Buns of steel

BUNS modified

Since this pathetic blog is brimming with macroeconomists obsessed with monetary policy, as opposed to things most people actually care about, let’s get at ‘er. After all, it’s rutting season once again and the bankers have just launched a new mortgage war to suck in the virgins. So, where are rates going?

Down a little, actually. Then up. There’s now little doubt what the coming months will bring.

Immediately, the banks are fighting for market share in a market that’s shrinking. Real estate has been saggy in 80% of the country’s regions, while it effuses in two others. No wonder, with commodity prices circling the drain, incomes stagnant, jobs being shed and citizens pickled in debt. As I told you on Monday, hours before the war broke out, this would take a five-year fixed-rate home loan to a new level as lenders raced to the bottom. Now we have word from the front of 2.5% fivers, 2% variables and 3.69% tens.

Of course, if the elfin deity were still with us, there’d be hunks of fur and blood splots across the board rooms of the Bay Street towers. F made it clear that cut-rate, teaser, special-deal, come-on-down-kids mortgage rates were bad news because they encouraged debt, inflated houses and hurt families. But his wimpy successor would rather hide than fight.

In fact it was left to the prime minister himself to make a comment on Wednesday. Said the big deity: “I’m not saying I’m unconcerned. But we are watching it. We’re not planning to take any immediate action. We continue to watch the housing market and the lending and borrowing situation very carefully. We have taken some steps over the past several years to cool the market somewhat.”

Hmm. He denied not being concerned. He didn’t rule out action, just ‘immediate’ action. Most significantly he said the government had ‘somewhat’ cooled the market. And it’s watching.

Sure sounds like there’s something coming in the budget, no?

Anyway, let’s obsess about the Fed for a few sentences. The US central bank bosses emerged from their recent meeting to confirm American rates will be rising in 2015, as I told you they would. The first increase may be in June, if employment and inflation data is reasonable, or in September, if it isn’t. Either way, it’s happening. The general belief is rates will rise about half a point this year, then be adjusted as warranted into infinity.

Here’s the news: this is the end of the most aggressive loose-money period in the last century that the central bank has existed. Not only were rates pushed into the ditch, but the Fed has spent a few trillion buying bonds and otherwise pumping liquidity into the economy to bring it back from the brink of the 1930s-style collapse which loomed in 2008.

Cool. It’s over. First the massive ($85 billion a month) bond-snorfling program was ended last autumn. And this year emergency interest rates will be lifted. This is a fundamental shift in monetary policy that I hope nobody misses. The Fed is shucking its job of trying to rescue the economy by giving away money, and re-establishing its role as a referee. It will continue to slowly increase rates as wages, prices and economic activity rises in order to contain inflation, and it will rest when job creation needs a lift or the dollar must be reigned in. But gone for now is the super-bank mandate. No cape. No tights. No buns of steel.

For Canadians, there’s no resisting. The Bank of Canada will follow suit as it always has. It may not be before the end of the year, but it’s coming. To fail to act would be to sacrifice the dollar, import inflation, and raise the misery index. It would also fuel more consumer debt, and since we’ve all proven we can no longer be trusted with money, this is a giant risk to the future.

Someone asked Wednesday evening if, given all that’s happened, if it made sense to take out a 10-year mortgage. You can score one of these for about 3.6%. And while your rate is carved in stone for a decade, because of the Canada Interest Act the mortgage becomes fully open after five years. So, if rates were to be lower then you could pay it off without penalty.

But I have a hard time understanding how that might be possible. There’s only one direction for the cost of money as the global recovery progresses, the US expands, Europe gets back on its feet and China moves out of economic adolescence. Over the next five years rates could easily double. People borrowing now at 2.7% will be renewing at more than 5% – if they are very lucky.

So, what would I do if I were nutso enough to buy the $2 million midtown Toronto house I rent for $3,800 a month and didn’t pay cash? Grab the cheapo five-year Spring Special? Or pay an extra 1% for no surprises until 2025?

Well, actually I’d go variable for 2% and invest every extra dollar into a robust balanced portfolio expected to grow 50% by renewal time. But that’s me. It’s not the wusses who read this blog.

For you, it’s a unique moment. Lock it up.

257 comments ↓

#1 ole Doberman on 03.18.15 at 6:44 pm

1st and for real this time!

#2 Saul Leibowitz on 03.18.15 at 6:44 pm

Everyone – 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. Oil inventories are skyrocketing. This will result in a continued plunge in crude prices, which will crater the Canadian economy and dollar, in my opinion.

#3 Yogi Bear on 03.18.15 at 6:45 pm

I for one will buy real estate if we see negative rate mortgages in Canada.

#4 Leroy Washington on 03.18.15 at 6:45 pm

Canadians are very stupid when it comes to money, and investing.

Long live the USA!!!

#5 Debt's Dark Embrace on 03.18.15 at 6:50 pm

Told ya. Get over it. No significant rates hikes till maybe 2020. Maybe not even then.

As I told you, US rates rise in 2015. Get over it. — Garth

#6 lou on 03.18.15 at 6:50 pm

when things are screwed, do nothing….

you heard it here first…

#7 Bobbyk on 03.18.15 at 6:52 pm

re: For Canadians, there’s no resisting. The Bank of Canada will follow suit as it always has.

to me the Fed announcement gives the Bank of Canada some room to implement two more rate cuts and then slowly follow the US from then on

That would be most unwise. — Garth

#8 cara on 03.18.15 at 6:57 pm

Garth, you almost sound like you miss Flaherty. Absence makes the heart grow fonder, and all that.

This low CAD is hurting business. My husband’s company has seen margin disappear on product purchased from the US. Hard to make a profit without passing it all along to the customer… who’s also only eking out a living as all the oil-patch related trickle-down business all but dries up.

Sad. We were going to pay off our mortgage next year with just one last bonus. Not anymore.

#9 Dominoes Lining Up on 03.18.15 at 6:57 pm

Saul Leibowitz (#2)

Your oil inventory chart is quite interesting. As Hilliard MacBeth said this week on CBC, the last two Canadian real estate crashes had almost perfect correlation with the oil price drop and crude inventory bulges of the past.

That chart clearly shows the 1990 peak, which also perfectly correlates with the last real estate crash here.

And 2015 on the chart looks much, much more dramatic.

It could hardly be any clearer what we are heading into.

#10 Obvious Truth on 03.18.15 at 6:58 pm

Who doesn’t love grandma yellen.

Every time she visits she gives out money.

Classic. Cash from grandma. Hiding in her hand.

If she was beside me I’d give her a kiss on the cheek.

#11 sideline sitter on 03.18.15 at 7:02 pm

Oh how I wish these rates were available on commercial properties!!! I’d love to renew at 2.79!!!

#12 Vader on 03.18.15 at 7:02 pm

Market operations were experimented with in the Roaring 1920’s by the Fed. These policies of the past 7 years have basically repeated the same sins of the past. This time it’s different? Global debt crisis straight ahead….

#13 aL Pacino on 03.18.15 at 7:03 pm

#4 Leroy Washington on 03.18.15 at 6:45 pm
Canadians are very stupid when it comes to money, and investing.

Long live the USA!!!

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

You sound bitter to me.
Like all of us here waiting for a crash should have bought multiple properties and ride the wave instead of being crashed by tsunami of specuvastors who are clearly the winners.
After All, our gov has shown time a time again they’re willing to do anything to prop housing.
THE END.

#14 Sideshow Rob on 03.18.15 at 7:07 pm

Sorry no rate hikes any time soon. The fed is talking trash because talk is all it’s got. Europe is disintegrating. 6 months from now it will be much worse as will the US economy. They cannot raise rates. Zero bound. The ironic part…when rates do rise (in a year maybe) it will be the bond market that does it and at a time when the fed will least want it.
Crappy time to be a central banker. Raise rates and the dollar gets even stronger which blows up all those emerging markets that borrowed in US dollars. Don’t raise rates and lose all credibility. Sorry Janet but you are on the wrong side of history. That steaming bag that Bernanke left on your desk wasn’t lunch.

#15 Lillooet, BC on 03.18.15 at 7:07 pm

I’m debt-free, mortgage-free and rent-free. Don’t even owe a nickel on my credit card ’cause I pay off the balance every month. I don’t have a line of credit or car loan either. All my income is free cash flow. So interest rate fluctuations are a big yawn for me.

I used to be a city-dwelling condo-owning corporate slave and an income-tax-paying road rage, latte sucking, stressed out mortgage serf … then I finally found out the secret to life. It’s called Freedom 35. A financial plan I developed on my own, and it’s all legal and ethical. And I don’t have to shovel 50 cm of snow on a March 18th. And no, I didn’t marry or inherit a big pile.

But you guys don’t want to know about it.

#16 Brian Ripley on 03.18.15 at 7:08 pm

“To fail to act (raise interest rates by the BoC after a U.S. rate raise) would be to sacrifice the dollar, import inflation, and raise the misery index.” Garth

Today I mashed up some charts on Canadian Retail Sales (with and without autos) and the Canadian Balance of Trade and Current account.

http://www.chpc.biz/history-readings/the-bank-job

It does indeed look like a trend towards misery.

The charts suggest that productive Canadians have already spent their future earnings and are liquidating their savings as Canada’s export trade gets swamped by higher import costs on a low CAD.

#17 Freedom First on 03.18.15 at 7:09 pm

#7 Bobbyk

My sentiments exactly. Canadian election coming up. Garth says it is unwise but Garth is thinking of what is best for Canadians.

#18 JSS on 03.18.15 at 7:09 pm

Power Financial increases dividend by 6.4%, first in over six years …

http://www.theglobeandmail.com/globe-investor/investment-ideas/power-financials-first-dividend-raise-in-six-years-restores-appeal-to-stock/article23526412/

#19 Patience No More on 03.18.15 at 7:13 pm

Yellen & the Fed may have lost patience today,
but when the interest rates start heading up later this year, Horny House Virgins will have lost something more precious – innocence.

#20 Interstellar Old Yeller on 03.18.15 at 7:14 pm

Garth, any word on how your laid-off exec neighbour’s house is doing? Has it been listed? I’m guessing with fetching mortgage rates like these, now would be the time…

#21 blobby on 03.18.15 at 7:18 pm

@#7 – Bobbyk

Are you INSANE?!? The Canadian dollar is already in the 70s vs the American Dollar!

If we cut twice, and they add twice.. Our dollar will be down to below 50c and falling!

The inflation that’d cause would be immense!

#22 sue on 03.18.15 at 7:19 pm

If incomes are flat lining, why are rents sky rocketing? I understand that landlords need to cover their crazy mtg payment but how is it that people are paying? I’m becoming obsessed with building a tiny house and plunking it in my friend’s backyard. lol

#23 Former Fool on 03.18.15 at 7:20 pm

Nice post Garth. We’re indeed living in very interesting times!

I think you will end up being correct and the Fed will end up increasing rates this year. Not sure when but I would bet on it happening rather than not.

Just a question – with the US federal debt being at $18 trillion, along with $95.6 trillion in unfunded liabilities – wouldn’t the Fed be doing a tremendous disservice to the US Government by upping interest rates? At higher interest rates, couldn’t the US end up defaulting on its debt? Please explain why/why not.

http://www.usdebtclock.org/

#24 zedgt87 on 03.18.15 at 7:23 pm

Global recovery lol… Thanks for the laugh.

#25 Drop to Drink on 03.18.15 at 7:23 pm

I said the Dow would add 500 for the week after the Fed announcement. Half way there. Sorry folks, no rate increase this year. They want to. The rate suppression in wrecking the duration matching for the insurance business and pension plans.
Markets to go up another 10% this year. Strive for yield and float shrink as buybacks cruise along keep driving the market. Fabulous! Just gotta know when to get out.

#26 TS on 03.18.15 at 7:25 pm

Love ya Garth

But I doubt we’ll see 5.4% interest rates again in my lifetime yet alone in 5 years.

March 20th 2020: I’ll send you a box of dog’s treat for your pooch if I’m wrong :)

#27 Debt's Dark Embrace on 03.18.15 at 7:28 pm

Told ya. Get over it. No significant rates hikes till maybe 2020. Maybe not even then.

As I told you, US rates rise in 2015. Get over it. — Garth

Yah yah, you been sayin’ that for how many years now? Not gonna happen in your lifetime.

#28 Godth on 03.18.15 at 7:29 pm

Anyway, let’s obsess about the Fed for a few sentences. [b]The US central bank bosses emerged from their recent meeting to confirm American rates will be rising in 2015, as I told you they would. [/b]The first increase may be in June, if employment and inflation data is reasonable, or in September, if it isn’t. Either way, it’s happening. The general belief is rates will rise about half a point this year, then be adjusted as warranted into infinity.
————————————————
You missed your calling Garth, this is the sort of thing best left for real estate agents. Wanting to raise rates and raising them isn’t the same thing at all. What I heard Janet say today was a big fat ‘maybe’.

#29 daivey on 03.18.15 at 7:29 pm

LOL Garth. Put your money where your mouth is. IF you are so sure that rates will rise short bonds. Put all your money into it and upload the screen shot so we know you got buns of steel.

Also they never said they would increase rates… They changed their verb-age and removed the word “patience”

lol.

#30 Ray Vasquez on 03.18.15 at 7:32 pm

Canada bonds 2, 5, 10, 20, 30 year yields are now 0.48%, 0.73%, 1.32%, 1.92%, 1.97%.

Pathetic, ultra low rates that keep coming back month after month.

These rates were double 5 years ago and even if they were to match them back again in 5 years, it is just getting back to where they were.

I’m sure that they will not get close to these but if they did, they will drop back down again.

Those with 2.5% to 3.00% mortgages that would have to pay at 3.5% to 4.75% mortgages would be temporary as in 12 to 18 months they would be in 3.00% to 3.5% ranges again.

Those that bought a $500,000, $600,000+ home will get burned from all the property taxes, electricity, heat, water bills, insurance, repairs and maintenance, H.S.T. etc. way before they’re are paying an extra $300, $400, $500 a month.

Those that bought condos are in real trouble with $500 a month being just the average condo fee in Toronto and that will be $1,000 in just 10 years.

Everything else will make real estate unaffordable not interest rates!

#31 Balmuto on 03.18.15 at 7:33 pm

Right now, I’m sure the Fed has every intention of raising rates at some point this year. But so what. Their view could easily change if they start seeing signs of disinflation. Yellen specifically mentioned that the strong dollar is pushing down inflation. And wage inflation is subdued. Hence her line about being “data dependent”. They’re forecasting the need for rate hikes but a forecast and a promise are not the same thing.

We’re all kinda scared, aren’t we? — Garth

#32 mitzerboy aka queencity kid on 03.18.15 at 7:33 pm

we are doing so good in Saskatchewan that we just borrowed 700 million $$$ …
oh o not again …where did all the saskaboom money go

#33 Marcus on 03.18.15 at 7:33 pm

the fed wants to raise interest rates soooo bad but i doubt it for 2015. Per Zero Hedge.
Why are stock soaring in response to the Fed statement and latest set of projections? Because, as Bloomberg promptly calculated, the FOMC revised down all forecasts for 2015 since the previous SEP was released on Dec. 17.

The median dot for year end 2015 falls to 0.625% from 1.125% in Dec: a whopping 0.50% cut.

And there goes not only the “recovery” but any imminent rate hike.

The details:

The central tendency for GDP this year is 2.3%-2.7% vs 2.6%-3%. But the real hammer was 2016 and 2017: these were just slashed from 2.5%-3.0% and 2.3%-2.5% as of December, to 2.3-2.7% and 2.0-2.4%.
Unemployment rate 5.0-5.2% vs 5.2%-5.3%
The Fed now sees PCE inflation at 0.6%-0.8%. This was supposed to be 1%-1.6% just three months ago.
Core PCE 1.3%-1.4% vs 1.5%-1.8%
And the one that matters most, the “dot plot”, saw the median dot for 2016 fall to 1.875% vs 2.5%, and decline to 3.125% from 3.625% for 2017.

#34 Senta on 03.18.15 at 7:33 pm

As interest rates rise – price of most assets will go down. Interest rates act as gravity to asset prices. The only exception would be selected financial institutions (Insurance companies, non-canadian banks) and cash rich companies (like AAPL, MSFT, GOOG, JNJ etc.) with little or no debt. Its time to be selective.

#35 everythingisterrible on 03.18.15 at 7:36 pm

#15 Lillooet, BC

“I finally found out the secret to life. It’s called Freedom 35.[…]But you guys don’t want to know about it.”
—————————
Let me guess, move to a small crap town and pan for gold or grow organic potatoes. -You’re right, we don’t.

#36 alex on 03.18.15 at 7:39 pm

#15 Lillooet, BC on 03.18.15 at 7:07 pm
I’m debt-free, mortgage-free and rent-free. Don’t even owe a nickel on my credit card ’cause I pay off the balance every month. I don’t have a line of credit or car loan either. All my income is free cash flow.But you guys don’t want to know about it……
Oh do prey tell wise one how this is done?

#37 JimH on 03.18.15 at 7:39 pm

#5 Debt’s Dark Embrace on 03.18.15 at 6:50 pm
“Told ya. Get over it. No significant rates hikes till maybe 2020. Maybe not even then.”
==========================
Wow! Yet another guru with a crystal ball!

Hey! If you can predict economic gyrations and the subsequent Fed actions and reactions 5 years out, you should have no problems blessing us with stock prices next month!

C’mon! Give us 5 of your top picks!

#38 Peter on 03.18.15 at 7:39 pm

“If incomes are flat lining, why are rents sky rocketing?”

I’ve been asking this about Vancouver since the mid-80s. By the time, I entered college, I knew without a doubt I would never be able to afford a home in the Lower Mainland. I was proven right for the following two decades.

#39 Finland is FINNISH on 03.18.15 at 7:51 pm

I did not realize that the IRD penalty goes away after five years. That is fantastic. I took a 7 year fixed (yeah yeah) in 2011 that hits the five year anniversary next April. Anybody got a suggested course of action for then? (The mortgage is under 100K if that makes any difference). Go variable, go with a 1-2 year fixed, or something else?

#40 Retired Boomer - WI on 03.18.15 at 7:57 pm

#15 Lillooet, BC

Congrats, dear lady! Living the life YOU want DEBT FREE is what the grand plan should be for the un-stressed.

Well Done. Freedom First, I and others here share a similar outlook, I think.

All are happy two try to instruct those who are stressed, but there are relatively few here it seems. Most seem to be doing well, and bless them, life IS better that way.

Everyone makeup their own mind ‘how’ they will live. Our blog host has provided untold wonderful wisdom over the years. While no one ever has perfect vision of tomorrow, we can usually react with grace, and help should the proverbial bottom fall out.

#41 JuliaS on 03.18.15 at 7:58 pm

#24 zedgt87

We’re recovering, like Flaherty.

#42 Retired Boomer - WI on 03.18.15 at 7:59 pm

OOPs… Lillooet, BC

I said “Dear Lady”…. I may well be wrong there, well done anyway, pardon my faux paus.

#43 margin disappear on 03.18.15 at 7:59 pm

” My husband’s company has seen margin disappear on product purchased from the US. Hard to make a profit without passing it all along to the customer… ”

———

Your husband should be selling parts for residential boilers for customers, who are not prepared to take Canadian winter without heating.

The going margin is 100% on parts, which are generally not sold to walk-in customers…. in Canada. In the US of course it’s a different story.

If you somehow magically source the part, the service man refuses to install it for you in Canada… telling you with straight face, “because we can not provide warranty on it”… as if it was not the manufacturer to provide the warranty on parts.

It feels like some industries in this country still operate as if it was the 1980’s and the sheep Canadian customers fail to put them out of business.

Your husband should sell boiler parts without discrimination to anyone who wants to pay for it.
With 50% margin he would be the #1 seller in Canada.

#44 Andrew Woburn on 03.18.15 at 8:02 pm

#23 Former Fool on 03.18.15 at 7:20 pm

Just a question – with the US federal debt being at $18 trillion, along with $95.6 trillion in unfunded liabilities – wouldn’t the Fed be doing a tremendous disservice to the US Government by upping interest rates? At higher interest rates, couldn’t the US end up defaulting on its debt? Please explain why/why not.
———————————
The US doesn’t borrow money to fund operations, it prints money. It issues bonds etc. to soak up excess money supply and for other strategic purposes. Countries that issue debt in their own currency can never go bankrupt. If you want your money back they will give it to you. It just might not buy as much as it used to. In olden times they called this “debasing the coinage”.

#45 the show must go on! on 03.18.15 at 8:06 pm

#14 Sideshow Rob on 03.18.15 at 7:07 pm

That steaming bag that Bernanke left on your desk wasn’t lunch.
——————————————————————–Sideshow, that is funny lol. but true. Bernanke bailed before TSHTF.

#46 John on 03.18.15 at 8:10 pm

#31 Balmuto
Maybe you can explain to us what is disinflation!

#47 Drill Baby Drill on 03.18.15 at 8:12 pm

Inflation has already been imported since the dollar dropped last year.

#48 Andrew Woburn on 03.18.15 at 8:14 pm

“There may be a simpler explanation for Saudi’s willingness to see prices slide than an attack on US shale or a “political plot” against regional rival Iran, though: a change in the Saudi view on peak oil.”

http://ftalphaville.ft.com/2015/03/17/2120557/saudi-oil-peak-conspiracy/

#49 lee bow on 03.18.15 at 8:16 pm

A few months back I listened to a CBC program with some Parliament Hill journalist who wrote a book about what is going on there. He was of opinion that Harper’s idea is to make it a habit for Canadians that Conservatives are the ruling party. Just as Liberals had their run.

His strategy is in very careful balancing between his own agenda and the opinion of majority. Basically, he is making all changes in a 1000 small steps that would be nearly impossible to undo and ultimately would lead to his vision of Canada.

On one hand, housing collapse. On the other hand, excessive borrowing, pension fund deficits, inflation.

Can’t solve this. The only solution for our Zeus is to postpone as long as possible.

#50 GTA Observer on 03.18.15 at 8:18 pm

#22 Sue: If incomes are flat lining, why are rents sky rocketing? I understand that landlords need to cover their crazy mtg payment but how is it that people are paying?

Where is this? Sounds like a real imbalance in supply and demand – fewer rentals, more tenants? Rent is ordinarily bounded by income, and that’s not going up.
Housing markets are increasingly distorted.

#51 Drill Baby Drill on 03.18.15 at 8:24 pm

Oil Market signals indicating upcoming stock market mayhem in my view are the following;

– continuation of lowering oil prices (over supply)
– oil industry junk bond collapse (starting to happen)
– bank stock drop (not upon us yet)

All 3 of these occurring in tandem will put serious downward pressure on Wall strret

Nope. Energy is a relatively small component of US markets. — Garth

#52 Mark on 03.18.15 at 8:25 pm

“cash rich companies (like AAPL, MSFT, GOOG, JNJ etc.) with little or no debt.”

Those companies may be cash rich, but they are enormously levered to consumer and government spending. Both of which will be significantly stopped in their tracks should interest rates rise significantly.

Insurance companies, likewise, in a higher rate environment would suffer large losses on their long-term bond portfolios and equities correlated to such. Excess returns on low-risk assets such as long-term fixed income has boosted the fortunes of insurance companies and pension funds everywhere.

If rates are to rise significantly, what you want to invest in are firms that require large amounts of capex that already have the investment made. Such firms, such as utilities, miners, etc., will have enormous pricing power in such an environment.

Basically, take a look at the S&P500 over the past 35 years. Find its average return over that interval. Now find which sectors outperformed over the past 35 years, and find the sectors that underperformed. You want to invest in the past underperformers, not the outperformers, for a rising rate environment.

#53 blown away on 03.18.15 at 8:30 pm

In some sane moments I am still blown away about the genius idea of charging interest on money, printed out of thin air.

I wish I was the one who invented it.

I can’t really think of any more appealing idea, I can’t imagine any better way to make money infinitely. I truly believe this must be the greatest achievement of mankind now, in the past and for the rest of the future that is still ahead us as the top visible species of the universe.

I find that the most unfortunate mistake and injustice ever occurred is that the genius minds behind this great idea never received even a post-humus Nobel prize… What a shame.

At least I am thinking of them with the greatest admiration every time when the head of the Fed, who is in charge of articulating today, for all of us around the world the wisdom of the genius minds of charging interest of money printed on thin air.

I feel utterly honored that I have the chance to use and take the blessings of this amazing idea that leaves us in debt, with no hope that our words can ever properly describe the genius minds.

#54 John on 03.18.15 at 8:34 pm

Garth,
The Canadian dollar was up 1-1/5 cent against the US$ today. The Dow was up 300+ points after the Fed’s statement. It appears the interpretation by the financial world is the the US rates are not going up any time soon. They may want raise the rates, but the deflation pressures exported from Asia and now from Europe with much weaker Euro, it may not happen for a long time.

Markets were up today after being down prior to the announcement. Traders covering their butts on speculation, buying on news. Means little. — Garth

#55 james on 03.18.15 at 8:42 pm

#5 Debt’s Dark Embrace

The idea that Canada will not follow suit as the US rises rates is far fetched. I believe that they are sweating bullets thinking of the various factors at play (e.g., personal debt levels, exports, etc). More proof that economies cannot be managed by central planning committees.

It is sad that our governments learned nothing from the 20th century. Distributed systems are more robust and adaptive that centralized ones, as any student of the internet knows. We should have competing currencies, no central banks, no moral hazard (e.g., bank bailouts).

#56 james on 03.18.15 at 8:45 pm

#53

Indeed, it is good to be a central banker. Garth’s claim that the Fed ‘spent’ trillions is questionable, as it conjures up an image of them shipping trillions of dollars of their hard earned cash reserves (or gold or some other asset). In reality, it is entries on an electronic ledger.

“the genius minds behind this great idea never received even a post-humus Nobel prize”

I think you mean posthumous. Post-humus conjures up images of researchers getting handed bags of decomposed soil. :)

#57 crowdedelevatorfartz on 03.18.15 at 8:49 pm

@#15 Lilloette
“A financial plan I developed on my own, and it’s all legal and ethical……..”
+++++++++++++++++++++++++++++++++++

Let me guess.

You eat, drink and sleep THIS !

http://www.google.ca/url?sa=t&rct=j&q=&esrc=s&frm=1&source=web&cd=17&cad=rja&uact=8&ved=0CEgQFjAGOAo&url=http%3A%2F%2Fjohnschreiner.blogspot.com%2F2010%2F09%2Flillooets-pioneering-wine-growers.html&ei=Fh0KVcPoKM22oQT_24DwBg&usg=AFQjCNHLUYw7KmA6JRVcH8QjfAA_VwkPfg

#58 mike in kelowna on 03.18.15 at 8:52 pm

Garth……..saw your buddy Benjamin Tal get scmucked by Peter Schiff on BNN this evening…What a goof!!

#59 Obvious Truth on 03.18.15 at 8:53 pm

As the day gets closer the deniers get more testy. They hard for any sliver of justification.

Canadian data was awful again. That inventory chart looks like the one garth posted on oil.

Fed don’t care. Rates will slowly rise. It’s now a matter of just months. Read the release. Very simple language. Business and households to provide the tailwinds.

Really good news. For everybody.

#60 Babblemaster on 03.18.15 at 8:54 pm

There goes the Fed once again. Saying nothing and bluffing big time. No more patience, though. So, are we to ASSUME a rate rise? Yes, but it depends. So, yeah, OK, there could be a rate rise.

What total BS this whole charade is. Instead of a rate rise, there’ll probably be another QE. That’s what Schiff says and I believe it.

BTW, you know what happens when one assumes?

#61 Justin T on 03.18.15 at 8:55 pm

Garth do you think this will be passed in the next budget:

Member of Parliament Irene Mathyssen introduced Bill C-282, An Act to amend the Excise Tax Act (feminine hygiene products), on October 16, 2013.

Sign The Petition: NO TAX ON TAMPONS

https://www.change.org/p/no-tax-on-tampons-a-campaign-to-remove-the-gst-charged-on-menstruation-products-sign-the-petition

#62 seeing it from both sides on 03.18.15 at 8:59 pm

Garth,

Have you succumbed to ads? I’m getting ads popping up as I scroll the comments. And ad tags attached to select words like Bank, Invest, Again (?) etc.

Not me. — Garth

#63 Drunk Actuary on 03.18.15 at 9:01 pm

#52 Mark “Insurance companies, likewise, in a higher rate environment would suffer large losses on their long-term bond portfolios and equities correlated to such. Excess returns on low-risk assets such as long-term fixed income has boosted the fortunes of insurance companies and pension funds everywhere.”

As an actuary working for a large canadian insurer I can tell you this is false. Decreasing interest rates hurt insurance company and increasing interest rates help them. Yes the bond portfolio of insurance companies take a hit with higher yield, but these bonds are used to back the reserve that they need to hold for claim payments, and these reserves decrease at the same rate the bond value decrease. So insurance companies, when interest rates move, don’t have much gain or loss of capital on bonds because of the same move in liabilities, but they benefit greatly from the higher monthly interest payments of a higher rate environment.

Don’t believe me ? Look an any chart of any canadian insurer you know in the first half of 2013 when rates raised (Manulife, GreatWest, Industrial Alliance…)

#64 TurnerNation on 03.18.15 at 9:05 pm

Smoking man vs Gartho on interest rate calls. I took oil today.

#65 John on 03.18.15 at 9:07 pm

Garth,
You got it backwards! it is “buy on rumors and sale on news”

#66 Holy Crap Wheres The Tylenol on 03.18.15 at 9:07 pm

Rates will raise this year, guarantee it! Perhaps third quarter but Garth is correct! Sorry kiddies the free ride is over. Oh it’s going to be hell out there with all of the minions of house horny overstuffed people saying WTF happened? Karma baby!

#67 marnic on 03.18.15 at 9:08 pm

“…as the global recovery progresses, the US expands, Europe gets back on its feet and China moves out of economic adolescence.”

Hmmm…wouldn’t be relying too heavily on any ONE of these, let alone all four. Wow.

#68 Andrew Woburn on 03.18.15 at 9:10 pm

#2 Saul Leibowitz on 03.18.15 at 6:44 pm
Everyone – take a look at the following oil inventory chart, updated today:
Oil inventories are skyrocketing. This will result in a continued plunge in crude prices, which will crater the Canadian economy and dollar, in my opinion.
=========================

It is not fun but remember this is a US storage problem, not a world price problem. Brent crude is $56 not $44. The US just finished a strike that cut out 20% of its refinery capacity and more capacity was down for overhaul. This is the major reason that gasoline prices in BC and California are up. Summer driving season is about to start.

US rules don’t let refiners export gasoline. Under the circumstances is it likely that the US government won’t give at least temporary export permits? It’s going to be tough in Alberta but if I were the oil minister of say, Venezuela, I would be more worried.

#69 Joe2.0 on 03.18.15 at 9:11 pm

Banks are going to milk you like a cow.
Computers project your actions before you even know.
Low interest rates now high interest rates later.
Surprise..your screwed.
But but but..

#70 Godth on 03.18.15 at 9:15 pm

#53 blown away on 03.18.15 at 8:30 pm

The ancients understood that the game, when society became too depraved & debauched had to be reset – thus the jubilee. The Romans took a different approach though, as the debts fell into private hands and not the state, they chose war to settle accounts. We’re going to have a war, but what will anything be worth once the mushroom clouds have receded? That’s the question.
http://www.amazon.ca/The-Lost-Science-Money-Mythology/dp/1930748035

#71 Smoking Man on 03.18.15 at 9:17 pm

Well I had a great day, my son, not so good, I’m thinking about banning him from Trading.. He’s out of control.

Last night we had a talk, it was to early for me to read into fear and greed. I Got a good feeling the FOMC was going to be in a bind, USD so high it’s hurting the recovery, the CEO of Galap poll said Labour stats are funded. But then I was worried Yellen might give a shit about her ego.. More than the recovery.

So I said to my son, no trading today, I told him I suspect the USD might lose a cent or so. But on these types of days you can get wiped out in Milli seconds.

What I dident know or check he had two sells on USDCAD. I trusted he was natural.

After I closed out my 2 million in profit, I log into his account.

Good news is he’s up 20k for the day ,

Bad news he l took a huge hit when he got out, just as I was loading up. Had he not caved he would have made 250k he should set some stops the negate a out.

Why I’m pissed, he should have let me know he wasn’t natural.

I can’t baby sit him…

One more chance I’m thinking. He caught the slidder perfectly, exited to early. Dident fallow rules.

Because he was rattled with the big hit, he was happy to get out with a win..

That’s not how you do this..

Not often you get a 4 big number move in one day.

You guys know where the pic is..

Now it’s time to drink.

#72 blown away on 03.18.15 at 9:17 pm

“I think you mean posthumous. Post-humus conjures up images of researchers getting handed bags of decomposed soil. :) ”

———–

After your colorful description I like this better than the pale word of choice that my broken English misspelled in a miserably funny way. How about just calling it a Freudian slip?

#73 Roial1 on 03.18.15 at 9:20 pm

Garth, or anyone, Can you explain this.—

Oil is 100$ bl. Gas =1.35$
Oil 50$ gas= .90$
Oil 43$ gas= 1.20$
Is this care of being screwed? or as I expect Rape. I never even got a kiss. That to me means RAPE!

#74 Hap on 03.18.15 at 9:25 pm

Yup, fed will likely raise interest rates in the fall, not this summer, admit it.

#75 Hap on 03.18.15 at 9:26 pm

Even Yellen admits stock valuations are on the high side, that means they have been that way for a long time.

#76 Massive Layoff!!! on 03.18.15 at 9:28 pm

Well Alberta has been in denial but this week has done much to put some reality on the table with huge layoffs being reported. One thousand jobs snuffed in just one day in Calgary!! For those who were laid off in Calgary on Tuesday morning there is no more denying that low oil prices will not impact their lives. Within one three hour period using a very conservative wage loss, Calgary just had $50,000,000.00 removed from its economy. Significant????

#77 Auntie Sam on 03.18.15 at 9:31 pm

Canada, you say? It is what it is, and there is no there there!

#78 Snowboid on 03.18.15 at 9:32 pm

#15 Lillooet, BC on 03.18.15 at 7:07 pm…

With all due respect, there are many others on this blog who have accomplished everything you have and more (and didn’t have to move to a tiny remote town to do it).

But they don’t post nearly every day to remind themselves of how smart they are.

Yawn, indeed.

#79 Cow Man on 03.18.15 at 9:36 pm

Sir Garth:

You have been right about a lot of financial bench marks over the past year. I truly hope our economy will support increased interest rates over the next five years. However I truly don’t see interest rate increases as you do.

“Over the next five years rates could easily double. People borrowing now at 2.7% will be renewing at more than 5% – if they are very lucky.”

More likely they will be renewing at .5% than 5%.

#80 Alberta is FINISHED on 03.18.15 at 9:37 pm

Adios Canada.
http://news.nationalpost.com/2015/03/18/why-leaving-canada-makes-sense-for-alberta-and-u-s-would-likely-welcome-a-new-state/

#81 The real Kip on 03.18.15 at 9:44 pm

So now we have to look to Mr. Harper for “guidance”? Is that some kind of joke? Oh well, it can’t possibly be worse than Janet Yellen and her parade of idiots!

#82 Mark on 03.18.15 at 9:50 pm

“More likely they will be renewing at .5% than 5%.”

Doubtful. If the economy really gets that bad that rates go that low, then risk premia for the most indebted borrowers, residential retail borrowers, will likely blow-out.

Lots of people lost their houses in the 1930s on account of foreclosure. Not because policy rates were high (they weren’t), but rather, because they had negative equity and the bank refused to roll their balloon mortgages on account of poor credit-worthiness. Balloon mortgages being the types of mortgages that are nearly universal in the Canadian landscape.

#83 Dog Trainer on 03.18.15 at 9:50 pm

#1 Ole Doberman

“1st and for real this time!”

That’s a GOOD doggy. Sit Dobey, sit. That’s a good boy!
Ok, see this stick? I’m going to throw it way over to the other side of the internet. Fetch Dobey, fetch!

#84 Smoking Man on 03.18.15 at 9:51 pm

#64 TurnerNation on 03.18.15 at 9:05 pm
Smoking man vs Gartho on interest rate calls. I took oil today.
…….

Dude, Garth is smart, safe wiegthed smart basterd, his problem, he’s pretty straight shooter, and assumes that the feds, the stats people are as straight as him.. So he goes with the schooled prospective.

Hence he’s not always right. Puts to much faith in institutions, and accepted hiarcky.

I know the machine is one big lying mafia. Takes one to know one. Hence I have an advantage.

GARTHS Balanced approach works, works well but boaring and slow.

Rabbit and Turtle.

He’s got to stop being so trusting. It’s hard, he’s got an obidance certificate.

#85 Mark on 03.18.15 at 9:54 pm

“Oil is 100$ bl. Gas =1.35$
Oil 50$ gas= .90$
Oil 43$ gas= 1.20$
Is this care of being screwed? or as I expect Rape. I never even got a kiss. That to me means RAPE!”

Decreasing volumes due to a significantly weakened economy mean that the margins have to be made up somewhere. And governments haven’t cut back their “take” on taxes. Remember also that much of Canada has been utilizing oil-sands derived feedstocks which were already severely discounted to WTI/Brent even before the oil price collapse started.

With as much deflation as appears to be occurring at the moment, the public should be clamouring for massive reductions in public sector compensation and spending. But unfortunately they keep voting for fools like the Wynne government.

Even in Saskatchewan today, the government brought down a budget claiming a $100M surplus, yet debt is going to rise $1.6B YoY. Just how the politicians can make such claims with a straight face is beyond me.

#86 Drill Baby Drill on 03.18.15 at 9:56 pm

The layoffs that make the headlines here in Calgary ie: Suncor, Nexen, Conoco, Talisman etc. are small compared to those suffered by the service industries. In Engineering alone in the past 18 mths there have been 5000+ let go and counting. This does not include, drillers, fab shops, suppliers, truckers, welders etc. It truly is bad and getting worse. I have been in this business for 35 yrs and it will be as bad as the mid eighties downturn.

#87 cory on 03.18.15 at 9:57 pm

#15 Lillooet

Actually I really do want to hear all about it. Where did you live before moving to Lillooet?

#88 Washed Up Lawyer on 03.18.15 at 9:59 pm

Having been educated to the point of being useless, I cannot understand the jump in oil prices today. Makes no sense in the absence of real data and news.

Tunis, Tunisia? Instability in a country between Libya and Algeria? Instability is good for the price of oil

I will leave the analysis of the machinations of oligarchs and the MIC to Dr. Smoking Man.

#89 Drill Baby Drill on 03.18.15 at 10:00 pm

I remember the dollar sales in 1985 – 87 whereby an antiquated law allowed Albertans who were underwater on their mortgages to sell their home to a speculator who then rented it out for up to a year or more before the sheriff kicked the renters out.

#90 CJ on 03.18.15 at 10:00 pm

#15

If I had to choose between:

Option A) being a mortgage slave for 40 years, shoveling snow for 8 months of the year, and having to commute one hour into work every day for the rest of my life

Option B) living in Lillooet, BC …

I would obviously choose Option A.

#91 danforth on 03.18.15 at 10:03 pm

GT, you’ve been quiet in recent weeks on a tory increase of the TFSA limit to 11K, yet some months ago you were regularly waxing poetic about it.

Revised predictions? Tx

They killed the budget. — Garth

#92 Grantmi on 03.18.15 at 10:03 pm

http://bit.ly/1LwB2T6

The Decline of Vancouver

That’s the 13th time this anti-immigrant drivel has been posted here. I expected more of you. — Garth

#93 Randman on 03.18.15 at 10:05 pm

Garth your Rosy outlook on the markets …is not justified
by Denninger’s standards ..and he makes some good points in regards to todays action….it’s big investors running from one side of the ship to the other on the whim of the Fed …..pretty soon it will all capsize ….

“There was one lesson today from the FOMC decision.

The Fed downgraded their economic forecast. The market, in response, shot up 50 handles on the S&P and four hundred DOW points from where it was before the announcement.

What this tells you is, quite simply, this:

ALL of the market’s upward move is a consequence of uneconomic decisions made by firms.

It is not due to growth.

It is not due to organic profits.

It is not due to an improving economy.

It IS due to borrowing to buy back stock and other leveraging games, all of which are Ponzi schemes.

And this will end exactly as it did in 2000 and 2008, Larry Kudlow’s chortling notwithstanding.”

http://market-ticker.org/akcs-www?blog=Market-Ticker

#94 Andrew Woburn on 03.18.15 at 10:09 pm

#63 Drunk Actuary on 03.18.15 at 9:01 pm
As an actuary working for a large canadian insurer I can tell you this is false. Decreasing interest rates hurt insurance company and increasing interest rates help them.
==============

Thanks for the info. Is it true that lifeco’s are gaining profit from increased lifespans or was that already basically factored into premiums?

#95 Smoking Man on 03.18.15 at 10:12 pm

Woman is all I’m saying.

I get home a bit late, had a few pints at the Duke.

The Nazi wife, at the door, “you bastard, why you home so late, ” she says.

“Had beer, and a massage, my back was sore. Hey I made 2 million today. ” I reply.

” You F©®}]] ¢ basterd, the snow melted there is a mountain of cigarette buts, your cleaning that up now. ” She demands.

I pull out the shop vac and suck them all up. As she supervises.
Meanest face going.

” You have a ashtrays every where, why do you do this year after year. ”

I said I don’t know. And she storms into the house.

So I think about it.. I figure it out, there is nothing more satisfying than taken a cigarette that’s down to the filter. You place it between your tumb and middle finger and launch it against the fence.

You watch it get smashed to pieces, it’s a very weird form of satisfaction. Destroying the thing that’s destroying you.

I have problems.. I know.

Honey Senica tomorrow night?

Ah she’s smiling again….

#96 kommykim on 03.18.15 at 10:15 pm

RE: #62 seeing it from both sides on 03.18.15 at 8:59 pm Garth,
Have you succumbed to ads? I’m getting ads popping up as I scroll the comments.

Check your browser for unwanted Add Ons. Run a malware scan, etc. Your machine has been compromised.

#97 Grantmi on 03.18.15 at 10:15 pm

#92 Grantmi on 03.18.15 at 10:03 pm

http://bit.ly/1LwB2T6

The Decline of Vancouver

That’s the 13th time this anti-immigrant drivel has been posted here. I expected more of you. — Garth

Sorry Garth! I must be in SM mode. My sincere appoligies. Too many martoonies….

#98 screwed on 03.18.15 at 10:16 pm

#25

“The rate suppression in wrecking the duration matching for the insurance business and pension plans.”

***

Yup. That’s why rates MUST rise. Insurers are Wall Street bankers too…

Imagine a bailout of AIG x 100 across North America and Europe.

Impossible. There is too much downside risk if they postpone rate hikes much longer.

#99 Mark on 03.18.15 at 10:20 pm

‘I remember the dollar sales in 1985 – 87 whereby an antiquated law allowed Albertans who were underwater on their mortgages to sell their home to a speculator who then rented it out for up to a year or more before the sheriff kicked the renters out.”

A few credit union issued mortgages may be still like that in Alberta, but for the most part, lenders aren’t at risk of that happening again and impairing their books.

Having said that, yes, my family did acquire one of those houses in Edmonton at the time. The attached mortgage was written out in the name of an obviously foreign-sounding name, and the mortgage lender was more than thrilled to allow us to assume it.

The current regime, where the mortgage lenders will simply “put” the paper to the CMHC if it defaults, rather than deal with assumptions and dollar sales, guarantees a much different landscape than we saw in the 1980s though. Liquidation will be far more rapid and violent I predict than the relatively slow melt experienced in the 80s and 90s for Alberta RE.

#100 OttawaMike on 03.18.15 at 10:23 pm

#43 margin disappear on 03.18.15 at 7:59 pm

Why can Americans buy boiler parts that are only available to Canadians through licensed tradesmen??

In most of the US states save for Mass. any handyman can install and service your gas or oil boiler. In fact is common to have the local carpenter do it.

Very few trades are certified through apprenticeships and written licenses either. You show up for the interview and explain that you know about high voltage electrical switchgear or high pressure natural gas steam boilers or whatever skill is required, then you start work that day.

Not to say the US does not have some of the most highly skilled tradesman in the world. Just they have a wild west of certification.

Now which system do you prefer? The one where anybody can but boiler parts at wholesale and install them ad hoc or where you pay a markup(usually 33%) on the part and have a licensed, insured and safety audited contractor sell and install it for you?

#101 Mark on 03.18.15 at 10:26 pm

“As an actuary working for a large canadian insurer I can tell you this is false. Decreasing interest rates hurt insurance company and increasing interest rates help them.”

That’s assuming that the insurers invest in short term paper which most generally don’t on any significant basis. Insurers are the quintessential long-term conservative investors in the economy. Insurers over the past few decades, like most financial institutions, have enjoyed excess returns by prolonging the duration of their investments. Products such as life insurance and annuities inherently require insurance companies to invest for the long term. Products are priced at the coupon rate, but capital appreciation arising from such long-term bond investments have largely accrued to the shareholders and employees of the insurers.

Of course, such isn’t sustainable (what the bond market giveth, it will eventually taketh as interest rates eventually flat-line and normalize over time). Which means that insurance companies will not benefit.

#102 Sheane Wallace on 03.18.15 at 10:28 pm

there will be no interest rates increase in Canada, I am absolutely convinced as can’t afford it. The CA dollar will be destroyed.

Our economy can’t handle interest rates increase as we use near zero interest rates to pile on debt, not to pay it.

Ca dollar at 40 cents, simple as that, if not CMHC will blow off.

#103 Balmuto on 03.18.15 at 10:29 pm

#52 Mark
“Insurance companies, likewise, in a higher rate environment would suffer large losses on their long-term bond portfolios and equities correlated to such. Excess returns on low-risk assets such as long-term fixed income has boosted the fortunes of insurance companies and pension funds everywhere.”

Unlikely, for two reasons:

1) Interest rates affect not just the assets but the liability side of the balance sheet.  Insurance companies – life insurance companies in particular – have long-dated liabilities that often aren’t fully hedged on the asset side.  In fixed income terminology, the duration of the liabilities exceeds the duration of the assets.  This means that when rates go down, the present value of the liabilities increases more than the present value of the assets, causing a hit to the surplus, which ultimately makes its way to the income statement.  When rates go up, the opposite occurs – there is less of a decrease in the value of the shorter-dated assets than in the value of the longer-dated liabilities, which increases the company’s surplus position.

2.  The spread insurance companies earn between the actual investment yields and the guaranteed interest rate  they offer to policy holders tends to be lower in a low rate environment.  This spread compression causes a drag on insurers’ earnings.  The widening of this spread that would accompany a higher yield environment would be a boon to insurers.  

This article explains the interest rate sensitivity of insurers in more detail:

http://www.naic.org/cipr_newsletter_archive/vol3_low_interest_rates.html

#104 Interstellar Old Yeller on 03.18.15 at 10:30 pm

#84 CJ on 03.18.15 at 10:00 pm
#15

If I had to choose between:

Option A) being a mortgage slave for 40 years, shoveling snow for 8 months of the year, and having to commute one hour into work every day for the rest of my life

Option B) living in Lillooet, BC …

I would obviously choose Option A.

LMAO.

Okay, for all that we’re crapping on remote, little towns, I do want to hear Lillooet out. For the average schmoes like me, fleeing to a small town would mean early/earlier retirement, which starts to look really good when job stress is through the roof.

Though we love the big city, all options are on the table. In a little town we could live on much less, have a bunch of big dogs, and the kids would be happy until they grew into bored teenagers. Lillooet, your brilliant recipe, if you will?

#105 OttawaMike on 03.18.15 at 10:30 pm

#84 Smoking Man on 03.18.15 at 9:51 pm
GARTHS Balanced approach works, works well but boaring and slow.

Rabbit and Turtle.
——————————————–

Here’s what eventually happens to the rabbit:

https://twitter.com/MidCenturyMike/status/556231244254826496

#106 Sheane Wallace on 03.18.15 at 10:30 pm

at 20 cents we can successfully compete with Asia for cheap labour.

#107 Travelin Fool on 03.18.15 at 10:31 pm

I’m sitting on my perch at the Hyatt Regency Hong Kong, reading a stern rebuke in today’s South China Morning Post, aimed at anyone who denies the HAM issue in Vancouver and Canada generally. Of course some people staunchly refuse to recognize facts as they are presented by China sources…for reasons of their own.

China now claims that as much as 1.4 trillion dollars has gone unaccounted for and they are launching a massive audit of all COE’s around the globe. They have signed extradition treaties with 69 countries recently ( Canada not mentioned) and have repatriated thousands of wrong doers who absconded with funds taken from ministries and through general graft and corruption.

Vancouver’s big real estate story was of a ‘duck farmer’ who bought a 52 million dollar mansion on Drummond Drive recently. Well….that’s not quite true. The fellow is a central planner in charge of the City of Nanking ( Director of CCPPC)…and has been buying multi million dollar homes around the world, including six others in Canada. All of these ‘officials are under ‘official investigation it has been announced in this mornings SCMP…….scurrilous rag that it is.

The headline reads…..’China sheds light on hunt for fugitives’ if you’re interested in Googling the story btw. It has been a very active investigation leading to the arrest of many prominent ‘New Canadians’.

So……ahhhh…NO Ham you say……balderdash. china says there are corrupt officials wanted for crimes against the people in the thousands who have stolen billions and have been very active accumulating multiple houses and buildings in Canada to get their money out of the country….but are not safe anymore.

The SCMP more accurately reported the buyer is one of 2,000 members of the CCPPC, which is an advisory, not a legislative, body. He does not run Nanking, nor is he a politician or public administrator. He is, however, a billionaire with a skyscraper-building construction firm, several hotels and a couple of pharma companies. In other words, he epitomizes success and has a house that demonstrates it. Your comment, inferring he is a corrupt official who stole his money, is so typical. Poor Vancouver. — Garth

#108 Mark on 03.18.15 at 10:32 pm

“Is it true that lifeco’s are gaining profit from increased lifespans or was that already basically factored into premiums?”

Insurance companies generally run portfolios where they seek to be neutral of longevity risk. So when they sell a life insurance policy, they will seek to also sell an annuity (or vice versa), such that, increased or decreased systemic longevity is neutral on the overall portfolio.

What kills insurance companies is diminished long-term returns on their portfolios (since their other risk, longevity risk, is basically hedged out). A rising rate environment destroys returns on long-term investment portfolios as long term bonds experience returns that more closely resemble or even fall short of the quoted yield to maturity, rather than the capital gains inherent in the falling rate environment we’ve seen since the apex of the long-term bond market in the early 1980s.

#109 gut check on 03.18.15 at 10:38 pm

#8 cara

you need US customers. whatever it is your husband is selling, sell it on line priced in USD.

#110 Whitby on 03.18.15 at 10:43 pm

Hey smoking Man nice trade, thankfully you didn’t get any of my stash. I bailed out of my long USD/CAD position last night with a small profit.

You can add me to your fan list, you add a comical note to the blog, I enjoy your sense humor.

On a side note can I get a signed copy of your book when it is available?

Please. Do not encourage him. — Garth

#111 Balmuto on 03.18.15 at 10:43 pm

Bad link on my previous comment, sorry – this should work: http://www.naic.org/cipr_topics/topic_low_interest_rates.htm

#112 Mark on 03.18.15 at 10:45 pm

“Don’t believe me ? Look an any chart of any canadian insurer you know in the first half of 2013 when rates raised (Manulife, GreatWest, Industrial Alliance…)”

I’ll look at the long-term charts of insurers, particularly those ones you quoted, and see that, over the past 30 years (or as far back as I can go, since ‘demutualization’), they dramatically outperformed the market indices, paid their employees extravagantly for what effectively is a clerical function of society.

http://yhoo.it/1MLPggd

Those charts clearly show outperformance of the insurers versus the broad index of Canadian equities as represented by the EWC ETF. In the long-term falling interest rate environment.

As I suggested in one of my earlier comments, a good investment blueprint for a rising rate environment is to figure out what sectors outperformed over the past 35 years, and underweight them relative to sectors that underperformed over the past 35 years. Insurers clearly benefitted enormously from the falling rate environment as the charts above show, relative to their peers in the broad stock market index.

#113 tundra pete on 03.18.15 at 10:46 pm

#43.

Only has to do with CSA etc. approval. A licensed insured heating gas/oil contractor would be required to use only either CSA, Warnock Hersey, or Underwriters Labrotories. With only Canadian approval. If not approved for Canada, cannot be used. Only for your safety.

Nothing to do with ripping anyone off. Quite the opposite actually.

Of course you could always take your chances with bargain parts from some third world country.

#114 Iwill on 03.18.15 at 10:52 pm

Garth, you can’t rent a $2m house in Toronto for $3800 per month. Not possible – unless it’s some shitty bungalow on a large plot of land that’s about to be demo’d. Co’mon garth, confess…

Actually, I’m inviting everyone over. — Garth

#115 Buns of steel | Realties.ca on 03.18.15 at 10:53 pm

[…] Source: http://www.greaterfool.ca/2015/03/18/buns-of-steel/ […]

#116 Rexx Rock on 03.18.15 at 11:00 pm

Canadians have nothing to worry about interest rates going up.We have Japan’s playbook and were in the 3rd inning.For over 20 years Japan has had very low rates and they did ok.Canadians will see prime rate 0.25% ,5 yr at 1.25% and the 10 yr at 1.79%.Yes we will endure a lower dollar,higher inflation and a real economic mess but we have no other choice.

#117 Drill Baby Drill on 03.18.15 at 11:06 pm

#85 Mark
A big reason refined product pricing is not in lock step with the oil price is that refineries at this time of year are starting to recalibrate from winter fuel to summer fuel. This means plant shutdowns for turnarounds thus less product leaving the refineries. Also in order to make up the gasoline shortfall in Canada they import refined product from the USA at a premium of course. Most of this imported gasoline was refined from You Guessed it Oil Sands.

#118 Smoking Man on 03.18.15 at 11:07 pm

#98 Whitby on 03.18.15 at 10:43 pm
Hey smoking Man nice trade, thankfully you didn’t get any of my stash. I bailed out of my long USD/CAD position last night with a small profit.
You can add me to your fan list, you add a comical note to the blog, I enjoy your sense humor.
On a side note can I get a signed copy of your book when it is available?
Please. Do not encourage him. — Garth
……. Please. Do not encourage him. — Garth

Garth, I love you, and I’m not gay.

Contemplating getting off my lazy boy chair, Need the little boys room, now that s fen risk.

I killed after 5 or 8 pints at Duke, two Mickie s of JD. God I’m sorry.

This might not end well.

#119 tundra pete on 03.18.15 at 11:08 pm

#53 blown away

In this world of financial mayhem, hows “fractional reserve banking”.

Wonder where the dude is that invented that one!

We are so screwed.

#120 Drunk Actuary on 03.18.15 at 11:12 pm

#102 Mark “Insurance companies generally run portfolios where they seek to be neutral of longevity risk. So when they sell a life insurance policy, they will seek to also sell an annuity (or vice versa), such that, increased or decreased systemic longevity is neutral on the overall portfolio.”

False again, the assertion that lifecos perfectly hedge their longevitiy risk is a myth. Yes the risk partially offset each other but you just cant get a perfectly neutral portfolio. The reason is simple, annuity business are generally sold to old people and retirees, and theyll receive their benefits till death. Life insurance is usually sold to younger people who will take temporary insurance and often lapse the policy when their kids get older. Also there are so many different products right now that you cant hedge everything easily.

And I don’t think that you understood my previous comment. Life insurer are generally not making profits from a rise in bond value since their reserve are raising at the same rate, but they get hurt by the lower interest payment on these bonds and the lower investment return they get on new premiums.

What kills insurance companies is diminished long-term returns on their portfolios (since their other risk, longevity risk, is basically hedged out). A rising rate environment destroys returns on long-term investment portfolios as long term bonds experience returns that more closely resemble or even fall short of the quoted yield to maturity, rather than the capital gains inherent in the falling rate environment we’ve seen since the apex of the long-term bond market in the early 1980s.”

#121 Drunk Actuary on 03.18.15 at 11:14 pm

“What kills insurance companies is diminished long-term returns on their portfolios (since their other risk, longevity risk, is basically hedged out). A rising rate environment destroys returns on long-term investment portfolios as long term bonds experience returns that more closely resemble or even fall short of the quoted yield to maturity, rather than the capital gains inherent in the falling rate environment we’ve seen since the apex of the long-term bond market in the early 1980s.”

That paragraph ain’t mine it’s mark’s one, Im just too retarded to quote properly.

#122 lionsroarin64 on 03.18.15 at 11:24 pm

Enough talk about things that matter.

Garth, you mentioned our esteemed prime minister and his Budget That Wouldn’t Be.

Do you think they’ll introduce a balanced budget with a sprinkling of sugar and spankings and then drop the writ for an election held before the end of June?

I’m no Harper fan, but he must look at Creampuff-With-a-Hairdo on the one side and 30-Seconds-Away-From-a-Cardiac-Arrest on the other side and think, “Hmmmm…”

#123 Sheane Wallace on 03.18.15 at 11:29 pm

#116 Rexx Rock

Japan’s debt is internal, they have bug trade surplus, also have very competitive manufacturing that will become even more profitable with the cheap Yen.

In long term Japan will do better than Canada however funny this might sound today.

#124 Godth on 03.18.15 at 11:31 pm

Actually, I’m inviting everyone over. — Garth

Buns of steel indeed.

#125 Carpe Diem on 03.18.15 at 11:32 pm

116 Rexx Rock

Japan has less than 2% of people being “foreigners”.

No need to say more.

#126 Sheane Wallace on 03.18.15 at 11:33 pm

Mark is an idiot, some of the insurance companies reserves are held in secure paper (e.g. bonds), it is mandated by the government, so are some of the long term investments for life insurance for example.

Higher interest rate bring more profit.

#127 the Jaguar on 03.18.15 at 11:42 pm

Read #117 Drill Baby Drill and those of you who live east of Saskatchewan may begin to understand why north America should be carved up into south/east quarters. It explains a lot.
A different universe. Nothing to connect us. Even hockey won’t accomplish this…

#128 Geofferson on 03.18.15 at 11:43 pm

Yellen in late Feb at a Senate Banking Committee hearing said the U-6 unemployment rate – which includes people who are working part-time for economic reasons and those who are marginally attached to the labor force “definitely shows a less rosy picture” of employment in the country.” How relevant is U-6 at 11.3% to the economic recovery compared to the trotted out U-3 at 5.7%? http://cnsnews.com/news/article/ali-meyer/yellen-unemployment-rate-less-rosy-when-you-count-part-time-discouraged

#129 AD on 03.18.15 at 11:50 pm

If interest rates go up, all the marginal companies that are surviving based primarily on low interest rates will suffer / disappear. How can that be good for the stock market?

#130 Ralph Cramdown on 03.18.15 at 11:57 pm

Actually, I’m inviting everyone over. — Garth

Bad idea. It’ll end badly:
https://www.youtube.com/watch?v=D_5I7boeRNU

Better idea:
https://www.youtube.com/watch?v=UDB9oCgVHGw

Today was great. When they unseal the Fed’s minutes, they’ll read “Let’s take out the word ‘patience’ but issue a quasi-dove-ish statement. That’ll head-fake all the flash traders with weak-ass NLP algos and they’ll get eaten by the ones with better parsers. Whee!”

Tip: WWWD? That’s right, What Would Warren Do? You think at 2:00 he was on the edge of his seat in front of his Bloomberg (Quotron?) in Omaha with finger hovering near the buy and sell buttons on his six screen trading workstation nearby? I don’t.

#131 Financial Freedom at 40 on 03.18.15 at 11:59 pm

#112 Mark
—-
Hmm, humouring myself with the 2013 MFC annual report, just search for the keyword “interest rates” in the management discussion & analysis. Highly recommend going directly to the source.

#132 kommykim on 03.19.15 at 12:01 am

RE:Actually, I’m inviting everyone over. — Garth

Have you been drinking with SM? ;-)

#133 paddler on 03.19.15 at 12:03 am

#4 Leroy Washington
Canadians are very stupid when it comes to money, and investing.

—————————————————————–
Now I heard it all. Who created that financial mess that just about blew up the World’s financial landscape in 2008? Giving people with no jobs mortgages over the phone in less than five minutes? Pretty smart eh.

#134 nonplused on 03.19.15 at 12:14 am

My only question is why do you, your wife, and a dog need to live in a $2 million dollar home? Seems you could plow a portion of that rent into something else and still live quite well.

Oh well I guess we all have to live in the moment too.

Personally I can understand why my dentist makes as much as I do. That’s tough work and she’s running a business with all those hygienists and what not. But my money manager? Yes he should make as much as I do, he has multiple clients after all. But if he’s living in twice the house and driving a Beemer and his wife has a Porsche, I’m wondering if maybe he isn’t investing enough of his own money.

I know it’s very common these days to “flaunt it if you got it”, and if it’s T&A I’m all in favor. But if it’s wealth to some extent I think it’s vulgar.

So it’s ‘vulgar’ to rent and invest my money instead of buying an inflated pile of stones? Would you be happier if money managers lived in mortgaged bungalows in the burbs? (That would inspire confidence.) Flaunting renters – I think you just invented something. — Garth

#135 NotAGreaterFool on 03.19.15 at 12:17 am

Garth – Will you take the elevator down from your glass office to hear Glenworth talk about the 1st Time Home Buyer? At least send out your spies and report back the blog.

http://www.genworth.ca/en/homeownership-education-week.aspx

#136 JimH on 03.19.15 at 12:22 am

#60 Babblemaster on 03.18.15 at 8:54 pm
“There goes the Fed once again. Saying nothing and bluffing big time. No more patience, though. So, are we to ASSUME a rate rise? Yes, but it depends. So, yeah, OK, there could be a rate rise.
What total BS this whole charade is. Instead of a rate rise, there’ll probably be another QE. That’s what Schiff says and I believe it.
BTW, you know what happens when one assumes?”
==========================
Yes, Babblemaster! Let’s review YOUR assumptions, shall we?
You ASSUME the whole ‘thing’ is BS.
You ASSUME the whole thing is a ‘charade’.
You ASSUME there will ‘probably be another QE’.
You ASSUME that Peter Schiff is one to be believed, even though his track record is dismal.

Yes, we know what happens when you assume!

#137 The R on 03.19.15 at 12:26 am

Mr. Garth, or anyone else who might know what the hell just happened…
2 of my ETFs :

1) VUN (total US)
2) XIU ( tsx 60 )

both went down today while the indexes they follow went up. It doesn’t make sense to me.

Is this a normal thing to happen ? Doesn’t this kinda defeat the purpose of following the news & blogs and then making a informed decision on where to place your money ?

are there any signs I could follow in the future to prevent something like this to happen to me again?

#138 Nodebt on 03.19.15 at 12:47 am

Who wants to live and retire in lilooet? Seriously?

#139 Mark on 03.19.15 at 1:02 am

“False again, the assertion that lifecos perfectly hedge their longevitiy risk is a myth. Yes the risk partially offset each other but you just cant get a perfectly neutral portfolio.

Of course, nothing’s perfect in life. But that’s the goal the insurers strive for, and judging by their financial results over the years, they’ve done quite well at it. We have not seen a failure of life insurers on a widescale basis because of increasing longevity. Quite the opposite, the insurers have solidily outperformed the TSX and the S&P500 indices along with the rest of the ‘financial’ sector.

The ‘theory’ that insurers do better in a rising rate environment might sound good, but the evidence of the past 15-30 years, of falling rates and insurance co outperformance relative to the market, does not bear this out.


The reason is simple, annuity business are generally sold to old people and retirees, and theyll receive their benefits till death. Life insurance is usually sold to younger people who will take temporary insurance and often lapse the policy when their kids get older.

Life insurance is also extensively sold to the elderly who use it to mitigate tax risk. I think we’ve all seen that heavily run ad where seniors are advised, as part of their estate planning, to buy life insurance to ‘pay the taxes’ owing on the disposition of a heavily appreciated family cottage.


Also there are so many different products right now that you cant hedge everything easily.

Agreed, but such products fit into an overall portfolio by the insurer, and the actuaries at a competent insurer strive to achieve pricing on products that reflect the risk.

Anyways, I’m not going to spend a lot more time along the lines of this topic, other than to say, the era of excess returns to “financial” entities, including insurers over the past 30-35 years, is gradually coming to an end. As Garth points out repeatedly (although we disagree on timing), we are on the cusp of a major change in the direction of interest rates. Sectors that benefitted from the long-term upside of falling rates, such as the FIRE sector, will find that rising rates represent quite the opposite of a benefit. And vice versa. The future, IMHO, is quite dark for most of the FIRE sector relative to the ‘rest’ of the economy, and insurers are likely no exception.

#140 nonplused on 03.19.15 at 1:03 am

#114 Cato the Elder (yesterday)

Um… no.

The process by which oil was created is quite well understood by geologists and others involved in it’s extraction, and the information is readily available if you want to research it.

So the only known natural (and read the word natural again, it can be done artificially but not in nature that we know) way of converting carbon and hydrogen into complex organic molecules is done by plants via photo-synthesis. You may remember something about it, this is why your tree has green leaves. But it’s also algae and a wide range of other plants.

Algae, and not fossils, is the true source of most of our oil and gas, not fossils, although their are often fossils found in the rock.

So what happened millions of years ago (say 500 million) is that eons of dead algae was entombed with forming shale layers at the bottom of the ocean, along with the odd fossil. But this wasn’t oil it was dead algae in sediment.

These shale layers are often referred to as “source rock” in the oil industry, and it is where the fracking is occurring now but let’s get back to the story because it wasn’t oil yet.

Along came plate tectonics. This is a weird word for the fact that the earth slowly moves, and certain parts crash up over other parts that are going down (if a crash can last 100 million years). Where the shale got buried deeply, the algae was converted through heat and pressure to oil and gas, and where possible migrated towards the surface since it is lighter than water, which there is a surprising amount of under ground in porous rock.

Most of this oil probably got reabsorbed by the environment and converted back into plant matter as is very slowly surfaced, but where a “trap” existed, that being a fold of tight rock above a porous rock lick a previous ancient river bed or perhaps even a deep corral structure like the Leduc field, the oil remained below surface in those traps.

Those traps over source rock are where conventional oil come from and we’ve probably found most of them at this point with our 3-d and 4-d seismic.

The proof is beyond conclusive. With modern chemistry we can prove that oil contains genetic markers of the algae that it was made from still included in the oil. Not all of the genes of the original plants were destroyed.

So that is how the earth makes oil, and it is not controversial. We understand this now as well as we understand why the planets orbit the sun.

Shale oil and gas is really going after the oil and gas that is left in the source rock, that didn’t migrate due to being trapped. That’s why you have to frack it, it won’t come out unless you break the rock.

So yes, the earth is making more oil. Unfortunately it looks like it will be another 500 million years before the tank is refilled.

A good analogy is coal, which comes from ancient (but more recently) similarly buried trees. Everyone knows coal is buried trees, sometimes it still looks like trees when you dig it up. But the idea that the earth is through natural processes is still burying trees and converting them to coal at the same rate we are mining it is ridiculous.

Oil is a finite, limited, and scarce resource. We can use it all up right away like the Easter Islanders used up their forest if we want (and that seems to be what we are doing), but like the Easter Islanders found out, the trees (and oil) aren’t coming back.

So please, please do a little bit of rudimentary research before making “sun revolves around the earth because the bible says so” type claims about oil. Every barrel of oil we consume is a barrel we will never have back on any time line that might matter to us. Claims to the contrary only display a lack of education, and wishful thinking.

The only question remaining, and has been since the 40’s, is not “are we using up the oil”, but “how much is there?”

#141 john on 03.19.15 at 1:10 am

Why is nobody complaining about this???

Oil is 100$ bl. Gas =1.35$
Oil 50$ gas= .90$
Oil 43$ gas= 1.20$

Thoughts???

#142 norstarr on 03.19.15 at 1:19 am

so lets play the numbers and place bets with our bookies on the fed budget: bet large on a raining in of CHMC look for lower pricipal purchase price limits. the big surprise will be in the minimum down payment requirements, regardless of purchase price, and new strict requirements as to where you get the down payment AKA forget flake 2nd mtg financing. make no mistake government politicos dont like time bombs ticking away in there back yards especially ones that could decimate the serving party, if it blows up on there watch. lets see how smart they are as we head into a federal election

#143 Waterloo Resident on 03.19.15 at 1:28 am

Garth, you said that rates in the U.S. will soon be going up.

So then, why are rates in the bond markets crashing towards zero as these 2 charts show?

5-year bond yields:
http://stockcharts.com/h-sc/ui?s=$FVX&p=D&yr=0&mn=6&dy=0&id=p08538043969

10 year bond yields:
http://stockcharts.com/h-sc/ui?s=$TNX&p=D&yr=0&mn=6&dy=0&id=p08538043969

If traders were expecting rates to be going up anytime soon, then those charts would be rising, not falling, right?

#144 Plex on 03.19.15 at 1:31 am

Remeber this response Garth, U.S will not be raising rates this year.

#145 Industrial Guy on 03.19.15 at 2:10 am

#43 margin disappear on 03.18.15 at 7:59 pm

You point out a major problem with your comments about cheaper parts sourced in the USA and service providers not installing them.“because we can not provide warranty on it”. It’s actually a lot more complex than that.

1st, not all manufacturers in the USA comply with Canadian CSA requirements. We live in a world with a hodgepodge of manufacturing standards ….. CSA, UL. CE, IEC, RUL, ISO, ITU.

I could fill pages with standard designations used around the world. The argument can be made that all these competing standards are simply non-monetary barriers to trade and you would have a strong case.

Here’s one of the big differences between doing business in the USA and Canada. Standards (CSA for example) compliance for many products is backed by Federal and Provincial laws in Canada. Gas appliances can only be connected to the gas supply by a licensed gas fitter in some provinces.

Here for example is TSSA Ontario Regulation 212/01:

Certificates required for various activities
6. (1) No person shall install, alter, purge, activate, repair, service or remove any appliance, equipment or other thing employed or to be employed in the handling or use of gas unless the person is the holder of a certificate for that purpose. O. Reg. 212/01, s. 6 (1).

In the USA, “Manufacturers submit products to UL for testing and safety certification on a voluntary basis. There are no laws specifying that a UL Mark must be used. However, in the United States there are many municipalities that have laws, codes or regulations which require a product to be tested by a nationally recognized testing laboratory before it can be sold in their area. UL is the largest and oldest nationally recognized testing laboratory in the United States. UL does not, however, maintain a list of the jurisdictions having such regulations.”

This is why any handyman can install and service your gas or oil boiler … well except as you pointed out in Massachusetts. Regulations are quite different in the USA. Many of Canada’s strict natural gas regulations came about after the “LaSalle Heights Disaster”, a gas explosion which leveled a housing project on the island of Montreal in 1965. 28 people lost their lives, 39 were injured and 200 left homeless. After this event it’s easy to understand our very cautious approach to Natural Gas and Propane appliances.

If you install a non-compliant item in Canada, you may be violating Federal/Provincial laws. You’re also accepting 100% liability for the part. If you buy a non-approved burner assembly or pressure blow off valve for your boiler and it causes a house fire or a flood ….. you’re stuck covering the repairs. If your’e poorly installed item blows up the neighborhood. Don’t expect you’re house insurance to cover it. Counterfeit parts is also a growing problem in North America.

2nd problem ….. distributors.

Canada is a huge country with a small population. Many firms outside of Canada are very intimidated by the economics of servicing such a large area. They find it much easier to use distributor who service the national and local wholesalers/retailers while representing multiple lines. These multiple lines make them economically viable.

These distributors are given National or Provincial exclusivity In exchange for the free labour and marketing expenses provided by the distributors. Distributors add roughly 20% to 30% to the wholesale cost to cover their expenses.

Would it be cheaper to go direct to the foreign supplier? …. Sure, but it’s highly unlikely they will sell to you in Canada and violate the binding distribution agreement in place. Since the distributors also handle local warranty issues … anything bought outside their territory is not their problem.

So sorry, no cheap parts for you …..
You’re also paying for a higher level of safety. Isn’t you family worth it?

#146 Canadian In US on 03.19.15 at 3:53 am

Your closing analysis today suggests recessions are no longer a topic of possibility. It has been at least six years and the US fed has zero policy tools available WHEN the one occurs. The US has never entered a recession with zero percent rates, much less (effectively) zero percent for 15 years.

It is also insane to reason a housing bubble exists completely independent of an equity market bubble. They were both born by excess central bank money desperate for yield and a lack of imagination of the populous as to what constitutes an investment.

As a result of the unprecedented actions of the terrified US fed (if QE actually works we would have already raised rates), the (tulip) investor mob and the brain dead US government (spending in 10 years what took 225 years of their predecessors to spend) the US markets will collapse this year – housing, equities and the 18 trillion US government debt. The long term charts tell it all.

#147 Waterloo Resident on 03.19.15 at 3:59 am

Well, that massive rise in the S&P 500 set off both ‘Buy’ triggers in my stock timing system, something I wasn’t expecting to happen for a few weeks at least. Oh well. So tomorrow I place a buy at an equivalent S&P value of around 2103, about where I sold everything 2 weeks ago.

For days and days all signals were red, even when stocks were rising a few days ago the moves were weak and all other signals were showing ‘no go’. Suddenly everything is ‘Go’, starting just today.

#148 Victor V on 03.19.15 at 6:05 am

http://m.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/oilpatch-layoffs-spread-to-downtown-calgary/article23527525/?service=mobile

ConocoPhillips became the latest major oil company to chop staff numbers to deal with the oil-price crash, and more layoffs in downtown Calgary are likely as the industry digs in for a lengthy downturn.

The Canadian unit of the Houston-based oil major told employees on Wednesday that it was reducing its work force by about 200 workers, or 7 per cent of its total, spokeswoman Kristen Ashcroft said.

#149 Victor V on 03.19.15 at 6:12 am

http://m.theglobeandmail.com/report-on-business/economy/housing/mortgage-breakers-ignore-posted-rates-at-their-own-peril/article23527870/?service=mobile

Take Brian, for example. With three years and $520,000 left on his five-year mortgage, Brian (who didn’t want his last name used) is getting ready to sell his Vancouver home in order to downsize. He’s now facing nearly $30,000 in fees to break his mortgage early, a calculation based on the difference between the 5.24 per cent posted rate on his mortgage when he first signed it two years ago and the 3.39 per cent posted rate his bank is offering today on a three-year mortgage (because Brian has three years left on his mortgage.) The bank uses these numbers despite the fact that Brian’s actual mortgage rate is just 2.79 per cent. Had the penalty been based on three months’ of interest payments, it would have been around $3,627.

Brian was prepared to pay some kind of penalty for breaking his mortgage early, but expected it would have been one based on the rate he is actually paying and not the posted rate. “The idea is sound. I’m even OK with how the calculations are done,” he said in an e-mail. “It’s just they use numbers completely unrelated to my actual commitment.”

#150 Victor V on 03.19.15 at 6:16 am

http://www.financialpost.com/m/wp/news/blog.html?b=business.financialpost.com/2015/03/18/conoco-to-cut-7-of-canadian-workforce&pubdate=2015-03-19

Alan Kearns, president and founder of Calgary-based CareerJoy, said his firm had been approached by a number of energy-sector companies looking for assistance in letting staff go.

“This entire year will be like this,” Mr. Kearns said in an interview. He said if oil and gas production companies are cutting jobs, then the engineering firms, construction and oilfield services companies that support the producers are likely to follow suit.

#151 margin disappear on 03.19.15 at 7:30 am

#143 Industrial Guy
So sorry, no cheap parts for you …..

———-

Let’s take out of the argument the non-CSA compliant parts. Let’s talk about parts that are made by the same manufacturer for the same product line.

Let’s even assume that the part is from the same local distributor.

The point you are ignoring to address is that why do services charge 100% margin (on top of the distributor’s margin) on parts they install?

This way you can also discard the emotional selling point of “you’re also paying for a higher level of safety. Isn’t you family worth it?”

In fact, a system that does not allow 100% margin charged to families is safer, since it removes the financial incentive to use “grey market” parts – if they even exist and they are not “simply non-monetary barriers to trade” (as you have pointed out).

Charging families with 100% margin and using the safety of families argument just makes the cynical exploitation of monopolies and predatory pricing to a ridiculous level.

#152 Rob on 03.19.15 at 7:42 am

If the economy is so strong why does the fed have to wait to raise rates? Sounds to me like the old fat person. I am overweight and I will eat like a pig until the end of the year and then start my diet on Jan. 1. You know how long the diet lasts right?

#153 maxx on 03.19.15 at 7:51 am

“We’re all kinda scared, aren’t we? — Garth”

Bulls eye. Direct hit, from what I’ve read over the past year.

The only thing that will cure Canadian borrower’s obscene appetite for debt is rate hikes. Slow, steady and unrelenting- to normalcy. Our economy is extremely distorted and unbalanced because of persistent dumb policy leading to excess debt.

Fiscal stress is a great teacher. It forces people to plan and think and that is clearly not what has been happening since cb diddling with interest rates began.

Where are the buns of steel at the cb? At the fm’s office?

#154 Kris on 03.19.15 at 8:05 am

There’s only one direction for the cost of money as the global recovery progresses, the US expands, Europe gets back on its feet and China moves out of economic adolescence.
————————————-

That’s a a lot of IFs, all strung together.

Let’s be clear – Perhaps ONE rate increase by the US Fed this year is certain. After that, solid economic data needs to emerge, quarter after quarter, for rates to keep increasing. Else, it’s just one step forward, one step backwards (if not two steps back).

Sure, it’s possible that rates double in 5years. But also very possible that rates stay the same. If the world economy is truly poised to pick up steam, the oil prices don’t anticipate that forecasted demand – Quite the contrary.

Many times in the past 3-5 years this blog has asserted that its predictions were imminent, “Hope you listed your house – It has begun” type of sentiments. We all know, “It” has NOT begun – “It” has actually gone backwards.

We’ve got a long, long way to go before SUSTAINED rate increases go from the realm of guesswork to real possibility.

#155 maxx on 03.19.15 at 8:12 am

#63 Drunk Actuary on 03.18.15 at 9:01 pm

Thought so.

I can’t imagine the amount of cash sitting on the sidelines that would otherwise be invested in annuities, given the retiring cohort. A portion invested in these puts a floor under basic expenses and liberates a portion of net worth for the “wants” or bucket lists of life.

#156 The real Kip on 03.19.15 at 8:19 am

Janet Yellen was giving a speech when her batteries went dead. A quick thinking minion shoved her carcass aside and replaced it with the energizer bunny and nobody even noticed. In fact, the bunny gave better “guidance” than Yellen.

Keep the Ponzi going!

Now, just for fun, let’s compare your resume with hers. — Garth

#157 Steve French on 03.19.15 at 8:20 am

Hey Smokey:

As a wise old owl once said. There’s a fine line between an idiot savant and plain idiot.

And tonight, you my friend, are, unfortunately, but very clearly, on the wrong side of that line.

#158 More number spinning from TREB on 03.19.15 at 8:34 am

http://business.financialpost.com/2015/03/17/that-1-million-toronto-home-just-got-even-pricier/

#159 maxx on 03.19.15 at 8:43 am

#73 Roial1 on 03.18.15 at 9:20 pm

“Garth, or anyone, Can you explain this.—

Oil is 100$ bl. Gas =1.35$
Oil 50$ gas= .90$
Oil 43$ gas= 1.20$
Is this care of being screwed? or as I expect Rape. I never even got a kiss. That to me means RAPE!”

Simple, ugly greed.

Skin-stripping shakedown.

No sensible explanation available.
No excuses.
No sense.
Simple greed.
Cartel heaven.

The enabling provincial PTB (because it does vary greatly by province) believe that the cartel have more right to your money than you do.

#160 Ottawa on 03.19.15 at 8:44 am

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

Agree with many of the economic comments here, but believe that the above story has more to it than posters give credit.

#161 Julia on 03.19.15 at 9:08 am

#129 AD
“If interest rates go up, all the marginal companies that are surviving based primarily on low interest rates will suffer / disappear. How can that be good for the stock market?”

If the low rates are the only reason they’re surviving then they have much bigger problems and wouldn’t survive long term in any event.

#162 Julia on 03.19.15 at 9:09 am

#133 Paddler
“Now I heard it all. Who created that financial mess that just about blew up the World’s financial landscape in 2008? Giving people with no jobs mortgages over the phone in less than five minutes? Pretty smart eh.”

Actually, nobody is forced to borrow. People have to make their own decisions.

#163 Sheane Wallace on 03.19.15 at 9:27 am

#136 JimH on 03.19.15 at 12:22 am
==========================
Yes, Babblemaster! Let’s review YOUR assumptions, shall we?
You ASSUME the whole ‘thing’ is BS.
You ASSUME the whole thing is a ‘charade’.
You ASSUME there will ‘probably be another QE’.
You ASSUME that Peter Schiff is one to be believed, even though his track record is dismal.

Yes, we know what happens when you assume!

————————————–
Do your leg work first and then pass judgement.

Peter Shiff is on record (search youtube) predicting the credit bubble and house crash in the US at the time (circa 2005-2007)
Morons were laughing at him publicly on TV, he was kind of the joke on public television. Very entertaining.
Until sudenly he was proven right.

I watch his calls, he might look off, based on timing (he predicted 5 k gold for example) but so far his views were pretty much accurate overwall. He looks at big picture and at the information avaiable and sees trend. It is not that difficult but it takes guts to be contrarian (as Garth here knows).

To say Peter Shiff’s track record is dismal proves ignorance and stupidity, so costly these days.

As for rasing rates meaningflully when the whole world is cutting them and playing currency wars, I would have to wait and see that.

Increasing rates by 0.25 or even 0.5 % is irrelevant, it is like putting lipstick on a pig.
I would need to see at least 6-8 % rates to even remotely consider bonds or money instruments.

#164 Sheane Wallace on 03.19.15 at 9:32 am

#159 maxx

Your money is a credit note owned by the bank and due to the bank. You own nothing. It is an illusion.

As for the gas prices, it is normal, the executives need to maintain that profit margin that justifies their bonuses and this is all that matters.

BTW gas in Toronto is 1.00 today.

#165 OMG on 03.19.15 at 9:43 am

#71 Smoking Man on 03.18.15 at 9:17 pm
Well I had a great day, my son, not so good, I’m thinking about banning him from Trading.. He’s out of control.
Last night we had a talk, it was to early for me to read into fear and greed. I Got a good feeling the FOMC was going to be in a bind, USD so high it’s hurting the recovery, the CEO of Galap poll said Labour stats are funded. But then I was worried Yellen might give a shit about her ego.. More than the recovery.
So I said to my son, no trading today, I told him I suspect the USD might lose a cent or so. But on these types of days you can get wiped out in Milli seconds.
What I dident know or check he had two sells on USDCAD. I trusted he was natural.
After I closed out my 2 million in profit, I log into his account.
Good news is he’s up 20k for the day ,
Bad news he l took a huge hit when he got out, just as I was loading up. Had he not caved he would have made 250k he should set some stops the negate a out.
Why I’m pissed, he should have let me know he wasn’t natural.
I can’t baby sit him…
One more chance I’m thinking. He caught the slidder perfectly, exited to early. Dident fallow rules.
Because he was rattled with the big hit, he was happy to get out with a win..
That’s not how you do this..
Not often you get a 4 big number move in one day.
You guys know where the pic is..
Now it’s time to drink.

;( ;(
Come on SM if you’ve got $2M in profit and on a day with 750 trades in play you’re BSing us. Tax farm slave trades and makes $2M profit………………………..right.
WTF are you doing working as a code smith? See you at Santon Bridge!

#166 Mark on 03.19.15 at 9:47 am

“The only thing that will cure Canadian borrower’s obscene appetite for debt is rate hikes.”

Or spreads/risk premia becoming quite large on account of diminished credit-worthiness due to over-capacity/over-indebtedness. Which is exactly what we’re starting to see. The declining housing market has sapped consumer equity which in turn, is increasing their borrowing costs. Its no coincidence that unsecured borrowing, typically at higher rates than dirt-cheap mortgage credit, has accelerated significantly over the past 2 years of house price stagnation and minor declines.

IOW, I would suggest that the market is taking care of the over-leverage in the consumer sector by increasing the cost of credit, independent of BoC policy which generally exists to target inflation across the entire economy. Since inflation is practically non-existent and will be even more non-existent as consumer balance sheets continue to weaken, there is no reason for policy rate hikes. Indications point more solidly towards the necessity of cuts, especially as such trend accelerates.

“If interest rates go up, all the marginal companies that are surviving based primarily on low interest rates will suffer / disappear. How can that be good for the stock market?””

Some companies actually benefit from higher rates. The TSX, for instance, is full of examples of such firms. Particularly firms with large investments in long-term plant and equipment, which will gain pricing power as higher hurdle rates for investment severely limit the ability of competitors to compete. Also, many firms are heavily indebted in long term obligations, so the rising rate/rising inflation environment depreciates the relative cost of debt service.

For instance, the long-term interest rate is a key input to the NPV analysis of mining projects world-wide, in making investment decisions. If one inserts a higher rate into the analysis, many projects become less feasible and do not move forward. Meaning that, over time, supply is eventually constrained, and prices rise, even with rising interest rates. Additionally, in the rising long-term rate environment, most fixed income investments typically are losing a considerable amount of value (ie: high rates = currency depreciation as I’ve explained on numerous occasions), and historically investors have sought to hoard precious metals and certain other industrial inputs and inventories, obviously enhancing demand for such to the benefit of the producers of such.

#167 Frank le skank on 03.19.15 at 9:47 am

#141 john on 03.19.15 at 1:10 am
Why is nobody complaining about this???

Oil is 100$ bl. Gas =1.35$
Oil 50$ gas= .90$
Oil 43$ gas= 1.20$

Thoughts???
==================================

Polar Vortex?

#168 Trojan House on 03.19.15 at 9:51 am

Now, just for fun, let’s compare your resume with hers. — Garth

Wasn’t it Ben Bernanke who (now infamously) said that there wasn’t a housing bubble just before it collapsed back in 2008?

You should see his resume.

#169 Leroy Washington on 03.19.15 at 9:55 am

#133 paddler:

Who created that financial mess that just about blew up the World’s financial landscape in 2008?

The answer is YOU did. YOU created that financial mess and just about blew up the World’s financial landscape in 2008. And don’t even pretend that you didn’t!

AmeriCUH!!! WOO-HOO!!!

#170 Broke Dick on 03.19.15 at 9:57 am

Actually, I’m inviting everyone over. — Garth

I hope you have at least two washrooms.

#171 margin disappear on 03.19.15 at 10:16 am

#100 OttawaMike on 03.18.15 at 10:23 pm

Now which system do you prefer? The one where anybody can but boiler parts at wholesale and install them ad hoc or where you pay a markup(usually 33%) on the part and have a licensed, insured and safety audited contractor sell and install it for you?

==========

I don’t live in Ottawa, but in our bigger city I have not managed to find that licensed, insured, etc. contractor that works with 33% markup. The markup is 100%.

So the total cost of replacing a $200 part is in a Canadian city as below:

a) initial service call $85-$120 (some use additional ridiculous “truck fee” $55)
b) 1-2 hours diagnosing the issue @ $95-$120 per hour “yes, we do service that make and model”
c) part $400 (with 100% markup)
d) installation min 1 hour $85-$120

Forgot to mention, no guarantee that this solves the issue, the 100% markup does not buy you refund if the already replaced part is not the issue.

Guess what?
The American system looks pretty appealing now.

#172 Cookie on 03.19.15 at 10:16 am

Government are on the side of voters, not renters.
Read about the Fed Meeting from yesterday. US interest rates will grow slower than expected. Search for “Fed dot plot”.

Mortage rates will remain low, very low, for longer.
Painful for us renters who want to buy a house.

Source: http://www.marketwatch.com/story/feds-dot-plot-shows-gentler-path-of-rate-hikes-2015-03-18

#173 LL on 03.19.15 at 10:23 am

At the News yesterday (Yellen):

In resume:

…”We might high interest rates, we might not,…maybe yes..maybe no…maybe in June…maybe in September…..”

bla…bla…bla…Always the same story..

Dans la brume pas mal…….(lots of fog!)

#174 Don Derc on 03.19.15 at 10:27 am

Now, just for fun, let’s compare your resume with hers. — Garth

I have a better, more qualified idea….let’s compare their T4’s instead….

money talks resumes walk.

re: #156 The Real Kip

#175 Ralph Cramdown on 03.19.15 at 10:31 am

#160 Ottawa — “Agree with many of the economic comments here, but believe that the above story has more to it than posters give credit.”

The SCMP more accurately reported the buyer is one of 2,000 members of the CCPPC, which is an advisory, not a legislative, body. He does not run Nanking, nor is he a politician or public administrator. He is, however, a billionaire with a skyscraper-building construction firm, several hotels and a couple of pharma companies. In other words, he epitomizes success and has a house that demonstrates it. Your comment, inferring he is a corrupt official who stole his money, is so typical. Poor Vancouver. — Garth

I think Garth’s comment above highlights the difference between his thinking and my thinking on the issue. I believe that it’s virtually impossible — or at least highly unlikely — to become a billionaire in China without supporting and being supported by various branches of the Communist party, which I believe to be a ruthless suppressor of human rights and a hotbed of corruption. Further, you don’t go from broke to billionaire real estate developer without using a lot of other peoples’ money, and it’s my understanding that the Chinese banking system, in addition to being the instrument of state financial repression (i.e. paying savers significantly less than inflation as a matter of law and public policy, and allowing few other places for capital to be lent), very much lends on the basis of connections rather than sound business plans. In short, I believe that the phrase “legitimate mainland Chinese billionaire” is an oxymoron.

Per other issues, of how much foreign money is in urban Canadian real estate? I believe more than the naysayers think, because I do believe we are a safe haven destination for offshore cash (some dirty, some clean), so it is likely that some of it is disguised behind Canadian straw buyers. Whether Canadians WANT a laissez-faire policy toward foreign residential real estate ownership is another issue again, as is the question of how much legitimate Canadian ethnic buying is confused for offshore money by local xenophobes.

The pro-China and pro-real estate crowd seems all too willing to conflate these issues and tar all opponents with the racist brush. Our man in Ottawa, such an idealistic crusader for human rights in certain conflicts elsewhere, gets a serious case of realpolitik on the China file.

I’ll say no more on the file, as Garth and I will obviously continue to disagree absent new data. But it does rankle me to see these issues continually conflated. I don’t think I’ve personally been called a racist here, except by one poster who labelled me such on the basis of what she imagined I’d say in some situations (you DO get the crazies here), but views I agree with have often been denigrated and wilfully misconstrued, and at least some of the people who’ve done it are obviously smart enough to know better. It’s a cheap debating tactic.

#176 cramar on 03.19.15 at 10:39 am

#15 Lillooet, BC on 03.18.15 at 7:07 pm

I’m debt-free, mortgage-free and rent-free. Don’t even owe a nickel on my credit card ’cause I pay off the balance every month. I don’t have a line of credit or car loan either. All my income is free cash flow. So interest rate fluctuations are a big yawn for me.

——————

Welcome to the club! But you did not mention your significant wealth. I assume, like anyone with sizeable investments, they are directly or indirectly interest rate sensitive. Therefore interest rate changes SHOULD be of major concern.

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

#138 Nodebt on 03.19.15 at 12:47 am
Who wants to live and retire in lilooet? Seriously?

So what’s wrong with Lilooet? Sounds good to me, considering that people actually think Elliot Lake (ONT) is a retirement haven. Maybe it is the glow-in-the-dark atmosphere in winter!

http://www.elliotlake.com/retire/

#177 Smoking Man on 03.19.15 at 10:40 am

For those interested in my trading technical methods.

http://www.investopedia.com/articles/forex/052113/introduction-guerrilla-trading.asp

Again this is very very risky.
Unlike my son, I never use more that 7% of my book at any given time. Need back up to fight a string of bad bets.

I strongly discouraged you from trying this. If you do, make sure you don’t use more than 5% of your net worth in your fx trading account..

Practise daily in a demo account for two years before using real money.

Later debunking the tortoise and the rabbit fable.

#178 Squirrel Meat on 03.19.15 at 10:44 am

#134 nonplused on 03.19.15 at 12:14 am

I know it’s very common these days to “flaunt it if you got it”, and if it’s T&A I’m all in favor. But if it’s wealth to some extent I think it’s vulgar.

So it’s ‘vulgar’ to rent and invest my money instead of buying an inflated pile of stones? Would you be happier if money managers lived in mortgaged bungalows in the burbs? (That would inspire confidence.) Flaunting renters – I think you just invented something. — Garth
——————————————————-
Maybe Garth’s got a great set of T&A’s to flaunt as well…..

#179 Cape Breton is FINISHED on 03.19.15 at 10:46 am

http://business.financialpost.com/2015/03/19/oil-sands-pain-spreads-all-the-way-to-canadas-far-flung-eastern-shores/?__lsa=f06a-9ad4

#180 Squirrel Meat on 03.19.15 at 11:02 am

It’s never dropping in YVR…..

“Last year, I sold a couple of grandparents’ estates, and the parents got the money, and they gave it to the kids to buy houses.”

http://www.theglobeandmail.com/globe-investor/personal-finance/great-jobs-cash-in-hand-but-no-chance-in-hot-housing-market/article23516653/

#181 Blogbitch on 03.19.15 at 11:10 am

I am always impressed with the healthy debate in the comments section of this blog, even if some of the comments are a little out of left field.

I see lots of news about financial literacy education and I can’t help but wonder if we need more of it? The folks who read this blog are arguably above-average in their knowledge of investments, but how do we raise the collective bar so we, as a nation, have a better sense of what to do with our money?

I’m sure this blatant display of hope for my fellow human’s capacity to learn will be met with ridicule by the naysayers on the blog, but heck, someone’s got to ask — What will it take to kick the S out of Sheeple?

#182 Daisy Mae on 03.19.15 at 11:12 am

#62: Garth, Have you succumbed to ads? I’m getting ads popping up as I scroll the comments. And ad tags attached to select words like Bank, Invest, Again (?) etc.

Not me. — Garth

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

This happened to me awhile back. If I remember correctly I went into CONTROL PANEL, PROGRAMS….and deleted the offending download I’d inadvertently picked up somewhere. Harmless enuf — just a nuisance.

#183 Holy Crap Wheres The Tylenol on 03.19.15 at 11:18 am

#160 Ottawa on 03.19.15 at 8:44 am

http://sofard.tumblr.com/post/113616107456/the-decline-of-vancouver
Agree with many of the economic comments here, but believe that the above story has more to it than posters give credit.
_________________________________________
Yep agreed, It is interesting that everyone is bashing the foreign investors that purchase property here. Specifically the Asian investors. I don’t give a dam if an investor comes here to drop a couple cool big ones. It is interesting though that a lot of this investing is unscrupulous if not totally illegal. The only codicil I would like to have is if you invest here, you actually need to reside here for a certain number of weeks, months or a to be determined number of days. This and this only can help the local economy generate some revenue. As for the bomb dropped who come here to purchase property as a safe haven in order to launder or hide their foreign assets we need a reciprocity agreement with the investors nations to let them know how is dropping big fat ones here and for how much. Lets see how many real investors muddy the waters then.

http://www.nytimes.com/2015/02/08/nyregion/stream-of-foreign-wealth-flows-to-time-warner-condos.html?_r=0

#184 Nemesis on 03.19.15 at 11:19 am

“Actually, I’m inviting everyone over.” — HonGarth

#[email protected]’s!… #It’sEASTER!,Or… #HaveYouEverSeenAnEquinoXBunny?… #RogerMooreHas… #SomethingForEveryOne…

https://youtu.be/8UhvcEJEfU8

#185 industrial Guy on 03.19.15 at 11:21 am

“The point you are ignoring to address is that why do services charge 100% margin (on top of the distributor’s margin) on parts they install?

In a word … they can.

Professionals can only charge what the market will bear. If no one was willing to pay the 100% margins …. these prices would fall.

‘Predatory Pricing’ ????? That’s when prices are set low in an attempt to eliminate the competition. Walmart has turned this into an art.

I thought you’re entire argument was about overly generous margins.

National safety standards tend to be duplicates with small variations of each other. The CSA has ratified a number of IEC standards over the last decade. As I said, some are simply non-monetary barriers to trade. Grey market products are a growing problem in Canada. It’s an International crisis in the aircraft parts industry.

Sounds like a great business …. we should all get our gas fitters license.

Do you prefer the US system where safety is driven by fear of a law suits and there are little or no requirements for professional competence. I trust carpenters to hammer wood together. Installing gas appliances … not so much.

Gas safety is not a straw dog …. remember the LaSalle Heights Disaster disaster.

#186 Roy on 03.19.15 at 11:24 am

Dollar-a-day mortgage offered by B.C. condo developers

http://www.ctvnews.ca/business/dollar-a-day-mortgage-offered-by-b-c-condo-developers-1.2287496

They must have heard the Fed is about to embark on rate hikes this year.

Desperation, masked as competitiveness

#187 Realtor007 on 03.19.15 at 11:30 am

RE sales in the GTA are increasing at a rapid pace, a 10% increase in prices in the next 12 months is not out of order.

Rate increase? maybe 25-50 basis points in the next 4 years, hardly anything to worry about.

Sure thing. Keep telling your clients that. Very responsible of you. — Garth

#188 Squirrel meat on 03.19.15 at 11:42 am

Keystone is dead, dead and deader. Obama wants a legacy other than the Nobel peace prize droner.

http://news.nationalpost.com/2015/03/19/obama-to-order-government-to-cut-its-greenhouse-gas-emissions-by-40-as-u-s-hopes-to-spur-global-change/

#189 Armando on 03.19.15 at 11:43 am

I don’t see how rates doubling over the next 5 years could possibly be good for the overvalued stock markets we have around the world (and the US of A in particular). On the other hand, I don’t think rates will go up that much if at all – Mistress Yellen will get cold feet once she starts seeing the market busting and US dollar boosting effects of higher rates.

Rising rates mean economic growth. Growth means more corporate profitability. That results in higher stock values. People here sure do obsess about extremes. — Garth

#190 CalgaryRocks on 03.19.15 at 11:43 am

#162 Julia on 03.19.15 at 9:09 am
#133 Paddler
“Now I heard it all. Who created that financial mess that just about blew up the World’s financial landscape in 2008? Giving people with no jobs mortgages over the phone in less than five minutes? Pretty smart eh.”

Actually, nobody is forced to borrow. People have to make their own decisions.

So the people that created the system, made billions off of managing it, marketing it and then spreading it across the planet by selling collateralized mortgage backed securities have no blame? BS

#191 Pre-Retiree on 03.19.15 at 11:44 am

To #15 Lillooet, BC: I’m debt-free, mortgage-free and rent-free. Don’t even owe a nickel on my credit card ’cause I pay off the balance every month. I don’t have a line of credit or car loan either. All my income is free cash flow. So interest rate fluctuations are a big yawn for me.

I used to be a city-dwelling condo-owning corporate slave and an income-tax-paying road rage, latte sucking, stressed out mortgage serf … then I finally found out the secret to life. It’s called Freedom 35. A financial plan I developed on my own, and it’s all legal and ethical. And I don’t have to shovel 50 cm of snow on a March 18th. And no, I didn’t marry or inherit a big pile.

But you guys don’t want to know about it.

________________________

Good for you! You must have been very disciplined and worked hard to arrive where you are. I truly think you deserve it.

But why brag about it? If I did not know better, I would think it shows insecurity to have to show off this way.
Almost sounds like Freedom First, and you know what some of us think about him.

#192 millennial cowboy on 03.19.15 at 11:46 am

Gartho: Yellen’s resume reads like every central bank employee’s…. completely lacking any private sector (real world) experience.
They are all just a bunch of ivory tower academics who really really believe in their theories.
This time is different?!

#193 World View on 03.19.15 at 11:50 am

Assumptions made by Garth:
1. US Fed is always right no matter what they do!!! Let us forget that 2008-09 crisis ever occured. It was an outlier, oversight and will never happen again. Although the Fed didnt know what to do before the crisis it has learnt and is capable of handling any eventuality in future. (Forget 2000 dot.com crash too, forget 1929, 1937 ).
2. Bonds and Stocks are “always” negatively correlated.
3. I am the smartest person in the whole world.
4. Real Estate in Canada is in a bubble, but stock markets and/or soveriegn debt markets (especially the US Treasuries) can “never” ever be in a bubble. (Where will people go if not into treasuries for safety??!!) Forget the trade deficits that US has run for 40 years!!!
5. Fighting deflation through monetary policies is correct, because what will happen if prices fall. (Despite any efforts by monetary authorities, prices fall anyways!!!!!! Isnt that a failure of monetary policies?)
6. Never question the independence of US Fed, ECB & Japanese Central bank buying their own soveriegn debt. Hey, they should also buy stocks and corporate bonds if need be. But insuring real estate through Fannie Mae and CMHC is always a bad idea, because that is a Government body.

good luck investing.

Cheers,

I’ll take “3” for a thousand bucks, Alex. — Garth

#194 Nagraj on 03.19.15 at 11:51 am

. . . a deflating housing bubble (if not yet in Toronto and Vancouver), stagnant incomes [I’m repeating Garth’s third paragraph supra] rising unemployment, and record household debt. Next to no hope for raw materials exports.

The PM is “not unconcerned”, and adds “we” (his gov’t) will take some sort of as yet unspecified action in the future.

I get a sense of: creepy. (As in: Harper’s a creep.)

There’s also something creepy about how some of the Alberta oil workers were let go – note shoved under the door in the wee hours, hitchhike home, condiments in the cafeteria just disappear . . .

The somnambulant doorknob sucker from North-of-Montana, this fat-lipped Teletubby PM, his Revived Egyptian Mummy FinMin, and cabinet crew of pudgy Cons savants are going to budget for what?

(Condoronto’s skyline is creepy-lookin’ too.)

Creepanada.

#195 Roy on 03.19.15 at 11:54 am

Another myopic view of the herded buyer

http://globalnews.ca/video/1891043/mortgage-wars-heat-up-vancouvers-already-hot-real-estate-market

Asian lady in Vancouver tells others to go back to where they came from so they can get their house

LOL

#196 estrella on 03.19.15 at 12:07 pm

a little off topic, but Yellen has a valuable stamp collection. I guess this is an example of how to hedge against mainstream economics, diversify. Love the history of stamp collecting myself…(interesting way of passing on inheritence to future generations too…., right Garth?)

So if rates go to 5% are we better off to sell our balanced portfolio and go into guaranteed investments like Gic’s? Most people rely on the 4% rule for financial independence. Which would be met without risk outside of equity funds in this scenario.

So Garth can you look inside your Crystal ball and tell me If rates go up what happens to the stock market?

Nothing. And rates won’t achieve 5% for a long time. — Garth

#197 estrella on 03.19.15 at 12:13 pm

P.S Stamps are much better than Beanie Babies. Be careful what you choose to collect.. just saying..

#198 JimH on 03.19.15 at 12:19 pm

#163 Sheane Wallace

re: Peter Schiff:

Sheane, here’s a little unbiased ‘legwork’ for you.

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

Read ’em and weep! Or better yet, please tell us how you would have made a red cent following his advice for the past, say 5-6 years!!!!

#199 Frank le skank on 03.19.15 at 12:26 pm

#177 Cape Breton is FINISHED on 03.19.15 at 10:46 am

—————–

LOL……..Classic!!!!

#200 4 AM Sunrise on 03.19.15 at 12:39 pm

#134 nonplused on 03.19.15 at 12:14 am
My only question is why do you, your wife, and a dog need to live in a $2 million dollar home? Seems you could plow a portion of that rent into something else and still live quite well.

If it’s within his means, he’s free to do whatever he wants. Otherwise, what’s the point of anything?

And I think you underestimate his net worth.

If he actually bought that $2 million home in cash (which he can), maybe that would be vulgar.

#201 Smoking Man on 03.19.15 at 12:39 pm

#165 OMG on 03.19.15 at 9:43 am.
Ha, damn it, I’m busted.

I boast about being a masterfull skilled lier on a weekly basis.. Of course I’m bull shiting about making 2 million in one day. It was actually a bit more., damn there I go again. Lying.. I have issues.

750 contracts 1.27901.2518

An imposably..

I’m A compulsive lier.. , some people collect stamps.

Get over yourself..

#202 Pete on 03.19.15 at 12:40 pm

john on 03.19.15 at 1:10 am
Why is nobody complaining about this???

Oil is 100$ bl. Gas =1.35$
Oil 50$ gas= .90$
Oil 43$ gas= 1.20$

Thoughts???
_______________________________

It’s because of the refineries in the US
That are either on strike or shut down for maintenance or whatever bs excuse they are given. Supply of gas vs demand equals price. Would be nice if canada would refine our own gas but the US would never allow that. The US will never allow Canada to have our own industries as they would bomb us. That’s why no canadian car company and they took down Avro arrow and Nortel and now trying to take down BlackBerry. Make no mistake the US doesn’t want Canada to become an economic power house. We have the resources the talent and man power to do anything.

#203 OMG on 03.19.15 at 12:52 pm

#180 Smoking Man on 03.19.15 at 12:39 pm
#165 OMG on 03.19.15 at 9:43 am.
Ha, damn it, I’m busted.

I boast about being a masterfull skilled lier on a weekly basis.. Of course I’m bull shiting about making 2 million in one day. It was actually a bit more., damn there I go again. Lying.. I have issues.
750 contracts 1.27901.2518
An imposably..
I’m A compulsive lier.. , some people collect stamps.
Get over yourself..
………………………………………………………………………
Over it already, just take it easy on the mendacities. Your excursions into the netherworlds bounce too much. The alien shit we can take, the womanizing, self-absorbed shit and such but get a hold of yourself when you start fabrications of colossal advances on the market. We will start to skip past your best shit.

#204 tkid on 03.19.15 at 12:54 pm

#201, the US will never bomb us. Get a grip, dude.

#205 Julia on 03.19.15 at 12:57 pm

#189 CalgaryRocks

“So the people that created the system, made billions off of managing it, marketing it and then spreading it across the planet by selling collateralized mortgage backed securities have no blame? BS”

I didn’t say that. Both sides share some blame. I just get tired of hearing that people get into debt trouble because of the big greedy bankers, or because of the Government, or immigrants or whatever the reason is except their own selves.

#206 S. Bby on 03.19.15 at 1:02 pm

living in Lillooet, BC

Nothing wrong with small towns IMO. I don’t see the point in living in TO or Van unless you need to be there for employment. If moving to a smaller town, make sure there is accessible health care. I know a guy who retired to Princeton BC from Vancouver and it was great until he needed medical care and he had to drive to Kamloops repeatedly.

Lillooet may be a bit too small for my taste.

#207 Finland is FINNISH on 03.19.15 at 1:10 pm

“2 of my ETFs :

1) VUN (total US)
2) XIU ( tsx 60 )

both went down today while the indexes they follow went up. It doesn’t make sense to me.”

Can’t speak for XIU, but VUN is unhedged and the US dollar dropped like a rock yesterday, so that’s why VUN went down even though US markets were up. I suspect you like today’s results better.

#208 Treasury Blonde on 03.19.15 at 1:14 pm

Appears that the MSM is slowly abandoning its current paymaster, the RE industry, and starting to make room for ads for collection agencies, grief, finance and marriage counselors.
Good times ahead.

#209 Treasury Blonde on 03.19.15 at 1:18 pm

DELETED (Defamatory)

#210 maxx on 03.19.15 at 1:23 pm

#164 Sheane Wallace on 03.19.15 at 9:32 am

“#159 maxx

Your money is a credit note owned by the bank and due to the bank. You own nothing. It is an illusion.

As for the gas prices, it is normal, the executives need to maintain that profit margin that justifies their bonuses and this is all that matters.

BTW gas in Toronto is 1.00 today.”

That vaporous “illusion” still seems to work really well for people and, amazingly, actually buys stuff. Has done for ages.

I saw know-it-all corporate robots like you coming down the pipe at the tender age of 19. I had more amusing things to think about, however, fortunately decided to prepare accordingly and devoted attention to understanding value and building a vault of “illusion”.

As for so many “executives” and their screw-the-consumer profit margins, I always vote with my wallet and buy most everything at 50%-90% below retail. “Only fools pay retail” is one of the tenets which can help create a lot of “illusion”.

The choice belongs to the consumer: either keep your “illusion” or hand it over to scummy little pinstripes.

Your beloved executive army spends a gargantuan amount of time in the consumer optimization loop. They almost always get it wrong, resulting in constant course correction, price reductions and huge corporate waste.

Btw, you’re paying too much for your gas.

#211 kommykim on 03.19.15 at 1:29 pm

RE:#203 tkid on 03.19.15 at 12:54 pm
#201, the US will never bomb us. Get a grip, dude.

Exactly. Why would you bomb your puppet?

#212 Babblemaster on 03.19.15 at 1:35 pm

#136 JimH

Yes, Babblemaster! Let’s review YOUR assumptions, shall we?
You ASSUME the whole ‘thing’ is BS.
You ASSUME the whole thing is a ‘charade’.
You ASSUME there will ‘probably be another QE’.
You ASSUME that Peter Schiff is one to be believed, even though his track record is dismal.

Yes, we know what happens when you assume!

——————————————————-

The word “assume” was used in the sense that since the Fed is providing no real candid guidance as to what they will do with rates (I listened to Yellen’s double-speak and she basically said nothing of substance), my question is, “Are we to assume” what she will do. This is a perfectly reasonable question to ask since the Fed just speaks carefully crafted BS with no real substance. How could anyone listen to her and arrive at any other conclusion?

So, your attack is not is simply not warranted. Besides, my statements are ASSERTIONS based on my observations and reasoning. They are not “ASSUMPTIONS”. The assumption is to take for granted that the Fed will raise rates

So, let’s take your comments one at a time:

“You ASSUME the whole ‘thing’ is BS.” No, JimH, I assert the whole thing is a BS dog and pony show with no real substance.

“You ASSUME the whole thing is a ‘charade’.” No, same as above.

“You ASSUME there will ‘probably be another QE’.” No, I’m of the OPINION that there will PROBABLY be another QE. That’s because I’m of the belief that there is no real substantive recovery in the US, amongst other reasons.

“You ASSUME that Peter Schiff is one to be believed, even though his track record is dismal.” No. I didn’t say that, or even hinted at that. Maybe, JimH, you’re the one assuming that his track record is dismal. While some of his calls have been somewhat off, he was actually spot on about the 2008 debacle. So, his opinion deserves some respect. Regardless, he makes a lot of sense in terms of the unsustainability of this endless QE crap. He’s the one telling us the emperor has no clothes and many people scoff at him because of that. They just don’t want to hear it.

#213 Nemesis on 03.19.15 at 1:48 pm

…”In other words, he epitomizes success and has a house that demonstrates it.”… – HonGT

#CrikeyGT,YouForgot….#Chen’sFourComprehensives!…

…“Advanced Individual in Contributing to the Construction of Pukou”, “Outstanding Private Entrepreneur of Nanjing”, “Star of a Honoured Enterprise,” and “Model Worker of Nanjing City”…

#InOtherNews… #PointGreyNeighbourhoodAssociation… #RescindsChen’s… #RogueGardenOrnament… #DevelopmentPermit…

http://tinyurl.com/l2rh8rg

#DuckSoup,AnyOne?…

https://youtu.be/qSabiG8q8-k

#Ooops…

[SCMP] – China sheds light on its quest to track down fleeing officials

…”US federal prosecutors contend Zhao and Jianjun Qiao falsely claimed to be married and lied about their source of money to obtain US visas through an immigrant investor programme.

An indictment unsealed on Tuesday in Los Angeles charges them with conspiracy and other crimes.”…

http://www.scmp.com/news/china/article/1741458/china-sheds-light-fox-hunt-its-quest-track-down-fleeing-officials

#214 Treasury Blonde on 03.19.15 at 1:51 pm

#208 Treasury Blonde on 03.19.15 at 1:18 pm
DELETED (Defamatory)
——————-
Garth, understand the Italians are now off limits.
But can we still stereotype the Germans? :)

#215 Treasury Blonde on 03.19.15 at 1:52 pm

I wonder how long it will take RE agents to retrain to work as collection officers?

#216 margin disappear on 03.19.15 at 1:59 pm

184 industrial Guy on 03.19.15 at 11:21 am
“The point you are ignoring to address is that why do services charge 100% margin (on top of the distributor’s margin) on parts they install?

In a word … they can.

Professionals can only charge what the market will bear. If no one was willing to pay the 100% margins …. these prices would fall.

Sounds like a great business …. we should all get our gas fitters license.

Do you prefer the US system where safety is driven by fear of a law suits and there are little or no requirements for professional competence. I trust carpenters to hammer wood together. Installing gas appliances … not so much.

Gas safety is not a straw dog …. remember the LaSalle Heights Disaster disaster.

—-

They can, because the system is rigged against the customers, who don’t even know that the markup is 100%.

Contractors are not even willing to break down the cost of parts without their markup, even if requested.

Go figure the market does not regulate the price.

By the way, fear of lawsuit is probably a more effective safety guard than any license. Licenses did not prevent to fall apart a mall in Canada, as we heard recently, causing fatalities.

Stats is the only hard proof that which system is safer.

But stop arguing about non CSA parts, non-licensed installers – that’s not the issue, as you are well aware of.

The issue is that costumers should have the right and ability to know the price of the parts before markup and have the choice to purchase them from legit suppliers if the licensed technician wants to charge 100% markup.

There you go: everything is as safe as before and the market makes the 100% markup disappear instantly.

#217 jess on 03.19.15 at 2:07 pm

What no tracking chips in them…what is wrong with you?

Pentagon Loses Track of $500 Million in Weapons, Equipment Given to Yemen (by Craig Whitlock, Washington Post)
Military Weapons Given to Police have Gone Missing (by Steve Straehley, AllGov)

Uncle Sam’s Favorite Corporations by Philip Mattera and Kasia Tarczynska
March 2015
Identifying the Large Companies that Dominate Federal Subsidies
http://www.goodjobsfirst.org/sites/default/files/docs/pdf/UncleSamsFavoriteCorporations.pdf

Banks Say “Thanks for the Bailout,” Now We’ll Park our Profits in Overseas Tax Havens
http://www.allgov.com/news/where-is-the-money-going/banks-say-thanks-for-the-bailout-now-well-park-our-profits-in-overseas-tax-havens-150316?news=855961

#218 Smoking Man on 03.19.15 at 2:11 pm

#214 Treasury Blonde on 03.19.15 at 1:52 pm
I wonder how long it will take RE agents to retrain to work as collection officers?
……
BEACH GIRL is that you?

#219 Bailing in BC on 03.19.15 at 2:19 pm

#194 Roy

Listen again – That woman absolutely did not tell anyone to go back to where they came from so they can get their house.

What she did say was “Why can’t they go back up to where they were before, then we would probably be able to find a place”. I believe that she was talking about mortgage rates. She understands that if mortgage rates were higher house prices would go down. – One of our blog dogs perhaps? Unfortunately the piece barely touched on it as it was one of the most interesting comments made.

Also that “Asian woman” (and everyone else in that segment) sounded pretty Canadian to me. I hope you weren’t suggesting that they should go back to where they came from.

#220 Ralph Cramdown on 03.19.15 at 2:21 pm

#212 Nemesis — #InOtherNews… #PointGreyNeighbourhoodAssociation… #RescindsChen’s… #RogueGardenOrnament… #DevelopmentPermit…

C’mon, Nem. Clumsily photoshopped banner aside, that photo is obviously of Chip Wilson’s place.

#221 DisgustMadeMePost on 03.19.15 at 2:26 pm

#175 Ralph Cramdown on 03.19.15 at 10:31 am

Re: SCMP article…

Well said. I have to agree with you.
I have often wondered about our zeal for foreign money even if it means keeping our heads in the sand when looking at human rights violations. Sometimes unbecoming of what I grew up believing about Canada.

I know, I know.. Violins are playing.. But when I was young, I thought the Prime Minister sat next to God. Was a shock, believe me. But I digress ..

Also, curious if the new home was purchased with money made and taxed in Canada ?

Still unclear if he is a New Canadian or a foreign investor.
And yes it makes a difference. So much is thrown around here about how there is no appreciable foreign money owning real estate here. Well. Is he a new Canadian? Or is he not?

Irrelevant. There is no law in Canada (or the US) preventing a non-citizen from buying property. — Garth

#222 DisgustMadeMePost on 03.19.15 at 2:39 pm

Of course it’s relevant.

If he’s not a new Canadian then foreign money is clearly huge in at least YVR. So lets stop pretending it isn’t. He happens to have a lot of it but think of how many foreign investors maybe only have enough for a 5 mil dollar place.

Yes I know there is no law against but isn’t that the point that a lot of blog patrons bring up? MAKE ONE. People on the street are feeling sold out.

The regular schmoe, the one you’ve been trying to educate, may be at risk of having the same thing happen to him and his vacation house in Arizona, but so what?

#223 Daisy Mae on 03.19.15 at 2:39 pm

“Actually, I’m inviting everyone over.”

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

OMG! NOW you’ve done it…

#224 Mark on 03.19.15 at 2:41 pm

“2 of my ETFs :

1) VUN (total US)
2) XIU ( tsx 60 )

both went down today while the indexes they follow went up. It doesn’t make sense to me

There’s an incredibly simple answer to your question — XIU went “ex-dividend” yesterday. So 15 cents was deducted from the NAV, and should have been added to the dividends receivable account by your broker.

#225 Realtor007 on 03.19.15 at 2:58 pm

#215 margin disappear on 03.19.15 at 1:59 pm

Your argument is so ridiculous, show me one business that is selling a product, any product that is not marked up? how do you think businesses make money? When you get your car fixed the part is marked up, your cost is not just labour, if you go to napa auto parts or any other part store to buy a part without a license you will get a part sold to you at retail, on the other hand the mechanic gets it at wholesale, that is the perk you get when you hold a license.

when you buy a banana/mango smoothie the fruits are marked up, that is the fact of business.

100% markup is chump change, many products see hundreds and even thousands of % in mark up at the cash register

#226 Raisemyrent on 03.19.15 at 3:03 pm

Smokey don’t take their shit man! Of all people I know you don’t care but just saying.
I used to skip his posts, now I word search to find them and it’s laughter (dressed with observation) guaranteed. Maybe it was the book, flak, or I just got his humour, but there’s definitely been a change for the good on what he posts so cherish it!

#227 Mark on 03.19.15 at 3:08 pm

“Dollar-a-day mortgage offered by B.C. condo developers”

Yet another example of price cuts seen in the Vancouver RE market (and, of course, downplayed/covered up by the RE board and their “statistics” which fail to properly acknowledge the dramatic shift in the sales mix that we all know has occurred over the past 2 years). The cost of such incentive must be in the several tens of thousands of dollars. Really unfortunate that the Realtors aren’t being fully forthright and up-front with the public with the state of the Toronto and Vancouver RE marketplaces and the declines seen there over the past 2 years.

#228 sue on 03.19.15 at 3:09 pm

#50 Yes, the rents are skyrocketing in Hamilton/Dundas/Ancaster area. Vacancy rate is suddenly very low at 1% probably because people are priced out. Also, no one is interested in creating rentals…maybe no money in that. It’s just scary here…and if you have pets, you are screwed.

#229 rosie "moving forward" in the knowledge that, "this won't end well" on 03.19.15 at 3:10 pm

If this story is any indication then the next federal budget is going to really be a doozy.

http://news.nationalpost.com/2015/03/19/federal-government-shutting-down-plant-that-employed-50-people-with-developmental-disabilities-for-35-years/

#230 Entrepreneur on 03.19.15 at 3:16 pm

When complaints come in continually (racist or not) the government should look into the matter with facts and figures (weather you believe in it or not). Who is buying and with what money? This is not only for the Canadians but to protect money laundering from other countries. I believe in law if found guilty, one cannot answer with “I didn’t know” does not apply but maybe only with government (only in democracy).
Capitalism versus Communism

#201 Pete on U.S. controlling us and “we have the resources, the talent and manpower.” B.C. (British Columbia) is rich in resources and the States would love to own it. If Alberta separates (as mentioned in media), how long to you think B.C. would last in Canada? Oh, on the other hand, how long would our politicians last with Anderson Cooper on CNN? (they watch every gesture). Interesting times ahead.

When an activity (non-citizens buying property) is legal, why should the government investigate? — Garth

#231 Ying Yang :):( on 03.19.15 at 3:20 pm

#95 Smoking Man on 03.18.15 at 10:12 pm
Woman is all I’m saying.
I have problems.. I know.
Honey Senica tomorrow night?
Ah she’s smiling again….
;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;

So the gambler is back at Seneca, Haven’t been in a while going Sat with GF.
:)

#232 Sheane Wallace on 03.19.15 at 3:26 pm

#197 JimH

It all depends on the timeframe, just wait…

#233 Sheane Wallace on 03.19.15 at 3:28 pm

#209 maxx

It seems we have more in common then differences.
It was a joke attempt…

I loved your original posting. I migth trade mark it with your permission.

#234 Darryl on 03.19.15 at 3:31 pm

Garth
You said
“First the massive ($85 billion a month) bond-snorfling program was ended last autumn.”

Maybe I don’t understand but if they stopped buying when do they start selling? or do they? And what will happen if they start selling ?

#235 rosie "moving forward" in the knowledge that, "this won't end well" on 03.19.15 at 3:58 pm

A reprieve, sort of. Still these people need a union, $1.00 p/hr is patronizing. Fun to watch the cons squirm though.

http://ottawacitizen.com/news/politics/ministers-vow-to-help-laid-off-disabled-workers-find-jobs

#236 Nemesis on 03.19.15 at 4:06 pm

#@RosièForwardMovingKnowledgeEndsWell… #TheBritishTemplate,Or*… #FiftyShadesOfSodomy… #Osborne’sBudget(*WithALittleHelpFromSteveBell)…

(Guardian) – George Osborne’s last budget before the election was full of giveaways

http://www.theguardian.com/commentisfree/picture/2015/mar/19/steve-bell-on-the-budget

#TheUnsavouryDetails…

(Guardian) – Clinical commissioning groups are looking for private company to take on £1.2bn contract in biggest privatisation of NHS services yet

…”Cancer care for patients in Staffordshire could be cut after it is taken over by profit-driven firms in the biggest privatisation of NHS services yet, campaigners are warning.

Handing the £700m contract to the private sector could see hospices closed, less money being spent on treatment and patients left at risk of experiencing poor care, they claim.

The fears follow the publication on Monday of a secret document prepared by the four local NHS clinical commissioning groups (CCGs) in Staffordshire involved in the outsourcing deal to rouse interest in the contract among private firms.”…

http://www.theguardian.com/society/2015/mar/16/privatisating-nhs-staffordshire-cancer-care-harm-patients-campaigners-say

#BonusPrivatisation!,Or… #”HowDareYouBurstIntoDr.Tinkle’sRoom!”

https://youtu.be/eNNhuvox43I

#237 margin disappear on 03.19.15 at 4:07 pm

#224 Realtor007

when you buy a banana/mango smoothie the fruits are marked up, that is the fact of business.

100% markup is chump change, many products see hundreds and even thousands of % in mark up at the cash register

———

Learn to read… nobody was arguing against markup.

Name me any equipment for residental/consumer market with “hundreds and even thousands of % in mark up at the cash register” on top of the distributor price.

You are sloppy, I would never hire you as RE agent.

#238 aL pacino on 03.19.15 at 4:09 pm

#45 the show must go on! on 03.18.15 at 8:06 pm
#14 Sideshow Rob on 03.18.15 at 7:07 pm

That steaming bag that Bernanke left on your desk wasn’t lunch.
——————————————————————–Sideshow, that is funny lol. but true. Bernanke bailed before TSHTF.

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

*Bernanke would never have a problem refinancing his mortgage in canaduh,i’d tell you what.
I guess that says pretty much all about the difference between yanks and canada in terms of easy money.

#239 X on 03.19.15 at 4:14 pm

#73 Roial1 on 03.18.15 at 9:20 pm

Garth, or anyone, Can you explain this.—

Oil is 100$ bl. Gas =1.35$
Oil 50$ gas= .90$
Oil 43$ gas= 1.20$

Compare those prices and when they were, to what our dollar was trading at. It will all come together…

#240 Roy on 03.19.15 at 4:22 pm

#218 Bailing in BC

Maybe you are right, just sounded odd when I heard it. No, I wasn’t insinuating that at all.

#241 Oil Is Sticky on 03.19.15 at 4:29 pm

http://www.cnbc.com/id/102518574

No rate hikes.

Okay…..now its time to hear some “FEAR PORN” about why we must have rate hikes.

#242 Oil Is Sticky on 03.19.15 at 4:36 pm

#201 Pete on 03.19.15 at 12:40 pm
john on 03.19.15 at 1:10 am
Why is nobody complaining about this???

Oil is 100$ bl. Gas =1.35$
Oil 50$ gas= .90$
Oil 43$ gas= 1.20$

Thoughts???

—-

Let’s see…….Tax me I’m Canadian? Canadians are sheep? The only difference between Canada and Russia is the AK-47?

#243 Exurban on 03.19.15 at 4:37 pm

#175 Ralph Cramdown

When they call you a racist it means they’re losing the debate.

Your points are well stated; I’d just add that whenever you hear about a Chinese anti-corruption drive you should take it with a grain of salt. These crusades against corruption are either (1) the Chinese version of boob bait for bubbas or (2) very selective action against corruptocrats which is actually a struggle between party factions. An enormous amount of money will continue to flow out of China — everyone who’s gotten some wants a foreign bolthole.

#244 Smoking Man on 03.19.15 at 4:41 pm

#66 Holy Crap Wheres The Tylenol on 03.18.15 at 9:07 pm
Rates will raise this year, guarantee it! Perhaps third quarter but Garth is correct! Sorry kiddies the free ride is over. Oh it’s going to be hell out there with all of the minions of house horny overstuffed people saying WTF happened? Karma baby!
………

Well now that you’ve sold your oakville mcmansion, I know you would be going to the dark side.

Attention Basement Dwellers.. You have a new member for your team, he’s a pilot. Old all the same, perhaps he can be trained to fly drones. Drop bombs on real estate hawks.

On behafe of all the proud Home owners of Greater Fool.

We bid you farewell and good luck, with you new friends.

#245 waiting on the westcoast on 03.19.15 at 4:52 pm

#240 Oil Is Sticky on 03.19.15 at 4:36 pm

“Let’s see…….Tax me I’m Canadian? Canadians are sheep? The only difference between Canada and Russia is the AK-47?”

and the will to use it… although, I am happy for those differences!

#246 Realtor007 on 03.19.15 at 5:23 pm

#236 margin disappear on 03.19.15 at 4:07 pm

Next time you order a smoothie ask them to break down the banana, mango, labour and all business costs, ask them what the mark up is…LOL, the ‘WTF’ look you get afterwards will reveal how ridiculous your whining is.

Whiners like you get fired as clients not hired, a business practice followed by anyone successful.

#247 jess on 03.19.15 at 5:24 pm

on this site is says it sold out?
http://www.buzzbuzzhome.com/144-park/photos

The 19-storey 144 Park building — at the corner of Park Street and Allen Street West — contains 149 units, 129 of which have been sold, but liens against the property mean Mady is unable to close the deals on the remaining 20 units or provide the current owners with titles to their property.

http://www.waterloochronicle.ca/news/mady-mayday/

#248 Bottom Feeder on 03.19.15 at 5:50 pm

RE: #24 Oil is Sticky and #210 Pete

Sorry number 24. Check your numbers better. I believe you are saying gasoline was $1.35 when oil was $100/bbl and $1.20 when oil is $43/bbl (like right now)

There is no place in Canada where the numbers are in that proportion. If you think there is tell me the city and I will check it with Gas Buddy charts that are available at Gasbuddy.com. Enjoy your cheap gas.

#249 Victor V on 03.19.15 at 5:53 pm

http://business.financialpost.com/2015/03/19/oil-sands-pain-spreads-all-the-way-to-canadas-far-flung-eastern-shores/?__lsa=8584-14b1

“If I were to ask the agents in this office, some of them would say up to 75% of their business is based on oil,” said Valarie Sampson, a real estate agent in the Cape Breton city of Sydney.

Sampson says that though sales are slowing, she does not expect to see the full effect of the oil downturn until the spring, when sales are usually the busiest.

The largest airport in Cape Breton saw passenger numbers fall by 1.9% in January and then 4.8% in February, a drop airport officials are attributing in part to oil worker related traffic.

Helen MacInnis, the airport’s chief executive, said much of that decline followed a decision by the charter service Canadian North to halve the number of flights between Sydney and Fort McMurray.

Ron MacDonald, general manager of Cape Breton-based dealership MacDonald Auto Group, said sales of the big, expensive pick-up trucks favored by oil sands workers have recently slowed down.

“They’re not sure about their jobs right now,” he said.

#250 Oil Is Sticky on 03.19.15 at 6:33 pm

#246 Bottom Feeder on 03.19.15 at 5:50 pm
RE: #24 Oil is Sticky and #210 Pete

Sorry number 24. Check your numbers better. I believe you are saying gasoline was $1.35 when oil was $100/bbl and $1.20 when oil is $43/bbl (like right now)

There is no place in Canada where the numbers are in that proportion. If you think there is tell me the city and I will check it with Gas Buddy charts that are available at Gasbuddy.com. Enjoy your cheap gas.

——

Cheap gas huh? $1.20 is cheap? You must be one of those “I make 100K working for the govt” people.

http://www.vancouvergasprices.com/

#251 45north on 03.19.15 at 7:39 pm

Mark: The current regime, where the mortgage lenders will simply “put” the paper to the CMHC if it defaults, rather than deal with assumptions and dollar sales, guarantees a much different landscape than we saw in the 1980s though. Liquidation will be far more rapid and violent I predict than the relatively slow melt experienced in the 80s and 90s for Alberta RE.

in Ontario, the banks have “power of sale”. Presumably they must exercise it in order to have a claim. This takes some time (90 days I think). Are you talking about Alberta only?

Travelin Fool: China now claims that as much as 1.4 trillion dollars has gone unaccounted for and they are launching a massive audit of all COE’s around the globe.

which basically backs up this article by Michael Shedlock: Hedge fund manager Jim Chanos, who has a long-running bet against China, said that the country’s credit bubble was starting to cause capital outflows to accelerate and may ultimately lead to weakness in the nation’s currency.

http://www.financialsense.com/contributors/michael-shedlock/imf-fears-taper-tantrum-rear-view

nonplused: The process by which oil was created is quite well understood

thanks for that

norstarr: so lets play the numbers and place bets on the fed budget: bet large on a reining in of CHMC look for lower principal purchase price limits.

I’d like to think so.

#252 industrial Guy on 03.19.15 at 8:04 pm

#215 margin disappear on 03.19.15 at 1:59 pm

Clearly business is a mystery to you.

“The issue is that costumers should have the right and ability to know the price of the parts before markup and have the choice to purchase them from legit suppliers if the licensed technician wants to charge 100% markup.”

No …. phone around. If all the licensed suppliers are charging the same price you have two choices. Pay that price or enroll in a licensed gas fitters course at the local College

Let me make this clear. I don’t want you installing or repairing your own gas appliances unless you have the proper training. When your house is launched into low orbit, it’s going to destroy mine and probably the rest of the neighborhood.

Sorry, no cheap parts for you.

#253 margin disappear on 03.19.15 at 9:38 pm

252 industrial Guy

=====

Clearly you have reading comprehension problem.

Not once ever i did write or hinted that an unlicensed person should install the parts.

#254 margin disappear on 03.19.15 at 9:45 pm

# 246 Realtor007

Smoothie? Do you have a bridge to sell?

#255 industrial Guy on 03.20.15 at 1:17 am

#253 margin disappear on 03.19.15 at 9:38 pm

Your comment is funny in ways you can not imagine.

It is you who simply doesn’t understand how business operates. If I can make a 100% margin on a product .. I will. If not, my competitor will.

Only a fool would provide the client with a statement outlining the margins on each sale. That information isn’t even shared with the Government.

What is an acceptable margin? 10%?. 15%?, 50%?

100% margin? that’s the market price. That’s what the market will bear sir, so honestly, get over it….

Well, the site is called the greater fool after all.

#256 margin disappear on 03.20.15 at 11:25 am

Maybe you just want to be entertaining when backpedalling randomly from one set of argument to an other.

Now randomly switching from safety to lecturing “how business operates…”.

You just can’t connect the dots how market price is rigged under non-transparent market conditions.

That’s fine. After all you are an industrial guy.

#257 Roland on 03.22.15 at 2:30 am

The FRB stopped QE. However:

ECB is doing QE. BoJ is doing QE.

With China’s economy slowing, PBoC may start doing QE.

As you say, Garth, bond markets set long-term rates. But a couple of the developed world’s major central banks are intervening in the bond market in manner similar to the Fed.

Financial markets are global. Yield-hungry Europeans may end up buying bundles of Canadian mortgages and thanking God that the interest isn’t negative.