Normalization!

NORMAL

The average Millennial was 16 years old and listening to Gnarls Barkley and the Pussycat Dolls the last time the Fed rocked up. That was pre-Christmas, 2006. The US housing market was an orgy. Stephen Harper was newly elected. And popular. A five-year mortgage was just under 7% and the average Toronto house was 50% cheaper (at $343,000). The TSX gained 17.3% that year. Of course, all were blind to the financial crisis that would sweep over the global two dozen months later.

The decision today to jack US interest rates and usher back a more ‘normal’ world makes you wonder what the heck normal is. Over the past seven years since the Fed went to zero, adopting emergency rates and dragging all central banks with it, it’s been a strange ride. Stocks in the US plunged in the credit crisis (created by residential real estate) and have since added $15 trillion in the second-greatest rally on record. Commodities went in the other direction, crashing to a 16-year low. Oil has lost 75% of its value.

In Canada cheap rates and fear of risk fueled a massive real estate bubble, shot debt to record levels, drained savings and created a new danger. In fact, rock-bottom rates have changed so much in our society in the last decade that weaning off them will painful. For some people, like the kids who have grown up knowing only 3% mortgages, it’s unthinkable.

Plus the doomers, of course. As late as last night they were coming here with their dour faces and sad souls to say it was all a sham. The cost of money can never go up again, or we’re all screwed.

Well, it just did. The consequences will be far-reaching and lengthy. Get used to it.

ZERO RATES

The Fed will increase routinely over the next couple of years, slowed only if the American recovery sputters. But there’s no sign of that now. Almost three million jobs were created this year, corporate profits are stable, consumer confidence is rising (look at house and car sales), household debt is falling, the federal deficit has plunged, cheap oil is a bonus and stock markets have already swallowed higher rates. History shows us the Fed regularly tightens for at least a couple of years and pops rates more than 2%.

Will Canada follow? The chief poodle said again yesterday nobody should expect his Bank of Canada to lockstep with the Fed. It won’t, of course, because our economy sucks as much as theirs doesn’t. But bond yields here will ape those to the south, meaning fixed-rate mortgages are headed higher. Even variable-rate ones have plumped in the last few weeks. Later in 2016, maybe the autumn, our central bank will raise its key rate. But the damage to housing will have already set in. Ditto the wounded dollar – higher US rates and an oil glut means there’s a bottom yet to reach.

Make no mistake, the Fed’s hiking because that is good for America – weaning a massive economy off government stimulus and bubble-blowing policies. But it’s not good for the indebted zombies who shunt onto the TTC or the Canada Line. So many people here have gambled everything on two beliefs: houses will always go up and the cost of money never will.

So the predictions remain the same. Anyone taking out a fixed-rate, five-year mortgage today at 2.5% will be renewing it in 2020 at twice that rate. At least. There’s no way that current housing valuations in Toronto or YVR can withstand that increase, especially with the oil creep that is now so evident, a commodity-crippled economy growing at one-third the global rate and a national government set to overspend by at least $20 billion a year. It’s reasonable to expect that 2015 was indeed the year of peak house.

This week the realtors told us the average house price in Canada increased 10.2% in the last twelve months. That’s double the growth in the US, where jobs and incomes are swelling, not declining. It’s five times the rate of inflation. It surpasses median wage gains. And it led directly to almost $100 billion in new mortgage debt – 75% of it taken as five-year loans that will face renewal in a changed world.

But at the same time, house prices have gone negative in six provinces, with Alberta in the crosshairs. Already millions of Canadians have seen their homes crest in value, then head off in the opposite direction. You’d expect that in a country facing our issues. Now with the normalization of interest rates a certainty, you’d be a fool to ignore it.

CREA VANCOUVER

348 comments ↓

#1 John Kaysick on 12.16.15 at 2:03 pm

Nice! 25 bps.

Say goodbye to Canada!

Vancouver and Toronto homeowners are in for a world of hurt. Good luck!

#2 Gnarls Barkley on 12.16.15 at 2:04 pm

TSN turning point – FIRST!

#3 Christmassss on 12.16.15 at 2:05 pm

Merry X-Mass Garth! Finally you are right and RE is the Scrooge!

#4 CADByeBye on 12.16.15 at 2:05 pm

Goodbye CAD, goodbye old friend!

#5 ARP on 12.16.15 at 2:05 pm

One hike a quarter!

http://www.marketwatch.com/story/fed-enters-new-era-of-higher-rates-2015-12-16

#6 Canadian on 12.16.15 at 2:06 pm

haha you had this article ready for posting 1 second after the announcement. When did you write this Garth last week!

Janet called me last night. — Garth

#7 noel on 12.16.15 at 2:06 pm

Better chance of a cut by the BoC than a hike in 2016.

Most likely no movement.

#8 Marcus on 12.16.15 at 2:06 pm

Heeeeeeeer we go! Can/US exchange to 65 by next year. It will be interesting to see what happens with high end real estate in Vancouver.

#9 Gradual, actual on 12.16.15 at 2:06 pm

That’s the important.

#10 (formerly known as) When will they raise rates? on 12.16.15 at 2:08 pm

http://rockstarfinance.com/wp-content/uploads/2015/06/hell-yeah-kid-262×300.jpg

#11 iWonder on 12.16.15 at 2:09 pm

I wonder if Poloz will hold an emergency meeting and reduce interest rates in Canada to support household debt.

Canadian Housing MUST survive and it MUST THRIVE. GO Canada GO!

#12 prairieboy43 on 12.16.15 at 2:09 pm

Congrats Garth. Finally shut down the Naysayers.
PB43

#13 Retired Boomer WI on 12.16.15 at 2:15 pm

I can’t quite believe it! The old broad pulled the trigger!! US rates actually went up a whole whopping scorching .25%

Boy, if that were oil, it wouldn’t be enough to power a piss-ant’s go cart around the inside of a cheerio, but it feels slightly better…

…Now on to ‘normalization’ whatever that might be…

off to the bank for the no-longer quite ‘free money’

#14 Randy Randerson on 12.16.15 at 2:15 pm

#202 Fuzzy Camel on 12.15.15 at 12:44 am

Hey Fuzzy, didn’t you say you’ll stake your reputation on the Fed NOT raising rate? Don’t write cheques with your mouth that your ass can’t cash.

Same goes for those who says the Fed will never in a million years raise interest rate.

#15 Unhinged Loon on 12.16.15 at 2:15 pm

Going LOOOOONG USD!

#16 (formerly known as) When will they raise rates? on 12.16.15 at 2:16 pm

I tip my hat to you Garth. You’ve taken a lot of slack, but kept the message consistent… and today you are fully vindicated. Finally.

Congratulations to you are in order, sir.

Enjoy your day, you deserve it!

:)

#17 Not Tonight Honey on 12.16.15 at 2:16 pm

Garth,
I missed the bet.
What will ‘the billionaire’ be placing under your Xmas tree?
;-)

#18 Randy Randerson on 12.16.15 at 2:17 pm

Will hold DLR for a bit longer, to see if BoC will cut rate giving me another boost. Don’t know forex so DLR is my proxy.

#19 Sheane Wallace on 12.16.15 at 2:18 pm

As expected, FED increased the rates.

Back to the ‘honorable’ Poloz who dreams of negative interest rates. The tale of the 2 currencies.

#20 Interstellar Old Yeller on 12.16.15 at 2:19 pm

I’m guessing 500 comments on today’s post?

I’m surrounded by a forest of future condo development. Wonder if some of those plans will be shelved or drastically altered as mortgages become less affordable. We can only hope!

#21 Ronaldo on 12.16.15 at 2:20 pm

Looks like the roller coaster has finally reached the top. Down she goes.

https://www.youtube.com/watch?v=hqOn5XEm86A

#22 Mark on 12.16.15 at 2:21 pm

No decimation in the precious metals like many were predicting on account of the rate hike. In fact, they’re actually doing reasonably well today.

CAD$ actually rose against the USD$ after the hike.

#23 The Marquis de Sade on 12.16.15 at 2:22 pm

I am normal.

#24 Godth on 12.16.15 at 2:22 pm

Between this BS and the Republican debates I feel like I’m shedding IQ points faster than a husky sheds in spring. I’m already mental enough but all this progress and evolution is making me feel really stupid.

I wonder what the rest of the world will think of this life changing event. Way to go Janet you just revolutionized the world with, not negative rates, but a whole quarter point increase. I’m going to sleep better tonight.

#25 steerage steward on 12.16.15 at 2:23 pm

“There is way more risk in the Canadian economy than most people understand,” says Garth Turner, a former MP and housing expert who writes the wryly-titled blog The Greater Fool. “And most of that risk is in housing.”

“A generation of people have bought houses they cannot afford,” he says. He doesn’t like to talk about or define bubbles, but he uses language no finance minister would use: “People should just use their goddamn common sense.”

http://www.cbc.ca/news/business/fed-interest-rate-household-debt-neil-macdonald-1.3366890

#26 NickTheGreek on 12.16.15 at 2:28 pm

All the traditional laws of Economics no longer apply in this country or our economy. So how do we make sense of anything?

#27 OXI in GREECE on 12.16.15 at 2:32 pm

After 3 years I have taken down my “The Fed will raise rates next month” poster….

signing off live in Brazil where its 30 degrees YAY !! Isn’t global warming awesome????

#28 AfterTheHouseSold on 12.16.15 at 2:34 pm

Who knew that waiting for an interest rate hike could be so exhilarating! Way to go Garth.

#29 conan on 12.16.15 at 2:34 pm

Your prediction on the interest rate increase was spot on Garth. You nailed it ! And, you have a cat in your pic that does not look like something from the zombie apocalypse.

The Garthster making friends with the world…

#30 Ryan on 12.16.15 at 2:38 pm

With the US raising rates, it’s going to make it very difficult for Canada to continue to cut them. Without more rate cuts, US hikes will probably put upward pressure on Canadian long-term rates as well. This, in addition to commodity declines and poor economic growth, does not bode well for housing markets in Canada. It looks like Garth may finally be proven right.

#31 Investorz on 12.16.15 at 2:38 pm

Canadian bond yields are down.

I’m surprised. Why?

#32 Victor on 12.16.15 at 2:40 pm

Well done Garth!

and I am so happy that she has balls.

#33 Leo Trollstoy on 12.16.15 at 2:43 pm

My U.S. multi-unit residentials thank you Janet.

Looking forward to the Jan. 1 rent collection.

The CAD is pitiful.

#34 Scully on 12.16.15 at 2:43 pm

American business analysts were jumping for joy on American newscasts. In their words this hike is long overdue. I agree. For those who keep believing zirp is the new normal I think you’ve been spanked byGarth :)

#35 No debt on 12.16.15 at 2:44 pm

Awesome news Garth! I wish they were raising there rates for a second time tomorrow!

#36 Glad I'm moving to USA on 12.16.15 at 2:46 pm

Other than the fact that I may have to live near the likes of the trailer trash Smoking Twit I’m out of here. Just in time. Canada just elected a selfy dingbat Prime Minister who is more interested in photo opps with the likes of Ms Wynne. I just signed my final home sale, heading to a much better job wife and kids in tow. USA looking better than my part of Durham now. GM’s days are numbered. Perhaps I’ll come back in four years after the millennial twerps that elected this menagerie are gone.

#37 Mark on 12.16.15 at 2:47 pm

“All the traditional laws of Economics no longer apply in this country or our economy. So how do we make sense of anything?”

When people, especially the unsophisticateds, try to overly exploit laws to their advantage, then the ‘laws’ end up being changed.

For instance, almost everyone was convinced on the blog yesterday that the CAD/USD$ pair would fall significantly when the Fed took its policy action. Too many lined up on one side of the trade. And wham, the smart money is now in the process of taking them out.

Same deal with housing. For generations, young people were told to “buy housing as soon as they can in life” or else you’ll forever be a poor renter. So most did, sending participation rates to record highs. Ironically, over-adherence to that ‘law’ actually was its undoing.

#38 Jack Mah on 12.16.15 at 2:49 pm

Canadian and U.S. bond yields are down everyone! Wait until some financial or economic blowup happens like Europe, Greece, emerging markets, China etc. etc. or something out of left field.

#39 Dogman01 on 12.16.15 at 2:50 pm

Good Article here:

http://www.cbc.ca/news/business/fed-interest-rate-household-debt-neil-macdonald-1.3366890

Garth apparently is a “Cassandra” ; I am sure he has been caller worse. I figure you always want to get out in front of these things.

#40 JacqueShellacque on 12.16.15 at 2:50 pm

House lust has not only skewed the economy, it’s skewed society as well. How many marriages, built on the chimera of some utopian houseowning future, will fall apart once the finances finally give way? How many oldsters will live in poverty, distant from relatives who may be able to assist them, because they want to hold onto their houses? How many young people, impressionable as they are, have given up freedom and mobility for decades of financial struggle? In the worst case, what’s coming could leave an imprint on at least some people similar to what the Depression did for people who lived through that.

#41 David on 12.16.15 at 2:51 pm

The average Millennial was 16 years old and listening to Gnarls Barkley and the Pussycat Dolls the last time the Fed rocked up.

Some of us had two whole decades under our belts and were listening to the other JT bring Sexy Back.

#42 Ole Doberman on 12.16.15 at 2:52 pm

I told you guys Garth will be right, just as he was right about QE coming to an end.
But Garth has been wrong on RE for 8 years – now he might be right here too.

Looks like stock markets hanging in there with TSX bouncing from a quadruple bottom.

Time to load up on equities as capital from the bond market (25 times the size of stock mkt) tidal waves itself into stocks.

#43 Garth is my enabler on 12.16.15 at 2:54 pm

No and No.

I am last year BBoomer, and was bought up and educated to spend what i earn and never owned anything to anyone.

Garth is the only mad man left to preach logic ,
reason, and invoke thinking…
i enjoy coming here and reading posts and mostly agree with Mark.

But then i look around and see people who borrow
and spend like there is no tomorrow money they never earned, and they after all sleep well.
They are professional borrowers.
They are winning and elected government and
T2 will BAIL them out by taxing me and you more.

i am an idiot.
you all are idiots here.

if we all borrow spend spend spend
we all will be too big to fail !!!

#44 After normalization on 12.16.15 at 2:55 pm

After the housing market normalization Garth can finally take on the way more important and daring task, the unhealthy, unbalanced structure of the Canadian economy, as a whole, not just real estate.

#45 ARP on 12.16.15 at 3:01 pm

720 seconds is all it took for the change in interest rates to be passed along to Wells Fargo consumer borrowers. 12 minutes…

http://www.marketwatch.com/story/wells-fargo-moves-fast-to-raise-rates-for-borrowers-but-not-on-deposits-2015-12-16

Still no love for depositors, but that’s a given right now.

#46 JimH on 12.16.15 at 3:02 pm

Normalization at last!

The naysayers and deniers seem to be largely absent, no doubt eschewing the delightfully frolicsome spectacle of eating crow in public.

I wish them a speedy recovery and a timely return to their senses.

#47 Leo Trollstoy on 12.16.15 at 3:03 pm

1 CAD = 72.6 USD. That’s terrible.

I remember the predictions 2 years ago when 1 CAD = 0.9 USD just like it was yesterday…

I wouldn’t view what’s happening as anything but short-term cyclical weakness. And of course, a great buying opportunity in the CAD$, and a great shorting opportunity for USD$ stuff. Take out some loans in USD$, and pay them back with more valuable CAD$ in the not-so-distant future.
http://forums.redflagdeals.com/hot-deal-canadian-dollar-loonie-sale-1434335/#post18149278

US strength won’t last forever either. So you combine USD$ weakness, and CAD$ strength due to domestic debt deflation, and you could have the setup for some really absurd CAD$/USD$ values, ie: eventually a complete inversion of the $0.63 bottom for the pair.
http://forums.redflagdeals.com/why-cad-usd-dropped-so-much-1-year-1420560/#post17961268

Man these people were dumb.

#48 Investx on 12.16.15 at 3:06 pm

#6 Canadian:
“haha you had this article ready for posting 1 second after the announcement. When did you write this Garth last week!”

He had a version of this article ready to go a few years ago. Prolonged low rates wasn’t believed to be a possibility here – only in Japan.

#49 A NightMare on Bay Street on 12.16.15 at 3:06 pm

(unrolling party horn)

Phhheeeeuuuu …

#50 Mark on 12.16.15 at 3:07 pm

“How many young people, impressionable as they are, have given up freedom and mobility for decades of financial struggle? In the worst case, what’s coming could leave an imprint on at least some people similar to what the Depression did for people who lived through that.”

But there’s always someone on the other end of the trade. For everyone who loaded up on RE at the top, there’s someone who sold RE at the top. For everyone who took out huge amounts of debt and has to pay high interest charges, there’s someone else who is the recipient of high interest charges.

Debt, in and of itself, isn’t a problem. Its a sort of tax on stupid people if they don’t use it appropriately in a manner that provides a return greater than its cost. However, when an economy is overly distorted towards one activity or a small range of activities, to the exclusion of others, then its an increasingly shrinking or not growing economy against which we must all draw.

Hence the problem with the RE bubble, CMHC, bail-outs rather than orderly debt to equity conversions (bail-ins), abnormally low policy rates, etc. They all serve to distort the normal flow of capital from producers to consumers, and back again. Accentuating volatility. Reducing economic growth. Un/Underemploying significant numbers who don’t happen to be in the favoured sector of the day.

If Yellen/the US economy manages to avoid systemic crisis on account of this increase, good. I don’t know if I’m convinced, especially with so many defaults in the pipeline, but the FOMC has, for better or worse, taken a stand. We’ll have to see how it goes because there’s not exactly a lot of precedent for what they’ve done. Last time this happened, they had World War 2 to augment demand, demographics were favourable, and debt levels were considerably lower.

#51 Ivec on 12.16.15 at 3:08 pm

Hey Garth

Got to ask, were you smoking a cuban while writing the article today?

#52 TRT on 12.16.15 at 3:08 pm

CDN $ hanging in there, just as I thought…due to Dovish language.

Chances are it will go down overnight as Asia will drive it down a little.

With regard to YVR houses, the Chinese Yuan ia massively appreciating against the Loonie. YVR RE not going down…expect more pace to park the Yuan/Renmimbi

#53 A NightMare on Bay Street on 12.16.15 at 3:09 pm

(handfull of confetti flying)

#54 Doug T. on 12.16.15 at 3:09 pm

All this talk of a recovery in the States is laughable – the U.S. job stats are a sham – the hundreds of thousands of low-paying service-sector jobs have limited upside in pay and benefits and the corporate owners skim whatever upside there is because labor is in surplus except for specific fields of expertise.
When the curtain is pulled aside and the great oz is exposed for what he (they) is then the ponzi that has been built for the last 30 years will collapse and then perhaps we can start to look at a different model that benefits the masses and not just the 1%

#55 Mark on 12.16.15 at 3:10 pm

“Man these people were dumb.”

You are aware that the timeframe being discussed there, for an eventual complete inversion, was more like the next decade or two, right?

#56 TRT on 12.16.15 at 3:10 pm

Leo:

Don’t tell these people that they’re dumb. How you gonna make $$$ if they know the truth?

I hold my aces up my sleeve!

Huge buying opportunity coming but we’ll take about it once smart money there is well established.

#57 Alvina Knows on 12.16.15 at 3:11 pm

#47 Leo Trollstoy on 12.16.15 at 3:03 pm

Or are they the “unsophisticateds”?

#58 Leo Trollstoy on 12.16.15 at 3:13 pm

Damn, at the time of this post it was 1 CAD = 0.85 CAD. I guess this wasn’t really ‘smart money’ at all…

Now I understand why Garth thinks the Zero guy is …well, a Zero guy.

Leveraged speculator sentiment (“dumb money”) is starting to turn a little, with a roughly equal number of contracts on the long and short added to the pair. Which is quite in contrast with the increasing bearishness towards the CAD$ that we saw in the past few reports.

Asset manager (aka “smart money”) is turning extremely bullish on the CAD$. These are the people who actually use currency, not a bunch of grown men playing speculator games on their computers.

With $100 oil (the highest on this day in history Zerohedge tells me!) and an economy that isn’t falling off the cliff despite a significant slowdown in the RE industry, it is no surprise that the speculators are at least starting to realize that the long term value of the CAD$ is considerably higher than currently depressed levels.
http://forums.redflagdeals.com/canadian-dollar-its-ups-downs-1442859/2/#post18323472

#59 Bram on 12.16.15 at 3:15 pm

#8 Marcus on 12.16.15 at 2:06 pm
It will be interesting to see what happens with high end real estate in Vancouver.

Should not affect that particular market.
‘high end’ in Vancouver means $10M+ houses.

Do you really think that people buying a $10M,- house need much help from a bank?
I’m going to venture that most of these houses are bought cash, without blinking an eye.

Bram

#60 BobC on 12.16.15 at 3:15 pm

Garth, you were right again. I’ve been listening, accepting and believing you since you said sell gold.
Maybe someone can answer a simple question with an educated opinion.
Since America wants to bring in hundreds of thousands of foreigners to fill jobs that I guess are going unfilled,

http://freebeacon.com/national-security/obama-approves-3-million-immigrant-workers/

will they begin cutting back on the $1 trillion Dollars a year paid out in Federal and state welfare?

https://www.washingtonpost.com/news/wonk/wp/2014/01/12/no-we-dont-spend-1-trillion-on-welfare-each-year/

But then wouldn’t that reduce GDP causing a recession?
Or would that many people bring down wages through competition and increase the need for more welfare?
Is it a downward spiral that will hurt both ours and your economy and bring down investments?

#61 eddy on 12.16.15 at 3:15 pm

Sheeple, low interest rates are good. Any typing to the contrary is proof that brainwashing works.

#62 pbrasseur on 12.16.15 at 3:16 pm

At long last, it’s not a moment too soon!

I’m sure the US RE market will continue to thrive, not so much in Canada.

2% in 2 years means the monthly payments for what is currently a 200K mortgage will then support roughly a 180K mortgage. A 20% drop! Obviously that doesn’t take into account the other stuff such as employment, ageing, more taxes, extra inflation due to CAD, market overshooting, etc…

Enjoy the selfies while you can T2, reality is running towards you, fast!

#63 pbrasseur on 12.16.15 at 3:18 pm

10% drop…

#64 tkid on 12.16.15 at 3:18 pm

This is the first time I skipped the column to go straight to the comments.

#65 jess on 12.16.15 at 3:19 pm

Which country is the biggest investor worldwide, the US or the Netherlands? How big is the percentage of mailbox company-related investments in Greece or the US? If mailboxes are an indication of tax dodging, which countries pay the bill? This website provides you with the answers in the form of interactive maps and allows you to download the underlying data.

Mapping Tax-free investments
New interactive website shows which European countries facilitate tax dodging through mailbox companies
Dec 15, 2015
http://www.somo.nl/news-en/mapping-tax-free-investments
http://read.somo.nl/story/tax-free-profits/
=======================

Central public register may be inevitable
Cayman News | 14/12/2015
https://cnsbusiness.com/2015/12/14/central-public-register-may-be-inevitable/

#66 I wish on 12.16.15 at 3:20 pm

#35 No debt on 12.16.15 at 2:44 pm

Awesome news Garth! I wish they were raising there rates for a second time tomorrow!

===

Are you making your money in USD?

If not, what good this interest rate increase will bring for you?

It is not passed on “savers” and it is not good for the crippled, overall Canadian economy, which will yield you most likely higher taxes.

#67 Ole Doberman on 12.16.15 at 3:26 pm

Even with oil further cratering today TSX is bouncing as portfolios are going into profitable sectors like IT and health.

Stock markets should double over next 2 years.

#68 Chris on 12.16.15 at 3:26 pm

Meh – pretty sure the sun will still rise tomorrow. Get a grip people, markets will adjust, people will adjust and life will go on. The pendulum swings and rates were too low, therefore had to eventually increase. Oil/resources are too low, they will at some point stabilize and recover as well. I don’t believe the US is on fire as Garth does, but if true, then Canada will tag along for the ride. I predict before the end of 2016 there will be a major unexpected event that nobody on this board will have predicted (except me right now) that will shake up whatever the consensus is. (Hmm, maybe Trump reveals he is actually Beelzebub…wait, that wouldn’t be so unexpected.) See you all next year, when our planet will still revolve around the sun.

#69 Mr. Frugal on 12.16.15 at 3:30 pm

Janet Yellen is great! The longer she yaps the more money I make. Go Janet go!!!

#70 Freedom First on 12.16.15 at 3:31 pm

The increase has taken the pressure off for Janet. She did it. Her language now makes it clear further increases will be slow and depend on the growth of the U.S economy. Same language, but now she has raised.

Let us hope that Poloz is smart enough not to cut. Enough damage has been done. The Canadian $hit$torm will be bad enough as it is. No need to make it worse.

#71 TurnerNation on 12.16.15 at 3:31 pm

And you Blog Dog Poloz?

#72 Bobs ur uncle on 12.16.15 at 3:39 pm

Gnarly Barkley – Sweet!

“Come on now, who do you, who do you think you are?
Ha ha ha bless your soul
You really think you’re in control?

Well, I think you’re craaaaazy”

#73 Prairieboy43 on 12.16.15 at 3:41 pm

I like The. “Collar” (yellin) fedup look. :) $$$

#74 Basil Fawlty on 12.16.15 at 3:42 pm

What does interest rate normalization mean in a country with $19T in debt? The US middle class is shrinking, while job creation is a part time joke. Yet the sheeple parrot a robust US economy, while ignoring the biggest credit bubble in world history. Manufacturing has been decimated, world shipping has crashed, while US exports are falling and commodities have crashed.
The best one could say is the US credit bubble has created the best looking horse in the glue factory.
Enjoy your pet Unicorns, this economy is a dog.

#75 gut check on 12.16.15 at 3:44 pm

watching the USD CAD is mesmerizing

#76 JimH on 12.16.15 at 3:45 pm

#37 Mark on 12.16.15 at 2:47 pm
“… almost everyone was convinced on the blog yesterday that the CAD/USD$ pair would fall significantly when the Fed took its policy action. Too many lined up on one side of the trade. And wham, the smart money is now in the process of taking them out.”
==================================
You might be right, Mark, but the quick initial response to the Fed’s move today in this instance could very well turn out to be a “selling the news” phenomenon.

CAD/USD peaked this morning at ~ 0.72839 and is currently trading ~ 0.72415; 0.582% lower.

I guess we could argue over whether or not 0.58% is “significant” over a 90 minute time span. After all, the US$ showed considerable volatility right after the announcement.

As for the broad stock market, the buyers have certainly been in control for the last 90 minutes of today’s trade.

The global Forex traders have yet to completely weigh
in on today’s tape, and we’ll no doubt have a better perspective by this time tomorrow.

#77 Nemesis on 12.16.15 at 3:50 pm

…”… you’d be a fool to ignore it.” – HonGT

#PeakSpider,Or… #MeanwhileDownUnder…

[Telegraph] – Massive Huntsman spider spotted lurking behind door is the stuff of nightmares

http://www.telegraph.co.uk/news/worldnews/australiaandthepacific/australia/12054521/This-massive-Huntsman-spider-is-the-stuff-of-nightmares.html

#78 JSS on 12.16.15 at 3:50 pm

Cassandra…hee hee

#79 Montellino on 12.16.15 at 3:52 pm

yaawn.. still a long way to go…

I am happy though someone finally pulled the frkn trigger

#80 noel on 12.16.15 at 3:54 pm

#70 Freedom First

Poloz will probably cut, he’s first and foremost a trade guy. He can’t see past boosting exports & mfg with a lower dollar to the detriment of a lot of other industries and our wealth. I miss Carney – he never would have fouled up the messaging aspect of BoC governer like Poloz has.

#81 Observer on 12.16.15 at 3:55 pm

I wanna kiss you Janet….

#82 waiting on the westcoast on 12.16.15 at 3:55 pm

#37 Mark says… “For instance, almost everyone was convinced on the blog yesterday that the CAD/USD$ pair would fall significantly when the Fed took its policy action. Too many lined up on one side of the trade. And wham, the smart money is now in the process of taking them out.”

Mark – you are really breathing on fumes. Many of us who have been charting about the decline in the CDN$ started back at $1:$1. And if you think the current 1/2% drop is indicative that your premise that the CDN$ will rally above parity, you are losing it.

This is the first increase of many to come. What many of us have pointed out is that the US$ had been held artificially low by the US Fed/Gov’t. Now they are letting it rise to where it should be. The reason it’s been rising is that EVERYONE knew it was going up despite the Fed not moving. Watch as either our dollar continues to tank or the BoC relents (probably in the summer or fall of 2016) and raises rates to maintain some optics of supporting the CDN$.

You really need to re-think your assumptions.

#83 US multi-unit on 12.16.15 at 3:57 pm

#33 Leo Trollstoy on 12.16.15 at 2:43 pm
My U.S. multi-unit residentials thank you Janet.

Looking forward to the Jan. 1 rent collection.

—-

That’s a real great tax-efficient income.

#84 Investorz on 12.16.15 at 3:58 pm

“It’s reasonable to expect that 2015 was indeed the year of peak house.”

I read that the effect of higher credit cost lags so I’m betting on summer 2016.

Depends if the big banks increase the variable rate (for some reason I don’t understand now) within the next weeks. Otherwise for now it looks like our 5 year bond yields are not moving (which I don’t understand).

#85 Carlyle on 12.16.15 at 4:00 pm

Haha without even looking I knew those links would lead to a Mark77 post haha

———————————-

#47 Leo Trollstoy on 12.16.15 at 3:03 pm

1 CAD = 72.6 USD. That’s terrible.

I remember the predictions 2 years ago when 1 CAD = 0.9 USD just like it was yesterday…

I wouldn’t view what’s happening as anything but short-term cyclical weakness. And of course, a great buying opportunity in the CAD$, and a great shorting opportunity for USD$ stuff. Take out some loans in USD$, and pay them back with more valuable CAD$ in the not-so-distant future.
http://forums.redflagdeals.com/hot-deal-canadian-dollar-loonie-sale-1434335/#post18149278

US strength won’t last forever either. So you combine USD$ weakness, and CAD$ strength due to domestic debt deflation, and you could have the setup for some really absurd CAD$/USD$ values, ie: eventually a complete inversion of the $0.63 bottom for the pair.
http://forums.redflagdeals.com/why-cad-usd-dropped-so-much-1-year-1420560/#post17961268

Man these people were dumb.

#86 Question on 12.16.15 at 4:01 pm

The question now is: Will the next move be lowering rates or hiking them??? Will the fed resit dropping them if the stock market get lower? As for another hike, should we expect it in 2020?

#87 Darren on 12.16.15 at 4:02 pm

Great news, I was wrong!
The Fed raised, and many more….

#88 not me on 12.16.15 at 4:03 pm

Finally. I hope this is only just the beginning.

#89 Doug in London on 12.16.15 at 4:05 pm

Garth:
No, I don’t believe you. The Fed will NEVER raise interest rates. Why do I say that? Because of all the expert comments I see here by very knowledgeable people in the steerage section of this blog which say otherwise. Here’s a sample of these comments.

1) The fed will not / can not raises rates
2) No rate hike in December, Garth
3) Yellen is in a tough spot now. The American economy is not as strong as you suggest yet she’s talked this rate increase right into the stratosphere. They must increase it now or lose face yet the mere suggestion of it causes markets to wobble as they did today.
I say no rate increase in December.
4)I do conquer with the US not raising rate till early summer 2016.
Watch and learn Garth!
5)Just watching this France terror thing unfold. Stock markets will dive Monday, housing will hold in Canada and this will place the odds of the Fed raising rates at 0% in December.
6) Dow Jones went up 200 today and lost all of it and is currently down 100. Fixed Ponzi.
Yellen doesn’t have the balls to raise interest rates. Economies around the world are already a train wreck and the US economy is smoke and mirrors
7) I will bet you a silver ounce they don’t raise rates.

You see what I mean? The blog dogs here have spoken and the Fed WILL NOT raise rates ever, period. I guess that’s why stock markets are up today.

#90 Suede on 12.16.15 at 4:06 pm

In 2006 that 5yr mortgage rate of 7% must have been the posted rate.

I was paying 2.75% variable or lower towards the end of that year

#91 Mark on 12.16.15 at 4:09 pm

“Since America wants to bring in hundreds of thousands of foreigners to fill jobs that I guess are going unfilled,”

A lot of what you see in the US, with these demands for higher foreign worker visas, are on account of firms simply trying to save money on their labour costs. Rather than a legitimate demand for workers.

A good place to start reading is here:

http://cis.org/miano/primer-reporters-looking-h-1b-program

Basically its a matter of US employers, particularly in the STEM sector, wanting to employ people at lower cost than they currently pay. So they throw out most resumes from qualified citizens who apply, and simply whine to government for increases in the number of foreign worker visas.

Like the situation in Canada (where 2/3rds of Canada’s engineering talent is underemployed/misemployed), they have a similar problem in the STEM sector in the US. Its not matter of a labour shortage existing, rather, its a matter of employers not wanting to pick up the phone and start hiring local talent.

#92 Canada is Greece now on 12.16.15 at 4:11 pm

@ #38 Jack Mah

Canadian and U.S. bond yields are down everyone! Wait until some financial or economic blowup happens like Europe, Greece, emerging markets, China etc. etc. or something out of left field.

******

Not really out of left field. Canada is highly uncompetitive and has an entitlement culture that is probably the most expensive (per capita) among the G8 and G20.

Try funding the government and all its promises (current and future) when the country is up to its eyeballs in debt on over inflated RE values.

Greece and Spain went through some tough times just because their funding ran dry.

The difference is that Canada can print its own currency to keep sending the entitlement cheques. At what cost to the entrepreneurs and workers in this country though?

Canada is dropping further in the ranking of countries where investment Dollars, Euros and Yuan will be spent.

#93 Andy on 12.16.15 at 4:13 pm

Nice call today Garth! Now, we are going to need your thoughts and guidance as US rates slowly edge up over the next 12-18 months and of course, how best to re-act to what-ever crazy decisions the BoC makes here in Canada!

#94 Dan on 12.16.15 at 4:15 pm

Are you all Americans, here?
I do not understand your happiness with a Canadian economy troubles. Are you drunk? Or you are just bad canucks? Brain frozen because of constant bad weather?

#95 Shawn on 12.16.15 at 4:17 pm

“2015 was indeed the year of peak house.”

Yes. The long dark housing winter has begun. Alberta was the canary-in-the-coal-mine that died.

This is 3X as bad as the early 1990s for Canadian housing.

#96 Dan on 12.16.15 at 4:19 pm

The Reverend is talking about this last ten years and now you people (yes you people), are going to say that he is right again? When ever he was right?

#97 James#2 on 12.16.15 at 4:19 pm

#68 Chris on 12.16.15 at 3:26 pm

Meh – pretty sure the sun will still rise tomorrow. Get a grip people, markets will adjust, people will adjust and life will go on. The pendulum swings and rates were too low, therefore had to eventually increase. Oil/resources are too low, they will at some point stabilize and recover as well. I don’t believe the US is on fire as Garth does, but if true, then Canada will tag along for the ride. I predict before the end of 2016 there will be a major unexpected event that nobody on this board will have predicted (except me right now) that will shake up whatever the consensus is. (Hmm, maybe Trump reveals he is actually Beelzebub…wait, that wouldn’t be so unexpected.) See you all next year, when our planet will still revolve around the sun.
;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;
You better let Smoking Goof know who and what Beelzebub is. He is an agnostic! Only believes in the Church of Tin Foil Hats.

#98 Gertrude Stank on 12.16.15 at 4:20 pm

DELETED

#99 Dan on 12.16.15 at 4:26 pm

And BTW… Sophie and T2 are hot and you basement residents are not. Sunny ways ahead, he said.

#100 Victoria Real Estate Update on 12.16.15 at 4:29 pm

Garth was right about the Fed beginning its multi-year rate hike cycle.

This uoward path to normalization in the US will, indirectly, push house prices down in Canada.

Canadian 5-year fixed mortgage rates will be moving higher along with fixed mortgage rates in the US.

All first-time buyers in Canada will be affected by this.

Fewer first-time buyers in Canada will weaken the entire property ladder, sending prices lower from top to bottom.

Those R/E agents who posted comments claiming that mortgage rates in Canada wouldn’t be rising were wrong. How many buyers took their word for it and bought as a result?

House prices fall as rates rise. Canada’s enormous housing bubble will deflate and this will involve substantial price corrections in every Canadian city.

Price corrections that result from the deflation of housing bubbles generally take 3 to 6 years to unfold.

It won’t be different in Canada.

#101 Alvina Knows on 12.16.15 at 4:32 pm

#22 Mark on 12.16.15 at 2:21 pm

CAD$ actually rose against the USD$ after the hike.

This might be relevant to a daytrader, the unsophisticateds, or the delusional, but for anyone that has shorted the US$, the longstanding, painful trend continues.

Down on the day.
Down on the week.
Down on the month.
Down on the year.
Down over 2 years.
Down over 3 years.

And for those that do not expect a return to parity in 2016, then July will bring a 5 year decline.

#102 jaybee on 12.16.15 at 4:34 pm

I expect the resident charlatan (Mark) will be very active in the comments section over the next few days.

#103 Capt. Obvious on 12.16.15 at 4:38 pm

@#85 Dan

Sunny ways ahead, he said.

I guess it’s a bit of a high brow reference for the riff raff, but he meant in terms of doing politics and respecting people’s differences. He did not pave a yellow brick road for people to tap dance on. Or promise to shine sun on all Canadians. Or promise to hand out gold bars. Or whatever else it is people think he meant by that remark.

#104 Doug in London on 12.16.15 at 4:39 pm

What the HELL has happened? I’ve read a lot of complaining here recently about the dropping price of preferred share ETFs. I don’t know about others, but the much complained about CPD, as well as XPF are both up today!

#105 Canadian on 12.16.15 at 4:43 pm

#93 Dan on 12.16.15 at 4:15 pm

Canada has a crab bucket mentality by and large.

#106 Darryl on 12.16.15 at 4:52 pm

#6 Canadian on 12.16.15 at 2:06 pm

haha you had this article ready for posting 1 second after the announcement. When did you write this Garth last week!

Janet called me last night. — Garth

———————————————————–

But did you have a second post in case Janet didn’t pull the trigger ?

Not after the convo. — Garth

#107 H on 12.16.15 at 4:59 pm

Thats awesome!!! They raised!

And the banks raised the lines of credits and mortgages!

But hold on….hold on…what??

They didnt raise the savings rate??? NOOOOOOOOO!

Isnt this supposed to help savers???

#108 Raise your head on 12.16.15 at 4:59 pm

#88 Doug in London on 12.16.15 at 4:05 pm

Resident suck up of the day.

#109 Winterpegger on 12.16.15 at 5:01 pm

re: Gnarls Barkley and the Pussycat Dolls
I’m impressed – not sure how/where you get your pop-culture references from but they’re (mostly) spot on.

You mean I don’t look hip? — Garth

#110 Ponzius Pilatus on 12.16.15 at 5:02 pm

#80 noel on 12.16.15 at 3:54 pm
#70 Freedom First

Poloz will probably cut, he’s first and foremost a trade guy. He can’t see past boosting exports & mfg with a lower dollar to the detriment of a lot of other industries and our wealth. I miss Carney – he never would have fouled up the messaging aspect of BoC governer like Poloz has.
———————–
Things must be really bad when some people want the snake oil salesman Carney back.

#111 mitzerboy aka queencity kid on 12.16.15 at 5:03 pm

atta boy federal reserve …

lets git this show back on the road again

#112 Smoking Man on 12.16.15 at 5:06 pm

Gloomer Doomer

Any Comments?
No ata-boy ,
well done SM
well done Gartho. ?

Anyway that’s it, One and Done…

Look for all the USA stats this month to be revised backward next month.

Yellen Lives

#113 Nanaimo Bar on 12.16.15 at 5:09 pm

The Dove has left her cage. She has turned into the Great American Eagle, once again. She has been gone for 9 years but now she is back controlling the skies.

During Yellen’s press conference, a emerging market journalist asked her about how the Fed’s path will effect emerging markets.

Her response was, “We have communicated with you about our intentions. Our path is about US strength going forward.”

#114 Constant bad weather on 12.16.15 at 5:09 pm

#93 Don

Are you all Americans, here?
I do not understand your happiness with a Canadian economy troubles. Are you drunk? Or you are just bad canucks? Brain frozen because of constant bad weather?

——

A sect of pretend billionaire Canadian renters. The 1%, as they call each other. Some are drunk. Those are the good ones. The rest is troll.

#115 straight six on 12.16.15 at 5:10 pm

No sympathy for the financial snorkel set. They’ll be back.
If rates doubled to a whopping 5% by 2020.. oh well!!
not like when mortgage rates doubled from 10% to 20% in the early 80’s throwing housing & investors off a cliff. Some landed on their feet but most landed under their RE.. and then a decade later the housing stampede started up again for a new generation of uninformed and the odd investment die-hard still wearing a 1980’s body cast.

#116 Herf on 12.16.15 at 5:11 pm

#57 Alvina Knows
#47 Leo Trollstoy

“Or are they the “unsophisticateds”?”

Maybe they’re the “gullibulls”?

#117 Nooooooo, on 12.16.15 at 5:13 pm

#106 H on 12.16.15 at 4:59 pm
Thats awesome!!! They raised!

And the banks raised the lines of credits and mortgages!

But hold on….hold on…what??

They didnt raise the savings rate??? NOOOOOOOOO!

Isnt this supposed to help savers???

Ah… The greatest fool…

#118 Randy Randerson on 12.16.15 at 5:14 pm

#106 H on 12.16.15 at 4:59 pm

You must’ve meant US banks. Scotiabank still has 2.7% as their prime rate.

Prime will not move until the BoC does – next year. — Garth

#119 Bottoms_Up on 12.16.15 at 5:15 pm

#62 pbrasseur on 12.16.15 at 3:16 pm
——————————
But in two years someone can pay that mortgage down (200k) to at least 180k.

So who is the loser, the home owner that gains no grpund by making monthly payments to live in their home, or the renter who pays rent for two years in order to buy that home for 180k?

#120 Bottoms_Up on 12.16.15 at 5:18 pm

#91 Canada is Greece now on 12.16.15 at 4:11 pm
———————
With a 60 cent dollar we will be very competitive

#121 not me on 12.16.15 at 5:19 pm

Finally. I sure hope they keep going. Been way too long.

#122 Mark on 12.16.15 at 5:20 pm

“This might be relevant to a daytrader, the unsophisticateds, or the delusional, but for anyone that has shorted the US$, the longstanding, painful trend continues.”

Its not painful if it was part of an overall hedging strategy for USD$ denominated assets (which is what my strategy was). It just limited the upside. And will limit the downside as the USD$ resumes its long-term slide. Also reduced the funding cost of the position since USD$ interest rates have spent the past few years 100bp lower.

I actually did remove the hedge at 1.12 when it was obvious the slide was accelerating (put the trade on at $1.06), so I have $0.19 P/L at this point. So not all is lost. I don’t fancy myself a short-term trader (and I’m generally not), but the sheer ferocity of the move, even if completely illogical, was too good to pass up. The big question now is when to reverse it to get onto the long-term trend of a rising CAD$ on account of Canada’s far superior fundamentals (chronic net exports, significant domestic deflation, lower debt to GDP, dominance in the global gold sector, etc.).

#123 Herf on 12.16.15 at 5:21 pm

#98 Dan

“And BTW… Sophie and T2 are hot and you basement residents are not. Sunny ways ahead, he said.”

What he didn’t tell you is that the sunshine will be in the form of a solar X-flare that will clobber the electrical power grid.

#124 K on 12.16.15 at 5:23 pm

Yay for US investments! Boo Canadian taxes :( Why do I have a sense of foreboding. Those entitled idiots that overextended their incomes in houses are going to be in so much shock they are going to force the government to bail them out at our expense.

#125 Herf on 12.16.15 at 5:23 pm

#32 Victor

“and I am so happy that she has balls.”

Maybe she can lend them to the gang at the BoC?

#126 tindericous on 12.16.15 at 5:24 pm

You mean I don’t look hip? — Garth

—-

The perfect Tinder match with Janet.
Start communicating for free this weekend.

#127 gulnar on 12.16.15 at 5:26 pm

# Garth….
ahhhh…..
Finally a sign of reliefffff for you.
Unlimited words and lines spent in the last many years convincing people ( Your time could have been better utilitized in other things you do better)

Garth was so bored for the last many weeks that he was looking at our T2 Pictures ( may be pictured himself there with B )

I trusted your advice and did benefit and was like Cognitive Therapy every day for me.

#128 For those about to flop... on 12.16.15 at 5:36 pm

#162 Vanecdotal on 12.16.15 at 2:50 am
#62 For those about to flop

+1
Feel the same, well put. The Crusty Clark decade has not been good for BC’s long term sustainability fo’ sho. Good luck with your surgery and good health to you.

/////////////////////////////////////////////
Thank you for kind words , I am out of the hospital and back home.
Thanks to any other well wishers I missed.

I’m glad that I’m the only thing that got cut today…
Seems like I missed all the hoopla it’s sad when . 25% rate increase is such a big deal but I am glad they did it .
Should have done it same time last year,if you wait for something bad to happen in the economy it will.

Thank you ” trading naked ” for explaining what will happen to my fund at tax time.

#129 Leo Trollstoy on 12.16.15 at 5:46 pm

I don’t know who this is, but I like how this clown talks about the long-term value of the Canadian dollar back in 2014 when the CAD was at $0.95 USD. Haha

…the long term value of the CAD$ is considerably higher than currently depressed levels.
http://forums.redflagdeals.com/canadian-dollar-its-ups-downs-1442859/2/#post18323472

#130 Caught In The Grip on 12.16.15 at 5:58 pm

I must admit Garth, you have called everything so far. I hope you’re right about the decline in the Canadian housing market.

#131 waiting on the westcoast on 12.16.15 at 6:00 pm

#93 Dan on 12.16.15 at 4:15 pm says “Are you all Americans, here? I do not understand your happiness with a Canadian economy troubles. Are you drunk? Or you are just bad canucks? Brain frozen because of constant bad weather?”

I am Canadian but have businesses interests in US. So this is a benefit for me but I personally would rather have seen the country take the appropriate steps to strengthen our economy earlier on its own. We needed to up or game by increasing productivity… Letting the dollar slide so we can enjoy our CC debt is not a smart play for the country in the long run.

I am sad that the Canadian government and BoC have hobbled us by not letting our economy rationalize naturally. Now we will have a much harder time as the US will force us to do more abruptly which we could have done more gently over the past few years.

Lack of political will is the problem of many democracies. There are a lot of benefits but the government cannot bring itself to do tactics that hurt the electorate short-term even when it is the right thing to do.

#132 LL on 12.16.15 at 6:05 pm

# 6 – Janet called me last night. — Garth

She forgot to call you last September! LOL

#133 1 on 12.16.15 at 6:10 pm

Now watch Vancouver defy all this and still go up.

#134 Broke Dick on 12.16.15 at 6:11 pm

Plus the doomers, of course. As late as last night they were coming here with their dour faces and sad souls -GT

With all do respect Garth but reading your commentary makes me believe you are one of the biggest doomers.
No insult intended. Peace.

Not being a CREA cheerleader or T2 sycophant does not make one a doomer. — Garth

#135 Randy on 12.16.15 at 6:14 pm

Aren’t the Fed and the BofC just political operatives ?

They won’t raise interest rates high enough to adversely affect their political masters….

#136 wade on 12.16.15 at 6:16 pm

ah yes…..hopefully the start of cheaper homes….

#137 Mark on 12.16.15 at 6:16 pm

“This is the first increase of many to come. What many of us have pointed out is that the US$ had been held artificially low by the US Fed/Gov’t.”

Artificially low? How do you figure that a country that has been a chronic importer for the past 30+ years can have a high currency and sustain long-term net imports indefinitely?

If you look at the long-term USD$ chart (ie: DXY), its been mostly downwards since 1970 which was the . With occasional severe corrections to the upside which is to be expected as too many pile into the trade against it.

http://sloanreview.mit.edu/files/2008/12/3817-ex9-lo7.png

http://www.oftwominds.com/photos2011/O2M-DXY2.png

The USD$ will continue its long-term secular pattern of weakening (with occasional corrections) until the trade balances meaningfully go positive for an extended period. Without a much lower long-term USD$, I’m not sure how the US can realistically achieve a larger export sector as a percent of GDP. The peak of the US export sector was ~1970, coinciding with the peak of the US dollar.

Currency relative valuations, over the long term, always come to reflect long-term accumulated trade balances. Currency weakness, over the long term is the market’s way of indicating that trade deficits need to be balanced out. In the long term, the economy will allow no nation to be perpetually either a debtor nor a creditor.

#138 Broke Dick on 12.16.15 at 6:16 pm

The chief poodle said again yesterday nobody should expect his Bank of Canada to lockstep with the Fed. It won’t, of course, because our economy sucks as much as theirs doesn’t.-GT

I guess that means we are doing so bad then.

Our GDP growth is 30% the global average and 40% of the US pace. Make up your own mind. — Garth

#139 Broke Dick on 12.16.15 at 6:19 pm

This week the realtors told us the average house price in Canada increased 10.2% in the last twelve months.-GT

don’t get Mark started. PLEASE!

#140 Craig on 12.16.15 at 6:19 pm

Interesting to see the TSX up almost 2% today despite the price of oil going down almost 5%.

#141 Mark on 12.16.15 at 6:20 pm

“I don’t know who this is, but I like how this clown talks about the long-term value of the Canadian dollar back in 2014 when the CAD was at $0.95 USD. Haha”

You’re the clown by not understanding what the meaning of ‘long term’ is (hint: there can be short-term corrections). Why do you troll so much? Is it because you have nothing else better to do in life?

#142 Mark on 12.16.15 at 6:22 pm

“This week the realtors told us the average house price in Canada increased 10.2% in the last twelve months.-GT

don’t get Mark started. PLEASE!

The Realtors basically have lost all their credibility by making such outlandish claims which are completely at odds with what most Canadians are really experiencing. Especially when they talk to their bankers and find that credit is tightening considerably — something that ordinarily does not happen against asset classes that are on the rise.

Its obvious to all but the mathematically unsophisticated (ie: the bloke who thought the 1970s and the 1930s were half a century and a century ago) that sales mix changes have featured prominently into what the Realtors are claiming.

Even Ross Kay points such out, in perhaps slightly different language, if you listen to his audio interviews on Howestreet.com. So you don’t have to take Mark’s word for it.

#143 nonplused on 12.16.15 at 6:23 pm

Well 0.25% is no screaming big move, but I agree with Garth it signals the end of a very unusual era. I think the increases will be slow to give the market time to wean itself off of the zero boundary, and that will be intentional, but more rises will come.

Some people argue that with oil in the toilet the economy must be slow so rates won’t rise. But I think maybe not. High oil prices are great for Alberta, BC, Texas, Russia and Saudi Arabia but they represent a net tax on the US economy, which is still a major net importer. Low oil prices are like a big tax break on the heart and soul of the US economy. So it will be the inflation rate “net of food and energy” that Janet will be watching. Remember, the Fed sets rates for their US constituents, not for us or the rest of the world.

#144 Hallen Gaer on 12.16.15 at 6:25 pm

There will be no ‘normalization’ for Canadians while Poloz keeps his boot on the neck of the Lonnie as his agenda as stated is to crush the value of our currency so as to enact his 1840’s vision of a coal and iron ore export economy on Canada.

http://www.bnn.ca/News/2015/12/16/Truedau-says-weak-Canada-dollar-brings-challenges.aspx

As you’ll notice even the media is misspelling ‘Truedau’ as he is noise only fluffed up by a propaganda campaign trying desperately to sell the new PM as sexy, but without substance.

The losers in all of this are of course us. Those of us who can’t pay 5 dollars a pound for cauliflower and lettuce, who have begun to starve on the handouts from foodbanks salute the mavins behind the scenes.

#145 Irish Stew on 12.16.15 at 6:28 pm

CDN Manufacturer selling to the USA – we love the US dollar movement!

#146 White Crock BC on 12.16.15 at 6:31 pm

Dan on 12.16.15 at 4:15 pm
Are you all Americans, here?
I do not understand your happiness with a Canadian economy troubles. Are you drunk? Or you are just bad canucks? Brain frozen because of constant bad weather?

Schadenfreude; noun:

pleasure derived by someone from another person’s misfortune.

#147 TRT on 12.16.15 at 6:35 pm

“With all do respect Garth but reading your commentary makes me believe you are one of the biggest doomers.”

Sorry Garth. But i second the motion.

…especially regarding YVR detached housing. You advertently fail to acknowledge foreign inflows.

Data? There are aliens…there are no aliens..

#148 Only-inflation-to-reduce-debt-burden on 12.16.15 at 6:37 pm

“Almost three million jobs were created this year”
– 3 million minimum wage jobs…

“corporate profits are stable”
– with government tax breaks,,, of course…

“consumer confidence is rising (look at house and car sales)”
– and so their debts begin to accumulate again…

“household debt is falling”
– questionable…

“the federal deficit has plunged”
– but debt to gdp still much, much higher than Canada’s…

“cheap oil is a bonus”
– Canadians share in this too…

“and stock markets have already swallowed higher rates”
– Perhaps, but what about bond markets???

#149 For those about to flop... on 12.16.15 at 6:38 pm

Mark#140
Even Ross Kay points such out, in perhaps slightly different language, if you listen to his audio interviews on Howestreet.com. So you don’t have to take Mark’s word for it.
////////////////////////////////////////

Interesting so now the Tramadol I’m on makes it appear that people refer to themselves as the third person.
Either that or you have finally decided to disown yourself.
Walk of shame!

#150 Over-Built and Over-Mortgaged on 12.16.15 at 6:39 pm

When it gets harder for people to pay their bills and get credit, and more and more are selling stuff to meet their oblicgations – the appetite to purchase wanes. Watch for an avalanch of job cuts and real estate listings starting after Christmas.

http://www.azlyrics.com/lyrics/neildiamond/america.html

#151 gut check on 12.16.15 at 6:50 pm

Okay so I’m no economist… I’m not even an investor – BUT…

What makes anyone think that the USD will weaken?
They are talking about ending their ban on oil exports which of course they are not going to get top $$ for as an export unless the price goes up.
They are going gangbusters down there right now, all systems go (right, GT?)
They are still the world’s foremost military might, Russia is struggling, and the whole world owes them $$.

Plus of course if WWIII (4?) breaks out they are in the cat bird seat, just like last time.

#152 Rexx Rock on 12.16.15 at 6:53 pm

Unbelievable,shocking and dumbfounded are some of the words to describe the rate hike.Its only been 9 years since the last one.This might ruin our housing bubble,how dare they?Maybe ,bozo the clown Poloz will go negative rates like he’s been talking about and continue the ponzi scheme.Is it true that they might rename the cad to the Canadian peso?

#153 Smoking Man on 12.16.15 at 7:02 pm

#128 Caught In The Grip on 12.16.15 at 5:58 pm
I must admit Garth, you have called everything so far. I hope you’re right about the decline in the Canadian housing market.

Really, and I’m just chopped liver, fk I get yellow pages and bombarded wrong. Everything eles. 100% certanty

NO accolades for me. Its all I live for.

Why do I bother..

James2, you’re a wanker.. Calling me the devil..how insulting. I’m that little piece of shits overlord…

#154 Julie K. on 12.16.15 at 7:02 pm

Normal is boring.

Usually.

#155 Sideshow Rob on 12.16.15 at 7:12 pm

“Artificially low? How do you figure that a country that has been a chronic importer for the past 30+ years can have a high currency and sustain long-term net imports indefinitely?

If you look at the long-term USD$ chart (ie: DXY), its been mostly downwards since 1970 which was the . With occasional severe corrections to the upside which is to be expected as too many pile into the trade against it.

http://sloanreview.mit.edu/files/2008/12/3817-ex9-lo7.png

http://www.oftwominds.com/photos2011/O2M-DXY2.png

The USD$ will continue its long-term secular pattern of weakening (with occasional corrections) until the trade balances meaningfully go positive for an extended period. Without a much lower long-term USD$, I’m not sure how the US can realistically achieve a larger export sector as a percent of GDP. The peak of the US export sector was ~1970, coinciding with the peak of the US dollar.

Currency relative valuations, over the long term, always come to reflect long-term accumulated trade balances. Currency weakness, over the long term is the market’s way of indicating that trade deficits need to be balanced out. In the long term, the economy will allow no nation to be perpetually either a debtor nor a creditor.”

///////////////////////////////////////////

I don’t buy this at all. The US can have a trade deficit forever. As long as the dollar is the global reserve currency they MUST run a trade deficit. The US chief export is dollars. The world needs them. For reserves, US dollar denominated interest and debt payments and global trade transactions. It’s an enviable position that comes with having the planets dominant military.

#156 family beagle on 12.16.15 at 7:15 pm

Blog induced thots… Whether higher interest + lower price, or lower interest + higher price, the total will be determined by price support and ability to make monthly payments. Jobs, wages, and investors will determine the sticker price and how much inventory sells, re: Calgary. Real estate is local. Can Vancouver maintain the current price curve? Hmmm. I think it can for awhile at the expense of local services and retailers. The increasing basket of taxes will also impact.

#157 Hope & Ruin on 12.16.15 at 7:16 pm

#37 Mark on 12.16.15 at 2:47 pm
Too many lined up on one side of the trade. And wham, the smart money is now in the process of taking them out.

Same deal with housing. For generations, young people were told to “buy housing as soon as they can in life” or else you’ll forever be a poor renter. So most did, sending participation rates to record highs. Ironically, over-adherence to that ‘law’ actually was its undoing.
__________________________________________

a small percentage of people are wealthy or even well-off. If everybody is doing it and not everyone is wealthy, then it is probably a poor way to gain wealth.

This is my poor attempt at logic. I’m sure there is a fail in there somewhere. It’s my unsophisticated way of describing “smart money”. If something is a must or a sure bet. I try to do the opposite. Results have varied.

#158 Pek on 12.16.15 at 7:17 pm

0.25% increase… not a big deal so far.
I believe in house prices correction when/if I see it
For now, I look at Fraser Valley houses for sale, then I look am WA and Oregon and I want to shoot myself. $800K CAD buys you in Fraser Valley what $200K USD buys in US. May be this is the real FX rate – 1CAD = 0.25USD
This is so screwed.

#159 Keith in Calgary on 12.16.15 at 7:18 pm

A .25 raise in rates is pure window dressing……symbolic at best, yet functionally irrelevant.

The first step on a path. — Garth

#160 cramar on 12.16.15 at 7:23 pm

ZPR sure took off like a rocket from the bottom in the last two days.

“Fascinating Captain.”
– Spock

#161 Smoking Man on 12.16.15 at 7:32 pm

#149 gut check on 12.16.15 at 6:50 pm
Okay so I’m no economist… I’m not even an investor – BUT…

What makes anyone think that the USD will weaken?
They are talking about ending their ban on oil exports which of course they are not going to get top $$ for as an export unless the price goes up.
They are going gangbusters down there right now, all systems go (right, GT?)
They are still the world’s foremost military might, Russia is struggling, and the whole world owes them $$.

Plus of course if WWIII (4?) breaks out they are in the cat bird seat, just like last time.
….

Gut check, I just made a fellow blog dog rich. Coached him for the last month or so. He’s got along way to go. But so far so good. Its up to him to share the ride.

I need a book cover, and some illustrations for the chapters, that’s my fee, I can teach you too.

Love your art work…you are one hell of a talented beast. The Harpo painting, to this day I’m still finding the little cryptic shit you put in there.

Brilliant

#162 Kenchie on 12.16.15 at 7:33 pm

#192 tkid on 12.16.15 at 11:22 am
“@190, Cassandra is an oracle no one will listen to or believe. She was cursed to be accurate but never listened to because she wouldn’t let Apollo into her pants.”

Describes Garth to a T!

#163 Bill F. on 12.16.15 at 7:35 pm

Wasn’t meaning to offend. Was honeslty just curious about your opinion on being underweight US equities and overweight Canadian?

A strategy for disappointment. — Garth

#164 not 1st on 12.16.15 at 7:37 pm

The 0.25% is irrelevant and it will be given back inside of a year. Those newly created jobs are always part time servers and maids and cleaning staff and walmart greeters – they are never engineers or manufacturing. They are irrelevant too.

Meanwhile the Fed now has to start think how its going to unwind 5 trillion in treasuries in an orderly way. haha good luck with that one.

You are out of cred. — Garth

#165 ANON on 12.16.15 at 7:38 pm

Crow!
*yuck*

#166 Knivesdrawn on 12.16.15 at 7:40 pm

Toronto is turning into a literal Stabfest! WTF is going on here? Is this a byproduct of the Fed’s rate hike? please explain…

#167 Smoking Man on 12.16.15 at 7:44 pm

The first step on a path. — Garth

Yes, to revised data, opps

Just fking with you sir…or am I.

All the same, love being in this democracy..

Look forward to the day when we can use the slang term for a dripping wet opposite of dog.

See my compulsive phyco problems.

#168 Kenchie on 12.16.15 at 7:47 pm

#27 OXI in GREECE on 12.16.15 at 2:32 pm
“After 3 years I have taken down my “The Fed will raise rates next month” poster….

signing off live in Brazil where its 30 degrees YAY !! Isn’t global warming awesome????”

Not for the Brazilian farmers who lose their crops due to floods and droughts, which leads to less food in the local markets and thus higher prices for everyone, but particularly the poorest of Brazilians. But each to their own.

http://www.reuters.com/article/us-brazil-damburst-environment-idUSKCN0T40PY20151115
https://en.wikipedia.org/wiki/2015_Brazilian_drought

#169 petal to the medal on 12.16.15 at 7:50 pm

When I lived in the U.S., my “holy shit” moment came in 2007 when I met a short-order cook, making not much more than minimum wage, who owned two large homes, and was planning to buy a third. – Neil Macdonald http://www.cbc.ca/news/business/fed-interest-rate-household-debt-neil-macdonald-1.3366890

#170 Suede on 12.16.15 at 7:56 pm

#129 caught in the grip

Dude, careful what you wish for.

If housing prices drop, you won’t be lining up to buy bc you’ll be too scared to pull the trigger…youll be Thinking prices will move lower for a better entry.

Market psychology 101

#171 willworkforpickles on 12.16.15 at 8:02 pm

It will start to get very real in the 2020’s when rates approach 18% + again ….completely unavoidable when the world shifts out of the US dollar as the reserve currency….

#172 Kenchie on 12.16.15 at 8:04 pm

#52 TRT on 12.16.15 at 3:08 pm
“CDN $ hanging in there, just as I thought…due to Dovish language.”
——————————-
It’s down 15.4% YTD… That’s not exactly “hanging in there”…

“With regard to YVR houses, the Chinese Yuan ia massively appreciating against the Loonie. YVR RE not going down…expect more pace to park the Yuan/Renmimbi”

CAD has fallen against the RMB by 12.1% YTD. But the CNY is falling against the USD too, nowadays. And expect it to be unpegged within the next year or so, which will bring it down even further. So the large advantage Chinese buyers received this year will dissipate over the next or so.

#173 Smoking Man on 12.16.15 at 8:10 pm

DELETED

#174 zedgt87 on 12.16.15 at 8:10 pm

“Of course, all were blind to the financial crisis that would sweep over the global two dozen months later.””

That is not true at all. Many people saw it coming, and anyone who pointed to excessive exuberance were laughed at and ridiculed.

Sounds kinda familiar to today.

#175 Kenchie on 12.16.15 at 8:11 pm

#54 Doug T. on 12.16.15 at 3:09 pm
“All this talk of a recovery in the States is laughable – the U.S. job stats are a sham – the hundreds of thousands of low-paying service-sector jobs have limited upside in pay and benefits and the corporate owners skim whatever upside there is because labor is in surplus except for specific fields of expertise.
When the curtain is pulled aside and the great oz is exposed for what he (they) is then the ponzi that has been built for the last 30 years will collapse and then perhaps we can start to look at a different model that benefits the masses and not just the 1%”

blah, blah, blah, doomer this, doomer that. Keep on betting against America then. Put your money in gold or your mattress!

Chicken Littles like you end up being slaughtered by good American companies like TSN and SAFM, so they can pay me my dividends.

#176 ROCK BEATS PAPER on 12.16.15 at 8:16 pm

Definition of dot plot; FED’s secret goal to transfer wealth from savers and middle class to 0.01%.

One & done

That will be s accuratw as the last prediction. — Garth

#177 sean on 12.16.15 at 8:17 pm

RE: Bottoms_Up on 12.16.15 at 5:18 pm

With a 60 cent dollar we will be very competitive
———————
I’m not so sure.

In the past Canada had a fairly robust manufacturing sector which could turn inwards and be somewhat self-sufficient when the loonie dropped in value. Under these conditions most of our inputs were loonie denominated and our outputs were thus more attractive to USD buyers.

Unfortunately, in the past ~20 years we’ve lost much of our manufacturing capacity either to US repatriation of branch plants or to lower-wage Mexico. This means that many of our inputs are now US dollar (more expensive) or MXN peso (relatively unchanged) denominated. As a result, I’m not sure that a lower currency helps us as much as it used to.

Sure US buyers will get a great price on manufactured items…but still from their current Mexican suppliers :-(

As for commodities, other commodity currency exchange rates are dropping as fast or faster than the loonie, so there’s no advantage there.

I think that the government and BOC consider a low dollar to be an easy “magic bullet” solution for exports, but fear that it may not be as effective as it was in the past.

Canadian consumers used to have a fighting chance at avoiding expensive imports when the loonie dropped by “buying Canadian”. Now consumers are crucified when they have to purchase either US goods or Mexican goods via US resellers since some items are no longer available from Canadian suppliers.

I fear a lower loonie may now be a “not win” (re: exports) / lose (re: imports) situation.

#178 Linda on 12.16.15 at 8:23 pm

#25 – Common sense, isn’t. If it were ‘common’, then vast quantities of currently indebted to their eyeballs Canadians would instead be debt free or in they did have debt, it would be the kind where your assets more than cover your liabilities & those assets could be quickly liquidated at need.

I’m not the kind of person who likes to wear a hair shirt & advocate austerity, but I am the kind of person who believes in living within my means. Do I like luxury? Of course I do. But I don’t fool myself in thinking I can afford a Lamborghini when my income only supports a Smart car. Thing is, lots of people seem to believe that if they want something they deserve to have it & that they also deserve sympathy if they end up bankrupt, because hey, it wasn’t their fault the economy went into a tail spin just as they purchased something wildly beyond their means. It is true that for most of us what the economy does is beyond our individual control, though if we act collectively we can exert some measure of influence. People in positions of power who can influence the economy – vide Ms. Yellen – still can’t ‘fix’ things in one fell swoop; any actions must work their way through the system & hopefully mitigate the worst of the effects.

That having been said, one can do quite a bit to protect oneself. Emergency funds, living within ones means, keeping up a network of contacts & being aware of & responsive to what is going on all help. It is very much like heading out the door to get somewhere. If you leave 15 minutes before you ‘have’ to go, your trip is usually smooth. You catch that bus or traffic light; traffic is lighter than expected & you arrive at your destination cool, calm & collected. Wait to the very last second to leave? You miss the bus or have to run like a crazy person to catch it, only to miss the connection because of some problem in traffic. Ditto if you drove – every light turns red, there is an accident etc. If you actually reach your destination at the designated time, you are already stressed & not at your best. I leave it up to the reader as to which of the two outcomes is preferable.

#179 Kenchie on 12.16.15 at 8:24 pm

#61 eddy on 12.16.15 at 3:15 pm
“Sheeple, low interest rates are good. Any typing to the contrary is proof that brainwashing works.”

Depends. Low interest rates lead to overinvestment and imprudent capital management by both companies and individuals. It also helps people pay off debt sooner, if they’re good at it.

On the flip side, it allows less than prudent people to take on too much debt, just due to the way mortgage math works. For every 25 bps drop in interest rates, someone at the same income can borrow 2.1% more than before.

So if a person’s income allows them to borrow $200k at 5.0%, then at 2.5% they can borrow $242k, despite no other variable changing. Let’s say they buy a house at $302.5k, or LTV = 80%, (excluding closing costs) in 2015. If interest rates in 2020 are 5%, all they can borrow without an increase in wages is $200k. If they don’t pay off that $42k in the 5 years, they will have to borrow from the bank of mom and dad, or a private lender (2nd mortgage at much higher rates) to make up the difference. Otherwise, they can be foreclosed upon.

So low interest rates can make them “debt slaves”, as some people like to call them.

#180 Daisy Mae on 12.16.15 at 8:25 pm

“Stephen Harper was newly elected. And popular.”

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

Popular? POPULAR? I never liked him from Day #1 when he announced: “You won’t recognize Canada when I get thru with it!”

I shuddered….but w can laugh now ’cause we’re permanently rid of him.

#181 For those about to flop... on 12.16.15 at 8:28 pm

#174 Kenchie on 12.16.15 at 8:11 pm
#54 Doug T. on 12.16.15 at 3:09 pm
“All this talk of a recovery in the States is laughable – the U.S. job stats are a sham – the hundreds of thousands of low-paying service-sector jobs have limited upside in pay and benefits and the corporate owners skim whatever upside there is because labor is in surplus except for specific fields of expertise.
When the curtain is pulled aside and the great oz is exposed for what he (they) is then the ponzi that has been built for the last 30 years will collapse and then perhaps we can start to look at a different model that benefits the masses and not just the 1%”

blah, blah, blah, doomer this, doomer that. Keep on betting against America then. Put your money in gold or your mattress!

Chicken Littles like you end up being slaughtered by good American companies like TSN and SAFM, so they can pay me my dividends.

////////////////////////////////////////
Who knows what’s gonna happen next year but at the start of this year I was unsure about putting some money in a u.s equity fund as it has had a run up the last 3 years but it is up 20% and has kept my portfolio even for the year.
Even if it cools off I will keep it as the U.S always appears to be the first to recover as they have a finger in all the pies.
I wish Canada’s economy was as diversified.

#182 ROCK BEATS PAPER on 12.16.15 at 8:28 pm

One and done was my last prediction! Although I assume you do not believe this to be accurate.

Of course in 1936, I believe it was 3 rate increases into a slowing economy before they back tracked in ’37.

It’s not 1936 and the U.S. economy is not slowing. — Garth

#183 Retired Boomer WI on 12.16.15 at 8:31 pm

NORMALIZATION. Here it means seeing a portfolio that is mostly all green, not red.

Oh, yes the usual suspects, IM Bonds, Short Bonds, and Oil are red. The important stuff at the moment however is all green, and that color spells confidence!

Nice to see, it has been quite some time since money has displayed any ‘confidence’ it did today, largely as a result of one lady’s .25% interest rate hike.
(I had my doubts until it was a done deal, admittedly)

Let us hope more ‘confidence’ is displayed over the coming year.

#184 mike in kelowna on 12.16.15 at 8:32 pm

congrats garth

#185 valleyrenter on 12.16.15 at 8:33 pm

ANON @ 7:38pm

Crow!
*yuck*

It would appear we are even on the keyboard front :)

#186 tundra pete on 12.16.15 at 8:37 pm

There must be some divorce fuelled arguments starting across the 604 and 416 tonight. My my. There must be some nervous soles biting nails tonight!

Oh to be a fly on the wall in one of those overbid,overpaid bidding war mistakes tonight! Sure the rates will never increase. Sure. Sure.

#187 Mark on 12.16.15 at 8:45 pm

” If interest rates in 2020 are 5%, all they can borrow without an increase in wages is $200k. If they don’t pay off that $42k in the 5 years, they will have to borrow from the bank of mom and dad, or a private lender (2nd mortgage at much higher rates) to make up the difference. Otherwise, they can be foreclosed upon. “

In the practical sense, if the borrower still has a job (which, if they were previously involved in an industry highly levered to RE, or consumption relating to RE, they may not), the bank will gladly refinance them. Even in negative equity.

However, the applicable interest rate is likely to be higher on account of the additional incremental risk posed in such loan, compared to a brand new loan that is being written at a significantly lower LTV.

While housing buyers in 2020 might be enjoying very low interest rates, say, 3% on their mortgage (after all, the BoC is likely to keep rates suppressed for many years to come on account of deflating RE and a deflating Canadian economy), the underwater ‘renewer’ might be paying a blended rate of 5-6% on that loan, and still have the negative equity to eventually repay.

Barring a significant recovery in the housing market or substantial wage increases that facilitate repayment of the negative equity, the noose will remain fairly tight around the necks of these borrowers for many years to come. The extra ‘spread’ will flow mostly to the banks’ bottom line and be paid out to bank shareholders, less taxes, as dividends.

Additionally, (Canadian) banks and the stock market more broadly, will benefit on account of multiple expansion as speculative enthusiasm moves away from housing, and back towards other asset classes such as stocks. Rising earnings + multiple expansion = very happy investors.

#188 Smoking Man on 12.16.15 at 8:47 pm

Wheeb you can badly walk, your getting deleted og gf.

Crack up the budds and this won will help you find the room

https://youtu.be/t4H_Zoh7G5A

#189 Darryl on 12.16.15 at 8:49 pm

people like to call them.
.
#179 Daisy Mae on 12.16.15 at 8:25 pm

“Stephen Harper was newly elected. And popular.”

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

Popular? POPULAR? I never liked him from Day #1 when he announced: “You won’t recognize Canada when I get thru with it!”

I shuddered….but w can laugh now ’cause we’re permanently rid of him.
—————————————————————

The sad thing is that it will be T2 that will render Canada unrecognizable. Those meddling middle class will finally be gone. Wa haha .

#190 VB on 12.16.15 at 8:52 pm

fed finally took the bandage off, didn’t even hurt.The U.S is headed back to a healthier place. Well done.

#191 OXI in GREECE on 12.16.15 at 8:56 pm

#160 not 1st on 12.16.15 at 7:37 pm
The 0.25% is irrelevant and it will be given back inside of a year. Those newly created jobs are always part time servers and maids and cleaning staff and walmart greeters – they are never engineers or manufacturing. They are irrelevant too.

Meanwhile the Fed now has to start think how its going to unwind 5 trillion in treasuries in an orderly way. haha good luck with that one.

You are out of cred. — Garth
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

Why is he out of cred? There is a reason I had “The FED will raise rates next month” hanging in my office the last 4 years…..

#192 debtified on 12.16.15 at 8:57 pm

Garth, are you okay? I am sensing something that is a bit off on your writing. I hope you are well. Thank you for all the free education. Take care.

Stick it. See? I’m fine. — Garth

#193 Mark on 12.16.15 at 8:58 pm

“There must be some divorce fuelled arguments starting across the 604 and 416 tonight. My my. There must be some nervous soles biting nails tonight! “

Oh, you mean scenarios like this playing out?

https://www.youtube.com/watch?v=20n-cD8ERgs

Ad from the US, about a year after the peak in prices.

#194 learningfromyou on 12.16.15 at 9:02 pm

Thank Garth for this post

Look how the today’s hero talked no sense and was smashed by the other lady who brought her to the point several times.
https://www.youtube.com/watch?v=XYtSMLgaW6U

Do they need average people to manage the Fed instead of choosing Elizabeth Warren to do an outstanding job?

#195 bigtowne on 12.16.15 at 9:04 pm

Indifference to our seriously challenged currency vis a vis our main trade partner America is and has been unstated principal and practise for our government and our Bank of Canada civil servant managers.

Our attitude to be immune to the value of our currency has been unstated fete acompli for a very extended period of decades. And now we find our country in love with refuges and immigrants where all will see the welcoming CIBC banners at the airport greeting the new people with slogans: SHOW UP AND WE WILL GREET YOU WITH KINDNESS AND DEEP POCKETS OF LOVE. However these newcomers are not as sticky as the old newcomers who showed up with zilch and had no cash to go back home.

These newcomers at some point might get cranky and pull their cash and put it back in some out of the way country that uses the greenback as their mean of exchange as they do in Hong Kong or Saudi Arabia.

The rhetoric remains unseen as in most Canadian economic agenda removing scrutiny by avoiding challenging the real agenda. It is like the dirty 30’s again where the government starved the people to pay for the railroad bonds interest payments so now the people will be starved by a very unfortunate state of affairs with our fatal slide in progress.

#196 Laughing on 12.16.15 at 9:06 pm

Not a 1 of you have figured out how this plays out in the comment section including Garth.

#197 Big Dipper on 12.16.15 at 9:07 pm

So, as I expected, GT bought the US interest increase lie.

A prime example of the msm and govt propaganda aimed to mislead the gullible. There has been no rate increase. All financial institutions were notified last month that Yellen’s announcement is all show aimed to manipulate the stupid. I have proof and several web sites will support me. A giant scam.

The real US unemployment rate is over 30% and going up. Everybody knows that. The Muslim Socialist Obama is just working on transferring more American jobs and wealth to Saudi Arabia.

This is all dome by the same people, with support of the liberal far left media, who brought us the climate change scam. Only stupid liberals and the loony left will believe any of this crap. Interest rates will go down.

You are a bigger whackjob than was previously evident. Don’t bother returning. — Garth

#198 Terry on 12.16.15 at 9:07 pm

Good job Janet Yellen !!!!!

The stars are aligning just right and the clouds look a little whiter and puffier today !!

#199 Chaddywack on 12.16.15 at 9:08 pm

“There’s no way that current housing valuations in Toronto or YVR can withstand that increase”

I showed this quote from you to one of my Vancouver colleagues. His response “There are over a billion people in China and even if only 1-2% of them are millionaires that’s a lot of people wanting to move to Vancouver!”

He just bought his second east van crapshack for 995k (interestingly just below the CMHC cutoff) Updates to follow.

#200 ROCK BEATS PAPER on 12.16.15 at 9:09 pm

For the large money, it was not the tinsy rate increase that caused the market to go up (that was priced in weeks ago) it was the news that the balance sheet would remain some $4+ trillion. We know that because the FED increased the Reverse Repo capability (RRR) from $300 billion to $2 trillion. That means that the treasuries and mortgages they hold will be rolled over.

I believe the US economy is decelerating (not negative) based upon the ISM, the PMIs, manufacturing and export declines. Oh, and the consumer was tepid this holiday shopping season. In adition, S&P profit margins have rolled over. Unlike garth’s employment numbers which are a lagging indicator, sales and especially the inventory to sales ratio do not boad well for the US economy.

This partly explains why Canada is in a pickle, because the east will not be able to export much to a decelerating economy even with a weak $ and low oil prices.

#201 Smoking Man on 12.16.15 at 9:13 pm

https://youtu.be/bESGLojNYSo

#202 BoB on 12.16.15 at 9:15 pm

Odd, this event wasn’t deserving of 30 seconds coverage on the Vancouver evening news. Apparently, it may have a negative effect on the loonie; end of story.

#203 TurnerNation on 12.16.15 at 9:15 pm

Stephen who? All these years later and our forum host is in the news.

#204 lee on 12.16.15 at 9:16 pm

#94 Shawn

Did you say 3x? We’re you even alive in the early 90s? Condos sold by developers for $250000 were selling for unde $100000. These guys building single homes asking $400000 were letting them go for half price. You could buy a house in Forest Hills with $25000 down. It’s not 1994.

#205 janice on 12.16.15 at 9:18 pm

Well, finally after 5 years of you taunting us with higher rates, you and yellin finally pulled it off but I’m sure will be retracted in 2016 when the economy goes into the dumpster..

#206 lee on 12.16.15 at 9:19 pm

Garth,

I heard someone on 680 today say that it’s a big deal Ms. Yellin used the phrase “gradual increases” instead of “measured increases” in describing where she goes from here.

#207 Smoking Man on 12.16.15 at 9:20 pm

If you bastards could live only one moment in my mind.

Wont end well for you.

On nectonite, shit I had to put up with..world govt, cp gone wild, death cult, hunt down and kill off opinions.

Being the best pilot in the star fleet, I got a muligan.

Glad I made it to earth..

Bought me a bit more time.. Lots of time.

#208 waiting on the westcoast on 12.16.15 at 9:20 pm

Mark – is great that you are going to a definitive site like oftwominds…

This is what I pulled from Wikipedia. Note the US dollar chart which shows that the US$ index was artificially driven down by QE and low interest rates. Look what is happening now due to investors recognizing the strength of the US economy…

https://en.m.wikipedia.org/wiki/U.S._Dollar_Index

I would also check your assumptions on exports driving the dollar… Especially for a reserve currency.

#209 For those about to flop... on 12.16.15 at 9:26 pm

#190 debtified on 12.16.15 at 8:57 pm
Garth, are you okay? I am sensing something that is a bit off on your writing. I hope you are well. Thank you for all the free education. Take care.

Stick it. See? I’m fine. — Garth

////////////////////////////////////
Easy , easy you are going to make my stitches pop from laughing to hard my financial Chewbacca!

#210 waiting on the westcoast on 12.16.15 at 9:32 pm

Sideshow Rob says “I don’t buy this at all. The US can have a trade deficit forever. As long as the dollar is the global reserve currency they MUST run a trade deficit. The US chief export is dollars. The world needs them. For reserves, US dollar denominated interest and debt payments and global trade transactions. It’s an enviable position that comes with having the planets dominant military.”

Mark – please read above comment again.

I don’t know why “waiting” is falling for the (i hope it’s just) Mark’s bait… Maybe “waiting” will start talking about himself in the 3rd person… ;-)

#211 Jeffrey of Saskatoon on 12.16.15 at 9:34 pm

RIP Mark Ernsting. Vile scum infest this country and a war needs to be waged.

#212 Smoking Man on 12.16.15 at 9:36 pm

Happens every time authority finds a nectoite.

https://youtu.be/JRfuAukYTKg

Disclousure soon, promise.

#213 Mark on 12.16.15 at 9:36 pm

“This is what I pulled from Wikipedia. Note the US dollar chart which shows that the US$ index was artificially driven down by QE and low interest rates. Look what is happening now due to investors recognizing the strength of the US economy…”

But the lows are getting lower, and the highs, lower. There is a downwards trend in that chart, even if there are relatively short-term huge bounces. Typically when everyone believes the USD$ is going to zero and too many people borrow it/short it, is when they manage to revive it.

Its sort of like a slow motion chronic illness, such as a slow growing cancer. Every so often, it might go into remission. But the long term trend is death, just as it is for the US dollar on account of long-term trade deficits. Until, of course, they get their proverbial act together, which probably will be forced upon them by crisis.

“I would also check your assumptions on exports driving the dollar…”

Assumptions checked, they are consistent with the long-term trend of the USD$ being in a chronic weakening pattern. Big bounces are excellent shorting opportunities as lower lows are inevitable.

“Did you say 3x? We’re you even alive in the early 90s? Condos sold by developers for $250000 were selling for unde $100000. These guys building single homes asking $400000 were letting them go for half price. You could buy a house in Forest Hills with $25000 down. It’s not 1994.”

Sounds about right for 1994. Previously quoted brand new $500k-$600k houses in Mississauga were being blown out at the time in the $250k range. Some had sat a couple years vacant, others were 90% completed (ie: interior finishing not done) but the vendor simply ran out of money to do the completion. With mortgage money at 10%+ and the stock market ticking up, opportunity costs were high.

#214 SWL1976 on 12.16.15 at 9:41 pm

I find it amazing how many people are willing to cheerlead a 1/4 raise in rates after years of counterfeiting and cash injections into a suspect ‘booming’ economy.

We have become so disconnected from reality and the truth that it is laughable if it wasn’t so god damn depressing. When one actually looks at at the very fundamentals of our modern monetary system it’s disgusting, a down right fraud. Again, laughable if it wasn’t so god damn depressing. I also understand though, that right now it is our only real option. However, what does upset me is the openly celebrated ignorance towards the criminal behaviour it is based on.

We cheerlead crooks and criminals so long as they let us keep half of what we earn.

We look to and admire central bankers, hanging off their every word as to what lever they will pull next

We dismiss their criminal behaviour for we still want an ever shrinking slice of the pie

We lie to ourselves and pretend everything is fine so long as the war is not in my back yard

We have lost touch with our connection to this earth we call home. Our waters and air have been poisoned, but we still honour money more than both.

I understand and am ashamed to admit; that yes to a certain degree I am also a slave to this shit, but at least I am not afraid to admit, or understand just how messed up it all really is.

I call BS on no one seeing 2008 coming, just like I call BS on the monetary policy afterwards actually solving anything. There is no unwinding this global debt bubble. People did see 2008 coming and right now many people see the next global crisis coming, but many many more dismiss it.

It’s all a good laugh to call them crazy until reality sets in.

Personally I feel like I am positioned well for what is to come, but I take no joy in the suffering that is going to come to others. Right now I am just another cog in the wheel, but I am personally not getting too attached to this debt based economy for I have watched them skim, lie, cheat, and steal my whole life and can clearly see where this is going.

At least when the day of reckoning comes I know what side I am on and where I stand. I came into this world with nothing, and will leave with nothing.

Until then I will enjoy peace of mind amongst the insanity

#215 Bobs ur uncle on 12.16.15 at 9:44 pm

Stick it. See? I’m fine. — Garth

Lol. There’s some jolly Christmas spirit.

Don’t poke the bear, folks…

#216 young & foolish on 12.16.15 at 9:45 pm

Chill ot blog dogs …. banks still don’t need your money!

#217 Randy Randerson on 12.16.15 at 9:52 pm

#184 tundra pete on 12.16.15 at 8:37 pm

You’re only assuming that those homeowners actually know what an increased in interest rate means to their mortgage. You’re giving them too much credit.

#218 young & foolish on 12.16.15 at 9:58 pm

“Debt, in and of itself, isn’t a problem. Its a sort of tax on stupid people if they don’t use it appropriately in a manner that provides a return greater than its cost”

Hey, that what Rich Dad says!

#219 Tony on 12.16.15 at 10:06 pm

Just like what 99 percent of the people already knew at 2:00pm the market indexes would go straight down and straight up this is almost too predictable. Going back through all the decades the FED tries to create a fictitious problem them solve that fictitious problem right before the election. The fictitious problem is the strong U.S. dollar. That will be very easy to solve as the U.S. economy has been rolling over for years. The bond market has the story right. We’ll likely see one more one quarter of one percent hike from the FED before they start decreasing interest rates around April or May next year. Everyone seems to have caught on to all the FED moves before they happen so they better change their patterns in the future.

#220 VanCity D-man on 12.16.15 at 10:08 pm

Hi Garth, remember Doomer Gloomer? How about double or nothing? Lol.

#41 Doomer Gloomer on 06.11.15 at 8:05 pm
Hey Garth, You seem so confident about a rate hike. I am willing to bet you $10,000 (ok make it $100,000) that we won’t see a rate increase in 2015 from the Yellen or Poloz. Easiest $100K you’ll ever make if you take my bet. Do we have a deal? Just reply accepting the bet and I will reply with my info. I am willing to put the cash in escrow if you are.
I am betting you won’t.

#221 Leo Trollstoy on 12.16.15 at 10:12 pm

The posters who invested in the US$ 3-5 years ago are now reaping the well-deserved rewards.

Congrats.

The people who, at the same time, championed the CA$ and gold are losers.

Condolences to the losers. Enjoy sitting on your hands. And don’t forget to wish your boss a good morning tomorrow.

#222 Tony on 12.16.15 at 10:15 pm

Re: #204 lee on 12.16.15 at 9:19 pm

But since 2009 the opposite of everything that should have occurred has occurred meaning what will occur will be the opposite of what Janet says. Like I said years ago everything is like through the Looking Glass and nothing has changed since. We saw another example today where gold and silver and the stock market indexes should have fallen but this is today not way back in history. Expect the converse or opposite of everything in the future to keep on occurring.

#223 Carousel on 12.16.15 at 10:23 pm

Hurrah! for Yellen, taking a stand … 1/4 point is a start, come on Canada follow suite!!!

RE needs to drop at least 25-30% of the value, before anyone would even think of buying. 2016 will be a bitter sweet year, financially and for RE.

No where to go, but down!!!

#224 Big Dipper on 12.16.15 at 10:28 pm

“You are a bigger whackjob than was previously evident. Don’t bother returning. — Garth”

——————————-

I regret that you did not recognize parody. The BS I spouted is exactly the kind of ignorant conspiracy garbage you blog seems to attract. Maybe you suffer from overload and did not recognize my comment for what it is. I go with that interpretation and ignore the rest of you comment.

It’s a relief to know you are merely unhinged. Apologies. — Garth

#225 Mark on 12.16.15 at 10:47 pm

“Mark – please read above comment again.”

I read it once, read twice, and read it a third time. “Reserve currency” status does not last forever. Any good reference to the history books will tell you that.

The (perceived) necessity of raising US policy rates to quell future inflation (devaluation). The increasing run on US treasury debt by foreign investors. The US CPI figures which actually came in quite a bit higher than I anticipated (especially compared to Canada which is at 1% YoY despite a 30%+ devaluation against our largest trading partner). The US’s shrinking prominence in the world. Declining living standards in the US. If you can’t add this all up and see the trend unfolding, well, there’s no hope for you.

#226 broke prairie boy on 12.16.15 at 10:55 pm

Our fearless leader gets a shout out on CBC!

http://www.cbc.ca/news/business/fed-interest-rate-household-debt-neil-macdonald-1.3366890

#227 Sean on 12.16.15 at 10:56 pm

“I don’t know about others, but the much complained about CPD, as well as XPF are both up today!”

Everything was up today. My real estate ETF (CGR) was up over 4%.

#228 Woke To The Sounds Of Horking on 12.16.15 at 11:22 pm

Rate increase. Big deal. What about Canadian housing and the CAD?

Housing: Truth is that Vancouver will not be affected in the way that some people think it will be, i.e. no crash, no meaningful decline of any sort. An abundance of Chinese, Indian and American money powers GVRD housing and will continue to do so.

Vancouver is the only major Canadian city worth living in and one of only a handful of truly livable global cities. I’ve said it before: Van is the Singapore of Canada and the tap water’s even better than Singapore’s. Toronto? Laughable in comparison (freeze your a$$ off for starters).

CAD: The Canadian gov’t will torpedo the CAD to save Canadians drowning in housing debt. You hold CAD, you will lose, no matter if you’re buying lettuce at 4 bucks a head in Winnipeg or living overseas on “the cheap.”

#229 Kenchie on 12.16.15 at 11:22 pm

#192 learningfromyou on 12.16.15 at 9:02 pm
“Thank Garth for this post

Look how the today’s hero talked no sense and was smashed by the other lady who brought her to the point several times.
https://www.youtube.com/watch?v=XYtSMLgaW6U

Do they need average people to manage the Fed instead of choosing Elizabeth Warren to do an outstanding job?”

Interesting video. But not exactly that important. Why doesn’t Elizabeth Warren, who I am impressed with, investigate someone from the FDIC about it? Although the Fed is a regulator too, I doubt it’s on the top of Yellen’s plate when she has bigger, more macro issues to deal with.

#230 Great Canadian Bubble Co. on 12.16.15 at 11:30 pm

So will all of the previous posters who claimed the Fed would NEVER raise rates please stand up … (crickets)

#231 waiting on the westcoast on 12.16.15 at 11:32 pm

Mark says… ““Reserve currency” status does not last forever. Any good reference to the history books will tell you that.”

Mark – if that is your timeline, there is no hope for you. Best of luck with your strategy…

#232 young & foolish on 12.16.15 at 11:55 pm

The new normal is not the same as the old normal. This rate increase does not reflect a healthy US main street any more than absurd RE values in Canada reflect strong growth here.

#233 OXI in GREECE on 12.16.15 at 11:59 pm

#167 Kenchie on 12.16.15 at 7:47 pm
#27 OXI in GREECE on 12.16.15 at 2:32 pm
“After 3 years I have taken down my “The Fed will raise rates next month” poster….

signing off live in Brazil where its 30 degrees YAY !! Isn’t global warming awesome????”

Not for the Brazilian farmers who lose their crops due to floods and droughts, which leads to less food in the local markets and thus higher prices for everyone, but particularly the poorest of Brazilians. But each to their own.

http://www.reuters.com/article/us-brazil-damburst-environment-idUSKCN0T40PY20151115
https://en.wikipedia.org/wiki/2015_Brazilian_drought
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

disasters have been happening in the world since it began. Slime Media is just better at reporting it. Just like the BS of GloBULL Warming invented so your people loving Govt can TAX THE CRAP out of you.

Cheers !!

#234 Normalization! | Realties.ca on 12.17.15 at 12:33 am

[…] Source: http://www.greaterfool.ca/2015/12/16/normalization/ […]

#235 slick on 12.17.15 at 12:57 am

CPD is OK, but ZPR is my pref, [pun intended], because of the options.
Wednesday, somebody went in and bought 300 Dec $10 calls for a nickel.
But the big winner may be the outfit that bought 10,000 Feb $10 calls for 30 cents. they now control 1 million shares. I hope they do well.
But for every buyer, there is a seller.
Tried to sell $10 puts, but no luck there.
I managed to pick up 25 March $10 calls for a dime a few days ago. Looking for $11 print before year end.
slick

#236 Randy Randerson on 12.17.15 at 1:14 am

I foresee a day when realturds will promote BoC dropping rate, killing loonies. The reason? They can sell the “Our Canadian is cheap against [insert foreign currency], so our RE can only go too the moon!” lies to the populace.

Actually, where are the certified lunatics with their realturd license? Seems they’ve disappeared into their leases BMW’s

#237 K on 12.17.15 at 1:24 am

#223
Interesting points about the declining US and true too. The US is not what it was. but I think in terms of the USD and shorting it, we won’t see a significant negative change of the kind you are talking about in our lifetimes (and I’m a millennial). Maybe not even our children’s.

#238 #99 Victoria RE...not all of the RE Agents lie on 12.17.15 at 1:44 am

BCREA did post an interest rate forecast, Dec. 2015, that shows increased 5 yr fixed mortgage interest rates thru 2016 4Q GOING UP (2016 5 yr fixed mortgage interest rate forecast between 4.8 to 5.1%)

http://www.bcrea.bc.ca/docs/economics-forecasts-and-presentations/mortgagerateforecast.pdf

Slightly more optimistic than CMHC base case forecast (2016 5 yr fixed mortgage interest rate forecast between 4.2 to 6.2%):

http://www.cmhc-schl.gc.ca/odpub/esub/61500/61500_2015_Q02.pdf

Like in life, some people do their homework and some do not or are oblivious.

#239 Freedom First on 12.17.15 at 1:58 am

#212 SWL1976

Nice Post. Yes, the world is insane. However, like you, I have learned how to live my life to have peace of mind amid the insanity.

Most mystifying to me is the people who choose any kind of slavery instead of freedom. So I just live my own life and share the truth. People can take it or leave it. I will be fine.

#240 Mortgage Rates increase not enough... on 12.17.15 at 2:03 am

Canada will need something else to shock economy in YVR and 416 to drop home prices other than forecast mortgage rates.

Calculations for a 25 yr amortization, 5 year fixed rate, average Cdn. mortgage amount of $250,000 (now and 2 years from now – forecast rates from CMHC base case) :

4.8% monthly payment: about $1425
6.2% monthly payment: about 1630
________________
Increase per month: about $205
Increase per year: about $2445
________________

I think for most, the above represents some belt tightening (or go further into debt to maintain the same lifestyle?).

The above is not enough to rapidly cool the YVR/416 RE markets into a large price drop.

I still believe some other economic shock will have to happen to precipitate alrge/rapid price drops as seen in AB (most likely where people in YVR and 416 fear for their jobs and have to sell).

#241 Senta on 12.17.15 at 2:29 am

Oil will be $75 in 2 years – at below 40 the a swath of NA oil patch will be bk in 6 months. Junk bonds are imploding.

#242 Rook on 12.17.15 at 2:43 am

#99 Victoria Real Estate Update on 12.16.15 at 4:29 pm

From your prediction, when will be a good time to buy in Victoria for a first time homebuyer? We would like to settle down but can’t get anything in Victoria proper under 500.

#243 juno on 12.17.15 at 3:40 am

19 Sheane Wallace on 12.16.15 at 2:18 pm

As expected, FED increased the rates.

Back to the ‘honorable’ Poloz who dreams of negative interest rates. The tale of the 2 currencies.
===============

Sound alot like Greece Vs Germany, just before greece currency crashed.

It amazes me how the Fed will keep on pumping up the Real Estate market at the cost of everything else. Not that all the sectors have been punished will the fed keep on pumping up the real estate bubble at the expense of the poor by killing the Loonie.

#244 Nagraj on 12.17.15 at 5:57 am

The Inn on the Moor, cont’d

The “Highwaywoman” rode Bucephalus, bleeding flanks and foaming at the mouth, onto the cobblestoned courtyard of the Inn. “Heathcliff!” and the stableboy came running shirtless into the rain, lantern held high. “Oh Lord, poor Buce!” “Yes. Take him in, keep him warm. Any guests?” “Two. Sir Gareth and Lord Doomergloomer.”
The lace-ruffled black-caped booted and triumphantly plumed tricorned Highwaywoman laughed, leaped
off her exhausted horse. As she turned to enter the Inn, Heathcliff clutched her strong arm – he knew both the Highwaywoman and Bucephalus intimately – “Will ye stop with me later, sir?”
Whereas she’d been stentorian (an Irish tenor) with the “Heathcliff!”, and a German baritone with the stable commands, her “Aye, lad” was that of a Russian basso profundo.

Just as Heathcliff was leading Bucephalus to a familiar shelter and as the Highwaywoman was making for the door of the Inn, Sir Gareth and his hound made an unscripted appearance: “Well, what ho! Lady Eccles, you here?!”
(Sir Gareth, alerted by Fidelio to noises in the yard, had espied the Highwaywoman from his window. He dressed furiously, rushed down the stairs to – unmask her. (And win his bet with Lord Doomergloomer.)

The Highwaywoman promptly pointed a pistol not at Sir Gareth but at Fidelio. “Stay your damned dog or I’ll shoot it.” “Heel, Fido.” “Give me your money belt.” Sir Gareth hesitated. “Now. Or I’ll kill him. And then you.”

As Sir Gareth unbuckled his money belt he suffered an eclaircissement to have rivalled the worst lightning of the now spent storm. Sir Gareth was nobody’s fool, the height and broad shoulders, for one thing, declared to him that the infamous Highwaywoman of the moors was not, as rumoured among Yorkshire’s aristocratic cognoscenti, the eccentric Lady Eleanor Countess of Eccles. A rare thought for Sir Gareth: ‘I don’t know what’s in front of me.’

“Heathcliff, take this man’s money belt and tie it around my waist.”
Heathcliff did so, crouching and kneeling so as not to obstruct the aiming pistol.
Sir Gareth watched with more fascination than concern.

The newly buckled Highwaywoman then sans proem preamble or prologue exactly lodged a bullet between Sir Gareth’s eyes. The second shot felled the dog.

[Bessie Pross, the innkeeper’s lovely daughter, was watching this from behind her prettily curtained window. Nothing she hadn’t seen before.]

Upstairs in the Inn’s best room, on the floor, next to the magnificent crimson-draped four poster, lay Lord Doomergloomer.
The candle flame which had desperately sought to revive its flagging life by means of a littering page of “The Highwaywoman” epic – met up with the abused spilt Port’s angry aimless wandering and so now all was darkness there.
If there had been light, you would have seen a deeper red, a bloody halo about the fine head of Lord Doomergloomerpeering sleeping in heavenly peace, for all eternity.

“But look, see how the morn in russet mantle clad walks o’er the dew of yon high eastward hill” said Heathcliff quietly looking out a little knothole space in a hayloft board, “Let’s leave off counting the money now, Jamie.”

FINIS

[Nagraj thanks you for your kindness, wishes you a Merry Christmas, Happy Holidays, and won’t be posting again until after New Year’s]

#245 Renter's Revenge! on 12.17.15 at 6:29 am

“Condolences to the losers. Enjoy sitting on your hands. And don’t forget to wish your boss a good morning tomorrow.”

Yeah, if they have a job! Lol

#246 George S on 12.17.15 at 7:00 am

#59 Bram
“Do you really think that people buying a $10M,- house need much help from a bank?
I’m going to venture that most of these houses are bought cash, without blinking an eye.”

Many years ago I went with my brother in law to look at a house they were interested in buying. When the real estate agent was explaining how the deal (really high price at that time) depended on him getting financing approval from the bank he got a strange look on his face and said “you mean I can’t just write a cheque for it”

Which he could and did. And has done many times since. They really do live in a different world.

#247 fancy_pants on 12.17.15 at 7:44 am

none of this will pass on to the savers, just more profits for the banks

#248 Stoopid Idiot on 12.17.15 at 7:50 am

Michael Pento-Fed Trying to Maintain Illusion of Credibility

https://www.youtube.com/watch?v=z0XofIe0ADs

#249 crowdedelevatorfartz on 12.17.15 at 8:27 am

@#234 R. R.
“Actually, where are the certified lunatics with their realturd license? Seems they’ve disappeared into their leases BMW’s to .. each other.”
++++++++++++++++++++++++++++++++++++

It warms my heart at this time of year to know the vulgarians are allowed access to a keyboard.

#250 NowhereToGoButUp on 12.17.15 at 8:29 am

#219…Leo Trollstoy….your post reflects the smugness that permeates this blog. Why only look at 3 – 5 years? If you are a long term investor, go back to 2000…then you would see that those that invested in real estate and gold for that matter have outperformed America and equity markets in general.

Keep in mind that the Fed had to raise rates…but they are still data dependent. With every other country invoking stimulus and decreasing rates, if we are truly a global economy something has to give? Keep in mind that this blog has been wrong more than right…and though Garth suggested that corporate earnings are strong they are actually forecasted to decrease in the next quarter? Additionally…have you looked at retail sales numbers over the busiest time of the year?

Just saying….a mere 25 basis point increase does not declare victory or justify your smugness.

I said corporate profits were stable. They are. As for retail sales, that is so 2009. It’s all online, baby. — Garth

#251 Millmech on 12.17.15 at 8:30 am

#244 Fancy Pants
Every time the rates are raised it is passed on to the savers.By having no debt there is no increase in monetary obligation,therefore more savings.

#252 crowdedelevatorfartz on 12.17.15 at 8:34 am

Smoking Man.
Only one “deleted” in the past few days.
Are you slipping or is it the “Season” and you’re attempting to be a kinder, gentler curmugeon to all the “Whos” down in “Whoville”.

#253 fancy_pants on 12.17.15 at 8:37 am

Current event:
After great deliberation with the surgeons, nurses and hospital administrators, managers and accountants, the doctor adjusted Mr. economy’s morphine dose by .25%. The news was spread to all concerned for his health. Hurray! This must mean he is getting better! In all the hype and excitement, word was spread that Mr. economy has not only been taken off life support but given discharge papers as well! What joy!

Coming sequel:
Meanwhile back on the table it was determined to be a nervous twitch as the debt disease spread to vital organs. “Ok”, said the hospital CEO while deliberately but briefly locking gazes with all the staff, “Nobody says a word about his condition. Remember, we get paid whether Mr. economy gets better or not. In fact, let me remind you, we need him on this table, and we need to appear to be essential for his health, it ensures our personal goals of wealth accumulation. Oh and congratulations on a job well done. Bonuses for everyone again this year.”

#254 James#2 on 12.17.15 at 9:05 am

#152 Smoking Man on 12.16.15 at 7:02 pm

#128 Caught In The Grip on 12.16.15 at 5:58 pm
I must admit Garth, you have called everything so far. I hope you’re right about the decline in the Canadian housing market.

Really, and I’m just chopped liver, fk I get yellow pages and bombarded wrong. Everything eles. 100% certanty

NO accolades for me. Its all I live for.

Why do I bother..

James2, you’re a wanker.. Calling me the devil..how insulting. I’m that little piece of shits overlord…
;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;
Smoking Turd I did not call you the Devil, learn to read. Read below I commented on Chris’s comment about your lack of knowledge on the Beelzebub as you are a self admitted hatter of religion and agnostic. Dam Smoking Goof you really can’t read! Get with it and I’m surprised you could actually spell Wanker. Better take some reading lessons with all your new found $$.

#96 James#2 on 12.16.15 at 4:19 pm
#68 Chris on 12.16.15 at 3:26 pm
You better let Smoking Goof know who and what Beelzebub is. He is an agnostic! Only believes in the Church of Tin Foil Hats.

#255 TurnerNation on 12.17.15 at 9:23 am

Success in Canada so far has meant going to right school, getting right obedience cert., buying right car – say Audi Q5 with roof rack on top – doing right Waspy activities like Mountain biking, skiing, cottaging – and buying house in right area.
We’re special and different.

#256 For those about to flop... on 12.17.15 at 9:27 am

As Janet Yellen strode purposely towards the podium yesterday,I remember thinking that the way she was dressed with that royal blue jacket she looked like she was testing it out in case she gets sick of her current gig and decided to slide in seemlessly behind the cosmetics counter of her local Walmart .
I guess you don’t have to look like you know what your doing when you actually know what your doing.

#257 Yuus bin Haad on 12.17.15 at 9:31 am

Glad that’s over with. What should we fret about next?

#258 tkid on 12.17.15 at 9:32 am

#244 none of this will pass on to the savers, just more profits for the banks

Gee, I’m a saver and I profited!

#259 Randy on 12.17.15 at 9:42 am

The world is addicted to debt. ZIRP is here forever.

#260 For those about to flop... on 12.17.15 at 9:51 am

After getting torn opened like a can
of sardines yesterday I am hurting in a big way this morning,the opioids are not helping much.
I am thinking of trying some of that medical marijuana but I don’t have any experience with the stuff so I think I’m going to use my call a friend card and call the prime minister aka The Metrosexual Messiah ™ and ask him for some tips.
Looking around the living room I don’t have many options, maybe I can throw out my “get well soon “flowers and modify the vase into a bong!

I had to trademark the Metrosexual Messiah before Taylor Swift did it ,damn girl is going after everything.
I will allow you guys to use it as long as you write [FLOP] in brackets beside it.
No plagiarism this time SWL!

#261 Sheane Wallace on 12.17.15 at 9:54 am

Loonie disappearing right before your eyes.

CAD/USD (CADUSD=X) -CCY
0.7181 Down 0.0075(1.0400%) 9:53AM EST

#262 Jeff Gaulg on 12.17.15 at 9:59 am

DELETED

#263 Leo Trollstoy on 12.17.15 at 10:06 am

#258 Sheane Wallace on 12.17.15 at 9:54 am

Don’t worry. You’ll see a profit in 20 years.

Lol

#264 Tony on 12.17.15 at 10:11 am

Shaw’s share price is falling sharply on the news of the Wind takeover. The utilities are under pressure from the U.S. rate hike yesterday. The street has gotten this one all wrong and I’m buying Shaw stock and will be also buying it tomorrow if it drops more. The shares should have surged on the news not fell. The Americans will figure this out soon and load up on Shaw’s stock.

#265 maxx on 12.17.15 at 10:21 am

#34 Scully on 12.16.15 at 2:43 pm

“American business analysts were jumping for joy on American newscasts. In their words this hike is long overdue. I agree. For those who keep believing zirp is the new normal I think you’ve been spanked byGarth :)”

Yes, and the spanking they get is nothing to the size and duration to come, given increasing rates. The fact that so many Canadians were pretending to be masters of the financial universe 3 years ago will now be amusing in the extreme.

Greedy sellers who have “hung on” and thereby created sticky prices (up to yesterday) have missed out on huge capital gains, US currency conversion gains and future opportunity (not to mention a good chunk of the good ol’ bucket list). The greatest morons of them all have shoveled even more equity towards their spawn so that they too can future wealth toast with over-priced re.

Debt is a fiscally putrid state.
Excess debt, by Canadian standards, is a nearly incurable nightmare.

Beautifully done Janet. Your country’s real economy is now also on the path to robust health. Many more Americans will feel a part of it and conservative savers will be out spending their gains. In Canada, all stops are being pulled in order to drown savers.

Canaduh.

#266 Dups on 12.17.15 at 10:32 am

Wishy washy TSX and currency just like our leaders and managers. The place where people that break the law are hand slapped and the smart educated people are taxed to the neck. Go Canada Go…

#267 Hank Stalworth on 12.17.15 at 10:33 am

Yes, normalization of lower interest rates, bond yields.

The day after the Federal Reserve and Janet Yellen increased a 0.25% point and bond yields are falling again.

The 30 year Canada is 2.18% down from 2.21% yesterday and 2, 5 and 10 year are all down much more as 10 year Canada 1.46% down from 1.50% yesterday, 5 year 0.80% down from 0.83%.

These are all down between 20 to 27 basis points since the highs in 2015-November.

The Canadian dollar to U.S. dollar is 0.7183 down it goes some more. When these Federal Liberals get in power we always get a crappy Canadian dollar to U.S., remember 62.5 cents back in 2002.

#268 For those about to flop... on 12.17.15 at 10:34 am

This Trump thing ain’t fizzling out any time soon so I might as well claim another one before Taylor Swift comes after it.
I had used it twice without trademarking it so here goes.
Donny Rump(tm)

#269 Dogman01 on 12.17.15 at 10:46 am

I know this is not relevant to this blog; by now the Fed increase talk has run its course; In Mad Vlad tradition of commenting on global affairs, the hungry minds may find this interesting:

Turkish shoot down of Russian jet a deliberate ambush?

http://harpers.org/blog/2015/12/mountain-ambush/

#270 Daisy Mae on 12.17.15 at 10:48 am

#213: “Stick it. See? I’m fine. — Garth

Lol. There’s some jolly Christmas spirit. Don’t poke the bear, folks…”

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

Garth is probably getting fed up with all the negativity and incorrect assumptions he reads daily….

His predictions have been correct all along. Seems a lot of people can’t handle the truth….however, that’s their problem.

#271 Tony on 12.17.15 at 10:48 am

Re: #258 Sheane Wallace on 12.17.15 at 9:54 am

Maybe the Bank Of Canada is saving their arsenal of defense when the dollar hits 50 cents U.S. They were trying to hold the dollar at 75 cents until the recent OPEC meeting. No sign of the Bank Of Canada in the markets to shore up the dollar since.

#272 Retired Boomer WI on 12.17.15 at 10:53 am

#264 Hank Stalworth

Your memory decides you.

2002 marked the 2nd year of our own idiot in charge, George (what, me worry) Bush.

You may call him many things, but “Liberal” would not be one of them.

you’re welcome.

#273 Doug in London on 12.17.15 at 10:55 am

@Great Canadian Bubble Co., post#228:
Aren’t they the same geniuses who said The Fed would never start and, ultimately finish, tapering?

#274 Retired Boomer WI on 12.17.15 at 11:14 am

#212 SWL 1976

You are confusing inevitability with the current reality. Be sure you keep what is, separate from what is not.

There is no Timeline here…. unless you devise one

Illusion may appear as fact… accept either, your peril

Illusions change, facts also, always beware the reporter

that’s ’nuff…

#275 fancy_pants on 12.17.15 at 11:17 am

#248 Millmech on 12.17.15 at 8:30 am

?

The increase in the cost of obtaining debt > increase of the benefit of parking $ into savings. The bank will net the difference, not Aunt Carol with all her $ in the orange guys shorts.

#276 Smoking Man on 12.17.15 at 11:21 am

Forget my advice back in Jun when USDCAD was 1.23

Two weeks ago Friday Knowing FED was going to spike.

If you Bought 100 contracts of USDCAD

Cost on entering the contract. 26K

Right this second you would be up 642,000.00

Yet I get Smoking Turd , Smoking Loser.
Sticks and stones bitches……..

Climate Change is all that matters…right?

Bahahahah -evil laugh

#277 Gas Plant Votes on 12.17.15 at 11:23 am

Finally, now go after Wynne lying in politics is common.

Ontario Provincial Police have laid criminal charges against two aides to former premier Dalton McGuinty in connection with the deletion of documents related to two cancelled gas plants.

David Livingston, McGuinty’s former chief of staff, and Laura Miller, the deputy chief who went on to work in the office of British Columbia Premier Christy Clark, are each charged with breach of trust, mischief in relation to data and misuse of a computer system to commit the offence of mischief.

The charges stem from the deletion of thousands of government emails related to the Liberals’ decision to cancel two gas plants prior to the 2011 election, which the auditor general found will cost ratepayers up to $1.1 billion.

Both Livingston and Miller are scheduled to make their first court appearances in Toronto on Jan. 27, 2016. Lawyers for both the accused have denied they did anything wrong, and none of the charges has been proven in court.

Documents released during the police investigation last February showed Livingston and Miller compiled a list of senior Liberal staffers in the then-premier’s office whose computers would be purged.

They hired Miller’s partner, Peter Faist, to wipe clean dozens of the hard drives on a weekend.

The OPP said the force will not comment further on the evidence “in order to protect the integrity of the investigation and the ensuing court process.”

#278 Bram on 12.17.15 at 11:24 am

This fed rate graph made me chuckle:
https://pbs.twimg.com/media/CWYuhRzUwAA_ObA.png

#279 Farzicombo on 12.17.15 at 11:37 am

I have read through 200+ comments and no one has mentioned the foreign buyers but a couple of people!

What about the chinese buyers with their suitcases full of cash!!! how will they be affected by all of this? Aren’t they one of the main reasons for the crazy house prices in Vancouver? Aren’t they just going to buy up what we can no longer afford?

Less than 5% of all sales are to foreigners of all kinds. Non-event. — Garth

#280 Retired Boomer WI on 12.17.15 at 11:39 am

Hmmm…. Lift-Off then comes settlement.. and apparent indigestion from all the ‘rich’ thoughts over a measly .25% rate goose.

It is still early, yet the bloom has faded. Still remarkably good numbers – except oil!!

As Oil goes, so goes amerika, and north amerika…

What? It takes a 1.38 CDN to buy a Greenback… ??

#281 Godth on 12.17.15 at 11:42 am

#271 Retired Boomer WI on 12.17.15 at 11:14 am

What if economists applied their own theories — to themselves?
http://atimes.com/2015/12/what-if-economists-applied-their-own-theories-to-themselves-part-i/

#282 Steerage Bilge on 12.17.15 at 11:45 am

#273 Smoking Man on 12.17.15 at 11:21 am

Forget my advice back in Jun when USDCAD was 1.23

Two weeks ago Friday Knowing FED was going to spike.

If you Bought 100 contracts of USDCAD

Cost on entering the contract. 26K

Right this second you would be up 642,000.00

Yet I get Smoking Turd , Smoking Loser.
Sticks and stones bitches……..

Climate Change is all that matters…right?

Bahahahah -evil laugh
——-

Nice!. Smoking gazillionaire

hey “Mark the financial wizard”.. what ya gotta say dudette

#283 Leo Trollstoy on 12.17.15 at 11:46 am

I love reading about how people make money. These early 2014 comments make me want to buy gold and gold miners. Anyone else?

Gold mining companies are awesome investments, especially when it is very difficult to build new gold mines (ie: see Barrick’s Pascua-Lama project).

Barrick’s enterprise value (equity + debt) not be approaching $100B? Instead of what, ~$25-$30B today?

Remember the wise Warren Buffet who said that he wants to buy companies at dimes and nickels on the dollar — that’s what you’re doing when you buy many of the gold miners these days
http://forums.redflagdeals.com/gold-bubble-bursts-1431262/7/#post18110968

If you go by the Dow:Gold ratio, we’re looking at more than $16,000/ounce today (although the Dow probably will end up falling). If you look at the ratio between outstanding US treasury debt and the price of gold, the price could be in excess of $20k. If you look at the fact that less than 1% of the world’s investible assets are currently in gold/gold equities, and the historic peak has been around 20% — that could mean gold at roughly 20X today’s prices, so $24,000/ounce.
http://forums.redflagdeals.com/gold-bubble-bursts-1431262/#post18103199

#284 Steerage Bilge on 12.17.15 at 11:51 am

#280 Leo Trollstoy on 12.17.15 at 11:46 am

I love reading about how people make money. These early 2014 comments make me want to buy gold and gold miners. Anyone else?

Gold mining companies are awesome investments, especially when it is very difficult to build new gold mines (ie: see Barrick’s Pascua-Lama project).

Barrick’s enterprise value (equity + debt) not be approaching $100B? Instead of what, ~$25-$30B today?

Remember the wise Warren Buffet who said that he wants to buy companies at dimes and nickels on the dollar — that’s what you’re doing when you buy many of the gold miners these days
http://forums.redflagdeals.com/gold-bubble-bursts-1431262/7/#post18110968

If you go by the Dow:Gold ratio, we’re looking at more than $16,000/ounce today (although the Dow probably will end up falling). If you look at the ratio between outstanding US treasury debt and the price of gold, the price could be in excess of $20k. If you look at the fact that less than 1% of the world’s investible assets are currently in gold/gold equities, and the historic peak has been around 20% — that could mean gold at roughly 20X today’s prices, so $24,000/ounce.
http://forums.redflagdeals.com/gold-bubble-bursts-1431262/#post18103199
———–
Hilarious..
You’re all over the financial wizard known as mark….

26,319 post before he got canned!!

Garth, is he close to that here yet? What’s your limit on this dudette?

#285 Broke Dick on 12.17.15 at 11:54 am

Garth, this is one Kia you won’t be making fun of.
The K-9
K-9, get it? Canine.

http://www.kia.ca/cars/k900

#286 TurnerNation on 12.17.15 at 11:57 am

We need another big war for the economy. Spreading hope and democracy 500lbs at a time?
An eternal enemy.

#287 saskatoon on 12.17.15 at 12:13 pm

fed rate is ranged.

for 7 years it has been 0% – .25%

now, it is .25% – .5%.

.25% is simply the top end of the previous range.

normalization?

hardly.

if the fed raises AGAIN…BEYOND the upper limit of the held 7 year range….

…THIS will be a significant event.

#288 LowRent of Arabia on 12.17.15 at 12:15 pm

Roadkill Loonie for Christmas Dinner

#289 Holy Moly on 12.17.15 at 12:15 pm

The USD just reached a new height of 1.3979 CAD. No end in sight!

#290 Spectacle on 12.17.15 at 12:17 pm

#60 BobC on 12.16.15 at 3:15 pm
Garth, you were right again.
Maybe someone can answer a simple question with an educated opinion.
Since America wants to bring in hundreds of thousands of foreigners to fill jobs that I guess……
But then wouldn’t that reduce GDP causing a recession?
Or would that many people bring down wages through competition and increase the need for more welfare?
Is it a downward spiral that will hurt both ours and your economy and bring down investments?

—It’s not about the middle class–if your really interested its a macro fleecing . Right under our own eyes————

Living Outside The Dialectic: Who in the world wants UN Local …
nikiraapana.blogspot.com › 2011/02 › w…
Feb 21, 2011 – The United Nations Local Agenda 21 Programme was adopted by all member nations in 1992.

#291 Bottoms_Up on 12.17.15 at 12:17 pm

#231 OXI in GREECE on 12.16.15 at 11:59 pm
—————————————————
You argue based on a false premise. Here’s the definition:

“A false premise is an incorrect proposition that forms the basis of an argument or syllogism. Since the premise (proposition, or assumption) is not correct, the conclusion drawn may be in error.”

Your conclusion that current weather patterns are not or in part the result of human impact on the environment based on historical weather is drawn in error.

One only needs to look at the “1 in 100” year storms that occur every couple of years, or “1 in 500” year droughts that funnily enough we are so lucky to witness (in California) to know that the 0.86 oC surface temperature rise and ocean acidification is having an impact.

#292 The Poloz dilemma on 12.17.15 at 12:18 pm

Save the C$ and the banks or RE valuations and the banks

Will Canada’s top families let the Dollar turn into the Mexican Peso only so the peasants can afford overpriced 4×6 shoe boxes on 3500 sq ft city lots?

I don’t think so.

RE needs to correct 50% and the Dollar needs to firm up or Canada is without any chance of keeping the existing brain pool here and certainly not attracting outside capital or brains.

Everyone in Canada knows this is true. We can’t afford to lose another decade.

#293 IHCTD9 on 12.17.15 at 12:23 pm

Morneau says for get about the 10 billion/yr deficit cap and wants to talk debt to GDP ratio

Trudeau says balanced budget in 4 years is “very” cast in stone.

http://www.cbc.ca/news/politics/trudeau-budget-deficit-1.3369459

Maybe these two guys should sit down over a coffee and get their story straight.

#294 Scott on 12.17.15 at 12:25 pm

No Santa Claus rally this year.

#295 Bottoms_Up on 12.17.15 at 12:28 pm

#231 OXI in GREECE on 12.16.15 at 11:59 pm
———————————————————
You must also have missed the article where Exxon admits to knowing about global warming in the 1970’s?

http://www.nytimes.com/2015/11/06/science/exxon-mobil-under-investigation-in-new-york-over-climate-statements.html?_r=0

#296 bdy sktrn on 12.17.15 at 12:29 pm

A new report from the Canadian Mortgage and Housing Corporation says Victoria has the lowest apartment vacancy rate of any major city in Canada.

The new report says the vacancy rate is 0.6 per cent — down from 1.8 per cent last year.

CMHC senior market analyst Eric Bond says the low vacancy rates are a product mostly of population growth.

#297 Smoking Man on 12.17.15 at 12:34 pm

Loser:

What a crock of crap.

http://michaelmoore.com/weareallmuslim

GO TRUMP

#298 TurnerNation on 12.17.15 at 12:38 pm

Bulls have hangover today. Too much selling for my liking. NYSE Trin indicator has been pinned near 3 all day.

#299 TRT on 12.17.15 at 12:40 pm

Told you guys exactly when Loonie would go down after rate announcement (see my earlier post).

Still time to get in on the free fall.

Maybe another 10 cents to go. Already went down 30 cents or so.

Oh yeah, inflation numbers at 1%. Suckers.

#300 TRT on 12.17.15 at 12:42 pm

Smoking Man:

You gonna ruin people. It’s never a smooth line between 2 points when a currency is going down.

200 contracts? LOL

#301 Godth on 12.17.15 at 12:46 pm

#246 crowdedelevatorfartz on 12.17.15 at 8:27 am

Are you turning into a sentimental moralist now that the sun is ebbing in the seasonal sky?

Oh, the irony.

Don’t worry, the sun will be resurrected on the 25th, same as always, and you can return to your usual form.

#302 Randy Randerson on 12.17.15 at 1:01 pm

#246 crowdedelevatorfartz on 12.17.15 at 8:27 am

Not exactly vulgar, you just have to know what its definition is. In case you’re wondering, it means realturds congratulate each other and self assure that RE prices can only go up to the moon. People canbe too sensitive nowadays.

#303 debtified on 12.17.15 at 1:02 pm

#190 debtified on 12.16.15 at 8:57 pm
Garth, are you okay? I am sensing something that is a bit off on your writing. I hope you are well. Thank you for all the free education. Take care.

Stick it. See? I’m fine. — Garth

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

Glad to hear that. :)

#304 Dan on 12.17.15 at 1:07 pm

I guess, better to be lead by retard than by anything which ever smell like damned words like social democracy. And also, why frozen paupers could not have their own dinasty, right?

#305 Dan on 12.17.15 at 1:09 pm

#212 SWL 1976

And yes, you are the world. Thank you.

#306 BS on 12.17.15 at 1:12 pm

One only needs to look at the “1 in 100” year storms that occur every couple of years, or “1 in 500” year droughts that funnily enough we are so lucky to witness (in California) to know that the 0.86 oC surface temperature rise and ocean acidification is having an impact.

Since there was nobody to track droughts in California 500 years ago who came up with the thesis they should only occur once every 500 years? The same people that are telling you we need to increase your taxes in order to stop these droughts. LOL.

#307 Retired Boomer WI on 12.17.15 at 1:17 pm

PEW report a family of 2 with an income of $102,559 qualifies at “upper class” one of the elite 21%.

Such BS!! Who is considered ‘upper class” on a gross income of that?

It is NOT what you earn, but what you actually keep, and how that is invested for your further upkeep!!
Numbers by themselves tell little…

http://www.pewresearch.org/fact-tank/

#308 Ogopogo on 12.17.15 at 1:19 pm

Realtors everywhere in Canuckistan are filling up their diapers fast.

As for the doomers who swore at Garth and called him names, the least you could do is apologize. Profusely.

#309 Sam Shepard on 12.17.15 at 1:24 pm

Loon crashes below 70…no bottom in sight…..importing inflation Zimbabwe style. Good luck to working families and those on a fixed low income already creamed by the ZIRP. Eat or heat…the new Canadian buzzword.

#310 Retired Boomer WI on 12.17.15 at 1:27 pm

# 280 Godth

What you get is the 13th century English mythical creature named the “Amphivena, or Amphisbaena.”

Similar to the two-handed Economist, i.e. “On the other hand…”

Not to be confused….also see: “slight of hand”…

#311 Doug in London on 12.17.15 at 1:42 pm

@Sam Shepard, post #308:
That’s why you need to have exposure to other currencies, including the Greenback, in your portfolio.

#312 Godth on 12.17.15 at 2:13 pm

#309 Retired Boomer WI on 12.17.15 at 1:27 pm
Amphivena, interesting, never heard of it before and I’m into occult folklore. It’s like Janus meets the ouroboros.

Maybe everyone should make a gift of slinkies this festive season and name them economystic.

On a different note, I just went for a drive in the first snow in the hood on Van. Isle. Funny stuff. I have snow tires on a front wheel drive diesel – other people, who knows what they’re doing. Even the 4wd’s, oh boy. Kinda scary, mostly funny, and a lot slushie.

#313 Kreditanstalt on 12.17.15 at 2:15 pm

“The Fed will increase routinely over the next couple of years, slowed only if the American recovery sputters. But there’s no sign of that now.”

Garth, you must either be willfully blind or totally short-sighted.

Did you not say rates would never increase? — Garth

#314 Ole Doberman on 12.17.15 at 2:25 pm

Oh great Gartho of hippo – what is your general outlook for commodities over the next 5 years?

Do you see oil over $60 ever again with the US now exporting after 40 years?

#315 Smoking Man on 12.17.15 at 2:30 pm

#299 TRT on 12.17.15 at 12:42 pm
Smoking Man:

You gonna ruin people. It’s never a smooth line between 2 points when a currency is going down.

200 contracts? LOL
……………….

with anything in life, finding the best entry point is where the art is.

quarter cent move going against your bet wipes you out with 400 to 1 margin

#316 Rob on 12.17.15 at 2:32 pm

Hi Garth,

My wife and I were celebrating the fed hike last night, it seems as though this weird era of viewing debt as wealth is finally coming to an end!

A well known mortgage brokerage firm in the GTA emailed me the following a few moments ago and I thought I should share:

You may have heard there was an increase in Prime Rate, please be aware that this change was not in Canada.

On Wednesday December 16th, the US Federal Reserve announced an interest rate increase of a quarter of a percentage point. This is the first time the FED has moved it’s benchmark interest rate since 2006.

What does this mean for Canadian Rates?

Last week the Bank of Canada Governor; Stephen Poloz suggested he would not follow the USA’s path and that in fact he has given consideration to further ways to reduce the Canadian Prime Rate and borrowing costs. Economists agreed that an increase in Canadian Prime Rate might be a year or 18 months in the future and perhaps not even then.

We at ______ Mortgage value our clients and strive to keep you informed of all pertinent mortgage information. Keep in mind that the rate changes in the United States are not indicative of what will transpire in Canada.

If you have any further questions please do not hesitate to call us at the number above.

Talk about desperation!

Rob

#317 calgaryPhantom on 12.17.15 at 2:41 pm

Shaw’s share price is falling sharply on the news of the Wind takeover. The utilities are under pressure from the U.S. rate hike yesterday. The street has gotten this one all wrong and I’m buying Shaw stock and will be also buying it tomorrow if it drops more. The shares should have surged on the news not fell. The Americans will figure this out soon and load up on Shaw’s stock.

——————————————————————-

Not so fast. A good chunk of Shaw’s share value was on the hope that one day rogers will buy Shaw. With this decision, the probability of that happening is considerably reduced. Also, to make Wind network competitive with other big players, Shaw would need to spend a lot of OPEX and CAPEX .
Shares will go down to 19 – 21 range, and that will be the time to buy.

#318 For those about to flop... on 12.17.15 at 2:43 pm

I have a sneaking suspicion that you have used this photo before.Am I right?

Nope. — Garth

#319 Don Patterson on 12.17.15 at 3:23 pm

A previous poster stated that bond yields are falling again, it is actually getting worse, 5,10, 30 year Canada’s are 0.78%, 1.43%, 2.16%.

It would not be a shock to me to see 30 year Canada’s below 2% in the next few weeks in 2015 going into 2016.

#320 TRT on 12.17.15 at 3:32 pm

Smoking:

When people realize the US can’t raise rates too much then Euro-USD mint!!

That’s where you leverage 100x. And retire by 40.

#321 pwn3d on 12.17.15 at 3:38 pm

#167 Kenchie on 12.16.15 at 7:47 pm

Not for the Brazilian farmers who lose their crops due to floods and droughts, which leads to less food in the local markets and thus higher prices for everyone, but particularly the poorest of Brazilians. But each to their own.

http://www.reuters.com/article/us-brazil-damburst-environment-idUSKCN0T40PY20151115
https://en.wikipedia.org/wiki/2015_Brazilian_drought
—————————
From your link:
“It has been described as the worst drought in 80 years.”

If that is true… what caused the drought 80 years ago?

#322 TRT on 12.17.15 at 3:38 pm

Incredible dissapeating posts.

Garth, who else has the power to post and then delete them out of existence a few minutes later. Wow. Seen it with my own eyes.

You were not deleted. Try harder. — Garth

#323 Kreditanstalt on 12.17.15 at 3:39 pm

“Did you not say rates would never increase? — Garth”

I stand by that…if a range of 0-25bps (at @13 now) can be manipulated up to one of 25-50 without ramifications in an economy in terrible fundamental shape an can be called a “rate increase” then you are correct so far.

But this won’t last…

…OR the central bankers will doggedly maintain it in the face of a genuine Main Street recession…which is the same thing…

#324 Arb Watson on 12.17.15 at 3:41 pm

Go figure. Fed increases rates, bond yields come down.

Real Estate party to continue.

#325 gut check on 12.17.15 at 3:41 pm

@ #160 Smoking Man on 12.16.15 at 7:32 pm

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

thanks for the big ups! I appreciate that.

I’ve been mentally sketching the cover for a month now. You know I’d be honored & it’d be a blast to be a part of your book forex instructions or not so thanks for the offer. :)

#326 For those about to flop... on 12.17.15 at 3:42 pm

I am slowly remembering why I go to work normally.
It is not to save for retirement .
It is not to look after my wife.
It is not to be a productive member of society

It is because daytime television really sucks!

#327 Arb Watson on 12.17.15 at 3:42 pm

The fed needs to take care of those reverse repos, until then its a free for all.

#328 pwn3d on 12.17.15 at 3:44 pm

#185 tundra pete on 12.16.15 at 8:37 pm
There must be some divorce fuelled arguments starting across the 604 and 416 tonight. My my. There must be some nervous soles biting nails tonight!

Oh to be a fly on the wall in one of those overbid,overpaid bidding war mistakes tonight! Sure the rates will never increase. Sure. Sure.
—————————-
LOL… the funniest part about jealousy is that you hate them because you want to be one of them but you can’t. People with a locked in mortgage were not affected, and people with a variable rate have been laughing every day after rate cuts and are also not affected by the fed. They may get another cut before all is said and done.

#329 Suede on 12.17.15 at 3:45 pm

#296 Smoking Man

Michael Moore is a ‘smoking man’ as well…just for the bleeding heart side. He knows how to make $$ off his audience.

#330 unohoo on 12.17.15 at 3:49 pm

We’ve identified T2: Garth, we need your help.

#331 Godth on 12.17.15 at 3:51 pm

#314 Smoking Man on 12.17.15 at 2:30 pm

You didn’t tell us you posed for an album cover. Who knew you liked plaid and cowboy hats?
https://www.youtube.com/watch?v=mz7XK847zZc

#332 jess on 12.17.15 at 4:04 pm

Martin Shkreli, the pharmaceutical CEO who caused a storm in September by jacking up the price of a life-saving drug, has been arrested on fraud charges, prosecutors say.

His arrest was not linked to the 5,000-per cent increase in the price of Daraprim, a drug used to treat malaria and infections suffered by HIV-positive people.

The FBI said he was targeted instead in an $US11 million ($15.5 million) embezzlement probe at another company he once led, Retrophin.

“As alleged, Martin Shkreli engaged in multiple schemes to ensnare investors through a web of lies and deceit,” said Robert Capers, United States attorney for the Eastern District of New York, a press conference in Brooklyn.

The MSMB Capital Hedge Fund Scheme
http://www.justice.gov/usao-edny/pr/former-hedge-fund-manager-and-new-york-attorney-indicted-multimillion-dollar-fraud

#333 JimH on 12.17.15 at 4:07 pm

#286 saskatoon on 12.17.15 at 12:13 pm
“… fed rate is ranged… normalization? hardly.
if the fed raises AGAIN…BEYOND the upper limit of the held 7 year range….
…THIS will be a significant event.”
================================
You’re either joking or being just plain silly.

The Fed is the only major Central Bank raising; others have cut or are contemplating doing so.

Did you happen to notice what is going on in commodities? To currencies?

This is not a significant event? Get real.

#334 Oceanside on 12.17.15 at 4:13 pm

#307 Ogopogo on 12.17.15 at 1:19 pm
Realtors everywhere in Canuckistan are filling up their diapers fast.

Maybe in Alberta and Saskatchewan …

Obviously you are not a realtor, try finding a decent listing in mid Vancouver Island, good ones are gone quickly.

#335 Retired Boomer WI on 12.17.15 at 4:23 pm

#311 Godth

Slinkies!!! Perfect Economists’ prognostication tool!

Yes, time they were rebranded for the ‘next generation’ as something quite special…

Snow? Strangely, we have had none here-yet.

Yes, I know, careful what I might wish for…..

#336 ROCK BEATS PAPER on 12.17.15 at 4:26 pm

“I said corporate profits were stable. They are. As for retail sales, that is so 2009. It’s all online, baby. — Garth”

I disagree. Profit margins are declining (60bps) at a level that in all cases but one was a pre cursor to recession. I acually think that we might skirt a recession in the N.A. in 2016.

As for sales, the combined online plus bricks and mortar sucked. Inventories are getting extreme and I am not talking about oil. Those inventories are going to be a major drag for this and next quarter.

Thank God the employment picture told us how great things were a year ago. BTW, can I get a 15 year lease on a new car?

Not even the hint of a recession on the US horizon. There are better things to worry about. — Garth

#337 Darryl on 12.17.15 at 4:29 pm

#334 Retired Boomer WI on 12.17.15 at 4:23 pm

#311 Godth

Slinkies!!! Perfect Economists’ prognostication tool!

Yes, time they were rebranded for the ‘next generation’ as something quite special…

Snow? Strangely, we have had none here-yet.

Yes, I know, careful what I might wish for…..
————————————————————

They say that Christmas eve will be 14 degrees C in Toronto .

#338 Tony on 12.17.15 at 4:30 pm

Re: #316 calgaryPhantom on 12.17.15 at 2:41 pm

Shaw won’t spend anything they’ll just up the rates high enough for the Wind subscribers so they don’t jump ship to another wireless provider. It also gives Shaw a better shot at running an oligopoly with the other providers when it comes to wireless meaning wireless rates will go higher for everyone in most of Canada.

#339 jess on 12.17.15 at 4:31 pm

Department of Justice
U.S. Attorney’s Office
Eastern District of New York
FOR IMMEDIATE RELEASE
Thursday, December 10, 2015
Tishman Construction Charged With Fraud; To Pay More Than $20 Million In Restitution And Penalties For Defrauding Clients In A Ten-Year Overbilling Scheme
Projects Included the World Trade Center Towers, the Plaza Hotel Renovation, the Javits Convention Center Expansion and Renovation Project, and the Aqueduct Casino

http://www.justice.gov/usao-edny/pr/tishman-construction-charged-fraud-pay-more-20-million-restitution-and-penalties

#340 Kreditanstalt on 12.17.15 at 4:33 pm

“Not even the hint of a recession on the US horizon.”

You state that so baldly. I suppose that, if one’s definition of “a recession” is determined by government statistics, one will never appear…

The problem is more pernicious, long-term and systemic. It has nothing to do with asset price levels, with government stats, access to the latest techie gadget or with the manipulated stock and bond “markets” and everything to do with the decades-in-the-making falling living standards which more and more people are noticing.

#341 Godth on 12.17.15 at 4:35 pm

#333 Oceanside on 12.17.15 at 4:13 pm

Oh please. I’m in the Cow valley and listings sit for years, or get de-listed and re-listed…ad naseum. That doesn’t mean that there’s no sales but you have to define decent. Nobody is jumping up and down, as was the case in the past, shouting “I’m going to be rich because houses always go up”. People really don’t talk about it anymore. You’re lucky if you sell. I have a number of friends from various strata’s that would love to sell – no sale, for years! Do you want to buy a 2500 sq. ft. traditional post and beam house, 3 acres located on the Cowichan river? 750 and it’s yours, nah – won’t happen. Been on the market for at least 3 yrs. Lower end with reno’s, same thing. Assessments are going down too. The wacky tabacky has all been smoked.

#342 Poor Boomer on 12.17.15 at 5:00 pm

2013: “I’m gonna retire with my $2 Million dollar house and move to the states after my pension starts. I just bought a house in Florida so life is good.”

2016: ” Damn Loonie. I can’t afford to go go to the states this year on my pension. I’m probably going to sell my house in Florida now but my house here is worth $3 Millon now.”

2020: FEEL FREE TO FILL THIS IN

#343 Bottoms_Up on 12.17.15 at 5:05 pm

#305 BS on 12.17.15 at 1:12 pm
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You have heard of thousand year old trees right? They tell quite a story….

#344 Bottoms_Up on 12.17.15 at 5:09 pm

#320 pwn3d on 12.17.15 at 3:38 pm
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Again, your point alludes to a false argument.

The existence of past droughts does not remove the impact atmospheric carbon is currently having on the habitability of our planet.

#345 jess on 12.17.15 at 5:18 pm

cibc and enron deductibility of a (misconduct) payment

http://www.taxinterpretations.com/content/365145

https://www.ctf.ca/ctfweb/EN/Newsletters/Canadian_Tax_Focus/2013/4/130412.aspx

http://www.canadiantaxlitigation.com/tag/cibc

#346 Oceanside on 12.17.15 at 5:23 pm

#340 Godth on 12.17.15 at 4:35 pm
#333 Oceanside on 12.17.15 at 4:13 pm

Oh please. I’m in the Cow valley and listings sit for years, or get de-listed and re-listed…ad naseum.

Cowichan Valley is a long way and different market from Qualicum Beach, Parksville, Nanoose etc…

My mistake I should have been more specific.

#347 Godth on 12.17.15 at 5:45 pm

#345 Oceanside on 12.17.15 at 5:23 pm

I figured you were in that neck of the woods. The Cow. valley is a commute to Vic., it’s a canary in the coalmine quite literally. Sure, Qualicum may have a higher percentage of Sotheby’s listings but I’ve watched plenty of those wither for years too. It really comes down to what you mean by decent. 400K or less for retirees? OK, that may be. As for the rest of us real estate has become a non-topic, well, there are those laggards that speak for the tail end but I assure you it’s not like it was at all. In fact I know enough people that want to move on for various reasons but are stuck. That’s the reality.

#348 YVR Madness on 12.17.15 at 7:02 pm

Currently own a SFH in the Tri Cities of YVR and trying desperately to convince wife we need to sell and get out before RE drops. Current value is probably still around $900k but owe less than $420k. I suggested we sell now and rent for a year and invest some of the profit into children’s resp and our own rrsp, tfsa and pay off car loan saving another $400 payment per month. Any other tips regarding investing the profits if I can convince her to sell?