Divergence

CUCUMBERS modified
RYAN  By Guest Blogger Ryan Lewenza

If the US and Canadian economies were in a marriage then they would likely be in couples therapy. Once strong and unified, now the two economies are “diverging” with the Canadian economy lagging behind the US. For example, since 2015 the US economy has grown by an average 2.2% Y/Y while the Canadian economy has limped along at an anemic 0.85%. This divergence has become more pronounced in recent quarters, which, if it persists, will have a number of important implications for interest rates, our dollar and relative equity returns between the TSX and S&P 500. How are you positioned for this potential outcome?

One notable divergence has been in the labour market with the Canadian economy experiencing much weaker job growth than the US. When comparing the two economies we first need to adjust for the different population sizes with the US being roughly 10x the size of Canada. After adjusting for the population differences we can then make an apples to apples comparison. Since 2011 the US economy has created an impressive 13.6 million jobs, or an average of 203,000 per month. In contrast, the Canadian economy has created the US equivalent of 9.3 million jobs (again after adjusting for population differences). What’s interesting is that the divergence in job growth started around mid-2014, right around the time when oil prices began to plummet, with WTI declining from roughly US$100/bl in 2014 to the mid-US$40s today.

With the weakness in global oil prices the Alberta economy has been particularly hard hit with their economy losing 100,000 jobs over the last year, and the unemployment rate hitting a 20-year high of 8.6%. In contrast, the national unemployment rate stands at 6.9%.

CHART 1

Another area of particular weakness has been business investment or capital spending. Here again due to the low oil price and energy companies slashing budgets, Canadian business investment has nosedived declining on average 14.4% per quarter since 2015 versus flat business investment in the US economy. This area of the Canadian economy has been the biggest detractor of growth, largely explaining why we’ve seen GDP growth below 1%.

What has been saving our economy is the residential housing market. Without this key pillar of strength it’s likely we would be in a recession right now. Below we illustrate the increasing importance of residential real estate to our economy, with it now representing 7.7% of our economy, up from 4.3% in 2000. When we include commercial real estate we see the same trend with total real estate (residential and commercial) as a percentage of GDP rising from 8.3% to 13.3% today. And as we’ve stressed for some time now, with our expectations that residential real estate is on the cusp of rolling over, this is likely going to weigh on our economy, and put it at even more risk. It’s one important reason why we hold more than twice the amount of US and international equities versus Canadian stocks in our client portfolios.

CHART 2

Ok so how does an investor position against this backdrop of a slow and diverging Canadian economy?

First, as we’ve discussed above, we believe investors should continue to overweight US and international equities in portfolios. Admittedly, the TSX has outperformed the S&P 500 YTD but this is after five years of massive underperformance, and we’re not sure if it will be sustained. If you look at the key contributors of the strong TSX performance this year, gold miners and resource stocks have been the strongest performers, which we doubt will be sustained. In fact, gold miners sold off hard this week on the rising prospect of a Fed rate hike this year. We continue to call for one rate hike this year which could limit upside in gold miners. So stay underweight Canada in portfolios for now.

Second, we believe the Canadian dollar could head lower in the back half of this year. Currently it sits at $0.7736/US and we see the potential for it to fall further as the Fed hikes rates later this year. We don’t see it retesting the lows of $0.68, but we would not be surprised to see it in the low $0.70s sometime later this year. If correct, this would boost US equity returns, another factor in our bullish view of US equities.

Finally, we believe the continued weakness in our economy will force the Bank of Canada to keep interest rates lower for longer. This will continue to be supportive of bonds, which we have a 17% weight in.

So there you have it. In a slow and diverging Canadian economy we believe investors should look outside our borders and position their portfolios with an emphasis on global investments.

Ryan Lewenza is a Partner and Portfolio Manager with Turner Investments, and a Senior Vice President, Private Client Group, of Raymond James Ltd.

 

162 comments ↓

#1 Brazil ex-pat on 08.27.16 at 2:25 pm

Great post – too bad the facts are not correct. You actually believe those job numbers? If I get told the Fed is going to “hike rates” one more time……I”m going to explode.

#2 For those about to flop... on 08.27.16 at 2:33 pm

#174 NoName on 08.27.16 at 1:25 pm
Lets help Floppy get 50 answers with “If you could live in any state in the U.S which one would you choose?” survey. Survey is free it will take only 50 participants and will be up 10 days, or what ever of those 2 comes first. ill screen grab results when surway reaches a max.

thank you
NoName

http://freeonlinesurveys.com/s/kY3vRHAs

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

First InLeweza,solid post the gap between tour and the headmaster is closing.

Secondly ,NoName thanks for trying to help with the survey.
I promote you to V.P and will pick up the mop and become janitor.
WULLY and Garth can co-chair.

Also I take back everything MF ever said about you.

It hurt to only give myself one star…..maybe I should have chosen the lone star state…

M42BC

#3 pathcontrolmonk on 08.27.16 at 2:40 pm

Ryan, that was nice (yawn) but where are the sarcastic comments eviscerating the blog dog misanthropes?

#4 Ponzius Pilatus on 08.27.16 at 2:43 pm

“WE” as in the Royal WE?

#5 unbalanced on 08.27.16 at 2:43 pm

Where is Jimmy!

#6 Victor V on 08.27.16 at 2:44 pm

Bombardier hands out pink slips as part of effort to cut 7,000 workers

http://www.financialpost.com/m/wp/news/blog.html?b=business.financialpost.com/news/transportation/bombardier-hands-out-pink-slips-as-part-of-effort-to-cut-7000-workers&pubdate=2016-08-27

#7 Hyman Minsky on 08.27.16 at 2:47 pm

I’m looking outside the borders…for a job!

#8 Ponzius Pilatus on 08.27.16 at 2:47 pm

Mr. Lewenza.
Your employment stats would carry more weight if stated in FTE.
Otherwise, you’re just resurgitating Government numbers.

#9 Victoria Real Estate Update on 08.27.16 at 2:52 pm

The Canadian unemployment rate is 6.9%.

Imagine how high that would be if CMHC and Genworth (Canada’s economic action plan) were not being recklessly used to artificially boost the Canadian economy.

Canada’s long-time overreliance on housing related industries has resulted in slow growth in other areas of the economy. In fact, many say it’s a big part of the reason our manufacturing base is shrinking so quickly. The reason: as house prices are artificially inflated, the cost of production/operation of business also increases quickly. Canada has simply created a situation where it is no longer competitive on the world stage. Thus the shrinking manufacturing base.

The reckless use of CMHC and Genworth to hand out high-risk, high-ratio mortgages to those with no money is no long-term solution for a weakening economy. It may help now, but it makes things worse for the country in the future.

When house prices across Canada are falling, the housing industry’s contribution to the economy will shrink and Canada will likely go into recession (if it isn’t already there at the time). Many say this will simply be what you get when you try to fix an economy by artificially (and recklessly) boosting housing related industries by giving risky mortgages to those with no money at ridiculously bloated house prices.

#10 Entrepreneur on 08.27.16 at 3:05 pm

“What has been saving our economy is the residential housing market. Without this…be in a recession.

Now that is so sad and that just proves that our system does not work.

Go back to “The deviant” #179 Entrepreneur, from Earth Pie Shape to Wake Up Pie Shape.

#11 Ryan Lewenza on 08.27.16 at 3:18 pm

Brazil ex-pat “Great post – too bad the facts are not correct. You actually believe those job numbers? If I get told the Fed is going to “hike rates” one more time……I”m going to explode.”

First, thanks for the kudos on the blog post (I’m assuming your not being sarcastic). Second, yes I believe in the job numbers. I’m not jaded or cynical enough to believe the government is manipulating job numbers. We can debate the quality of the jobs being created (i.e. low paying service jobs versus high paying ones) but I don’t think there is much debate in the actual monthly job statistics. Keep in mind that initial jobless claims (which I don’t know how you could manipulate them) are at near historic lows, thus confirming the monthly jobs data. Lastly, the Fed has already hiked rates. And we believe they will once again. I’ll give you that rates are going to remain low, but I don’t buy into the thesis that the Fed and other central banks will never hike rates again, as many believe on this blog. I hope you don’t explode! – Ryan L

#12 Racing to bottom on 08.27.16 at 3:18 pm

You know the Canadian economy is bad when a partner and portfolio manager, SVP of investment firms needs to write free marketing articles on the weekends.

And what does it say of you making a comment like that? — Garth

#13 Entrepreneur on 08.27.16 at 3:22 pm

My comment #179 on “The deviant” not on so repeating.

Let’s play a game here and you can add or subtract whatever you want to visualize what the graph would look like:

Earth Pie Shape: growing and multiplying, before

Earth Nation(s) Pie Shape: when mankind lived within
borders

Whip Cream The Whole Pie Shape: forget the earth, forget the people that live within the border and add international free trade agreements

Cherry On Top Pie Shape: election time and say the words that will win votes but in the meantime rubbing the pie in our faces

Automation, Robots Pie Shape: made by the same group with same, made over and over and over

Wake Up Pie Shape: Brexit, the people of that nation come first

A little fun there, enjoy!

#14 hope & ruin on 08.27.16 at 3:29 pm

How bad can Canada possibly get with America booming?

Its like being on a tandem bike with Lance Armstrong. Doesn’t matter if my slow ass stops pedalling or takes a nap. As long as Lance keeps pedalling we’re flying.

#15 Vanboy64 on 08.27.16 at 3:29 pm

My client recently listed there home in Burnaby (Deer Lake area) Asking price was 1.35m. No bidding war!!! Closed at 1.1 m. Looks like the decent is in play.

#16 Vanboy64 on 08.27.16 at 3:30 pm

My client recently listed there home in Burnaby (Deer Lake area) Asking price was 1.35m. No bidding war!!! Closed at 1.1 m. Looks like the descent is in play.

#17 I'm stupid on 08.27.16 at 3:33 pm

If you lay your chart over price house history it will match perfectly. One could use the % of the economy that’s represented by Realestate to determine a bottom and top for prices. If the % of the economy retreats back to 4.2% it would be close to a bottom when a correction does occur. As over 7% is clearly a top.

#18 Victoria Real Estate Update on 08.27.16 at 3:38 pm

# 12

You assume Ryan isn’t busy with his work. Where do you get that information?

#19 crowdedelevatorfartz on 08.27.16 at 3:48 pm

@#1 Brazil ExPat.
“I”m going to explode….”
*******************************************

Dont let us stop you.

“Yellen expected to raise rates soon.”

http://www.google.ca/url?url=http://www.wsj.com/articles/fed-chairwoman-janet-yellen-sees-stronger-case-for-interest-rate-increase-1472220004&rct=j&frm=1&q=&esrc=s&sa=U&ved=0ahUKEwiIrKvereLOAhUO0GMKHXn5AWIQqQIIGDAB&usg=AFQjCNGGQ5pTiK6pA_cBTGMI37EEHJpapQ

However. You know best so lets move along shall we.

How’s the impeachment of YOUR corrupt, imcompetant, President going?

Hows the economy in Brazil going?

Pay for the Olympics yet?

PS

Yellen expected to raise rates soon …………..blogdogs should prepare for the inevitable “thunder from down under” when Brazil ExPat’s head IMPLODES from the dangerous vacuous “breach” in his thought processes.

:)

#20 Smoking Man on 08.27.16 at 3:50 pm

Not bad Ryan

I would say that’s dead on, with the exception on CAD. My crystal ball is screaming 65isness. BOC will cut, then the Fed will spike 1/4 and oil down 30 by year end.

#21 crowdedelevatorfartz on 08.27.16 at 3:51 pm

@#12 Racing to the Bottom ( of the piggy bank)

Pray tell…..where do you invest YOUR millions?
Brazilian real estate?

#22 Bram on 08.27.16 at 3:52 pm

#15 Vanboy64 on 08.27.16 at 3:29 pm
#16 Vanboy64 on 08.27.16 at 3:30 pm

Third time lucky, maybe?
If you replace ‘there’ with ‘their.’?

Too many grammar and spelling mistakes could make you look like a 12yo pretending to have ‘clients?’

#23 Entrepreneur on 08.27.16 at 3:55 pm

Press “comment” at the end of the blog and just “Share your comment” comes up, something wrong there.

#24 WalMark of Sadkatoon on 08.27.16 at 3:56 pm

Canada: great place to live if you already have money. Otherwise an economic basket case using Monopoly money

#25 Shawn on 08.27.16 at 3:57 pm

Very informative. I agree completely. Thanks Ryan – great post.

#26 WalMark of Sadkatoon on 08.27.16 at 3:59 pm

we believe the Canadian dollar could head lower in the back half of this year. Currently it sits at $0.7736/US and we see the potential for it to fall further as the Fed hikes rates later this year.

Yea!

Let’s go baby!

#27 Arfmooocat on 08.27.16 at 4:10 pm

“diverging”

Kind of like 2008 when the U.S. crashed and we took barely a 3 second pit stop on our Formula One race to the stratosphere.

#28 Victor V on 08.27.16 at 4:14 pm

Editorial: Residential real estate takes a dive

http://vancouversun.com/opinion/editorials/editorial-residential-real-estate-takes-a-dive

It may be coincidental that sales of detached homes in Metro Vancouver dropped by as much as 86 per cent from Aug. 1 to Aug. 15 over the year-earlier period at the same time as the foreign buyers tax came into effect. After all, how many times have we heard that correlation does not imply causation?

#29 Rexx Rock on 08.27.16 at 4:18 pm

You forgot to mention that the USA has over 20 trillion in debt.You think that kind of debt will come with no consequences in the future?Its sad Canada can’t print money like our good neighbors to the south.

#30 Brazil ex-pat on 08.27.16 at 4:18 pm

#11 Ryan Lewenza on 08.27.16 at 3:18 pm
Brazil ex-pat “Great post – too bad the facts are not correct. You actually believe those job numbers? If I get told the Fed is going to “hike rates” one more time……I”m going to explode.”

First, thanks for the kudos on the blog post (I’m assuming your not being sarcastic). Second, yes I believe in the job numbers. I’m not jaded or cynical enough to believe the government is manipulating job numbers. We can debate the quality of the jobs being created (i.e. low paying service jobs versus high paying ones) but I don’t think there is much debate in the actual monthly job statistics. Keep in mind that initial jobless claims (which I don’t know how you could manipulate them) are at near historic lows, thus confirming the monthly jobs data. Lastly, the Fed has already hiked rates. And we believe they will once again. I’ll give you that rates are going to remain low, but I don’t buy into the thesis that the Fed and other central banks will never hike rates again, as many believe on this blog. I hope you don’t explode! – Ryan L

++++++++++++++++++++++++++++++++++++

Ryan – 5 to 10% of the working population is on welfare. People that do not “qualify” for EI are not counted in the un-employment numbers. Govt has be misrepresenting these numbers for years and everyone knows it so they are laughable. Plus look at all the Govt jobs. They do not count as Govt does not pay taxes – they take money from the working public in the form of taxes. I hope you as a professional analyst would take these factors into consideration. ALL govt job numbers are bogus.

The Fed hiked once in Dec of last year. We are assured there would be 3 more this year……where are they? Won’t happen unless the bond market pops……

#31 Ryan Lewenza on 08.27.16 at 4:29 pm

Hope & Ruin “How bad can Canada possibly get with America booming?”

I agree. We see the US economy improving in H2/16, from roughly 1% GDP growth in H1/16 to 2%-2.5%. This should help our economy, particularly our exports sector. Add in a dollar in low $0.70s, we should see a decent rebound in non-energy exports. And we see oil slowly improving over the next 12-18 months which should help our economy turn around. So I’m more bullish on our economy for 2017, but see it continuing to lag behind the US. – Ryan L

#32 Context on 08.27.16 at 4:33 pm

The condo rental cartel has some competition that I found last night. The real apartment cartel who are in the business of holding apartment buildings have their own detailed site up with pictures. There are at least 1000 apartments available with the benefit of an annual renewal.

#33 triplenet on 08.27.16 at 4:34 pm

Welcome to globalization.
Apple – pay the 19 billion you owe the EU in tax avoidance.

But that’s not how we play in America.
You are not in America! This is global – remember.

#34 Ryan Lewenza on 08.27.16 at 4:38 pm

Smoking Man “Not bad Ryan. I would say that’s dead on, with the exception on CAD. My crystal ball is screaming 65isness. BOC will cut, then the Fed will spike 1/4 and oil down 30 by year end.”

Wow, Smoking Man gave me a compliment! Someone got lucky last night. I agree that IF oil falls to $30 then CAD will fall back into the $0.60s. But I don’t see that happening. The oversupply continues to narrow. Rig count is down by 2/3rds. And OPEC has signalled its intent to keep a floor on prices around $40/bl. So I see an oil market slowly coming into balance. I see it range bound through 2016, and then higher oil prices in 2017. But let’s not split hairs here. Smoking Man we agree on a few things. That’s progress! – Ryan L

#35 Arfmooocat on 08.27.16 at 4:45 pm

The Alberta economy has been particularly hard hit with their economy losing 100,000 jobs over the last year, and the unemployment rate hitting a 20-year high of 8.6%.

That 8.6% comes from people who still qualify for EI, mine has run out.

#36 WallOfWorry on 08.27.16 at 4:53 pm

Nice post Ryan. How do you reconcile the impressive job growth in the US with the lowest tax revenues in history? I also believe that the Fed are backed into a corner….how do you not raise rates with job market and inflation on track? Yet…GDP growth remains anemic and the Fed Gov sits with a $19 Trillion dollar debt? Maybe they have to raise rates as a token gesture? However, while all other nations devalue currency and increase stimulus an already problematic trade deficit will worsen, and economy may not support higher rates?

#37 Ryan Lewenza on 08.27.16 at 4:56 pm

Brazil ex pat “They do not count as Govt does not pay taxes – they take money from the working public in the form of taxes. I hope you as a professional analyst would take these factors into consideration. ALL govt job numbers are bogus.”

I don’t get this at all. If we have no government we have no country, and we all live in anarchy. Don’t we need individuals working in libraries, people to fill out/renew visas and drivers licenses, lifeguards at swimming pools, police officers to keep us safe and ensure order etc. These are government jobs that are incredibly important to the functioning of society. Therefore why would we not count these as jobs?? And they pay taxes too! – Ryan L

#38 Smoking Man on 08.27.16 at 5:07 pm

Ryan, why did you have to be so polite? I don’t know how to respond… That’s a wierd place for me.

Much more fun debating the lunatic left..

#39 Mark M. on 08.27.16 at 5:20 pm

That’s right Ryan, the US is BOOOOMING!

2nd quarter GDP revised down to 1.1%, less than 1% growth for the first half of the year. A period when we were assured by your boss and several posters on this blog that we were to have had 2 rate hikes, with 2 more to come. Obviously not.

In each of the last three years Q2 GDP is the high watermark for the year, quarters 3 and 4 were lower.

Ignore the nonsense from the “really smart people” at the Fed, with the world at 0 or negative rates, debt exploding and US GDP anemic, their lies at Jackson Hole this week will be exposed when there is no rate hike in September. I don’t care what the jobs data says. No hike.

The next move is a cut, start coming up with excuses now.

#40 Smoking Man on 08.27.16 at 5:20 pm

Man if you think Trump is bad…

Look at what’s happening in the Netherlands.. And this nationalism is sweeping Europe. Globalists getting bitch slapped from all directions now.

http://www.zerohedge.com/news/2016-08-27/close-all-mosques-ban-koran-poll-leading-dutch-freedom-party-unveils-de-islamization

#41 Context on 08.27.16 at 5:31 pm

#37 Ryan Lewenza – what do you have to say for the millions of farmers who have children helping on the farm of legal working age with no payment but are counted as employed in USA?

#42 Shawn on 08.27.16 at 5:31 pm

What is your view on emerging markets relative to Canada and the US?

#43 Shawn on 08.27.16 at 5:36 pm

Mark M.

Bond yields are about to move higher fast. Just make sure you can see the stage.

#44 For those about flop... on 08.27.16 at 5:40 pm

If the US and Canadian economies were in a marriage then they would likely be in couples therapy -InLewenza

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

More like the U.S is like Freedom First and doesn’t want to hand over any keys to the kingdom…

M42BC

#45 chopstix on 08.27.16 at 6:08 pm

ah the vancouver economy is having a toll on renters and employers alike due to stupidly overpriced costs.

http://www.cbc.ca/news/canada/british-columbia/vancouver-housing-price-restaurant-1.3738254

http://www.cbc.ca/news/canada/british-columbia/rentals-vancouver-housing-costs-1.3328183

evictions soar:
http://business.financialpost.com/personal-finance/mortgages-real-estate/eviction-complaints-soar-in-b-c-s-hot-rental-market-as-landlords-break-rules-to-secure-higher-rent

#46 JO on 08.27.16 at 6:17 pm

I always respect others’ opinions
Being a lifelong follower of markets and economics I love discussing these subjects. Like everyone else my crystal ball has certainly cracked more than a few times
That said in my view, for a long time , is that Canada’s economy is an illusion of a massive debt bubble (housing and consumer debt mostly ) , an oversized and overpaid public sector that has been sheltered from the economy’s natural cycles , and overdependant on oil / commodities. Our productivity and capital investment and R&D spending is persistently weak and quite laughable. The financially illiterate public is being fooled into thinking we are prosperous . Sorry our country is in the early stages of what will become a dangerous and historic collapse in living standards
I know there is a lot of good happening too mainly in tech but the math is simply not going to work. Whatever remains of our rights and property is being destroyed with bloated government and junk monetary policy.

I hope for a better future but watch out over the next 5 years of so. In the next 6 months I see a CAD under .70 and steady rise in unemployment with the BofC likely to drop the rate at least once more

#47 Gordon Downey on 08.27.16 at 6:32 pm

Previous article on Hillary-
https://youtu.be/4ZU-NTiKMno
Just the tip.

#48 Ryan Lewenza on 08.27.16 at 6:33 pm

WallOfWorry “How do you reconcile the impressive job growth in the US with the lowest tax revenues in history? I also believe that the Fed are backed into a corner….how do you not raise rates with job market and inflation on track?”

I’m not seeing the the lowest US tax revenue in history. According to this site US Federal tax revenue rose to $3.25 trillion in 2015, which is a new record high. Are you referring to State and Federal? Even then I don’t see how it could be low.
http://www.usgovernmentrevenue.com/federal_revenue_chart

But I agree with your assessment on Fed hiking rates. Keep it simple. Fed’s dual mandate is maximum employment and stable prices. We have an unemployment rate at 4.8% and core CPI at 2%. Isn’t that fulfilling its mandate?

I know, I know. Many of you blog dogs question the US government statistics on employment and inflation. But I don’t know how to debate that. – Ryan L

#49 Mark M. on 08.27.16 at 6:35 pm

#43 Shawn

How high were bond yields in January? What came of it?

Prepare your explanations now for why after all their bluster this past week, the liars at the Fed will once again keep rates unchanged. Collaborate with JP, The American and WalMark on it, the four of you should be able to come up with something.

#50 I Second #20 Smoking Man on 08.27.16 at 6:42 pm

Firstly, ‘atta go Ryan. Just add a little Garth sass next time…

Bang on SM…may be too pessimistic on dollar. All I will add is a possible oil rally very late this year or very early next year with no job effect until late next year…but not before Smoking Man drop in oil price.

Also, see a job loss recession becoming MSM in October and extending to 1st Qtr next year. Why liquid until then and for market to impound bad news including YVR RE implosion and 416 RE beginning the same but not as acute.

#51 Ryan Lewenza on 08.27.16 at 6:45 pm

Mark M. “That’s right Ryan, the US is BOOMING! 2nd quarter GDP revised down to 1.1%, less than 1% growth for the first half of the year. A period when we were assured by your boss and several posters on this blog that we were to have had 2 rate hikes, with 2 more to come. Obviously not.”

I never said the US was booming and specifically cited the 2.2% Y/Y GDP growth. That’s clearly not booming. I focused on the fact that the CAD economy is trailing behind the US. And yes H1/16 GDP growth was surprisingly weak but a drawdown in inventories and weaker investment as a result of low oil prices were the main detractors. Often inventory drawdowns are followed by inventory buildups so we should see this reverse in H2/16 and stronger economic growth. And I’ve consistently called for less Fed rate hikes than other economists. In my 2016 outlook report in December I said the Fed would hike twice versus the 4 hikes expected by most. I’m now calling for 1 hike this year given the weaker growth in first half of the year. Time will tell. – Ryan L

#52 Jack Wellington on 08.27.16 at 6:48 pm

To Shawn

I keep hearing bond yields are going up but even if they do they are always at new lows so any rise is still leave them at levels that are low…………..

The Canada 10 year bond is 1.08% and 30 year is 1.68%. These are off lows of 0.96% and 1.55% respectively for 10 and 30 year Canada bonds.

This time last about 3 years ago which bond yields were still lower than 2009 highs, are now 1.25% to 1.5% percentage points lower than 2016.

People are getting tired and inpatient waiting for something that will not probably happen in a big way for 10 years+ that is 4% to 5% GIC, government bond yields and 4.5% to 5.5% mortgage rates.

#53 Ryan Lewenza on 08.27.16 at 6:49 pm

Shawn “What is your view on emerging markets relative to Canada and the US?

I’ve always viewed the EM trade as the same as a TSX trade. They are highly correlated. Both benefit from a weaker US dollar and higher commodities. That said, I would currently tip my hat to EM equities given lower valuations, and their significant underperformance these last few years. But we still prefer US to most markets right now. – Ryan L

#54 2nd Shocker today was #15 Vanboy64 on 08.27.16 at 6:51 pm

Wow, a $250 K drop in list vs. sell price. Seems high compared to Ron Chipman average difference price which is a lot less than that.

Probably a one off, but definitely a shock in terms of recent data from YVR.

Maybe your client had to bail or smart to cash out before the Greater Fool horde catches on? Just curious.

#55 Entrepreneur on 08.27.16 at 7:09 pm

#37 RL “I don’t get this at all”…your funny, lol.

Yeah, we understand that we have to have some government to avoid anarchy but now we are heavy handed.

“and they pay taxes too”…that is true but have you ever heard of the term “turn a buck” or “make a buck” and have you ever been at the bottom where there is no one to guide you but by trial and error (or by the CRA and costing you). We all cannot be government workers now can we, where it is all figured out.

Free Trade will give us benefits of lower prices, create employment opportunities. Competitive at whose expense? Ignore the person who may try to start a business but cannot even start. Notice on T.V. that we don’t have hobby shows anymore, what for, we trade for a cheaper product at a lower price.

#56 The Wet Coast on 08.27.16 at 7:13 pm

If you look at the Austrialian blogs they are talking about a major slow down in Chinese buyong activity. The timing seems to coincide with the initial slow down here. They are blaming the banks slowing the lending to off shore buyers and difficulty the Chinese are having getting money out.

#57 the Hammer on 08.27.16 at 7:14 pm

Flop, grew up in the same area as where Boom lives. Beautiful. 22 years in Saskatchistan…moving back, I would go for Wisconsin for various reasons, Wyoming for peak bagging and cutthroats, Utah, Oregon, Washington. Go west young man, go west.

#58 Tony on 08.27.16 at 7:25 pm

Re: #11 Ryan Lewenza on 08.27.16 at 3:18 pm

No one on Earth believes the job numbers coming out of America especially the FED. It will be a welcome relief to see all the negative jobs numbers very shortly after the election knowing full well America has been in recession all year long. Back up the truck and load up on the precious metals this November. Like I’ve told everyone and now you I’ll be shorting Teck Corporation at the end of this September and buying the shares back at 5 bucks Canadian at the end of January 2017 or the start of February 2017.

#59 Tony on 08.27.16 at 7:28 pm

Re: #56 The Wet Coast on 08.27.16 at 7:13 pm

Arresting all the money launderers would have a more beneficial effect on the rest of the world.

#60 Andrew Woburn on 08.27.16 at 7:39 pm

#29 Rexx Rock on 08.27.16 at 4:18 pm
You forgot to mention that the USA has over 20 trillion in debt.You think that kind of debt will come with no consequences in the future?Its sad Canada can’t print money like our good neighbors to the south.
======================

Canada can and does print its own money. Be careful what you wish for.

#61 RayofLight on 08.27.16 at 7:39 pm

My portfolio is completely in Low PEG Growth stocks, (<1.0). At any one time I have no fewer than 10 positions and no greater than 15. It is 85% in $US companies, because this is where the best growth stocks are. I have been frustrated lately by the recent $CAD strength. I think it is unwarranted, and believe also it should be sub $.70.

#62 Disco Stu doesn't advertise on 08.27.16 at 7:47 pm

Excellent post Ryan, could have used a dick joke or two but right on the money. As someone who followed the housing crash in Ireland back in 2008 (still have an investment property there), can’t help but notice how similar the real estate stats are to Canada in 2016.
Hoping for different outcome this time but can’t help but think that Harper might end up like Bertie Ahern (former PM who is now the most hated man in the country).

#63 Ace Goodheart on 08.27.16 at 7:58 pm

Interesting article. I guess the next question would be why is our economy being driven by real estate?

I continue to believe we have too much government control over production, to the extent that we control many growth industries to the point that we look like communists.

Take a simple example: say I am a business minded individual and I decide to start my own, say, Beer manufacturing company. Yup, I want to produce and sell suds.

Seems simple enough right? You’d figure, someone wanting to do that would need some form of license, there would be some inspections, there would be taxation. That sort of thing. Seems reasonable?

Well…..in Ontario, there is a complete ban on the sale of alcohol. Has been that way for over 100 years. So I could produce beer, but I couldn’t sell it. So things are looking good so far…..

But….there is an exception. Beer can be sold by the LCBO, and also by three multinational companies that own a chain of stores.

So I can either sell my beer to the LCBO, at whatever price they decide to give me (it’s a monopoly, sale of alcohol is illegal) then act as their “agent” and then resell my own beer, for them, in my own facility, or I can pay $100,000 to my competitors for shelf space in their store and then sell my beer to them, again for whatever price they’ll give me, and then they can sell it to the public.

This is an example of Commerce in Ontario. The rest of Canada is similar.

If one wants to know why we don’t have a successful economy, try starting a business. Then you’ll understand……

#64 The American on 08.27.16 at 7:59 pm

Mark M., you poor and naive soul. As I said, wait and watch. That rate hike is coming by end of the year. Sorry your economy sucks so badly and your view of the global economy is so myopic that you cannot see beyond your country’s boarders. Remember, Canada is smaller than fuckin’ states in the U.S. The U.S. economy is cooking, while the Canadian economy is sucking ass.

As for those who are asking, “How bad can Canada possibly get with America booming?” I suspect you are the same people who REJECT the notion that the Canadian economy could be taken down in the wake of the U.S. financial collapse several years ago. I find it hilarious how you will tie yourselves to the success of another country, yet reject the follies of that same country, depending on which way you need your conscious to feel at a particular moment. The answer to your question is simple. The Canadian economy is going to suffer a LOT worse fate than you’re seeing as of now. You were warned for the past 8 years. You rejected it. Now deal with it. The utter ignorance and hypocrisy is laughable.

#65 For those about to flop... on 08.27.16 at 8:02 pm

#57 the Hammer on 08.27.16 at 7:14 pm
Flop, grew up in the same area as where Boom lives. Beautiful. 22 years in Saskatchistan…moving back, I would go for Wisconsin for various reasons, Wyoming for peak bagging and cutthroats, Utah, Oregon, Washington. Go west young man, go west.

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

Hey Hammer,all sounds good.

My blog buddy NoName made up this survey to help me out as he could see I was struggling.

Some of the follow up questions are dubious but if Lewenza and Robax have to be judged then I will take the hit with a smile…

M42BC

http://freeonlinesurveys.com/s/kY3vRHAs

#66 F.dover on 08.27.16 at 8:03 pm

all opinions and emotions removed, and only facts beginning with State healthcare policy, education of residents yada yada and on to climate and available choices of topography etc. and the computation is Oregon by a long shot.

More bars in Portland per capita than even Sin Janz too by’z. And more enlightened lefties than at CBC to boot!

Actually if some one did some digging some where it would turn out that this has been public knowledge for some time. Oregon the American alternative to Canada.

#67 james on 08.27.16 at 8:08 pm

“Many of you blog dogs question the US government statistics on employment and inflation. ”

One SHOULD question these.

If someone isn’t questioning the government’s methodology, they aren’t doing their duty as a citizen.

The government (USA, Canada, Uzbekhistan, etc) has an obvious interest in manipulating both of these numbers. CPI is directly tied into social security payments, for instance.

From a statistical standpoint, CPI is incommensurable across years. The basket of goods used to calculate it is constantly changing. This is not a political statement, but rather one based on Statistics 101.

It is also worth looking at the official data on crime. A host of major police departments (e.g., LA) have admitted to doctoring crime data and tossing out 35+% of crimes in order to meet political demands for lower crime rates. Hence, you cannot view a chart of crime rates over time and think it accurately represent crime trends.

#68 F.dover on 08.27.16 at 8:09 pm

TPP just like nafta…vote for American prices with CDN wages and get CDN prices with American wages. Oops.

#69 Context on 08.27.16 at 8:12 pm

#63 Ace: My grandfather was a bootlegger from the old country in Kitchener and had his operation in the basement. Lots of beer cases going out the backdoor day and night. Keep the faith!

#70 For those about to flop... on 08.27.16 at 8:15 pm

#62 Disco Stu doesn’t advertise on 08.27.16 at 7:47 pm
Excellent post Ryan, could have used a dick joke or two but right on the money. As someone who followed the housing crash in Ireland back in 2008 (still have an investment property there), can’t help but notice how similar the real estate stats are to Canada in 2016.
Hoping for different outcome this time but can’t help but think that Harper might end up like Bertie Ahern (former PM who is now the most hated man in the country).

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

I tried to show InLewenza how to do your request this morning ( see below)but he is slowly loosening up.

Also if Bertie Ahern is #1,does that mean that Thierry Henry is now number 2…
:::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::
From this morning…

If the conductor of this orchestra had asked the question we would have gotten an easy 500 responses, but I have good intentions …..really I am just a guy in the horn section who has lost his sheet music and is playing with his trombone…

M42BC

#71 Mark M. on 08.27.16 at 8:23 pm

The American – “Mark M., you poor and naive soul. As I said, wait and watch. That rate hike is coming by end of the year. Sorry your economy sucks so badly and your view of the global economy is so myopic that you cannot see beyond your country’s boarders. Remember, Canada is smaller than fuckin’ states in the U.S. The U.S. economy is cooking, while the Canadian economy is sucking ass.”

You clearly are an American. So if you can, without the vulgarity so prevalent in your culture, explain to all of us where the FOUR rate hikes this year are?

Also tell us why an economy with 8 years of emergency interest rates, and trillions in QE is growing at 1%?

Is 1% GDP “cooking?” Is it the new normal?

Then tell us why Bernanke said once unemployment was below 6.5% interest rates would normalize?

Tell us why the Fed hasn’t cleared their balance sheet yet? They bought a lot of bonds, shouldn’t they be in a position now to unwind that position as their economy continues “cooking?”

Tell us why all last year we waited for a rate hike and were told by our blog host and many of the posters here that the reason it hadn’t come yet was because they wanted to make sure once they started they could come regularly. Is regularly once a year?

After you finish all of that, prepare your explanation for the unchanged graphic you will see on CNBC on Sept. 21st? I’ll be waiting, it should be awesome.

#72 Barb on 08.27.16 at 8:33 pm

#46 JO on 08.27.16 at 6:17 pm

“… an oversized and overpaid public sector that has been sheltered from the economy’s natural cycles…”

Exactly!
Plus all those public sector employees in B.C. are an UNFUNDED LIABILITY!

The typical yabba-yabba from politicians re too-high public wages is “we need to offer that to get the ‘correct caliber’ employees.”

What a crock!

#73 ROCK BEATS PAPER on 08.27.16 at 8:36 pm

Ryan,

No career risk in your comments.

Well, the birth-death adjustment is what makes the unemployment figures a joke that will be radically revised. They are notorious bad at turns in the economy. So while the stats are probably not manipulated they are next to useless.

Nevertheless, there is only a small correlation between economic numbers and the market. There are plenty of markets at all time highs while the economy struggles.

Even if there were a correlation between economy and markets, the unemployment numbers as a lagging indicator does not help us with investing.

The reality is that once the commodity cycle bottoms (as it did in January) historically you have a minimum of 15 months of bull run. Knowing that, plus seeing EM inexpensive compared to its historical price, and the US at very lofty levels with 5 quarters of declining earnings, you are clearly not robust in your analysis.

But your career should be safe.

#74 conan on 08.27.16 at 8:38 pm

I am going to be following the Trump index myself. I expect dollars to flow to Canada if Hillary can not squash her POTUS rival in the coming months.

So Trump strong equals a positive influence on the C dollar and markets. Investors are not going to wait for election day, if they see a trend.

#75 BOOM! on 08.27.16 at 8:39 pm

Well can’t argue with your stats and logic today, Ryan.

As for the US recovery, yes it is here, it is tangible, it is also weak. As for Yellen raising rates, sure sometime, maybe, in the future, maybe December. A big .25% goose a rump, a rounding error, and already priced into the market.

A few years ago if not even longer, they were going to raise rates…. I decided to buy into long term bonds. Everybody said I was nuts. I did lighten up on them recently, but still hold some. Just checked my VC/LT up 17.60 YTD my WWESX up 16.41 YTD. Its 3 yr is over 10.4% I haven’t owned it for quite 5 years …

Credibility they have lost in my eyes. There has been NO recession here (US) for over 5 years. ONE lousy .25% hike since then.

Honestly, the FED can’t ‘afford’ to hike rates toward normalcy, look at what that does to trading partners who borrowed in that world reserve currency.

Solve that dilemma, and then maybe we can see more than another lone .25% goose to short rates.

Remember, long rates aren’t really in the Feds control, and just now the world seems a tad out of control in my eyes.

I’ll spend the interest, and have harvested a lot of the capital appreciation gains- thanks!

#76 Freedom First on 08.27.16 at 8:41 pm

#44 Flop

Flop. Now that, was brilliant.

Grasshopper, you are learning.

007
Freedom First
PHD/Freedomonics

#77 Context on 08.27.16 at 8:46 pm

Well at least my new credit card works as just did an order. Now did all the phone pushing and here is what the banks are doing. On the recorded message they said hit this number as we will extend your line of credit an additional 20K or if not hit this number. I don’t need the credit line I have and they know it so hit the reject number.

#78 jess on 08.27.16 at 9:17 pm

The problems seem to be universal in the IT departments
======================
The danish tax
The firing of Jesper Rønnow Simonsen comes after months of political pressure after it was discovered that agency had been hit by multi-billion kroner tax fraud.
failed to act on numerous warnings that foreign companies had drained the national system by applying for dividend tax refunds “for fictional share holdings, based on falsified documents.”

…the agency has also been plagued by problems with its tax collection IT system… the Danish government plans to write-off some 7 billion kroner in Danes’ debt

because the IT problems mean that it would cost more money to pursue the debt manually than the collections would bring in.

#79 NoName on 08.27.16 at 9:25 pm

@ floppy

i cant believe whopping 12 people took whole 11 more than i expected (1st was mine). California is leading maybe eagles and hotel california have to something with it…
state
http://imgur.com/a/i5BEF

what is interesting majority that took a time and wasted their 10 clicks are self identified 7 as working stiff, 2 enterpraturs and 3 retired persons.
employment status
http://imgur.com/a/pv3Sj

considering so low response to survey i should stay clear from being statician and you as a stand up comedian.
we should not quit our day job
http://imgur.com/a/HNq6I

and drum rolllllll
RL vs DR
in my opinion lots of recency bias or they are just suckups, dont know. InLeweza is leading “big” over Robax. It is very surprising just for that fact no alcohol was mention in today’s post…
Note to Robax, next saturday more alcohol analogy, start with cheap beer and work a way up, target working stiff crowd, and come up with something for geriatric crowd.
InLeweza vs Robax
http://imgur.com/a/WC84D

c’mon people it just 10 clicks.

survay
http://freeonlinesurveys.com/s/kY3vRHAs

#80 TPP just like nafta on 08.27.16 at 9:33 pm

#68 F.dover on 08.27.16 at 8:09 pm
TPP just like nafta…vote for American prices with CDN wages and get CDN prices with American wages. Oops.

—–

Think again:

http://www.zerohedge.com/news/2015-05-27/julian-assange-tpp-deal-isnt-about-trade-its-about-corporate-control

#81 c’mon people it just 10 clicks on 08.27.16 at 9:37 pm

c’mon people it just 10 clicks

—-

The audience of this site is not exactly the clicking for free type.

#82 BOOM! on 08.27.16 at 9:42 pm

Flopper-

We have got to come up with a better nickname for Ryan Lewenza. Yours of InLewenza just isn’t getting it done.

I vote to try out Af Lewenza or ‘AfLewenza’ has a nicer ring to it.

It is customary to give everybody around here a nickname. Guess it has been a custom for generations!
Speed, Hambone, Stinky, the list gets rather long…

Boom!

#83 For those about to flop... on 08.27.16 at 9:48 pm

NoName,this is why I elevated you to V.P ,you are earning big bucks now and so I am expecting results.

So far not to many responses but some states were chosen on the survey that had not been mentioned to me yet.

As far as the 3 strikes against my sense of humour,one of them was myself and Billybob and the Jaguar most likely account for the other two.

Thanks to”Flopper Fan” for giving me 5 stars and that reminds me to go to Home Depot tomorrow and get bars for my windows in case you become a stalker…

M42BC

#84 Smoking Man on 08.27.16 at 9:55 pm

Ryan, something you need to know about me.

I’m a well-disciplined alcoholic. Typically I pop that corks at around 9pm and go hard till I pass out. Ankylosing Spondylitis is a bitch at night trying to sleep. Opiates are not my thing. My posts become technically challenged. But the truth flows out as quick as a wiz.

So here you go..

Altho your post was bang on, there was no spirit it at all. Like reading the commentary on a quarterly report.

Myself being the world’s most famous unpublished fiction writer, I can tell you I know shit.

Look at Bill Gross, the big hero in his Pimco days, he’s monkeys did all the work, what separated him from the rest. His monthly newsletters. Brilliant, hilarious, the man had a soul… You need to develop one. Single malt can help. Trust me.

Not everyone is as gifted as I am when it come to thumbing words into a supposed smartphone, fighting the stupid auto correct all the time.

You’re probably a damn good portfolio manager, but if you want to shine. Lose the tie, pick up a bottle and let it flow. And if it sucks, Gartho has a huge red delete button that he uses quite often on me, typically around 11pm.

If you respond to this, please call me an asshole or something like that, at least I’m in my zone with that kind of stuff. This nice shit is creepy.

#85 WallOfWorry on 08.27.16 at 9:55 pm

RayOfLight…61….”I have been frustrated lately by the recent $CAD strength. I think it is unwarranted, and believe also it should be sub $.70.”

If you look at the US dollar from a technical analysis perspective you will see that it has started a bear market (secular or cyclical to be determined)…so over the next 12 months I expect it to go much lower…probably as oil continues to rebound and move closer to $60.

#86 Context on 08.27.16 at 9:55 pm

#79 NoName:- This comes as no surprise as Ryan wrote an excellent essay today and is being rewarded for his research.

#87 acdel on 08.27.16 at 10:09 pm

I like this blog. My concern has always been on how so many ignore the U.S. debt.

I caved and diversified, time will tell on how it will work out. T2, Winneys, Notley, and Crusty scare me, and no it has nothing to do with all of them being women, sorry T2.

In the end it is a guessing game; who really knows what will happen.

#88 The American on 08.27.16 at 10:26 pm

At #71: Mark M., clearly you have no reading comprehension, let alone anticipatory judgement that I would never argue with someone I construe to be a complete idiot. You, Mark M., are an idiot. I’ve never claimed four rate hikes this year, but you will be seeing another one before year end. Guarantee it. Hence, I refer to my previous comments at #64. Enjoy, you ignorant and needy fuck. You’ll be proven wrong (as usual).

Also, as for vulgarity, the most vulgar of all are those who are willfully blind, as is in this case many of you Canadians (not to mention that weak-ass piss you refer to as “beer,” yet still believe it to be better than American microbrews, even though the rest of the world would disagree with you).

#89 Mandria on 08.27.16 at 10:26 pm

I have to agree to the sentiment that gov job numbers are trustworthy/not faked. Rosy…maybe…but totally faked I really don’t see it.

#90 Smoking Man on 08.27.16 at 10:32 pm

#87 acdel on 08.27.16 at 10:09 pm
I like this blog. My concern has always been on how so many ignore the U.S. debt.

I caved and diversified, time will tell on how it will work out. T2, Winneys, Notley, and Crusty scare me, and no it has nothing to do with all of them being women, sorry T2.

In the end it is a guessing game; who really knows what will happen.
…….

Once the market discovers that David Suzuki, and Gerald Butts are behind Canada’s energy policy..

The loonie is going down the toilet like my wiz goes down after 9pm….

Bet accordingly…

#91 The American on 08.27.16 at 10:32 pm

Mark M., sure it’s nearly four years old, but I get a chuckle out of it every time I hear it. It isn’t so much about being so ugly, as much as it is about believing you are something you are not. Canadian culture struggles with this phenomenon.

http://www.cbc.ca/radio/thisisthat/ugly-canadians-bless-you-ban-manitoba-white-debris-trans-canada-enthusiast-sod-hut-hotel-1.2843575/new-list-ranks-canadians-as-the-most-unattractive-people-in-the-world-1.2843578

#92 Owe Canada on 08.27.16 at 10:34 pm

Latest household credit numbers for Canada (to the end of July, 2016):

http://credit.bankofcanada.ca/householdcredit

Latest business credit numbers for Canada (to the end of July, 2016):

http://credit.bankofcanada.ca/businesscredit

#93 For those about to flop... on 08.27.16 at 10:36 pm

Boom, below is the original joke from June when Garth introduced Lewenza in June.

I reworked it for the now infamous post that he
took to heart when I was only trying to get him to relax after his nervous first contribution.

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

For those about to flop on 06.04.16 at 6:39 pm
It seems a couple of people on the blog are sick of me.

There is a bug going around ,I think it’s called the Ryan Inflewenza…

M41BC

From the “Number crunchers” post

I have had a birthday since then and Ryan has settled in his seat as relief captain while the skipper gets some rest…

M42BC

#94 Smoking Man on 08.27.16 at 10:39 pm

#86 Context on 08.27.16 at 9:55 pm
#79 NoName:- This comes as no surprise as Ryan wrote an excellent essay today and is being rewarded for his research
…..

It was good, but soulless. Doug is probably thinking… It’s my turn next week… Thank God Smokey gave me an advantage, next week. Doug is drinking hard before he hits the keys…

#95 Context on 08.27.16 at 10:44 pm

#82 BOOM!:- Doug Rowat has already been fashioned a nickname by a female fan by calling him the sexy investment dude.

#96 Brazil ex-pat on 08.27.16 at 10:47 pm

#37 Ryan Lewenza on 08.27.16 at 4:56 pm
Brazil ex pat “They do not count as Govt does not pay taxes – they take money from the working public in the form of taxes. I hope you as a professional analyst would take these factors into consideration. ALL govt job numbers are bogus.”

I don’t get this at all. If we have no government we have no country, and we all live in anarchy. Don’t we need individuals working in libraries, people to fill out/renew visas and drivers licenses, lifeguards at swimming pools, police officers to keep us safe and ensure order etc. These are government jobs that are incredibly important to the functioning of society. Therefore why would we not count these as jobs?? And they pay taxes too! – Ryan L
+++++++++++++++++++++++++++++++++++

No I did not mean that Govt workers do not pay taxes – I meant that they do not provide any money into the tax base. How can they? They are paid…..with taxes. You can’t create tax revenue when you are being paid with the revenue you are creating…..

So only the “private sector” creates taxes. So if you take the sum of the private sector, the welfare people, the people that don’t qualify but are employable and divide that into the working population (minus Govt workers) the un-employment rate is going to be closer to 15 or 20%.

This is the same in the USA and many other countries around the world where they want you to believe the un-employment is around 5 to 8 percent. Completely and totally laughable…..

#97 Smo Kingman on 08.27.16 at 10:48 pm

Your single malt is fairly psycho. Delicious. Who knows some day you might even enlight to the wakan pipe, ment for holding the universe. For now I sing one for you to the Great Spirit.

#98 For those about to flop... on 08.27.16 at 10:53 pm

#82 BOOM! on 08.27.16 at 9:42 pm
Flopper-

We have got to come up with a better nickname for Ryan Lewenza. Yours of InLewenza just isn’t getting it done.

I vote to try out Af Lewenza or ‘AfLewenza’ has a nicer ring to it.

It is customary to give everybody around here a nickname. Guess it has been a custom for generations!
Speed, Hambone, Stinky, the list gets rather long…

Boom!

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

Hey Boom, why don’t you just go with Alf Lewenza.

This is a canine themed blog and I’m pretty sure Alf used to chase cats around .

Do you think Lewenza has figured out yet that we get off track pretty easy?…

M42BC

#99 conan on 08.27.16 at 10:55 pm

#84 Smoking Man on 08.27.16 at 9:55 pm

Look at the picture that is with today’s post…… Drinking booze dehydrates your system… it fucks it up. If anything, you should be drinking lots of water and smoking a ton of weed.

Maybe doing this will take your writing to the next level.

Read this guy, he is not selling anything.

http://www.watercure.com/

#100 Smo Kingman on 08.27.16 at 10:56 pm

Listen up, brother

https://m.youtube.com/watch?v=CXC-lAv2BUI

#101 WalMark of Sadkatoon on 08.27.16 at 11:01 pm

Don’t worry ray. The posters who doubt the strength of the US economy hold dollarettes. That’s why they’re angry. I would be too. Useless currency.

#102 WalMark of Sadkatoon on 08.27.16 at 11:01 pm

Don’t worry Ryan. The posters who doubt the strength of the US economy hold dollarettes. That’s why they’re angry. I would be too. Useless currency.

#103 Michael on 08.27.16 at 11:23 pm

Ryan and Garth,

I wonder if any of you guys read this and what your thoughts/comments would be on it?!
http://www.alhambrapartners.com/2016/08/25/the-reckoning/
I found it very enlightening to say the least!

#104 AisA on 08.27.16 at 11:38 pm

A lot of posts tonight by people failing to comprehend the degree of leverage involved in our real estate market, call it local all you want but there has been an ideology ingrained from coast to coast for well over a decade that you can’t lose money buying real estate and that myth has entered “emperor wears no clothes” territory.

It doesn’t matter how the U.S. is doing, it doesn’t matter what the price of a barrel of oil is. It doesn’t matter what rates do anymore.

A large enough portion of the population has indebted themselves to the maximum possible extent and there are not enough greater fools left to in-debt themselves enough to save the day. Debt in this land is completely saturated.

Shit. With all that income, property, sin, blah blah blah tax, One would imagine we could balance a budget.

The fish rotted from the head, the tail fins let it.

IT IS OVER.

#105 American Redoubt on 08.27.16 at 11:51 pm

Hey flopper…. I hope that doesn’t mean you’re some sorta lefty degenerate.. nonetheless

Pacific NW is where it’s at ….Guns n God… preppers heaven

http://www.washingtonpost.com/sf/national/wp/2016/08/27/2016/08/27/a-fortress-against-fear/?hpid=hp_hp-top-table-main_americanredoubtnew630%3Ahomepage%2Fstory

#106 Russ on 08.27.16 at 11:56 pm

BOOM! on 08.27.16 at 9:42 pm

Flopper-

We have got to come up with a better nickname for Ryan Lewenza. Yours of InLewenza just isn’t getting it done.

I vote to try out Af Lewenza or ‘AfLewenza’ has a nicer ring to it.

It is customary to give everybody around here a nickname. Guess it has been a custom for generations!
Speed, Hambone, Stinky, the list gets rather long…
===========================

How about?

R. Alf Lewenza

which we will hear as “our affluenza”,
remembering the Saturday Night Live skit in Season 6 Episode 7… Foundation for the Tragically Hip

Which I am looking for a torrent or vid link.
C vu plait to all.

#107 Julie K. on 08.27.16 at 11:56 pm

Solid post, Ryan.

Probably solid advice (the use of “If correct…” spooks me a bit in the 3rd to last paragraph).

And then there is the whole Trump/Clinton thing which is not going to be resolved for a few more months yet (and GT already schooled us on what might happen should Mr. T win).

I don’t know. Maybe it is the women/mother in me (vs the cuke) but a sideline position for now still feels right.

#108 Ronaldo on 08.27.16 at 11:58 pm

#87 Acdel

”In the end it is a guessing game; who really knows what will happen.”

Probably the most accurate statement so far.

#109 Steve French on 08.28.16 at 12:00 am

I’m starting to get worried about the sheer volume of alcohol that Smoking Man seems to be imbibing….

Is anyone else worried about SM’s continuous benders? It can’t be healthy.

#110 Harry Hines on 08.28.16 at 12:17 am

Does anyone really believe that Canada is not in a deep recession masked only by massive government spending and hidden by the media who accepts ad dollars in exchange for silence.

Does anyone really believe that losing billions in Alberta revenue in the last year alone hasn’t affected the balance sheet?

Does anyone really believe that losing hundreds of thousands of workers and professionals and ancillary service jobs in Alberta and Ontario and The Maritimes in the last year alone under the pathetic ‘leadership’ of Junior Justin has kept the unemployment stats under 7% as reported by the government media mouthpiece?

If you believe anything the Juice Box Justin Liberals have reported you really are ‘the greater fool’. What have Juice Box Justin and his antediluvian slackers accomplished in the past year?

Having said that I have collected a majority Maple Portfolio that consists of companies that receive a major portion of their revenues in USD. Why…it pays a better yield than similar co’s in the US. They trade at a lower PE…..have a lower beta. Have more upside due to the CDN being already low and the US at record highs…more risk on the USD side of the ledger. I believe this is why so much USD is flooding into anything dual listed with Canada’s fat yields.

Buy Canada while it’s cheap….and wait for the Liberal Wacko’s to implode…buy low….sell high…be patient.

Hint…2 of my biggest positions are banks.

#111 MoneyfromA$is on 08.28.16 at 12:21 am

Thanks Ryan for your thread.

It is a rather reverse psychology to think that a rate hike would be bad for gold. Yes, drops in the gold price and shares have been relative to the anticipation of rate hikes regarding general investor psychology historically. I look at it differently. A rate hike is an admission that inflation is on the move, considering the massive amounts of stimulus being injected into the system.

Manufactured exports are what matters to bring our standard of living up. We’ve sold them all out to take on more jobs that are just passing the buck. They don’t bring in value to our dollar, the same with the US. Allot of those jobs in the US are part time as well so businesses do not have to pay medical. I don’t believe in this 10 percent influence on Vancouver real estate. The Globe and Mail has had articles on rich Asian foreign buyers bidding up prices in Vancouver. I’ve seen it first hand. I’ve seen it in 94′ with Hong Kong and Taiwanese and now with mainland Chinese. Those manufacturing jobs we’ve lost to China from Canada and US has now made many thousands of millionaires based on a country with a billion people. Those wealthy from China have chosen to invest abroad as land in their country is only lend lease.

Canada has turned its back on its middle class with selective immigration policies of rich imigrants of the prior government.

Expect knee jerk reactions in Gold prices. Investors will sell off at first and as things realize, they will correct upward again.

Inflation is good for Canadians that are over indebted (which is the majority) as it allows them to pay off their debts with debased dollars. (Their incomes will be higher due to inlflation too) I can say my income has increased well since the 2008 crash…that’s inflation.

It will be interesting with the coming US election. Nafta is on the table. Watch for QE 4, yellin is full of it. (Talking about raising rates is only to support the Democrats in election year) US dollar will drop and gold will go up. Canadian dollar will be closer to matching the US dollar.

We should be welcoming immigrant investment in creating manufacturing jobs here. Not creating competition and asset bubbles in Real Estate.

T2, look after your Canadians first.

Regards,

MoneyfromA$is

PS. I for sat the demise of the penny on this blog a year or two in advance of it really happening!!! And current markets have hit a ceiling. Sitting in cash for a bit.

#112 MrMaple on 08.28.16 at 12:27 am

” Second, we believe the Canadian dollar could head lower in the back half of this year. Currently it sits at $0.7736/US and we see the potential for it to fall further as the Fed hikes rates later this year. We don’t see it retesting the lows of $0.68, but we would not be surprised to see it in the low $0.70s sometime later this year. If correct, this would boost US equity returns, another factor in our bullish view of US equities.

Finally, we believe the continued weakness in our economy will force the Bank of Canada to keep interest rates lower for longer. This will continue to be supportive of bonds, which we have a 17% weight in.”

Humbug, hard to imagine someone can get paid to give such advisory perspectives on Canadian Economy.

Watch the magic of T2, Son!

#113 Londoner on 08.28.16 at 12:49 am

Seeing Garth at Niagara on the Lake last week has me coming back to this blog for a second time…

“Finally, we believe the continued weakness in our economy will force the Bank of Canada to keep interest rates lower for longer. “

This is something I’ve been saying for years but for some reason we keep hearing that Canada will raise rates to follow the US. So Ryan, can you explain to me how Canada can possibly raise rates when economic expansion is slowing, unemployment is rising and the trade deficit widening? When rates do eventually rise won’t this be during a period of economic expansion and wage growth? Following on from that argument, Won’t that largely make repayment of debt at higher rates a non-issue for the majority of borrowers?

#114 Cloudy on 08.28.16 at 1:22 am

Another great post Ryan. Any chance in your future posts you can offer us tidbits of your expertise in assessing stocks? What ratios or numbers you put weight on, etc? For the most part my portfolio follows the Garth formula of 60% growth and 40% fixed but myself and a few other blog lurkers I know were born with a lust for junior mining stocks and beat down pharma instead of house horniness to satisfy our risk appetite.

#115 RayofLight on 08.28.16 at 1:22 am

#85 WallOfWorry on 08.27.16 at 9:55 pm
If you look at the US dollar from a technical analysis perspective you will see that it has started a bear market (secular or cyclical to be determined)…so over the next 12 months I expect it to go much lower…probably as oil continues to rebound and move closer to $60.
—————————————————————
For the past three years, the $US has weakened in the first half of the year, and then strengthened in the last half. The $US has ended the year stronger than the previous year. The $US has weakened similarly for the first half of 2016, but has not showed the same resurgence strength displayed in 2014 & 2015. Along with $OIL, I suspect the possibility of a POTUS Trump is also distorting this rebound. I believe a Trump President would drive the $US/$CAD back close to parity.

#116 Ponzius Pilatus on 08.28.16 at 2:00 am

Garth
Please take your two stiffs out for a good party with Smoking Man.
Or make them watch some old Seinfeld episodes to appreciate sartire.

#117 Ponzius Pilatus on 08.28.16 at 2:20 am

I know, I know. Many of you blog dogs question the US government statistics on employment and inflation. But I don’t know how to debate that. – Ryan L
————–
Wow,
Ryan, you are in charge of over 500 mill in investments and you can’t justify your position on employment and inflation.
If you’d be my investment advisor, I’d fired you a long time ago.

#118 wicked as it seems on 08.28.16 at 2:40 am

#14 hope & ruin on 08.27.16 at 3:29 pm

Awesome …I would love to cross India in that way!

#119 So true #64 The American on 08.28.16 at 2:54 am

A bit heavy handed about Canada but truthful. With RE beginning to crater and unprecedented debt levels, we are at the start of the journey that the US began in 2008.

Add to that a recession, which is likely, well: repeat the American experience. I only hope we will come out of it quicker than you did…but who’s kidding who…it will take many years to dig out from under our current debt load which eclipsed yours back then by a good 20%.

Best of all, you let the ever ubiquitous and incompetent gadfly, Mark, have it (the latter who fails at basic Math skills and has taken upon himself to comment on everyone else’s comments but has nothing original to say for himself).

#120 Freedom First on 08.28.16 at 3:16 am

Flop. Year round. No Brainer. Hawaii.

You’re welcome.

#121 Sam on 08.28.16 at 4:06 am

Let’s see…. US employment participation rate is an an 38 year low. Real US unemployment rate is over 23%. The capitalization of all publicly traded US companies are around 18 trillion (held up mainly by OE’s, share buy-backs and HFT algorithms) while the US corporate debt is over 7 trillion. Subtract from that the 20 trillion US debt, the 56 trillion in unfunded liabilities and the 300 trillion in US derivative debt and that the US has to borrow/create three dollars for every dollar in GDP….. so, what are you left with??? US government fudged “statistics”.

About Canada, I have only to say one thing: “Never have so many achieved so little with so much”
….. and by the way, gold/mining sector is doing exactly what it should after this run up…you have seen nothing yet. Stay tuned.

#122 Maurice Bricard on 08.28.16 at 6:34 am

My goodness, 17% in bonds, which pay nothing for 30 years , wow, that’s some serious market phobia.

#123 Fortune500 on 08.28.16 at 7:55 am

Should anyone (Millenials in particular) be interested in signing …

http://www.gensqueeze.ca/homes_first

#124 Ronaldo on 08.28.16 at 7:57 am

#109 Steve French on 08.28.16 at 12:00 am

”I’m starting to get worried about the sheer volume of alcohol that Smoking Man seems to be imbibing….

Is anyone else worried about SM’s continuous benders? It can’t be healthy.”
——————————————————
Nothing to be worried about.

Do you really believe that Smoking Man is something other than fiction?

#125 adam on 08.28.16 at 8:20 am

Active managing has been shown to lose against passive managing on a consistent basis. Active loses against index funds in a balanced portfolio. But that isnt as sexy as guessing and starting sentences with “we believe markets will… ” etc blah blah blah. oh well!

#126 Ronaldo on 08.28.16 at 8:45 am

#114 Rayoflight

”I believe a Trump President would drive the $US/$CAD back close to parity.”

I believe so as well. Along with energy and resource stocks and in particular the precious metals stocks which are currently resting from an amazing run since January 20th after a long drought. Happens every seven years or so. In the meantime I have a fresh 200 g’s sitting on the sidelines waiting for deployment in the next 4 months. Preservation of capital at this moment is my #1 priority. No need to rush into these markets.

#127 Ronaldo on 08.28.16 at 8:48 am

#120 Sam

”….. and by the way, gold/mining sector is doing exactly what it should after this run up…you have seen nothing yet. Stay tuned.”

Your absolutely correct in this regard.

#128 Mark M. on 08.28.16 at 9:04 am

#88 – The American

Yup, in January the belief here and among the experts was FOUR rate hikes this year as the Fed had achieved “liftoff” and nothing could stop them. That economy was on fire. So what happened?

Don’t lie pal, you were not calling for ONE rate hike a year. And you sir are of far less than even average intelligence which is why you fall for the Fed’s bullshit, over and over and over again.

So join with your friends JP, WalMark and the rest of the “America is BOOOOMING!” crowd and work out your response to the failure of the Fed to raise rates next month.

A booming economy grows at better than 1% after eight years of emergency interest rates trillions of QE. It’s a shocking embarrassment, just like you.

#129 crowdedelevatorfartz on 08.28.16 at 9:06 am

@# 111 Brazil ex Economist
“So only the “private sector” creates taxes. So if you take the sum of the private sector, the welfare people, the people that don’t qualify but are employable and divide that into the working population (minus Govt workers) the un-employment rate is going to be closer to 15 or 20%.

This is the same in the USA and many other countries around the world where they want you to believe the un-employment is around 5 to 8 percent. Completely and totally laughable…..
*******************************************

Riiiiiiight.

So in that vein(or in your case…vain) of economically superior calculating.
The dollar in your pocket is actually worth THREE dollars because ……..
A) Its the dollar you have
b) Its the dollar you didnt spend.
c) Its the dollar you didnt pay the taxman.

You sir….are a rich man.

Dont worrry about govt employees
Their time is coming.

http://www.google.ca/url?url=http://www.businessinsider.com/us-government-7-trillion-pension-shortfall-2016-4&rct=j&frm=1&q=&esrc=s&sa=U&ved=0ahUKEwi0nqipluTOAhVD1GMKHTimCQkQFggnMAM&usg=AFQjCNFwz7N1IxbqArj_IBGS4Wamn0BZcQ

#130 VicPaul on 08.28.16 at 9:37 am

#27 Arfmoocat.

“diverging”

Kind of like 2008 when the U.S. crashed and we took barely a 3 second pit stop on our Formula One race to the stratosphere.
*************
Yes, our economy strapped to the back of a debt-fuelled spend fest in real estate….not brag-worthy (rather embarrassing that so many felt this is the way to live).
Can you feel the change in the air…or is that fall?

M52BC.

Flopper, I’d live in Sandy,Utah – moderate temperatures, clean environment – I’d play golf with another lefty, Mike Weir.

#131 fleixyhe on 08.28.16 at 9:51 am

Cdn economy is so bad ex-PM is forming a “global” business consultancy a rather than a “national” business consultancy……if any one would know where the best ops are, it should be the elites!

#132 Context on 08.28.16 at 9:54 am

I am a fan of explorers concerning the lost mines of Ontario looking for gems. One guy remembered this place called Belfountain as he saw a picture once of a ladder in the forest leading down into the mine shaft. It was located near the upper area of the hairpin bend so now were looking for the tunnel systems. Much to their surprise they were wide open in the dense vegetation so went exploring and found a lake underground with tunnels branching out in every direction but needed a floating device for the future return.

#133 Honey Dripper on 08.28.16 at 10:06 am

Bonds?
If you’re a retiree which I am, I need to grow my monthly income to keep up with the cost of living. The distribution rate on bond etfs is going down every month so why have 17% invested there.
We need more direction on how to grow income rather than balanced portfolio theory.
While I appreciate it, I also have my own selfish agenda. Thanks:)

This topic has been addressed here many times. So pay attention. Of the 17%, less than half are in low-yield government securities, whose functions are to (a) decrease portfolio volatility so you sleep at night and (b) to offset dips in equity values since these are generally negatively correlated with stock markets. The remainder of the bond component in a balanced portfolio is made up of corporates, provincials, high-yield and real return bonds, all of which beat GIC returns, are 100% liquid and also temper volatility. Combined with an equal weighting in preferreds (about 18%) the fixed-income sleeve should deliver a yield of about 3.5% while being fully liquid. More than a GIC, completely cashable and flexible, with the potential of capital gains. — Garth

#134 crowdedelevatorfartz on 08.28.16 at 10:08 am

@ Brazil ExPat

Hmmmmm

Apparently the Democratix arent waiting for the “last 3 weeks of the election” to “drop the shoe”…..

Sundays front page of the New York Times…

http://www.nytimes.com/2016/08/28/us/politics/donald-trump-housing-race.html

An expose’ of the Donalds’ racist policies towards blacks waaaay back when daddy first gave him a start in the real estate biz………

But Im sure this is only the beginning. There’s so much material to choose from. Who has the dirtiest laundry in their closet/ Time will tell. We aint seen nuthin yet. My moneys on Trump’s dirty undeerwear…..
While he brays out his racist , low brow venom….she’ll nuke and pave.
The Donald……….
Trumped by Hillary.

Enjoy the new York Times article. Its the first of many.

#135 Padiwan on 08.28.16 at 10:25 am

If you’re expecting another drop in the CAD, how much of our portfolio should we have in USD? Also, does this mean CAD-hedged ETFs are a bad idea? What are the options?

Thanks for all that you guys are doing, this blog should be mandatory reading for everyone entering the work force.

#136 For those about to flop... on 08.28.16 at 10:32 am

Thanks , VicPaul and Freedom for your answers.

Maybe you want to spend a minute and fill out No Names survey on the same subject.

Not sure why he put the other dodgy questions in but I give him an A for effort.

I have seen enough evidence the last 3 or 4 days to confirm what I thought.

Basically that if given the chance not everyone would want to live in small town Arizona or Florida,no matter how affordable the real estate.

As my wife said to me yesterday if it was all about that wouldn’t everyone pick Detroit, Michigan .

We all have different hobbies and expectations of life but just as it doesn’t make sense to pay 750k for a townhouse in Saskatchewan it doesn’t make sense to pay 80k to live in a small town in the desert in Arizona if that is not your thing.

The boss goes on about balance all the time and in this case people put enough thought into their answers to see beyond cheaper real estate and lots of sun.

I tried to be realistic with my answer of Oregon because my wife does not do well in the heat, hence why we don’t live in Australia.

My poll had many ,many flaws just like the guy who made it up but the answers did surprise me and was definitely more skewed towards the northern states than I thought it would be.

You never know one day living anywhere you want on this continent without conditions might become reality one day…

M42BC

http://freeonlinesurveys.com/s/kY3vRHAs

#137 WallOfWorry on 08.28.16 at 10:40 am

Looks like it is not just Canada that is experiencing a slow down in real estate?

http://www.zerohedge.com/news/2016-08-27/%E2%80%9Ci%E2%80%99ve-never-seen-anything-housing-markets-hamptons-aspen-and-miami-are-all-crashing

#138 Who luvs ya baby on 08.28.16 at 10:50 am

#91 The American on 08.27.16 at 10:32 pm

Mark M., sure it’s nearly four years old, but I get a chuckle out of it every time I hear it. It isn’t so much about being so ugly, as much as it is about believing you are something you are not. Canadian culture struggles with this phenomenon.

http://www.cbc.ca/radio/thisisthat/ugly-canadians-bless-you-ban-manitoba-white-debris-trans-canada-enthusiast-sod-hut-hotel-1.2843575/new-list-ranks-canadians-as-the-most-unattractive-people-in-the-world-1.2843578

You may not have noticed but you have a delusional orange faced orangutan running in your elections…. keep it up, best entertainment in years.

#139 Ryan Lewenza on 08.28.16 at 10:53 am

Padiwan “If you’re expecting another drop in the CAD, how much of our portfolio should we have in USD? Also, does this mean CAD-hedged ETFs are a bad idea? What are the options?”

We currently have 20% exposure in US dollars. We don’t try to take active bets in currencies since over the long run its a wash. But for diversification benefits, and our current preference for US equities we think that’s a good percentage. We don’t think having hedged ETFs is a bad idea. We use a mix of hedged and unhedged ETFs. Of our 40% in US global/equities, half is hedged and half unhedged. – Ryan L

#140 MF on 08.28.16 at 10:55 am

#71 Mark M. on 08.27.16 at 8:23 pm

Well put. Harsh rebuttal.

MF

#141 Randy on 08.28.16 at 11:02 am

Didn’t the Fed just indicate they need another $4 Trillion for Stimulus Spending ? http://www.zerohedge.com/news/2016-08-22/fed-admits-another-4-trillion-qe-will-be-needed-offset-economic-shock

#142 Ryan Lewenza on 08.28.16 at 11:06 am

Londoner “This is something I’ve been saying for years but for some reason we keep hearing that Canada will raise rates to follow the US. So Ryan, can you explain to me how Canada can possibly raise rates when economic expansion is slowing, unemployment is rising and the trade deficit widening?”

I also believe the BoC will raise rates but they likely wouldn’t even consider it till 2017. In my view it all comes down to oil. Since I see oil prices firming up in 2017, this should help our economy, trade deficits, job growth etc. So we see Fed hiking once this year, maybe a few more times in 2017, with the BoC following sometime later in 2017/early 2018. – Ryan L

#143 For those about to flop... on 08.28.16 at 11:19 am

To give you an indication of how much my wife hates hot weather ,if she had to choose between living in Australia for a year or reading Marks posts for a year,she chose the latter.

Walmark of Sadkatoon’s gonna love that one…

M42BC

#144 Context on 08.28.16 at 11:27 am

For those who are looking for a Ryan nickname why not polish it up with a touch of class so how about Sir Lew?

#145 The American on 08.28.16 at 11:42 am

At #128: Mark M., the only thing embarrassing in this dialogue is your willful blindness/ignorance to the fact that Canadians have misbehaved more-so than Americans ever dreamed (and that includes your banks, too), creating the inevitable shit-storm that has arrived that so many like yourself are in denial. You should be embarrassed by your pathetic trade levels, GDP, horrific loony, clinging to archaic technologies, energies, and resources that simply will not serve you into the next century. So what do you have to say for the Canadian economy (having also been bailed out much in part by American tax payers back in 2007), yet you’re sucking soooooooooooo much worse than the U.S. to this day? Yeah, clean up your shit in your own back yard before you point fingers at another. You are representative of a pathetic and unfounded attempt to deflect responsibility and attention from the *real* issue, and that issue is the great Canadian denial of the mess you’ve created for yourselves while believing you’re “different.” Ohhhhh, you’re different alright, much like a baby who’s been dropped on his head…. repeatedly.

#146 BOOM! on 08.28.16 at 11:46 am

#98 Flopper #106 Russ

“Alf Lewenza!” Good job on that one!

Yes, our portfolios suffer the Ying & Yang of the uncertainties of any investment, but our warped humor less us astray as ever.

Yes, it is mostly a crapshoot, we really never know what is going to happen next. That said, the crapshoot is our best chance of avoiding the fate of so many others, ending up old poor and broke! Hey, your going to either end up old then dead, or maybe just middle age then dead. What you need to try to avoid is that crappy lingering period with nothing in your pockets.

GIC’s are for dummies…

Sorry, that came off as a tad cold, but get used to it, that is just the no nonsense American I are.

M64WI

#147 LP on 08.28.16 at 11:48 am

#143 For those about to flop… on 08.28.16 at 11:19 am
*************************

I hear you Mrs. Flop. That’s why I chose Maine.

F69ON

#148 NoName on 08.28.16 at 11:55 am

#81 c’mon people it just 10 clicks on 08.27.16 at 9:37 pm

we are all “free clicker” its just that some don’t that yet.
——–
@floppy

back to
so “our” surway is scientific as it then get Mr William Gosset, a statistician and Head Brewer for Guinness, declared that small sample with 30-ish pionts is enough to work with.

http://imgur.com/a/bWUCD

#149 Trump is a symptome on 08.28.16 at 12:15 pm

http://www.zerohedge.com/news/2016-08-28/german-economy-minister-ttip-talks-have-failed

New cracks of the globalization era.

An other issue that puts Canada and US at odds.

#150 Mark M. on 08.28.16 at 12:38 pm

#145 – The American

Deflect much?

You’re on notice buddy, on September 21, when the “really smart people” at the Fed once again refuse to raise interest rates an insignificant 25 basis points, all of us here will be waiting for your explanation.

Join forces with JP, WalMark and the rest of the willfully blind “America is BOOOOMING” crowd, who after several decades on earth still can’t see a bubble until AFTER it’s popped.

And for the record, I’ve stated a number of times on this forum that the Canadian economy is also a basket case, so address the issues I’ve presented regarding your “cooking” economy, or shut the hell up until you deliver your ingenious analysis on September 21. It will be epic.

Think they’ll need more data?

#151 Shawn on 08.28.16 at 12:43 pm

Thanks for your reply.

Yes, I agree the TSX and emerging markets have traditionally traded in a highly correlated fashion. However, the sector composition of the TSX has changed little recently whereas the sector composition of the FTSE EM index has. The EM index is now 18% technology compared to the TSX at 3%. I think this will cause EMs and the TSX to be less correlated over time.

What do you think?

#152 For those about to flop... on 08.28.16 at 1:01 pm

http://imgur.com/a/bWUCD

Hey NoName,I think some people would have done your survey and also posted their answer to my question on the blog so I would say we have around 50/55 which is good enough.

Some states were chosen on your poll that were not mentioned to me before and Hawaii picked up more points than had been previously suggested.

The myth that we all want to live as far south as possible…busted…

M42BC

#153 Frank on 08.28.16 at 1:11 pm

6 months of divergence isn’t much of a trend to bar investment advice off of. Historically have we ever diverged for more than a year?

#154 Londoner on 08.28.16 at 1:13 pm

“I also believe the BoC will raise rates but they likely wouldn’t even consider it till 2017. In my view it all comes down to oil…”

That will have to be one hell of a turn around in oil prices, but if true then how does that support the case for a prolonged slow down in the housing market?

#155 Vamanos Pest on 08.28.16 at 1:20 pm

HEY ROWAT!! It’s Sunday, shake a leg. Asia opens in 4 hours. Let’s go buddy, your people await!!

#156 John in Mtl on 08.28.16 at 1:32 pm

#149 Trump is a symptome on 08.28.16 at 12:15 pm

http://www.zerohedge.com/news/2016-08-28/german-economy-minister-ttip-talks-have-failed

New cracks of the globalization era.

An other issue that puts Canada and US at odds.

“…[They] have failed because we Europeans did not want to subject ourselves to American demands.”

Too bad T2 and us Canucks have no balls and have signed the damned thing. If people cared and paid attention, and really knew what the TTIP was all about, they would be like the Germans – out in the streets defending Canada against American & international corporate hegemony.

#157 Context on 08.28.16 at 1:32 pm

#145 The American:- The next time you come to Canada, if ever, I have a hot blind date for you that will gladly show you the City Of Toronto. She has a figure to die for and dresses in black leather so you might get lucky while walking her down Church Street taking you to her favorite nightclub.

#158 The American on 08.28.16 at 2:53 pm

At #145: Context, there you all going again showing that *true* Canadian hospitality.

At #150: Mark M., watch your language. Telling someone to “shut the hell up” is vulgar, and typical of Canadian censorship. You are claiming Sept. 21 there will be no rate increase. Political suicide before an election, you moron. I won’t be surprised if it doesn’t happen on September 21. As I’ve stated numerous times it will happen before year end with the rate hike. So, stop trying to re-write your argument and put words into an argument that weren’t introduced in the first place. BEFORE THE END OF THE YEAR THE RATE INCREASE WILL HAPPEN. It will bring you and your clearly shitty portfolio a world of hurt. Wait and watch. As I’ve said, you’ll be eating crow. Would you like mayo with that? :-) Cheers, little man!

#159 W A Mozart on 08.28.16 at 4:09 pm

The american job growth is barely tracking population growth and when you consider the good job index most are falling behind that why growth is slow. Also the profit growth of the SP500 has been revised lower over the year and stock there are trading a historic valuations and if the increases interest rates it will increase the value of the US$ and slow the economy more there and spook the market just like it has done every time the FED talks of rate hikes.
Adding US stocks now with not much rate differential here does not make sense.
I do not see any alpha in the ETF portfolio and it will dip for years in a long recession so any one in retirement will drawn down capital and is for losers wanting to play it too safe.
Being with good companies low debt good cash flow with international exposure and paying a dividend and being diversified out of the volatile sectors is the best way to survive, but it be done even automatically using something like the morningstar screener what has been back tested over time and produce alpha and low beta. I’m talking returns 2x the TSX, just see the G&M report on business blog dogs.

#160 Russ on 08.28.16 at 4:27 pm

BOOM! on 08.28.16 at 11:46 am

Yes, our portfolios suffer the Ying & Yang of the uncertainties of any investment, but our warped humor less us astray as ever.

… the crapshoot is our best chance of avoiding the fate of so many others, ending up old poor and broke! Hey, your going to either end up old then dead, or maybe just middle age then dead. What you need to try to avoid is that crappy lingering period with nothing in your pockets.

GIC’s are for dummies…

Sorry, that came off as a tad cold, but get used to it, that is just the no nonsense American I are.

M64WI
=========================

Hey Boom,

I spent some time last week with a 72 year old friend. He lost half the retirement by selling mutual funds when they went down, then bought real estate (because you have to live somewhere) and put the little bit left over in GICs (because he can’t afford risk). Now his wife (age late 50s) has to work again.

He knows about Couch Potato adnother friends with EFs and balancing strategy but its still too scary for him. Sigh.

Anyhow, what is anyone’s opinion about this Sunshine Coast area credit union package? I hate to call these things products, no year of manufacture per se.

I got something similar from Manulife when the guarantee was 5 percent annually, still have it too ’cause it’s not bad for a guaranteed return & principal.

https://www.sunshineccu.com/Personal/ProductsAndServices/Investing/MarketConnectTermDeposit/

#161 Gulf Breeze on 08.28.16 at 7:50 pm

I would hardly describe the action of precious metals miners last week, as selling off hard.

The American economy is doing better than the Canadian and European economies. That only makes it the tallest midget in the room. The extreme low interest rate environment promoted by Yellen, thus far, speaks to a very strong fear of stalling out a weak recovery.

As long as people are buying American treasuries, at these rates, there isn’t much incentive to raise them. For this reason, Poloz is going to go negative, most likely.

I just put my maximum allowed amount into precious metals mutual fund tfsa. I feel it is important to hedge against toppy looking stock markets and devaluing currencies.

Precious metals benefit from confusion, chaos and the unexpected. In a Daffy Duck cartooniverse that gave us Donald Trump as the republican nominee, gold is the place to be.

#162 Vanboy64 on 08.29.16 at 2:49 am

BRAM, nice gramitical catch. You will make an excellent English teacher. 40 to 60 k per year. Unfortunately, you will have to work 6 years for every year that I work given you are making the higher amount in the range. Can you do math or is English your best skill?