $4.5T had hit the street, we wouldn’t be sitting here worrying about deflation.

How about:

“The US presence in the Middle East serves not primarily to gain access to its oil and gas…, but first and foremost to protect the petrodollar, to ensure that the global fossil fuel markets continue to be denominated in dollars.”

Just because something is priced in USD, it doesn’t mean you have to pay for it in dollars. You could pay for it in the equivalent amount of Euros or ringgits if the seller agreed. Sellers don’t though. They like to be paid in dollars. Even Putin.

Or this one:

“Russia and China … are also dumping US treasury bonds from their reserves, and buying massive amounts of gold. In November 2014, China announced a financial reform plan, including redeployment of its currency reserves: instead of recycling them into US Treasuries, they should go “to support the domestic economy and the development of an overseas market for Chinese high-end equipment and goods.”

They are selling their Treasuries to defend their currency, Russia because the ruble is in trouble and China, because it is trying to maintain the yuan/dollar peg. Both states are losing huge amounts of capital the wealthy flee. As these emigrants sell domestic currency to buy foreign they put downward pressure on the home currency.

To be as acceptable as the USD, a strong international currency would need a strong central bank to manage it. That’s not happening anytime soon and neither is gold.

#85 John on 03.17.15 at 8:41 pm

Imagine having the sell your house to meet make your margin calls when the poodle peckers goose the sitting ducks leveraged up to their necks. Whew, good thing everyone here is too smart to play that roulette game.

#86 Retired Boomer - WI on 03.17.15 at 8:41 pm

Death & Taxes.

It is TAX season here in the states. The time of year when you get to figure your taxes, and if you paid too much, or not enough. Some use the standard deductions, others see if itemizing might make more sense. We generally itemize, and have tried to structure income from investments to pay the least effective rates (a worthy goal). This year itemizing made sense.
After all is compiled our effective Federal Tax rate was 13%. Our Wisconsin effective tax rate was 3.73%
A good job done!!

NO, contrary to rumor our tax rates are NOT too high.

#87 John on 03.17.15 at 8:45 pm

NYSE reported, as of January 2015, that their stock action, based upon borrowed (leveraged) $$$, had then breached $450,000,000,000 -US$. The S&P was just behind @ about $410,000,000,000. This is higher than in both 2000 and 2008 for both casinos. It certainly looks like borrowing to chow down on housing debt has lots of company at the cheap debt trough.
Imagine how that plays out in all ‘gambling’ venues when cup-cake, Janet Y, signals a rate hike is in the mixer. Followed by Canada’s poodles and their pixel dust harmonic tremors aiming higher.
Nobody Escapes. Greater Fool. Feb. 15, 2015.
http://www.advisorperspectives.com/dshort/charts/markets/nyse-margin-debt.html?NYSE-margin-debt-SPX-since-1995.gif
Your comment is awaiting moderation.
– See more at: http://www.greaterfool.ca/2015/03/17/the-gamble-2/#comments (Sorry, typo)

#88 Ontario's Left Coast on 03.17.15 at 8:45 pm

Garth, today’s photo is awesome! Cheers.

#89 chapter 9 on 03.17.15 at 8:49 pm

Global News Calgary– Rumor gas prices are going up 0.11 cents a liter over night!!

#90 Retired Boomer - WI on 03.17.15 at 8:55 pm

#72 Washed up lawyer

Good story. Not sure the 67 Valiant was a ‘good car’ though. Probably, with the slant six and good rust protection added.

Agree with post 50 on the future of oil prices. Were Governments wiser, they would have a flexible oil tax that slides both up and down, opposite the oil prices, to add revenue when prices fall, and stability to prices when they rose. Naturally, governments are never ‘wise.’

#91 maurice on 03.17.15 at 9:08 pm

To All,

I have been following this blog, and as far as I can tell, nothing is mentioned about the workers that build houses, their wages, their demand and supply.

As if houses were built by no one, as if it was all a matter of financial concepts like interest rates, inflation, exchange rates, central banks. None of this concepts will put a roof over your head.

I could work every weekend for 20 years, the duration of a mortgage, follow the Canada Building Codes, and have a fabulous house. But this is illegal.

So we are all stuck having to pay enormous amounts to the government in taxes and banks in interest.
Canada is not a free country, its free for rich to take from others, that is what it is.

Keep trying to make money without working, and we are going to be enslaved and ignorant to others.

Come on people, its common sense. You can’t take without giving.

#92 Nemesis on 03.17.15 at 9:15 pm

#StrictlyForSpinCycleFogeyBriefs… #Ok,SnowBoid,Too…

#WhyValiantYouAsk?… #”Hey,Charger!”…

https://youtu.be/D1RY8FTWB-M

#BonusWayBack….

https://youtu.be/1OHa0vWXIL8

#93 MSM-free Zone on 03.17.15 at 9:20 pm

#74 bob on 03.17.15 at 8:02 pm
“…..I agree with everything you say Garth, but how many years have we said interest rates were going to rise? Since 2009?………”
__________________________

I’m guessing Garth’s previous comments were correctly (naively?) based upon commonly accepted principles of supply/demand and free-markets, which apparently, are completely foreign and unacceptable concepts to our currently over-lobbied and ideologically-twisted government.

#94 TRT on 03.17.15 at 9:34 pm

Garth,

No, Canada will not follow suit on US interest rate increases.

I trust the Cons on that..;)

#95 Washed Up Lawyer on 03.17.15 at 9:36 pm

# 92 Nemesis

#Goodwork…#Findanadvertforthepushbuttontransmission…#Ichuckled…

#Enjoyedtheadverts…

#96 Smoking Man on 03.17.15 at 9:39 pm

#83 Millencolly Millenial on 03.17.15 at 8:37 pm
I think I’m going to read you blog every day religiously, then after every article I’ll say something like “Garth, or Gartho, I’m not an economist, neither do I have and run and investment firm, neither was I part of parliament, but I know more than you do.” Ya… That’s what I’m gonna do. By the way Garth. I think you’re right and agree with a lot of the things you say!
………

Grasshopper, no one cares with what you agree with, or disagree with.

If you want your words heard.. Piss people off.

Sucking up to celebrities, not cool, call Garth an ugly senile bastard. Tell him his Harley is out dated, and he’s to God damn old to ride it…

Look in the mirror, tell yourself I’m the God damn most special prick in the universe.

It goes against every kind of conditioning your parents, teachers, brothers and sisters, freinds put in your head.

It may feel wierd at first, but after a while… Success lands in your lap.. You don’t even need to try.

SM Rule number 1

Im number 1..

#97 Randy on 03.17.15 at 9:39 pm

100% support #55 Fuzzy Camel. Ignoring it is the epitome of ignorance. When a (good guy)BILLIONAIRE Hugo Salinas Price- says something is going to happen- it will. It is exponential function- DEBT ACCUMULATION CAN NOT continue into infinite. This is basic math in a finite world. How someone can try to dismiss it with ‘stupid’ is frankly much more then stoopid. There are people with extreme knowledge and intelligence trying to get the word out about what will be the single biggest event in the history of the world. The debt bubble collapse and they are fighting the gov shills, the ignorant, the unintelligent, the dumbed down fluoride eating average Canadian citizen who have no idea of the reality of the world or the pain that they are about to be dealt. Keep reading reading and learning people.

Aaron Russo-“Freedom to facism”, “Money as debt”, Chris Martenson- “Crash Course”, Damon Vrabel- “Renaissance 2.0”, Mike Maloney- “The secrets of money”
Keep up the good fight.

You guys are here for comic relief, right? Because I think 60 million people dying in WW2 might actually have been a bigger world event than the mythical re-run of a credit crisis. Go away. — Garth

#98 Brew on 03.17.15 at 9:41 pm

#38 Suede
Why will US rates rise? Because their economy is hot.

How do we know their economy is hot? Prices for 3 weekend nights in Las Vegas are through the roof, and that just in USD
—————————————————————-

Also the price of lobster is way up.

#99 mechanized on 03.17.15 at 9:44 pm

That whole thing about peak oil is so old.

That’s right, it’s about 10 years old according to EIA data. The current massive glut is due to cheap money fueling massive shale projects, none of which is easy or cheap. it takes 10x the rigs to produce the same, and they last a fraction of the time. All the “tight oil”.. that production is, by latest estimates, to peak in 2020 at the latest.

#100 devore on 03.17.15 at 9:44 pm

#91 maurice

I could work every weekend for 20 years, the duration of a mortgage, follow the Canada Building Codes, and have a fabulous house. But this is illegal.

It is absolutely not illegal to build your own house. Many people have done it. My parents did. If you have the skills, get all permits and pass all inspections, have at it. The trick is in knowing what you don’t know how to do, and delegate to professionals.

#101 Lukas on 03.17.15 at 9:45 pm

Rate will not stay low forever…that was the message 5 years ago. Where are we now? My prediction is that rate will stay at this level in Canada for at least 2 years. Meanwhile house prices in YVR and YYZ will continue to go up while YYC will stablize in the second half and will continue its upward trend starting next spring. With rates at this level, there’s no catalyst for sellers to sell at fire sale prices. By the 2nd half of 2015 YYC buyers will realize prices will not go down as much as they had hoped and those who are on the sideline will jump in…we have seen this movie in late 2009/10 in YVR.

#102 BlackDog on 03.17.15 at 9:50 pm

This is getting interesting.

“France, Germany and Italy have joined Britain in signing up to the China-backed Asian Infrastructure Investment Bank (AIIB), dealing a further blow to the US government.
Australia is also believed to be rethinking its position to stay allied with the US and reject joining the $50bn bank, which is seen as a rival to the World Bank.
Last week the UK said it believed its decision to become a founding member of the AIIB was in the national interest, shrugging off US concerns about the move.”

http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/11476533/Joining-Chinas-World-Bank-is-in-UKs-national-interest-depsite-Washington-anger.html

#103 Mike on 03.17.15 at 9:57 pm

If you’ve been on the fence about buying in the 416 all these years…don’t even bother now that interest rates are approaching (real) negative territory.. Banks practically paying you to own brick and mortar. A mortgage in a currency that’s depreciating quicker than a rabbit gets (fill in the blank). Nah, that’s not for you…Let someone else load up on useless real-estate as the GTA population continues to increase by 100,000 each year. You just sit back, relax, play paper games and pinch virtual pennies, hoping for the crash (I now keep hearing correction) that will never come. We will definitely need all the obedient, meticulous, steadfast renters we can get.

Do I really need to say sarcasm off – except for that last sentence?

30%+ down, near the subway 15 – 20 mins to downtown or near points of interest – you are golden:)

#104 Blogbitch on 03.17.15 at 10:05 pm

Didn’t we just have news a few days ago that Canada’s household debt levels are a new, all-time high? And in response to that, two of Canada’s big banks lower their mortgage rates to entice more buyers. Is it just me or does it make the banks seem like drug pushers and debt is our opiate?

#105 Leo Trollstoy on 03.17.15 at 10:10 pm

Remember when Poodle and the BoC dropped rates and the big banks didn’t immediately follow suit? Some posters thought this meant something. Lol. Silly kids.

#106 Leo Trollstoy on 03.17.15 at 10:14 pm

Anyway, my 2 tiny 1980s built 16 unit rental apartments in FL are dumping $16,000 USD into my bank accounts every month. Or should I say $20,000 CAD? Life is good. lol.

Time to take a European Vacation ™. The Euro is getting rekt. Life is good. Maybe by the time I get back I’ll enjoy a 75 cent loonie.

#107 Mark on 03.17.15 at 10:15 pm

“How long could the BoC delay following a Fed rate hike?”

5+ years, if not longer. As long as it takes to liquidate the negative “wealth effect” that’s occurring in Canadian RE. Canadian consumers are slowing their spending dramatically, and this is keeping prices stable despite the obvious short-term loss in the currency.


I would think the FOREX would punish the Loonie mercilessly and immediately if there’s any perception of a delay.

Doubtful. A higher policy rate implies a weakening currency. If the US raises, it sends a message to the world that inflation is coming back to America, which, at this point, couldn’t be anything further from the truth with the incredibly weak US and global economy (notwithstanding all the propaganda in the media lately!).

That was embarrassing. — Garth

#108 Oil Is Sticky on 03.17.15 at 10:16 pm

64 Daisy Mae on 03.17.15 at 7:43 pm
“….Meanwhile oil just won’t quit. It’s flirting with $43 a barrel, and the momentum’s to the downside. Nobody will be much fussed to see it slide into the thirties. The reason is simple – too much supply.”

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

So…please tell us again WHY our pump prices are so high? Thanks.
——-

I can tell you why in Scamcouver. Tax and tax and tax and tax and then GST on top of all those 4 taxes. Welcome to the province of Bring Cash (especially with the govt looking the other way).

#109 Leo Trollstoy on 03.17.15 at 10:17 pm

Btw SM is right. Most people are too brainwashed by society to know how to make real $. Get a job and pray is how the general teaching goes…

#110 Randy on 03.17.15 at 10:21 pm

Oh –there is comedy alright. Not the kind you will think is funny in a few weeks. Too bad. ALL ELSE RESEARCH THOSE LINKS then ask where the comedy lies.

Do you have an ark? — Garth

#111 Mark on 03.17.15 at 10:21 pm

“Remember when Poodle and the BoC dropped rates and the big banks didn’t immediately follow suit? Some posters thought this meant something. Lol. Silly kids.”

The banks still haven’t cut the full 25bp. And the issue, then and now, is credit-worthiness. Even these latest iterations of cheap 5-year mortgages from BMO et al are only available to an increasingly limited subset of the population as equity recedes on account of falling housing prices.

If you pay 3% to borrow money, and your house decreased by 5% in a year (ie: a typical scenario over the past year or two in most of Canada, contrived RE board “statistics” aside), that’s an awfully expensive loan! With housing depreciation, even a 0% loan disaccretes wealth the homeowner.

#112 Mike J on 03.17.15 at 10:21 pm

US GDP tanking …
GPD forecast from the Atlanta FED …
https://www.frbatlanta.org/cqer/researchcq/gdpnow.aspx
Not so sure about that rate increase, deflation might come sooner than you think

#113 Leo Trollstoy on 03.17.15 at 10:23 pm

Not sure how tightening monetary policy is supposed to “help” an extremely weak economy that is probably in recession at this point. It just doesn’t make sense to me.

That’s why you’re not successful like SM. At least he doesn’t delude himself. He knows where it’s at. Street Smarts (TM) not Fake Smarts. Lol

#114 Cato the Elder on 03.17.15 at 10:24 pm

Cue the whining nanny-statists that plead for more and more environment protection legislation that there are no good jobs. Of course, never cluing into the fact that they prevented so much development of the oil sands when we still had a chance.

Oil is abundant. There’s hundreds of years left of the stuff – all the hype about it running out is an orchestrated marketing campaign by the big players to justify higher prices. Saudi Arabia can turn on the tap for 10$ a barrel and let it run for 50 years straight without a hiccup.

No one even realizes that the origins of oil are STILL UP FOR DEBATE. It isn’t a definitive fact that it’s even a fossil fuel.

Using common sense, one would have a hard time justifying the argument in the first place. How many ‘fossils’ or micro-organisms would it take to create just ONE of the hyper massive oil fields in Saudi Arabia? Can anyone explain why those dead organisms didn’t simply decompose like they do everywhere else? How many thousands upon thousands of layers of these things had to accumulate to make even 1 barrel of oil?

Oil is most likely created INORGANICALLY somewhere within the earth, and it seeps out in various spots. That makes it abundant, replenishing, and something we don’t have to worry about.

Quit being so Canadian and think for yourself every now and again.

#115 Leo Trollstoy on 03.17.15 at 10:25 pm

That was embarrassing. — Garth

Lol. That’s exactly what I was thinking. Hilarity ensues.

#116 H on 03.17.15 at 10:30 pm

Data Disappoints

The dollar has slipped versus most of its 16 major counterparts for the past two days amid disappointing data. Beginning home construction plunged in February by the most in four years. Bloomberg’s ECO U.S. Surprise Index slid to minus 0.73 on Tuesday, the least since March 2009.

“There has been a spate of weak data out of the U.S. of late,” Bipan Rai, director of foreign-exchange strategy at Canadian Imperial Bank of Commerce’s CIBC World Markets unit, said by phone from Toronto. “The market’s taking some positions off ahead of the Fed tomorrow, and there’s maybe just a little bit of skepticism creeping into that earlier belief that they might remove the reference to being patient.”

The dollar is trading in a “more defensive tone” before the Fed meeting, BNP Paribas SA wrote in a report Tuesday.

“These latest soft reports will be of limited concern for the Fed,” the BNP analysts wrote in the report. “A bigger source of worry at this week’s FOMC meeting may be the strong appreciation of the U.S. dollar in recent weeks, and markets are likely wary of any comments in the statement or press conference suggesting dollar strength is impeding Fed willingness to hike.”

#117 TurnerNation on 03.17.15 at 10:30 pm

We’re trembling with fear over the Fed tomorrow.

But the TV psyops newz is telling us our problem is people wearing a bit of cloth on tip of their head. Or on it. Or over their faces. Riight.

The elite collie dogs are nipping at our heels – us the scared masses.

Latest bit of cloth outrage must be polling well out West in the ‘Belt. Top marks.

#118 Smoking Man on 03.17.15 at 10:35 pm

Garth, don’t know if you know the Mulronies, X pm. Not sure if you’re palls

If you do, kindly warn Ben, about me.. If not, I’m having some fun.

To funny….

http://dyslexicsmokingman.blogspot.ca/2015/03/ben-mallory-discovers-smoking-man.html

#119 45north on 03.17.15 at 10:37 pm

Mincus E. Stoneham: Has any analyst out there thought that perhaps rates will rise on time but at a higher velocity? That side of the conversation has been very quiet. Out of the three scenarios a)No rate rise b) slow and calibrated rate rise c) Faster rate rise than everyone else is talking about, What chance is there of “C” happening?

I’m not an analyst but I read all kinds of arguments that the government cannot raise rates because of this. Because of that.

Analyst implies that there is a body of knowledge which can be learned, from which predictions can be made.

I think that we’ve never been here before. Nobody knows.

#120 VICTORIA TEA PARTY on 03.17.15 at 10:41 pm

CURRENCY WARS DRIVING THE FED’S RATE DECISIONS:

HIGHER US INTEREST RATES

will invite more investment to a “re-stabilized US economic environment” is perhaps what the Fed heads in DC are pondering these days. A new type of US isolationism may be forming up.

As they meet again tomorrow, they can only be marching to one set of orders: maintain the US dollar’s supremacy at any cost; that is at any cost to the rest of the known universe and to hell with consequences because if the Fed DOESN’T, then the future could be ever more bleak indeed, for THEM.

The US dollar has been on a tear, for months (but a bit weaker in the last couple of days), generally pummeling the EU, driving down commodity prices of every type and, as a result, weakening resource economies everywhere including Canada’s. Lots of damage to US “friends”.

The various planned and unplanned consequences are so many and varied that one needs a dance card to keep track for crying out loud.

MEDIA FED WATCH

The amount of time spent by CNBC, Bloomberg and other talking heads, over the last several years concerning whether or not the Fed should raise rates by another quarter of a point for God’s sake, is amazing in its breadth and depth. We can only assume, therefore, that we are all in a lot of economic trouble everywhere.

ISOLATIONISM RETURNS TO DC

If I were running the Fed I’d goose rates by a full point this week and say, “go ahead world, make my flaming day!”

Inspite of the co-ordinating of countries’ central bank money printing policies over the last six or so years, the Fed STILL needs to raise ITS rates because, as I’ve already alluded to above, that’s the only economic bullet it has left.

THE RESPONSE

As China, Japan and others still desperately try to survive their collective unworkable remedies of printing tsunamis of their currencies, “solutions” are proposed:

–Russia and others joining a new Chinese-sponsored SWIFT banking proposal;

–other sovereigns are selling US paper;

–many are buying gold,

–there’s EU QE;

–others may be lighting candles in the local churches;

–and a few are having a little lunch (Greece’s new finance minister).

IN SUM

I don’t think central bankers, anywhere, have a clue as to what they’re doing, any of them; a pox on all their houses.

So, why shouldn’t the US go for broke (they’re really broke anyway!)?

The international financial navigation sysem has failed.

This will be one interesting Fed meeting with more to follow.

As for oil prices, no bottom in sight just yet…

#121 Netanyahu on 03.17.15 at 10:50 pm

I am back, biatchez!!!

#122 Mukadi on 03.17.15 at 10:51 pm

Welcome to the real estate casino!

I personally know 2 friends who bought million $ houses in 2001 and 2007(at the peak of the stupidity) and that are still under water today – that’s 14 and 8 years of lost opportunities!

[5.4 Million homes still underwater in U.S.]

http://www.centralvalleybusinesstimes.com/templates/print.cfm?ID=27964

#123 Nemesis on 03.17.15 at 10:58 pm

#ByRoyalCommand… #BonusBonusWayBack… #”PushButtonDriving!”…

http://youtu.be/1IlEYoAq2zU

#124 Smoking Man on 03.17.15 at 10:59 pm

#121 Netanyahu on 03.17.15 at 10:50 pm
I am back, biatchez!!!
……..

He won..?

Nice, 4 more years of chirping the phyco path.

Book food is all I’m saying.

#125 John on 03.17.15 at 11:06 pm

Investment House Jefferies reports a Fixed Income plunge of -56% FEB 2014-FEB 15 and -34% for Investment Banking…. Imagine how that would feel if your house value collapsed to match that ‘bloodbath.’ Nobody escapes.

#126 Nagraj on 03.17.15 at 11:08 pm

a little factoid for #87 John

As I try to remember StockMarketFactoids 101 –
Margin debt as a rule does NOT rise into a mkt break; prior to a “casino” panic, the margin debt graph turns DOWN. (Which makes sense, as the smarter money pulls back sooner.)
(Stress on “as a rule”.)

Which reminds me that former Canadian PM Martin (can’t remember his first name) got away with lower than US rates because, in the Americans’ rush for Canadian resource stocks, the TSX had a SALE! sign up: “Lowest CALL MONEY rates on the planet!”

#127 bright side on 03.17.15 at 11:09 pm

All this gloom and doom… Stop crying and licking your wounds day after day…

Look at the bright side… The US economy is on fire… sell something there… forget oil, find something else… rake in high US$ … enjoy the ride.

#128 Tax me, I'm Canadian on 03.17.15 at 11:10 pm

It’s not just translink, it’s every crown corporation from Coastal health, B.C ferries, ICBC, BC hydro they’re all slopping at the trough. It’s so easy to google, the C.E.O.’s and their executive teams are all making more money than our own Prime Minister. Compensation for the public sector is way out of balance when compared to the private sector. Not only do they earn multiples of the average taxpayer, we must not forget about their rich pension and severance packages.

Our Crown Corporations are much less efficient than private sector businesses because in the private sector they’re objective is to profit. Unlike government agencies who need to spend their budget in order to apply for more money next year. Don’t get me started on the unions, i use to work in the B.C.G.E.U and hard work and initiative were frowned upon. There was a culture of complacency, the attitude was slow down you’re making us look bad and we set the pace, there will always be more work tomorrow.

That’s how our government diffuses a revolution, they keep more people dependent on the government cheese than not. Everybody on welfare/disability/pensions – to the civic/municipal/federal/provincial/native nations. Government has more dependent than not.

The rich don’t care the poor don’t have to pay they’re fair share, it’s the middle class that erodes.

Go to youtube and type in TAXES. 44 % of our earnings goes to taxes, that’s more than the average person pays for their housing + food + clothing combined. Then what about parking and fines and everything else.

It probably wouldn’t be half as bad if the scum of the earth contributed their fair share but the parasites contribute nothing, expect everything for free and they compound the burden on the enslaved because the social/medical industry is paid for by the tax-slaves, no wonder people are sleeping in hospital hallways.

Insite saves lives, that’s part of the problem because before they use to O’D and were put out of their misery. Our government propaganda says it saves money to provide Supportive Housing which is Absolute Bullshit, it costs 100’s of thousands of dollars to keep those maggots on life support.

That’s not the worst part though, the worst part is we have to co-habitate with them and be victims of they’re crimes.

Gregor and the goofs and the advocates are the enablers. It’s easy to advocate when you come into the neighborhood for the day and then go home to the burbs and self congradulate. Come live the hell we live with these demons as neighbors.

% 44 of your earned + 1/3 of your life = The story of your enslavement

#129 BS on 03.17.15 at 11:13 pm

23:

I bought a car the other day. They had a big board in the dealer showing the sales of the month and which were purchased by cash vs finance. I was very surprised at the split – perhaps 50% were cash purchases (mine included.) That seems inconsistent of the stories of Canadians loading up on debt. Mind you, this was in Richmond.

The dealer has no idea where the cash comes from. The dealer ‘cash purchase’ just means the dealer or car manufacturer didn’t finance it or lease it. If someone borrows the money on a HELOC, LOC, from a loan shark or takes out a bank loan or third party lease the dealer would record that as a cash purchase. All of those are a cash purchase to the dealer.

#130 Nemesis on 03.17.15 at 11:14 pm

#PartingShots… #IfItLooksLikeADuck… #QuacksLikeADuck… #It’sGottaBePointGrey?…

[SCMP] – Former duck farmer from China revealed as buyer of US$40million Vancouver mansion

http://m.scmp.com/comment/blogs/article/1740649/former-duck-farmer-nanjing-revealed-buyer-c51m-vancouver-mansion

#131 Drill Baby Drill on 03.17.15 at 11:18 pm

#104 Blogbitch
The banks are in the business of selling money. It is very much up their alley to sell as much as possible using whatever angle they can muster.

#132 BS on 03.17.15 at 11:24 pm

64

So…please tell us again WHY our pump prices are so high? Thanks.

Because you are buying retail gasoline at the pump, not wholesale crude oil. There is a difference. Of course there should be a reduction in gasoline if crude falls but both have different inventories which dictate prices so they do not always move in unison. Crude inventories are ready to blow the tops off storage facilities. Likely the refineries have slowed production in order to keep gasoline inventories lower and prices higher. At some point the low crude price will show up at the pump.

#133 Andrew Woburn on 03.17.15 at 11:29 pm

#119 45north on 03.17.15 at 10:37 pm
I think that we’ve never been here before. Nobody knows.
=============

Amen to that, brother. I was thinking everyone who wants refuge in USD must be there by now and then I read:

“Japanese investors to buy $300bn of US Treasurys by end 2017”

http://www.ijapicap.com/blog/2015/03/japanese-investors-to-buy-300bn-of-us-treasurys-by-end-2017/

#134 Mark on 03.17.15 at 11:30 pm

“That’s why you’re not successful like SM. At least he doesn’t delude himself. “

I do just fine, because, unlike you, I actually get things right most of the time. You, on the other hand, have done little in contribution to the comments section other than engage in ad hominem against myself without even providing much of anything in argument. Pretty utterly pathetic I must say. I don’t demand that you believe everything I say, but at least bring some real content to the table please.

#135 Paul on 03.17.15 at 11:33 pm

# 114
Oil is most likely created INORGANICALLY somewhere within the earth, and it seeps out in various spots. That makes it abundant, replenishing, and something we don’t have to worry about.
————————————————————-
I guess we are snowflakes after all.
Certainly nothing divine!

#136 gut check on 03.17.15 at 11:36 pm

IMO the bubble can EASILY continue to inflate, but to understand why one has to be able to admit to oneself that there *is* a huge amount of foreign investment going on that is fueling this fire.

Canada is on sale. The world’s 1% are looking for a place to …ummm.. shall we say, park?, their money. A change in our rates won’t effect them one way or the other.

Oh… and has it ever been discussed on this blog as to whether or not the vacancy rates are fudged with? I’m not sure they are at all accurate. I wonder how much a Real Estate board would have to pay (and to whom) to get to be on the Top 5 places to invest as a landlord. My city is on it perpetually and you know what? The lie is starting to show.

#137 Mark on 03.17.15 at 11:41 pm

“Has any analyst out there thought that perhaps rates will rise on time but at a higher velocity? That side of the conversation has been very quiet. Out of the three scenarios a)No rate rise b) slow and calibrated rate rise c) Faster rate rise than everyone else is talking about, What chance is there of “C” happening?”

If inflation were to take off, sure, c) could happen. And eventually, after a prolonged deflationary period, the plant and investment that makes up the economy will have depleted itself to an extent that inflation will return. However, deflation appears to be the big problem at the moment, with overcapacity existing in most sectors and oceans of untapped labour potential.

At some point, demography will reach a cross-over point at which the available labour force is fully and efficiently utilized, and inflationary pressures will exist. However, we appear to be eons away from such. I’d put more credence in the whole idea of an external event/black swan, such as a major world war or a severe natural disaster, creating inflationary pressure requiring significant rate increases to control inflation and suppress consumption, than I would on the scenario of the economy naturally recovering out of the deflationary abyss any time soon.

Of course, for borrowers borrowing against specific collateral, actual rates they pay can change quite drastically even in the absence of policy rate changes. On account of credit-worthiness and the perceived risk in a given asset class. This is a more likely scenario for housing, especially as credit quality/collateralization diminishes due to falling prices.

#138 JimH on 03.17.15 at 11:42 pm

#114 Cato the Blissfully Ignorant
“… Oil is most likely created INORGANICALLY somewhere within the earth, and it seeps out in various spots. That makes it abundant, replenishing, and something we don’t have to worry about.”
=============================
You, sir, are a pathetic and woeful embarassment to yourself, your family, your country, and perhaps worst of all, this blog.
Cry, beloved country! What a waste of oxygen.

#139 Simon Cowel on 03.17.15 at 11:43 pm

If not for CMHC no bank will lend with less than 50 % down, at the current prices, with rates north of 6 % in absence of rate suppression by BOC.

Combination of BOC + CMHC = destruction of the canadian dollar and mountains of debt.

#140 bubu on 03.17.15 at 11:44 pm

“But all this is likely just the start. It takes many months for the impact of layoffs, reduced payrolls and family disruptions to ripple through a local economy. Most sellers start out with an optimistic ask and start reducing it after sixty or 90 days on the market. ”

Again, wrong assumptions:) AB will not see more than 2-3% lower prices which is nothing.. we just had a 10% increase last year…. By next spring oil will be back and nothing will be affected… Unless we see an increase of 2-3% for the interest rate nothing will change.. As we know the unemployment is way higher in ON and the RE is not collapsing… Yes, maybe if the unemployment goes to 9-10% maybe.. unlikely to see that in AB… So the advice is buy now before the oil goes back and the RE will reach Toronto levels….

#141 No Canada, No on 03.17.15 at 11:49 pm

The patient is about to be removed from intensive care. Just in time to free up space for another one, from Canada.

#142 Victor V on 03.17.15 at 11:52 pm

http://www.financialpost.com/m/wp/news/blog.html?b=business.financialpost.com/2015/03/17/talisman-energy-inc-nexen-energy-ulc-fire-hundreds-of-employees-in-bloody-tuesday&pubdate=2015-03-17

It’s a “bloody Tuesday,” said one observer. “What a way to ruin St. Patrick’s Day.”

More layoffs are expected this week, picked by employers because it’s ahead of spring break when many take holidays and before the end of the first quarter.

“I can tell you with absolute certainty you’re going to hear more fairly sizable layoffs happening in the next couple of days that we’re already aware of with some of our clients,” said Shannon Bowen-Smed, CEO of Bowen Workforce Solutions, a Calgary-based recruitment and placement firm.

#143 Mark on 03.17.15 at 11:56 pm

“As they meet again tomorrow, they can only be marching to one set of orders: maintain the US dollar’s supremacy at any cost”

Just a thought — if they raise rates, since a lot of US debt is held overseas, that increases the outflows of USD$ to foreign countries to make coupon payments on government and corporate debt. Hence, the USD$ should fall, as theory would imply with rising rates.

Maybe the Fed is onto something with the rate hikes. The 1970s also tell us that the period of rising rates was also profoundly USD$ negative.

Either way, we’ve had ZIRP for 6 or so years now. The USD$ has mostly gone up, with transient weakness in 2010-2011 which has now been more than fully overcome. The people who are arguing that rate hikes will push the USD$ up further effectively are arguing that the USD$ can only go up, as they are not willing to acknowledge a scenario in which the USD$ would go down. If low rates have been good for the USD$ (which they have, as seen in the evidence), why should rate hikes also be good for the USD$? People advancing the theory that the CAD$ is going to 50 cents and that Fed hikes will push the USD$ up to the moon really need to explain that contradiction!

#144 PeterfromCalgary on 03.18.15 at 12:02 am

Don’t worry be happy! If you bought your house 15 years ago and paid off your mortgage and shifted all your financial assets to US dollars you’ll be fine.

So relax and drink some green beer. Worse comes to worse you can move to Ireland because everything worked out there.

#145 NotAGreaterFool on 03.18.15 at 12:13 am

Harper, Oliver and Company are extremely quiet these days about Canada’s Economy, the real estate market and tanking oil prices. Bet you they are in his Basement trying to figure out the silver lining here so they can hit the ground running for an election even with the Duffy case coming to the spotlight.

PS: No way BMO pulls this move off one year ago today with Flaherty (RIP).

#146 Blobby on 03.18.15 at 12:15 am

I feel sorry for the new PM.. Who will get the blame when rates go up and house prices start to drop.

#147 4 AM Sunrise on 03.18.15 at 12:16 am

Shanghai Real Estate Anecdote: a speculator owns a couple of office spaces. Wants to sell. Can’t sell because the buyers are staying away as a result of the government changing some kind of pricing regulation. Speculator is anxious because money is “locked up” in those office spaces.

#148 Van Island Girl on 03.18.15 at 12:17 am

Well even with the new house purchase, we’re staying on track with saving and socking away money for the just incase. As Garth might suggest, rather than put the extra money on our mortgage, we’re going to invest and then perhaps lump sum it on renewal time. We want to be prepared for the worst!

#149 Blobby on 03.18.15 at 12:21 am

@73 Randy:

You DO realise that Peter Schiff was the same guy who said gold would go to $5k!?!?!

#150 The 'Merican! on 03.18.15 at 12:32 am

At #107: Mark, I wouldn’t know where to begin to compile a response to your sad rhetoric. Well, at least I hope it is rhetoric. Otherwise, I would be laughing histarically in my drink right now. Do you know *anything*about economics at all?

#151 Rexx Rock on 03.18.15 at 12:35 am

Canadians can handle a 64 cent dollar as history shows but if it breaks 60 cent dollar that’s when I think Canadians will speak up against devalution of the currency.Interest rates will rise when this happens.I guess most people will flee with their dollars before then.

#152 Babblemaster on 03.18.15 at 12:38 am

Yes, yes. Someday it will happen. Rates will go up.

Sure, sure. Like when pigs fly.

#153 The 'Merican! on 03.18.15 at 12:44 am

At #106: Leo Trollstoy, it sounds like you have it figured out, with a grasp on the reality of the situation. I think I might like you…

#154 kommykim on 03.18.15 at 1:00 am

RE: #107 Mark on 03.17.15 at 10:15 pm
RE: I would think the FOREX would punish the Loonie mercilessly and immediately if there’s any perception of a delay.

Doubtful. A higher policy rate implies a weakening currency.

Looks like Mark still can’t figure out which one is “cause” and which one is “effect”.

#155 kommykim on 03.18.15 at 1:02 am

RE: #114 Cato the Elder on 03.17.15 at 10:24 pm
No one even realizes that the origins of oil are STILL UP FOR DEBATE. It isn’t a definitive fact that it’s even a fossil fuel.

Seriously? Really? LOL!

#156 angela on 03.18.15 at 1:07 am

#23 ILoveCharts: A cash purchase of a car at the dealership may just mean they borrowed on their home equity line at a better rate. You can get a car for a cheaper price if you get your own financing than to finance through the dealership.

#157 sad on 03.18.15 at 1:39 am

This will ripple affect everyone.

http://www.nytimes.com/2015/03/18/business/international/china-developer-gets-lifeline-amid-slump.html?ref=dealbook&_r=0

#158 A Yank in BC on 03.18.15 at 2:29 am

Just watched Tuesday’s CBC “The National” broadcast with Wendy what’s-her-name. Naturally they covered the BOM 2.79% story. Their take? Best damn thing ever. They literally showed a chart showing exactly how much the 20 basis point drop would save a borrower over a 25 yr. period. (Huh? A 25 yr. period? Isn’t it only fixed for 5?). Then the obligatory video sequence, showing a moist young property virgin looking at a brand-new Condo in Vancouver, (fawning over the stainless and granite in the kitchen, no less), while saying into the camera that it makes no sense to rent when you can own, and how she will soon be paying her own mortgage, instead of someone else’s.

Chapter, line, & verse from the CREA handbook of disinformation. Well done CBC.. well done. Give yourselves another raise.

#159 Mountain Man on 03.18.15 at 3:26 am

The price of oil is tanking for several reasons.

The price of oil was $100/barrel for several years. At that price level, it was profitable to drill just about anywhere (deep underwater and under the sea bed, up in the Arctic, the Tar Sands, fracking etc). So $100 oil created a flurry of projects all over the world. At the same time, there has been relative political stability in the Middle East and around the world. So producers scrambled to produce and sell oil at $100/barrel. This created an apparent abundance. Consumption never dropped globally, in fact, it has risen from 85 million barrels/day to 90+ million barrels/day in a few years.

As massive amounts of $100 oil started flowing worldwide, demand was met, there were few if any supply disruptions due to conflicts/wars and there was a temporary “surplus”, driving prices down.

However, as demand continues to rise globally, and oil companies layoff staff, shutdown production and slowly turn off the taps, the temporary “surplus” will dissappear. It’s taking longer than people expected. This is possibly because some oil companies locked in their prices for the year and can continue pumping and getting $80/barrel or more. Once those contracts expire, and there is a price reset, those companies will produce and sell dramatically lower volumes. And the price will rise back up to normal levels.

Oil production is kind of like a handheld water pump. You first have to pump twenty or thirty times before you get any water – then the water flows abundantly will much less effort, even for a brief period after you stop pumping. Then the flow runs to a trickle. In other words, there is a delayed reaction between production, refinery, delivery, consumption and pricing.

Oil will rise again. And Peak Oil is still a fact of life. Oil is formed by decaying biomass over millions of years, so there is not an infinite, endless supply. If you don’t believe in Peak Oil, then by default you are an “Unlimited Oil Theorist.”

#160 liquidincalgary on 03.18.15 at 5:32 am

Pierre Lapointe on 03.17.15 at 6:14 pm

This is all good news for Quebec. The decreasing dollar will help Quebec revive our manufacturing industry, so we should see our economy do much better in the coming years

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

it will take YEARS of a low dollar policy for any economy to be ‘revived’

#161 liquidincalgary on 03.18.15 at 5:56 am

chapter 9 on 03.17.15 at 8:49 pm

Global News Calgary– Rumor gas prices are going up 0.11 cents a liter over night!!

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

i work midnights…prices DID go up. tuesday prices were near .85/l. on way in to work: .96/l

#162 Julia on 03.18.15 at 6:14 am

#129 BS
23: I bought a car the other day. They had a big board in the dealer showing the sales of the month and which were purchased by cash vs finance. I was very surprised at the split – perhaps 50% were cash purchases (mine included.) That seems inconsistent of the stories of Canadians loading up on debt. Mind you, this was in Richmond. The dealer has no idea where the cash comes from. The dealer ‘cash purchase’ just means the dealer or car manufacturer didn’t finance it or lease it. If someone borrows the money on a HELOC, LOC, from a loan shark or takes out a bank loan or third party lease the dealer would record that as a cash purchase. All of those are a cash purchase to the dealer.

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

With dealers often offering cash discounts, its worth looking into using other sources to pay for the car.

#163 Kit Schicker on 03.18.15 at 6:15 am

Last!

#164 hamish42 on 03.18.15 at 6:22 am

Well at least we now know who all the folk with 100K to 200K of income who have pushed up Toronto RE prices are. Yes- Public servants, who have to work overtime parked next to people digging holes in the road to hit said figure.
No danger of a bubble here; as the public sector grows and pushes up the price of RE, the private sector should have no trouble funding it all, since manufacturing is doing so well in Ontario….

#165 raytott on 03.18.15 at 7:52 am

Is it too late for Canada to change its name to Weimar Republic North, or maybe just Frozen Banana Republic!

#166 maxx on 03.18.15 at 8:03 am

And now, a couple of timely messages from the philosopher cowboy:

“It’s almost been worth this depression to find out how little our big men know.”
― Will Rogers

“There are men running governments who shouldn’t be allowed to play with matches.”
― Will Rogers

No CB decryption software required.

#167 jerry on 03.18.15 at 8:07 am

In 2013 there was a considerable dump of bonds as fears of interests sparked panic. Some didn’t panic, kept their bonds and did very well.

Now again, the fear of rate rising causes anxiety to dump bonds. Is Yellen for real?

Incorrect. In 2013 the fear was the Fed would taper its stimulus spending to zero. It did exactly that. The market got over it. The same will likely happen as rates normalize. — Garth

#168 LOL Canada on 03.18.15 at 8:34 am

According to the plot graph. The USA is expecting 3.5 percent increase over the next 3 years. I don’t see how we are going to survive that kind of rate increase.
Being a nation of debtors, bring on the 40 year amortizations.

http://www.marketwatch.com/story/clues-to-feds-2015-plans-expected-in-latest-dot-plot-2015-03-17?dist=beforebell

#169 Mike L on 03.18.15 at 9:16 am

#24 SoCal – “Absolutely rates are going up here in the US. The economy is expanding rapidly. ”

Not so here in Texas. It’s pretty much the same Calgary story down here. Thousands of layoffs in O&G, not as many jobs as there used to be and the restaurants are quite empty (a few tables at dinner time). I was looking at a new car and visited 5 dealers at a Saturday afternoon, none had more than 10 customers.

Maybe it’s better then in SoCal?

#170 Oh oh China on 03.18.15 at 9:38 am

http://finance.yahoo.com/news/china-came-close-another-massive-214244302.html

#171 liquidincalgary on 03.18.15 at 9:40 am

Leo Trollstoy on 03.17.15 at 10:17 pm

Btw SM is right. Most people are too brainwashed by society to know how to make real $. Get a job and pray is how the general teaching goes…

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

something tells me you are just another SM persona.
droll, smoketard, droll

#172 Vancouver 1M on 03.18.15 at 9:43 am

Visiting Vancouver this week, alway knew housing was high here, but yesterday’s head lines were a shocker
There are no houses assessed under $500,000 and 66% of homes are valued over one million

How do people live here?

I remember 1990 I could have bought a house for $90,000 and thought that was expensive, who would have guessed.

#173 Kris on 03.18.15 at 9:44 am

So if you’re loading up on cheap debt, have a plan to survive renewal in 2020. Seriously.
—————————————-

Wow, that almost sounds like a capitulation, Garth.

It’s a caution. Borrowers at 2.79% have 60 months to prepare for a potential doubling. — Garth

#174 Daisy Mae on 03.18.15 at 10:04 am

“….But all this is likely just the start. It takes many months for the impact of layoffs, reduced payrolls and family disruptions to ripple through a local economy.”

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

This is the reason for increased bank rates coming soon?

#175 Holy Crap Wheres The Tylenol on 03.18.15 at 10:04 am

#49 Smoking Man on 03.17.15 at 7:18 pm
Attention teachers, here world renowned scientist, it’s a one minute clip..
I now you need to follow the curriculum, but better to know what damage you do to kids.
Holly crap, show this to your wife.

https://www.google.ca/url?sa=t&source=web&rct=j&ei=BLUIVaOpKdi2yATylIC4Dg&url=http://m.youtube.com/watch%3Fv%3De9yUXVzs0Qw&ved=0CCgQtwIwAA&usg=AFQjCNGfn8e-CfcAR5dwhvlypJFlul4Ocw&sig2=Sar1n2m9AQ-pWcBCxirgog
– See more at: http://www.greaterfool.ca/2015/03/17/the-gamble-2/#comments
_________________________________________
Sorry Smoking Man it was St. Patrick’s Day yesterday, and my wife being from Ireland needed to feel close to the old country. So we went downtown to The Irish Embassy for some snotty drinking. Showed her your blog and link before she drank too much. She said something you being Off your nut and you sicken my pish. Don’t ask. She was a Calculus teacher she said its simple ya wab 1+1=2.
BTW we walked over to McVeighs on Church for some real Irish fun. Another word of advice don’t ever mess with an Irish lass when shes had a few Guinness too many.

#176 Randy on 03.18.15 at 10:12 am

Logic and facts vs personal insults. The last refuse of a dying man holding onto what he believes in reality. When you make personal insults against logic you have already lost. That is all I have ever seen you make- and don’t try the pat response of these ideas are too ridiculous to argue. YOU HAVE NO REBUTAL soo you use the argument of intellectual midgit. You insult! NICE! You should apply for a job with fox news so you can further your reality.

Enjoy your personal apocalypse. Now, go away. — Garth

#177 Mister Obvious on 03.18.15 at 10:29 am

#128 Tax me, I’m Canadian

Your rant starts off like the usual ones: Frothing about government inefficiency, excessive taxation, lazy union workers and the like.

However, by the midway point you stray dangerously close to hate of a variety that I feel does not belong here.

Save that for one of the sleazier craigslist forums. Clean up your act or get lost.

#178 Keith in Calgary on 03.18.15 at 10:33 am

The government will let Canadian rates stay where they are for a couple of reasons.

Firstly, letting the dollar drop back down into the mid 60 cent range where ti was 10+ years ago is a very effective form of capital control, which forces people to keep their money inside the country, and spend their money inside the country without the government actually broadcasting they are doing so.

Secondly, they cannot afford to raise rates back to pre 2008 levels, or higher, nor can the US, for the obvious reasons stated here many a time. We’re trapped in a box, like Europe, and Japan.

If rates go up a quarter point next month…..then another quarter point next year….then down a quarter point the following 6 months, etc, which may occur as the FED postures to keep the FIAT FRAUD afloat, IT HAS ABSOLUTELY NO “material” effect on your personal finances in any way.

Personally speaking, I have no debt that I am carrying, but even if I had a floating rate on a $500,000 line of credit……..a quarter point increase in my carrying cost is $102 a month…….if I had a balance of $10,000 on my VISA card it equates to $2.00 a month…….

I spent that amount last night celebrating St. Patty’s day in the pub……..the $100 figure, not $2………

Once monetary policy shifts, it will not stop at a quarter point. — Garth

#179 Sue on 03.18.15 at 10:35 am

There’s a cartoonish impression I get of central bankers as penguins jostling on an ice floe…each nudging the other to do something, anything…with purported leopard seals cruising the waters below and a loud crowd of tourists watching from the cliffs above. National Geographic making a movie.

When the Swedish penguin jumped in he was badly bitten. A bunch of penguins just stepped back but the floe is getting smaller. The birds have to get in the water otherwise they and their offspring starve…

#180 JimH on 03.18.15 at 10:53 am

#155 kommykim
(in response to Cato the Elder)
“Seriously? Really? LOL!”
============================
Thank you, kommykim! Humor really is the best way to deal with this poor soul.

He really is pathetically funny. He has lost any claim to rational and critical thought, credible research and analysis and without a trace of any knowleddge of the way science works is vulnerable to the snares of any and all conspiracy theory.

You’re right; Cato really is pathetically funny; reading his arguments is rather like watching a one-legged man in an ass-kicking contest!

Sad, but still funny!

#181 Alberta is FINISHED on 03.18.15 at 10:59 am

Alberta is a one trick pony where the demented people of Alberta continue to cling to the hope oil price will come back up. Why will oil prices go back up Alberta? Just because it will. Really just because? Yes Oil will be low but will go back up. LOL Alberta you hear of cheaper fracking oil in the US? Alberta oil sands is going to be shut down in an orderly manner. I would tell you Alberta at least you have cattle but even that you screwed up since the people of Alberta are foolish, ignorant and wasteful as the Harper conservatives. Alberta is FINISHED.

#182 industrial Guy on 03.18.15 at 11:01 am

“This helped to drag down the whole of manufacturing sales, which sucks when a 78-cent dollar was supposed to save us.”

To expect a sudden turn around in the Canadian manufacturing sector is unrealistic. It takes time to open new plants, hire and train staff, set up suppliers. The production part approval process in the auto industry for example, can take months before final approval is received.

The Low dollar is helping a lot but it’s also causing input prices to rise. Electric motors, PLC (industrial computers), specialized tooling, high tech machinery and a lot of industrial supplies not made in Canada are purchased in USD. We’re all watching as these new costs work their way through the markets. Some are taking advantage of this fluid situation by pushing through price increases far above the changes in exchange rates.

The lower cost of fuel is now visible in shipping quotes out of the USA.

I know many Canadian manufacturing firms with filling production schedules and rising exports. Some are hiring. Firms heavily tied to the Alberta oil industry are wishing they had diversified long ago. Sadly, the lay-offs are happening fasted than the hiring if we look at the latest numbers released by Stats Canada. This will change. Honda, Toyota, Hitachi, GM, Ford and Chrysler still think Canada is a good place to manufacture their products. Yeah, some like Chrysler and GM are pushing for Government handouts. It’s a bad habit they need to break.

If you believe some recent reports out of Ontario ……. Government funds are offered before anyone asks. Will someone please send Premier Wynne a basic calculator that can add $Billions.

There are some price reductions being passed on to our North American customers which make our good and services much more attractive to US based clients. The really good news for us in Canada is … A rising tide raises all boats and the US tide is rising very quickly.

#183 Alberta is FINISHED on 03.18.15 at 11:02 am

Oh yeah oil prices are DOWN again and about to go below $42? $42 Alberta. You are finished at $60 and now oil is sitting at $42. Alberta is FINISHED .

#184 Holy Crap Wheres The Tylenol on 03.18.15 at 11:03 am

So if you’re loading up on cheap debt, have a plan to survive renewal in 2020. Seriously.
_____________________________________________
I guess everybody out there with these cheapo mortgages have been bitten and are now infected!
Jesus Garth, this sounds like the Zombie Apocalypse!
https://www.youtube.com/watch?v=FSi2fJALDyQ

#185 mousy on 03.18.15 at 11:09 am

Tax me, I’m Canadian: the so called “maggots” you refer to are your brothers, sisters, children, parents and friends. Ask yourself, what have you done to reach out and make the lives of these unfortunates better? You, personally, not your tax dollars. These people are lost and you are blessed. Where is your gratitude and grace?

#186 Keith in Calgary on 03.18.15 at 11:11 am

“Once monetary policy shifts, it will not stop at a quarter point”

Garth

——————————————-

Hmmmmmm…….Canadians are one of the most heavily indebted groups of people on the planet. Something you’ve said here a million times.

A 3% increase in the BOC rate over 24 months would push a $500K mortgage up by $1,200 a month just on interest alone. If you live in YYZ or YVR that mortgage could very well be double the stated $500K amount…….so $2,400 a month increase at some point, not counting the rest of Canadians variable debt.

Let’s recap, we’re probably the most heavily indebted people on the planet, we’re entering a long economic depression full of permanent job losses, no new full time high wage employment, increased offshore outsourcing, computerization and incomes dropping below inflation.

If you or anyone else thinks that locking in your debt at today’s ultra low rates for 5 years is going to save you, it’s not…….unless of course the BOC does not raise rates.

Want me to do the federal debt level calcs for the US and Canada for you, or is just asking you to refer to Zero Hedge for that data good enough ?

;<P

#187 Mark on 03.18.15 at 11:22 am

Don’t particularly like quoting the “Zero” guy, but wholesale trade in Canada collapsing:

http://www.zerohedge.com/news/2015-03-18/unequivocally-good-canadian-wholesale-trade-sales-crash-most-jan-2009

Yet another data point in support of domestic deflation and the necessity of more policy rate cuts in Canada.

#188 Treasury Blonde on 03.18.15 at 11:23 am

#1 TurnerNation on 03.17.15 at 5:57 pm
Hmm Treasury Blonde prices are on fire again.
—————–
Congratulation, you just won the typo award of the week.
And btw, Yellen is not Blonde.

#189 Godth on 03.18.15 at 11:25 am

#84 Andrew Woburn on 03.17.15 at 8:41 pm
Who benefits, who pays (even within the US)?
Being the reserve currency has its privileges and costs
http://equitablegrowth.org/news/reserve-currency-privileges-costs/
Who is going to hurt the most?
Global finance faces $9 trillion stress test as dollar soars
http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/11465481/Global-finance-faces-9-trillion-stress-test-as-dollar-soars.html

If you aren’t framing your analysis with “full spectrum dominance”, Wolfowitz – Brzezinski doctrines, Fukayama and “The End of History” (https://www.youtube.com/watch?v=lzqkXhdo0qc) then the world just got more confusing (for you).

Russia, China and other countries have been trying their hardest to get out from under having to trade in US dollars, it’s a dangerous game though; we could ask Hussein and Qaddafi but we can’t. Have you noticed a ‘pivot to Asia’ and a proxy war on the Russia border?
http://www.telegraph.co.uk/finance/comment/liamhalligan/10978178/The-dollars-70-year-dominance-is-coming-to-an-end.html

Dollar Demand = Global Economy Has Skidded Over the Cliff
http://www.oftwominds.com/blogmar15/USD-demand3-15.html

#190 Holy Crap Wheres The Tylenol on 03.18.15 at 11:28 am

#159 Mountain Man on 03.18.15 at 3:26 am

The price of oil is tanking for several reasons.
____________________________________________

Yep pretty much sums it all up.
100% correct Oil is a finite resource as is solar energy. Just that oil will be completely gone in 60-90 years and the sun well we’ve got about 5 billion years.
I’m thinking that will be an interesting day 5 billion years from now.

#191 Holy Crap Wheres The Tylenol on 03.18.15 at 11:32 am

#11 BlackDog on 03.17.15 at 6:12 pm

to not too….grrrr….hate typos.
____________________________________________

BlackDog how the hell do you peruse Smoking Mans diatribes? It must hurt your eyes.
Nice Handle BTW great song!
https://www.youtube.com/watch?v=Fgm7F30EN50

#192 Holy Crap Wheres The Tylenol on 03.18.15 at 11:39 am

#173 Kris on 03.18.15 at 9:44 am
So if you’re loading up on cheap debt, have a plan to survive renewal in 2020. Seriously.
—————————————-
Wow, that almost sounds like a capitulation, Garth.
…………………………………………………………………….
It’s a caution. Borrowers at 2.79% have 60 months to prepare for a potential doubling. — Garth
____________________________________________
As it should be this is like its a small world ride at Disney World, it just goes on, and on, and on! The low cost of borrowing is so reminiscent of the US with their bank loans just a few short years ago. We have enabled a whole generation of home purchasers to jump on board the Titanic. The worst is that when she goes down its not going to be women and children first off the ship. Everyone is going down with her!

#193 Holy Crap Wheres The Tylenol on 03.18.15 at 11:42 am

My most sincere apologies to Walt Disney World regarding my former statement re: Its a Small World. My grandchildren loved that ride. I have to wonder how many parents on that ride want to jump in the water and drown though?

#194 Down with the Ship on 03.18.15 at 11:49 am

Asked in my community’s Facebook group how bad things are:

“This will be the worst it’s been since the early 90’s. I see this summer being worst for layoffs, we’re still running off last years momentum. After this summer, the dark days will be here for a few years. This one is definitely not like the others in the last 15 years at least.”

“Wife was saying there is room on the trains at rush hr”

“Not good. I work at Nexen and over 300 people in head office lost there jobs yesterday. Lots of companies doing the same”

#195 Smoking Man on 03.18.15 at 11:59 am

What have I been preaching for years on here.

416 SFH… BOOM

21. 3% yr /yr.

Any one remeber my call form the fall, a spectacular spring market.. And it’s not anywhere near done.

Fear not, I’m not expecting any accolades , being the self appointed village idiot and all.

Not one human on this plant has a better crystal ball than Dr Smoking Man..

#196 Mike on 03.18.15 at 12:04 pm

More Alberta oil cuts (in addition to Nexen)

https://ca.finance.yahoo.com/news/canadas-talisman-energy-cut-15-151826993.html;_ylt=AtW78a8lzZJQ5IE0Q0DuFNChuYdG;_ylu=X3oDMTB1dHZiZXM5BG1pdAMEcG9zAzEwBHNlYwNsbl9NYXJrZXRzX2dhbA–;_ylg=X3oDMTBhdnVpNmo3BGxhbmcDZW4tQ0E-;_ylv=3

https://ca.finance.yahoo.com/news/conoco-says-cutting-7-percent-152450674.html;_ylt=AqcEYmz_0fVOcsGCPfGImc6huYdG;_ylu=X3oDMTB0OGdkbTM2BG1pdAMEcG9zAzgEc2VjA2xuX01hcmtldHNfZ2Fs;_ylg=X3oDMTBhdnVpNmo3BGxhbmcDZW4tQ0E-;_ylv=3

#197 TurnerNation on 03.18.15 at 12:06 pm

I got an XTR.TO low price alert. Will wait for $11 instead.

#198 DM in C on 03.18.15 at 12:09 pm

http://globalnews.ca/news/1887724/canadian-home-prices-to-fall-40-50-per-cent-financial-author-says/

A lot of hand wringing and exclamations by RE agents in the comments section — more interesting than the actual article.

#199 Saskatchewan Skeptic on 03.18.15 at 12:16 pm

I used to work with a girl who constantly bragged about how much money her boyfriend pulls in from working the oil sands. He was 22, she was 29. I asked her what role he played and the answer was ‘I dunno, I think something to do with lifting. I love his arms!” Needless to say, I never did like her that much. She once made fun of me for working in a media design job and renting, while she drove his leased Beamer and lived in his highly leveraged 600K McMansion in Harbour Landing here in Regina.. Just saw her profile Pop up on Tinder the other day. Guess he got the layoff notice, which means she’s wasting no time to jump back on the market too. Pretty sure his house and Beamer will do the same in the coming months.
Long live the humble designer! Thanks for everything Garth, I’m opening a TFSA tomorrow and looking forward to more of your Knowlwdge. Question though, if I only have a couple thousand bucks to start off with, should I even consider ETFs yet with fees being the killer? When should I start thinking about buying some and how much initial investment should I have before going solo on a diversified portfolio within the TFSA?
Go Riders.

#200 Cato the Elder on 03.18.15 at 12:38 pm

Re: #138 Jim / #155 kommy

Don’t sympathize for me – I’m not the one that needs it. I keep an open mind, and being a huge advocate for science, I understand something: EVERYTHING, even previously, widely held, proven facts are always subject to change. That’s what science is: any given ‘truth’ can be overturned with new evidence.

You are the types of people that would have said ‘flying’s impossible, you guys are idiots!’ back in the 1800s – right up until the Wright brothers took flight.

Why don’t you do some research? Or better yet, use some common sense and realize the size of some of these oil fields are ENORMOUS and it seems impossible that it could have been some accumulation of organic matter.

Ghawar Field alone in Saudi Arabia has produced over 65 billion barrels of oil (over 4 million olympic size swimming pools) and the estimates are that there’s another 50 billion. And that’s not even including the nearly 2 BILLION cubic feet of natural gas a DAY it produces.

Now, I’m not saying definitively that abiogenic processes are the sole origin of petroleum – perhaps there is a biological and abiological method. But just think about the size of that ONE FIELD. Now, how many layers upon layers upon layers of tiny, nearly microscopic organisms would it take? Why didn’t they simply decompose like they do elsewhere? Also, not only does this deposit need to form, then some mysterious rock has to cap it off so it doesn’t get disturbed. Just seems like an unlikely set of very special circumstances.

Here’s an article that discusses how many oil fields replenish themselves over time, which wouldn’t be possible with a limited, set amount of ‘fossil’ fuels material:

http://oilprice.com/Energy/Energy-General/Are-Oil-Wells-Recharging-Themselves.html

#201 Smoking Man on 03.18.15 at 12:38 pm

FOMC the word patients will be gone.

Replaced by, depending on stats. Which is an open invite to go up or down, but packaged in a way to make it sound as hikes are imminent.

With the USD so bloody high, don’t be surprised by laungage designed to talk it down a bit.

Bet Accordingly.

#202 Alberta is FINISHED on 03.18.15 at 12:47 pm

Toasted.
http://www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/conoco-to-cut-7-of-canadian-work-force/article23516835/

#203 Porsche on 03.18.15 at 12:47 pm

Oil glut going from bad to worse, EIA says supplies hit 80-year high

http://finance.yahoo.com/news/oil-glut-going-from-bad-to-worse-135608762.html

#204 Porsche on 03.18.15 at 12:50 pm

Global oil and gas debt up 250% since 2006

#205 Alberta is FINISHED on 03.18.15 at 12:50 pm

Done, done , done. Blood on the tracks.
http://business.financialpost.com/2015/03/17/talisman-energy-inc-nexen-energy-ulc-fire-hundreds-of-employees-in-bloody-tuesday/?__lsa=dcf2-aba2

#206 TurnerNation on 03.18.15 at 12:50 pm

#188 TB, I poke you with my shtick.

#207 Godth on 03.18.15 at 12:52 pm

Washington’s War on Russia
http://www.counterpunch.org/2015/03/18/washingtons-war-on-russia/
(interesting links therein)

EU allies defy US to join China-led Asian Bank
http://thebricspost.com/eu-allies-defy-us-to-join-china-led-asian-bank/#.VQms6I7LI6B

#208 DisgustMadeMePost on 03.18.15 at 12:55 pm

#130 Nemesis on 03.17.15 at 11:14 pm
#PartingShots… #IfItLooksLikeADuck… #QuacksLikeADuck… #It’sGottaBePointGrey?…

[SCMP] – Former duck farmer from China revealed as buyer of US$40million Vancouver mansion

http://m.scmp.com/comment/blogs/article/1740649/former-duck-farmer-nanjing-revealed-buyer-c51m-vancouver-mansion

…..

Duck dynasty II?

Did he immigrate to Canada? Is he a Canadian citizen? No mention.

If the CMHC and ultra low rates hadn’t been around, presumably he would still have bought the place. It’s the peons that wouldn’t have been trading the ‘cheap’ million dollar shacks back and forth.

#209 Starck Raving Mad on 03.18.15 at 12:56 pm

Trump to the rescue. Real estate tycoon saves the USA!

http://news.nationalpost.com/2015/03/18/i-am-the-only-one-who-can-make-america-truly-great-again-donald-trump-announces-presidential-plans/

#210 Mark on 03.18.15 at 12:58 pm

“The worst is that when she goes down its not going to be women and children first off the ship. Everyone is going down with her!”

I don’t know if I fully subscribe to the doom and gloom. However, it does appear that Canada, over the past decade or so, has sacrificed output, in favour of concentrating economic growth in 2 sectors, FIRE and O&G. Well make that three sectors, FIRE, O&G, and healthcare.

Unfortunately this commodities crash time around, we may not have a Nortel waiting in the wings waiting to rescue the economy like in the 1990s. While policy makers were cheering on FIRE and O&G through giant subsidy programs like CMHC subprime mortgage insurance, they did almost nothing to encourage economic diversification and the creation of a national “balanced portfolio” of economic growth.

But then again, it may not really be as bad as implied. Perhaps Canada’s precious metals sector, occupies the place of Nortel in the contemporary iteration of the commodities cycle — ready to explode upwards and facilitate if not demand growth, at least preservation of demand and debt repayment. But its a tall order, especially since the mines under Canadian ownership/management mostly aren’t in Canada, and the likelihood of precious metal related industries springing up throughout Canada like technology research parks did in the 90s is almost nil.

#211 Starck Raving Mad on 03.18.15 at 12:58 pm

Vancouver is the best. Prices never going down.

http://news.nationalpost.com/2015/03/17/beat-it-new-york-vancouver-the-best-place-to-live-in-north-america-according-to-mercer-ranking/

#212 Mark on 03.18.15 at 1:25 pm

““Not good. I work at Nexen and over 300 people in head office lost there jobs yesterday. Lots of companies doing the same”

The problem with Nexen (aka CNOOC) is that when the resources down-cycle is eventually over and its time to hire those people back, they’ll be hired in the Beijing offices, live in China, and pay Chinese taxes. Not Canadians living in Canada and paying Canadian taxes.

This is one of the practical consequences of Canadians not having “balanced portfolios” (ie: they’re quite under-weight equities), and not being willing to provide appropriate equity valuations to our domestic industry. The same is being played out at Talisman right now as well with its acquisition by foreigners. When people talk of “foreign money” coming to Canada, this is what’s happening — the foreigners are scooping up our unloved and cheap assets, not houses at top dollar.

#213 Starck Raving Mad on 03.18.15 at 1:33 pm

The clowns are taking back the streets.

http://business.financialpost.com/2015/03/18/violent-anti-austerity-protests-mar-opening-of-new-ecb-headquarters-in-germany/

#214 Armando on 03.18.15 at 1:36 pm

Garth could be right about rates rising, but I have my doubts. A number of economic stats are coming in showing a sluggish economy – not one that would warrant a rate increase. Having said that, ZIRP is an obscene policy that should never have been put in place to start with and rates should go higher. There is only one fair and effective set of interest rates – the ones set by the free market.
Bottom line, I think the US Fed will be too cautious by half and not raise rates this year, particularly if the economy continues to deteriorate. And what’s worse: If in fact the economy starts tanking the Fed will be “out of bullets” as you can’t lower rates below zero (unless you want go even more loony and go for negative rates). Either way Canadian housing is toast: A US recession would only make things worse for Canada no matter what happens to rates!

#215 Saul Leibowitz on 03.18.15 at 1:37 pm

Take a look at the following oil inventory chart, updated today:

http://postimg.org/image/qnkb9viwb/

Now, as a Canadian, please tell me how you’re not concerned.

#216 OttawaMike on 03.18.15 at 1:56 pm

NY Times begs to differ with this blog on rate increases. Check their nice interactive charts:
http://www.nytimes.com/interactive/2015/03/19/upshot/3d-yield-curve-economic-growth.html?abt=0002&abg=0

#217 Starck Raving Mad on 03.18.15 at 1:58 pm

#208 DisgustMadeMePost on 03.18.15 at 12:55 pm

#130 Nemesis on 03.17.15 at 11:14 pm
#PartingShots… #IfItLooksLikeADuck… #QuacksLikeADuck… #It’sGottaBePointGrey?…

[SCMP] – Former duck farmer from China revealed as buyer of US$40million Vancouver mansion

http://m.scmp.com/comment/blogs/article/1740649/former-duck-farmer-nanjing-revealed-buyer-c51m-vancouver-mansion

…..

Duck dynasty II?

Did he immigrate to Canada? Is he a Canadian citizen? No mention.

If the CMHC and ultra low rates hadn’t been around, presumably he would still have bought the place. It’s the peons that wouldn’t have been trading the ‘cheap’ million dollar shacks back and forth.

———————————————-
If it looks like a duck, swims like a duck, and quacks like a duck, then it probably is a duck.

#218 Millmech on 03.18.15 at 1:59 pm

Alberta is FINISHED,
Coffee breaks over your turn in the drive thru

#219 TRT on 03.18.15 at 2:07 pm

So much for USA interest rate increases. Bond yields tanking. Now forecast from FED is for two 0.25% increases over the next year (not significant). And then again, forecasts can change over the next year.

IMO, one hike in USA for the year. Canada holds and maybe one cut before election call.

Immigration concentration in Cancouver and Toronto will continue to drive detached prices higher.

#220 Smoking Man on 03.18.15 at 2:09 pm

Patients is gone, and, futers implied rate pushed from Jun, to Sept..

This is a big stand down.

Ha, as I called it above.

Take this to bank.. Ain’t going to happen in 2015..

Are they going to put my brain in a jar, just like Einstein’s when I’m gone?

#221 TurnerNation on 03.18.15 at 2:11 pm

Keep buying everything. Stocks, bonds and sht Long Branch bungs.

Whack! Thank you Fed may we have another?

#222 S. Bby on 03.18.15 at 2:13 pm

More info on the buyer of the $52 million house in Vancouver. The guy sounds industrious.

http://www.vancouversun.com/business/Buyer+million+Vancouver+home+once+duck+farmer+China/10897767/story.html

#223 Smoking Man on 03.18.15 at 2:22 pm

Ha, Globe and mail reports, Fed hints at a hike in Jun. Bahahaha.. Yet Treasury’s, Canadian bonds, and equities ralying… Hence, markets calling Yellen a fibber…

Oh, my son was band from trading today… No I..

Is that six zeros, led by a one on my daily P&L.

Mohahahaha…. Yes baby..

Getting hammered tonight for sure….

#224 Mark on 03.18.15 at 2:22 pm

“FOMC the word patients will be gone. “

Looks like you mostly got it right SM. The question ultimately becomes, how many more quarters are they going to sit by watching the economy become increasingly comatose before they finally have to admit that raising policy rates is nothing but a charade?

#225 CalgaryRocks on 03.18.15 at 2:43 pm

#199 Saskatchewan Skeptic on 03.18.15 at 12:16 pm
Guess he got the layoff notice, which means she’s wasting no time to jump back on the market too. Pretty sure his house and Beamer will do the same in the coming months.

Long live the humble designer!

Honestly I think you are as bad as he is. No disrespect meant or implied.

If life hands you the opportunity to make a boatload of cash in exchange for some hard work then you should take it. Just don’t spend all the money while you make it.

You can’t just s*it like that on a guy that took a chance and worked really hard to make some good money while you sat there, content with your little designer job.

BTW, designers are a dime a dozen so not sure if you’re in a better position anyways.

#226 Randy Randerson on 03.18.15 at 2:43 pm

Fed dropped the word “patient”. Looks like rate hike in June is a go.

http://www.bloomberg.com/news/articles/2015-03-18/fed-drops-patient-stance-opening-door-to-june-rate-increase

#227 Holy Crap Wheres The Tylenol on 03.18.15 at 2:44 pm

#195 Smoking Man on 03.18.15 at 11:59 am
What have I been preaching for years on here.
416 SFH… BOOM
21. 3% yr /yr.
Any one remeber my call form the fall, a spectacular spring market.. And it’s not anywhere near done.
Fear not, I’m not expecting any accolades , being the self appointed village idiot and all.
Not one human on this plant has a better crystal ball than Dr Smoking Man..
_________________________________________
These guys do! Put your ear-buds on and listen to these guys tonight, you may have an Epiphany!
https://www.youtube.com/watch?v=9b-i0XknSnM

#228 Ray Vasquez on 03.18.15 at 2:44 pm

Canada 10, 30 year bond is now 1.33%, 1.99%, below 1.35%, 2.00% again for at least 4 times now this year.

As the U.S. Fed talks, they keep dropping!!!!!!

#229 OttawaMike on 03.18.15 at 2:46 pm

NY Times begs to differ with this blog on interest rates with an interactive chart

http://www.nytimes.com/interactive/2015/03/19/upshot/3d-yield-curve-economic-growth.html?abt=0002&abg=0&_r=0

#230 Alberta is FINISHED on 03.18.15 at 2:48 pm

Not good. http://business.financialpost.com/2015/03/16/canada-crude-falls-below-us30-for-first-time-in-six-years-as-bmo-warns-oilsands-must-cut-costs/

#231 Ponzif on 03.18.15 at 2:55 pm

After the Feds announcement, stocks and Gold are moving up.
They are supposed to move in the opposite direction.
That’s what I am being told on this blog.
What gives?

#232 screwed on 03.18.15 at 3:01 pm

Rates will go up. If not in June then in September. Economy or employment have little to do with it.

#233 S. Bby on 03.18.15 at 3:04 pm

The Subaru dealer gave me an extra $1000 off the purchase price for paying cash.

#234 seeing it from both sides on 03.18.15 at 3:04 pm

#230 Alberta is Finished

Hey, take a break from the doom and gloom …there’s a party going on in the oil market right now. Up >3%

#235 Holy Crap Wheres The Tylenol on 03.18.15 at 3:08 pm

Yellon notes that the strong dollar will be a drag on net exports and is pushing inflation lower.
No Shit Sherlock! I have been telling my counterparts in the US this for years. Do you think they will believe it now? Nope! I guarantee they wont!

http://blogs.wsj.com/economics/2015/03/18/live-blog-fed-decision-and-janet-yellens-press-conference-2/

#236 Phil on 03.18.15 at 3:08 pm

A colleague of mine just got quoted 2.64% fixed for five years by BMO, 2.15 variable.

#237 S. Bby on 03.18.15 at 3:13 pm

#172 Vancouver 1M

I remember 1990 I could have bought a house for $90,000 and thought that was expensive, who would have guessed.
—————————
No way were any SFH $90K in 1990.
Add 1 in front of the 90 and you would be getting close.
I paid $150K for a teardown rancher in North Delta in 1990 and Vancouver city was beyond my price point even back then.

#238 4 AM Sunrise on 03.18.15 at 3:21 pm

#225 CalgaryRocks on 03.18.15 at 2:43 pm

No, one shouldn’t diss a guy for taking a chance to make a boatload of money, but the way he blew his money, as a naive kid in his early 20’s does, is worth at least a facepalm.

#239 JimH on 03.18.15 at 3:26 pm

Thank you, Granny Yellen.
The 1%’s answer to Mother Teresa?
‘News’ per se, in and of itself, basically doesn’t matter a whit. It’s how the market reacts that matters.
Price is the only thing that pays!

BOT today: SCHA, SCHM, SCHE

#240 OttawaMike on 03.18.15 at 3:40 pm

That’s a nice stock market that you have there Janet.

Wouldn’t want to see anything bad happen to it. Like say if you was to raise da rates?

#241 JimH on 03.18.15 at 3:44 pm

#240 OttawaMike

What’s the matter, Mikey?

The train left the station without you?

Notice what happened to the aggregate and multi-sector Bond markets today???? (se AGG?)

#242 Did Everything Right .... on 03.18.15 at 3:46 pm

Tax Foreign Ownership

http://sofard.tumblr.com/post/113616107456/the-decline-of-vancouver

This racist little anti-immigrant GenX rant has been posted here about 12 times already. Enough. Deal with the world you live in, not the monolithic one you fantasize about. — Garth

#243 Smoking Man on 03.18.15 at 3:47 pm

#231 screwed on 03.18.15 at 3:01 pm
Rates will go up. If not in June then in September. Economy or employment have little to do with it.
…….

Yes and I know a guy selling swamp land in Florida.

#244 Capt. Obvious on 03.18.15 at 3:59 pm

FOMC concluding paragraph:

When the Committee decides to begin to remove policy accommodation, it will take a balanced approach consistent with its longer-run goals of maximum employment and inflation of 2 percent. The Committee currently anticipates that, even after employment and inflation are near mandate-consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below levels the Committee views as normal in the longer run.

We’re not going to see increases for sometime yet. They outright said definitely not in April (in line with expectations, not shocking). They’re clearing starting to socialize the idea of rates increasing though.

#245 Smoking Man on 03.18.15 at 4:05 pm

Make that 2 million….. Up

Crazy….

#246 Trading Naked on 03.18.15 at 4:08 pm

#240 OttawaMike on 03.18.15 at 3:40 pm

Yeah, did that chart spike or is it just happy to see me?

#247 Trading Naked on 03.18.15 at 4:19 pm

“#231 Ponzif on 03.18.15 at 2:55 pm
After the Feds announcement, stocks and Gold are moving up.
They are supposed to move in the opposite direction.
That’s what I am being told on this blog.
What gives?”

My best guess is that before the Fed announcement, gold was down because it was pricing in a rate hike and a hawkish stance.

Gold is more anticorrelated to the USD than the stock market. So when they’re like, “gee, maybe that USD is high enough to be hurtin'”, gold goes up in anticipation of the USD coming down.

Disclosure: I’m long and short the same gold stock at about the same price, both positions hedged, so I don’t know what team I’m cheering for anymore.

#248 Mark on 03.18.15 at 4:36 pm

“Tax Foreign Ownership

http://sofard.tumblr.com/post/113616107456/the-decline-of-vancouver

Unfortunate, because he gets so much of it wrong. If capital was actually flowing into Canada from abroad, the vendors of the houses would have enormous amounts of capital to re-deploy into creating local businesses, etc. Its obvious that they don’t, because the only ‘capital’ that is going into the Vancouver RE market is that of borrowed money. Exxagerations in that essay run quite deep, and the whole thing reeks of a defeatist attitude, as though one cannot participate in the Vancouver economy or become rich unless they are invested in housing — an obvious mis-truth if there ever was one.

Shops closing up? Sure, but only because the RE buyers aren’t actually bringing meaningful amounts of money to the table, and declines in Vancouver RE seen over the past few years are starting to take their toll on consumers’ ability to borrow and spend. And the streets empty and devoid of people — couldn’t be anything further from the truth! Additionally, it is quite affordable to rent accommodation relatively close to the central business district in Vancouver. In fact, of all so-called “world class cities”, Vancouver rentals are amongst the most affordable available, largely subsidized heavily by the landlords, whatever ethnicity they happen to be.

#249 Stoopid Idiot on 03.18.15 at 4:40 pm

Whether you “believe” or not, the ranting is hilarious and we are sure Diana Olick will not be seen on screen again for a while (which is shame for numerous reasons)

https://www.youtube.com/watch?v=wSPXvV3PRLQ&feature=youtu.be

#250 Bottom Feeder on 03.18.15 at 5:02 pm

Just in – BMO has dropped it’s 10 year rate to 3.64%. I thought the bottom was in, but I guess not.

Garth, if you think 5 year rates will hit 5% or more in 5 years from now, a person could avoid the upside risk by locking in for 10 years. Still too rich a premium?

#251 46 and 2 on 03.18.15 at 5:18 pm

So in the months to come how would you call a geophysicist in Calgary?

#252 Cookie on 03.18.15 at 5:18 pm

US fed meeting:

Interest rates expectations just went down to 0.6% from 1.1% for the end of the year.

Imagine how slow the Canadian interest rates will move up. Don’t hold your breath. Buy more houses.

#253 not me on 03.18.15 at 5:33 pm

lol for anyone that didn’t hear let me summarize: we are not increasing but we may be increasing but it doesn’t mean we will increase….. just shows that no one knows what to do or what’s going to happen. Speculators’ heaven.

#254 Raisemyrent on 03.18.15 at 5:42 pm

What Mark just said. Plus rent hasn’t gone up the max allowed in at least a couple years for the Yaletown building in aware of. I know people who live in enviable flats (views etc) in this world class City who got in years ago and pay much less than $1k per room. They laugh at the mortgaged.

#255 Mark on 03.18.15 at 5:43 pm

“Just in – BMO has dropped it’s 10 year rate to 3.64%. I thought the bottom was in, but I guess not.”

For their most creditworthy customers. Who are increasingly few and far between, especially as housing prices continue to fall. Advertised rates may very well continue to fall, but it’ll effectively be ‘bait and switch’ for most of the mortgage renewers who go in and find they don’t qualify for the products.

#256 Colin on 03.18.15 at 6:14 pm

Garth may be interested in having a read here,

http://www.blogto.com/city/2015/03/what_a_1_million_house_looks_like_in_toronto

You can imagine the types of people that go on blogTO, so you can also imagine the comments. Thought Garth should be made aware that he was mentioned.

#257 Sheane Wallace on 03.18.15 at 6:16 pm

I am relieved, They are watching it:

https://ca.finance.yahoo.com/news/feds-watching-housing-market-carefully-no-plan-cool-172908952.html

#258 Sheane Wallace on 03.18.15 at 6:19 pm

#149 Blobby on 03.18.15 at 12:21 am
@73 Randy:

You DO realise that Peter Schiff was the same guy who said gold would go to $5k!?!?!

——————————-
Did he specify time frame for you to judge that he is wrong?

#259 Westcdn on 03.18.15 at 6:32 pm

Hey Sm0King Man,

Here I thought you were long USDCAD going into the FOMC announcement given your comments per #60 (Mar 17) and #201 (Mar 18).

If you are not playing “BS baffles brains” – congrats on your bet shorting USDCAD. I have never seen currency charts like today – amazing.

#260 Mark on 03.18.15 at 6:35 pm

“You DO realise that Peter Schiff was the same guy who said gold would go to $5k!?!?!”

I’m sure the same people were snickering at the buyers of gold in the early 1970s at a mere $32. Oh how wrong they were proven a decade later. I disagree with a lot of what Schiff has been saying over the years, including his claims of strong inflation — but he’s at least willing to explain himself, often at extreme lengths (with his radio show and all) which is more than most of the housing bulls care to do with prices falling and most of the evidence pointing to a bubble and dramatic overvaluation.

#261 JimH on 03.18.15 at 6:40 pm

#258 Sheane Wallace on 03.18.15 at 6:19 pm
inresponse to #149 Blobby on 03.18.15 at 12:21 am
@73 Randy:

You DO realise that Peter Schiff was the same guy who said gold would go to $5k!?!?!

——————————-
Did he specify time frame for you to judge that he is wrong?
===========================
Sheane Wakkace; please get a grip!
Yes, yes, and yes! Peter Schiff doid indeed specify a timeline!
To his credit, he also acted on his wildly wrong predictions of hyper inflation and soaring gold prices and Japan’s economy going to the moon.

at the worst, he had lost about 72% of those investors’ money who were foolish enough to stand by his incredibly wrong predictions!

here! have fun!

http://www.economicpredictions.org/peter-schiff-predictions/index.htm

I’ve said it before and i’ll say it again, Sheane; price is the only thing that pays!

Sure, Peter Schiff may ONE DAY prove to have been right. In the meantime, watch the price action and act accordingly.

We Canadians are incredibly prone to uncritically accept “arguments from authority”, and after all, Schiff pawned himself off as an expert.

Those who forecast an immediate second coming in 36 A.D. were 100% sure they were right too.

Of course, being right in the long run has some rewards, most of them intangible.

I don’t give a rat’s ass about whether or not I’m “right”; but, godammit, I sure love being rich!

Say hello to Peter for me, will you? And have a nice day.

#262 MTVmademedoit on 03.19.15 at 12:41 am

#242 Did Everything Right
————–
Lol, that article is not racist.

#263 Honey Dripper on 03.19.15 at 6:03 pm

Buy that which goes up in value (financial assets) and rent those which do not (cars, houses etc..) Turn off the white noise and go live your life. I hate being bi-polar, it’s awesome!