Trumped!

deplorable-modified

RYAN  By Guest Blogger Ryan Lewenza

Well we got that one wrong!

In recent blog posts and in our weekly client conference calls, we predicted that Clinton would be victorious over Trump, in large part due to his high unfavourable ratings with women and minorities. Like so many other pundits and pollsters, we failed to appreciate the extreme indignation among so many Americans that lead to this historic outcome. But to be fair, we by no means saw it as a lock for Hillary (in a conference call shortly before the election I put the odds of a Trump win at 40%), and as I believe history will show, the vague FBI letter that they were reopening their investigation into Hillary’s email server just days before the election may have been what did her in (or maybe Benghazi, the Clinton Foundation, term “deplorables” etc.).

So, now that we have Trump moving into the Whitehouse, with his interior designer likely drawing up plans to deck out 1600 Pennsylvania Ave in gold and tacky baroque sculptures and paintings, what does this mean for the economy and financial markets?

In a word….inflation.

Trump’s policies of pro-growth tax cuts, massive infrastructure spending, tariffs on imported goods from China and Mexico, and larger expected deficits, all point to higher inflation and in turn, higher interest rates.

This is exactly what the market is now pricing in with the US 10-year Treasury yield surging roughly 50 basis points (bps) following the US election. And it’s not only US yields that have risen with the Canada 10-year government yield gaining 30 bps to 1.56%. Globally, the back up in government bond yields has wiped out over US$1 trillion in bond values since Trump’s victory. This is potentially a big deal, and could represent a sea change for the economy and financial markets.

US 10-Year Treasury Yield Jumps 50 bps Post Election

ryan-1

Source: Bloomberg, Turner Investments

Since the financial crisis we’ve been stuck in this low-growth, low inflation environment. For example, US GDP growth has averaged 2.1% since the financial crisis versus the long-term average of 3.3%, and US inflation at 1.5% versus the long-term average of 3.8%. Trump and his policies could be a game changer, particularly for inflation, which explains the back up in bond yields and inflation expectations. This can be seen in the chart below which is an index that measures future inflation expectations, and it surged higher following Trump’s victory.

Inflation Expectations Surge on Trump Win

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Source: Bloomberg, Turner Investments

With inflation likely to rise under a Trump presidency, how should investors be positioned in this changing environment?

First, we see equities as the best asset class for an inflationary environment as they provide a natural hedge against inflation. As inflation picks up companies raise prices for their products/services to help protect their margins and profitability. Higher prices result in stronger corporate profits and rising dividends, hence the natural hedge against inflation. Below is a chart that illustrates this relationship with the S&P 500 overlaid with Y/Y changes in US inflation.

While not perfect, it does illustrate the positive correlation between inflation and the S&P 500 generally. So, stick with your equities which we believe will continue to rise into 2017. From a sector perspective investors should focus more on cyclical sectors like industrials, information technology and energy, rather than interest sensitive sectors like utilities, which typically underperform in a rising inflation/interest rate environment.

Equities Act As A Hedge Against Inflation

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Source: Bloomberg, Turner Investments

The next best investment for an inflationary environment, and a must have in portfolios right now are real return bonds (RRBs). RRBs are government issued bonds that are linked to inflation. As inflation rises both the interest and principal amount increase, helping to preserve your purchasing power. Since inflation bottomed in late 2015, Canadian RRBs have outperformed straight government bonds, with the iShares Real Return Bond ETF (XRB-T) up 3.6% YTD versus the iShares Canadian Government Bond ETF (XGB-T) down 0.9%. We believe inflation will continue to rise and may ultimately see a boost from Trump’s policies with RRBs likely to do well in this environment.

Higher inflation should lead to further Fed rate hikes, and we continue to call for a Fed hike in December, and possibly a few more in 2017. As such, we believe investors should hold shorter dated maturities which are less sensitive to a rise in interest rates, and have their fixed income holdings tilted more in favour of corporate bonds, both investment grade and some high yield, versus government bonds. Corporate bonds typically outperform in a rising interest rate environment as credit spreads (the difference between corporate and government bond yields) tighten on the back of an improving economy.

Finally we continue to be bullish on the Canadian preferred share market which we see recovering further in 2017, as the Fed and then the Bank of Canada start to hike rates later in 2017 and 2018. Specifically, we like the fixed resets within the Canadian preferred share market which reset their dividends every 5 years versus perpetuals which have a set dividend. We continue to hold the iShares Canadian Preferred Share ETF (CPD-T) for clients with its 72% weighting to fixed resets.

So there you have it. We believe inflation has bottomed and we see it rising further if Trump is able to get some of his economic policies passed through Congress. Are you positioned correctly for this potential outcome? And are you ready for “Trump Whitehouse”?

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

157 comments ↓

#1 crowdedelevatorfartz on 11.19.16 at 1:13 pm

I cant wait for The Donald to redecorate the White House in gold taffeta and purple draperies.
Busts of Ceasar and Trump himself in every room. Black porcelain toilets with solid gold handles, Deplorable New Jersey art deco to help stimulate that sluggish economy…..
What could possibly go wrong?

#2 WalMark of Sadkatoon on 11.19.16 at 1:21 pm

Inflation!! Wheee!

I told y’all the deflation boogeyman was a big fat illusion!

#3 InvestorsFriend on 11.19.16 at 1:27 pm

Real Return Bonds?

Buying and holding those for a very long time is expected to provide a real return of 0.39% per year. So you can expect (in fact count on, in the long term) inflation protection and preservation of capital but essentially no increase in purchasing power.

I am not satisfied with that and would allocate nothing to that asset class.

#4 TRT on 11.19.16 at 1:34 pm

Check my predictions the last 6 years. Bang on!

They are going are going to inflate their way out. Canada will not follow the USA in raising rates. They will sacrifice the Loonie for sake of housing. Poloz is tied at the hip with Gov/Corps (Arms distance?? Haha). The Big 5/other Oligopolies run Canada. And T2 is a puppet to them. Can’t think for himself and running around to sign free trade deals like an uniformed idiot.

#5 Ralph Capocci on 11.19.16 at 1:37 pm

Thank you for an excellent analysis Ryan. What do you see happening to the Canadian dollar for 2017 and 2018?

#6 conan on 11.19.16 at 1:41 pm

If you think interest rates are going to go up then Real Return bonds are portfolio killers

“an increase of one percentage point in yield would send the price of the 10-year RRB tumbling about 9 per cent.”

Imagine what the same one percent increase in yield would do to a 25 year RRB.

The people who distribute RRB to people like you make it sound as if this bond is way cool and harmless. I know, because I have probably met the same people.

RRB’s only work the way they say they work if you hold them to maturity. That’s the domain of pension funds, not Ma and Pa Mainstreet who will lynch you if you put too much of this in their portfolio.

Jebus Murphy

http://www.theglobeandmail.com/globe-investor/investor-education/the-hidden-pitfalls-of-real-return-bonds/article4263112/

#7 oncebitten on 11.19.16 at 1:42 pm

Thanks for the specific ETF recommendations. Now I know what I’m buying myself for Christmas.

#8 Contrary Canadian on 11.19.16 at 1:48 pm

Ryan, is there a reason you prefer CPD over ZPR?

#9 Penny Henny on 11.19.16 at 1:50 pm

With inflation going up wouldn’t we normally see gold trending up too?
And can we contribute gold’s lower price per ounce to the strength of the US dollar.

Disclaimer, I own no gold.

#10 Stanley on 11.19.16 at 1:57 pm

You still don’t know what is happening

#11 Context on 11.19.16 at 1:59 pm

What did Hillary in was Guccifer 2.0 and always remember that Trump’s handlers were in discussions with Putin’s deputies before and during the election. This was all admitted by the Russians after the election was a done deal.

#12 Wait There on 11.19.16 at 2:04 pm

Talk about changes. A year ago, we were worried about deflation maybe months ago. Now we openly predict inflation.

Anyone caught on the other side of the trend is gonna hurt and hurt some bad soon.

Anyone who travelled to out of the city America could openly see the hurt that the “liberal” years had put on the deplorables. The pendulum is a natural time keeper and will always be part of the future.
Trying to engineer any economy that would prevent swings removes the energy of the system. Change is what drives the economy and creates opportunities. That is what we had for over a decade.

The next decade will see a return to more conservative views and less liberalism. The pendulum is swinging. It always have and always will.

#13 ShawnG in TO on 11.19.16 at 2:27 pm

Dr Smokey Herdonomics is on a speaking tour coming to a city near you. yes, you!

this is not a tour about selling his newest bestseller, but it will be available at 15.99 usd (or 35.99 cad, if you prefer the inferior currency)

since i figured you would benefit from his lecture, i asked to reserve 3 seats for you guys in the front row.

if you are wrong about this inflation thing, Mark also has a speaking tour coming.

#14 Figmund Sreud on 11.19.16 at 2:31 pm

… and as I believe history will show, …
______________________________

Oh, never mind history. This fellow pretty well pinned it – from the fly over, “down-at-the-heels mill town in the north central Appalachians”:

When The Shouting Stops
http://thearchdruidreport.blogspot.ca/2016/11/when-shouting-stops.html?m=0

Enjoy the read.

F.S. – Comox, BC.

#15 JSS on 11.19.16 at 2:33 pm

Ryan, with higher interest rates being forecasted with a trump presidency, is there danger of collapse of any Canadian banks? Reason I’m asking is that I’m slightly overweight in Canadian banks, and don’t feel like selling because of the dividends. There was some talk earlier this week of a worst case scenario with chance of collapse of a “major financial institution”

#16 Mark on 11.19.16 at 2:44 pm

I personally have lots of trouble with the suggestion that stocks, particularly the suggested S&P500, is an inflation hedge. If you look at periods of risinginflation, such as the 1960s and 1970s, the stock market, at least in the United States, went nowhere.

The TSE (predecessor to the TSX) did somewhat better, on account of its mix/exposure to the resource sector and gold.

Intuitively, with the S&P500’s P/E at very elevated levels, it makes little sense for the US stock market to do well going forward. The TSX, in comparison, with its historical outperformance during rising inflation, and much lower P/E at this point, would appear to be a much better investment.

#17 BS on 11.19.16 at 2:47 pm

we failed to appreciate the extreme indignation among so many Americans that lead to this historic outcome.

I think the part you miss (along with the mainstream media) is Trump was elected because he has better policies. Your forecast, the bond market, the gold market, the US stock market all confirm that. People need to get past Trump’s unfiltered rhetoric and look at his policies. The bond market has no emotion and has indicated (so far) Trump was the right choice.

People who vote (or hire) based solely on a person’s sex, race and level of political correctness get what they deserve. Under performance. Obama proved that. Nice guy, minority, politically correct policy and speeches, politically correct cabinet, but a failure getting anything done as president.

#18 Mark M. on 11.19.16 at 2:59 pm

Ryan,

How is America going to have sweeping tax cuts, tighter monetary policy AND a trillion dollar fiscal stimulus?

The answer is obvious, monetary stimulus, more QE.

What’s remarkable is all the people who spread nothing but doom at the prospect of a Trump presidency for 18 months, Garth among them, are now positively giddy because they believe his policy is going to bring growth.

If they bothered to think about it for more than 10 minutes they’d realize NOTHING has changed.

The US and the entire world has a debt problem, it’s remarkable that after 8 years of debt orgy and no growth you’re cheerleading for more debt.

And now I’ll concede, it looks like the Fed will finally have to raise rates a token 25-basis points next month. It isn’t because they want to, but rather as I have argued all along, because they’ve been forced by the bond market to act.

I guess in a perverse way, the election of Trump will allow Garth to get the Fed rate hike he’s been jonsing for all year. The outcome however, a recession, will blindside him.

#19 Context on 11.19.16 at 3:02 pm

Sir Lew tell us which energy industry you like the best for a potential investment in North America. Something that might have in the past decade experienced a compound annual growth rate of about 60% might be fitting into one’s portfolio – thank you!

#20 Smoking Man on 11.19.16 at 3:08 pm

In recent blog posts and in our weekly client conference calls, we predicted that Clinton would be victorious over Trump, in large part due to his high unfavourable ratings with women and minorities. Like so many other pundits and pollsters, we failed to appreciate the extreme indignation among so many Americans that lead to this historic outcome.
…….
Don’t think anyone faults you guys for being wrong on the election outcome. You’re all human.

Now something very significant happend on Friday Nov 5th. Alien intervention. There is an obscure Deplorables book out there somewhere that explains it detail. You need to find it yourself to totally understand why Trump is in the white house.

Or ask Steve French. He read it.

#21 Mark on 11.19.16 at 3:24 pm

“Imagine what the same one percent increase in yield would do to a 25 year RRB.”

The duration on a 25-year Treasury (GoC or UST) is around 15-20 years (closer to the latter given the very low coupons on recent issues). So a 1% increase in yield could knock 15-20% off the value of the bond.

If the 1% increase in long-term interest rates was due to inflation increasing, then the RRB wouldn’t suffer a loss. If it was due to the yield curve steepening but CPI not accelerating, then the RRB would perform closer to that of the nominal bond — suffer a significant loss.

The problem with RRB’s, first and foremost, is that they’re linked against a benchmark (CPI) which is controlled by, and can be manipulated to the benefit of the government. With no recourse against the borrower. At least with a nominal bond, the rate of return is clearly spelled out, and there’s no doubt as to whether the index is miscalculated, manipulated, or not. Of course, governments can run horrible fiscal and economic policy which will render a long-term obligation far less valuable than anticipated, but that’s quite different from outright fraud in calculating CPI.

#22 Mark on 11.19.16 at 3:31 pm

“A year ago, we were worried about deflation maybe months ago. Now we openly predict inflation.”

Deflation in Canada. Inflation in the USA. Canada is going to be rewarded in the coming years/decades for building a stronger economy, investing in industry, being prudent with government spending. Running long-term trade surpluses. Keeping the deficits relatively under control (Obama’s single-year deficit of $2.4T is, scaled 1:10, almost worse than what Harper ran over an entire decade! — in an economy claimed to be “good” and “near full employment” to boot!). This is why monetary policy will be able to disconnect going forward, without trashing the Canadian dollar. This is why the TSX is set to outperform relative to the US markets.

#23 David P on 11.19.16 at 3:36 pm

So you think interest rates are going up, meaning mortgage rates are going up, which should prick the housing bubble and cause a mayhem since this is the ONLY driver of the Canadian economy, yet you are bullish on TSX? Housing collapse should trigger a major recession here. Don’t you think?

#24 Ryan Lewenza on 11.19.16 at 3:58 pm

Ralph Capocci “Thank you for an excellent analysis Ryan. What do you see happening to the Canadian dollar for 2017 and 2018?”

Thank you Ralph for your nice feedback. I don’t get much of that on this blog. I’ve been calling the CAD dollar pretty good these last few years, so let’s see if I can keep it up. After being a CAD bear for much of 2015 and predicting a low in the high $0.60s (low was around $0.68), I called for a rally in the CAD on stronger oil prices. Then at $0.80 I predicted a drop on the diverging paths of the Fed and BoC. Now I see further weakness in the CAD down to the low $0.70s, as the Fed hikes in December and again in H2/17. So from current levels I see another 5% downside. But then I see it rallying in 2017, possibly in H2/17, as oil prices recover. There 2 main drivers of the CAD which are oil prices and the interest rate differential of CAD/US rates. So the interest rate differential sends the CAD lower in the coming months, but then stronger oil prices drive CAD higher later in 2017, which I’m targeting around $0.80 based on my regression model. – Ryan L

#25 ROTFL on 11.19.16 at 4:01 pm

About Canadian prefs, and CPD in particular: Do you have a theory as to why they’re a good deal? My data says that since 2007-10-25, they’ve returned a total of 8.17% or 0.87% per year, assuming all dividends reinvested. Sorry, bit of a gap between inception of the ETF and my data, but looking at a chart, makes little difference to the conclusions. Pretty much every dime an investor has gotten between then and now has been getting his/her own money back — with taxes payable to boot. Being prefs, there’s no upside participation above “yesterday I thought they’d go broke, today, not so much.” And I think that the terms of a lot of issues are skewed such that, if credit conditions become easier (i.e. spreads narrow), issuers will call. Heads they win, tails investors lose? Empirically, these things have been absolute crap for holders, with the “great, tax efficient dividend” on the ETF being reduced regularly.

Honest question from someone who isn’t in the asset class, but suspects Canadian retail investors are being sold something.

#26 Ryan Lewenza on 11.19.16 at 4:06 pm

David P “So you think interest rates are going up, meaning mortgage rates are going up, which should prick the housing bubble and cause a mayhem since this is the ONLY driver of the Canadian economy, yet you are bullish on TSX? Housing collapse should trigger a major recession here. Don’t you think?”

Like Garth I have real concerns about our housing market, and I see higher IRs popping this ridiculous bubble. But I don’t believe it will create “mayhem” and I see US growth and commodity prices still being the main drivers of our economy. I expect stronger US economic growth (why the Fed will hike rates) and commodity prices slowly recovering (I’m forecasting $60/bl oil next year) which should all be supportive of our economy, helping to offset the weakness from the housing market. Basically I see the housing market weakening in 2017 on higher IRs, but it not killing our economy, with other areas offsetting some of the hit from deflating home prices. – Ryan L

#27 Smokey the giant P... on 11.19.16 at 4:10 pm

hahaha, good use of the Croatian. Just finished the book. Fantastic work, thoroughly entertaining, every last page. Thank you!

Bond Junkie

#28 Scott in Gibsons on 11.19.16 at 4:25 pm

Before you all run out and make big bets on inflation consider the following. Asset values are already overinflated. Don’t assume Trump will merely add to this bubble. Draining the swamp will destabilize the current system. Trump’s strategy may be to reduce and reallocate. No telling at this point which way that swings the needle.

#29 Ryan Lewenza on 11.19.16 at 4:26 pm

Mark “I personally have lots of trouble with the suggestion that stocks, particularly the suggested S&P500, is an inflation hedge. If you look at periods of rising inflation, such as the 1960s and 1970s, the stock market, at least in the United States, went nowhere.”

I believe US stocks go in secular cycles lasting 13-15 years. Your correct that the S&P 500 did nothing in the 1960s and 1970s in part due to the very high inflation and interest rates. But I believe the main reason the S&P 500 did nothing was due to the amazing returns in the decade earlier. I believe we started the next secular bull cycle in 2013 when the S&P 500 broke above its all-time highs of 1550. As such I see a great decade for US stock returns. Inflation and IRs will rise in 2017, but remain low from a historical perspective, allowing this current bull market to continue. Down the road, possibly in 2018 when the Fed is farther into its rate tightening cycle is when we could see a pullback/recession. But we’ll try to adjust ahead of this and be ready for the next recovery, as the secular bull cycle goes for another 10 years. With respect to the TSX, yes it should do well in an inflationary environment (it’s why copper is breaking out), but we need to address the oversupply in oil first. If we do this, and oil breaks above resistance in the low $50s, then I think the TSX could do better relative to the US. We have a dynamic and tactical approach as we adjust our weightings among the different geographies based on our outlook. – Ryan L

#30 Ryan Lewenza on 11.19.16 at 4:37 pm

Contrary Canadian “Ryan, is there a reason you prefer CPD over ZPR?”

CPD also has some perpetual holdings so its more diversified. But ZPR is a good pref ETF and we could consider switching CPD for ZPR, but we’re not there yet. – Ryan L

#31 Ryan Lewenza on 11.19.16 at 4:42 pm

JSS “Ryan, with higher interest rates being forecasted with a trump presidency, is there danger of collapse of any Canadian banks? Reason I’m asking is that I’m slightly overweight in Canadian banks, and don’t feel like selling because of the dividends. There was some talk earlier this week of a worst case scenario with chance of collapse of a “major financial institution”

Banks do better in a rising interest rate environment as their net interest margins improve. Banks look fine despite our cautious outlook on Canadian housing. See my blog post Don’t Fear the Banks on September 10th, for my outlook on the Canadian banks. I took a lot of slack on that one, but I stick by my long-term bullish outlook on the Canadian banks. – Ryan L

#32 InvestorsFriend on 11.19.16 at 4:44 pm

Real Return Bonds

#6 conan on 11.19.16 at 1:41 pm said:

If you think interest rates are going to go up then Real Return bonds are portfolio killers
“an increase of one percentage point in yield would send the price of the 10-year RRB tumbling about 9 per cent.”

Imagine what the same one percent increase in yield would do to a 25 year RRB.

************************************
Agreed, the market yields on Real Return Bonds can increase independently of other rates in the market.

The market yield on a real return reflects supply and demand for those bonds and reflects the market REAL return over and above inflation.

With the market yield on long-term real return bonds at 0.39%, they could fall a lot in capital value from now to maturity, though they will mature at par.

They do not protect you from all changes in interest rates. They are designed to protect you from changes in CPI not changes in the market yield for real returns.

#33 Ryan Lewenza on 11.19.16 at 4:47 pm

ROTFL “About Canadian prefs, and CPD in particular: Do you have a theory as to why they’re a good deal? My data says that since 2007-10-25, they’ve returned a total of 8.17% or 0.87% per year, assuming all dividends reinvested.”

Part of our bullish call on CPD is due to the weak returns over the last few years. CPD and the Canadian pref market did poorly last year on low oil prices and BoC rate cuts. That created good value in our opinion. But the other reason why we like CPD despite the poor returns so far is that we believe we’ve hit the low in interest rates and they will slowly grind higher. If correct, prefs, particularly fixed resets will recover nicely providing capital appreciation on top of the 5% yields. – Ryan L

#34 mike from mtl on 11.19.16 at 4:59 pm

Why do that when you can just get an ETF of short bonds like VSB? Much better yield and less volatile.

Also as Garth is against this, but why not have some portion of fixed income in GIC? Seriously if you’re not planning on cashing out the whole portfolio why worry about potentially losing 5-15% equity in bonds or preferreds? Yes they’re illiquid but bonds are not the only kind of ‘fixed’ investment.

Wasn’t the whole point of bonds to be the base and stable part of a balanced breakfast?.. I mean portfolio.

#35 Context on 11.19.16 at 5:13 pm

Sir Lew where have you been with “as I believe history will show”. History has come and gone as its old news about the cyber war that took place on election day with vote flipping and voting machines shutting down from coast to coast. What about the hack dumps of thousands of emails? Surely you must know that WikiLeaks was the middleman in play making those dumps for a third party.

#36 Mark on 11.19.16 at 5:21 pm

“So you think interest rates are going up, meaning mortgage rates are going up, which should prick the housing bubble and cause a mayhem since this is the ONLY driver of the Canadian economy, yet you are bullish on TSX? Housing collapse should trigger a major recession here. Don’t you think?”

Yes there will be a recession as the 25% of GDP relating to Canada’s housing sector will be probably halved. However, the banks are positioned to benefit from declining housing prices due to spread expansion. The Bank of Canada will likely cut policy rates to zero (and even go negative) to fight the recession, keeping the banks’ funding costs low. Most of the housing construction/supply sector is privately or foreign-held, so losses associated with such contraction in GDP will largely fall onto those firms. If you look at the TSX60, for instance (ie: XIU), there is minimal retail exposure. Almost no exposure to RE. And plenty (ie: 40%) exposure to the banks which are positioned to benefit from a housing crash.

Stocks are heavily under-owned in Canada (Garth routinely tells us that 80%+ of TFSA’s are entirely in cash or fixed income/GICs/bonds). And as the delusion of housing being a sustainable retirement asset (whether through ownership of an outsized principal residence, or ownership of rentals) shattered, those with money to invest will be looking elsewhere. So you could see P/E multiple expansion just on that fact alone. A 7% TSX after-tax, earnings yield (with long-term growth at roughly the rate of nominal GDP growth) is awfully attractive when 30-year GoC T-Bonds are barely even paying 2% these days! After-tax to boot!

Other factors supporting a rise of the TSX includes a near zero-ing of capex, which means that operating cashflows will mostly be re-invested into dividends and share buybacks. TSX-listed non-financial firms have some of the lowest leverage in decades at this point, and there’s plenty of room for more debt issuance for buybacks.

Last but not least, if you look at the TSX non-financials, most of the market, by capitalization, is in sectors which require large amounts of capital investment (mines, pipelines, O&G, etc.). If interest rates are higher, the hurdle rates to competitors trying to make competing investment tend to be higher. Hence, higher rates act as a sort of ‘moat’ around more competition, and diminished competition usually means higher prices/earnings. Hence, the TSX tends to act very well as a inflation hedge — solidly outperforming the Dow/S&P500 during the 1970s for such reason.

#37 Mark on 11.19.16 at 5:31 pm

“Banks do better in a rising interest rate environment as their net interest margins improve. “

Careful Ryan. The banks, if their asset base is in long-term investments (ie: US-style 30-year mortgages), can suffer enormously in a rising rate environment. Canadian banks, in particular, run duration matched, so they can benefit from higher rates. Providing asset values don’t collapse with higher rates, increasing competition to lend against a smaller pool of collateral (and compressing spreads). But US banks, with their heavy investment in long-term loans, will be absolutely and utterly decimated with higher long-term rates. Not only will competitive pressures increase on account of falling asset values, but the values of the long-term investments on their books will fall as well. With higher funding costs at the short end of the curve which the Fed may very well not be able to suppress if inflation is rising.

Similar logic can apply to the insurers who will suffer poor investment returns in a rising rate environment due to bond market losses. And will suffer a decline in the notional amount of business they can underwrite on account of rising discounting of assets (and incomes in the case of life insurance). Rules of thumb, without examining the underlying business and incorporating some reasonable macro assumptions, can be quite dangerous.

#38 ANON on 11.19.16 at 5:40 pm

In a word….inflation.

*cough*big*cough*D*cough*
Sorry, flu season… basically agree with the article, and want to add that there were also news of interest rates on mortgages rising (probably a similar of inflation, leading to rate hikes, and ever inflated prices, except in housing). Which means, people who could have gotten that 665K house will now get a 500k one (or two), and they will definitely be spending the difference. Now, with general inflation having bottomed and calling for hikes, in a virtuous circle, we’d better buy that something fast, before anyone else does. Makes perfect sense.

#39 GreyDog on 11.19.16 at 5:47 pm

I quake in my boots for all the Trump Chaos proposed for the next 4 years.

The one benefit of a Trump Presidency is GeorgeWBush will not be at the VERY bottom of the heap for most incompetent President.

Ivana wants to be Ambassador to Cech Republic, while Marla Mapples wants any place that speaks English, send Melania back to Yugoslavia?

I’m still shaking my head and not quite recovered.

#40 Tony on 11.19.16 at 6:01 pm

Re: #15 JSS on 11.19.16 at 2:33 pm

Heads and tails you both lose. Falling interest rates mean less bank profits and rising interest rates mean a housing crash and the total freezing of credit (in Canada) which will also decimate bank profits.

#41 GreyDog on 11.19.16 at 6:01 pm

Penny Henny; the reason for Gold to go up is because Trump will need so much of it to decorate the White House….come to think of it…name may be changed to Gold House.

He”ll make King Ludwig of Bavaria looks like he was on a budget while he was decking his crib out in gold.

#42 InvestorsFriend on 11.19.16 at 6:16 pm

Seriously?

#37 Mark on 11.19.16 at 5:31 pm starts his response:

“Careful Ryan”

****************************************
Seriously now. Ryan is a financial expert with credentials and uses charts and data to support his views.

Mark meanwhile lives to disagree with the world and almost never provides any data or evidence for his off the top of the head views.

Further, Mark has been calling for the TSX to outperform and the Canadian dollar to rise for at least three years now.

But Mark is lecturing Ryan here. Seriously dude. Get a grip.

#43 Victor V on 11.19.16 at 6:18 pm

http://www.theglobeandmail.com/globe-investor/funds-and-etfs/etfs/rob-carricks-etf-buyers-guide-vol-4-income-paying-etfs/article16743674/

For those interested, link above has info on CPD, ZPR and XPF.

#44 Spiltbongwater on 11.19.16 at 6:20 pm

All these supposed experts who said Trump would not win, can now predict accuratly how the future will play out? These FPs are like weather reporters, use alot of talk to justify their job, but are wrong about as often as they are right.

#45 rock beats paper on 11.19.16 at 6:20 pm

Ryan,
I congratulate you on your consistency. You seem to reflect the herd’ mentality perfectly.

First, the USD$ rise will restrain profits of S&P 500 companies and put downward pressure on domestic prices.

Moreover, fiscal policy will be ineffective while monetary conditions are tightening. These conditions are tightening dramatically with the surge in yields and the rise of the US $. Plus the FED itching to pull the trigger.

With 7 years of expansion there is no pent up demand for big ticket items, so auto sales are toast.

The lowering of taxes has a multipier effect, but the infrastructure build out (in what 2018, 2019) will crowd out private investment, just as the huge debt loads will keep growth low.

Trump and his policies are no panacea and Garth was correct to disparage him on most fronts pre-election.

#46 Pete on 11.19.16 at 6:30 pm

“his high unfavourable ratings with women and minorities”
——–
Just more BS from the bought and paid for owners of the main-stream media.
And be assured that the whining you hear about now is mainly confined to fringe groups who are being sought out and given the spotlight at this time.
Lots of us on here told you that he would win.

#47 RG on 11.19.16 at 6:31 pm

“One trouble with every inflationary creation of credit is that it acts like a delayed time bomb. There is an interval of indefinite and sometimes considerable length between the injection of the stimulant and the resulting speculation. Likewise, there is an interval of a similarly indefinite length of time between the injection of the remedial serum and the lowering of the speculative fever. Once the fever gets under way it generates its own toxics.” “The Memoirs of Herbert Hoover – The Great Depression 1929-1941”

As Exciting as the 1930s

http://creditbubblebulletin.blogspot.ca/2016/11/weekly-commentary-as-exciting-as-1930s.html

#48 inflate - inflate on 11.19.16 at 6:31 pm

Okay,,, hard assets like houses used to be the favored investment during times of inflation as the currency devalues the hard asset does not… Hard assets are houses not stocks and bonds… Where in the 60s it took $18K to buy a house,,, the 70s it took $80K,,, the 90s $200K and so on… As your currency devalues so too does stock as it’s $10 value becomes a $5 value unless the specific stock’s demand goes up which it must do first the keep up with inflation then to pass it a few points… Sorry but I don’t see what you see as described here as I’ve lived thru the inflationary 70s…

#49 Pete on 11.19.16 at 6:50 pm

4 TRT on 11.19.16 at 1:34 pm
They are going are going to inflate their way out.
————
They can’t inflate their way out. The debt, denominated in dollars can’t just be inflated away. The ‘dollars’ are just a fungible proxy representing the value of the man hours worked producing the goods that were bought through debt expansion. Don’t think for a minute that China or anywhere else will just accept what would essentially be a 10 Trillion Dollar bank note printed up out of thin air by the FED as payment. The purchasing power of that money would be so diminished as to be almost worthless. They will demand payment with something that honestly represents all of those man-hours worked. See how well inflating the currency worked out for Zimbabwe. And before someone says, “Yeah but that’s Zimbabwe”, it isn’t different here. A debt-based paper currency will always return to it’s intrinsic value = NOTHING. We are presently at the end of the life-cycle of our currencies. Only collapse awaits us, Donald or no Donald.

#50 1984 on 11.19.16 at 6:53 pm

TRT on 11.19.16 at 1:34 pm
Check my predictions the last 6 years. Bang on!

They are going are going to inflate their way out. Canada will not follow the USA in raising rates. They will sacrifice the Loonie for sake of housing. Poloz is tied at the hip with Gov/Corps (Arms distance?? Haha). The Big 5/other Oligopolies run Canada. And T2 is a puppet to them. Can’t think for himself and running around to sign free trade deals like an uniformed idiothe.

______________________________________

We have had inflation to the point it was hyper inflation. Now the TPTB are staying we are going to get inflation when the reality is they are going to give us deflation. It’s 1984 where inflation is deflation and vis versa . Interest rates up and assets are going down which means housing will be falling hard. Happy housing crash everyone!

#51 Smoking Man on 11.19.16 at 7:00 pm

#27 Smokey the giant P… on 11.19.16 at 4:10 pm
hahaha, good use of the Croatian. Just finished the book. Fantastic work, thoroughly entertaining, every last page. Thank you!

Bond Junkie
……..

Thanks man. Your the first one who caught that hiden joke.
Appreciate you taking the time to read it.

#52 That Nick on 11.19.16 at 7:16 pm

Wouldn’t you say that’s strong correlation between inflation and equities? Maybe the inflationary president will save the new equity bubble, but maybe not by much considering the apparent variance that you present?

#53 Former Fool on 11.19.16 at 7:16 pm

Ryan, what’s happened with XPF.TO in the last month? Thought XPF and other preferreds should rise with the expected interest rate hikes. Please educate me as to what I’m missing. Thanks.

#54 What Democracy!? Hillary massively WON the popular vote!! This will not stand!!! on 11.19.16 at 7:17 pm

Hillary blew Donald away by some 2 million votes!!!!!!

Probably more, as the vote counts are still coming in.

http://heavy.com/news/2016/11/clinton-vs-trump-popular-vote-2016-margin-lead-latest-update-results-2012-2008-2000-hillary-gore-obama-electoral-college/

This is the most undemocratic voting result in global history. Talk about a rigged system!!!!

As evidenced by protests that have merely ebbed a little this week, immense turmoil is coming to a boil in America.

Inflation may be there if Trump is president. But he won’t be, for long, or at all.

Uprisings, revolution and assassinations are much more likely in the near future.

Contrarians would be well advised to consider foreign currencies and gold.

This will hit the fan and be HUGE, to quote Donald.

#55 Self Directed on 11.19.16 at 7:19 pm

“Corporate bonds typically outperform in a rising interest rate environment as credit spreads (the difference between corporate and government bond yields) tighten on the back of an improving economy.” – Ryan

Ryan, would that include XCB (CDN Corp. Bond ETF)? Garth recommended to include Corporate Bonds, but XCB has been in a free fall lately… or did he mean buy US Corp Bonds? I have both XCB and VSB… both are taking a beating.

#56 WalMark of Sadkatoon on 11.19.16 at 7:23 pm

#9 Penny Henny on 11.19.16 at 1:50 pm
With inflation going up wouldn’t we normally see gold trending up too?

No. gold is useless.

http://www.forbes.com/sites/danielfisher/2013/08/08/gold-not-much-of-a-hedge-for-anything-unless-youre-a-centurion/#1418fc9d30d9

And 100 year old people don’t care about gold

#57 Self Directed on 11.19.16 at 7:27 pm

“We continue to hold the iShares Canadian Preferred Share ETF (CPD-T) for clients with its 72% weighting to fixed resets.” – Ryan

I picked ZPR over CPD on purpose because of its rate resets… Are they both about the same? They have roughly same market cap.

I wanted to sell it this week and buy it back cheaper, after watching it lose 3% since Monday. But it looks like the bleeding has stopped… will stay the course.

#58 Smoking Man on 11.19.16 at 7:29 pm

Altho it looks like the fed might spike. Just came across a Steve Bannon interview. He’s Trumps version of what Butts is to T2

Bannon’s vision: an “entirely new political movement”, one which drives the conservatives crazy. As to how monetary policy will coexist with fiscal stimulus, Bannon has a simple explanation: he plans to “rebuild everything” courtesy of negative interest rates and cheap debt throughout the world.

#59 Context on 11.19.16 at 7:31 pm

#33 Sir Lew:- His logic is sound as the resets will adjust over time and the outcome should be profitable.

#60 Mark on 11.19.16 at 7:31 pm

“Falling interest rates mean less bank profits”

We’ve had falling interest rates for the past 35 years. Did bank profits fall or rise over the past 35 years? Are banks and insurers not some of the wealthiest, most highly compensating firms in the world at this point?

The falling rate environment has plumped up assets and bank profits quite nicely. Gross margins at the banks have trended towards infinity as they were able to borrow at very little cost, and lend for a positive return. Margins with low/zero rates have exploded as investing in practically anything with a positive yield could earn positive cashflow against a zero cost of funding. And capital gains on long-term investments were significant.

FIRE tends to do bad in the rising rate, not the falling rate environment. It takes some very special positioning to increase profits in a rising rate environment in the FIRE sector. Especially with falling asset values and spread compression that is inherent to the rising long-term rate environment.

#61 Mark on 11.19.16 at 7:37 pm

“Okay,,, hard assets like houses used to be the favored investment during times of inflation as the currency devalues the hard asset does not…”

Housing responds well to inflation, but this has to be contrasted with how debt responds to inflation. As the housing market is significantly priced off of the amount of debt against it, with replacement costs of contemporary housing being a mere fraction, adjusting for depreciation, of current market prices.

So you basically have 2 competing forces at work in a rising rate, rising inflation environment. Higher replacement costs, but also higher financing costs. Higher replacement costs try to drive up housing prices by restraining supply. Higher financing costs drive down housing prices by restraining demand.

When housing was priced at 2-3X average income, in times like the 1970s, these factors created an equilibrium which was able to shift prices up significantly. However, contemporary housing prices are so severely out of whack relative to replacement costs and relative to demand, that housing can fall quite significantly until inflation eventually starts exerting a meaningful force on prices through higher replacement costs.

IOW, current investors in housing have already incorporated strong inflation into their pricing. While the credit market has not. As these dueling expectations end up coupling and converging, the result is most likely going to be significantly higher finance costs and significantly lower prices. Destroying a lot of, if not all “unearned equity” that was showered onto homeowners 2000-2013 for merely owning RE.

#62 Mark on 11.19.16 at 7:41 pm

“Seriously now. Ryan is a financial expert with credentials and uses charts and data to support his views.”

What do you disagree with me on? Is it not well known that fixed rate debt loses value with higher interest rates? Is it not well known that asset values systemically fall with higher interest rates? Is it not well known that central banks can’t really suppress funding costs sustainable and meaningfully in a higher inflation environment?

If you can’t synthesize those facts, and come to a conclusion that bank profitability doesn’t increase — then I think you have no business criticizing me, whether indirectly or indirectly.

#63 conan on 11.19.16 at 7:45 pm

Looks like winter starts tomorrow for most of Eastern Ontario. Fun while it lasted.

https://www.youtube.com/watch?v=iFWz1v7Pobs

#64 not 1st on 11.19.16 at 7:49 pm

Ryan/Doug/Garth;

I highly suggest the three of you get down out of scotia tower and rent an old truck and drive across the entire mid section of the USA.

Then you will understand it all…..

#65 VS on 11.19.16 at 7:50 pm

Hi Ryan; looking how SP500, USD/CAD and Gold behaved after Dec 16 2015 rate hike, what is your thoughts on their movement (short and long term) after the rate hike in this December? Should we assume that this will mimic (at least short term)? Thank you

#66 not 1st on 11.19.16 at 7:52 pm

Garth said equities were a hedge against deflation now they are a hedge against inflation too.

Seems like there is nothing they cant do. Can even make you a sandwhich.

#67 conan on 11.19.16 at 7:54 pm

RE: #55 Self Directed on 11.19.16 at 7:19 pm

I am up 13% ytd on corporate bonds.

#68 VS on 11.19.16 at 7:54 pm

#33 Ryan Lewenza on 11.19.16 at 4:47 pm

Part of our bullish call on CPD is due to the weak returns over the last few years. CPD and the Canadian pref market did poorly last year on low oil prices and BoC rate cuts. That created good value in our opinion. But the other reason why we like CPD despite the poor returns so far is that we believe we’ve hit the low in interest rates and they will slowly grind higher. If correct, prefs, particularly fixed resets will recover nicely providing capital appreciation on top of the 5% yields. – Ryan L
————————-
Hi Ryan; can you suggest good prefs for my USD account? Thanks

#69 Smoking Man on 11.19.16 at 7:58 pm

American Serbs took down Hillary. Good prosective.

http://russia-insider.com/en/politics/reason-hillary-clinton-lost-what-happened-wisconsin-michigan-pennsylvania/ri17640

#70 Setting the Record Straight on 11.19.16 at 8:05 pm

You predicted a Clinton victory because you are afflicted by the Canadian disease—smug, complacent, contented, middlebrow!

#71 Shortymac on 11.19.16 at 8:08 pm

So in your opinion, will the US dollar drop against the Canadian?

I ask because I’m an US expat with a 17k in an old ROTH index fund and 9k in student loans. I’m struggling to pay off the 9k due to bouts of illness, contract work, and the difference between the US and CAD dollar.

Should I ask for another deferment and hope for a more reasonable difference or just pay it off with the ROTH?

#72 InvestorsFriend on 11.19.16 at 8:25 pm

Residential Construction and GDP

Some interesting information released by Statistics Canada on Friday.

The volume of Canada’s non-residential and residential net capital stock increased 2.2% from 2014. In value, the Canadian net capital stock reached $4.5 trillion in 2015, with non-residential capital stock accounting for 52.8% and residential capital stock representing the remaining 47.2%.

http://www.statcan.gc.ca/daily-quotidien/161118/dq161118b-eng.htm

****************************
So residential buildings constitute almost half the invested capital in the country. Is that a lot? I don’t know. Well like I said before, what is the definition of a City but a huge pile of houses and apartments?

Some call residential property “unproductive”. But it provides one of the three main necessities of life, that being shelter. That’s important in Canada. In most of Canada you would freeze to death without shelter. Gotta have it.

Interestingly, Alberta accounts for 31% of the non-residential capital stock in the country but only 16% of GDP.

I think it is pretty clear that there has been a vast over-investment in the oil sands in Alberta. Much of that may be written off. The recent levels of capital spending in Alberta will not return for many many years. It was unsustainable.

So far, the population of Alberta is still growing so the jobs picture is not all that terrible. Alberta is not looking at empty houses. House prices may not sink much.

#73 InvestorsFriend on 11.19.16 at 8:38 pm

Corporate Bond Investing

#67 conan on 11.19.16 at 7:54 pm bragged:

RE: #55 Self Directed on 11.19.16 at 7:19 pm
I am up 13% ytd on corporate bonds.

***************************************
Good show, congratulations. How do you invest in them? I’m with TD Direct and they have a pretty small selection and also charge fat buy/ sell spreads.

Did you make that return because of high yields or due to capital gains as the company became more credit worthy?

And I don’t think TD Direct offers much if anything in the way of IPOs. So basically I have not had much access to Corporate bonds.

Example, a ten year Telus bond yields just 3.1% to maturity. That is of little interest when I can get that on a dividend stock with high probability of capital gain over ten years. TD is showing very little over 4% and you have to go over 20 years to get that and go to somewhat weaker companies too. No thanks.

#74 InvestorsFriend on 11.19.16 at 8:45 pm

#62 Mark on 11.19.16 at 7:41 pm asked me:

“Seriously now. Ryan is a financial expert with credentials and uses charts and data to support his views.”

What do you disagree with me on?

*****************************************
Your incredible and uncalled for sense of importance and expertise implied in your opening of “Careful Ryan” which was insulting.

You strike me as the blind attempting to lead the sighted in this case.

#75 For those about to flop... on 11.19.16 at 9:07 pm

I was just watching King 5 news and I saw this story about a new style of bridge construction meant to be earthquake resistant.

It’s in Seattle.

I think the plan is to fill the columns with coffee to make them more flexible…

M42BC

http://www.king5.com/news/local/first-of-a-kind-bridge-to-survive-earthquakes/351906635

#76 mike from mtl on 11.19.16 at 9:08 pm

#57 Self Directed on 11.19.16 at 7:27 pm

I picked ZPR over CPD on purpose because of its rate resets… Are they both about the same? They have roughly same market cap.
=====================================

Same. ZPR is full of rate resets but cheaper than CPD and slightly less yield. However if investing now it’s the better deal as far as price/payout is concerned. PFF is also a nice US$ when sheltered in an RRSP.

Until a 2014 either would have been a fine stable choice if it were not for the idiotic rate cuts that killed pretty much everything.

#77 Deplorable Dude on 11.19.16 at 9:09 pm

#69 Smoking Man “American Serbs took down Hillary. Good prospectuve”

Actually I thought it was all the Amish votes in PA that did it ;-). Good luck with the Left explaining how the ‘Salt of the earth’ Amish are actually racist bigotted mysogismists who voted for Trump.

#54 “Hillary blew Trump away by 2 million votes”…

Delete the 3M illegals who voted in Ca….then get back to me.

Trump is putting together a fine ‘lobby free’ cabinet who will drain the swamp…..

#78 Tallulah on 11.19.16 at 9:25 pm

The world economic engine was purposefully suppressed by the globalists who sought to reset a balance of expectations. In order to have people in the west understand that privelage was bad that same prosperity needed to be taken away from them. The Liberal experiment of gutting the maritimes was the model. Keep people poor and dependant on welfare and they’re far more malleable and misdirected. That is the model that has been imposed on developed countries around the world. Just like in Russia and China the suppression of people’s natural desire to better themselves won out, even in the face of armed threat by thier own governments. Wynne in Ontario is using Mayor Moonbeams gambit of apologizing profusely for her ‘mistakes’. Don’t be misled, the fact is that seniors will continue to starve while her crony windmill operators sail a way with billions. Why Ontario isn’t screaming “lock her up” is a mystery only known by psychologists who study victim behaviour.

#79 Ronaldo on 11.19.16 at 9:33 pm

#61 Mark

”When housing was priced at 2-3X average income, in times like the 1970s”
——————————————————-

And that was on a single income not family income as today.

#80 Warren- the lagging indicator on 11.19.16 at 9:51 pm

I now understand the need for appointed rather than elected people in higher government positions. It seems that the government has to fight off both the banks and provincial politicians from undermining the intent of their policies when they darn well know the well-being of the country and families are at risk. Of course, the whole CMHC thing just blows my mind though.

#81 JIZ on 11.19.16 at 9:53 pm

Inflation will show up in commodities which will cause cad$ to rise, boc will have to raise rates, they can delay a bit, but no way will they kill the cad$ to protect the debt zombies. usd$ is peaking now expect to trend lower for next few yrs. Long Stocks, Short Treasuries.

#82 conan on 11.19.16 at 9:58 pm

RE: #73 InvestorsFriend on 11.19.16 at 8:38 pm

No I am not trying to brag. I have talked about this before.
I do not believe that ETF corporate bond anything are that good.

1) you are buying all of market, but that is not guaranteed as substitutions are allowed.

All of market means bad with the good

2) Managed funds are buying all of the good paper. That leaves more bad paper for ETF’s

3) The ultimate manager of your ETF are the same folks who bundled worthless paper and sold it to unsuspecting commercial investors during the 2008 financial crisis.

Here is a tip, emerging market ETF corporate bond anything is crapola. Get out of it now.

#83 ROTFL on 11.19.16 at 10:37 pm

#33 Ryan Lewenza
Thank you for your reply.

#84 palebird on 11.19.16 at 10:39 pm

“#54 What Democracy!? Hillary massively WON the popular vote!! This will not stand!!! on 11.19.16 at 7:17 pm
Hillary blew Donald away by some 2 million votes!!!!!!

Probably more, as the vote counts are still coming in.”

Do you have any idea how and why the electoral system works the way it does in the USA? It is over, get used to it.

“#64 Ryan/Doug/Garth;

I highly suggest the three of you get down out of scotia tower and rent an old truck and drive across the entire mid section of the USA.

Then you will understand it all…..”

Yes I think they need a little enlightenment. Getting out of Ontario would help immensely. Nothing against Ontario but how you can stomach the crap that is bestowed upon you by politicians such as McGuinty and Wynne is beyond belief. People such as #54 should also take that drive. Maybe they will begin to appreciate it is not all about CA or NYC. It is a huge, diverse country. Try experiencing it first hand.

#85 Smoking Man on 11.19.16 at 10:46 pm

The exodus from twitter is accelerating.

Short twitter. They are commuting suiside.

One of my palls. James Woods has told twitter to take a hike. Need a new Friends of Abe club started.

#86 #26 Ryan Lewenza Under Estimate... on 11.19.16 at 11:01 pm

I think you are underestimating how bad RE will be in terms of wealth loss to Canadians and its impact on the economy.

A quick calculation: 1.72 MM homes in BC x $200K avg price loss/home and you get about $343 Billion (StatsCan 2011 Census data: detached, condo, townhouses). % drop – 20%

ON has 4.87 MM home. Same $200K drop you get $974 Billion.

Total = $1.3 Trillion in RE wealth loss within the year, probably within the next 6 months. Compare that number to the CDN GDP forecast of USD $1.55 Trillion or CDN $2.1 Trillion.

When people feel “less wealthy” and from the above they will, they will spend less. People looking to buy up in RE will not be able to, as a chunk of their home equity will be gone. Boomers looking to retire from a RE nest egg will have lost a sizable amount of it, thus they will spend less. HELOC Boomer’s personal ATM account greatly reduced and with higher line of credit rates coming.

Resource sectors, nearly all, are stagnant. Oil demand is not forecast to equal supply until 3rd Qtr 2017, maybe then and for 1 Qtr you will get your $60/bbl price, unlikely before.

RE and related sectors are 20% of Cdn GDP. Resource sector is about 8.5% of GDP. There are other GDP sectors showing negative growth. 2016 GDP forecast lower than 2015 USD 1.83 Trillion.

So about 30% of GDP is going to shrink or stay stagnant. Overall GDP $300 billion less in 2016. Canadians, probably in the next 6 months, are going to lose about $1.3 Trillion in net worth.

Let alone for most of the year we have had sputtering jobs growth and many of those are part time McJobs.

And your saying that a few hundred basis points is what is really going to tip the boat?

See the forest for the trees.

It is looking grim with no good news on the horizon, none. T2’s $80 billion Keynsian stimulus effect on Canadian GDP will be like urinating in the Pacific Ocean and then measuring how much the water level went up by…it is all smoke & mirror positive psychological and way short of the $300 billion shortfall for this year, let alone making up the RE wealth loss which itself will take 10 years to recover.

bsant

#87 WalMark of Sadkatoon on 11.19.16 at 11:01 pm

Lol ppl still crying about popular vote

Like it matters lol

Salty sore losers lol

#88 WalMark of Sadkatoon on 11.19.16 at 11:03 pm

Your incredible and uncalled for sense of importance and expertise implied in your opening of “Careful Ryan” which was insulting.

A documented money loser for at least half a decade. He’s just trying to rebuild his confidence

#89 left right left right left right on 11.19.16 at 11:17 pm

actually Ryan, stocks do quite poorly with higher inflation. they like low or falling inflation. try and get yourself a chart going back at least 50-60 years.

and if you believe in secular bull/bear markets, try and at least count them correctly. this one started in March 2009, not 2013.

#90 Doug t on 11.19.16 at 11:20 pm

What do you think the next 12 months ahead looks like?
There is a separation happening in the U.S. and it will be interesting times ahead. It’s going to be ugly – because the norm has been turned on its head. Everything you have come to expect to happen has been crushed. There is a current of change around the globe – expect the unexpected moving forward. Get ready people and prepare.

RATM

#91 Smoking Man on 11.20.16 at 12:38 am

#87 WalMark of Sadkatoon on 11.19.16 at 11:01 pm
Lol ppl still crying about popular vote

Like it matters lol

Salty sore losers lol
….
You’re dealing with entire generations that have been deliberately inplanted with a virus of mind control. Well thought out and planned. They think it was the internet that took Hillary down.

Nope. It was MSM constant attacks on Trump and his push back that fired up the deplorables.

The entire libreal platform has been built to hate men and espacialy men that are white. Downright openly Racism and Sexism.

The Liberal mind control minions can’t even see the obviousness of the hypocrisy. Get em young in school and you can get away with murder.

It’s halarious to an outside observer.

#92 Smoking Man on 11.20.16 at 1:03 am

https://www.google.com/trends/explore?date=today%203-m&q=Pizzagate

#Pizza gate. Wow. Do your oun resarch.

#93 Ponzius Pilatus on 11.20.16 at 1:21 am

#64 not 1st on 11.19.16 at 7:49 pm
Ryan/Doug/Garth;

I highly suggest the three of you get down out of scotia tower and rent an old truck and drive across the entire mid section of the USA.

Then you will understand it all…..
———————–
Could not agree more.
But instead of a truck, take your Harleys and go Easy Rider style.
Guys, life’s too short to stare at charts all day.

#94 Smoking Man on 11.20.16 at 1:36 am

Now you know why I had to hand the white house to Trump.

Nictonites like our privacy

https://www.google.ca/url?sa=t&source=web&rct=j&url=/amp/www.inquisitr.com/3289920/obama-will-make-full-ufo-and-alien-disclosure-in-2016-bookmakers-slash-the-odds-as-expectations-rise-video/amp/&ved=0ahUKEwj5lp7g27bQAhXJ54MKHUGBAMoQFggqMAE&usg=AFQjCNHBpUtKR-5DIfcOmEImYj54hDgdaQ&sig2=dsOewcG_wt3NINtfpl4ZoA

#95 DON on 11.20.16 at 1:44 am

#44 Spiltbongwater on 11.19.16 at 6:20 pm

All these supposed experts who said Trump would not win, can now predict accuratly how the future will play out? These FPs are like weather reporters, use alot of talk to justify their job, but are wrong about as often as they are right.
#45 rock beats paper on 11.19.16 at 6:20 pm

Ryan,
I congratulate you on your consistency. You seem to reflect the herd’ mentality perfectly.

First, the USD$ rise will restrain profits of S&P 500 companies and put downward pressure on domestic prices.

Moreover, fiscal policy will be ineffective while monetary conditions are tightening. These conditions are tightening dramatically with the surge in yields and the rise of the US $. Plus the FED itching to pull the trigger.

With 7 years of expansion there is no pent up demand for big ticket items, so auto sales are toast.

The lowering of taxes has a multipier effect, but the infrastructure build out (in what 2018, 2019) will crowd out private investment, just as the huge debt loads will keep growth low.

Trump and his policies are no panacea and Garth was correct to disparage him on most fronts pre-election.
****************
It does not add up for me either – and the Trump win did not surprise me either…ear to the ground.

Last year the experts said oil would be back up above $60 a barrel by the end of 2016. Survey SAYS! Nope.

With the high levels of debt both housing and credit who will be contributing to create an environment where higher corporate profits will be realized.

I think we are in for a slow grind down and slow grind up much like the 80s and 90s. The next leap in technology is not yet hear. More oil found in Texas. House prices already to high, people living on the streets.

Then again a new fade may come into being. I predict base jumping without the parachute. Higher divorce rate…increased crime (already happening – more bank robberies). Liquor sales will rise and not for good reasons. Let the herd lead the way. Just hang back just in case they get spooked and change direction.

Housing in slowly becoming a work topic of the past.

#96 The real Kip on 11.20.16 at 2:32 am

“We see”, “We think”, “We believe”. What do you think Ryan? Does Garth allow anyone there to have an opinion without going to commitee?

Tell ya what I think. I think you need to step out from under Garth’s skirt and get your own opinion.

#97 Gordon White on 11.20.16 at 2:38 am

Question for Ryan the Planner. Can you elucidate? What is the max income level to target for tax planning while drawing down an RRSP for a retire and income flexible 62 year old hoping to liquidate the RRSP before the dreaded 71 Rule comes into effect and thus save a huge tax bite.

#98 When Will They Raise Rates? on 11.20.16 at 2:43 am

By Guest Blogger Ryan Lewenza

Well we got that one wrong!

In recent blog posts and in our weekly client conference calls, we predicted that Clinton would be victorious over Trump..
——————–

No shi!t. I and others told you the polls were oversampling dems and that Trump would win. It was obvious to anyone who looked at the methodology of the “polls” that they were rigged to show Clinton ahead. You could have easily verified this yourself.

The fact that you didn’t see it coming is due to your own bias; Your belief that the narrative the corporate media propagates is actually true.

You’re wrong about your portfolio allocations also IMO… But since this comment won’t be published, I’ll save my explanation. Hint: If enacted, Trump’s policies would essentially require QE4. How would that change your planning?

#99 When Will They Raise Rates? on 11.20.16 at 3:20 am

Let’s look at this rationally. The US gov will have to borrow a LOT more $ to account for the following:

$1 Trillion dollars in infrastructure spending + current budget deficit + tax cuts + increased interest expense on existing debt (due to rising rates).

Who’s gonna buy those bonds to finance all of the above? What will happen to bond yields with a torrent of supply hitting the bond market?

And do you think the Fed will allow rates to skyrocket… and in the process destroy the real estate bubble that they’ve spent 8 years trying to re-inflate… and the banks who will experience increasing defaults due to rising rates… and the derivatives…etc..

You think the Fed will alow that clusterfuck? Or will they monetize the debt?

Either way, the currency will be devalued. Or am I missing something?

#100 drydock on 11.20.16 at 3:22 am

58 Smoking Man on 11.19.16 at 7:29 pm

Altho it looks like the fed might spike. Just came across a Steve Bannon interview. He’s Trumps version of what Butts is to T2

Bannon’s vision: an “entirely new political movement”, one which drives the conservatives crazy. As to how monetary policy will coexist with fiscal stimulus, Bannon has a simple explanation: he plans to “rebuild everything” courtesy of negative interest rates and cheap debt throughout the world.

…………………………………………………….

Yup,
You got it.
TRUMP 2020.

#101 Freedom First on 11.20.16 at 3:44 am

Yes. Been busy the last two weeks. Had an epiphany. Not Posting much. Too busy.

Stock Markets are at or near record prices. Central Banks are/have all ramped up their buying of equities. I’ve been busy since the election-balancing down and taking more profits/ I made in Canada/U.S. markets since the Great Recession. Paring down, but keeping everything.

Cut back on emerging markets too. Did not sell anything from the Oil ETF and Gas ETF I acted separately with though. I know they will both explode in time due to all the unseen world supply/demand issues/volatility that will for sure surface. Count on it. Only earn approx 2.7% yield on oil, but between 9&10% yield on Nat Gas. I have a 40 year horizon. And unhuman like foresight, (especially concerning RE) plus the Freedom to take advantage of it. Which I had have and will continue to have, over decades before and the future decades to come. Sitting in the birdseat right now. With eagle vision.

I am way high overweight in cash today. My record of predicting market dumps coming is unbelievable. Includes all markets. Re too. With cash available, unbelievable deals have always surfaced. For guys like me, the payoffs have been orgasmic. 7-10% growth per year is nice, but 25-50% returns following “unforeseen events” really really make a difference”. Blood in the Street Returns are my favorite. I have 0 greed and 0 fear, but I do have 100% patience. The Bullseyes are always there for the taking. Smokey knows.

I find it incredible that people are not seeing what I am seeing. Even though that is normal in my life..

#102 Future Expatriate on 11.20.16 at 3:59 am

Three words getting more and more likely each day as Trump does even more stupid things than anyone else could even dream of in one day:

ELECTORAL COLLEGE OVERTURN

The prudent would hold on economic advice. At least until Dec 19th.

#103 Shakyamoney on 11.20.16 at 6:20 am

XRB started out the year at $25 , its a coont hair over $25 today, plus a miserly 1.7 yield . I get yet 6.4%

#104 CJBob on 11.20.16 at 7:12 am

#6 conan on 11.19.16 at 1:41 pm
…Imagine what the same one percent increase in yield would do to a 25 year RRB.

http://www.theglobeandmail.com/globe-investor/investor-education/the-hidden-pitfalls-of-real-return-bonds/article4263112/
______________
Thanks for the link to the article, I ladder 5 year GIC’s for a small portion of my portfolio. It’s simple, low risk and lets me sleep at night. I’ll keep doing that.

#105 Bytor the Snow Dog on 11.20.16 at 8:03 am

@Tallulah-

Wynne “apologizing” is a cynical political move. It was done in order for her to take the political stench with her as she steps down before the next election and the Liberals appoint a new Chosen One.

Don’t fall for it.

#106 Bytor the Snow Dog on 11.20.16 at 8:17 am

To those thinking the ELECTORAL COLLEGE will revolt…. dream on.

They have not “officially” counted MI for either candidate as of yet. If Trump takes MI he will have 306 total EC votes, which means that 37 faithless electors in pro Trump states will have to flip their votes to Clinton. In the unlikely event that MI goes to Hilar(it)y, that count would be 21.

Won’t happen.

#107 DoomandGloomer on 11.20.16 at 9:28 am

Everyone needs to take a time out and just relax.

I suggest that all those that post comments on this blog use their downtime to learn at least how to spell and punctuate properly.

Really, for a bunch of braggadocious self proclaimed political, real estate, and financial gurus who think they’re smarter than Garth, Doug, and Ryan, you ought to first learn the English language.

This does not apply to Smoking Man. He is writing in an altogether different language and dialect that is quasi-understandable to those who read and speak English.

That is all.

#108 att on 11.20.16 at 9:43 am

Its amazing how you are all stumbling over each other to hear a prediction by one of these crystal ball types. Don’t forget if portfolio managers could predict the future they would be retired long ago!

I could have retired many times over, but instead have chosen to assist people and put up with nimrods like you. — Garth

#109 Ryan Lewenza on 11.20.16 at 9:46 am

VSS “Hi Ryan; can you suggest good prefs for my USD account?”

You should look at PFF or XPF. PFF is 100% invested in US dollar prefs while XPF invest in a mix of CAD and US prefs. We own XPF for clients.

#110 Ryan Lewenza on 11.20.16 at 9:49 am

Mike from Mtl “Why do that when you can just get an ETF of short bonds like VSB? Much better yield and less volatile.”

We own and like VSB as well. That’s what I was referring to when I mentioned having shorter dated bonds. It has a cheap MER, decent yield and lower duration. We like it but we like corporate and high yield bonds more as we believe they outperform in a rising interest rate environment. – Ryan L

#111 Peter on 11.20.16 at 9:53 am

sp…
that lead to this historic outcome.
Should be …
led

#112 Discouraged investor on 11.20.16 at 9:56 am

“So there you have it. We believe inflation has bottomed and we see it rising further if Trump is able to get some of his economic policies passed through Congress. Are you positioned correctly for this potential outcome? And are you ready for “Trump Whitehouse”?”

Just a couple weeks ago you said I should be positioned correctly for a “Clinton Whitehouse”. It was supposed to be a sure thing, like 95% sure. I have lost 50% of my money since the election after taking that advice!!! That was money I was saving for the last 5 years, to buy a house after real estate crash!

If I take this latest advice, will I get this money back, or do I risk losing another 50%?

Please help, I am getting desperate watching my dreams shattered and hard-earned money evaporating before my eyes.

#113 Ryan Lewenza on 11.20.16 at 9:57 am

Former Fool “Ryan, what’s happened with XPF.TO in the last month? Thought XPF and other preferreds should rise with the expected interest rate hikes. Please educate me as to what I’m missing. Thanks.”

Good question. XPF has roughly 50% exposure to US preferred shares. US preferreds are mostly perpetual securities which pay a set dividend and are very sensitive to rising interest rates. The US preferred share market does not have fixed resets which reset their dividends every 5 years and do well when interest rates rise. So it is due to the composition differences between the Canadian and US pref market. The CAD pref market has a large weighting to fixed resets and therefore will outperform when interest rates rise. – Ryan L

#114 Context on 11.20.16 at 9:58 am

#104 CJBob:- Laddering GIC’s at low interest rates gives you no liquidity and you are losing money all the time from a tax point of view.

#115 What Democracy!? Hillary massively WON the popular vote!! This will not stand!!! on 11.20.16 at 10:07 am

#102 Future Expatriate

ELECTORAL COLLEGE OVERTURN

The prudent would hold on economic advice. At least until Dec 19th.
————————————————————–

Wise words, my friend, wise words.

And it HAS happened before.

Could you even begin to imagine the revolt that would be already here if Trump had won the “popular vote” but lost the electoral college?

Except Trump might have only won the vote by thousands.

Clinton has won it, by MILLIONS.

What would happen if it was the other way around, for all the dumbasses here saying stuff like:

“Do you have any idea how and why the electoral system works the way it does in the USA? It is over, get used to it.”

“Lol ppl still crying about popular vote

Like it matters lol

Salty sore losers lol”

and….

“Delete the 3M illegals who voted in Ca….then get back to me.

Trump is putting together a fine ‘lobby free’ cabinet who will drain the swamp…..”

(So stupid and wrong – illegals cannot vote, and Trump’s cabinet is already looking like the most toxic group of status quo insiders ever!)

I have good connections with Democrat voters and operatives in the USA. Believe me, an uprising is brewing, made stronger with every stupid thing Trump says or does (which is pretty much daily).

Shit, meet Fan.

Stay away from US investments. And don’t visit there either.

This will be epic.

#116 Ronaldo on 11.20.16 at 10:08 am

#101 Freedom First

”I find it incredible that people are not seeing what I am seeing. Even though that is normal in my life..”
———————————————————-
It is normal for people who view things from “outside the box”. Do opposite of what the herd does or is told to do and things will work out just fine. Amazing sometimes how those the closest to the action fail to see what is really happening. Like the Trump win for example. That was so obvious it’s laughable.

#117 Ryan Lewenza on 11.20.16 at 10:14 am

Discouraged Investor “Just a couple weeks ago you said I should be positioned correctly for a “Clinton Whitehouse”. It was supposed to be a sure thing, like 95% sure. I have lost 50% of my money since the election after taking that advice!!! That was money I was saving for the last 5 years, to buy a house after real estate crash!”

Yes I predicted a Clinton win but as I stated in this week’s blog I was wrong. Many of you blog dogs are pretty hilarious, because if I/we make a wrong call we’re idiots and shouldn’t be managing money and making recommendations. Let me spare you the suspense, we make mistakes all the times, as do most investors. This business is not about being right 100% since its never going to happen. It’s about being more right than your wrong and learning from your mistakes to be better in the future. Now I never said 95% odds, but I did say it was a good chance she would win barring a major announcement/event like a wikileaks release. But then there was a HUGE announcement with the FBI reopening the case. I think this did her in and caused her to lose. But even if that is not the case, all you Trump supporters make it sound like it was a blowout and she never stood a chance. She won the popular vote and in states like Florida, Michigan and other swing states, the vote was very close. In some cases just of thousands of votes. So it was a Trump win but it was far from a blowout. Take a victory lap for the call, but show some humility! And what are you talking about that you lost 50% of your money?? The equity markets are up since the Trump victory. Sorry you can’t play the card that since we were wrong about Trump that you now lost 50% of your money. It doesn’t work that way. But other than that I loved your post! – Ryan L

#118 Context on 11.20.16 at 10:16 am

All indications from numerous sources indicated a Hillary win and what occurred was a surprise to all. Hillary was stealing the election and had the world elite behind her to continue an agenda as she was their puppet. What was unknown that a deal was hatched with the Russians to steal the election back from her as both groups faced off using technology during the voting on election day and before dumping hacked emails.

#119 jess on 11.20.16 at 10:33 am

7 Deplorable Dude on 11.19.16 at 9:09 pm and the swamp measurement quotients

inversions and federal subsidies – export import bank
Who will be uncle sam’s favourites and will they be measured by “ethics quotients” ;^)
e.g. “Richard Davis, chairman and chief executive officer for U.S. Bancorp. … Congratulations to everyone at U.S. Bank for being recognized as a World’s Most Ethical Company.”

e.g. Eaton reincorporated in ireland based in ohio -has received $32 million in grants and allocated tax credits as well as $7 million in loans and loan guarantees from the Export-Import Bank and other agencies.

Boeing, with $64 billion in assistance
General Electric, with $836 million, mostly
from the Energy and Defense Departments

privatized border services?

Immigration Detention Centres factsheet
Thu, 15/09/2016 – 13:50

https://corporatewatch.org/news/2016/sep/13/home-office-quietly-advertises-%C2%A380-million-privatisation-calais-border-security

#120 traderJim on 11.20.16 at 10:52 am

Just saw this headline by the bbc: How to avoid being hit by an asteroid.

http://www.bbc.co.uk/programmes/p04fwwsx

Scientists say we are guaranteed to have a collision with an asteroid, unless we do something about it.

Sounds an awful lot like the climate change debate, doesn’t it?

Yes, I am sure that in the next million years we will collide with an asteroid, just as I think it’s likely that the climate is changing.

Now, should we spend trillions of dollars, destroy our economies trying to prevent this event?

That’s the real question. The answer in the asteroid case is obvious.

In regards to climate change, I say we have plenty of time to wait for the right, affordable technology to come along.

Despite all the doomers and fear mongerers the world will not end next week.

I have heard the same tune for 50 years: we’re running out of food, we’re running out of water, we’re overpopulated, blah blah blah.

Some idiots even think the earth’s resources are finite.

Hard to believe these people didn’t learn about the sun in grade 3 like I did. Or maybe they just forgot about it.

#121 conan on 11.20.16 at 10:53 am

The next 4 weeks are going to be fascinating.

1) Does the electoral college vote for Hillary?
2) Is the Turkish army ever going to leave Iraq?
3) What does Canada do with their E/W pipelines?
4) Is Key Stone DOA…..
5) Is the Trump admin going to follow Trudeau’s lead and set up an investment bank to handle the infrastructure rebuild? Or, will he plaster the Nation with Action Plan signs instead?

This list could go on and on….. everything is hyper news now.

#122 jess on 11.20.16 at 11:14 am

1970’s china entered cheap wage ——->sept 8 2008 lehman

http://www.spiegel.de/international/world/globalization-failures-have-world-at-a-turning-point-a-1121515.html

#123 Ace Goodheart on 11.20.16 at 11:14 am

I guess as bonds continue to get trashed this is going to cause interest rates to rise regardless of what the Fed does. Bond prices and interest rates always move in opposite directions.

I know this is going to trash privately owned residential real estate. It would appear the Americans were looking for someone other than a Socialist to “trust” and they have their man. They are a very interesting lot of people. They are connected to value creation and the bottom line in a way no other country is. However they completely ignore sensitivities that the rest of us are unable to live without.

At any rate without making a political statement (which I don’t like doing) and keeping this economic focussed, if the USA’s population has decided it’s time to trust their government again and get back to work, yes that will be inflationary.

The weird, inherently racist and sexist, religiously bigoted singularity that has morphed over several hundred years out of what was supposed to be the Constitution of a free, religiously neutral, all accepting Country where everyone has value regardless of outward appearance, is running on all twelve cylinders again.

What ugly beast will be born out of the whole shmozzle at this time is not clear. But what appears to be clear is the machine is functioning again.

Heavily indebted households should take note of this. Money will not be cheap for much longer……

#124 Henry Morgan on 11.20.16 at 11:38 am

Garth, you guys ever thought about being PodCasters?

http://www.noagendashow.com

We create a weekly podcast. Here. — Garth

#125 TurnerNation on 11.20.16 at 11:41 am

It’s over for Canada.

Predict massive layoffs due to unpaid/underpaid Millennial interns desperate for student debt relief (ask any hospitality or server worker, they’ll have a worthless degree and stumping for tips), Temp. Foreign Workers, automation and robotics, and good ole off shoring.

Let’s face it, maybe 25% of workers are useless: White collars wasting time on conference calls, extended coffee breaks and meetings, and watching YouTube at work.

Blue collars screwing the pooch, shoddy work and over billing. Step aside, a TFW will do that work for 1/2 price.

The days of buying a house that goes Uppa Up and using it as a cash machine for fancy cars and vacations?

You bought the sht bung for $xx,xxx, sold for $xxx,xxx and landed a Mini McMansion for $x,xxx,xxx with xxx,xxx mortgage debt. Now youse can’t leave.

Nothing makes me madder than laziness. And I see lots of it. Do not tarry in the wine Blog Dogs.

#126 Context on 11.20.16 at 11:51 am

The First Lady and her son will not be moving to DC, but will stay in NYC, as her WH will become the Trump Tower. She will visit the WH in DC from time to time for special appearances.

#127 Yuus bin Haad on 11.20.16 at 11:52 am

Of course, these are adjustments we’ve been making to our portfolios for some time now; haven’t we?

#128 Bytor the Snow Dog on 11.20.16 at 12:19 pm

@115 Disgruntled Feminist Hillary Troll-

Please provide a citation of where/when “this has happened before”.

#129 Smoking Man on 11.20.16 at 12:20 pm

#117 Ryan Lewenza on 11.20.16 at 10:14 am
Discouraged Investor “Just a couple weeks ago you said I should be positioned correctly for a “Clinton Whitehouse”. It was supposed to be a sure thing, like 95% sure. I have lost 50% of my money since the election after taking that advice!!! That was money I was saving for the last 5 years, to buy a house after real estate crash!….
……

I think discouraged invester is full of shit. How could you lose 50% when the markets haven’t moved enough to do that kind of damage. But then again the bugger might have sold USDMXN betting on a hillory win, then he would have been crushed.
But that’s high stakes gambling, not for amateurs.

I think you got Trolled Ryan.

#130 Bytor the Snow Dog on 11.20.16 at 12:20 pm

Not gonna wait for the troll:

http://heavy.com/news/2016/11/faithless-electors-electoral-college-ever-changed-flipped-vote-history-hillary-clinton-switch-from-trump-petition-when-was-last-time/

Took all of two minutes.

#131 Polls R Phake on 11.20.16 at 12:27 pm

Wrong about Trump? That is just one of dozens of things. Rates. Global warming. Main stream media. The list goes on. That is why Trump was elected. All the phake predictions will be proven wrong by the Donald.

Time to drain the swamp.

#132 conan on 11.20.16 at 12:27 pm

RE: #112 Discouraged investor on 11.20.16 at 9:56 am

Prank post alert, or Discouraged Investor took half his savings and placed a large bet with an offshore bookie.

Nothing has lost half of its value since “Trumpster the Great” won POTUS.

https://www.youtube.com/watch?v=gecX6ofQJHc

#133 Nodebt on 11.20.16 at 12:36 pm

Hey Ryan, quite obviously u don’t read ur bosses posts meaning Garth, he said trump would never win period, well he was wrong, smoking man called it, go read previous posts so you know what’s getting said on this blog rookie!

#134 traderJim on 11.20.16 at 12:44 pm

I love the people still whining about the popular vote.

So, Hillary had the brilliant judgement to win a game that was not being played.

They don’t even realize how funny that is.

Love the smell of desperation in the mo(u)rning.

#135 traderJim on 11.20.16 at 12:48 pm

Apparently Hillary saw ‘Hamilton’ 3 times.

She didn’t bother to visit Wisconsin once.

Guess not enough popular votes there.

Please let the electoral college deniers keep bawling, this is just so much fun.

#136 ROTFL on 11.20.16 at 12:54 pm

What kind of fantasy world do people have to be living in to think that Clinton could emerge victorious from the electoral college? That loyal members of some states’ Republican party leadership (because that’s who the electoral college members from Republican states are) would vote for four years of Clinton?

If you really want fantasies, a careful reading of the rules shows that the Electors are not required to vote for any of the actual candidates in the election — so there could be a conspiracy afoot to elect a compromise president who wasn’t on the ballot. And frankly, that’s a lot more likely than dozens of Republican Electors voting for Clinton. Do I hear any names?

#137 Context on 11.20.16 at 1:11 pm

Sir Lew’s essay held some very important advice in regards to preferred shares so pay attention to what he offered. He documented the ones he liked and gave the reasons why the resets in place might work well over time. I believe he is correct as this might become a good investment while prices are down a bit. Now if he could only answer the question about what energy industry looks good going forward with about 60% growth compounded annually over the last decade and costs are falling like Niagara Falls stimulating more growth into the future.

#138 David McDonald on 11.20.16 at 1:12 pm

#118 Ryan Lewenza
I had a lot of cash on hand 5 days before the election but based on the probability of a Clinton win I bought equities. It was the right call for the wrong reason!

I recall Ryan’s post early in the fall recommending to stay invested. I thought I knew better and feared another tamper tantrum. At least I took the advice before the Trump bump so it all worked out.

Thanks for the predictions on the Canadian dollar and on equities for 2017. I don’t do exactly what you and Garth say but I certainly pay close attention!

#139 Former Fool on 11.20.16 at 1:22 pm

#113 Ryan Lewenza on 11.20.16 at 9:57 am

Thank You Ryan for your reply. Seems like expected interest rate hikes are getting priced in. I’ll be hanging on; it pays 5% and I don’t need the money in the near future, so why not enjoy the dividends?

#112 Discouraged investor on 11.20.16 at 9:56 am

I have no idea how you managed to lose half your money on the outcome of the election. I was logged into my trading account the next morning expecting deals and was sorely disappointed when markets were up.

#140 isuckless on 11.20.16 at 1:23 pm

To SM:
“Thanks man. Your the first one who caught that hiden joke.
Appreciate you taking the time to read it.”
Maybe you should look at my post days ago
BTW it is not Croatian

#141 isuckless on 11.20.16 at 1:26 pm

Ryan, why do you think the oil will go up?
I believe that it is not in US interest as it will help Russia a lot
US is OK with the low oil prices and the world demand is not really growing

#142 DON on 11.20.16 at 1:47 pm

“Take a victory lap for the call, but show some humility!”

Ah humility, I mentioned that a while back and remember receiving a respectable response. Something about humility being associated with loosing. It sunk in at the time. There’s a little bit a truth in everything, just have to keep an open mind.

Trump winning represents a upheaval. We will all suffer the consequences if any arise. We have our own worries on the horizon, hope I am proven wrong.

#143 CL on 11.20.16 at 1:53 pm

I wouldn’t worry too much about people in general, Ryan. I’ve been investing for almost 2.5 decades. Through the major crashes and I am still here. I’m relatively good at it and am right ~70-75% in my portfolio…this year has been one of my best ever for returns believe it or not. One thing I have learned is that human ego cannot be overcome.

I once was on the path to becoming a money manager and in finance. Had an open offer for TDW but after analyzing it, while I love the true investing, research, and analytics that come with it, I could never stand to babysit humans and their cash. It wouldn’t be about managing money, it would be about babysitting people and telling them everything will be ok day after day. Not something for me.

I don’t know how you guys do it really.

I

#144 crowdedelevatorfartz on 11.20.16 at 2:07 pm

@#112 Discouraged Investor
“I have lost 50% of my money since the election after taking that advice!!!”
*******************************************
My balanced and diversified portfolio has gone up.

Perhaps you should stop “investing” and let someone qualified do it for a 1% fee.

#145 Context on 11.20.16 at 2:55 pm

This election stuff reminds me of two brothers fighting over the same woman. Its all about control and power with one political party against the other as both want to become winners. A story was related to me about a young woman from Woodstock years ago. Believe it or not, as she invited two young man over to the family home one night for a movie date just to watch them fist fight over her. Now that was mean of her.

#146 RIL (Angered) on 11.20.16 at 3:23 pm

The gloves are coming off.

The subjugation, suppression and exploitation of the West by the East, and Ottawa in particular, continues. An unprecedented and joyous Le Coupe Grey between Calgary and Edmonton squelched by the monied and heartless banking and railroad barons in the 200 year old continued attack by an industrial heartland against an agrarian and resource rich hinterland. Just when Albertans needed a lift in their step, the colonialists in Ontario pound us.

Retribution is coming. We will grace this Dominion with another Prime Minister from the former Athabasca Territory. Mark my words. A house divided cannot stand.

#147 Smoking Man on 11.20.16 at 4:01 pm

#139 isuckless on 11.20.16 at 1:23 pm
To SM:
“Thanks man. Your the first one who caught that hiden joke.
Appreciate you taking the time to read it.”
Maybe you should look at my post days ago
BTW it is not Croatian

Just saw it.
Your correct, you are First. And yes it’s Serbian.
I never liked that name or lived up to it. Lol.
Got other double enders and easter eggs.

#148 Blacksheep on 11.20.16 at 4:17 pm

# 102, Future Expatriate

# 115, “What Democracy!? Hillary massively WON the popular vote!! This will not stand!!!”
——————————————–
Fact: The US of A is constitutionally a Republic. The election of the PotUS is not based on the popular democratic vote of the citizens. Period. The outcome of this election confirms this fact.

OK……now you realize you would need to change the constitution, removing the systems ability to ‘override’ the will of the people just to ‘place’ her, in power?

Good luck with that.

She-Who-Must-Not-Be-Named, will be enthusiastically tossed under the bus before the system relinquishes control of future PotUS elections.

#149 Doug in London on 11.20.16 at 4:50 pm

So, weren’t the “experts” predicting that if the Democrats won the election they would be the ones to ramp up spending, create a bigger deficit, and bring on inflation more so than if the Republicans won? What happened?

#150 espressobob on 11.20.16 at 5:12 pm

Trust me Ryan, your last few posts are killer! Thanks.

#151 espressobob on 11.20.16 at 5:22 pm

Investing ain’t for the sheepish but more for the predatory who have a clue.

If you read this blog long enough it sinks in.

#152 Ryan Lewenza on 11.20.16 at 5:31 pm

isuckless “Ryan, why do you think the oil will go up?
I believe that it is not in US interest as it will help Russia a lot. US is OK with the low oil prices and the world demand is not really growing”

It’s all about supply and demand. First, demand does continue to rise, now at roughly 94 mln barrels per day, up from 92 mln in 2015. Second, supply has started to decline in US (down almost a mln barrels from the peak of 9.6 mln), and I think the OPEC meeting at the end of month will be a big event, as I think they will cut production. So we’re slowly getting more into balance. I see this continuing next year and prices rebounding. But I’m not calling for a huge jump, just a slow grind higher up to $60. – Ryan L

#153 Coopoiler on 11.20.16 at 5:36 pm

What’s the deal with all these people in Toronto protesting Trumps election. Do they not know they are living in another country. Do they not have anything better to do? Like going to an open house for instance!

#154 crowdedelevatorfartz on 11.20.16 at 6:56 pm

@#144 Context
“she invited two young man over to the family home one night for a movie date just to watch them fist fight over her…..”
*******************************************
Ahh but was she worth it?

#155 Future Expatriate on 11.21.16 at 1:06 am

#115 Thanks for the encouragement. Same thing I’m hearing.

#128 Class, bud. Real class.

#156 computer tips on 11.21.16 at 11:27 am

Thanks for the specific ETF recommendations. Now I know what I’m buying myself for Christmas

#157 Bytor the Snow Dog on 11.21.16 at 1:26 pm

@154 Future Expat-

I noticed you didn’t address the actual issue at hand.

Oh, and have you learned nothing? Shaming the unshameable doesn’t work. We aren’t listening to your ilk any more.