Trumped-up growth

president-modified

RYAN  By Guest Blogger Ryan Lewenza

The economic recovery since the Financial Crisis has been one of the weakest on record. Yes the labour market is doing quite well, housing is recovering nicely and stocks are trading at all-time highs. No complaints there. But overall economic growth has been subpar.

Going back to the 1950s, the U.S. economy has grown at an average of 3.3% annually and following recessions, typically grows at 5%+. Since 2010, the U.S. economy has grown at a lackluster 2.1%. But this looks set to change in 2017 as President-elect Trump is able to get some of his economic policies passed through congress providing a much needed boost to economy.

Long-term U.S. Economic Growth

ryan-1

Source: Bloomberg, Turner Investments

Leaving aside some of Trump’s more controversial policies (e.g., ripping up NAFTA, deporting immigrants, and banning Muslims from entering the U.S.), I believe some of his economic plans have real merit, and if passed, could help improve the trajectory of the U.S. economy, possibly boosting GDP growth to 3%+ over the next few years.

To show this we have to examine the four components of economic growth. In Economics 101, we learned that GDP = Consumption (C) + Government (G) + Investment (I) + Net Exports (X-M).

In recent years, consumption has been the main driver of economic growth for the U.S. economy. For example, over the last two years the U.S. economy has grown at an average rate of 1.90% (quarter-over-quarter annualized), with consumption contributing more than 100% to this growth (1.98% to be exact). Therefore, the other three areas (government spending, investment and net exports) actually detracted from economic growth.

I see personal consumption remaining healthy next year supported by an improving labour market, rising wages, stronger housing and equity markets, and high consumer confidence.

Where I see Trump’s policies having a positive impact is on government spending and investment.

On the government side, Trump’s trillion dollar infrastructure proposal could provide a strong boost to economic activity should it be passed. If we assume the trillion dollar infrastructure program is passed and the government spends $50 billion annually (his plan has the government and private sector each spending $500 billion over 10 years), I estimate that this could boost US GDP growth by 0.40% annually, assuming a multiplier of 1.5. The multiplier is an economic term which estimates the impact of government spending. Some studies show that infrastructure spending has a higher impact/multiplier than typical government spending, with some estimating the impact at 1.5 to even as high as 2 (i.e., infrastructure spending of $1 boosts the economy by $2). We think a more reasonable estimate is 1.5, which translates into a potential boost to growth of 0.40% annually.

On the investment side we see two specific policies possibly impacting economic growth. First is Trump’s plan to lower the corporate tax rate from 35% to 15%. Lower taxes paid by corporations will result in higher earnings and cash flow which could lead to increased investment from U.S. corporations.

More importantly is his proposal to reduce the tax rate on cash held overseas. It is estimated that over US$2 trillion in cash is stashed in overseas subsidiaries of U.S. corporations. Under the current tax regime if say, Apple, decides to repatriate those funds back to the U.S. it will have to pay Uncle Sam 35% first. Given this, many U.S. corporations have elected to keep those funds overseas to avoid paying these high taxes.

If Trump reduces that tax rate on these funds to say 15%, thus offering a “tax holiday” to U.S. companies, we could see a number of U.S. companies finally bring that cash back home, which could be used to increase dividends and stock buybacks, or better yet, increased investment which has a greater long-term economic impact.

Essentially, we see Trump’s policies providing a boost to government spending and investment which could push overall GDP growth above 3% in later 2017 and into 2018, a level not seen much during this recovery.

Government and Investment Are Detracting From Growth

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Source: Bloomberg, Turner Investments

Now I’m going to get a bit geeky here so bear with me. If I’m correct on my economic growth expectations for 2017, then this has positive implications for corporate earnings and equity prices. Based on my economic model of S&P 500 revenues and U.S. GDP growth, if the U.S. economy grows at 3% on a real basis, then this implies a 7% growth rate for S&P 500 revenues in 2017. Applying a net income margin rate (net percentage companies earn after all expenses) of 9.5%, I estimate that S&P 500 earnings will rise to $117/share in 2017 or 9% year-over-year.

All of this supports our continued bullish view of the stock market, with stronger corporate earnings expected to drive equity prices higher in 2017. Finally, and to totally nerd out, based on my technical readings of the U.S. equity market, I’m projecting that the S&P 500 will rise to 2,400 in 2017 or 6.5% from current levels, coincidently the same as my fundamental target.

I always love it when my technical readings align with my fundamental projections. But then again, I don’t get out much!

S&P 500 Sales To Rise 7% Next Year

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Source: Bloomberg, Turner Investments
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.

124 comments ↓

#1 paulo on 12.17.16 at 3:02 pm

Excellent article and research.
might be on the conservative side, provided the trumpster turns out to be a get her Er type of guy.

What about Interest rates any thoughts? if trump pulls it off the bond market will be clobbered = increasing interest rates , setting aside other possible issues such as a pissing contest with china

#2 Figmund Sreaud on 12.17.16 at 3:03 pm

In Economics 101, we learned that GDP = Consumption (C) + Government (G) + Investment (I) + Net Exports (X-M).
____________________________

Yes, … but, but said equation does not – unequivocally – incorporate political risk factor in it!

I say, therefore: … the above equation contains a fatal flaw, …

Anyway, … political risk matter in the financial system. Period.

F.S. – Comox, BC.

#3 Vancouver Troy on 12.17.16 at 3:07 pm

Good article Ryan, thanks, but can we please stop saying
“Deporting immigrants” and say “deporting illigal aliens”

Trump has no plan to deport legal immigrants to the USA and wants to focus on issues like Kate’s law that would give them the power to deport illegal aliens convicted of violent criminal offences.

By repeating the false narrative that Trump wants to round up legal immigrants, it makes me question the validity of the rest of your writing.

#4 For those about to flop... on 12.17.16 at 3:14 pm

Vampire studies GMST 454 on 12.17.16 at 12:06 pm
ETFs have put pressure on the MF industry to lower fees. Some of the banks have low fee options, usually index funds, well under 1% MER. CIBC has a balanced Index fund with 0.49% MER. I had some MFs there from decades ago, and I just rolled the bunch into it, with a couple of other funds to balance it out more to my liking.

Supposedly some new rules coming in January. Garth has stated many time the MF model is broke. Definitely needs some revamping.

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

Hey Vamp,my wife has some of her Tfsa money in this fund.
The only difference is to get the lower MER you have to have 50k in there and so in a couple of years we will most likely do this and keep the u.s equity fund for diversity.

I think the current rate for 50k is 0.39%,which is even better…

M42BC

#5 Leo Trollstoy on 12.17.16 at 3:18 pm

The US is BOOOOOMING!

And Trump will preside over the US BIOM!

Perfect timing

#6 NEVER GIVE UP on 12.17.16 at 3:24 pm

At ground level, the amount of Government Red Tape in the USA is absolutely breathtaking!

I would say it stifles all sizes of business.
82,000 pages of regulations!

http://thehill.com/regulation/administration/264456-2015-was-record-year-for-federal-regulation-group-says

#7 Polls R Phake on 12.17.16 at 3:28 pm

“The economic recovery since the Financial Crisis has been one of the weakest on record. Yes the labour market is doing quite well, housing is recovering nicely and stocks are trading at all-time highs. No complaints there. But overall economic growth has been subpar.”

WHAT? We have been old on this blog that US recovery has been strong and robust. Was that phake news for the last 7 years?

#8 Pepito on 12.17.16 at 3:29 pm

Seems like there are a lot of ifs in all that. Consumers, you know those 99% folks, are tapped out and there is little evidence of serious enough wage growth in the Mcjobs to justify an increase in consumption. But you’re r9ight about share prices rising because all those tax breaks will continue to go to dividends and buybacks with zero to investment and growth. Ask yourself, what did corps do with the money they borrowed in the last 8 years of the lowest financing costs in history. That’s right, buybacks and dividends. So yes, if trump doesn’the blow up, investers may do very well, the rest, as usual, not so much. Until the next crash when the fraud is again exposed.

#9 Al on 12.17.16 at 3:32 pm

The Influenza!!

#10 Metaxa on 12.17.16 at 3:33 pm

Now all Trump has to do is appoint Snoop Dog in charge of the DEA and the circle of life will be complete.

Money and happiness for everyone.

#11 I'm stupid on 12.17.16 at 3:35 pm

What a wonderful post! You explained your predictions numerically.

#12 Context on 12.17.16 at 3:37 pm

Good afternoon Sir Lew and tell us all how this will benefit Canada, so bring it full circle, as I for one need to be informed by your complex equation for USA.

#13 InvestorsFriend on 12.17.16 at 3:39 pm

Consumption is the main driver of Economic Growth?

“In recent years, consumption has been the main driver of economic growth for the U.S. economy.”

*******************************************
Consumption is also ultimately the ONLY reason to have an economy in the first place.

Investment is made to increase future consumption. Government expenditures support consumption and safety and law and order in order to insure people stay alive and safe and consuming. A country wishes to export more than it imports only so it can do the reverse and enjoy the fruits thereof at some point.

#14 InvestorsFriend on 12.17.16 at 3:48 pm

GDP Growth of ONLY 2.1?

Since 2010, the U.S. economy has grown at a lackluster 2.1%.

*************************************
Okay, but that is 2.1% REAL growth (not in nominal dollars but real dollars)

At 2.1% the entire economy of the U.S. would double in 33.5 years in real terms. Imagine what that looks like. Would it twice as many houses, cars and buildings? It would be if everything grew evenly at a real rate of 2.1%.

Everything would quadruple in 67 years.

THAT is ENORMOUS growth, actually. Slower than 20th century growth but still enormous.

Feel free to check the math.

#15 inflate - inflate on 12.17.16 at 3:48 pm

Good enough article sir but for the fact that Trump cannot keep away from going past the edge regarding laws of any sorrt and so will be impeached rather qickly. If not then the Repulican Machine will push his tax reduction thru and some of his infrastructure too and as their deficit & debt will balloon the Republicans will say” see what government spending does to the debt” convincing the silly public to agree when the biggest contributor to the deficit & debt will in fact be the tax reductions… Their cure will be to cut back on the social services which are already way lower than ours in Canada… Good luck to the fool who voted this Republican Machine back or better told were conned by the FBI & KGB together… Every American individual who has died in the last 50 years has got to be rolling over in his or her grave with such an American / Russian set-up…

#16 InvestorsFriend on 12.17.16 at 3:52 pm

GDP Growth per Capita

What matters more than GDP growth is GDP growth per capita.

A economy that doubles while the population doubles leaves each citizen in an unimproved position, on average.

References to slow growth today versus the past are much more meaningful if done on the basis of per- capita growth.

#17 Mark on 12.17.16 at 4:01 pm

If economic growth rates are coming down (and they clearly are), then the justifiable P/E ratios also should come down dramatically.

The S&P is trading at what, a P/E multiple of around 26? If we assume growth is slower, much slower, then just how exactly is this multiple justified?

Contrast such wish, say, the TSX. Yes, Canada’s growth has/is slowing down significantly, largely on account of the crash in commodity prices and the falling/stagnant residential RE prices in the post-2013 peak era. However, there has been a ~30% currency depreciation which has largely buffered such, keeping earnings relatively robust in the roughly 900-1000 range for the TSX Composite (~15,200 right now!).

In a nutshell, there’s a recovery in Canada’s resource sector which will eventually occur, to act as a tailwind to TSX earnings. The P/E multiple is only a modest 16 or so. And growth could very well accelerate after being so poor these past few years. Contrast such with the United States which seems to be suffering permanently reduced structural growth, and already suffers from an excess in P/E multiples.

My personal excess allocation is in Canada. Wouldn’t touch much of the S&P500 with a ten-foot pole simply on valuations. If higher interest rates materialize, bye-bye US FIRE sector, particularly the insurers and financials that are very sensitive, in quite a negative fashion, to higher long-term interest rates.

#18 tkid on 12.17.16 at 4:02 pm

Good post!

#19 Mark on 12.17.16 at 4:08 pm

“References to slow growth today versus the past are much more meaningful if done on the basis of per- capita growth.”

Fair enough, but the populations of either Canada or the USA are not expanding to any meaningful extent. So the point, which may be well made for an economy which does have population growth “juicing” GDP, really is somewhat moot in this discussion.

Also, lots of the sort of ‘investments’ made during periods of rapid growth don’t show up in GDP immediately, when they do occur. For instance, educating a class of 100 students shows up as a few teachers’ salaries, maybe an imputed cost of a building and a few other items. GDP doesn’t reflect, for instance, the input of the students into learning the material, nor the asset that has been created. GDP, similarily, does not delineate between activity that is productive and accretive to the long-term performance of the economy, and activity which is basically one-time consumption and unsustainable.

I personally believe a good chunk of the USA’s “GDP” falls into the latter category as despite the US being such a high GDP economy per capita, they are not even able to cover their own domestic consumption with their domestic production. ie: they run quite a deep structural trade deficit, and have incurred large corresponding amounts of external debt.

#20 SS in MTL on 12.17.16 at 4:12 pm

Let’s say GDP grows at 3%, then what?

Once the stimulus slows or is withdrawn, we then have a close-to-zero YoY growth rate, with a higher debt level.

I’m all for stimulus when warranted, but that close to full employment, really?

And then with the higher USD, and some of that extra consumption leaking out as increased input, Trump’s main barometer, the current account deficit, will flash deeper into the red. He won’t let that happen.

Even if GDP grows at 3% next year, it would be a one-off mirage.

Deficits at full employment, and us liberals are supposed to be spendthrift?

– From a Liberal that does not agree with the size of our PM’s current deficit.

#21 SS in MTL on 12.17.16 at 4:13 pm

*leaking out as extra imports

#22 jess on 12.17.16 at 4:19 pm

Aggregate Data Q3 2016
HFA Performance Data Reporting – Borrower Characteristics
Total Assistance Provided to Date
QTdate = $251,736,041.00
cum. = $5,509,203,116.00

Total Spent on Administrative Support, Outreach, and
Counseling
QTDate – $26,307,916.00
cummulative – $690,680,197.00

2. The data in this report does include individuals who have applied for down payment assistance, with the exception of individuals who have received
down payment assistance through Florida’s Hardest Hit Fund program. Including Florida, 280,866 borrowers have received assistance through the
Hardest Hit Fund program.

——————————————–
As many as one-third of working Americans do not earn enough money to meet their basic needs. Wages have not kept pace with the rising cost of housing, healthcare, and education and currently, 40 million Americans are working in low-paying jobs without basic health and retirement benefits.
================
Allocation:see dollars
https://www.treasury.gov/initiatives/financial-stability/TARP-Programs/housing/Pages/Program-Documents.aspx

free program The HHF provided to support homeowners in states hit hardest by the economic crisis. State housing finance agencies have used the Fund to develop programs that stabilize local housing markets and help families avoid foreclosure in the following states:
https://www.makinghomeaffordable.gov/steps/Pages/step-2-program-hhf.aspx

877-GET-HOPE
In December, 2015, Congress passed the Consolidated Appropriations Act, 2016, which gave the Secretary of the Treasury the authority to commit up to $2 billion in additional TARP funds to current Hardest-Hit Fund (HHF) program participants. The additional $2 billion was obligated by Treasury as of June 2016 and is included in the total amount obligated for HHF

#23 jay on 12.17.16 at 4:23 pm

http://www.commondreams.org/news/2016/12/16/100-ceos-have-much-retirement-savings-116-million-americans The U.S economy has been going great for these guy’s.

#24 conan on 12.17.16 at 4:38 pm

“I believe some of his economic plans have real merit,…”

Which ones Ryan?

Me, I see Trump as a coin toss. Heads, he invades Venezuela and takes their stuff. Tails, he invades somewhere else, and takes their stuff.

As far as economic policies go, he has his finger on the danger button. Danger that is, to countries like Canada, that may lose jobs to a “Make America Great Again!” job repatriation policy.

Looking forward to hearing the “Trumpian verbiage” from Donald once the “honeymoon” period is over, and SHTF stuff is going on.

My prediction is that he will be the first POTUS to use the F word on live TV.

#25 mark on 12.17.16 at 4:39 pm

Interested to know your for cast for international stocks and emerging markets.
Alot of so call experts project the U.S. to have lowest projected 10 year returns going forward, with emerging markets highest R.O.I. and international stocks in the middle.
I am wondering 10%possible for emerging market going forward, doable??
Thanks.

#26 InvestorsFriend on 12.17.16 at 4:39 pm

Markisms

#17 Mark on 12.17.16 at 4:01 pm said:

If economic growth rates are coming down (and they clearly are), then the justifiable P/E ratios also should come down dramatically.

****************
Agreed directionally. But high P/E are also supported by ultra low interest rates and they may remain ultra low despite some little increases. But yes, I think U.S. P/E ratios should decline.

Mark also said:

So the point, which may be well made for an economy which does have population growth “juicing” GDP, really is somewhat moot in this discussion.

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

I think you got my point backwards (before wandering completely off track). High population growth of the baby boom and immigration is what “juiced” GDP to an average 3.3% to 2007 versus the more recent 2.1%. I suspect the GDP per capita growth may be better now than in the boom years due to lower population growth rate recently.

If someone does that chart with GDP per capita, recent growth may not be lower than the 1952 to 2007 average after all.

Warren Buffett argued in Fortune magazine articles in 1999 and 2001 that earnings should grow, on average, with nominal GDP per capita. (Note real GDP plus inflation and to that he added the dividend yield to predict returns in the 6% range at a time when others were predicting 12%)

#27 BobC on 12.17.16 at 4:57 pm

#3 van Troy
But it’s the “in” thing to blast and hate Trump. Makes me question what they’re so scared of.

#28 Shawn on 12.17.16 at 5:53 pm

Very good article. However, I think you’re being too conservative. I think we see S&P500 2500 easily in 2017.

#29 For those about to flop... on 12.17.16 at 6:08 pm

#26 InvestorsFriend on 12.17.16 at 4:39 pm
Markisms

#17 Mark on 12.17.16 at 4:01 pm said:…

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

Hey Shawn, you call them Markisms,but when he talks about real estate cresting in Vancouver and Toronto in 2013 and such ,I call it a skid Mark…

M42BC

#30 Ryan Lewenza on 12.17.16 at 6:10 pm

Paulo “What about Interest rates any thoughts? if trump pulls it off the bond market will be clobbered = increasing interest rates , setting aside other possible issues such as a pissing contest with china.”

I covered this exact topic two weeks ago in Sell Your Bonds? Yes we see Trump’s policies as inflationary which could bring forward Fed rate hikes. But we still see interest rates remaining low from a historical context given low productivity gains and population growth. So we don’t see bonds getting killed in this environment and therefore continue to recommend investors hold bonds to help provide balance to portfolios. Also we believe investors should overweight corporate bonds and preferred shares which do better in a rising interest rate environment. Check out that blog post for my detailed outlook on bonds. – Ryan L

#31 JSS on 12.17.16 at 6:12 pm

Ryan , what kind of growth do you see for the TSX in 2017, and 2018, from the current level of around 15,250?

#32 The Technical Analyst on 12.17.16 at 6:16 pm

Enjoy the analysis. IF the S&P500 goes up 7% next year with three more rate increases, great; it will do our portfolio good.

But already the P/E ratio is 26. Very worrisome and at 0% S&P500 increase would take 20 years to get it to the historical average of 14.

Always been a Trump supporter. Go Trump.

Disclaimer: I’m not investing much in the US market right now, all funds are going to EEM.

#33 the Awakened One on 12.17.16 at 6:17 pm

Thanks Ryan,

Great post to read! So you’re a billionaire reclusive nerd eh? Well with this cold spell, you must be crouching over a cup of Earl Grey fortune-telling… getting aroused over computer models of growth.

You saying that S&P 500 will up ~ 7% in 2017 ? Great! I’m gonna pile some more into ETF for S&P 500. Like VFV.

What if Trump gets impeached from the white house over that Russkie election hacking thing… will S&P 500 take a dive then?

#34 Ryan Lewenza on 12.17.16 at 6:20 pm

Figmund Sreaud. “Yes, … but, but said equation does not – unequivocally – incorporate political risk factor in it!”

I agree with this and is a concern. I’m hoping he softens up on some of his more controversial policies like a trade war with China and Mexico or deporting 11 million immigrants. Equity markets do not like uncertainty so I’m hoping cooler heads prevail. – Ryan L

#35 Ryan Lewenza on 12.17.16 at 6:29 pm

Context “Good afternoon Sir Lew and tell us all how this will benefit Canada, so bring it full circle, as I for one need to be informed by your complex equation for USA.”

It will benefit Canada given the important relationship between our two countries. US GDP growth and commodity prices are the two most important drivers for the Canadian economy. Therefore stronger US growth should translate into stronger Canadian growth, higher Canadian profits and higher Canadian stock prices. We’ll see if oil prices continue to recover next year which will dictate whether the TSX outperforms the S&P 500 in 2017. – Ryan L

#36 WaitingOnTheWorldToChange on 12.17.16 at 6:32 pm

Nice analysis Ryan. How do you reconcile higher interest rates affecting the real estate market and capital investments and the stronger US dollar affecting corporate earnings and a growing trade imbalance?

#37 Ryan Lewenza on 12.17.16 at 6:34 pm

JSS “Ryan , what kind of growth do you see for the TSX in 2017, and 2018, from the current level of around 15,250?”

I see good upside in the TSX next year in part driven by stronger US growth and higher oil prices. The key is oil prices. If oil continues to rise as is my expectation, then I see the TSX doing well next year. 16,000 is definitely doable if oil prices continue to rally. – Ryan L

#38 Ryan Lewenza on 12.17.16 at 6:38 pm

Mark “Interested to know your for cast for international stocks and emerging markets.”

I’m conflicted on emerging markets right now. We like them long-term given stronger economic growth and better valuations. However, EM generally underperforms when the US dollar is strong. So you have some positives and a big negative. We have 4% exposure right now to EM and we’re struggling with whether we should increase right now. I’m waiting for stronger technicals before we consider adding to our position. – Ryan L

#39 Smoking Man on 12.17.16 at 6:40 pm

Ryan you got to get out more. You and Doug have been doing this for a while. Doug’s putting more of his soul into his posts. Probably drinks more than you.

Your post tonight, informative but boaring as shit. Ad a gifted word smith with technical challenges let me give you some writer advice.

Sweat spot somewhere between second and third glass of wine.

That’s when you should write.

Toss in a few personal trauma, like when you were 15 on you’re first date and that golf ball sized zit appeared on your for head. And how you delet with it.

I’m Seneca, after my stake dinner I’m hitting the JD. Keep your friends close and the delete button handy when free booze is all around me.

#40 Smoking Man on 12.17.16 at 6:49 pm

I agree with this and is a concern. I’m hoping he softens up on some of his more controversial policies like a trade war with China and Mexico or deporting 11 million immigrants. Equity markets do not like uncertainty so I’m hoping cooler heads prevail. – Ryan L
………..
Do you want to know the future….. You must bielive in extra terrestrials. Reach out. Kid.
Do you even have a twitter account, I searched, just found a kid with a giant zit on his for head. Or perhaps I can’t spell.. That could be the reason I could not find you.

@SmokingMan wee grasshopper.

#41 Barb on 12.17.16 at 7:02 pm

“…In recent years, consumption has been the main driver of economic growth for the U.S. economy”.

——————————-

Canada too.

And that’s the whole problem because our two nations, frankly, produce nothing any more. Think back to when both were powerhouses with steelyards, shipping, textiles, etc.

Now? we “consumers”, with after-tax money, are encouraged to spend spend spend, thanks to Hallmark (*grin* Mothers / Fathers Day/ Christmas/what-have-you days).

And banks that mail unsolicited credit cards, preprinted with your name, inviting those same “consumers” to keep spending, albeit this time with a new piece of plastic.

I received a call from my bank last week advising that they were willing to increase my card’s credit limit to $11,000.
Eleven thousand dollars!

I have no debt, no mortgage and–if I use a credit card–it’s paid in full as soon as the invoice arrives.

It’s a travesty that “consumers” are encouraged and expected to augment a country’s economic growth.

So I purposely spend less and less.

#42 For those about to flop... on 12.17.16 at 7:05 pm

Check out this footage of a tanker crash in Baltimore.

55 car pile up and two fatalities.

Unfortunate,but could have been a lot worse.

Some people will say these types of vehicles should not be on the road ,but how else do you get the product to the marketplace…

M42BC

http://www.dailystar.co.uk/news/latest-news/571211/baltimore-maryland-us-horror-crash-tanker-explodes-freezing-weather-icy-arctic-blast

#43 Smoking Man on 12.17.16 at 7:06 pm

Sad thing about crossing the Rubicon, finding your voice as a writer.

Imposable to have a social life, you are 24/7 obsessioning, shut up I’m watching something to write about..

It’s a lonely and beautiful world….

#44 For those about to flop... on 12.17.16 at 7:30 pm

Bill16 at 1:03 pm
#197 For those about to flop… on 12.16.16 at 6:32 pm
North Arm Road , Bodwell road , Ferris road , Wilson road
are what Vancouver streets respectively?
http://vancouverstreetstories.com/histor-of-south-vancouver/

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

Hey Bill,just wanted to let you know that I got your message and enjoyed the link.
I live in between 33rd ave and 41st,two of the streets mentioned and I’ve never heard of this.

On Fraser st. there are little historical markers strapped to the streetlights that I read to learn about the history of my neighborhood ,while my wife is inside the fruit market throwing elbows desperate to get the last bunch of decent looking bananas.

In between 41st and 49th avenues on Fraser there are 11 fruitstands with all sorts of ethnicities jostling for position…it is super competitive.

I have to stay out on the sidewalk yelling tactical advice as I am not allowed to compete as they don’t have a heavyweight division…

M42BC

#45 The electric universe on 12.17.16 at 7:47 pm

#39 Smoking Man on 12.17.16 at 6:40 pm
Ryan you got to get out more. You and Doug have been doing this for a while. Doug’s putting more of his soul into his posts. Probably drinks more than you.

Your post tonight, informative but boaring as shit. Ad a gifted word smith with technical challenges let me give you some writer advice.

Sweat spot somewhere between second and third glass of wine.

That’s when you should write.

Toss in a few personal trauma, like when you were 15 on you’re first date and that golf ball sized zit appeared on your for head. And how you delet with it.

I’m Seneca, after my stake dinner I’m hitting the JD. Keep your friends close and the delete button handy when free booze is all around me.

Speaking of boring…. it’s another Saturday night drunk in Seneca craphole venting at the world about lesbian teachers. Stunning imagination!

#46 Ronaldo on 12.17.16 at 7:50 pm

Wow, what a difference two months can make. Three cheers for the Trumpster. Finally someone in charge that is not bought and paid for. Look forward to 2017.

#47 Long-Timer Lurker on 12.17.16 at 8:03 pm

Good analysis and projections, Ryan. Just watch out for the wildcards. Things are heating up with Red China.

#48 TurnerNation on 12.17.16 at 8:06 pm

USA is governing itself accordingly. Diversity through industry. Germanic Trump and Bushes rule (check out Sr’s face profile). Who won that skirmish again?

Anyway, how disgusting is Canada? The USA gossip site thedirty.com – click on Top Cities. Of the 10 listed four are Canadian cities. What gives, our pop is ten times smaller. These are self-reported.
Clearly we are leading the continent with jokery and fakery and hustling. Explains our trade in sht bungs.

#49 Dark Matter on 12.17.16 at 8:06 pm

Excellent post Ryan, and I hope you are correct. My problem is Trump scares the crap out of me. I get the feeling Trump will say anything to anyone to win any argument. I feel he is a very big loose cannon. The markets are rallying now because investors are assuming what he has said during the election will come true. What they are ignoring is Trump could drive the world economy off the rails. He could be starting trade wars with Mexico, China, Canada and Europe. Tariff retaliations between counties could add to inflation and simultaneously stifle growth. I truly hope the Trump we saw during the elections was the “Showboat Trump”, and the ”Smart Trump” will emerge on Jan 20th to preside over the largest economy in the world. The trouble is, nobody really knows which one will appear. I don’t think Mr. Trump knows either.

#50 Context on 12.17.16 at 8:19 pm

Trump has made it clear just last week that the $1 trillion budget for infrastructure will be used for American corporations through tax grants and American workers. I fail to see how this will benefit Canada, and I don’t believe he will have a change of heart.

#51 espressobob on 12.17.16 at 8:21 pm

Optimism never hurts until something unforeseen pulls the rug out from under ones feet.

The markets are poised to the upside in 2017.

Taking profit is never wrong. It’s the occasional rebalancing that provides protection and some dry powder retail investors can count on in case of a pullback.

Euphoria, the other emotion that can have consequences.

#52 Frank on 12.17.16 at 8:38 pm

That long term growth is such a joke. The weight is so far towards the 50s it’s a joke. If hasn’t been slow since 2010. It has been since 97. That’s 20 years of slower growth. This is the new normal, get used to it.

#53 Smoking Man on 12.17.16 at 8:59 pm

#45 The electric universe on 12.17.16 at 7:47 pm
#39 Smoking Man on 12.17.16 at 6:40 pm
Ryan you got to get out more. You and Doug have been doing this for a while. Doug’s putting more of his soul into his posts. Probably drinks more than you.

Your post tonight, informative but boaring as shit. Ad a gifted word smith with technical challenges let me give you some writer advice.

Sweat spot somewhere between second and third glass of wine.

That’s when you should write.

Toss in a few personal trauma, like when you were 15 on you’re first date and that golf ball sized zit appeared on your for head. And how you delet with it.

I’m Seneca, after my stake dinner I’m hitting the JD. Keep your friends close and the delete button handy when free booze is all around me.

Speaking of boring…. it’s another Saturday night drunk in Seneca craphole venting at the world about lesbian teachers. Stunning imagination!
…….

Last sanctuary of Freedom left within 1000 miles from communist Toronto. …. I can smoke at my table. Display my rotting teach with our fear of judgement. Not that I ever gave a shit about judgement.

That superiority complex that comes knowing you own a plasma flyer, and your not from this pathetic word we know live in.

Jealousy gets you no where. You try writing something creative.. It’s not easy.

Insults. Dime a dozen, your not as special as me.

Get over it.

#54 Smoking Man on 12.17.16 at 9:05 pm

Garth, please for one day give the well trained teacher dogs permission to get hammered and type freely on here.

Nothing makes me cringe more that suck up’s worshipping the main post. No self respect or confidence.

Men need to insult other men, so the other men respect them.

Oh Ryan, So good.. Oh Doug that was great. Garth your amazing..

That’s just sick and against guy code.

It’s what happens we men are feminized.

#55 words have meaning on 12.17.16 at 9:07 pm

‘the Financial Crisis’

—-

that phrase is commonly used to describe the massive transfer of wealth from taxpayers to AIG
‘the Financial Fraud’ would be more apt

#56 Smoking Man on 12.17.16 at 9:32 pm

Beilve it or not. Got me a few life long best freinds.

The day we met. Fists to the head over nothing but cut eye.

That’s not going to happen in lesbonic run universitys. Making high pitch voice Starbucks servers.

What is with this new world, globlaisim can’t be pulled off without making clones happy dog Tail wagger T2.

I am a small pedal of the resistance.

Whos in.

#57 Mark M. on 12.17.16 at 9:34 pm

It’s really quite incredible hearing all the same people who’ve been telling us for five years how robust this US recovery has been now fawning over Donald Trump, the person they spent 18 months saying would destroy it all, and his pro-growth bridge building policies.

The cognitive dissonance is striking. Apparently now the Obama years were so sub par with growth far below normal post recession levels that the Dow was only able to triple during his presidency.

Now remember, as Garth says, the markets are self-correcting, and this run up had absolutely nothing to do with trillions in stimulus and 0% interest rates. Oh no, it’s the piss poor fundamentals that tripled the Dow, and the best is yet to come!

So get ready, the bridges are coming, while taxes are cut and interest rates will rise. Oh and the Dow, 80 000 by 2024, bank on it!

You’re the guy who said US rates could never go up. — Garth

#58 Smoking Man on 12.17.16 at 9:43 pm

Nothing un hinges creativity more than booze and tunes in the ear buds.

Haven’t figured out the right mix for perfection yet.

Till then I’ll keep experimenting.

#59 Stock picker on 12.17.16 at 9:43 pm

Obama added 10 trillion to the debt in eight years….what’s the big deal about Trumps 1 trillion proposal? And seriously, the talk of labor being a full capacity is nonsensical as the Obamatons only count the people who still collect benefits not the 100 million who are unemployed and ineligible .

#60 hope & ruin on 12.17.16 at 9:47 pm

Thanks for the post Ryan. Gotta disagree with the smoking man #39, I prefer your succinct technical writing style. When I need entertainment the comments section will do.

#61 Janes on 12.17.16 at 9:48 pm

Great post. It’s funny, when you deliver optimism re: the markets, everyone cheers your posts. It’s almost like the readers here all have horses in this race.

We want to believe!

#62 Smoking Man on 12.17.16 at 9:56 pm

DELETED

#63 Smoking Man on 12.17.16 at 10:06 pm

DELETED

#64 Cloudy on 12.17.16 at 10:38 pm

Ryan, I really enjoy reading your posts. Thank you.

#65 Spectacle on 12.17.16 at 10:52 pm

Hi,

Excellent post guys, and big thanks to Mr Turner for his massive contribution to Canadian investment intelligence. ( I’ve never heard of that woman head of canadian investment intelligence).

The other dimension criticized for tonight, “risk” is of course important. But seriously, things like the Guass virus taking the world computers for such a significant storm are kind of beside the point. Doesn’t effect the investment put forth here.

Eg: Big thanks too; brother sold his house YVR , instant close, 6 months free rent….. Then kaboom, 15% hits. Now developer getting a $10,000 per month hit. Bro bought a condo cash, investe the remains.

Took me 16 months fighting to make him see the light. I’m bruised & beaten, but he claims it was a simple, decision, and no hard feelings…. Yes! Turner wins again!

That’s why we loyal ( still steerage section, but I’ll take it..) followers come here!

Regards gentleman, m.

#66 fishman on 12.17.16 at 10:57 pm

The thing to remember Ryan is that when men insult other men they don’t really mean it. When women compliment other women they don’t really mean it.

#67 Spectacle on 12.17.16 at 11:00 pm

#57 Smoking Man on 12.17.16 at 9:43 pm
Nothing un hinges creativity more than booze and tunes in the ear buds.

Haven’t figured out the right mix for perfection yet.”
****************************************

Just a note Smokey,

You are the perfect individual to benefit from one-to-one therapy with a great Psychologist to guide you to that sweet spot of creativity and balance. Much like. A solid portfolio!

If your ever in YVR I can introduce you to a master Psychologist. Change your life x10!

#68 Plasma Balls of Fire on 12.17.16 at 11:03 pm

#61 Smoking Man on 12.17.16 at 9:56 pm

DELETED
#62 Smoking Man on 12.17.16 at 10:06 pm

DELETED

Stunning creativity and imagination.. you should be a writer!

#69 Smoking Man on 12.17.16 at 11:20 pm

DELETED

#70 Spectacle on 12.17.16 at 11:21 pm

Re:
#49 Dark Matter on 12.17.16 at 8:06 pm
Excellent post Ryan, and I hope you are correct. My problem is Trump scares the crap out of me. I get the feeling Trump will say anything to anyone to win any argument. I feel he is a very big loose cannon. The markets are rallying now because investors are assuming what he has said during the election will come true. What they are ignoring is Trump could drive the world economy off the rails. He could be starting trade wars with Mexico, China, Canada and Europe……….. I don’t think Mr. Trump knows either.
****************seriousle, people, Cahill *********

Trump is far smarter and competent than the majority of people can know or understand.
1) relax, Mr Trump does not want the money,.
2) he has done large miracles for the economic positivism in North America and the market returns. Significant , or your not playing by Turners rules.
3) he wond, he did it clean. And h did it with the U.S. Media against him. That’s legit.

Fear not, trust that the media is lying. Believe in good and that this is a major change in North American politics, economics, and if he drains the swamp, it’ll be so good for all of us.

Night…..

#71 paulo on 12.17.16 at 11:23 pm

#30 hey ryan thanks for the response and advice,defiantly will check it out.
P.S. keep up the good work,its appreciated by many!

#72 Eric Gobeil on 12.17.16 at 11:31 pm

Trump has no plan, has no clue, has no brain, is a liar, does not care about anyone but himself, pays no taxes (not because he is bright but because he can afford financial advisors), and will be the president of the U.S….. What a disaster!

#73 paulo on 12.17.16 at 11:39 pm

I Think 2017 will be a interesting year of significant changes, and challenges.
ill take the plunge and agree that trump will be successful in implementing many parts of his stated platform. investors will be on there toes,there will be some fantastic
opportunities,and the corresponding pit falls. sharpen your pencil,and have a great new year

#74 Mark M. on 12.17.16 at 11:44 pm

You’re the guy who said US rates could never go up. — Garth

Nope. I said they wouldn’t go up this year, not that they could NEVER go up. Once again I was right until December, just like last year.

I also said they’ll only go up appreciably when the bond market forces the Fed’s hand, well here we are.

Two years ago I said no rate hikes and we have 2 puny 25-basis point hikes. Is that how many hikes you thought we’d have by now?

The Fed just downgraded US GDP forecast for the coming year, do you really believe we’re getting 3 hikes?

Oh and if you believe the US recovery was lackluster, and the stock market isn’t juiced by QE and ZIRP, then can Trump triple the Dow over the next eight years? He should do better, the bridges right?

The coming recession will be far worse than 2008, and it’s coming during Trump’s presidency. Imagine, two once in a hundred year events in a single decade.

The Fed as always won’t see it coming, and won’t understand they’re the cause.

It would be useful for you to reveal your identity and credentials. Ryan, Doug and I stand in the sunlight and give an honest, fact-based opinion. Come out of the weeds and be measured, Einstein. — Garth

#75 Polls R Phake on 12.18.16 at 12:36 am

No proof that Russia did the hacking of the DNC but it was the Russians. Honest. Please believe us. We never lie.

http://www.reuters.com/article/us-usa-cyber-congress-idUSKBN1452E1

#76 Ponzius Pilatus on 12.18.16 at 12:54 am

#39 @ 40.
smokey, you are on fire.
Without you this blog would not amount to a hill of beans.
The two chart brothers are boaring, boaring.
But Garth is still king.
Long live this blog.

#77 Ponzius Pilatus on 12.18.16 at 1:04 am

I’m tired of the low IQ people beating up on Smoking Man.
This guy is a Genius.
Every day I go straight to his comments.
He’s the soul of this blog.
Sorry Garth.

#78 att on 12.18.16 at 1:23 am

What happened Ryan? The “we” turned into “I”.. are “we” wearing you down?

#79 NoName on 12.18.16 at 1:39 am

Interesting read

Management theory is becoming a compendium of dead ideas

“The similarities between medieval Christianity and the world of management theory may not be obvious, but seek and ye shall find. Management theorists sanctify capitalism in much the same way that clergymen of yore sanctified feudalism. Business schools are the cathedrals of capitalism. Consultants are its travelling friars. Just as the clergy in the Middle Ages spoke in Latin to give their words an air of authority, management theorists speak in mumbo-jumbo. The medieval clergy’s sale of indulgences, by which believers could effectively buy forgiveness of their sins, is echoed by management theorists selling fads that will solve all your business problems. Lately, another similarity has emerged. The gurus have lost touch with the world they seek to rule. Management theory is ripe for a Reformation of its own.”

https://goo.gl/f54N2I

#80 Future Expatriate on 12.18.16 at 2:03 am

Oh wow, another article by a 2%’er telling us how right wing economic policies will be good for everyone, when they clearly never are and are only good for other 2%’ers. And have led this part of the world into the biggest income disparity since the French Revolution. Which always works out well.

Here’s my stock tip; invest in guillotine manufacturers, have most of your wealth offshore like the big boys do, and always have open-ended plane tickets bought, paid for, and within arms reach.

Even if this US Putin coup sham does turn around. Because now, it’s going to be messy.

#81 mark on 12.18.16 at 2:34 am

Thanks ryan.
Guess my 30 % weighting in emerging markets is too much .
4 % is very conservative for emerging markets, don’t they account for over 20 % OF THE GDP?

#82 MutterMutter on 12.18.16 at 3:07 am

Republicans driving a Keynesian agenda to generate jobs for the labouring class — ah a penny for Ronnie and Maggie’s thoughts.

#83 Polls R Phake on 12.18.16 at 4:24 am

https://www.iceagenow.info/boston-coldest-december-16-133-years/

Apparently Al Gore forgot to tell Boston about Global Warming. They just hit a 133 year old cold record.

#84 When Will They Raise Rates? on 12.18.16 at 4:25 am

I always love it when my technical readings align with my fundamental projections. But then again, I don’t get out much!

S&P 500 Sales To Rise 7% Next Year:

http://www.greaterfool.ca/wp-content/uploads/2016/12/Ryan-3-768×418.png

Not bad…

The (not so) technical readings on which I base my S&P 500 projections:

https://i2.wp.com/www.acting-man.com/blog/media/2016/09/1-Monetary-base-vs.-SPX.png

I’ll leave this here:

“There is no means of avoiding a final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion or later as a final and total catastrophe of the currency system involved.”

– Ludwig von Mises

#85 the other white meat (pork) on 12.18.16 at 4:32 am

What is this “deporting immigrants ” meme that the liberal media, and now this blog has picked up on? Immigrants are people who come through legal channels and wait their turn. Perhaps you’re referring to “illegal aliens” who can’t be bothered with formalities and decide to crawl under the fence instead of waiting their turn. President Elect Trump was elected on the platform of deporting illegal aliens, much to the chagrin of coastal dwellers and people with degrees in such useful fields as Women’s Studies and other Humanities/Communications fields.

#86 Parksville senior on 12.18.16 at 5:16 am

You have to be careful with posts with any “academic ” content.
Has the unfortunate effect of luring the deplorables out of their holes and gives them the confidence to go on another hate filled rant.
Obeisance with “Trump is great” and “all hail Von Mises” is obligatory anywhere neocons may be slithering.

#87 Stock Picker on 12.18.16 at 5:49 am

Ryan, when you say you’re struggling with the decision to add to EMs and waiting to confirm better fundamentals doesn’t that equate to market timing…..something Garth has soundly denounced recently?

I strongly agree with timing principal btw. Welcome to the dark side.

#88 David McDonald on 12.18.16 at 7:16 am

Thanks for the lucid post.

As you predicted we are seeing a slow recovery of preferred shares; CPD is above $13 dollars.

I was afraid of another tamper tantrum and heavily in cash but before the election Garth said that the FED rate hike was priced in. That encouraged me to jump 100% back into stocks just in time.

Thanks again for what you do.

#89 go away SM on 12.18.16 at 7:26 am

#61 Smoking Man DELETED
#62 Smoking Man DELETED

Keep going Sir Garth, don’t hold back.

#90 crowdedelevatorfartz on 12.18.16 at 8:49 am

@#75 Ponzi Pilates
“I’m tired of the low IQ people beating up on Smoking Man.
********************************************

Pot meet Kettle

#91 traderJim on 12.18.16 at 8:54 am

#86 I would much rather see your comments deleted.

Most adults are able to skip by reading comments they don’t want to.

Some of us are even capable of reading comments they disagree with and not ask that the writer be banned.

Grow up.

#92 Ryan Lewenza on 12.18.16 at 9:08 am

Mark “Guess my 20% weighting in emerging markets is too high”.

Yes I would agree with this for 3 key reasons. First, EM has a strong negative correlation with the US dollar (in part because they have US denominated debt which makes it more expensive to support as USD rises). EM is more volatile so purely from a risk perspective I believe 20% is too high. Third, despite EM being cheaper and having higher GDP growth, the technicals remain neutral to negative so we prefer other areas right now. I think there will be a great time to load up and be overweight EM but I don’t think its here yet. – Ryan L

#93 Ryan Lewenza on 12.18.16 at 9:18 am

Stock picker “Ryan, when you say you’re struggling with the decision to add to EMs and waiting to confirm better fundamentals doesn’t that equate to market timing…..something Garth has soundly denounced recently?”

Garth is more referring to investors who think they can correctly time when to be in and out of the markets. For example, those selling ahead of US election or a Fed hike since they believe markets will sell off. I totally agree that trying to time the markets is a difficult and unwise strategy and that if investors build a high-quality and balanced portfolio that this will get them the returns they need over the long-run. But that said we still take an active approach in which equities and geographies that we decide to overweight. For example we’re overweight US stocks right now, but we could decide to reduce this if we start to see more bullish trends in commodities and say a weaker USD. In this case we would reduce US and increase exposure to TSX and EM. So yes we don’t try to time markets but we do actively attempt to determine where the best equity markets are to invest our client’s assets. – Ryan L

#94 Ryan Lewenza on 12.18.16 at 9:21 am

att “What happened Ryan? The “we” turned into “I”.. are “we” wearing you down?”

Yes YOU are. I’ve written research reports/commentary for over a decade first at TD Bank and then at Raymond James. Since I represented a firm and research desk I always had to say “we”. So its taken me some time to break this habit. But thanks for noting my progress. – Ryan L

#95 DoomandGloomer on 12.18.16 at 9:38 am

As noted above:

“There is no means of avoiding a final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion or later as a final and total catastrophe of the currency system involved.”

– Ludwig von Mises
——————————————————————-

How about we abandon all of the nonsense and go back to hunting, gathering, and foraging. To hell with consumption. Just eat what you kill.

#96 Shanghai Sharon on 12.18.16 at 9:45 am

Corporate Bond ETF recommendation by Ryan, short or long duration please. Thx

#97 Ace Goodheart on 12.18.16 at 10:06 am

RE: #54 Smoking Man:

“That’s just sick and against guy code.

It’s what happens we men are feminized.”

I actually work in an all female workplace (I’m a guy) and I can tell you that is not true. Women are absolutely brutal to each other, in a way that you really can’t imagine until you see it. True with men there is a “code” of sorts and certain things are considered “below the belt” and not done. With women, there is no code. They do everything and anything to each other. It is quite scary.

#98 Deleted Man on 12.18.16 at 11:03 am

ha ha… love it

#99 Keith in Rio on 12.18.16 at 11:25 am

Sitting at my local watering hole in Rio……..at 218 PM it’s currently 35 and headed for 40 degrees…
…….taxed at 15%……2 bedroom 2 bathroom beachfront condos can be had for $125K CAD……the leftist shits that screwed this country are going to Bangu for 20 years or more……..Iceland also thru the bankers in jail
……….wonder why the media missed that…..LOL…

If Garth and company could call 2 elections correct as I did maybe I’d have hired them. LOL !!!!!

#100 For those about to flop... on 12.18.16 at 11:56 am

This one is a little stale in date but goes to show you how important the service industry is in contributing to the GDP of each country.

The main reason I am posting this one is that it might help some people decide how much of their portfolios they want in emerging markets…

M42BC

https://howmuch.net/articles/one-diagram-that-will-change-the-way-you-look-at-the-us-economy

#101 crowdedelevatorfartz on 12.18.16 at 12:08 pm

@#161 Protea

“Leadership was the key”

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

Good to know you place incompetence and corruptability over incompetance.

And if you think the traffic will improve under the Liberal reign.
Spare me
They’re the one’s that have allowed nonstop housing and condo developments to sprout up everywhere in the Lowerbrainland there was available land with zero thought as to the traffic consequences or traffic planning.
Something about Real Estate companies and developement companies donation millions of dollars to their election fund over the past decade I suspect.
And this new “free” loan will throw gas on an already out of control fire.
Christy Clark hasnt dealt with anything to do with the gridlocked traffic of 4 years, 5 years, 10 years ago until this election.
The freeway system in Vancouver is an embarrassing joke for a major North American city.
The multi billion dollar, multi year Hwy 1 “expansion” the TCH is still 4 lanes each way until you reach an overpass and are forced to squeeze into 3 lanes
The 2 bridges they have built in the past 20 years have been an overbudget, unmitigated disaster everytime it snows. Please google “ice bombs BC bridges”
She punted the Deas Tunnel decision down the road until this election.
The Deas Tunnel, built in 1955 and overcapacity by 1985
I garanteed you she will be photoed wearing a hard hat within the next month or so at the entrance to the Deas tunnel for the new bridge.
A bridge that has been desperately needed for at least 10-15 years.
A bridge that hasnt yet been designed or determined if it will actually be feasible due to the soil sample currently taken.
Can you say horribly overbudget?
Kinda like the Site C dam?

#102 Ponzius Pilatus on 12.18.16 at 12:47 pm

#78 NoName on 12.18.16 at 1:39 am
Interesting read

Management theory is becoming a compendium of dead ideas

“The similarities between medieval Christianity and the world of management theory may not be obvious, but seek and ye shall find. Management theorists sanctify capitalism in much the same way that clergymen of yore sanctified feudalism. Business schools are the cathedrals of capitalism. Consultants are its travelling friars. Just as the clergy in the Middle Ages spoke in Latin to give their words an air of authority, management theorists speak in mumbo-jumbo. The medieval clergy’s sale of indulgences, by which believers could effectively buy forgiveness of their sins, is echoed by management theorists selling fads that will solve all your business problems. Lately, another similarity has emerged. The gurus have lost touch with the world they seek to rule. Management theory is ripe for a Reformation of its own.”
————–
Amen!

#103 InvestorsFriend on 12.18.16 at 12:55 pm

OH NO, the U.S. is a Service Economy!

#98 For those about to flop… on 12.18.16 at 11:56 am alerted us:

This one is a little stale in date but goes to show you how important the service industry is in contributing to the GDP of each country.

The main reason I am posting this one is that it might help some people decide how much of their portfolios they want in emerging markets…

M42BC

https://howmuch.net/articles/one-diagram-that-will-change-the-way-you-look-at-the-us-economy

*****************************************
I see, and what is the correlation between equity returns and the percent of the economy that is service based?

In a rich economy, people can afford to spend more on services than hard goods. What of it?

Are you implying that the equity returns in service industries are lower? I think the data would be to differ.

And please be direct, what exactly are your conclusions from the diagram? For equity investors? For the people of the U.S.?

#104 Context on 12.18.16 at 1:02 pm

#95 Ace Goodheart:- Your words of wisdom are correct as have seen it all, and its more than brutal as cat fights can go on forever. So you are surrounded by women in the workplace and be cautious what you say or do. They can turn on you for no reason at all faster than the speed of light because you ain’t seen nothing yet, and will pray for your survival.

#105 cold-war on 12.18.16 at 2:17 pm

For now Trump thinks he’s great.

USA thinks they are the greatest.

But when Trump’s Honeymoon is over and his chapter unfolds. All I can see is a new cold war, with China Ramping up there Nukes and same with Russia

USA has already proven they are not the power they once were, with Russia Kicking the USA back Rebels Arses. It has shown the world that USA / Trump is all talk and no action.

Eventually this madman may pull the trigger and then what?

#106 };-) aka Devil's Advocate on 12.18.16 at 2:19 pm

What’s all this I hear about Gold and Silver price collusion?

#107 For those about to flop... on 12.18.16 at 2:42 pm

InvestorsFriend on 12.18.16 at 12:55 pm
OH NO, the U.S. is a Service Economy!

#98 For those about to flop… on 12.18.16 at 11:56 am alerted us:

This one is a little stale in date but goes to show you how important the service industry is in contributing to the GDP of each country.

The main reason I am posting this one is that it might help some people decide how much of their portfolios they want in emerging markets…

M42BC

https://howmuch.net/articles/one-diagram-that-will-change-the-way-you-look-at-the-us-economy

*****************************************
I see, and what is the correlation between equity returns and the percent of the economy that is service based?

In a rich economy, people can afford to spend more on services than hard goods. What of it?

Are you implying that the equity returns in service industries are lower? I think the data would be to differ.

And please be direct, what exactly are your conclusions from the diagram? For equity investors? For the people of the U.S.?

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

Read my post 3 times then comment.

I didn’t mention the U.S…

M42BC

#108 crowdedelevatorfartz on 12.18.16 at 3:06 pm

@#97 Keith in Rio

Canadian ExPat I presume?

Enjoy the 35 c and the gunfire.
We have fresh snow in Burnaby and a fresh Fentynl crisis. Gunfire….not so much.

#109 crowdedelevatorfartz on 12.18.16 at 3:07 pm

@#103 cold war

You sound suspiciously like Apocalypto 2016

#110 Yuus bin Haad on 12.18.16 at 3:10 pm

Thanks for taking the conversation beyond the “Trump is evil” meme Ryan. You want “outlandish”? Let’s talk about what Twinkle Toes is doing and what Barry has done.

#111 protea on 12.18.16 at 3:16 pm

#99 crowdedelevatorfartz

I was very direct in saying that Kristy is far from perfect but you are deluded if you think the NDP are going to make everything come right ??

Socialism is a philosophy of failure, the creed of ignorance, and the gospel of envy, its inherent virtue is the equal sharing of misery. Winston Churchill

#112 Ronaldo on 12.18.16 at 3:43 pm

#104 };-) aka Devil’s Advocate on 12.18.16 at 2:19 pm

What’s all this I hear about Gold and Silver price collusion?
—————————————————————-
What! First you’ve heard of it? Where you been?

#113 Nonplused on 12.18.16 at 5:19 pm

One thing this so called economic expansion has mysteriously not produced is an increase in energy consumption. It’s not just oil, but worryingly electricity as well. The deregulated side of the US power business is dying on the vine, and it’s not all weather related. Things are getting so bad that a real liquidity crises is developing because nobody wants to give these power companies any credit, so they are literally approaching a point where they can’t buy fuel for their power plants even if we might imagine at some point there will be enough demand for them to turn the idle power plants back on.

This is not consistent with robust growth. The fact is that the economic recovery has been mostly on Wall Street and it hasn’t poured over to Main Street yet. Until that happens for most people the recovery hasn’t really happened yet.

Even the so called “green” market is in a world of hurt. All the money that was spent on solar is basically dead, with energy prices so low the solar operations cannot pay the loans they took to build the projects. Sure Elon is still able to run his scams, but he’s yet to turn a profit. It’s all government subsidies and stock issues.

Speaking of Tesla, sure it’s a neat car, but it’s a shame it’s got the great inventor’s name on it. It certainly isn’t going to change things the same way alternating current did. And how can Tesla have a market cap on the same order as GM when they build and sell so few cars, cars which are mostly unaffordable to the masses? We aren’t talking about an electric Model T here. The fact is if the electric car ever does take off, it will be GM, Ford, Toyota, Nissan, etc. that go to market with mass produced affordable electric cars. All of them have dabbled in it enough to understand the technology. And also enough to know it isn’t really market ready yet. The batteries just aren’t sufficient, and to charge them you need electricity which really isn’t all that cheap compared to gasoline for the purpose and is still mostly sourced from burning fossil fuels anyway. The electric car holds promise for the future, but at this point it is simply a novelty that provides an inferior driving experience at a higher cost and really doesn’t do anything to reduce the carbon footprint of the vehicle when the full fuel cycle is considered back to the source of the electricity.

#114 };-) aka Devil's Advocate on 12.18.16 at 5:23 pm

#110 Ronaldo on 12.18.16 at 3:43 pm

Heard some rumblings but mostly conspiracy bitching. Sounds more Newsworthy than that which it is receiving.

#115 crowdedelevatorfartz on 12.18.16 at 6:09 pm

@#109 Protea
“Socialism is a philosophy of failure, the creed of ignorance, and the gospel of envy, its inherent virtue is the equal sharing of misery….”
*******************************************

Well.
If you switch the word “socialism” for “BC Liberals”
I think you’ve summed up Christy Clarks “Reign of Error” very succinctly.

#116 maxx on 12.18.16 at 6:44 pm

#17 Mark on 12.17.16 at 4:01 pm

….”My personal excess allocation is in Canada. Wouldn’t touch much of the S&P500 with a ten-foot pole simply on valuations. If higher interest rates materialize, bye-bye US FIRE sector, particularly the insurers and financials that are very sensitive, in quite a negative fashion, to higher long-term interest rates.”

Am pretty much in agreement with everything in this post, however I think that that the insurance industry might very well gain serious traction with long-term rate rises on the basis of pent-up demand for annuities which pay predictably, are safe and carry less risk than most other investments, which they have felt forced into given stupid-low rates. There is a huge demographic which craves annuities, given the paucity of people with decent pensions.

#117 Boring? Awesome! on 12.18.16 at 7:38 pm

Great article that gives us a clear direction! Excellent technical analysis.

#118 conan on 12.18.16 at 7:38 pm

#103 cold-war on 12.18.16 at 2:17 pm

If the USA got into a serious shooting war they would go back to WW2 fighting style. Meaning, civilians need to get out of the way. The USA has a ridiculous fighting force. No one wants to mess with them,

#119 alberta guy on 12.18.16 at 10:00 pm

Sounds like someone is getting excited.

http://www.radarwire.com/images/cyc_emot.jpg

#120 Shanghai Sharon on 12.19.16 at 12:24 am

#98 Kieth in Rio.. how’s the rent and the personal security. What does a standard plate of food cost? In BKK simlarily charged at 15% and col is one quarter of Canada ….. healthcare is excellent. Care to fill in the blanks

Anyone got an answer to the cot bond long or short duration answer?

#121 Dimitri on 12.19.16 at 9:29 am

#112
@Nonpulsed.

You are incorrect on so many accounts about electric cars it is scary.

I will speak for Ontario ( and Quebec has cheaper and cleaner electricity) as the generation mix changes by province.

1). It is 2x cheaper to drive on electricity than on gas relative to the most efficient gas-powered car, Toyota Prius. The overnight all-in rate in Ontario is 11c. My Volt (not a Tesla) can travel about 100km on $2.10.

2). The carbon footprint of kWh in Ontario is 60g relative to 2.2kg of burning gas. This equates to 1.13kg vs Toyota Prius 10kg.

Please do your research before you write.

#122 IHCTD9 on 12.19.16 at 3:54 pm

#120 Dimitri on 12.19.16 at 9:29 am

You are incorrect on so many accounts about electric cars it is scary.

I will speak for Ontario ( and Quebec has cheaper and cleaner electricity) as the generation mix changes by province.

1). It is 2x cheaper to drive on electricity than on gas relative to the most efficient gas-powered car, Toyota Prius. The overnight all-in rate in Ontario is 11c. My Volt (not a Tesla) can travel about 100km on $2.10.

_________________________________________

This is lala land math and is obviously biased as hell.
Who cares what your over night rate is – you will be charging across the lines all the time unless you live 5 minutes from work. Sell your Volt (which uses gas) and get a PURE ELECTRIC and see how you make out.

You’re not even qualified to speak about electrics when you own a car like the volt which is primarily a gas powered vehicle, just like the Prius – a Hybrid. It’s easy to wave your magic wand and crap out garbage math when you’ve always got that gas engine in the Volt to bail you out when your battery is dead as a doornail because it hit 30 below while you at work and you would have needed a tilt+load to get your heap back home.

My Ontario Bill bottom line taxes in over a year averages .26/KWH all in. Every month. .11 all in is lala land.

The Chevy Bolt (a real electric compared to your gas burning Volt) takes 70 KWhr to charge after efficiency and temp losses on a summer day – $17.50. Then you can go about 300 km in the summer when it’s warm, and about 150 km when it’s freezing cold (50% loss at -20, or same if plowing through snow and slush using heater and defrost below zero). You are going to average over a year a real world 225 km for your 17.50 in hydro.

My wifes Civic will go 300 km on $17.50 worth of fuel with the same adjustments. A TDI Golf will go 370 km of 17.50 worth of diesel. A 0.8L TDI Smart will go near 500 km on 17.50 worth of diesel.

The brand new Bolt does 4.3 km/KWHR under IDEAL pie in the sky conditions, but somehow your old clunker Volt can do 12.0 km/KWHR anytime at all LOL! Right, you are sniffing paint thinner if you really believe you are doing more than DOUBLE the Bolt all the time. LOL, why does GM even bother with building the Bolt.

You are obviously living in a small room filled with open bottles of glue and un-capped magic markers if you think you are averaging 100 km for 2.10 worth of OPG hydro.

#123 Nonplused on 12.19.16 at 9:00 pm

#121 IHCTD9

Thank you for responding to the idiot #120 Dimitri. Saves me some time.

The major problem here is that people generally do not understand science and the sub-set thermodynamics. You can’t charge a battery for free. Electric cars have been around since cars were around but there is a reason they haven’t taken off: they don’t work as well and aren’t as economic as gas powered cars. It’s a simple fact. Even if they solve the battery problem they still have to fix the “where does the electricity come from” problem.

#124 IHCTD9 on 12.21.16 at 11:36 am

#121 IHCTD9

I charge on overnight Ontario electricity, which comes at 11c per kWh. How is that Lala land? Unless Ontario and Lala land are synonyms?

Also unlike yourself, I actually drive the car instead of hypothesizing.

Chevy Volt is electric-first with gas generator kicking in when the electricity runs out to charge the battery. The all electric range is EPA-rated (and confirmed in the wild) at 85km with more range in summer about 90, and only 65km in winter.

Volt drivers generally try to run on gas as little as possible, and last few months I averaged about 85% of electric-only driving.

You do have a few points.
– The gas generator does kick in subzero to warm up the battery. This does not consume a lot of gas, but needed to mention.
– There is a gas generator in case you need to make a longer trip. That’s the point.

A few questions about your math:
– Why do you use the highest rate for electricity?
– Why do you assume that people drive over 85km per day? Do you? I am in mid-town Toronto, and need to go to outer suburbs (Ajax, Oakville, etc) to go over the range for the trip.

Try to keep it civil.