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MONOPOLY modified

Friday morning is worth watching. The latest jobs numbers will hatch, telling you something about where your mortgage rate and house value is headed. Or not. Anyway, here’s what to expect.

First, this’ll be big news, coming a few weeks before the next possible interest rate move in the US. The Fed announces on Wednesday, October 28th, and if the monthly stats are hot, the odds of the much-anticipated rate lift-off rise. If tepid employment growth indicates the economy is cooling, no cigar this time. Right now markets are putting the odds of pulling the trigger in October at just over 40%.

Second, expectations are for about 200,000 new hires last month, up from 173,000 in August and in line with every other month this year (the average is 212,000). This is less than the 260,000 monthly total last year, but indicates solid economic growth. More than 13 million positions have been created since the lights went out in 2009.

Third, unlike in Canada, where government jobs are blossoming (and just wait and see what happens if Prime Minister Mulcair emerges), 99% of the new positions in the US are in the private sector. This is despite the fact the US oil business (like ours) has been nailed to the wall, and a high American dollar is hurting exports.

Fourth, expect the unemployment rate to stay right around 5%, or less than half what it was six years ago. It’s the lowest number since the summer of 2008 and is now just a hair away from what policymarkers consider to be ‘full employment.’ This is despite the fact a deadly recession and an aging population have structurally reduced the labour participation rate. The biggest economy in the world still has a lot of slack in it, but the direction is unmistakeable.

Lastly, wages. Lots of eyes will be watching to see if there’s been any pick-up in worker pay. Economists think there’s a break-out coming soon, and expect an increase of 2.4% to be announced on Friday will be the best since 2009.

Why should you care about all this macroeconomic stuff? Simple. This – the potential of a US rate increase – is huge. And the longer the Fed waits to get the ball rolling, the huger it gets. When the central bank failed to initiate the first of a series of increase last month, financial markets went into a funk that has continued. So far this year the Dow has shed 8.7% and on Bay Street the market is 9.5% lower. In fact, the TSX is down 16% from its high of six months ago – which is why everybody should have less maple and a balanced, diversified portfolio (off this year only about 2%).

Markets reacted badly to the Fed choking for one clear reason – fear. If the central bankers were too chicken to finally end emergency interest rates, traders figured, then they must know some scary stuff. This concern, plus more uncertainty and fog about the future of rates, helped drive markets down at the same time China and commodities were sliding.

So will the jobs report Friday morning change anything? Maybe. But everyone should still count on the cost of money rising, with the first round happening this year. Delaying the inevitable will send out a more negative message and undermine confidence in the US expansion. Those who argue rates will never swell again (something most people under 35 weirdly believe) are delusional.

By the way, the yield on a five-year Government of Canada has been on the rise lately. In fact, it’s way up from a low point in August, which might help explain an increase in some mortgage rates yesterday. Remember that fixed-rate mortgages (which 80% of people now have) are set in the bond market, and not by the Bank of Canada. Over 90% of the time, our bond market follows that in the States, which reflects Fed policy. It means we can have a crappy economy here, and still pay a lot more to borrow.

Also keep in mind that 80% of the rapid accumulation in Canadian household debt over the past year came in the form of new mortgages. Overall, the size of mortgages is bloating – hardly a surprise given what people have been willing to pay for detached houses in the GTA or the Lower Mainland lately. This is why Friday’s job numbers, and how the Fed responds, are so important that I have to devote a whole post to this boring topic. Instead of just ridiculing people, as usual.

But this much should be obvious: those you work with, plus your house-horny sister-in-law, have been buying real estate at the highest price ever with mortgages at the lowest level ever. When the cost of money changes, so will the value of properties.

Armed with that knowledge, I know what I would do.

208 comments ↓

#1 Londoner on 10.01.15 at 5:53 pm

#42 Mf on 09.30.15 at 6:57 pm

“Professing that you know better like he did is laughable.”
______________________________________________

I made no such claims. Believe what you want, it makes no difference to me.

#2 Suede on 10.01.15 at 5:54 pm

Few days ago I mentioned incomes were rising in Canada.

This morning Bloomberg reported the same thing. That price part of the price to income ratio of a house near you may not be the part of that equation that changes.

#3 Londoner on 10.01.15 at 5:59 pm

“Those who argue rates will never swell again (something most people under 35 weirdly believe) are delusional.”

Yes, but we all live in the real world ;)

#4 Port Girl on 10.01.15 at 5:59 pm

I’ve been following this blog almost daily for the past year and I have become addicted. I want to say that I really enjoy the feedback that is generated from the followers.

Please don’t stop bringing facts to people just trying to stay afloat in a very insecure economy.

#5 Bby604 on 10.01.15 at 6:12 pm

Buy a 60×120 in 604 and lock in the 10 , that’s what I would

#6 Vanman on 10.01.15 at 6:13 pm

“Endless summer for Victoria real estate.”

http://www.vreb.org/pdf/VREBNewsReleaseAndSummary.pdf

#7 LH on 10.01.15 at 6:14 pm

Dear Garth

I trade interest rates for a living.
My view: they ain’t going higher for a generation.
Only fools get fixed mortgages when cheap VRMs are better in so many ways (low cost break clauses chief among them)

Respectfully,

LH

#8 JSS on 10.01.15 at 6:19 pm

“Over 90% of the time, our bond market follows that in the States, which reflects Fed policy. It means we can have a crappy economy here, and still pay a lot more to borrow.”

What are the odds that Canada continues to have a apathetic economy, yet interest rates go up simultaneously? I’m sure others are also wondering.

#9 MSM-Free Zone on 10.01.15 at 6:21 pm

“……Those who argue rates will never swell again (something most people under 35 weirdly believe) are delusional……”
_________________________

Today, my early 30’s daughter, married, living in Calgary (of all places) with a large mortgage on $400k two-storey cookie-cutter with her oil-patch hubby, just texted me today saying they put a conditional offer on a $200k 600 sq. ft. 4th floor condo, full of granite and stainless, as an ‘investment’, citing ‘real estate always goes up’.

Apparently the early 80’s oil-patch history lesson (5 years before she was born) and the early 90’s recession lesson (Calgarians walking away from their mortgages leaving their bathtubs running for the banks) I e-mailed to her two days ago fell on blind eyes and deaf ears.

I feel like such a failed parent.

Heading to Long Branch in search of SM for a shot of JD.

#10 Mark on 10.01.15 at 6:26 pm

US economy recovering? Sheesh, why do people keep trotting out that narrative? At best, what’s happened was that Obamacare ‘encouraged’ business to lay off large numbers of employees, and re-hire them on employment terms that relieved the employers of the obligation to pay for health insurance. Hourly compensation, hours worked, etc., are not up, and the employment participation rate is in the toilet.

Additionally, there are no capacity pressures present. If there were, then there would be a mad dash to hire as many scientists and engineers as possible to implement productivity improvements, robotics, advanced IT systems, etc. Simply not happening in the US. I haven’t seen the US (or Canadian) job boards for those sorts of jobs as dead recently as they’ve been in a long time.

Even one of the Fed governors indicated that he believes that a reduction of policy rates, into negative territory, is called for. Canada’s economy, likewise, suffering the early impacts of a falling housing market, is barely ekeing out growth.

““Those who argue rates will never swell again (something most people under 35 weirdly believe) are delusional.””

I wouldn’t say delusional, since it is likely to be a very long time before the economy is actually strong enough that rates can be raised, and probably decades before before they can be raised higher than the nominal GDP growth rate. But that’s not going to stop risk premia against certain types of credit from expanding. For instance, as Canadian house prices continue to fall, as uncertainty grows as to the government’s backstop of the CMHC, and as the cost of equity capital/requirements for regulatory capital increases for the banks — retail mortgage rates are likely to rise completely independent of BoC policy rates (or heaven forbid, the alleged Fed hikes in the US which Garth swears up and down will translate into changes in CAD$ term funding costs — a position I strongly disagree with!).

#11 Godth on 10.01.15 at 6:27 pm

What credibility does the Fed. have these days? Zero or negative? That’s the question.

Canadian housing, meh. Bubble, bubble toil and trouble. It’s all debt everywhere. We need another planet to strip search.

The big news is what’s up in the Middle East. Putin is really screwing with the fiction.

#12 balance ha on 10.01.15 at 6:39 pm

My portfolio has lost 6.5 percent so far this year..but my brothers house has gained 8 percent this year wonder who is better off at the end of 2016.

Invest smarter. And your bro’s house is worth what someone will pay, less fees. The gain is illusory until realized, just like your ‘losses’. — Garth

#13 balance ha on 10.01.15 at 6:40 pm

When housing deflates so will everything else….

#14 LH on 10.01.15 at 6:41 pm

Just to make that clear–I believe floating rate mortgage rates are not going to up by any meaningful amount for the next decade or two.

For the typical bobo, a paid off house has many advantages over other assets, even if the owners equivalent rental yield is only 3% (typical in 416 or 604)

1. This is a real yield, as rents tend to increase with inflation
2. The asset is a real asset, which tends to increase near the rate of inflation over long periods
3. The capital gains tax is zero for primary residences

This trifecta is huge, when compared with paltry bond and linker yields.

Sure, Jeremy Siegal is right and stocks are better for the long run, but lost lack the patience and foresight to be invested through the cycle.

Not to mention that chicks and hot wives dig property ;)

#15 MF on 10.01.15 at 6:47 pm

Big report tomorrow. It’s interesting how the market is actually for the rate increase now. Will be interesting.

#1 Londoner on 10.01.15 at 5:53 pm

Then why comment on it? But okay I won’t lose any sleep anymore.

MF

#16 Reality on 10.01.15 at 6:50 pm

I agree that RE is way over valued and strictly looking at fundamentals we are long due for a correction. So why have we not seen this correction? (been waiting 6 yrs) The fundamentals do not apply when governments and banksters can manupilate rules and policy. As long as policy makers manipulate to their own selfish benefits we wont see a correction for awhile or until they run out of tricks.

#17 Edmonton Fool on 10.01.15 at 6:50 pm

Canadian house price rise outstrips all but 3 other global markets

http://www.cbc.ca/news/business/canadian-house-price-rise-outstrips-all-but-3-other-global-markets-1.3252406

#18 Butch on 10.01.15 at 6:53 pm

100% October increase will be 0% once November rolls around. I’m betting money on it.

2025 rate increase, maaaaybe, and only if Garth says it ain’t happening. Pretty sure the central bankers read this blog and go opposite just to spite Garth.

#19 Kenchie on 10.01.15 at 6:54 pm

Garth,

Please post this. It’s for subscribers only, but some people here need to read it:

“Looming labour shortage will transform political landscape”
LONDON — Special to The Globe and Mail
Published Thursday, Oct. 01, 2015 1:16PM EDT
Last updated Thursday, Oct. 01, 2015 4:15PM EDT

Forget class war. Instead, prepare for the war of the generations, because it is not the rich who are keeping us down, it is the old. It is those baby boomers and a global surge in the numbers of working people that has tilted the scales in favour of capital and against labour.

But a great reckoning is on the horizon because we are crossing a demographic Rubicon. The expansion of the global work force is slowing and we are now heading for a shortage of labour. With fewer people seeking work, wages and prices will rise and investment returns will shrink. The changing economic landscape will change our politics, too, putting the interests of labour back in the driving seat while forcing governments to invest heavily in provisions for the old.

Inequality is the great political totem of left-of-centre politics. The received wisdom is that it is the owners of capital who are keeping us all down. While they accumulate more cash, more stocks, more bonds and more real estate, our wages don’t go up and we get poorer as they get richer. The reason, asserted by Thomas Piketty, the French economic historian and darling of the Left, is that the average return from investment naturally exceeds the rate of growth in the economy and ordinary earnings over time. For Picketty and a host of politicians, including Justin Trudeau and the new leader of the British Labour Party, Jeremy Corbyn, the solution to the problem of greedy capital getting bigger is more taxes on the rich.

They are flogging a dead horse, reckons Charles Goodhart, a professor at the London School of Economics and former senior staffer at the Bank of England. In a joint research paper published by Morgan Stanley, he argues that the world has been in a “demographic sweet spot” since 1970. A sharp increase in the number of working-age people in the developed economies since the 1970s was followed more recently by the sudden doubling of the global work force when China and the states of Eastern Europe joined the global capitalist economy during the 1990s.

It was a massive labour supply shock, says Prof. Goodhart, and employers took advantage. The export of manufacturing jobs to the huge cheap labour pools in the Far East kept a lid on wage growth. Labour’s share of the economy diminished, worsening inequality. Meanwhile, the Chinese invested their surpluses in the U.S. Treasury bond market, causing interest rates to fall. All that is history, because the demographic supply shock is about to shift into reverse.

Regular readers of this column will know that the population “problem” is about to be turned on its head. In poor countries, fertility rates (meaning live births per female) have declined from a rate of more than six in the 1970s to less than three, while in the richer countries, births are now below the replacement rate. Global population growth is now 1.25 per cent a year and the UN predicts it will fall to 0.75 per cent by 2040.

“We are at the point of inflection” says Prof. Goodhart when the “sweet spot” disappears. The working-age population in developed countries and North Asia will soon begin to decline sharply and the ratio of workers to the retired will deteriorate. And it will get worse, he points out, because the aging population in developed economies means more demands on the labour supply in terms of caring for the elderly, the sick and the infirm.

It’s great news for workers but it’s bad news for employers and investors. Prof. Goodhart rejects the argument that the demographic upheaval will lead to Japan-style deflation. Japan was different, he argues, because its demographic transition happened in the 1970s when the global work force was expanding. Japanese firms invested in cheaper labour overseas, but this time it’s different. Interest rates will rise as the aging population in richer countries begins to save less and spend more.

Governments, too, will be forced to spend more to provide the infrastructure needed to service the growing cohorts of non-working people. Wages will rise with the improved bargaining power of a shrinking work force but taxes will go up, too, as governments demand more of the national cake to pay for the increasing burden on the state from pensioners. A cycle of wage hikes, tax increases and more wage hikes could lead in turn to inflationary pressures and push interest rates even higher.

Such demographic upheavals in the work force have happened before, but mainly due to war or plagues, such as the Black Death in the 14th century when a shortage of agricultural labourers caused huge wage inflation. In the 21st century, the wild card is likely to be technology. The response of businesses to surges in wage inflation may be investment in technology. A surge in labour productivity may mitigate the negative impact of labour shortages, but in the short term, technology is unlikely to have much effect in sectors where labour shortages are likely to be acute, such as health care, social services and house building.

A different world will lead to a different kind of politics. Supporters of the radical socialist movements in Europe may be disappointed; instead of a conflict between capital and labour, battle is joined over the vested interests of generations. Indeed, Justin Trudeau could do worse than turn the tables on his opponents, Stephen Harper and Tom Mulcair, when they deride the Liberal leader’s youth. In a future Canadian election, an aging population may become fundamental to the political debate.

During the next quarter century, politics will not just be about the right to a good job and fair wages. Instead it will also be about the right to retire. A swelling cohort of retirees will acquire huge political power in democratic countries due to their sheer numbers and their sense of entitlement. At the same time, the working-age population will demand greater economic power in return for the burden they will have to bear in terms of higher taxes and a much longer working life. Political parties will have to redefine their mission and their constituency. It will be a new “them” and “us.”

#20 JSS on 10.01.15 at 6:55 pm

#5 MSM-Free Zone on 10.01.15 at 6:21 pm

“Apparently the early 80’s oil-patch history lesson (5 years before she was born) and the early 90’s recession lesson (Calgarians walking away from their mortgages leaving their bathtubs running for the banks) ”

I’ve heard of Albertans walking away from their mortgages in the 1980’s, but not the 1990’s recession.

#21 Kreditanstalt on 10.01.15 at 6:57 pm

13,000,000 what?

Waiters, waitresses, shelf-stockers, bartenders, “sales associates” and – absent a lifetime of debt – assorted other non-household-formation “careers”.

That’s why there won’t be any “rate normalization” in our lifetimes.

#22 Russ on 10.01.15 at 6:58 pm

LH on 10.01.15 at 6:41 pm
For the typical bobo, a paid off house has many advantages over other assets, even if the owners equivalent rental yield is only 3% (typical in 416 or 604)

Not to mention that chicks and hot wives dig property ;)
=========================

chicks & H. W. — you have both?

Please let us know how it is done.

Or is it only:
2 out of 3 is possible (paid of house, chicks, hot wife)

#23 NetCentric on 10.01.15 at 6:58 pm

So Garth, if you currently own property, are you selling now? Not trying to be a jerk, just want to know why you might not be selling.

Because I abide by the Rule of 90. — Garth

#24 Mark on 10.01.15 at 7:01 pm

“When housing deflates so will everything else….”

Historically that’s not been the case. “everything else” did just fine in the 1990s, for instance, as there was a cyclical rotation away from housing into other types of investments.

The sky is *not* falling as house prices go down. Capital is in the process of being liberated from a low growth asset class, housing, towards more productive uses. The quicker the bubble can be liquidated, the better off Canadians will be over the long term. The positive legacy of the housing bubble is that there is now a well-developed army of highly indebted young Canadian tradespeople who can be tasked to work on renewal of critical infrastructure in a multitude of areas within the Canadian economy given the proper economic leadership. Ask your candidates, particularly your Tory candidates, what “the plan” is for the Canadian economy as the housing bubble continues to deflate. And vote accordingly.

#25 ROCK BEATS PAPER on 10.01.15 at 7:03 pm

Every 5% rise in the US $ index is equal to a 25 basis point hike by the FED. There will not be a hike until the US dollar comes down to relieve pressure on US corporations and virtually the rest of the planet, especially emerging markets, which account for the majority of global growth.

Bernanke discusses further easing on Wednesday

http://www.reuters.com/article/2011/09/29/us-usa-fed-bernanke-idUSTRE78R5QK20110929

and the 3 month treasuries went negative today!!! The 10 year treasury remained between 2% and 3% for a decade after the 2nd world war had already ended. The yield curve has been flattening in the US YoY.

To say that rates are going up from here from is easy, but not necessarity in the 2010s.

#26 Vanman on 10.01.15 at 7:07 pm

October home sales Victoria

http://www.vreb.org/pdf/VREBNewsReleaseAndSummary.pdf

#27 Serenity Now on 10.01.15 at 7:08 pm

Have we hit the “Delusional” stage? The comments here really make you think we have…

#28 Porsche on 10.01.15 at 7:08 pm

#11 balance ha on 10.01.15 at 6:39 pm
My portfolio has lost 6.5 percent so far this year..but my brothers house has gained 8 percent this year wonder who is better off at the end of 2016.
…………………………………………………………………..

and he doesn’t pay Capital gains on that 8% gain that’s probably 3 times the size of your stock portfolio minimum
……………………………………………………………….

and he’s also living in that 8% tax free capital gain and your not

No capital gains inside a TFSA or RRSP; and no property taxes, insurance, mortgage payments, closing costs or maintenance on the portfolio, plus any leverage is tax-deductible. — Garth

#29 Mark on 10.01.15 at 7:10 pm

“For the typical bobo, a paid off house has many advantages over other assets, even if the owners equivalent rental yield is only 3% (typical in 416 or 604)”

Stocks (ie: those that make up the TSX 60 index) basically have similar characteristics, yet trade at an after-tax yield closer to 7%.

So why should a diversified basket of Canadian stocks with growth typically in excess of inflation over the long term trade at a yield of 7%, while housing with its inflation-tracking trade down at a yield of 3%?

Makes no sense to me, and if history is any indication, eventually the market will revert, with likely overshoot (upside for stocks, downside for housing), both asset classes to their more historic relationship of relative risk-adjusted equilibrium.

#30 to_be_frank on 10.01.15 at 7:13 pm

LH –
“I trade interest rates for a living.
My view: they ain’t going higher for a generation.”

I don’t see how being a trader provides any insight into secular trends. On the contrary, there is surely an element of recency bias inherent in trading. However, if you would share the reasons for your point of view, it would be interesting to know why you believe that.

#31 Leo Trollstoy on 10.01.15 at 7:17 pm

The U.S. economy is booming.

Just ask the guys selling cars.

http://www.businessinsider.com/us-auto-sales-rise-to-10-year-high-september-2015-10

#32 Smoking Man on 10.01.15 at 7:17 pm

#6 LH on 10.01.15 at 6:14 pm
Dear Garth

I trade interest rates for a living.
My view: they ain’t going higher for a generation.
Only fools get fixed mortgages when cheap VRMs are better in so many ways (low cost break clauses chief among them)

Respectfully,

LH
…….

Aggreed, one of the last projects I worked on at my former tax farm gig was to enable swaps trading system it to handle negative rates.
What do the boys up in the Ivory towers know?

Ha didn’t know you traded rates, could have built you a kick ass pricer with discount curve and all the bells and whistles. But sadly, I’ve been scooped by a giant in the USA.

When I’m back in Toronto, let’s have a pint.

You must know all the people I know….

#33 Brian Ripley on 10.01.15 at 7:17 pm

While waiting for real estate boards to update with Sept data, I looked up the S&P TSX Commercial Bank Index (^TXDE) to see what buyers of Canadian Mortgage Bonds have been doing:

http://www.chpc.biz/history-readings/foreign-surrender

The chart shows a 47% decline from the 2014 peak.

According to Bloomberg “Short interest in the eight-company Standard & Poor’s/TSX Commercial Banks Index (CAD) has climbed to the highest this year” via the Financial Post online Sept 11, 2015

Yields backed by real estate assets in Canada are not looking attractive.

#34 Smartalox on 10.01.15 at 7:20 pm

A major revision of ISO 9001 has just been released. Over the next three years, ISO registered businesses (including increasingly the financial industry, hospitals and governments) will have to upgrade their businesses, or risk losing certification. This may seem like a mundane thing, but the ramifications have the potential to be massive for industry, as well as for workforces that will soon see their most experienced employees retire. This has the makings of a perfect storm for Canadian professionals, causing a brain drain; Canadian industries, already suffering from complacency and low competitiveness will be caught flat-footed, and be hit hard as US companies that have been planning for years, extend their gains.

#35 Nora Lenderby on 10.01.15 at 7:20 pm

#134 Ralph Cramdown on 10.01.15 at 11:07 am
#127 gladiator on 10.01.15 at 9:51 am
#132 NoName on 10.01.15 at 10:40 am

If a child is smart and has the right kind of mind, programming will be no problem at all. Whatever language s/he learns first, imo.

Motivation is key.

If you want to interest a girl in stuff like this, I suggest you look at http://www.adafruit.com (Limor Fried’s business). They have a lot of 3-D printing gear, blinky wearables, and other fun things. You have 30 days to make an awesome glowy Halloween constume. (For last year I bought some EL piping and programmable LED strips and helped my little friend make a knockout jean jacket and pants…jus ‘cos I don’t have kids doesn’t mean I can’t have fun – but I can send them back where they came from :-)

I have no connection to Adafruit, just a happy customer.

#36 Panhead on 10.01.15 at 7:22 pm

#8 MSM-Free Zone on 10.01.15 at 6:21 pm

Heading to Long Branch in search of SM for a shot of JD.

————————————————————-
If I didn’t live out here in 604land, I’d join you …

#37 Nora Lenderby on 10.01.15 at 7:23 pm

#139 Calgary Rip off on 10.01.15 at 12:02 pm
I dont know what it is with these guys that marry these women are they stupid or what? Does he not realize that all women have certain assets? Why did he marry one with high maintenance? Him and his wife are both morons.

I endorse this message.

Gentlemen, inspect the hands of the women you, er, date. If their fingernails are short, unvarnished or chipped and they have calluses on their palms, they are either rowers or handy around the house (or both). They will be helpmates.

However, they do not suffer fools gladly, and they can be bossy :-)

#38 bdysktn on 10.01.15 at 7:28 pm

china $$$ buying quarter million foot office towers as tear downs! – van proper is being grabbed by cash from ALL OVER THE PLANET.
———————————————–
http://www.vancouversun.com/news/national/chinese+investors+scoop+vancouver+toronto+office+towers/11406658/story.html

a small office tower — the 212,000 square foot United Kingdom building, which might best be described as a B class structure — in the heart of downtown Vancouver sold for $122 million on Monday. The deal has yet to close, so details remain scarce other than that the buyer of 409 Granville St. was from mainland China.

“It sold for more (than) $600 a square foot,” said one source, who said that might be 50 per cent more than the going rate for similar office buildings in the area. “When I heard the number, I thought ‘no way.’ But the thing is it’s right on top of a SkyTrain station. I think the Chinese are buying the land for speculation as much as the building.”

#39 Gray Man on 10.01.15 at 7:33 pm

The Federal Reserve (Not Federal and has no Reserves)
Said they would raise rates when unemployment hit 6.5%
I think that was some time ago now using BLS stats.
Donald Trump stated just last week that unemployment in the U.S. is more like 40%
Its going to be a long time until any rate hike but maybe not so long for QE4

#40 Nora Lenderby on 10.01.15 at 7:39 pm

#8 MSM-Free Zone on 10.01.15 at 6:21 pm
Today, my early 30’s daughter… just texted me today saying they put a conditional offer on a $200k 600 sq. ft. 4th floor condo… as an ‘investment’, citing ‘real estate always goes up’…I feel like such a failed parent.

Not your fault, dear sir. It’s no consolation that they didn’t listen to you. Let’s just hope they keep their jobs and marriage intact.

#41 Smoking Man on 10.01.15 at 7:40 pm

#9 Mark on 10.01.15 at 6:26 pm
US economy recovering? Sheesh, why do people keep trotting out that narrative?

Because it’s true, I’m living proof. After I signed my contract, my in box is hit daily from USA head hunters.

Canadia ones two, but they can’t even come close on compensation.

#42 My Life is a Pile of Shit on 10.01.15 at 7:40 pm

“This – the potential of a US rate increase – is huge.”

The Fed is using every excuse in the book not to raise the rate. Despite robust employment numbers, if there is market volatility in December, the Fed will use that as an excuse not to raise the rate. And even if there is no volatility in Dec, the Fed will find another excuse. If the Fed doesn’t raise rate this year, I recommend ketchup with your crow, Garth.

#43 common sense on 10.01.15 at 7:47 pm

Leo #19

US economy is not booming…they fail to report how many sub prime car loans are made and the number of leases compared to actual sales…also the length of the loans are usually over 84 months…

Sales are better for sure but not booming…

#44 BS on 10.01.15 at 7:50 pm

For the typical bobo, a paid off house has many advantages over other assets, even if the owners equivalent rental yield is only 3% (typical in 416 or 604)

1. This is a real yield, as rents tend to increase with inflation
2. The asset is a real asset, which tends to increase near the rate of inflation over long periods
3. The capital gains tax is zero for primary residences

You claim rents increase with inflation and the property increases near the rate of inflation. True over the long term, but for the past 12 years the property increases have been double or more than inflation while rents have increased at inflation. Do the math on what happens in the next 10 years factoring in the last 12 years. Then let me know how well the capital gains exemption works when there is a loss.

#45 Mr Happy on 10.01.15 at 7:51 pm

“Armed with that knowledge, I know what I would do.”

WHAT?????????????

#46 Greg on 10.01.15 at 7:54 pm

Hi Nosty,
FYI, Sept 29th article link,
“The International Monetary Fund (IMF) has issued a double warning over higher US interest rates, which it said could trigger a wave of emerging market corporate defaults and panic in financial markets as liquidity evaporates…”
http://www.telegraph.co.uk/finance/economics/11898936/World-set-for-emerging-market-mass-default-warns-IMF.html

#47 Paul on 10.01.15 at 8:01 pm

Just saw Justin walking on the escalator for the fifth Time in an hour! So I topped up my pledge to Harper made me feel like l had a shower!

#48 Bby604 on 10.01.15 at 8:02 pm

C’mon Garth put that red white and blue flag down,
How can yellen raise without imploding emerging markets? What will happen to all those countries printing money? Global contagion, There is no raise this year, you were so sure about September but your tone is way different now because ,wait wait …maybe you have no idea? 9/10 expert exonomists are usually wrong, the time to raise rates past a long time ago, you don’t seem to get that . It’s over

#49 ANON on 10.01.15 at 8:02 pm

Easy, it’s a Fool’s Mate:
1. Rates rise.
2. Checkmate.
Still worth repeating: Rates won’t rise voluntarily, but they will rise, since trust has nowhere else to go but down.

#50 saskatoon on 10.01.15 at 8:06 pm

how many full-time jobs have been LOST in as much time?

The job gains are net. — Garth

#51 BC Guy on 10.01.15 at 8:06 pm

In the US, from 1970 to 2008, the top 1% got a 385% income increase.

The bottom 90% saw a 1% decrease.

The situation is similar in Canada. If you think this is fair, vote Conservative. If you think it’s unfair, vote ABC.

http://charleshughsmith.blogspot.ca/2015/09/following-in-ancient-romes-footsteps.html

Prove the Canadian numbers. Link? — Garth

#52 BS on 10.01.15 at 8:07 pm

and he’s also living in that 8% tax free capital gain and your not

The 8% capital gain is only a gain if he sells. If he sells he won’t be living in the house. If he stays he still lives in the same crap box just 1 year older. Can’t have it both ways, live in the house and make a capital gain. Besides the transaction costs would also eat up all of that 8% if he did sell netting zero. In reality he has gained nothing whether he stays or sells.

#53 John on 10.01.15 at 8:07 pm

As far as lightening up on Maple, many Canadian stocks, other than resource stocks probably have less risk now as the US market has been so strong, but then again you have been consistently wrong on real estate

#54 Tommydouglas on 10.01.15 at 8:13 pm

I would say my TFSA is down about 10% since the start of the year. I use ishares etfs with allocation based on the millennial portfolio. I am not going to complain though, have only been investing for a few years and without GF probably would have bought Blackberry, gold wafers, oil stocks, or whatever mutual fund the lady at the bank told me to buy. It could be worse and I am in for the long run.

If you are down 10% YTD you do not have an appropriate asset mix. — Garth

#55 Porsche on 10.01.15 at 8:16 pm

#51 BS on 10.01.15 at 8:07 pm
and he’s also living in that 8% tax free capital gain and your not

The 8% capital gain is only a gain if he sells. If he sells he won’t be living in the house. If he stays he still lives in the same crap box just 1 year older. Can’t have it both ways, live in the house and make a capital gain. Besides the transaction costs would also eat up all of that 8% if he did sell netting zero. In reality he has gained nothing whether he stays or sells.
……………………………………………………………………

Can’t live in your stock portfolio

#56 John on 10.01.15 at 8:17 pm

http://business.financialpost.com/news/property-post/chinese-investors-scoop-up-vancouver-and-toronto-office-towers-as-canadian-commercial-market-heats-up

#57 Freedom First on 10.01.15 at 8:20 pm

#6 LH

The people you deal with at work are idiots. Whatever interest rates are at should be insignificant. Vm or Fixed should be nothing but meaningless white noise. That’s how I run. Whatever others do is ok.

Garth is laying all of the info needed to make this happen. Some people even listen to him. You can even read about it here.

#58 Freedom First on 10.01.15 at 8:38 pm

#14 LH

BS on everything.

And it is wise to avoid women who dig property. They will end up living on the inside, while eventually you will find yourself living on the outside. Odds are bad. High risk. fact.

LH I think you are a low life. You lie.

#59 LH on 10.01.15 at 8:41 pm

@56 Freedom First

?????

The person sitting to my right makes 2-3mio usd a year.
And he’s a cheapass like you (and me) so he has something like a few dozen doors, that’s a few dozen units and rental checks coming in each month. All cash purchases, no debt at all (if only he were more aggressive with leverage like me… Hehe)

With idiots like these at the office I can carry on wage slaving forever!

I think I speak for the many: freedom is cool but not at the cost of a vasectomy. Ouch. Neither will I soon retire from this job because it’s fun to call the shots.

#60 jess on 10.01.15 at 8:42 pm

living in cages or cardboard but how about these 2nd generation The fuerdai (pronounced foo-arr-dye) i think prefer the basement dwellers

http://www.bloomberg.com/news/features/2015-10-01/children-of-the-yuan-percent-everyone-hates-china-s-rich-kids

#61 Steve French on 10.01.15 at 8:44 pm

Oh hey another mass shooting in Americuh.

What the f is wrong with those people?

I’m starting to think a border wall with those nutcases is a good idea for Canada.

#62 LH on 10.01.15 at 8:45 pm

As smoking man shows, having loot and independent wealth is great. But a job at a cool place with smart people can be a barrel of fun as well. Just like having a warm family, not to be missed for all the financial independence in the world.

#63 Freedom First on 10.01.15 at 8:49 pm

#18 Kenchie

It is already them and us. I am one of them. The young have being hoodwinked. Ageism. Too bad. They made the Boomers mad. Big mistake.

#64 Rachel Notley news on 10.01.15 at 8:56 pm

“Delta Mayor Lois Jackson says she was surprised Albert Premier Rachel Notley didn’t speak to her first before publicly recommending Kinder Morgan switch its Trans Mountain Pipeline oil export facility to Roberts Bank from Burnaby. Maybe she’s naive in her new role?”

http://www.vancouversun.com/delta+mayor+perplexed+alberta+premier+pipeline+comments/11406919/story.html#ixzz3nMqp2AQ4

#65 Freedom First on 10.01.15 at 8:58 pm

#36 Nora Lenderby

A mistake. It is ok Nora, I will edit it for you. They will be bossy. Women always make the same mistake. They end up trying to think for me. The end.

#66 waiting on the westcoast on 10.01.15 at 8:59 pm

The US economy continues to power up.

Mark – I just did a search in Seattle for Programmers. 1000 new openings in the last 30 days alone (salary. com). The Bay is booming. Lots of opportunities even in smaller metros like Des Moines, Nashville, Louisville, etc.

If you have an comp sci / engineering degree, you should move to the US. Lots of great roles available.

The recovery started in 2011 slowly but it has significant momentum now. Biggest risk I see is that it will peak in the next two years and we will have a reversal.

#67 ANON on 10.01.15 at 9:02 pm

#47 Bby604 on 10.01.15 at 8:02 pm
“C’mon Garth put that red white and blue flag down,
How can yellen raise without imploding emerging markets? What will happen to all those countries printing money? Global contagion”

No one is printing money (that would have made money worthless in a jiffy), what happens is someone is receiving bits in his computer, and making promises give those bits back, including extra bits. The bit issuer puts these bits as wealth on his bit account, and the bits receiver is using the bits as wealth also, doing stuff with it, same as the issuer (some call what they do investing, some call it speculating, some call it spending, some -the wisest IMHO, whom I envy- simply have a ton of fun with it). This is issuance of debt, not the printing of money. There will be printing of money, but a bit later on, when it is demanded, and then quite insisted upon.

Now on the second point, this being the real world, some things cannot be said with a loud blog megaphone but, as a member of the peanut gallery I totally agree imploding is the right word to use, and the reasoning is sound. However, it won’t be the choice of a sick old woman and some old dudes, it is the choice of the”market” (bit issuers and receivers) because emerging markets are in the midst of a terminal loss of trust crisis, and are supposed to pay their USD promises, which they cannot do, since they are not the issuers of those particular bits.
Trust in USD promises (the more tangible the better) will be the last to fade, bank on it. Or not, whichever you choose.

#68 For those about to flop... on 10.01.15 at 9:02 pm

. In fact, the TSX is down 16% from its high of six months ago – which is why everybody should have less maple and a balanced, diversified portfolio (off this year only about 2%). Garth

—————————-
Well I thought I was sucking at this investing bollocks but my b&d portfolio is down approx 2.5 % for the year.
There is hope for me yet.

#69 IM in C on 10.01.15 at 9:03 pm

1. Interest rates will not rise. basic law of supply and demand. There is an ocean of money out there.
2. House prices will continue to rise for another 5 years. At this point demographics will kick in.The leading edge of the baby boom will be turning 75. They will discover that they will have to sell their houses. -But- new families won’t want to buy them. Then you will see interesting times in the real estate market

#70 omg the original on 10.01.15 at 9:08 pm

“I trade interest rates for a living.
My view: they ain’t going higher for a generation.”
—————-

Now you may be a a very good trader.

But its been my experience of watching “forecasters” for the last 30 years that those closest to a sector are the worst at forecasting long-term prices/production/costs/etc/etc.

Simply because its is human nature to focus on what we know and what we know is heavily weighted by recent trends and technology.

For example I remember
– the predictions by CD (compact disc) manufacturers that the cost of production would never go below $20/disc (mid 1980s)
– petroleum geologists/engineers predicting that shale oil production would never be economic (early 1990s)
– Goldman Sachs predicting that oil would never again go below $100/bbl (mid 2000s)

The list goes on and on.

The best predictor of the future is history.

#71 Kilby on 10.01.15 at 9:17 pm

My thoughts after reading today’s blog is that all the “experts” pundits, financial analysts, politicians don’t really have any better idea of what is going to unfold for the economy and the nation any better than the average citizen that pays attention to what’s going on around him/her. Polls, job and growth forecasts are usually never right, housing crashes should happen but don’t…. Prime Minister Mulcair…..hmmmmm….

#72 H on 10.01.15 at 9:20 pm

Hows that US yield looking Garth? 2,5 and 10

Oh yes, conveniently overlooked. Why? Because this is where a future rate increase (or not) lives.

Look it up.

#73 Mark in Guelph on 10.01.15 at 9:23 pm

Garth-“Aging population have structurally reduced the labour participation rate.”

We’ve been over this Garth, 60+ are working in far greater numbers than before, in fact their participation is at 50 year highs. Meantime, under 25 have seen a dramatic drop in participation.

It’s simply not due to retirement that the labour force participation rate is at a 38 year low.

On the upside, you sound much less convinced that a Fed rate hike is imminent. That old saying, “Fool me 9 times, shame on you…”

#74 Porsche on 10.01.15 at 9:24 pm

Find one working stiff like you that bought a decade ago while you read this blog and waited for the big collapse that’s worse off than you are.

It’s been the biggest lottery ticket in this country that the working stiff has ever seen.

You can paint it what ever way you want, but you have lost out huge not buying.

The message here is not houses vs financial assets, but to achieve a balance in life. Your reference to a lottery speaks volumes. — Garth

#75 eddy on 10.01.15 at 9:25 pm

yet another reason to not vote-

https://billblair.liberal.ca/

remember the agent provocateurs at the g20, jumping on cop cars and setting them on fire? thanks Nill, I mean Bill

#76 Mark on 10.01.15 at 9:26 pm

“Mark – I just did a search in Seattle for Programmers. 1000 new openings in the last 30 days alone (salary. com).”

Careful there. If you drill into the results, you’ll find that the same posting is often replicated many times (I’ve seen as many as 20 3rd party recruiters advertise the same ‘position’ in order to chase a commission). Many ‘advertised’ jobs are only ‘advertised’ for immigration compliance reasons (ie: to get a foreigner a work visa) and for which there is no legitimate intent of the employer to actually hire someone. And compensation has not been meaningfully rising in that particular field.

I know, it might seem like there’s a lot of jobs in that sector, but when you really drill down into it, there isn’t.

Once you reject the ads posted by 3rd party recruiters, and once you reject postings not made in good faith (ie: ones that demand 5 years of ‘experience’ for an entry-level role, for instance), then the numbers of positions available is substantially less, and extremely limited in scope. It might be a bit better in Seattle than it is in dreadful Canada, but not by much.

#77 Mark in Guelph on 10.01.15 at 9:28 pm

#30-Leo-The U.S. economy is booming. Just ask the guys selling cars.

Those guys would have told you it was booming in 2006 and 2007 too.

This is a bubble, not a recovery, which is why no Fed rate hike is coming, this month or this year. QE4 is actually on the launch pad.

#78 Your move | Realties.ca on 10.01.15 at 9:34 pm

[…] Source: http://www.greaterfool.ca/2015/10/01/your-move/ […]

#79 Mark on 10.01.15 at 9:35 pm

” petroleum geologists/engineers predicting that shale oil production would never be economic (early 1990s)”

Have they been entirely proven wrong yet? Even when oil was $100/barrel, most of the shale drillers weren’t able to generate returns to meet their long-term cost of capital. With oil prices less than half of that, obviously equity in the sector is being destroyed at a rapid pace. Large amounts of debt will inevitably require restructuring in the shale oil and gas sector. Debt issued at relatively low rates. If they can’t make shale ‘work’ at near historic highs for oil prices, and near historic lows for the cost of debt capital….

A big part of the problem with shale wells is their very high initial production (which, when a large amount of wells are drilled, creates a very large glut of production), followed by very rapid depletion. The technology works well for first-adopters, but late-comers can be easily destroyed.

#80 Millenial on 10.01.15 at 9:36 pm

Atlanta Federal Reserve is estimating Q3 at 0.9%. ADP national employment stats says not one single manufacturing job has been gained in the US this year; first time that’s happened this decade. Latest US manufacturing PMI lowest in over 2 years. And for the first time since 2009, all six major Fed regional activity surveys are in contraction territory. Yellen now seems concerned with global economic issues, so add on top of all the American bad news: emerging market currency carnage, deflation in Japan and Europe.

If you actually believe that the federal reserve’s decision to raise interest rates is data dependent, I don’t see how you can think they’ll raise rates this year. But whatever, US unemployment rate is 5.1%, right? Lol.

#81 BS on 10.01.15 at 9:44 pm

Can’t live in your stock portfolio

I can rent a place to live in with the dividends from my stock portfolio and bank the capital gains.

#82 Smoking Man on 10.01.15 at 9:45 pm

#61 LH on 10.01.15 at 8:45 pm
As smoking man shows, having loot and independent wealth is great. But a job at a cool place with smart people can be a barrel of fun as well. Just like having a warm family, not to be missed for all the financial independence in the world.
…..

So true Man, I miss it. My traders where a blast, I’m probably the only non manager IT dog that got invited to after work booze ups and shenanigans. No one rated me out when I would crashed the Bond Traders bashes.

But I was a bit disappointed when they started forcing Contractors out after two years. Take 3 months off, then come back. I shouldn’t complain, I got 5 years.

But now my new gig is amazing, definitely pays a little more, but it’s right up my alley, and an opportunity exist to partner up and set up shop in Toronto.

That’s why I’m doing it, but Man… I miss the gang. It’s was a blast.

#83 BS on 10.01.15 at 9:46 pm

It’s been the biggest lottery ticket in this country that the working stiff has ever seen.

Yup and like the lottery you can’t buy last weeks numbers and expect to win. You also need to cash the ticket before it expires.

#84 For those about to flop... on 10.01.15 at 9:55 pm

#47 Bby604 on 10.01.15 at 8:02 pm
C’mon Garth put that red white and blue flag down

——————————
Why is Garth waving an Australian flag ?

#85 ole Doberman on 10.01.15 at 10:03 pm

This blog sounds eerily like the time gartho said qe would end, while the naysayers said it wasnt possible and followed “gurus” like jim sinclairs qe to infinty – as you know gartho was right!

#86 Marco on 10.01.15 at 10:05 pm

Thanks Garth

http://wolfstreet.com/2015/10/01/australias-black-swan-moment/

“The other grave mistake that Wayne Swan made was not allowing Australian households to deleverage back in 2008/9. It was the first and last real opportunity for Australian households to have what would have been a difficult yet manageable fall in house prices due to the all but 100% guarantee the mining boom would continue until at least 2012 and flank a depressed housing market as the housing bubble would have burst.”

Cheers.

#87 Father Garth's "In TFSA We Trust" Congregation on 10.01.15 at 10:16 pm

Coming to this blog starts to feel like visiting church.

You know on your way that Father Garth is going to give someone shit for being a real estate sinner, he will predict the coming of Janet, daughter of FED and the raise of the holy interest rate for the salvation of the righteous savers.

There will be prayer for the well-being of the TFSA, condemnation of the fallen angel, Justin and the evil Thomas.

The choir of the altar boys start to sing the sweet melody of “Garth Warned You, fool”, the crowd is releasing the Amen and Hallelujah bubbles, when they land, they burst into neat little blog comments.

God shows mercy for the members of Father Garth’s congregation and the human race by teleporting the rotten teethed, drunk sane smoking Greek, sometimes with hot tips of how to make a quick million, other times some infotaining anecdotes from the other side of heaven or hell.

By midnight the last Amen is approved and canonized.
We are all so grateful, holy shit.

#88 young & foolish on 10.01.15 at 10:17 pm

“Because I abide by the Rule of 90. — Garth”

Does the Rule on 90 apply to rental property or just primary residence?

Residential RE as a % of total net worth, age-appropriate. — Garth

#89 Boombust on 10.01.15 at 10:18 pm

#83…

That reminds me of people in Canada referring to “Southern Cooking”.

“You mean, Point Pelee or Tsawassen? After all, those places about about as far south as you can go in Canada. Right?” Blank looks…

#90 Mister Obvious on 10.01.15 at 10:20 pm

#73 Porsche

“You can paint it what ever way you want, but you have lost out huge not buying.”
——————————–

Also by not selling. Crystallize profit, not loss

#91 Leo Trollstoy on 10.01.15 at 10:29 pm

I just did a search in Seattle for Programmers. 1000 new openings in the last 30 days alone (salary. com).

Very true.

My friend who owns a recruiting company says the same thing. Lots of IT jobs, not enough candidates.

According to them, apparently it’s not a skill shortage. Lots of engineering and CS ppl with skills. Just really terrible social skills.

Either way, unless you’re a social baffoon, for anybody with IT skills, the world is your oyster.

#92 Porsche on 10.01.15 at 10:30 pm

#89 Mister Obvious on 10.01.15 at 10:20 pm

I keep hearing about sales dropping… show me the price drop.

Then compare it with your maple REIT in the last year

Here you go. — Garth

#93 Leo Trollstoy on 10.01.15 at 10:32 pm

If you have an comp sci / engineering degree, you should move to the US. Lots of great roles available.

Definitely true. Also tons of roles in Canada too (if you don’t mind making CAD).

I have engineering friends working at some of the big banks and companies are all looking to poach them.

Time for them to feast.

#94 For those about to flop... on 10.01.15 at 10:32 pm

Yeah Boombust , I knew which country he was talking about but if you go to flags of the world there are lots of red,white and blue flags.
Even state and provincial flags feature these colours/ colors prominently.
To my ( limited) knowledge there is only one flag that is referred to as the Stars and Stripes though.

#95 Leo Trollstoy on 10.01.15 at 10:35 pm

#40 Smoking Man on 10.01.15 at 7:40 pm

SM knows.

IT is hot.

6 figures easy.

Unless you’re socially incompetent. Gotta mention that cuz I’ve been told that there’s a higher percentage of social idiocy in the IT crowd.

I wish I had a lick of IT skills. Easy $

#96 Washed Up Lawyer on 10.01.15 at 10:36 pm

Why does Mark Carney hate Fort McMurray???

What did we ever do to him?

Kelly Gruber or Joe Carter or Devon White would each have been a far better Governor of the Bank of England.

#97 Yuus bin Haad on 10.01.15 at 10:44 pm

Straw poll update: anti-majority movement back on track. Then again, I’ve come to distrust my waffling neighbours (and of course, the only poll that counts is the one taken on Oct 19).

#98 Porsche on 10.01.15 at 10:55 pm

Here you go. — Garth

Doesn’t work

Just go to CREB.com. Enjoy. — Garth

#99 Burnaby Guy on 10.01.15 at 10:56 pm

My portfolio has lost 6.5 percent so far this year..but my brothers house has gained 8 percent this year wonder who is better off at the end of 2016.

Invest smarter. And your bro’s house is worth what someone will pay, less fees. The gain is illusory until realized, just like your ‘losses’. — Garth

Well Garth your point makes no sense because it would apply both way – If the house lost 6.5 percent and the portfolio gained 8 percent, the portfolio is also worth what someone will pay less trading fee and capital gains tax. The portfolio gain is illusory until realized.

I don’t care how much my house has dropped or how much my portfolio has gained they are both illusory until realized is it not?

Portfolios are liquid. Houses are not. Portfolios pay you income. Houses suck it. Gains in registered accounts are also tax-free. Houses have property taxes, need to be insured and maintained. They cost 5% of their market value to be sold. Money borrowed to invest has deductible interest, mortgages don’t. Portfolios are diversified, residential real estate isn’t. Nope, not the same. — Garth

#100 Edward on 10.01.15 at 11:04 pm

“The Conservative Party is asking Elections Canada to formally investigate the activities of Tru-Youth United – a youth-run fan club of Liberal leader Justin Trudeau which has a connection with the daughter of Michael Ching, a man wanted by the Chinese government.”

http://globalnews.ca/news/2253431/tories-ask-elections-canada-to-investigate-former-liberal-fundraiser-trudeau-youth-organization/

#101 LJ on 10.01.15 at 11:08 pm

We’re starting to get a “peek under the covers” here in Calgary about how ugly things actually look. It’s not going to be very pretty next year.

Wonder what kind of mess will be revealed when Vancouver hits the wall.

#102 LH on 10.01.15 at 11:12 pm

Look forward to having a pint together one day Smoking Man! Are you going to be in NYC?

#103 Mark on 10.01.15 at 11:20 pm

“IT is hot.

6 figures easy.

Unless you’re socially incompetent. Gotta mention that cuz I’ve been told that there’s a higher percentage of social idiocy in the IT crowd.

Couldn’t be anything further from the truth. IT is a “profession” characterized by so many applicants relative to jobs available that employers have the luxury of not even bothering to respond to all but a few of the qualified applicants. The claim that ‘social skills’ is causing mass unemployment in the IT sector is nonsensical, as a potential employer cannot discover this alleged ‘lack of social skills’ without actually calling in the candidates for interviews. Additionally, if there was a legitimate shortage, employers would definitely be willing to look past some of this alleged lack of ‘social’ skills as they did routinely in the distant past when there was significant demand (ie: 80s and 90s).

As it stands, in IT, employers actually tend to prefer people with poorer social skills as it allows them to pigeonhole them into certain roles with relatively lower pay. Rather than dealing with a high-performing “alpha” employee who is looking to move up the ranks, demands raises, and wants to enjoy the finer things in life including travel/vacations, and home ownership. It is much easier to enslave a bunch of anti-social geeks (or guest workers threatened with deportation), than it is to enslave a normal Canadian with normal social skills. With how poor job prospects are in IT and with such little entry-level hiring in the Canada’s IT sector since the Nortel collapse, one would have to be rather socially out of touch to believe that the profession has good short to medium term prospects.

#104 LH on 10.01.15 at 11:22 pm

To be fair, while mortgage interest in Canada used to finance a primary residence is not deductible, neither are owners taxed on the rental value of their abode. A paid off house is tax efficient compared to using taxed dollars to pay for rent.

#105 Ralph Cramdown on 10.01.15 at 11:46 pm

#99 Edward — “The Conservative Party is asking Elections Canada to formally investigate […]”

What a load of bullshit! The Harper Government took that power away from Elections Canada in the “Fair Elections Act” of 2014. Maybe they forgot?

#106 With All Due Respect on 10.02.15 at 12:33 am

Here is a little eye opener. GDP calculations inflate the reported number.

http://www.bloomberg.com/news/articles/2015-05-22/gdp-changes-coming-in-july-as-u-s-addresses-weak-first-quarters

When you don’t like the numbers, change them.

The old joke back in business school was that it took 1 year to learn accounting and then another 4 to cook the books. If financials were reported in GAAP, you would crap your pants at the numbers. And, no Garth, you are not qualified to argue; you have never done a math or statistics course beyond high school, with all due respect.

Really drill down through the BLS numbers when they come out. The story is not in the number of jobs but their quality

#107 chadooodle on 10.02.15 at 12:38 am

Garth

You keep saying to reduce the maple exposure…at what point does maple become a buy as it has already dropped substantially, and is cheap in USD terms

#108 PeterfromCalgary on 10.02.15 at 12:54 am

The betting odds of Harper being our PM our now even.

https://sports.bodog.eu/politics/2015-canadian-federal-election

The odds of the conservatives getting the most seats are now 2/5

http://www.paddypower.com/bet/other-politics/canadian-politics

#109 Christopher Dillon on 10.02.15 at 1:01 am

The Economist says Canadian Property 89% overvalued against rents; 34% against incomes
http://www.economist.com/news/finance-and-economics/21669967-house-prices-are-rise-again-around-world-upwardly-mobile?fsrc=rss

#110 Freedom First on 10.02.15 at 1:06 am

#86 FGITWTC

If you keep reading this Blog eventually you will be saved.

#111 Freedom First on 10.02.15 at 1:09 am

#87 young & foolish

Your handle is apt. But you have come to the right place. Good on you.

#112 Nagraj on 10.02.15 at 1:26 am

Forgive me for being a smartass.

“When the central bank failed to initiate the first of a series of increases last month, financial markets went into a funk that has continued.”

Actually the broad indices (and the XLF) had their waterfall decline almost a month BEFORE Sept. 17.

“Markets reacted to the Fed choking . . . ”
Would it be more to the point to say that markets PRE-REACTED . . . ?

I don’t for a moment disagree with the idea that the FOMC’s never-ending Hamlet soliloquy To Raise Or Not To Raise has the theatre’s patrons wanting their money back, nor do I think that ZIRP is sane . . .
Market psychology is my issue here: does the market’s ability to anticipate now have a thirty day limit? Tee hee.

OF COURSE many things factor into a whopping market sell-off. Why markets committed technical suicide going into the end of August is still an open question.

Isn’t it fun not to really know what happened as well as not to really know what’s gonna happen. Omniscience is such a dull thing.

(I hope I haven’t misread your post.)

#113 Ralph Cramdown on 10.02.15 at 1:30 am

Raise the dividend in June when your stock is at 48 1/2, dilute your investors in October by selling shares at $41.90 to top up your working capital.

http://business.financialpost.com/news/ceo-of-canadas-smallest-bank-makes-the-most-money
http://www.canadianbusiness.com/leadership/ceo-of-the-year/2014-louis-vachon-national-bank/

#114 Londoner on 10.02.15 at 4:32 am

#94 Leo Trollstoy on 10.01.15 at 10:35 pm

Gotta mention that cuz I’ve been told that there’s a higher percentage of social idiocy in the IT crowd.

I wish I had a lick of IT skills. Easy $
__________________________________________

Forget social, there’s a higher percentage of idiocy in the IT crowd in general. It’s not the developers but the project managers, programme managers and all the other non-sense middle manager roles they’ve created. I work in Finance and have to constantly deal with these idiots to get the things we need. The introduction of these roles filled with idiots who don’t know anything about either IT or the Business has just created barriers to progress. How did these idiots get the job in the first place? Nepotism runs strong in investment banking. So good news for you – you don’t actually need any IT skills!

#115 Leo Trollstoy on 10.02.15 at 4:35 am

If you’re not making 6 figures in IT today, you’re doing it wrong.

If you’re an engineer or CS major and can’t find a job in IT today, you’re probably not that good or socially inept or both.

Sorry to break it to ya

#116 Goofy with Lust for Obama on 10.02.15 at 5:28 am

Sorry G…but if you think that unemployment in the US is 5%…..you must be smoking

“Fourth, expect the unemployment rate to stay right around 5%, or less than half what it was six years ago. It’s the lowest number since the summer of 2008 and is now just a hair away from what policymarkers consider to be ‘full employment.”

With the U6 numbers off the charts and 65 million people on welfare, food stamps….the Obamanomics is so politically fingered that ‘official numbers’ coming out of the White House are laughable. G-Dog….there isn’t a single international pundit economically or politically that isn’t shouting at Obama’s lies and idiocy…..He’s the biggest idiot president ever…..I know you’re not as gullible as Josh Lerner thinks you are for repeating the White House Obama Legacy Building Nonsense.

Obama wants to go out on a high note…the numbers he’s putting out will all crash 5 minutes after his departure.

#117 maxx on 10.02.15 at 7:49 am

#8 MSM-Free Zone on 10.01.15 at 6:21 pm

” “……Those who argue rates will never swell again (something most people under 35 weirdly believe) are delusional……”
_________________________

I feel like such a failed parent.”

Even with great parents, children will do what they will.
It’s mind-boggling that most don’t see that in the current money-printing environment, buying re, especially as an “investment”, moves absolutely 180 degrees away from wealth accumulation.

#118 TomJones on 10.02.15 at 7:58 am

Oh Garth – you’re such a smart man and usually dead on about most things….but you’re way off on your optimism for the US market (in my opinion).

Rates will not go up. Not this year or the next. (if they do, its a 0.25% increase and then back down to 0%). If they couldn’t do it in March or September, what makes anyone think that something will change in one month to increase it JUST a quarter point???

They are living in yet another bubble, this time bigger, fueled by the same thing that got them into trouble the last time…cheap $$.

Investing in the US today is a fool’s bet –

#119 TJM on 10.02.15 at 8:07 am

“Q -My portfolio has lost 6.5 percent so far this year…

A – Invest smarter. And your bro’s house is worth what someone will pay, less fees. The gain is illusory until realized, just like your ‘losses’. — Garth”

Uh… Respectfully, Garth, this is not helpful.

Last December I did what you suggested, stopped sitting on the sidelines waiting for the next correction, divvied up my nut into five piles and allocated like you said, and I’ve also gotten “clobbered” this year. (It’s hard to tell by how much because when preferreds took a dive, I went and bought more, which then also went down further, and bought some US ETF’s on the dip, so it’s hard to tell exactly how much my original investment is down.)

The one point I differed on is that bonds did not make up any of my 40% safe stuff–it was all preferreds and REITs.

Anyway, I’m not super worried because as you say, dips are temporary, losses not real until you sell, and I knew that whenever I jumped in, it would seem like immediately afterwards everything would go down. Fine.

But don’t go telling people, after this happens, that they should have “invested smarter.” It implies that they did something wrong and people are already inclined to rush from one thing to another in a panic. They do that because they’re like, “Oh my god, that was the wrong strategy, now I need to move to this other strategy.”

Put it another way: What reasonable allocation of assets bought in December 2014 WOULDN’T have taken a (temporary, paper, capital) beating in the past year? What WOULD have been the smart thing to have done? Don’t tell me there shoulda been more bonds, there’s no way they would have made up for the drop in preferreds.

No bonds, eh? Then you did not follow my recommendation, and paid the price for it. A properly-balanced portfolio is down marginally YTD, and the decline will surely be temporary. Next time follow the plan, or stop whining. — Garth

#120 Mark on 10.02.15 at 8:14 am

“To be fair, while mortgage interest in Canada used to finance a primary residence is not deductible, neither are owners taxed on the rental value of their abode. A paid off house is tax efficient compared to using taxed dollars to pay for rent.”

True. However, does that justify the imputed income from housing “costing” around 3X as much as after-tax income from a TSX index constituent stock portfolio?

Even accounting for this advantage, housing prices are so dramatically overvalued that they could fall in half and still be overvalued relative to the Canadian “stock market”.

“If you’re an engineer or CS major and can’t find a job in IT today, you’re probably not that good or socially inept or both.

Sorry to break it to ya

Sorry to break it to ya (not really), but you’re completely wrong and so out to lunch on your comments that your entire narrative is laughable. There are no salary surveys for the IT sector which support the sort of compensation you are claiming, which is logical given the plurality of applicants relative to few available jobs. Stick to things you actually have a clue about please.

#121 waiting on the westcoast on 10.02.15 at 8:15 am

Mark…

Seriously – there is tons of opportunity in the IT sectors. Here in Vancouver, there are hundreds of jobs in many different industries and levels. I am an investor in startups and have seen many more that I haven’t invested in. All are seeking more employees – especially skilled ones.

This link shows the categorization of jobs by role, sector, level, etc.

http://www.bctechnology.com/jobs/job-categories.cfm

#122 Mark on 10.02.15 at 8:19 am

“The introduction of these roles filled with idiots who don’t know anything about either IT or the Business has just created barriers to progress. “

So true. And those individuals usually don’t come out of the engineering or CS programs, but are rather, ‘business’ graduates who took maybe a first year programming course and now think they’re some sort of God’s gift to the company in terms of “IT”. I’ve seen enough of those types to understand completely what you’re talking about. They can rattle off all kinds of terms such as “business process”, or “metrics”, but they can’t build anything that actually works for its intended purpose.

Meanwhile, because they have armies of those sort of people, they typically don’t have much money left over to hire real technology professionals. So they end up with the bottom of the barrel, whether TFW’s, incompetent outsourcing firms, or the marble-mouthed sort of social inbreds that Troll thinks have trouble finding jobs (ironically, the less competent you are, the greater chance of employment in much of the contemporary IT sector). Its basically “the Peter Principle” on steroids out there, which is why nearly every IT project under-delivers and over-costs.

#123 fancy_pants on 10.02.15 at 8:25 am

hey yeah, wow. a drop from 42million from 44million on food stamps. sounds like a recovery to me. smoke and mirrors. economic predictions no longer fit any historical models.

Historically all nations wax and wane in prosperity. The west is entering the waning phase. The country America once adored as indicated in Norman Rockwell paintings no longer exists.

The golden years will soon be behind us. this is what will skyrocket rates:
http://cointelegraph.com/news/115258/rumor-mill-new-reserve-currency-may-rock-us-dollar-in-october

bad things are on your doorstep. living beyond your means? last chance to get your house in order

#124 pbrasseur on 10.02.15 at 8:26 am

#113 Londoner

«Forget social, there’s a higher percentage of idiocy in the IT crowd in general.»

There are a number of incompetent people and opportunists in IT, I’ll give you that, not sure this is avoidable given the high demand, companies cannot be too picky. But I remember it was much worse before the collapse of the .com bubble, even the developers were often incompetent then…

Also I believe management (of projects or people) is a way forward for some who don’t have the proper skills or lack the will to be developers (they find it boring). Then again most developers don’t have the skills nor desire to become manager. It’s ok I guess since the skills required don’t always match, I mean people who are very strong technically but are also people’s persons good at managing are quite rare (and also expensive…)

There’s always a dilemmas between the two sets of skills, I remember a time when managers had to be sound technically, in fact that’s precisely why they got promoted, problem was then they weren’t always good managers.

#125 Q1 Duplex Drive 4-6-4-4 Type on 10.02.15 at 8:39 am

Hey Garth –

US employment numbers bit in September. August and July were both revised DOWN. Bonds are rallying like crazy – 10 year just dropped below 2%. How are ya left?

#126 With All Due Respect on 10.02.15 at 8:39 am

You edited my post. Wow. What a wimp.

Use language like that at home, not here. — Garth

#127 Tony on 10.02.15 at 8:47 am

U.S. September jobs report +142 thousand. Labour participation rate also fell. The more the talk about raising rates in America the lower the monthly jobs figure in the future. Looks like the long term peak in the U.S. dollar is over.

#128 Millmech on 10.02.15 at 8:48 am

#91
Won the lottery?I posted yesterday about my foreman who offered to sell me his house,has lost $1600/mth since purchase,not including property taxes and interest.Still can not cash in his ticket so the size of his negative winnings keeps increasing every month.

#129 Londoner on 10.02.15 at 8:50 am

Payrolls = 142K

Participation rate = 62.4%

Oct rate hike probability = 0%

#130 Londoner on 10.02.15 at 8:58 am

“Portfolios are liquid. Houses are not. Portfolios pay you income. Houses suck it. Gains in registered accounts are also tax-free. Houses have property taxes, need to be insured and maintained. They cost 5% of their market value to be sold. Money borrowed to invest has deductible interest, mortgages don’t. Portfolios are diversified, residential real estate isn’t. Nope, not the same. — Garth”

Nice one! I disagree with you on interest rates but not this stuff.

#131 fancy_pants on 10.02.15 at 9:00 am

My crystal ball still says (as I have been saying for the last 5 years on this blog) that low rates are going nowhere in a hurry. But if inflation and rates do take off it will be due to a significant unforeseen event (like the US dollar going defunct as global reserve currency)

ps. crystal balls on sale at iseefarfar for $2.99
get them while they’re hot b/c they don’t work when they’re not. your mileage may vary.

for every armchair economist that argues black, another argues white. up? no, down. tighten? no, relax. maybe some of them are buying their balls at myopicforesight

#132 World Economy = ponzi on 10.02.15 at 9:04 am

If the free markets were allowed and not the current fascist system you would see much higher interest rate and lower everything else overnight. I don’t understand why governments that talk about free markets hate them so much? US fake job numbers are out and of course big slow down so no rate increase. real economics don’t apply when they change the rules or make up stats to suit the fake story they wish to tell us

#133 Millenial on 10.02.15 at 9:07 am

Payrolls disaster.

#134 Gord In Vancouver on 10.02.15 at 9:08 am

This – the potential of a US rate increase – is huge. And the longer the Fed waits to get the ball rolling, the huger it gets.

Garth, I hope you’re right but given the USA job numbers that were just released (and downward revisions in previous months), it could be awhile before the Fed increases rates. When they do, your “pressed down spring” prediction appears to be much less likely now.

#135 World Economy = ponzi on 10.02.15 at 9:15 am

http://www.theguardian.com/business/live/2015/oct/02/markets-us-jobs-report-non-farm-live-updates

You are a house of cards USA. Canada is a house made of tissue.

#136 Loonie Watcher on 10.02.15 at 9:15 am

The jobs report this morning made a few things abundantly clear:

1) There will be no U.S. rate increase in 2015.
2) There will be no U.S. rate increase in 2016, because:
3) The U.S. is quickly headed into a recession. Expect a U.S. recession to begin by Q116 at the earliest, Q316 at the latest.

What does this mean for the Canadian dollar?

4) The loonie will benefit a little bit in the short-run (i.e., the next week or so), but,
5) After the dismal Canadian jobs report comes out next Friday, the loonie will collapse, and decline steadily to the $0.70 range by the end of the year.
6) As it becomes apparent that a global recession has taken hold, the Canadian dollar will plummet in 2016. It will likely end the year close to $0.60, but I doubt it will breach that level for any meaningful amount of time.

Also,
7) Canadian resource companies like Teck will go bankrupt en masse, and,
8) Canadian banks will likely see their share prices halved.

#137 IHCTD9 on 10.02.15 at 9:17 am

#13 LH on 10.01.15 at 6:41 pm

Not to mention that chicks and hot wives dig property ;)
___________________________________________

Hmmm, I own property, and indeed – my wife is hot.

You may have hit on something here! :)

#138 Bottoms_Up on 10.02.15 at 9:18 am

#108 Christopher Dillon on 10.02.15 at 1:01 am
—————————–
We’ve seen the economist do this before. I can’t locate it but i read an article that said the rent prices they use in their calculations is flawed, that it’s not based on true market rents. I wish someone would dig up the source of their numbers. $800 rent that is legally capped is vastly different than a marketbased rent of $1800…

#139 Bottoms_Up on 10.02.15 at 9:23 am

#96 Yuus bin Haad on 10.01.15 at 10:44 pm
———————————
There is still a large percent of undecided left and centre voters that will make up their mind in the booth. This has got to be scary for the conservatives.

#140 H on 10.02.15 at 9:26 am

wow–didnt see that coming.

US jobs revisions lower
Wage increases dropping
Job gains dropping

Oh wait, I did. But was mocked and dismissed.

Cue the revisions—“march of 2016 rate increase”

Or more accurate revisions of QE4 coming.

I would err on the later according to the bond market and the Fed funds futures.

#141 IHCTD9 on 10.02.15 at 9:28 am

#11 balance ha on 10.01.15 at 6:39 pm
My portfolio has lost 6.5 percent so far this year..but my brothers house has gained 8 percent this year wonder who is better off at the end of 2016.
____________________________________________

I don’t know about these days, but back when I was paying a mortgage at ~ 6.4%, the totals for taxes, insurance, mortgage interest, CMHC, and maintenance averaged about 10% of my original purchase price per year thru my first term.

Your bro probably is not being intellectually honest about the cost of ownership. Alas, even at -2% or so, he is still doing better than you this year.

Problem is, -2% is probably about as good as it’s going to get for him from here on out…

#142 sexist or first freedom? on 10.02.15 at 9:34 am

Come by yourself or bring a group, all men are invited to this free preview event developed especially for men.
This seminar teaches you how to get started in real estate investing and teaches you how to do it yourself. It is by men, for men. There will only be men speakers and men in the audience. It is a great opportunity to learn from great instructors who have your best intentions in mind.

#143 Ronaldo on 10.02.15 at 9:59 am

#123 prasseur –

”There’s always a dilemmas between the two sets of skills, I remember a time when managers had to be sound technically, in fact that’s precisely why they got promoted, problem was then they weren’t always good managers.’

That is absolutely true. Many times companies will promote individuals into management positions thinking they need to reward them for long service because they have been great engineers or whatever and have done a great job. Often these people are not good at managing people and end up hating their jobs and making other employees lives miserable. If you’ve read the book, “The Peter Principle”, it will explain all about this sort of thing and much more about people rising to their level of incompentence.

#144 Johnny d on 10.02.15 at 10:03 am

@#135 Loonie Watcher on 10.02.15 at 9:15 am
The jobs report this morning made a few things abundantly clear:

1) There will be no U.S. rate increase in 2015.
2) There will be no U.S. rate increase in 2016, because:
3) The U.S. is quickly headed into a recession. Expect a U.S. recession to begin by Q116 at the earliest, Q316 at the latest.

What does this mean for the Canadian dollar?

4) The loonie will benefit a little bit in the short-run (i.e., the next week or so), but,
5) After the dismal Canadian jobs report comes out next Friday, the loonie will collapse, and decline steadily to the $0.70 range by the end of the year.
6) As it becomes apparent that a global recession has taken hold, the Canadian dollar will plummet in 2016. It will likely end the year close to $0.60, but I doubt it will breach that level for any meaningful amount of time.

Also,
7) Canadian resource companies like Teck will go bankrupt en masse, and,
8) Canadian banks will likely see their share prices halved.

————————————————————————————

…9) and then an asteroid will crash into earth, killing off all life as we know it. Apple shares will lose only 5%.

#145 Ronaldo on 10.02.15 at 10:10 am

#121 Mark

”Its basically “the Peter Principle” on steroids out there, which is why nearly every IT project under-delivers and over-costs.”

Absolutely. Saw it many times myself. I was working for a large company several years ago and we had an army of these people in developing systems which never worked properly and we had to let them go after spending millions. It was a runaway. We finally ended up hiring two full time programmers who basically trashed the previous systems and redid the whole works over a couple year period and got a fairly decent working system. The previous contractors had us by the short ones until finally we decided that enough was enough and put the boots to them.

#146 Ralph Cramdown on 10.02.15 at 10:21 am

Hey, remember when bad news was good news? That was bad news. Now bad news is bad news again, and that’s good news!

#141 sexist or first freedom? — “Come by yourself or bring a group, all men are invited to this free preview event developed especially for men.”

Affinity fraud.

#147 Canadian Housing on 10.02.15 at 10:22 am

This was the last big report before the Oct Fed decision. Jobs way down & previous months revises lower. If they were on hold in Sept, there is no way that things will drastically improve for the December decision. Markets are falling, the world economy is suffering and commodities are staying low.

The Fed is now on hold until at least March.

Canadian housing will not see an interest rate driven force lower for at least another year. With listings drying up, interest rates low, government incentives and some foreign buying pressure, prices will hold up and may even go higher for another year. The winter real estate season will more than hold up and spring will heat up once again.

#148 Mark on 10.02.15 at 10:24 am

” 6) As it becomes apparent that a global recession has taken hold, the Canadian dollar will plummet in 2016. It will likely end the year close to $0.60, but I doubt it will breach that level for any meaningful amount of time.”

Very doubtful. Canada’s fiscal position is amongst the best in the industrialized world. Canada has a huge amount of domestic deflation in the pipeline originating from the housing sector and the necessity of repaying debt associated with housing and consumer consumption. There is no pent up demand in Canada except for Canadian dollars which the Canadian public is notoriously short of (debt!!). Deflation typically results in a higher, not a lower currency, although there can be a short term transitory period of a lower currency at least initially into a deflationary period — a sort of blow-off top sucking the few remaining gullible borrowers into the vortex (ie: people who are bidding top dollar for luxury properties in GTA/GVR today!).

If anyone remembers the 2006-2008 era in the USA, the currency took a big dump after the statistical peak of the US RE market. But as panic set in, demand for USD$, as opposed to assets such as mortgages and houses, became voracious. There is no reason to believe a similar dynamic won’t play out in Canada as its RE market starts into a terminal dive from the relatively smooth descent we’ve seen in the past couple years.

#149 TJM on 10.02.15 at 10:31 am

Response to #118

“No bonds, eh? Then you did not follow my recommendation, and paid the price for it. A properly-balanced portfolio is down marginally YTD, and the decline will surely be temporary. Next time follow the plan, or stop whining. — Garth”

Okay, first off… that’s uncalled for. We appreciate your curmudgeonly directness, but I think I made a pretty reasonable point about not messing with people’s heads and reinforcing their tendency to panic.

Secondly, I actually went and checked my portfolio, mostly bought last December, plus a few later buys after some things dropped. And here it is:

My five equal piles, bought December 2014:

1) S&P 500 ZUE (hedged to CAD) down 5.8%
2) S&P 500 ZSP (not hedged to CAD) down half a percent. Damage mitigated entirely by collapse of CAD.
3) ISHARES S&P/TSX 60 INDEX ETF(XIU) down 10%

So that’s 60% growth stuff, of which 2/3 American and 1/3 Canadian, plus some extra caution in splitting between currency-hedged and not-currency-hedged.

4) BMO S&P/TSX LADDERED PFD SH IN (ZPR) down 23% (actually down more, because part of this includes the extra I bought after the first big drop and has fallen less than did the original buy.)
5) ISHARES S&P/TSX CAPPED REIT IN (XRE) down 9%

Plus a bit of Europe (BMO MSCI EUROPE HIGH QUALITY (ZEQ)) – down 4%. (Because international is good.)
And some US REIT, up 4%

So overall, down 8% from a year ago. And you’re saying that putting part of that 40% safe in bonds would have made the difference because… what… bond funds are up more than 50% from last year? Because that’s what it would have taken for them to make up for the drop in everything else.

It’s one thing to recommend diversification–I think it’s the right thing to do. But it’s quite another to retroactively claim that any deviation from the details of that diversification is the cause of your ruin. It’s oracular in its sketchiness.

(Hey, wait, maybe I needed some more China in there!)

Your choices were poor. You do not have the fixed income weighting I suggested. Hence, you are on your own. Reap the results. — Garth

#150 Butch on 10.02.15 at 10:32 am

Did you see that jobs report?

2015 Sept/Oct/Nov/Dec rate rises? Pffffft.

2025. Maybe.

#151 young & foolish on 10.02.15 at 10:34 am

“Your handle is apt. But you have come to the right place. Good on you.”

Well, maybe I am foolish … but I thought it was a fair question regarding the Rule of 90. Some residential RE is held for income (rental units) and some even make up REITs (apartments).

#152 Incubus on 10.02.15 at 10:38 am

“My expectation is that the Fed will soon reverse course and return to some form of easing — probably more forward guidance and a cheaper dollar. If I’m wrong and the Fed actually does raise rates, deflation will get worse and a global recession will emerge.”

http://dailyreckoning.com/how-inflation-could-be-caused-in-15-minutes/

#153 Sheane Wallace on 10.02.15 at 10:51 am

Job report disappointing, prior is revised down.

Not very rosy picture, so no rate hike in October. Not very likely in December either.

At some point they have to pull the trigger. The sooner the better. Or inflation will kill us down the road.

#154 Stoopid Idiot on 10.02.15 at 10:57 am

World set for emerging market mass default, warns IMF Higher US interest rates will expose weaknesses in emerging market corporations which have gorged themselves on cheap debt, IMF warns

By Szu Ping Chan
6:50PM BST 29 Sep 2015

The International Monetary Fund (IMF) has issued a double warning over higher US interest rates, which it said could trigger a wave of emerging market corporate defaults and panic in financial markets as liquidity evaporates.

The IMF said corporate debts in emerging markets ballooned to $18 trillion (£12 trillion) last year, from $4 trillion in 2004 as companies gorged themselves on cheap debt.

It said the quadrupling in debt had been accompanied by weaker balance sheets, making companies more vulnerable to US rate rises.

“As advanced economies normalise monetary policy, emerging markets should prepare for an increase in corporate failures,” the IMF said in a pre-released chapter of its latest Financial Stability Report.

It warned that this could create a credit crunch as risks “spill over to the financial sector and generate a vicious cycle as banks curtail lending”.

In a double warning, the IMF said market liquidity, or the ease with which investors can quickly buy or sell securities without shifting their price, was “prone to sudden evaporation”, particularly in bond markets, when the Federal Reserve started to raise interest rates.

It said a steady growth environment and “extraordinarily accommodative monetary policies” around the world had helped to maintain a “high level” of liquidity. However, it warned that this was not the same as “resilient” liquidity that could support markets in time of stress.

http://www.telegraph.co.uk/finance/economics/11898936/World-set-for-emerging-market-mass-default-warns-IMF.html

#155 The Other Chris on 10.02.15 at 10:59 am

I have to disagree with Mark on IT jobs. I’m not in IT, but just looking at the job postings, it’s pretty clear that tech is the one industry where hiring is still exceptionally strong, and with good pay. It’s also basically the one industry where the federal government seems to be having trouble filling all of their open positions, despite the high (but not competitive for tech) salaries, fantastic pensions, and job security the feds offer.

#156 Leo Trollstoy on 10.02.15 at 11:01 am

Mark…Seriously – there is tons of opportunity in the IT sectors. Here in Vancouver, there are hundreds of jobs in many different industries and levels. I am an investor in startups and have seen many more that I haven’t invested in. All are seeking more employees – especially skilled ones.

He has a hard time finding a job let alone one that pays well. That’s why he tries to paint the industry with his brush of failure. He has a failure bias.

IT is booming and he’s been left out.

#157 Leo Trollstoy on 10.02.15 at 11:03 am

#113 Londoner on 10.02.15 at 4:32 am

Good to know!

#158 Leo Trollstoy on 10.02.15 at 11:04 am

There are a number of incompetent people and opportunists in IT, I’ll give you that, not sure this is avoidable given the high demand

That’s a good point.

#159 Basil Fawlty on 10.02.15 at 11:18 am

Oh oh, what if the doomers and bullion lickers were correct. Has reality caught up with the the strong US economy meme?
A lot of rot can be hidden by ZIRP and money printing.

#160 old gringo on 10.02.15 at 11:24 am

I have recently worried about China.This will affect our markets, just not sure how much!

From Financial Post.

Fears that China is heading for a “hard landing” have prompted the greatest flight for safety since 1988, it emerged this week, with investors on track to pull US$541 billion out of emerging markets this year.

#161 Retired Boomer - WI on 10.02.15 at 11:33 am

#86

Chuckle of the day comment. Can I get an a- (never mind)…

Great mind.

#162 Oceanside on 10.02.15 at 11:34 am

#138 Bottoms_Up on 10.02.15 at 9:23 am
#96 Yuus bin Haad on 10.01.15 at 10:44 pm
———————————
There is still a large percent of undecided left and centre voters that will make up their mind in the booth. This has got to be scary for the conservatives.

In the last BC election the polls had the NDP with a safe majority but at the polls a lot of people got cold feet and voted for the incumbents who had been throwing taxpayers money all over the place, selling off the province’s assets but ran on a platform of fiscal responsibility…..Sound familiar?

#163 Samantha on 10.02.15 at 11:43 am

Mark, sorry to break it to you but IT demand is really hot across the board in both Canada and US. So as usual you are the clueless one:

http://finance.yahoo.com/news/jobs-where-students-lock-in-6-figure-salaries-months-ahead-of-graduation-115653722.html#

If you are in IT (I doubt it) better spend some time doing actual work instead of posting 50 comments here daily. If you do that you will see that making $100K a year in IT is not a big deal.

And as for your repeated laughable claims that housing in GTA has been falling for the last 2 years, have a look at some sold listings before you open your mouth:

http://v3.torontomls.net/Live/Pages/Public/Link.aspx?Key=07a644061cc84ca8b4c2360a2ce29015&App=TREB

———————————————

#119 Mark on 10.02.15 at 8:14 am

Sorry to break it to ya (not really), but you’re completely wrong and so out to lunch on your comments that your entire narrative is laughable. There are no salary surveys for the IT sector which support the sort of compensation you are claiming, which is logical given the plurality of applicants relative to few available jobs. Stick to things you actually have a clue about please.

#164 Tony on 10.02.15 at 11:50 am

Re: #6 LH on 10.01.15 at 6:14 pm

The two factors are the falling birth rate and the Millennials being both broke and lazy. Zero demand for money. Like a vicious circle the lower interest rates fall the poorer the people on fixed income become. Again less demand for money.

#165 Ralph Cramdown on 10.02.15 at 11:57 am

How not to raise capital:
– raise your dividend
– a few months later, tell investors that you’re taking a restructuring charge and need to shore up your capital base
– sell shares in a “bought deal” led by your in-house underwriter
– set the price just before the US jobs report lays an egg
– watch your share price tank 5.5%, to over a buck BELOW the bought deal price
– run away, quickly, from the flaming bag of crap you’ve just left on investors’ (and maybe slow moving fellow underwriters’) front porches

Ladies and Gentlemen, National Bank of Canada, now yielding 5.1% in a somewhat ponzi-like manner!

#166 TurnerNation on 10.02.15 at 12:05 pm

No rate hike this year folks. It’s coming (it surely is).
So’s the spaceship taking us all to Planet TurnerNation.

#167 Marcus on 10.02.15 at 12:08 pm

Record 94,610,000 Americans Not in Labor Force…
Participation Rate Lowest Since 1977…
Record 56,647,000 Women Not Working…
Jobs Up ONLY For IMMIGRANTS; Down 262,000 For ‘Native-Borns’…
‘Payrolls Disaster’…
‘Fed never going to raise rates’…
IT’S UGLY!
FLASHBACK: IT’S GOING TO BE GREAT…
Bank Stocks Tumble…
Markets at ‘panic levels’…

#168 Bottoms_Up on 10.02.15 at 12:13 pm

Letter from Harper to federal public service, and I quote:

“The public service pension plan is solid and fully-funded, and there is no need to make any such changes. These are the facts.”

http://ottawacitizen.com/news/politics/stephen-harper-writes-open-letter-to-canadas-public-service-tries-to-correct-misinformation-on-sick-leave-and-pensions

#169 learningfromyou on 10.02.15 at 12:30 pm

>No capital gains inside a TFSA or RRSP; and no property >taxes, insurance, mortgage payments, closing costs or >maintenance on the portfolio, plus any leverage is tax->deductible. — Garth

Please help me out with the following question
-If I have a secure credit line against a property and I pass these funds to a registered, or TFSA ,or RRSP account and invest them from there, in all the scenarios the interests paid for the loan are tax deductible?

No. The funds must flow first to a non-registered account. — Garth

Thank you in advance

#170 Breaking News... on 10.02.15 at 12:31 pm

Conservatives heading for a majority..

The MSM media has done a fine job confusing the public…Pump up the NDP at expense of Liberals and now NDP support is plummeting…The public is too shallow to know what strategic voting is.

Awesome strategy or dumb electorate?

#171 James on 10.02.15 at 12:40 pm

Garth,

I too believe you are incorrect on your prediction of rate increases. It’s impossible to say that there will ‘Never’ be a rate increase, but the global fundamentals make it certain that it will not happen in the foreseeable future (5-10 year time horizon). Even if the fed goes 0.25%, it will be a one and done for many years to come.

As a former executive and trader for one of the largest Canadian banks and current manufacturing business owner, I’m well qualified to speak to the current situation. The two largest forces driving the developed world right now are population demographics (too many wrinklies as you refer to them) and mechanization/automation. In order to prevent recession, interest rates must be kept at or near zero to continue the consumption/debt economic paradigm. I can tell you first hand that every single day I work on investing in new robotics to replace workers, reduce wages and cut costs. We will continue to do this until we have as close to zero plant workers as possible. Every manufacturing company is pursuing the same strategy.

What people fail to realize is that the current zero interest rate policy exacerbates this problem. I can borrow money for almost 0% interest. I then invest that money in new equipment to eliminate workers. I then fire the workers, which reduces employment. In response, the central banks reduce interest rates. Do you see how this works? Every time they make capital cheaper, I invest it in eliminating jobs, which then just makes capital even cheaper. Raising minimum wage accomplishes the same thing.

Machines which used to have a 24-36 month payback period, are now 12-18 months. If the machine pays for itself in 12 months, how can I not borrow to purchase it?

The third part of the equation is that every time I invest in new machinery and eliminate employees, I become more productive. Since my factory is more productive, I have no reason to raise prices. In fact, we typically reduce prices to drive volume. Since prices are not rising, the central banks think they need to lower rates even further to stimulate inflation. The circle starts ALL OVER AGAIN! I invest in more equipment, fire more workers, become more productive, lower prices, ETC. ETC. ETC.!!!!

Garth – You tell me how the central banks can escape this low interest rate debt prison they have created for themselves! I’m just giving you my perspective as a business owner.

#172 David Lee on 10.02.15 at 12:43 pm

… and this is why property values won’t fall in any material way in GVRD; governments won’t let them:

http://www.vancouversun.com/business/liberals+work+revisions+property+transfer/11406931/story.html?__lsa=7aff-d5c5

The debt-loving majority and the governments they vote in at municipal, provincial and federal levels will continue the “you wash my back and I’ll wash yours” arrangement. Everything will be done to ensure the single asset strategy works. It’s working and looks like it will work for the foreseeable future.

This is really why the BC Liberals are still in power and why Deceivin’ Stephen will still be in power at the end of the month.

Yes Garth, I will go out and vote, not to punish, but based on what ever substance I can find in my local candidates’ positions. But it’s slim pickings. Our electoral system does not work: the social contract between generations is broken and it doesn’t look like it will be fixed anytime soon.

#173 Leo Trollstoy on 10.02.15 at 1:01 pm

#166 Marcus on 10.02.15 at 12:08 pm

That means 20 million people are of normal working age, not in college and not working. That’s less than one-quarter the amount repeatedly cited in the blogosphere.

So the 90 million number is exaggerated.

http://www.politifact.com/truth-o-meter/statements/2013/jul/30/blog-posting/are-90-million-americans-not-working-or-looking-wo/

Sorry buddy

#174 Edward on 10.02.15 at 1:01 pm

Check out the amount of US layoffs announced for October:

http://www.cnbc.com/2015/10/02/cashin-this-is-not-going-to-be-a-pleasant-christmas.html

#175 Leo Trollstoy on 10.02.15 at 1:03 pm

#162 Samantha on 10.02.15 at 11:43 am

Mark has a history on this blog of being the village not-genius.

The flavour of this month is Mark being wrong about IT job opportunities and Toronto RE prices.

#176 Terry on 10.02.15 at 1:08 pm

US hiring slows……142K jobs created in September, August jobs number revised down to 136K. US manufacturing barely expands in September while global growth continues to stall. US factory orders drop 1.7% in August its biggest decline in 8 months. Doesn’t sound like a booming US economy to me Garth? Forget about a rate hike everyone the US is heading into a recession very shortly.

The comments on here are really entertaining me today. US recession? Yeah, sure. — Garth

#177 Sheane Wallace on 10.02.15 at 1:23 pm

#170 James

You can become as productive as you like but without consumers your productivity is nothing.

The danger is that the idiotic monetary policies are destroying future consumption by pulling it forward and by eliminating savings.
Automation of work is secondary factor, also contributing to the problem.

With declining consumption and the current banking model dependent on perpetual nominal ‘growth’ at some point we will face the music with:

– Either deflationary depression and economy goes down the drain
or
– Lost of faith in currencies and monetary reset.

They cannot indefinitely postpone the increase in interest rates without consequences.

It is either the economy or the monetary system with the second far more important.

What seems so far like a remarkable play by Central banks is simply a transitional episode, repositioning for the tomorrow global reality. In that reality local real estate and labour would most likely not be major factors influencing economy and determining wealth.

#178 bdysktn on 10.02.15 at 1:32 pm

#145 Ralph Cramdown on 10.02.15 at 10:21 am
Hey, remember when bad news was good news? That was bad news. Now bad news is bad news again, and that’s good news!
—————————-
hey, hey, perhaps you spoke too soon.

we’re back to bad news being good news, and that’s bad news! (indexes all green!)

jobs and factory orders make it a slam dunk for no rate increase anytime soon.
markets seem to like it.

Might be useful for you to read this. — Garth

#179 Nemesis on 10.02.15 at 1:35 pm

#AnyResemblance… #ToGlobalCapitalMarkets…. #IsPurelyCoincidental…

“Stop it, bear! Stop it. Bear. Bear. Bear… You’re breaking my kayak! Why are you doing that? Why are you breaking my kayak?” she shouts. “Bear! Please stop breaking my things! It’s not — it’s not even food. It doesn’t even taste good! It’s just plastic!”

[CBC] – Bear eats Alaska woman’s kayak right after she thanks it for not eating her kayak

http://www.cbc.ca/news/trending/bear-eats-kayak-in-alaska-pepper-spray-1.3253168

#180 westcdn on 10.02.15 at 1:43 pm

I am feeling a bit more confident in oil prices. I think we have hit bottom and bounced. It will be a long time before we get back to $60 us WTI but I can see it happening in 2016. Alberta has more pain to go through and I still remain in favour of a sales tax (HST) over an income tax increase. I still see my property taxes (which include education taxes) increased by about 40% by the end of 2019. I will stay quiet about government employees because there is more bad news to come.

I see Alberta RE softening about 20% from July 2014 pricing. Fewer people are leaving the province than happened in 1983. It speaks to Albertans and our willingness to tough it out. My vision will change. I remain disappointed in our elites.

#181 Retired Boomer - WI on 10.02.15 at 1:44 pm

It is most democratic to share the spotlight of “village idiot” as well as “Town Drunk” amongst the rest many posters on here.

That HAS been the tradition for a good number of years. Some have had a great run for either title, occasionally both, and sometimes neither.

Wits and Wisdom ebb ad flow, much like money. Why do you think they call it “currency”?

Still my most interesting read on most days.

#182 bdy sktn on 10.02.15 at 1:49 pm

“Stop it, bear! Stop it. Bear. Bear. Bear… You’re breaking my kayak! Why are you doing that? Why are you breaking my kayak?” she shouts. “Bear! Please stop breaking my things! It’s not — it’s not even food. It doesn’t even taste good! It’s just plastic!
_________________
After listening to that voice how could anyone not be cheering for the bear to chew the kayak to shreds.

#183 Donald Trump loves women on 10.02.15 at 1:49 pm

#178 Nemesis

“Stop it, bear! Stop it. Bear. Bear. Bear… You’re breaking my kayak! Why are you doing that? Why are you breaking my kayak?” she shouts. “Bear! Please stop breaking my things! It’s not — it’s not even food. It doesn’t even taste good! It’s just plastic!”
……………..
After listening to her rants, I really wanted the bear to turn his/her attention from the kayak to the person narating the video.

#184 Russ on 10.02.15 at 1:54 pm

Nemesis on 10.02.15 at 1:35 pm

“Stop it, bear! Stop it. Bear. Bear. Bear… You’re breaking my kayak! Why are you doing that? Why are you breaking my kayak?” she shouts. “Bear! Please stop breaking my things! It’s not — it’s not even food. It doesn’t even taste good! It’s just plastic!”

[CBC] – Bear eats Alaska woman’s kayak right after she thanks it for not eating her kayak
==========================

Do we need any more proof a bear market is here (at least for kayaks) ?
:)

It seems the bear was most interested in the kayak seat… maybe smelled some tuna…?

#185 kommykim on 10.02.15 at 2:16 pm

RE:#118 TJM on 10.02.15 at 8:07 am
The one point I differed on is that bonds did not make up any of my 40% safe stuff–it was all preferreds and REITs.

That’s your mistake right there. Unless your investments are in a taxable account, there is ZERO reason to sub preferred shares for bonds and MANY reasons not to. In a TFSA or RRSP DON’T use preferred shares for the fixed income amount. Use bonds.
If you are worried about interest rates rising, buy short term bonds for the 40%. REITs don’t factor into the 40% at all.

#186 Carl on 10.02.15 at 2:19 pm

Bring on Sales Tax for Alberta…Go Kijiji!

#187 Nagraj on 10.02.15 at 2:23 pm

In Canada, lower-than-a-snake-in-the grass interest rates coupled with incomprehensible political (and public) stupidity, have distorted the Canadian economy – catastrophically.
The Canadian housing bubble, and Canadian household (and gov’t debt levels) are already a disaster.
Canadians who believe this country’s economy, or its currency, have a bright future are crazy. It is not unheard of for nations to go collectively nuts.

Today’s US jobs report and factory orders data confirm that ZIRP qualifies at best as – useless.
To continue ZIRP risks the sort of gross distortions we’ve seen in German Bunds. And note that ridiculous German yields have done zip for the DAX. I’ve come to think of ZIRP as Un-american.

The Canadian Prime Minister admits to no housing bubble, and has explained the household debt bubble as evidence of Canadians’ faith in the Canadian economy; so it’s no surprise, is it, that this freak wants to see a 725% home ownership rate here. [This bozo needs to be “headsacked”. Somebody get him a nqsquab thingy.]

“Things are never quite right.” True. But there are also times when things are particularly whacko. Like now.

Our gracious host is still absolutely correct in calling for the normalization of rates, and in warning Canadians to equate domestic real estate with the plague.

#188 hhhhh on 10.02.15 at 2:48 pm

the US is slowing down and you are totally missing the data. NFP is slowing. no rate rise.

#189 M_S on 10.02.15 at 2:59 pm

“Your choices were poor. You do not have the fixed income weighting I suggested. Hence, you are on your own. Reap the results. — Garth”

Garth,
His choices indeed seem poor

But to be fair, I assume he doesn’t have much capital so he would probably go with a single bond ETF

assume VAB or VSB or similar. These gained ~0.3% YTD and have a small yield payed as distributions

This still means YTD volatility in the portfolio. Not everybody has the tolerance necessary

#190 M_S on 10.02.15 at 3:02 pm

“5) After the dismal Canadian jobs report comes out next Friday, the loonie will collapse, and decline steadily to the $0.70 range by the end of the year.”

Wouldn’t bet on a dismal Canadian jobs report this close to the election date. Especially with the track record of Stas. Canada

#191 Holy Crap Wheres The Tylenol on 10.02.15 at 3:12 pm

#179 westcdn on 10.02.15 at 1:43 pm

I am feeling a bit more confident in oil prices. I think we have hit bottom and bounced. It will be a long time before we get back to $60 us WTI but I can see it happening in 2016. Alberta has more pain to go through and I still remain in favour of a sales tax (HST) over an income tax increase. I still see my property taxes (which include education taxes) increased by about 40% by the end of 2019. I will stay quiet about government employees because there is more bad news to come.

I see Alberta RE softening about 20% from July 2014 pricing. Fewer people are leaving the province than happened in 1983. It speaks to Albertans and our willingness to tough it out. My vision will change. I remain disappointed in our elites.
____________________________________________
At least they come back in Alberta, it hurts but the fact is we all need oil. Here in the rust belt of Ontario once the companies fold and the workers go they never come back. In Ontario we are going to have to change our car tags from, “Yours to Discover” to “The Welfare Province”.

#192 Darryl on 10.02.15 at 3:20 pm

US just released the job numbers for September… they were not great… so like you said “no cigar this time”. Maybe emphasis needed on “this time”.

Many new jobs are low paying positions, like in the food and beverage industry. For this reason, spending into Christmas this year will be modest. FED would be nuts to touch interest rates yet… if anything they should announce that THEY WON’T raise rates until sometime in 2016… and Merry Christmas everyone… Here’s a free copy of Miracle on 34th Street! Enjoy!

Garth, I like your style…. even though your predictions are not always bang on, it gets your readers attention, and thus interested in the many economic levers.

Good read!

#193 Bill Gable on 10.02.15 at 3:23 pm

American job numbers were brutal.

Now there is talk of NO INTEREST RATE increase this month – maybe not even in December:

Link: http://tinyurl.com/oc6j7s9

#194 Bottoms_Up on 10.02.15 at 3:28 pm

#187 hhhhh on 10.02.15 at 2:48 pm
———————————————
Smoking man called this like 1 year ago.

#195 Jim B on 10.02.15 at 3:31 pm

What exactly might it be that the FOMC “knows” about the US economy that no one else (including captains of industry) knows? This myth is often trumpeted on the likes of CNBC with not even the most basic speculation as to how/why the Fed is keeping crucial, ostensibly public, information under wraps, nor what this mysterious information might be. The Fed does not “know” anything (relating to the US economy, or anything else) that is not common public knowledge/data, so please stop perpetuating this myth. And all traders know this (okay, maybe not your Uncle Frank) so attributing market action (positive or negative) to “fear (that the) central bankers…must know some scary stuff” that no one else, including Wall Street, knows, is simply lazy punditry. And Garth, you are obviously not a lazy pundit (usually).

#196 jess on 10.02.15 at 3:47 pm

#134 World Economy = ponzi on 10.02.15 at 9:15 am

ponzi finance pik toggles ? consulting /advisory dividend fee suckers

http://uk.reuters.com/article/2013/12/06/us-usa-qe3-piktoggles-special-report-idUKBRE9B50G620131206

The Hypocrisy of ‘Helping’ the Poor
By PAUL THEROUX OCT. 2, 2015
new york times opinion

==========

In 1998, the government of Argentina awarded to a subsidiary of Siemens Aktiengesellschaft (Siemens AG) a contract worth approximately $1 billion to create state-of-the-art national identity cards (the Documento Nacional de Identidad or DNI project). The Argentine government terminated the DNI project in 2001.

In connection with his guilty plea, Truppel admitted that he engaged in a decade-long scheme to pay tens of millions of dollars in bribes to Argentine government officials in connection with the DNI project, which was worth more than $1 billion to Siemens. Truppel admitted that he and his co-conspirators concealed the illicit payments through various means, including using shell companies associated with intermediaries to disguise and launder the funds, and by paying $7.4 million as part of a hedging contract with a foreign currency company incorporated in the Bahamas.

In addition, Truppel admitted that he and his co-conspirators paid nearly $1 million to a former official in Argentina’s Ministry of Justice that was used to bribe an Argentine government official.

Truppel also admitted that he used a $27 million contract between a Siemens entity and a company called MFast Consulting AG that purported to be for consulting services to conceal bribes to Argentine officials.

http://www.justice.gov/opa/pr/former-chief-financial-officer-siemens-argentina-pleads-guilty-role-multimillion-dollar

#197 James on 10.02.15 at 3:52 pm

#176 Sheane Wallace

Canadian consumers are irrelevant to manufacturing businesses. Not only do we have virtually no population by global standards, our weak dollar disincentives any sales in Canada. Also, don’t even get me started on dealing with Canadian retailers… They are literally the worst that I have dealt with globally.

Therefore, contrary to your comments, productivity is everything. Global demand is created by furthering the cycle of lower interest rates and increasing debt. I just get to fund my productivity by borrowing in Canadian dollars at low Canadian interest rates.

I fully agree that the end result will eventually be a loss of currency faith or a deflationary spiral. However, we are a long way from either of those events occurring. Just look at Japan’s debt and GDP ratios. Most developed countries are not even close, and Japan has yet to experience a loss of currency faith. We can easily maintain this debt model for at least another decade. Hence, my comment about no rate hikes in the foreseeable future (5-10 years).

While it may seem like I’m only focusing on manufacturing, the same logic applies to almost every business. My trucking company, for example, will be replacing every driver with autonomous trucks the moment they are available. Again, the extra expense of the autonomous trucks will be paid for by cheap capital. We get to fire more Canadian workers, which incentivizes the BOC to lower rates, which incentivizes me to borrow more to buy more autonomous trucks. Welcome to the future of most industries.

#198 Smoking Man on 10.02.15 at 3:54 pm

#101 LH on 10.01.15 at 11:12 pm
Look forward to having a pint together one day Smoking Man! Are you going to be in NYC?
…..

Might in about 3 weeks, next week in Boston,

Contact me.

[email protected]. Of look me up on Twitter @SmokingMan

FYI rotated half my USDCAD to long curde. Can’t wait for the Fed, they had a chance in Sept and blew it. Now no God damn way for 2016

For CAD rates, look at export numbers on Wednesday . More important than Fridays job numbers for longer term bets on CAD rates.

#199 Smoking Man on 10.02.15 at 4:03 pm

#190 Holy Crap Wheres The Tylenol on 10.02.15 at 3:12 pm

Don’t you just love how any criticism of Wynne, she changes it to your a Homo phone.

This ding aling has no idea how business thinks, or she doesn’t care so long as her secret agenda goals are met no mater the cost to the province.

Ladies free invetro, 10k a pop.

And don’t worry gays and lesbians. We are going forward to remove the words Mother and Father from every Ontario form. Cost be damned.

I will not tolerate anyone of you feeling less than or offended.

You come first..

#200 Sheane Wallace on 10.02.15 at 4:03 pm

http://www.marketwatch.com/story/october-hike-ruled-out-as-economists-say-2015-hike-unlikely-2015-10-02?mod=MW_story_top_stories

No rate hike,

#201 Leo Trollstoy on 10.02.15 at 4:11 pm

Smoking man called this like 1 year ago.

SM knows what’s up.

His game is spot on.

#202 Leo Trollstoy on 10.02.15 at 4:12 pm

Interest rates will stay low and the Canadian RE party will go on.

Especially Toronto and Vancouver.

Ridiculous

#203 Patrick on 10.02.15 at 4:28 pm

#198 Smoking Man on 10.02.15 at 4:03 pm

“This ding aling has no idea how business thinks, or she doesn’t care so long as her secret agenda goals are met no mater the cost to the province.”
_____________________________________________

I worked in a municipal government office for 1 year, planning department. Most painful year of my life. Not a soul in that building had a clue how the real world worked, nobody had ever worked a real job and they were all making 70-90k+ a year.

You shouldn´t be allowed to get a job straight out of school in government. Minimum 10 years in industry/business. Or else you get a whole government full of ding alings like Wynne.

#204 alberta on 10.02.15 at 5:59 pm

http://globalnews.ca/news/2253952/calgary-real-estate-market-creates-accidental-landlords-forced-to-rent-instead-of-sell/
“But as we know, oil is down and the real estate market is shaky so…sellers are being forced to drop prices by 10, 20 or 30 per cent,”

#205 Bytor the Snow Dog on 10.02.15 at 6:38 pm

117 TomJones on 10.02.15 at 7:58 am
Oh Garth – you’re such a smart man and usually dead on about most things….but you’re way off on your optimism for the US market (in my opinion).

Rates will not go up. Not this year or the next. (if they do, its a 0.25% increase and then back down to 0%). If they couldn’t do it in March or September, what makes anyone think that something will change in one month to increase it JUST a quarter point???

They are living in yet another bubble, this time bigger, fueled by the same thing that got them into trouble the last time…cheap $$.

Investing in the US today is a fool’s bet –

You know Tom, It’s Not Unusual…

#206 AckNack on 10.03.15 at 8:17 am

Ooops, trying again, because you deleted it for some unknown reason. The comment was not offensive. It was a description of reality, consistent with some other posters.

Garth, Yellen passed out and was taken out on a stretcher to an ambulance. She is not up to the job. Job numbers for September and the downwards revision to August are telling the true story: NO RECOVERY IN USA. Fed can’t raise rates. If they do, USA government becomes insolvent.

Global money supply is slowly imploding. Commodities are back down to their lowest levels of 2007 and March 2009 – and they are under pressure to decline even farther.

Although US$ index is in decline from its high of 105, is now at about 95 and is probably moving towards 82, this decline is just a reaction in the long-term bull market. US$ is in long-term deflation precisely because debts, globally, have risen to unrepayable levels and are at long-term unsustainable levels. Deleveraging and defaults are inevitable. Cancellation of energy projects, layoffs, and Emerging Markets that are imploding due to capital flight – all mean that money supply is imploding due to deleveraging. Price deflation in more sectors will soon follow.

My suggestion to you: Stop singing the praises of the USA government, Fed, or their supposed recovery. Their housing market was held up by corporate purchases that have been losing money. There ain’t any recovery. Their Fed is just printing money to offset the implosion of the money supply (i.e. debt deleveraging). And the printing game is up.

All the preparations in the USA’s homeland security, military acting as police, ‘shelter in place’ futile exercise following the Boston Marathon terror attack are all for one purpose: Be ready to deal with mass unrest and riots when USA government MUST implement severe austerity due to the reality of a Greater Depression than that of 1920’s and 30’s.

God help us.

God help you. BTW, give us a link to Yellen collapsing, and not from a fictional doomer site. — Garth

#207 DEVELOPERS GALORE on 10.03.15 at 7:58 pm

Everywhere I go, there are old commercial building on sale. Blocks of homes in residential areas are being sold to build condo towers. People I know are getting double the assessment price from developers so they can buy the old apartment to redevelop. People saying Vancouver will never be affordable again. Vancouver is so desirable and the wealth around the world wants to be here.

I have been waiting a long time for things to change and I am starting to believe things won’t and we are in the new norm.

#208 AckNack on 10.04.15 at 10:46 am

Garth, re my comment thta Yellen passed out and per your request:

http://www.cnbc.com/2015/09/24/yellen-rate-hike-likely-appropriate-this-year.html

Now, do you expect the whole ‘truth’ from the MSM?!

The truth is there’s no report that she passed out. Stop posting gossip and fabrication. — Garth