Change

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Last week RBC jacked mortgage rates, following an earlier move by TD. The latest increase was about a third of a point (people taking loans with longer ams will pay a premium). It doesn’t seem like a big deal, but probably is. This increase, as you know, does not stem from any jump by the Bank of Canada, and flies up the nose of all the macroeconomists who come here to tell us the cost of money can never increase, because nobody can pay more.

Here’s why this increases has legs:

bond-yield-modified

That’s a chart of the yield on a 5-year Government of Canada bond, and depicts what happened last week. Bonds become a lot less valuable than they’d been the week before, with prices selling off and yields surging. It’s not that bonds are suddenly trashy and cheap, like Survivor: Millennials vs Gen X. It’s more a return to normal, as bonds had become so inflated in value with inflation scant and economies limp. Yields – and interest rates in general – had descended into the unknown. In 300 years of record-keeping, for example, the Bank of England had never seen a day when money was so cheap to borrow as, oh, two weeks ago.

The US election changed a lot, fast. Now markets expect 4-5% growth in America (double that of the past year), big government spending, elephantine deficits, higher costs thanks to new tariffs and trade walls and (as Ryan detailed here on the weekend) inflation. As this blog explained, that will help portfolio components like equities, real return bonds and preferreds. It will deflate assets like government bonds with long durations.

The biggest impact, however, could be on residential real estate. That’s because the mortgage increases we’ve just seen, reflecting the five-year bond yield, are but the first moves. The expectation now is that the Fed will restart the normalization process with an increase on December 14th, then at least two more during 2017. The central bankers will do that in order to keep US inflation within the narrow band of acceptability they’ve established. A December increase was already in the cards before November 8th. Now it’s a certainty. The bond market’s reflecting that, and adjusting in advance.

So, uncertainty fills the air. If the new gang in Washington steps on the gas the way they promised, the greatest bull bond market in history will continue to unravel. US public spending will balloon, the debt ceiling will be raised, America may get a credit downgrade, the greenback will rise, trade skirmishes will break out (especially with China) and meanwhile Canada may see a painful rewriting of NAFTA.

It seems likely, then, that by April our dollar will be lower, commodity prices under pressure, the trade deficit rising and mortgage rates plumper, even if the Bank of Canada sits on its thumbs. By then we should know what impact the MST has had on the market, and how many first-time buyers were told to go back to their parents’ basements.

In short, how could you not think the bottom in rates is behind us? If our central bank did cut its key marker next year, while the Fed was raising and Trump hyperventilating, it would be a sign of monetary desperation. Canada would be pooched. And good luck selling your $1,888,888 Richmond McMansion to a Chinese dude, let alone a sucker from Etobicoke.

Of course, things could get better, too. The US economy might bloat like your nephew after that unfortunate bee sting on the nude beach, Keystone could get built, our exports south could explode and Canadian corporate profits plump. Inflation, too. It would be a recipe for higher interest and mortgage rates.

In short, when you live next to the biggest economy in the world, which has just decided to spend whatever it takes to be great again, well, put your coat on. We’re going, too.

This could end badly if the deplorables start erecting tariff walls between us – a sputtering economy and higher rates. It could end a lot better if common sense prevails – a better economy and higher rates. But it will not end smoothly.

The advice? Stick with the balanced and globally diversified portfolio, as Ryan told you. Returns are likely to rise. Lock in your mortgage rate, because money is still (for a while) ridiculously cheap. Delay buying any real estate, because there’s no valid scenario under which rates fall. And if most of your net worth is in residential real estate, you’d best change that. This coming spring market will long be remembered.

156 comments ↓

#1 Randy on 11.20.16 at 5:54 pm

Hope and Change….Not all Change is good

#2 This Week in Money on 11.20.16 at 5:56 pm

Ross Kay – Canadian Real Estate Market turning down.
Hilliard MacBeth – After the Bubble Bursts.
on This Week in Money:
http://www.howestreet.com/2016/11/19/this-week-in-money-79/

#3 Johnny D on 11.20.16 at 6:00 pm

This will surely end bad for Canada. We have a government that just wants to increase taxes (carbon tax) and allow hardline environmentalists to dictate the economy here. The Trudeau economic action plan consists of two things… higher taxes and weed.

#4 Randy on 11.20.16 at 6:08 pm

Don’t worry Garth, We have Justin Trudeau negotiating with Donald Trump on NAFTA.

#5 Question on 11.20.16 at 6:10 pm

In your opinion was is the maximum % of bonds to hold in a ” balanced portfolio”. 40% seems high

Never said that. — Garth

#6 Linda on 11.20.16 at 6:18 pm

So, because we live right beside the USA we can expect (some) inflation. However, the world may be going back to the dark ages, with each country erecting a real or virtual wall between them & the rest of the world. In the era of the Internet however I’m not sure how much of a wall can exist & even if one is built, how effective it could be. Thus, what about all those world economies that are facing deflation or stagflation? How much will that keep the overall outlook down? What about demographics (world wide aging) & how might that affect the macroeconomic picture? The former black & white world the USA is trying to re-enact is more like shades of (older) grey…… White Power might come to mean the rise of the wrinklies (with white hair, natch) as more & more of us reach our ‘golden’ years.

#7 betamax on 11.20.16 at 6:19 pm

Garth: “If the new gang in Washington steps on the gas the way they promised…”

That’s the billion dollar question. I’m not convinced…

#8 Mark on 11.20.16 at 6:21 pm

“It seems likely, then, that by April our dollar will be lower, commodity prices under pressure”

A bit of a problem here. If US GDP growth is really going to be that hot, then Canadian commodities should be in pretty good shape (along with the CAD$ which is set to rise anyways as deflation becomes more of an issue in Canada due to RE continuing to fall). If not, well, then you don’t get your 4-5% GDP growth in the US. The whole matter of debts and deficits run by Trump is likely overstated — Trump has made it clear that he’s going to extract huge savings through a reduction in spending in government itself (ie: reigning in salaries, rightsizing/rationalizing the role of government, etc.).

As far as NAFTA goes, not a single word uttered by Trump or Pence on the campaign trail of any perceived abuse of the trade relationship between Canada and the USA (Mexico is a different story!). Remember that NAFTA superceded the 1988 FTA, so if Mexico is booted our or demoted, its entirely plausible that Canada and the USA carry on as usual. If Trump can achieve a revival in the rustbelt, that would be profoundly good for Canada as there is significant economic overlap between the ‘rustbelt’ areas and Canada on account of their geographic proximity.

#9 Andrew Woburn on 11.20.16 at 6:24 pm

A clear eyed view of the future from Australia

“…..Canadian border residents say it’s not uncommon to see dozens of sociology professors, liberal arts majors, global-warming activists, and green energy proponents crossing their fields at night. ‘I went out to milk the cows the other day, and there was a Hollywood producer huddled in the barn,’ said southern Manitoba farmer Red Greenfield, whose acreage borders North Dakota. ‘He was cold, exhausted and hungry, and begged me for a latte and some free-range chicken. When I said I didn’t have any, he left….’

“In an effort to stop the illegal aliens, Greenfield erected higher fences, but the liberals scaled them. He then installed loudspeakers that blared Rush Limbaugh across the fields, but they just stuck their fingers in their ears and kept coming. Officials are particularly concerned about smugglers who meet liberals just south of the border, pack them into electric cars, and drive them across the border, where they are simply left to fend for themselves after the battery dies. ‘A lot of these people are not prepared for our rugged conditions,’ a Mountie in Alberta said. ‘I found one carload without a single bottle of Perrier water, or any gemelli with shrimp and arugula. All they had was a nice little Napa Valley cabernet and some kale chips’. When liberals are caught, they’re sent back across the border, often wailing that they fear persecution from Trump high-hairers.”

http://quadrant.org.au/opinion/qed/2016/11/panic-lefts-giggle-factory/

#10 OttawaMike on 11.20.16 at 6:27 pm

Read Donald’s plan.
Infrastructure spending through 3P. Public private partnerships. Just like all the buildings with his name on that he doesn’t own.

Invest in who you think will get into these profitable contracts.

#11 Question on 11.20.16 at 6:29 pm

With regard to a balanced portfolio.Is a portfolio consisting of 40% bonds too high.

That has not been my recommendation. Balanced portfolio weightings have been spelled out here frequently. — Garth

#12 sprang to spring on 11.20.16 at 6:38 pm

Here in Vancouver the spring market will appear early January. ..as nobody wants to panic until the xmas bills arrive in the mail. My realtor brother has 7 listings ready to market but not until Jan. Gonna be fun to see the disorderly exodus

#13 Unbelievable on 11.20.16 at 6:41 pm

“good luck selling your $1,888,888 Richmond McMansion to a Chinese dude”

Wow that’s so racist Garth. Why you gotta be like that?

#14 Andrew Woburn on 11.20.16 at 6:47 pm

Angela Merkel has confirmed she is running for a fourth term. While this should be comforting, I can’t help wondering what will happen if she doesn’t make it. I would almost certainly jeopardize the Euro if not the EU itself.

#15 Jonathan on 11.20.16 at 6:56 pm

“And good luck selling your $1,888,888 Richmond McMansion to a Chinese dude”

LOL the 8’s made my day, thanks Garth.

Happy Sunday all!

p.s. this weekend in the deplorable Vancouver area, people are tripping over each other paying up to $50 for a $5 SIM card so they can sign up for a $38/month cell phone plan… if we’re all so stinkin’ rich then why are we doing this? You tell me

#16 Context on 11.20.16 at 7:05 pm

It sure happens fast as yields go up, then bond prices fall that is similar to Newton’s 3rd Law. Thus when mortgage rates go up, then Real Estate prices fall. The best of luck to the fence sitters who didn’t sell their junk condos. You had better buy a life jacket instead as many of you are going underwater.

#17 SimplyPut7 on 11.20.16 at 7:06 pm

So what will happen when our provincial and federal governments, find out that anyone who got a mortgage in the greater Toronto and Vancouver areas in the last 3 years, can’t handle a 0.50% increase in mortgage rates.

#18 Isabel on 11.20.16 at 7:08 pm

DELETED

#19 Smoking Man on 11.20.16 at 7:09 pm

I dedicate this tune to tonight’s blog post title.
Bet Accordingly.

And yes I started early today.

https://youtu.be/n4RjJKxsamQ

#20 conan on 11.20.16 at 7:16 pm

Maybe I am on the wrong planet here, but ……..

Real Return bonds are government bonds and the average duration ( is 18 years.)

Do you think we will have inflation without a bank rate increase? What percentage of a portfolio should contain RRB IYHO?

I could see owning a tiny percentage of this asset (2-3%), but not enough for it to be worthy of mention in the same breath as you have stated with equities and preferreds.

Not getting your horniness on RRB.

Appropriate: 3%. — Garth

#21 Proud Ontario Liberal on 11.20.16 at 7:21 pm

Loonie will be > US$ 0.80 next year.

Real estate in Toronto is only going to increase higher and higher. There is only so much land in Toronto for over 200,000 people who call Toronto their new home. Without Toronto, the entire GDP of Canada will fall by over 75%, and the American economy will enter a recession.

#22 common sense on 11.20.16 at 7:25 pm

Great article as always..

#23 conan on 11.20.16 at 7:29 pm

RE#8 Mark on 11.20.16 at 6:21 pm

The Canadian auto union people are scared to death of Trumpster. The President of this union was on the radio the other day. He called Trump a ” dangerous clown that threatens their livelihood.”

Dangerous Clown is not a positive statement.

#24 soost on 11.20.16 at 7:34 pm

My mind is running wild with thoughts the under-equipped team of ‘leaders’ that will be tasked with getting Canada through this ; the most uncertain economic time in recent history. Justin vs Trump? This isn’t a charity boxing match!

#25 toronto1 on 11.20.16 at 7:43 pm

Posted this a few days ago, but seems relevant to this post as well. Look at the difference between a 50-100-160 basis point mortgage

lets look at the numbers, remember that this is after tax net income:

500K mortgage at 2.4%/25 =$2151

500K mortgage at 3.0%/25 = $2366 (+$151 from 2.4%

500K mortgage at 3.5%/25 =$2496 (+$345 from 2.4%

500K mortgage at 4.0%/25 = $2630 (+$479 from 2.4%

For GTA centric- I would add another: PLUS
$25/ month in increase in condo fees/year or maint for house upkeep=
$15/ month in increase in transportation (either insurance or public transit- TTC/GO etc..) /year=
$25 / month increase in property taxes/year
$20/ month in misc, phone/internet/banking fees/food etc..
total of $85 month

an increase of 2.4% -3.0% plus $85 = $200/month

an increase of 2.4% -3.5% plus $85 = $430/month

an increase of 2.4% -4.0% plus $85 = $564/month

No one is going to lose their home over $200-$400 a month, but that amount puts a big strain on finances. and that is on a 500K mortgage which wont get you a lot in Toronto.

BUT an increase of 1.6 basis points is $564 a month and thats where its gets interesting.

I dont know what the breaking point is but I would wager that anything plus $400 a month is going to start to cause a lot of problems for a lot of people.

#26 Context on 11.20.16 at 7:49 pm

I saw a condo listed for sale with a broker just 5 minutes away from the Go Station all updated but you need an appointment for viewing. The area looked ok so you tubed others in that nice building and inside was wonderful with taxes at $873.73. Its a 1+1 but the price made no sense so coded to find a 2 bedroom and must be so. I am sure something is missing as the neighbourhood looked fine because the subject property at 15 Torrance Road is listed for $175,000.

#27 falseprophet on 11.20.16 at 7:50 pm

Sorry for the soap box rant but-

As the economy weakens, its a good idea to take another hard look at what Garth seems to think is a ‘misguided’ foreigner tax (CDT) in Ontario. The last little while I have tracked stigmatized properties which are like feng shui kryptonite. They sit … and when they go they fetch lower prices!

Tracking completed sales to foreigners is only examines the tip of the iceburg – foreigners need only to participate in bidding wars to have an effect.

This is not a racist tax (I’m quarter Chinese). These foreigners include the many Americans buying up Yorkville. But lets be honest, Chinese money can be obtained on the backs of slave labour, lax environmental and health standards. Meanwhile local wage slaves commute for hours. Its just not fair. The Chinese view property as a more secure bank (foreign property moreso), so much so that punitive taxes have been employed in China. So metropolitan Chinese have begun to view less regulated parking spaces as bouillon. They are house horny and they are mobile!

#28 #13 on 11.20.16 at 7:53 pm

Because it’s true… Never mind the feng shui bullshit they label on homes

#29 InvestorsFriend on 11.20.16 at 8:04 pm

Carbon Taxes

#3 Johnny D on 11.20.16 at 6:00 pm said:
This will surely end bad for Canada. We have a government that just wants to increase taxes (carbon tax) and allow hardline environmentalists to dictate the economy here.

*************************************
I have always thought that if my energy consumption causes pollution or global warming then I should pay a price that reflects that cost. A fully compensatory cost.

So, A have no problem with paying a carbon tax.

It should not be imposed on energy producers since that makes Canadian producers less competitive.

The carbon tax should be imposed on energy consumption. I am all for it.

I believe it is coming to Alberta on January 1.

Meanwhile gasoline in Edmonton is around 82 cents per litre which includes already about 25 cents in taxes. Yet it is still cheap. The existing taxes contribute to the costs of the “free” roads. I have no issue with those taxes. There is room for a carbon tax.

#30 Wrk.dover on 11.20.16 at 8:05 pm

Is the carbon tax replacing an existing tax or is it more tax on what is left on the pie plate after the others come out? I am naive…

#31 VS on 11.20.16 at 8:05 pm

so if the bonds (most likely) gonna go lower from current levels, should we lower the exposure, then add? thankx

#32 crowdedelevatorfartz on 11.20.16 at 8:06 pm

@#13 Unbelievable
“Wow thats so racist….”
*******************************************

No.
‘888″ included the selling price has been a Realtor marketing ploy here for decades…….target marketing…..hardly racist
Grow up.

#33 Marius on 11.20.16 at 8:08 pm

The US economy always does better with democrats running the show for their Wall St. backers. Trump will run this thing like a Russian oligarch while enriching his friends and family and expanding the military / prison/ /industrial complex. The massive US wealth gap will become even greater and social upheaval will ensue.

On the other hand, Trump may just decide to use one (or more) of the thousands of nukes lying around. Stuff happens when a megalomaniac has the codes.

#34 InvestorsFriend on 11.20.16 at 8:08 pm

In Promises we Trust

And we can thank government for that

Trust that our persons and and our wealth will be safe from theft and fraud (law and order, enforcement of contracts) is at the very heart of our capitalist economy.

It is the government that enforces and ensures that trust.

Without government, capitalism simply cannot function.

All hail the government and do not begrudge the government its fair taxes, without which we would have no trust and no economy.

So there…

#35 ROCK BEATS PAPER on 11.20.16 at 8:11 pm

UTOPIA, stocks went up because of cheap money, low rates and deflation. Now the meme is that stocks go up because of inflation. TINA we love you.

#36 Lulu on 11.20.16 at 8:12 pm

With that all said and done from down south, our T2 infamous quote ” The budget will balance itself” Have a Lot of faith in him on that…..

I’m gonna go house hunting in the Willowdale area as my x’mas present, as T2 famous quote…. lol

#37 Reit's on 11.20.16 at 8:13 pm

Garth , decrease reit exposure?

Their yields should rise

#38 AJ on 11.20.16 at 8:14 pm

We just sold! So thankful. Thank you Garth (and regular commenters- here’s looking at you Smokey…)! We entered the market recently (2013) (school blah blah), and now have 2 little ones. We wanted mobility and felt like the music was going to stop soon. All our friends and neighbours think we’re nuts. But Warren Buffet said something like, “you never know whose swimming naked until the tide goes out…” Tide feels like it’s leaving and our little family is happy to rent and live simple. Thank you everyone! Heartfelt.

#39 falseprophet on 11.20.16 at 8:16 pm

#13 I mean stigmatized as in they have had people murdered in them, die in them, been grow ops etc.

#40 Ryebone on 11.20.16 at 8:18 pm

Garth’s portfolio seemed to be a 60/40.

40% fixed income was broken down like 10 being preferred, 10 being REIT, 10 corporate bonds, and 10 gov’t bonds.

Those numbers are the roughest approximation and I encourage anyone with better memory to correct me. I don’t recall if he had real return bonds in the mix and i have a hunch he did.

It’s a lot more to balance compared to those of us following the couch potato guide. 40% VAB and done.

#41 Metaxa on 11.20.16 at 8:31 pm

Story Time…gonna preach a bit so…your choice, skip or read.

Back in the day Scotty, the fishing apparatus, downrigger company, field tested a black box that you hooked to your weighted line and energized. The theory was you dialed in a voltage that attracted a certain species of salmon while repelling unwanted fish. You dialed it up or down, depending on what you were after…Springs, Coho, Sockeye.

Long story short (lol…me?) they couldn’t idiot proof it, you had to more or less constantly fiddle with it so they abandoned the project. I, however, was a field tester for them on this as I had a boat that was a bit famous locally for catching coho.

For some reason they forgot to collect my unit and so until a few years ago I had both it and a boat. I don’t mind fiddling so it worked for me. And it really worked. Limited out on coho? Dial it up a bit and start hauling in springs.

Which brings me to the crux of this story.

There are private fishing lodges and even private islands all over the place here. These are individually or corporate owned and are staffed year round and generally pretty first class,

A friend of mine is a guide for one of these outfits owned by a national drug store chain not owned by Galen Weston and from time to time he would need an extra hand and I often was called upon. My black box sure was a hit and these guys often clamored for my boat. I dislike meat fishing or freezer fishing but I swallowed my principles in order to hang with these folks.

After hours we would sit around the fire and drink, smoke cigars and shoot the breeze. These folks sure don’t talk about things in the same manner many posters here talk about things and these are very wealthy people. They don’t hire Garth, they have a Garth analogue on their staff.

They keep me around for some reason, I’ll be interested if there are any perceptible shifts in their world views this spring but I doubt it. Like me, they are only interested in others insofar as “do they have enough” and not interested in caustic, petty retribution or vindictive posturing.

Reading here over the past few weeks makes me sad.

Your outcome in life is in large part predicated on how you approach life and so I’d postulate that if your life isn’t running the way you’d like the first place to examine is real close to home.

Because life is good, people are great and things will be fine. Live accordingly as some here put it only they say invest accordingly…invest in yourself.

Thanks for once again indulging me.

#42 Porsche on 11.20.16 at 8:32 pm

60+ now but I remember as a little kid 5 or 6 years old playing with my dinky toys (little metal cars and trucks for a moister)

They always had the same writing on the bottom… Made in the USA

I didn’t know what that mean’t so I asked my dad… “Well son that’s a big country below us”

I replied… Country? What’s that? as I’m looking down at my feet? lol

Now you see.. Made in China

Funny how some little moment like that sticks in your memory forever.

#43 Smoking Man on 11.20.16 at 8:36 pm

A bit gone rightnow.

Next book, a preachers kid. A good kid with a great upbringing. Get a job as a rehab councler. He gets chones. Living on ensure losing weight fast. The doctors pills not working. A buddy suggests weed . He trys it. It works. No sympotoms. He’s cured.

Now he’s got to work everyday and tries to cure stoners while stoned.

I’m seeing it. Probably sell 30 copies like the last one. Who cares this shit is fun.

#44 MSM-Free Zone on 11.20.16 at 8:43 pm

“….On B.C.’s farmland, mega-mansions and speculators reap the rewards of lucrative tax breaks….”

“…Investors and speculators are taking prime agricultural land out of production – and sometimes erecting palatial mega-mansions on the landscape – as the B.C. government’s outdated tax system allows them to exploit incentives intended only for those who farm….”

“…Back in July, a B.C. numbered company linked to a Hong Kong firm registered in the Cayman Islands snapped up a piece of vacant farmland in suburban Maple Ridge for $6-million – 33 times what the government pegs its value at. Five years ago, the same land sold for just $15,200.

“…The company has Tony Cai, son of a politically connected billionaire from China, as its director, and this year will pay about $5,300 in property tax, which includes a standard 50-per-cent break on school levies. By contrast, the tax bill for a residential property in the same municipality with the same market value would be roughly $77,000….”

http://www.theglobeandmail.com/news/investigations/farmland-and-real-estate-in-british-columbia/article32923810/?service=mobile

#45 Wild Albertan Gonads on 11.20.16 at 8:45 pm

Way to go T2… front page coverage on breitbart!.. we are sooo screwed.

http://www.breitbart.com/news/asia-pacific-summit-closes-with-call-to-work-for-free-trade/

#46 Smoking Man on 11.20.16 at 8:47 pm

At a bar in port credit with Ashman tonight. He’s having an episode.

Parenting is not easy.

#47 TurnerNation on 11.20.16 at 8:51 pm

Agenda 21 at work – forcing people out of land/rural into concentrated cities? We’re supposed to be a wealthy First World Country – I mean we’re all paying 50-70+% of each dollar we make in income and consumption taxes. Robbed again.

http://www.cp24.com/news/parents-protest-slew-of-rural-school-closures-claim-funding-model-is-faulty-1.3168909

“Nicholas takes a 15-minute bus ride from home to Lively, and from there, he sometimes walks to work at a local grocery store after classes end.
If Lively is closed, playing sports and working after school may have to end, Rideout said. Nicholas would be transferred to a school in Sudbury, an hour-long bus ride from home. He couldn’t stay late to play sports, because his parents work and aren’t able to pick him up from Sudbury. And he would be home late, so he wouldn’t have time to work after school”

#48 april on 11.20.16 at 8:52 pm

#13 – Garth is not racist at all. You misunderstand.

#49 Warren- the lagging indicator on 11.20.16 at 8:53 pm

Ahhhhhh, “We have a dynamic and tactical approach as we adjust our weightings among the different geographies based on our outlook. – Ryan L” . I see now… how you guys get your Alpha, and to think, all along I thought it was Hummer’s and Harley’s.

#50 falseprophet on 11.20.16 at 8:55 pm

Why do my once posted comments now appear deleted?

#51 WalMark of Sadkatoon on 11.20.16 at 8:59 pm

It seems likely, then, that by April our dollar will be lower, commodity prices under pressure, the trade deficit rising and mortgage rates plumper, even if the Bank of Canada sits on its thumbs.

Oh Garth, the things you say to woo us!!

#52 Porsche on 11.20.16 at 9:00 pm

Emerging markets are also thriving as the Trump trade lifts all boats

http://www.cnbc.com/2016/11/19/emerging-markets-are-also-thriving-as-the-trump-trade-lifts-all-boats.html

#53 Steve French on 11.20.16 at 9:02 pm

Smoking Man:

I’m a bit busy getting my ETF’s all lined up in a row.

But reading your magnum opus is next on the list!

Steve-O.

#54 WalMark of Sadkatoon on 11.20.16 at 9:03 pm

A bit of a problem here.

Another problem… your CAD$ thesis has been wrong for years

Lol

#55 Steerage Bilge on 11.20.16 at 9:06 pm

#43 Smoking Man on 11.20.16 at 8:36 pm

A bit gone rightnow.

Next book, a preachers kid. A good kid with a great upbringing. Get a job as a rehab councler. He gets chones. Living on ensure losing weight fast. The doctors pills not working. A buddy suggests weed . He trys it. It works. No sympotoms. He’s cured.

Now he’s got to work everyday and tries to cure stoners while stoned.

I’m seeing it. Probably sell 30 copies like the last one. Who cares this shit is fun.
..

I thought you sold the movie rights already?

#56 quebecEconomist on 11.20.16 at 9:11 pm

I will be selling ALL my equity assets in january…I do not foresee a very stable outcome when Trump is in office. Any balanced portfolio is too risky, according to me. What will prevail after he takes office is unpredictable. After 6 months in office we should have a better idea of how, and if, the World will survive under Trump. Losing gains for six months, if all is nice and dandy, is a low cost for not risking against the plausible alternative that all goes to shits.

I disagree with your suggestion of keeping a balanced portfolio in these times. Equity is liquid, use that to manage risk. Don’t wait for a Nuclear Tweet from Donald to sell. Getting out of markets for a short period should provide security against highly volatile events.

Am I over reacting, maybe, at a small cost. I will not hesitate to jump back in to join the party if I did.

Cheers and good luck.

#57 RIL on 11.20.16 at 9:16 pm

The bulk of my scant wealth is in my Calgary house. I am not selling it ever. I have two young adult children. You know, the ones our BoC head honcho said should work for nothing. The ones our Finance Minister said should get used to the gig economy or job churn at minimum wage (he should have avoided euphemisms for “your parents’ election choices and greed have created a crap future for you”).

They will need shelter. With a team of interior design/architecture/construction specialists, the 1700 square feet can be crafted into two 850 sq. foot homes, each with a garage space. There can be a common kitchen which is basically a room that is used for shorter durations each day than the bathrooms in the house.

For about $500 per month each for tax and maintenance. While they cope with 25% or greater unemployment rates for their cohort.

#58 Alice on 11.20.16 at 9:20 pm

@ #17 SimplyPut7

Obviously they pass the blame from one administration to the next and then propose that they’ll get them out of this if only they have 4 more years. Then people that are pressured by the rates vote again because it’s their last hope.

#59 chimingin on 11.20.16 at 9:21 pm

I thought the first line said “people taking loans with longer arms will pay a premium.” And I thought, “man, that really isn’t fair.”

#60 ROTFL on 11.20.16 at 9:24 pm

“In short, how could you not think the bottom in rates is behind us?”

How? Let me tell you. On the buy side of the bond market, there are a LOT of price takers — who will buy bonds not because they think the price is good, but because they think that bonds must make up x% of their portfolio. They buy bonds when the YTM is lower than inflation, and they keep buying bonds even when the YTM is below zero, when it’s a stone cold mathematical fact that they’d be better off holding cash.

I certainly don’t know that the bottom for bonds is or isn’t in. But I do know that growth isn’t up, inflation isn’t up, and people whose investment thesis is that all the dumb money just got smart, well…

#61 Gasbag Boomet on 11.20.16 at 9:43 pm

Smoking Dude, you are a real downer tonight. I’m not so sure things will get that ugly, maybe a few more JD’smight soften that outlook?

How about some Edward Bear?

#62 White Crock BC on 11.20.16 at 9:47 pm

Wild Albertan Gonads on 11.20.16 at 8:45 pm

Way to go T2… front page coverage on breitbart!.. we are sooo screwed.

==========

Ah yes, Breitfart. The “National Enquirer” of right wing US politics.

Sheesh

#63 Scorpions on 11.20.16 at 9:47 pm

Wind of change is great smokey.

https://www.youtube.com/watch?v=cm_bhujtxf4

#64 Happy Housing Crash Everyone! on 11.20.16 at 9:48 pm

Tis the season to be jolly! Happy Housing Crash Everyone! :)

#65 RIL on 11.20.16 at 9:49 pm

#29 InvestorsFriend on 11.20.16 at 8:04 pm

carboncarboncarboncarbon

Exactly. Yes, Rachel’s carbon tax starts Jan 1. About $4 more to fill the Yukon XLT Denali. I have not purchased gasoline in 3.5 years.

#66 For those about to flop... on 11.20.16 at 9:56 pm

The nuclear codes are being updated to nine digits that have to be entered simultaneously.

If the Orange Octopus is going to blow anything up, he is going to need help…

M42BC

#67 Riffmeister on 11.20.16 at 10:00 pm

Whose going to do business with Justin when he can’t even pay his employees for almost a year late? The simple plug and play pay system is a joke that a 10 year old could program better than IBM and the useless beaurocrats. Canada real estate is going down the tubes fast.

#68 WalMark of Sadkatoon on 11.20.16 at 10:02 pm

America will be great again!

And Canada is America’s b*tch!

https://www.policyalternatives.ca/newsroom/news-releases/canada-prohibited-cutting-gas-and-oil-exports-us

#69 Smoking Man on 11.20.16 at 10:03 pm

DELETED

#70 dave on 11.20.16 at 10:18 pm

JT is bringing in over 400k immigrants and a load of Mexicans will have free visas.

Either people pay rent or pay a mortgage, we can not live in trees. 1 to 1, a mortgage will always be cheaper. Raising interest rates will just raise the cost of rent and ultimately the cost of a house.

Average immigration into Canada since 2011 has been 259,600 annually. The 2017 target is 300,000. Have you been listening to Trump-loving Kellie Leitch? — Garth

#71 Smoking Man on 11.20.16 at 10:22 pm

63 Scorpions on 11.20.16 at 9:47 pm
Wind of change is great smokey.

https://www.youtube.com/watch?v=cm_bhujtxf4

Man I feel that song…

My favorite for this time of year.
November rain. It’s cool when you feel down for no good reason. When you got a lake close by with ear buds.

No moon tonight. Just beautiful darkness. And November rain.

Enjoy

https://youtu.be/8SbUC-UaAxE

#72 robert james on 11.20.16 at 10:34 pm

Seems to be a lot of lightning hitting Vancouver vacant homes recently… http://www.castanet.net/edition/news-story-181435-3-.htm#181435

#73 westcdn on 11.20.16 at 10:36 pm

I recently slipped on my backyard stairs- I broke something in my spine . Anyway I am slowly start to heal – the internet says 4 more weeks.

SM, take a look at Park Lawn Corp (plc). Small company – death awaits when liquefy runs out…

#74 Jenny on 11.20.16 at 10:39 pm

DELETED

#75 InvestorsFriend on 11.20.16 at 10:46 pm

In these Times?

56 quebecEconomist on 11.20.16 at 9:11 pm said:

I disagree with your suggestion of keeping a balanced portfolio in these times. Equity is liquid, use that to manage risk. Don’t wait for a Nuclear Tweet from Donald to sell. Getting out of markets for a short period should provide security against highly volatile events.

**************************************
Check back in history and I will guarantee you that people lamented about “these uncertain times” or these terrible times” every single year back to the beginning of recorded history. The past always looked more certain than the future.

I have heard the worry about “these times” for the past 45 years at least. Even in the best years.

Equity investing is NOT about avoiding risk. It’s about embracing some risk in order to reap probable (but never guaranteed) returns.

Volatility is the greatest friend of the intelligent investor. It is used to buy low.

#76 Smoking Man on 11.20.16 at 10:50 pm

My respect to a true artist. A painter a piper.

I think about this stuff in November.
https://youtu.be/NG7vIWZVrUk

Wow 40 years ago it’s like yesterday.

#77 nonplused on 11.20.16 at 10:57 pm

Even if Trump wants to rewrite NAFTA, he’ll still want cheap access to our commodities. He’s talking approving Keystone. He’s not going to kill the TN visa program because it benefits America more than Canada. He might tax Canadian manufactured cars more but I doubt it unless he want us to tax US manufactured cars. His problem with NAFTA is Mexico, not Canada. Under NAFTA jobs go to Mexico and products come back. Canada hasn’t really done this under NAFTA because our economies are more similar. All that happened between Canada and the US was specialization. Although we still sell them a crapload of raw materials.

To answer one of Ryan’s perplexities from yesterday, it was probably Bill’s years in the White House that cost Hillary the election, as well as her low level scandals. It was a mistake for the democrats to put forward an ineluctable candidate, one who couldn’t even beat Trump. In fact, I would say the only reason it was close was because the only other choice was Trump. A good republican candidate and it would have been even more of a landslide.

There is an old saying, “you can judge a person by the company they keep”. Well, for Hillary, a good part of that company is Bill. People know him all too well. They lived through 8 years of his treachery. Tough decision for Hillary obviously, she should have divorced him after the Monica impeachment thing (my first wife dumped me for a lot less than that), but then she would have to fight the whole divorced female politician thing. It’s a case where pragmatism just didn’t work but there was no better option.

#78 IO on 11.20.16 at 11:03 pm

Here’s an article just came out:
http://www.msn.com/en-ca/money/topstories/higher-down-payments-should-be-considered-cmhc/ar-AAktual

“They don’t mention that the Canadian system has not been stressed since the Great Depression. Further, they choose to ignore the strong academic support that loudly warns against the drunken brew of elevated house prices and an advanced credit cycle.”

Yes, worth noting. We covered this last week. — Garth

#79 For those about to flop... on 11.20.16 at 11:05 pm

Quite often, on Sunday evenings I wonder…… what’s Tony Blair up to these days…

M42BC

http://www.dailystar.co.uk/news/latest-news/563592/tony-blair-return-to-politics-brexit-theresa-may-jeremy-corbyn-labour-prime-minister

#80 Smoking Man on 11.20.16 at 11:06 pm

CTV NEWS

Watching it with the buds on. I see the images but I’m in my own world. Preventing the aganda from taking my mind

Brain damage is so under rated .

https://youtu.be/1Z39KZAryzk

#81 Student of Garthenomics on 11.20.16 at 11:07 pm

#11 Question
“With regard to a balanced portfolio.Is a portfolio consisting of 40% bonds too high.”

In a 60/40 balanced and diversified portfolio, the 40% is not the “bond” portion but the “fixed income” portion which includes bonds.

From my study notes, Garth has recommended the following assets allocations:

FIXED INCOME
18% Preferred shares, rate reset
17% Bonds (see below)
5% Canadian REIT*
===
40% Fixed Income

where 17% Bonds contains:
7% Government bonds, short duration
4% Corporate Bonds
3% Real Return Bonds, inflation-linked
3% High Yield Bonds

* Not sure if the Canadian REIT technically should be classified as fixed income or part of a Canadian Equity position, if so this could be a 5% cash position to take advantage of future buying opportunities.

EQUITY
17% Canadian Equity
21% US Equity
18% International (including Emerging Markets
4% Tactical Equity (aka alternative holdings/completion funds)
===
60% Growth Equity

Cheers

#82 LG on 11.20.16 at 11:16 pm

@26
15 Torrance Rd, not a great area, lot of governmt housing…its cheap for a reason.

#83 NEVER GIVE UP on 11.20.16 at 11:16 pm

#13 Unbelievable on 11.20.16 at 6:41 pm
“good luck selling your $1,888,888 Richmond McMansion to a Chinese dude”

Wow that’s so racist Garth. Why you gotta be like that?
—————————————————————-
#13 WTF? Soooo sensitive aren’t we?
Maybe put on a hair shirt and you will feel better.

#84 data on 11.20.16 at 11:26 pm

Don’t be a fool. The moment a trump victory was close pre-election, the market tanked. Now he wins and everyone is talking inflation, trillions in spending and brokers are spitting out the same crap research about a new high growth in the US.

DON’T BE FOOLED AND SUCKED INTO THIS SQUEEZE. HOMES, STOCKS AND BONDS ARE ALL GOING DOWN. BE READY IN CASH TO POUNCE ON DISTRESSED ASSETS. IF YOU ARE RENTING OR IN CASH, YOU WILL GET YOUR CHANCE IN 12-18 MONTHS.

Then the news will change just as swift and you will be scared to buy. But go back to this post.

#85 Entrepreneur on 11.20.16 at 11:38 pm

Our biggest trading partner is the U.S. and T2 goes along with APEC with free trade agreement and they all want to “resist protectionism with increased free-trade skepticism, highlighted by the victory of Donald Trump in the U.S. presidential election.”

Not adding up to me, T2 should be more concerned about the people that live in Canada. I would like a leader to protect us first, the ground up.

And then as in #45 Wild Albertan Gonads video, it goes on about carbon reduction goals and climate change and a threat to food.

Well, sending a big corporation to another country does not help carbon reduction and climate change so we can brag about reductions. Most of B.C. mills close down but ship those raw logs off to another country. Not adding up to me; in fact, more of a subtraction, a negative way of thinking.

As for food security, that is a joke, our food has gone down hill. How about putting some stops or serious corrections in our country first.

It bothers me to see these free trade agreements, investors biases, then throw in like they care about climate change and food.

#86 Fortune500 on 11.20.16 at 11:47 pm

What’s your take on Nova Scotia real estate? If I have plenty of cash. Good 3 bedroom 2 bathroom historical homes fully renovated. $250,000. Great acreage. Good place to raise a family (not to work obviously). You own/owned there Garth. Give us your thoughts.

#87 Shane on 11.20.16 at 11:51 pm

#70 dave on 11.20.16 at 10:18 pm
JT is bringing in over 400k immigrants and a load of Mexicans will have free visas.

Either people pay rent or pay a mortgage, we can not live in trees. 1 to 1, a mortgage will always be cheaper. Raising interest rates will just raise the cost of rent and ultimately the cost of a house.

Average immigration into Canada since 2011 has been 259,600 annually. The 2017 target is 300,000. Have you been listening to Trump-loving Kellie Leitch? — Garth

Wrong. You failed to include the new immigration categories not included in those figures. Why do you think the statscan head left his job? He couldn’t stand the lies.

#88 WalMark of Sadkatoon on 11.20.16 at 11:54 pm

I’m not sure how to interpret this. Anybody know what happened to the speculators who bet on a rising CAD$ in 2014? Who are they and are they still around?

Apr 7th, 2014 I view it as very likely that the CAD$ has probably bottomed out and is moving to parity and beyond — far beyond, over the next number of years.
http://forums.redflagdeals.com/canadian-dollar-its-ups-downs-1442859/15/#p18633499

Mar 29th, 2014 But this 90 cent nonsense, when the fundamentals for the CAD$ are stronger than ever, well, we’re seeing the speculators lining up to make huge bets on the rise of the CAD$, and recent history shows that speculators are pretty good at moving currency pairs.
http://forums.redflagdeals.com/canadian-dollar-its-ups-downs-1442859/12/#p18589709

#89 Polls R Phake on 11.21.16 at 12:15 am

https://www.youtube.com/watch?v=ahkMA6JPOHU

Great compilation of all the fools laughing at Donald running for the Republican nominee and for becoming president. Epic.

#90 WalMark of Sadkatoon on 11.21.16 at 12:21 am

Interesting foreshadowing!

Nov 15th, 2010 You will not be saying that when the Canadian Dollar hits .70 US, in a couple of years.
http://forums.redflagdeals.com/boc-buying-usd-964543/#p11874193

I think many Canadians purchased rental real estate in the US during this time. Mostly seniors. The houses were cheap, easy to manage, and threw off US dollars like crazy!

#91 CONFUCIUS SAY... on 11.21.16 at 12:53 am

To #13. …CONFUCIUS SAY, “MAN WHO THROW DIRT IS LOSING GROUND”. IN OTHER WORDS, TAKE A HIKE!!!

GARTH IS THE ALL KNOWING “ORACLE” FROM “The Hilarious House of Frightenstein”. KEEP SHINING THAT CRYSTAL BOWL, GARTH. WE ARE GOING TO NEED IT FOR 2017.

#92 Rook on 11.21.16 at 12:57 am

I’m really confused by the last statement by Garth. Would love someone to clarify.
He advices to lock in your mortgage rate now because money is cheap, but don’t buy because house prices may go down. If I buy a house right now at current rates and renew in 5 years at 5%, I would have paid down 50,000 of the home. Now if I wait 5 years to buy, how is there any guarantee that the price of this said home would go down in price by 50,000. Yes, it may even drop lower than that, but it also may not. That would leave me to have been sitting here on my thumbs again for 5 years getting booted out of another one or two rentals that I tried to make a home.

‘The advice? Stick with the balanced and globally diversified portfolio, as Ryan told you. Returns are likely to rise. Lock in your mortgage rate, because money is still (for a while) ridiculously cheap. Delay buying any real estate, because there’s no valid scenario under which rates fall.’

#93 paulo on 11.21.16 at 1:39 am

I am curious as to the reason the Trupster has such a hard on for mexico?
Fact of the matter is that most “illegals” working in the states are doing jobs that most Americans do not to wish to do- minimum wage service and labor positions. this plan to deport millions of them is nonsense in the end.
On the infrastructure plan; this will require billions of dollars, mostly borrowed, via bonds. guess whom holds the largest stake of current us goverment debt: China.
So Trump is also staging to have a shot out with china over trade issues, really . Nothing like biting the hand that feeds you…… usually a bad plan:
I suspect Mr Trump is being dialed into a lot of realities
he was not aware of when the election was unfolding, and will find it hard to deliver on many of his shot from the hip campaign promises.
It will be interesting to see how it unfolds, but i will not be surprised if he steps aside in the end.
he will have a hard time transitioning from main street to politico central, not sure he will have the patience and will to complete the job, that he never expected to have at the outset.

#94 Russ on 11.21.16 at 1:42 am

Student of Garthenomics on 11.20.16 at 11:07 pm

In a 60/40 balanced and diversified portfolio, the 40% is not the “bond” portion but the “fixed income” portion which includes bonds.

From my study notes, Garth has recommended the following assets allocations:……

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

Hey Stud,

Nice summary. That is how I see things from Garth too.

I try to keep this balance in my “hobby” account.

The “pro” account has MICs and other wonders and, so far, does a bit better. say 1 percent YOY.

#95 Johnny D on 11.21.16 at 2:18 am

#65 RIL on 11.20.16 at 9:49 pm
#29 InvestorsFriend on 11.20.16 at 8:04 pm

carboncarboncarboncarbon

Exactly. Yes, Rachel’s carbon tax starts Jan 1. About $4 more to fill the Yukon XLT Denali. I have not purchased gasoline in 3.5 years.

——————————————————————-

Have you turned up the thermostat on a cold winter day in the past 3.5 years? Get ready to pay more. Power bill?… more. Food at grocery stores (costs to produce/transport food)… going up. Good for you for not using gas for a few years. But unfortunately all those things in your life in which energy use is indirectly a factor will increase in cost too.

If you really love your government getting more of your money and how they spend it then feel free to pay more for everything.

#96 Peter on 11.21.16 at 3:46 am

Wouldn’t a devalued CDN$ end up making real estate more attractive to foreign investors?

Serious question…

#97 Boomer, Dear to my Heart... on 11.21.16 at 4:11 am

“…trashy and cheap, like Survivor: Millennials vs Gen X.”

Washing the keyboard for the Espresso + Grappa (Caffè Corretto) I just spewed on it laughing so hard…

I let my guard down for a few days, figure its safe to have my morning coffee at the PC…and then, another Garth ‘gotcha moment to catch us when we least expect it.

Clever Boomer.

Ciao d’Italia Garth and keep that off the wall, lateral thinking humor of yours coming, I love it.

bsant

#98 Of course, things could get better, too on 11.21.16 at 4:37 am

I sure hope you are correct Garth.

From where I am standing it is not looking good for Canada.

As I posted yesterday, 2016 GDP projections will fall short by CDN $400 billion from 2015 – that’s a lot of money out of circulation in the economy. I know you are not big on Macro but even you will have to admit that is a big chunk of change gone from last year.

Commodities are stagnant with no good news in oil expected until 3rd Qtr 2017 when supply finally = demand and if RE crashes 20%, that will be a huge amount of net worth gone for another 10 years, maybe as high as $1 Trillion lost and that is for BC and ON alone.

You give good advice again, in essence, get out of RE some, if that is your only wealth strategy…I doubt Canadians will listen.

Good to read there is after all an optimistic scenario for Canada out there.

But that scenario rides on the coat tails of America.

From what I am reading here and elsewhere, flipping a coin is as good a way to guess what Trump will do with NAFTA.

If he makes good on his promise to use trade tarrifs to repatriate jobs back to America, then that will be bad for Canada (worse yet for China and Mexico et al).

A test of Trump’s resolve may well come with the Softwood Lumber Agreement that expired on October 12, 2015 with the litigation moratorium expiring Oct. 13 of this year.

True, only 1.3% of GDP but it contributes large to a + Canada trade surplus (+ $21.7 billion in 2015).

I truly hope you are correct about that optimistic scenario; otherwise and in your words, we are pooched for at least a year.

bsant

#99 400k immigrants (300,000 in reality in 2017) on 11.21.16 at 5:01 am

They will rent and not rescue any local RE market.

StatsCan 2012:

“In 2012, the median employment income was $20,000 for immigrants who had landed 1 year before, $25,000 for those who had been in Canada for 5 years and $31,000 for those who have been in Canada for 10 years.”

Yup, these immigrants will be going out there to buy those $1MM homes in droves and rescue YVR and 416 RE.

As if.

bsant

#100 Wrk.dover on 11.21.16 at 6:39 am

I see in last nights post there are still people trying to second guess the Forrest Trump win.

Does anybody at all reading this think that anyone who carried a draft card in their wallet from age 18-35 was going to vote for another generation to carry a rifle in Eastern Ukraine for Hillary Sachs aka Goldman Clinton?

That Russian war thing didn’t win Harper an election recently did it? Nor did the cosy up to Israel so we will go to Heaven when the Rapture unfolds help either election.

#101 Wrk.dover on 11.21.16 at 7:01 am

#85 Fortune500 on 11.20.16 at 11:47 pm
What’s your take on Nova Scotia real estate? If I have plenty of cash. Good 3 bedroom 2 bathroom historical homes fully renovated. $250,000. Great acreage. Good place to raise a family (not to work obviously). You own/owned there Garth. Give us your thoughts.
——

I can tell you from my experience of living here for 35 years, You don’t buy houses in N.S. to gain money PERIOD There is no money to be made on a house here.

But to live here is a win. Grew up in GTA, rode the Subway, wore the tie, breathed the air, and worse of all lived the pointless life with all of those plastic ( phony) people.

Ontarians spend their money on house payments, here we pay off the house in a decade and spend money on life. Greatest percentage of owned homes in Canada…N.S.

As for work, if you are a silly servant, teacher etc. why do that in a million dollar home in GTA when you could get the same pay cheque here on a sprawling $150,000 property. Beats me too.

#102 Ret on 11.21.16 at 7:18 am

#94 “But unfortunately all those things in your life in which energy use is indirectly a factor will increase in cost too.”
Also including lots of things that you may not use but will have to pay energy carbon taxes for such as schools, hospitals fire halls, government offices, patrolling police cars etc.

Unfortunately, many Canadians are unable to see the big picture.

#103 SimplyPut7 on 11.21.16 at 7:46 am

RE #25 toronto1 on 11.20.16 at 7:43 pm

I agree with most of your calculations except, people in Toronto don’t have savings, they spend most of their pay cheque. So an extra $200 means, those people are not spending that money at restaurants, movies, retail shopping or sport games. It means businesses will start laying off people who were not directly linked to the decrease in economic activity like in Calgary (http://www.cbc.ca/news/canada/calgary/calgary-downturn-dentists-therapists-optometrists-1.3857098)

Which will lead to more people not being able to pay their mortgage, default on mortgage payments and foreclosures. Then banks will increase mortgage rates to compensate for these new risks in real estate market. Which leads to another wave of people not being able to pay their mortgage.

Also, many non-bank lenders, even some big banks were very lenient in the amount of money they were giving to people to buy higher price homes in Toronto. I live in a lower income area of Toronto and selling prices for a detached home went from $300,000 in 2006 to $800,000- $1 million in 2015. Those people were paying less than 10% down, they will be more affected by an increase in mortgage rates and could easily see an increase of over $1000 a month.

Lastly, there is a shadow mortgage market of lenders and speculators that has formed in the last few years and no one knows how deep the market is, I know people who have used HELOC to buy condos, lend to people at higher mortgages, buy homes to flip and buy frivolous things they don’t need. There is no influx of immigrants or young Canadians who can afford to rent condos at $1600/month so it will be interesting to see who are the domestic investors who made up the 52% of condo purchases in Toronto (https://www.urbanation.ca/news/156-most-gta-condos-development-q3-were-sold-investors-who-don%E2%80%99t-plan-living-them)

#104 Grey Dog on 11.21.16 at 8:02 am

Fortune 500, re living in Nova Scotia, consider the weather reports describing the most severe storms each year in Canada. Snow or rain wallop events, cause me to say however bad it gets in the GTA to cause kids to have a snow day, it doesn’t touch the harshness of weather on the Canadian East Coast.

Over the last 10 years, I know of too many wrinklies that cashed out of GTA, bought a lot, built their dream home overlooking water, after a few years come crawling back to GTA. Drove around East Coast last year, there was a bunch for sale! My friend’s home in Moncton has been for sale for over 2 years!

Love the East Coast, love the people, but it takes a special kind of hardy to live there.

That’s a myth. — Garth

#105 jerry on 11.21.16 at 8:11 am

Bond Funds versus individual Bonds.

Do bond funds holding shorter durations together with tax preferred treatments have any particular advantage over individual bonds within the projected Trump/Fed impact on interest rates and economic stimulus?

Bond funds are far superior. — Garth

#106 Trumpocalypse2016 on 11.21.16 at 8:20 am

Dump real estate, quickly.

Gold and copper are looking better daily.

Have fuel and food for 18 months at the ready.

Disaster ahead.

#107 faustfist on 11.21.16 at 8:46 am

http://www.theglobeandmail.com/news/british-columbia/farmland-and-real-estate-in-british-columbia/article32923810/

Am I the only one who sees the irony in BC striking a Faustian bargain with speculators on its farmland and then trying to close the barn door after the horse has bolted?

#108 faustfist on 11.21.16 at 8:50 am

A December increase was already in the cards before November 8th. Now it’s a certainty. The bond market’s reflecting that, and adjusting in advance.
So, uncertainty fills the air. Garth”

Garth rather than the certainty-uncertainty contradiction why not go Geddy Lee-esque and say Plus ca change, plus c’est la meme chose….

#109 traderJim on 11.21.16 at 9:38 am

#92 Paulo

Just wondering why you and the left have a collective blindness to the concept of ‘legal’ immigration vs ‘illegal’ immigration and even further to ‘illegals who commit other criminal acts’ as Trump made clear many times, most recently on his 60 Minutes appearance.

Is it deliberate or just an inability to understand a pretty simple distinction?

Either way it looks bad on the folks spreading the disinfo.

#110 Wrk.dover on 11.21.16 at 9:43 am

#103 Grey Dog on 11.21.16 at 8:02 am
Fortune 500, re living in Nova Scotia, consider the weather reports describing the most severe storms each year in Canada. Snow or rain wallop events, cause me to say however bad it gets in the GTA to cause kids to have a snow day, it doesn’t touch the harshness of weather on the Canadian East Coast.

———–

Over the last 10 years, I know of too many wrinklies that cashed out of GTA, bought a lot, built their dream home overlooking water, after a few years come crawling back to GTA. Drove around East Coast last year, there was a bunch for sale! My friend’s home in Moncton has been for sale for over 2 years!

Love the East Coast, love the people, but it takes a special kind of hardy to live there.

That’s a myth. — Garth

——

I should not argue with Garth/step on Superman’s cape on a Monday morning, but I know this one. Thoroughly.

The come from away’s buy the best water front lot left, for about four times what it is worth, then self design some god awful house that could double as a train station, and hire a rip artist to do the build. After they move here, they find out the only restaurant sells fish and chips, and closes around 7 at night. And can’t get a family doctor.

A new guy here retired from an Ontario Bank manager job, did the above, and when it was time to sell three years later, he told me, the buyer can have the $150K piece of land, the five power poles with line I paid for and the $25k driveway they go along…but I want my $450k back for the house it’s self! Only took a year to sell for $430!

There is an old farmstead in Gilbert Cove Digby County with 80 acres, 400 feet ocean front for sale for 1/2 mil or so for the past two years. It has a barn turned into a restaurant that could be nicer than Bob Villa’s work shop for a wrinkley. The second last owner, a gazillionaire from Stateside put a half a million in to upgrades there. The owner before him put in $100K as has the present owner.

I could tell and document these story’s till bedtime, tomorrow.

But Garth is right about the weather bomb, it is a myth. If you looked at environment Canada for the past few days, it sucked to be here. Wrong.

The Atlantic provinces are no more homogeneous than, say, Ontario. The weather in northern New Brunswick bears as much similarity to the South Shore of NS as Timmins does to Oakville. Choose your real estate carefully. It’s hard to move it. — Garth

#111 Herb on 11.21.16 at 9:44 am

“Donald Trump’s economic plan must be given a chance to succeed” – Don Pittis

http://www.cbc.ca/news/business/trump-economy-success-1.3857025

#112 TurnerNation on 11.21.16 at 9:45 am

As I expected the terror attacks in Paris France ended once global “climate change” bill was rammed onto each of us, we had no say.

Elites softened us up. Who hates our freedoms?
Little girls going to school etc etc?

Anyone wasting more than a second followings so called news is wasting their time. The real news is in your mind. Make it.

#113 Deano on 11.21.16 at 10:22 am

#103 Grey Dog on 11.21.16 at 8:02 am
Sorry, but your observations are so completely false, I have to laugh. Get out a bit more will you.. Garth lived in Nova Scotia for a while I understand, he knows the truth and so do I. Currently I’m living in NS and have lived in Toronto and Vancouver. The winter is bad in all three places if you really don’t like rain, cold, and snow.

#114 Braj on 11.21.16 at 10:23 am

#41 Metaxa on 11.20.16 at 8:31 pm

Because life is good, people are great and things will be fine. Live accordingly as some here put it only they say invest accordingly…invest in yourself.

Thanks for once again indulging me

I like to live like I agree with this, and indulge I did. Thank you! Your posts are quite refreshing, you seem wise.

I especially agree with the part about examining close to home..its usually the place we are least willing to look. Either that, or we are so accustomed to looking elsewhere for something to fill that void within us.

#115 common sense on 11.21.16 at 10:33 am

Well they just published Traders are 100% sure rates will raise in December….

And Hillary was a 90% plus pick a few weeks ago…

What can go wrong?

Clinton topped out at a 82% probability. By election day that had declined to 50%. Regardless, the Fed pulls the trigger on the 14th. — Garth

#116 Neil Armstrong on 11.21.16 at 10:41 am

#67 Riffmeister
“Who’s going to do business with Justin?” thought you were talking ’bout Bieber for a minute, then thought why not have Bieber as PM, what difference would it make, really?

So Ontario and Canada for that matter want to phase out fossil fuels by 2030. Right on schedule, that’s the year electric vehicles will be to gasoline what PCs were to typewriters.

My son doesn’t want EVs to supplant ICE until he learns to drive, unfortunately, he may not get a chance except maybe on the race track (or a visit to Alberta), but even then, 0 to 100 in 2 seconds is better than 0 to 60 in 6 seconds. No maintenance, no fuel, no pollution and related health costs. I think that will make up for the lack of exhaust noise.

http://www.climatechangenews.com/2016/10/19/statoil-chief-rise-of-electric-cars-will-shrink-oil-industry/

#117 Context on 11.21.16 at 10:42 am

#102 SimplyPut7:- Years ago we used a system to determine the extent of the bubble on any condo project that had recently sold out especially the new one at Bloor and Avenue road. A few months later we would pick a night mid week after dark to see how many lights were on this massive structure. There might be a few but essentially it was empty as it was sold to speculators not renting out.

#118 Dual Citizen In Canada on 11.21.16 at 11:00 am

Off topic post (please skip if not interested):

As Canada is set to wave the VISA requirement for Mexicans entering this country, Canada has a chance to do it right and not get into the mess that is so clear south of the border.
I understand it, Mexicans will require a work or study permit, and an Electronic Travel Authorization (eTA) if they wish to travel within Canada while they are here.
What the USA failed to do was cut off the desire for Mexicans to enter the US. If Mexicans knew they will get no services, health care, driver’s license, and employment without being documented, then why would they enter the US? Well, I blame the employers for hiring the undocumented workers and creating the demand. You will not need a wall if you cut off all avenues for them to make a living without being documented. All Trump had to do was fine employers for hiring undocumented labourers but he won’t because he did it himself and all his corporate buddies did it too. They created the problem and blame the Mexicans for taking advantage of it.
If he reduces the corporate tax rate from 35% to 15%, does he and his buddies get richer, or will they pass on those savings to the employees so they can make a living wage and spend it in the local economy?

#119 rainclouds on 11.21.16 at 11:06 am

#103 GD ” however bad it gets in the GTA to cause kids to have a snow day, it doesn’t touch the harshness of weather on the Canadian East Coast.”

Uhhhh yea, Yesterday. Snowed in Taranna, 10c in Halifax. Harsh…………

#120 InvestorsFriend on 11.21.16 at 11:28 am

How a Country Can Get Rich

The U.S. learned that the country could not get rich by its people selling its houses to each other at ever escalating prices.

Can a country get rich (or at least richer) through putting a lot of its labour and timber and other resources into building houses? Well, yes, because it ends up with all those new houses and the debt is just owed to other people in the same country. The housing stock of the country is improved. That is a real gain. Especially if much of the labour would otherwise have been idle and the timber left standing to rot on the stump.

Can a country get rich by arbitrarily shutting down coal fired power plants in some cases WELL before the end of their useful lives? Of course not, that is worse than trying to get rich by having the government employ people to dig holes and fill them back in.

Can a country get rich by promoting green energy development? Not if the cost of the energy produced is higher than the cost of the existing energy production.

#121 InvestorsFriend on 11.21.16 at 11:32 am

Probability – implies a statistical probability, a random chance.

Predictions – even those backed up by financial bets – may not imply anything about the true probability of uncertain future events.

#122 Context on 11.21.16 at 11:54 am

#81 LG:- I brought down the city map indicating what you are suggesting but there is nothing nearby. This building is just a bit north of Eglinton and near the GO station and the immediate neighbourhood is sound with goods and services nearby. I you tubed too past sales and this building is beautiful. The units would compete with anything in the core and the furniture inside from the ownership was very expensive; the unit has quality construction inside. The one for sale is a 1+1 for $175,000 with all updates including stainless steel stove and fridge, a white stacked washer / dryer, dishwasher, and new flooring.

#123 TurnerNation on 11.21.16 at 11:56 am

Kiss another ~150 million of our money away. Today’s Party announcements are some complex No Fly list administration databases and money given away untraced to Haiti corruption.

Our money is theirs and not to be spent on us.

#124 For those about to flop... on 11.21.16 at 11:56 am

Just saw this story on HLN,thought I’d relay it.

Dallas in financial distress…

M42BC

http://www.nytimes.com/2016/11/21/business/dealbook/dallas-pension-debt-threat-of-bankruptcy.html?_r=0

#125 dodgedbullet on 11.21.16 at 12:10 pm

Hey Garth,

Thanks for everything.

DB.

#126 RiseandShine on 11.21.16 at 12:25 pm

Anybody with a lick of common sense would know that there is zero chance that the US, under a Trump administration will get back to 4 – 5% growth next year. Trump will implement some form of protectionist economic policies that will be reciprocated by other nations…and with a strong US dollar, American produced products will have zero chance competing.
Additionally, the US debt is at 100% of GDP, and with that debt level expected to rise significantly under Trump, increasing rates at anything less than 3% growth will be a massive headwind for the US. Expect much greater civil unrest….social issues…and American being anything but great again. Far greater chance that they will be just getting by again.

#127 DisgustMMP on 11.21.16 at 12:26 pm

Nonplused

There is an old saying, “you can judge a person by the company they keep”. Well, for Hillary, a good part of that company is Bill. People know him all too well. They lived through 8 years of his treachery. Tough decision for Hillary obviously, she should have divorced him after the Monica impeachment thing (my first wife dumped me for a lot less than that), but then she would have to fight the whole divorced female politician thing. It’s a case where pragmatism just didn’t work but there was no better option.

………

YES. I have long thought that Ms Clinton did a disservice to women everywhere when she didnt dump that man. What a volume it spoke that she didnt choose to stand up to his abuses. Was she trying to maintain the vote of old white men?

Divorced female ? I think better she had principles.

I could never have voted for her.

#128 Mariano on 11.21.16 at 12:39 pm

Garth, can you please explain how is it that
1. given that Trump’s win was a surprise for almost everyone
2. given that Trump has promised to reduce corporate tax rate from 35 to 15%
3. why have American stocks, whose owners are supposed to benefit from reduced tax, have not surged the day after the election?
I can only think that it could be that American corporations were already not paying 35% tax anyway.

#129 cramar on 11.21.16 at 12:41 pm

#56 quebecEconomist on 11.20.16 at 9:11 pm

I will be selling ALL my equity assets in january…I do not foresee a very stable outcome when Trump is in office. Any balanced portfolio is too risky, according to me.

———————

If you think a balanced portfolio is too risky, try an unbalanced one!

#130 NoName on 11.21.16 at 12:53 pm

#115 Neil Armstrong on 11.21.16 at 10:41 am

Hybrid, or plug in hybrid are in a future, ev not so much, just think in a terms of battery and charging it, on a fast charger 20min to full charge, 5min to refuel.

Another problem real estate to park them and juice to charge them all. maybe you could standardize battery and placement of power pack to swap them, but that would be nightmare for consumers.

Only thing i can see standardized are power supplies and plugs, charger would probably be pared to battery pack in a car.

Think of it this way, everyone now days is talking self driving cars this and that and that is probably where car industry is headed.

So if you own self driving company that makes money only when cars are in motion what system would you chose system that idles 20 min a day or one that idles 5min every few days or perhaps every few weeks.
So write this down, self driving plug in hybrid will kill ev.

Only good ev is forklift!

#131 Polls R Phake on 11.21.16 at 12:58 pm

I keep reading the “surprise” win by Trump. Do you fools think the people that voted for him were surprised? You are only reading the media and the establisment rhetoric. Welcome to the real world.

DRAIN THE SWAMP

#132 Victor V on 11.21.16 at 1:27 pm

http://business.financialpost.com/investing/market-moves/tsx-surges-on-oil-rally-dow-eyes-record-high-and-nasdaq-nails-it

TORONTO — Canada’s main stock index is rising today as higher oil prices supported shares of energy companies, while the materials and financials groups also gained ground.

Wall Street is also up, with the Nasdaq hitting a record intraday high, helped by a jump in technology shares and as higher oil prices boosted energy stocks.

The S&P was less than one point away from its intraday record high, while the Dow also inched closer to its record. The three indexes have rallied since the U.S. election as investors bet Donald Trump’s policies would be market friendly.

#133 bdwy sktrn on 11.21.16 at 1:27 pm

growing up in pei there were at least a few trips a year to hfx area as all the very large extended family lived there

some pretty coastline but i concur with the harshness of it all. i will take the sandy beaches and rolling hills of pei anyday.

even after spending summers in the notorious blackfly infested woods of n. ont. i have never seen an endless assault of flying insects like in NS.

as far as diversity, it’s almost 100% white people (outside of hfx)so if you don’t like diversity it’s for you!

fish and chips are big, yes, but there are hundreds of Lebanese dudes making pizza. there’s your ethnic food choices.

but overall, imho, the west coast is heaven, east coast is hell

#134 cto on 11.21.16 at 1:38 pm

Spike in interest rates could trigger housing crash says CMHC.

Canada won’t experience a crisis like the one that happened in the U.S., said Dianne Usher, senior vice-president of Royal LePage’s Johnson & Daniel division.

“We’re just not governed the same way. It’s very much a non-issue,” she said.

There you heard it from Dianne Usher my friends!!! CMHC is concerned, but the president of the biggest real estate company in Canada is saying don’t listen to them, and carry on as usual, all’s good in our wonderful country.

We should be legally aloud to sue these people later for miss-information should the SHTF.

It’s funny that Toronto star would publish an alarming headline about a statement from CMHC and then follow up with the usual sunshine and rainbows BS from a high paid industry schill and call it news. and of course turn a few pages and see all the real estate advertisements. What a rag!

#135 Rexx Rock on 11.21.16 at 1:46 pm

Tsx 15,000 today.A total reflection of a strong and growing economy.

No. Oil. — Garth

#136 n1tro on 11.21.16 at 1:59 pm

Don’t worry about the Mexicans coming to Canada. Even with the waved visa requirements. Why? Mexicans like their country other than the high crime and poverty. That’s why, given the chance they would migrate just go to the lower states where the climate is similar with less crime and poverty. Canada sucks…climate wise…if you are use to the heat of Mexico. I predict there is negligible takers on T2′ waved visas to the cold north…especially if the same conditions are applied to other new comers….eg. not allowed to sponge off government services for first 5 years of entry.

#137 doug t on 11.21.16 at 2:04 pm

Don’t worry about what impact Trump will have on the economy – be more concerned with the ever growing tensions between the masses in the U.S.S.A. Civil unrest will ramp up in 2017 down south and it will be nasty. Too many people have become have nots and they are seriously fed up with the lack of attention to their needs.

#138 Smartalox on 11.21.16 at 2:31 pm

@Metaxa:

I, too enjoy reading your posts, especially the insights into entrepreneurship, how you chose to start and run your businesses, and your description of the impacts your choices had on people.

I’ve often looked at businesses, and wondered ‘how do they stay in business’, not seeing the full picture, and not really having access to that knowledge. Experience like yours is not the stuff of books.

While I agree that “not all that is worth knowing can be learned from books”, your approach to life’s lessons is a stark contrast to some others’ in the comments section.

Not surprisingly, your tales of your business acumen seem somewhat more believable as well.

Keep ’em coming!

#139 Capt. Serious on 11.21.16 at 2:34 pm

Is XRB a realistic way to hold real return bonds, or better just to buy one of the government of Canada ones for a maturity date of interest? XRB seems kind of expensive to own, and only holds 14 bonds anyway.

#140 Alice on 11.21.16 at 2:59 pm

@ #130 Polls R Phake

The surprise was that much media manipulation couldn’t elect a president.

#141 Context on 11.21.16 at 3:01 pm

This condo building is becoming weird as another 1+1 came up for sale 800+ sf, all renovated, high up for a good view, and selling for $149,000. There must be a CA on the condo board as have never seen this done before. Everything is included in the condo fee such as all utilities, underground parking, and cable TV for a total annual carrying cost of $7,200 for this unit. I assume the annual taxes of $853 is included too.

#142 Neil Armstrong on 11.21.16 at 3:09 pm

#129 NoName – Write this down: Battery storage efficiency and capacity per volume is doubling every few months. So is solar technology. Coal-fired, heck, even nuclear is not as cheap as solar, as we speak, right now, today. Conventional analysis such as yours, is vastly outdated and you would do well to keep up.

But you’re right about one thing, the peak of vehicle ownership is behind us and all the old stakeholders, insurance companies, auto parts manufacturers, governments, and oil monopolies are beginning to wake up if they haven’t already and prepare for the inevitable autonomous EV revolution. I don’t think you would want to miss it either. Opportunity of a lifetime. Invest now. Energy stocks (and solar stocks) are down right now. Still time to buy in. Are you ready?
https://www.plugshare.com/

#143 USDCAD on 11.21.16 at 3:11 pm

Garth,

Trump’s economic plans require more debt in order to fund the plan. Sorta like what Hoover did in the Thirties. Infrastructure spending like there’s no tomorrow. It needs to happen but what I’m failing to see is how this increased spending of money that’s obviously not there will prop up the USD vs. other majors?

USD should go down, commodities go up (demand and value) and CAD, NZD, AUD go up in synch as always. GBP is still in Brexit limbo. JPY will dilute further to keep up with China’s export monster economy and the EUR is going to die slowly but surely.

Maybe the support for the stronger USD is the fact that more and more of Europe will be voting for less or no EU games going forward. Merkel running again for the 4th time basically sealed the deal for Le Pen in France and Grillo in Italy. The EU looks very very very weak and sick.

#144 Context on 11.21.16 at 3:43 pm

#135 n1tro:- You are correct and in fact southern Arizona is in trouble as businesses are hurting. The Mexicans are leaving back to Mexico as cannot tolerate a Trump government. I finally found a negative in that condo building as its heated electrically.

#145 Nemesis on 11.21.16 at 3:56 pm

#MondayMischief,Or… #DraftDodgingBrothelKeeperArousesImperialIre…

[Guardian] – Historian finds German decree banishing Trump’s grandfather: Royal decree ordered Friedrich Trump to leave Bavaria and never come back after he failed to do military service

…”Residents of Kallstadt, a small wine-growing town of about 1,200 people in south-west Germany, joke that the blame for Trump becoming US president-elect lies with the German authorities who threw his grandfather out. They have so far shown little enthusiasm for claiming the businessman turned politician as their own.”…

https://www.theguardian.com/us-news/2016/nov/21/trump-grandfather-friedrich-banished-germany-historian-royal-decree

#146 isuckless on 11.21.16 at 4:06 pm

As this is one of the last comments on today’s (yesterday’s?) blog, probably nobody will read it but still:
coming back from down under last Friday I took National Post to read some of our news and was really surprised how much vitriol and sulfuric acid was there regrading Trump. There were articles attaching Trump almost on every page (I skipped sports section and ads).
I thought that National Post is not leftist propaganda machine.

I wonder if the same war is waged in USofA – if so, the EC decision will be something to put a bet on.

#147 AGuyInVancouver on 11.21.16 at 4:35 pm

@#13 Unbelievable
Garth’s remark wasn’t racist. Nobody but the Chinese were buying the overpriced Mcmansions on the floodplain that is Richmond.

#148 chapter 9 on 11.21.16 at 4:38 pm

#135 n1tro

In 2008 9,490 Mexicans claimed refugee status,the introduction of the visa requirement in 2009, the numbers dropped dramatically, 120 total in 2015. Cold weather is not a deterrent!

Who cares? — Garth

#149 maxx on 11.21.16 at 5:02 pm

#23 conan on 11.20.16 at 7:29 pm

“RE#8 Mark on 11.20.16 at 6:21 pm

The Canadian auto union people are scared to death of Trumpster. The President of this union was on the radio the other day. He called Trump a ” dangerous clown that threatens their livelihood.”

Dangerous Clown is not a positive statement.”

Nor is it scintillatingly brilliant . It behooves people in his position to make nice with the likes of the President of our largest trading partner. What’s he attempting to do? Out tongue-lash him into submission? That should do wonders for NAFTA. Sheesh.

#150 Capt. Serious on 11.21.16 at 5:29 pm

I hadn’t looked at the Shiller PE on the S&P500 in quite some time. It’s not looking very good kids. Real earnings have been declining and the PE climbing well into places it shouldn’t go. We need a solid uptick in earnings or a swift correction to get things back in line.

Elevated, but not too scary. — Garth

#151 Context on 11.21.16 at 5:29 pm

Here is a thought as when the bubble pops will the developers walk away with half built condo towers leaving the banks holding the bag? The developers borrow $millions from the banks for interim loans which are not insured but secured with the land and a half ass building in a hole. The developer is using your bank funds and not his own.

#152 Media = right wing on 11.21.16 at 5:51 pm

#145 isuckless

ALL MEDIA IS RIGHT WING. There is no left wing media since corporations advertise in media and compovations are right wing thus media will print right wing nonsense to please their corporate masters.

#153 Love the arm chair quarterback rubbish on 11.21.16 at 9:38 pm

‘Would have earned $3000’ in a tfsa. Lol . No returns are guaranteed , unless Garth wants to give me a ‘Garth GIC at 6% ‘ for 5 yrs?

Didn’t think so ..:)

Sure. Average return of 60/40 over past six years (two of them sucked) is 6.3%. Try it. Pays better than trolling. — Garth

#154 Smoking Man on 11.21.16 at 11:09 pm

To all the beautiful wives out there.

https://youtu.be/IEVow6kr5nI

#155 LG on 11.22.16 at 1:47 am

#121 Context
Building & area may look ok, but used to live 10 min from there yrs ago & have worked in area recently & heard some scary things by coworkers.

#156 Ronaldo on 11.22.16 at 5:34 pm

#100 Wrk.dover on 11.21.16 at 7:01 am

What you say makes way too much sense. Stop it already. LOL