The bull case: Part II

RYAN  By Guest Blogger Ryan Lewenza

In my last post I examined the bear case for the equity markets. I cited high valuations, age of current bull market, and the inevitable end of accommodative central bank policies. This provoked a sense of validation or “I told you so” sentiment from some of the bearish blog dog readers. Well buckle up you doomers and believers in the coming zombie apocalypse, as I’m going to present our bull case for further equity gains in 2017. I can already envision the Darth Vadar (or Kylo Ren for you youngsters) rage I’m likely to encounter in the comments section of this pathetic blog (Garth’s words). There goes my Saturday!

In developing my market outlook I always start with the economy. As Bill Clinton’s campaign strategist James Carville famously said “It’s the economy, stupid!” I see the US and global economy picking up this year. I’m expecting the US economy to grow around 2.5% this year, up from a lackluster 1.6% in 2016. I see the consumer continuing to do most of the heavy lifting, but see the potential for a boost from business investment and government spending if President Trump is able to pass some of his pro-growth policies.

Most of the economic data I track shows a clear acceleration in recent months. US Q3/16 GDP came in at 3.5% Q/Q annualized, which is the strongest quarterly growth rate in two years. The US economy did slow in the fourth quarter to 1.9%, but the trend in economic data remains clearly to the upside. This includes continued strength in the labour market, housing, auto sales, industrial production etc.

One economic indicator I track closely is the US Citigroup Economic Surprise Index, which measures how economic data is coming in relative to economist’s expectations. It’s recovered nicely in recent months (capturing data is coming in above expectations) and is at a level not seen since 2014.

Finally, I focus a lot on manufacturing data as the manufacturing sector is highly cyclical capturing the ebb and flow of the economy. I analyze manufacturing data across all the major countries and regions, and as illustrated below, manufacturing globally is in an upswing with the global manufacturing index at the highest level since February 2014.

In summary, I see the odds of a US recession as remote for this year (Bloomberg estimates it at 15%) and in fact, I see the US and global economy re-accelerating following a soft patch last year.

Global Manufacturing Is Rebounding

Source: Bloomberg, Turner Investments

A stronger economy should bode well for higher corporate profits this year, which is the main thrust of our bullish outlook for 2017. Stocks rise through either an increase in valuations (e.g., P/E rises from 10 to 12x), or through an increase in corporate profits. Much of the gains over the last few years have been by an increase in equity valuations. For example, the P/E ratio for the S&P 500 has increased from roughly 17x in 2014 to a lofty 21x currently. I believe the equity markets will transition from a valuation driven market to an earnings driven market this year. And the recent results are showing this.

The S&P 500 experienced an earnings recession in 2015 and first half of 2016, posting a number of consecutive quarters of Y/Y earnings decline. However, this trend reversed in Q3/16, with S&P 500 earnings hitting an “inflection point”. Based on Bloomberg data, Q3/16 earnings rose 2.3% Y/Y with the current quarter tracking at an impressive 8.6% Y/Y.

Given our expectations for stronger US and global growth, I see earnings continuing to improve this year, thus driving US and Canadian stock prices to new all-time highs. Currently, analysts are forecasting S&P 500 earnings to rise 19% to $130/share in 2017. I think this is overly optimistic and see earnings growing by high single digits, helping to realize my year-end price target of 2,400 for the S&P 500.

Critically, this forecast does not embed the potential for President Trump and Congress to lower the US corporate tax rate. The US corporate tax rate is currently 35%, and is one of the highest of any developed nation. President Trump is proposing to lower the corporate tax rate from 35% to just 15%, while House Republicans are pushing for a cut to 25%. Regardless of the final rate reduction, a cut to corporate tax rates of even 10% would equate to over $13/share in S&P 500 earnings according to Thomson Reuters. If this gets passed this would be huge for corporate America and could provide more fuel to the equity markets, possibly resulting in the S&P 500 surpassing my 2,400 price target for this year.

S&P 500 Earnings Are Rebounding

Source: Bloomberg, Turner Investments

Finally, I believe strongly in combining fundamentals with our technical readings of the markets in determining our outlook and strategy. And in my opinion the technicals are demonstrably bullish for the equity markets at present. Looking at the chart below you can see that the S&P 500 remains in well-defined long-term upward channel. Note the trend of “higher highs” and “higher lows” which is the definition of an uptrend.

Additionally, the S&P 500, and most other global equity markets are trading above their rising 200-day moving averages, which again defines an uptrend. And finally, market breadth, which measures the number of stocks advancing versus the number stocks declining, is very strong with the NYSE Advance/Decline line continuing to make new highs. This is very bullish and is confirmation of a healthy bull market.

I could go on and on, citing numerous charts and indicators that show a healthy bull market. But you have other things to do other than reading this pathetic blog on this Saturday. Suffice to say, given our positive assessment of the economic, fundamental and technical readings of the economy and stock market we’re sticking with our bullish outlook. As referenced in my last blog post, “when the facts change, I change my mind.” We’ll adjust accordingly when the weight of evidence tells us to do so. Until then, stay long and prosper!

The S&P 500 Is In A Long-term Uptrend

Source: Stockcharts, 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.

113 comments ↓

#1 pathcontrolmonk on 02.18.17 at 1:09 pm

All is fun and games until Trump pokes someone’s eye out.

#2 Fortune500 on 02.18.17 at 1:13 pm

Hi Don Pittis!

http://www.cbc.ca/news/business/real-estate-canada-greater-fool-1.3983797

#3 TurnerNation on 02.18.17 at 1:25 pm

Already Kanadians are wishful to the days when our politicians spent more time sticking their foot in mouth (than kicking our butts with more taxes and ThoughtControl laws):

– King Ralph in AB
– Jean Cretien PM.
– Mel Lastman (TO’s ex mayor)
– Even Rob Ford.
– Dolton McGuilty premier?

Ineffectual but effusive.
Not like the current crop of people bent to destroy Our Way of Life and families via Global Agenda.
Today we all are Icelanders. Standby for debt reset in ON…

#4 Penny Henny on 02.18.17 at 1:32 pm

The real reason to oust Trump.
-The current hue and cry in the US over Flynn’s supposed infraction is entirely a fake political ambush to cripple the Trump administration. Trump caved in much too fast. The deep state is after his scalp: he has threatened to cut the $80 billion per annum intelligence budget – which alone, boys and girls, is larger than Russia’s entire defense budget! He’s talking about rooting waste out of the Pentagon’s almost trillion-dollar budget, spending less on NATO, and ending some of America’s imperial wars abroad.-

https://ericmargolis.com/2017/02/red-hysteria-engulfs-washington/

#5 Penny Henny on 02.18.17 at 1:35 pm

Go Bull’s Go!

#6 When Will They Raise Rates? on 02.18.17 at 1:44 pm

In developing my market outlook I always start with the economy.
—————

Except the opposite has been true since 09; Bad news (for the economy) is good (news for the markets). Why? Because the algos know that bad economic data lower the probability that the FED will take away the punch bowl and vice versa:

http://www.coffeeandcharts.com/wp-content/uploads/2015/09/BalanceSheet-vs-SP-20150909.png

#7 NoName on 02.18.17 at 1:44 pm

Bill Gates Says Robots Should Be Taxed Like Workers

http://fortune.com/2017/02/18/bill-gates-robot-taxes-automation/

#8 Penny Henny on 02.18.17 at 1:47 pm

Small business optimism surges. Consumer confidence is back.
http://scottgrannis.blogspot.ca/2017/01/small-business-optimism-surges.html

#9 david colquhoun on 02.18.17 at 2:01 pm

Agreed

#10 conan on 02.18.17 at 2:09 pm

If any photo shows the “kiss of death” it is the one at the top of this page.

I have a feeling that the US ,and the World, are going to be preoccupied with “WTF” to do with Trump.

Higher corporate profits are not translating into higher wages or , stable employment. Instead, monies are retained by share holders, or owners. This might be good for financial advisers of the one percent, but it does bugger all for the rest of the economy. Business owners are not going to create a job for someone who has nothing to do.

The secret is average people having more disposable income, stable employment, and a reason to have children. Immigration strategies have just as much to do with the long term survival of the Nation as they do with humanitarianism. Both are equally important.

I hope that the markets go on a bull run, but logic says the most important country in the World is going to have problems. How severe, I don’t know. Ukraine could flare up into something really bad, very soon.

#11 mark on 02.18.17 at 2:09 pm

Nice acticle Ryan,

What about some of the undervalued index’s, are emerging markets still pooched for awhile, they have shown some life of late, great valuations, some are shouting there the trade of the decade, and whats your favorite emerging markets etf, xec i like it trades in canadian dollars?

Thanks in advance.

#12 Euro observer on 02.18.17 at 2:15 pm

I absolutely agree.

Stock markets will go up, they front run the inflation.

With house markets at record peak/dept and only downhill from here, there is still time to save some of the purchasing power of the useless confetti called currencies.

I see Dow 30-40k potentially in the next 5 years.

Savers and people on fixed income will be destroyed.

Just park your money in diversified ETFs and sleep well, the Great Inflation is coming.

#13 TurnerNation on 02.18.17 at 2:21 pm

Ps. For the Schlock Pickers I still treat TECK.B’s price as a sort of leading indicator. In one week’s time I will get into Kaputs on broad market indices.
Already I see strength returning to commodities ETFs last week: Corn, weat, coffee, cocoa. Yeah I trade most. Nat gas too.

Almighty Oil remains mum lately. Curious. The dog that isn’t barking.

#14 NoName on 02.18.17 at 2:23 pm

Scroll down to #755 and press play !!!
How Argentina got Great Again

The Phone At The End Of The World
http://www.npr.org/podcasts/510289/planet-money

#15 TRT on 02.18.17 at 2:25 pm

Based on yesterday’s comment, a huge appetite exists for higher taxes on capital gains.

If higher taxes Do arrive, then the financial markets don’t look as attractive anymore.

Good to prepare for this scenario now by reducing equity and bond exposure?

#16 Euro observer on 02.18.17 at 2:26 pm

And BTW do not buy the general TSX index, buy resources, energy and consumer staples (non Canadian).

If you have the guts to sell da house and buy junior minors you might end up gaining 300-400 % in the next 3 years.

What is happening is that the players are re-positioning in equities, the best growth opportunity at this point.

When inflation hits, the herd will be slaughtered by inflation.

#17 Cheap Houses on 02.18.17 at 2:33 pm

The amount of different people saying “The USD will go up” vs “The USD will crash” is amazing. I would suggest anyone to spend some time reading both sides. Its fascinating.

#18 JSS on 02.18.17 at 2:49 pm

Ryan, how high do you think the TSX will go by year end?

#19 Penny Henny on 02.18.17 at 2:54 pm

#7 NoName on 02.18.17 at 1:44 pm
Bill Gates Says Robots Should Be Taxed Like Workers

http://fortune.com/2017/02/18/bill-gates-robot-taxes-automation/

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

could work but not with free trade

#20 For those about to flop... on 02.18.17 at 2:56 pm

#205 when the whip comes down on 02.18.17 at 12:07 pm
FOR THOSE ABOUT TO FLOP – question, what do you feel the outlook for SFD homes in the burnaby/vancouver border will be for the next 3-5 yrs. I have seen prices have come off by up to 18% in the past 6 months. Are we moving down further? Would appreciate your take on it.

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

Hey Whip ,I will try to answer your question and do a case study at the same time to show some other people what has been going on in a lot of cases and perhaps why there is not as much panic as some people are expecting.

The duplex at 2220 No 4 Rd. was purchased for 826k in April 2016 and later that year was re-listed in the fall for 968k.When nothing happened at this price it was dramatically lowered to 799k at one stage to draw attention and maybe spark multiple bids.

Now it is available for 958k,and so it really has been all over the shop with no results but leads me my main point.

A lot of people that were considering selling at a lower price have now received their 2016 assessments and that combined with the Spring Fling has emboldened them to raise prices back up to where they make a10/15 % profit and walk away unharmed.

Now to get to your question,which I already kind of answered in an around about way for another person is that if I was casually looking at buying ,as things stand today I would wait and monitor a few houses until after the Spring Fling ,election and the summer and wait to the fall with less competition and a growing number of sellers and flippers in particular understanding which way the 2017 assessments are going to go and a year or so of carrying costs under their belts.

Hope this helps….Flop.

M42BC

#21 LMAO on 02.18.17 at 3:06 pm

“If you have the guts to sell da house and buy junior minors you might end up gaining 300-400 % in the next 3 years.”

where do you find these people? at Casinos?

#22 For those about to flop... on 02.18.17 at 3:37 pm

Here’s a stat that I have been monitoring for the last 6/7 weeks and have seen a spike in the last week or so.

Listed price reductions in Greater Vancouver February 10th – 17th

196 …listed price reductions during this time.

56 ….of these sellers bought these properties in the last three years.

28% of these people or on the hook for sizeable sums of money.

Earlier in the year in was in the 10/15% range but when I started to notice the spike I kept a better track of the numbers.

I am no Vancouver housing expert…just a blue collar bum that is trying to shine a light on happenings in this city…

M42BC

#23 Euro observer on 02.18.17 at 3:48 pm

#21 LMAO on 02.18.17 at 3:06 pm
“If you have the guts to sell da house and buy junior minors you might end up gaining 300-400 % in the next 3 years.”

where do you find these people? at Casinos?

————————————–

No, you don’t find them there. Apparently over 1/3 of Canadians plan to retire by winning the Lotto.

You can visit the racetrack in Woodbine and see the real gamblers (you know the ‘free drink benefit’ kind of guys).

Buying junior minors at this point, even buying general indexes looks much less of a gamble to me.

#24 Kelowna on 02.18.17 at 3:51 pm

Great article and analysis Ryan – I hope that your projections are correct. My remaining skeptism is based on what “The Donald” might do that would completely upset the logic of your case. Go bulls go!!

#25 What? on 02.18.17 at 3:53 pm

Meh.

Most readers here are canadian though.

#26 conan on 02.18.17 at 3:55 pm

Planning on visiting Ottawa this week? Bring a canoe. We just had 50 cm of snow, and now 5 days of plus zero weather is forecast.

#27 Ryan Lewenza on 02.18.17 at 3:56 pm

Mark “Nice acticle Ryan, What about some of the undervalued index’s, are emerging markets still pooched for awhile, they have shown some life of late, great valuations, some are shouting there the trade of the decade, and whats your favorite emerging markets etf.”

Yes we like EM and see tremendous value. To your point EM trades around 13x versus developed markets closer to 20x. But right now we have more of a market weight position as EM tends to underperform when the US dollar is strong. If/when we see a top in the US dollar, we’ll look to increase our weight to EM. For our EM exposure we use VWO/VEE. – Ryan L

#28 Ryan Lewenza on 02.18.17 at 4:01 pm

JSS “Ryan, how high do you think the TSX will go by year end?”

16,500. This is our price target for the TSX. I think oil prices will continue to trend higher which if this occurs will boost energy sector profits and in turn TSX earnings. As a result we increased our exposure to Canada to market weight (same weight as US). If we see commodity prices trend higher we may even overweight the TSX. – Ryan L

#29 Shawn on 02.18.17 at 4:10 pm

Hi Ryan,

Great post.

What’s your view of a valuation driven international market (ie VEA, VWO) catch up trade? Do you think one should be adding to international equities at this juncture? Would a rising $US eliminate any potential international market alpha vs the S&P500?

Thanks! Shawn

#30 BS on 02.18.17 at 4:17 pm

Currently, analysts are forecasting S&P 500 earnings to rise 19% to $130/share in 2017. I think this is overly optimistic and see earnings growing by high single digits, helping to realize my year-end price target of 2,400 for the S&P 500.

The S&P 500 is at 2351 today. The bull case is for 2400 by year end or a 2% increase? Not very bullish.

#31 Alex on 02.18.17 at 4:20 pm

I fully agree with this post.
I am lowering my fixed income portion to just 30% (preferred shares are half of that) of my portfolio (from 40% originally and buying CAN-US-Intl as much as I can while the savers are saying ‘but the markets are at an all time high?!’

#32 BS on 02.18.17 at 4:24 pm

#15 TRT on 02.18.17 at 2:25 pm

If higher taxes Do arrive, then the financial markets don’t look as attractive anymore.

Good to prepare for this scenario now by reducing equity and bond exposure?

Equities and bonds are a global market dominated by institutional investors. Canada’s personal tax rates will have zero impact. Besides, what alternative is there where you will pay less tax?

#33 TurnerNation on 02.18.17 at 4:34 pm

It appears Smoking man’s plasma flyer dropped by the
Gen. Store then reversed course finding no liquor licence on the premises.
From our forum host’s Twatter feed:

https://twitter.com/garthturner/status/832764205690269696/photo/1?ref_src=twsrc%5Etfw

– I don’t really believe in UFOs -they began appearing with the rise of military industrial complex.
Joke’s on us, we fly around in planes with jet engines (essentially 80-year old technology!) – carbon taxes, too.
With the trillions of $ taken from us for wars and ‘cold war’ over past 100 years I’m sure they’ve developed stuff we can dream of.
Say, we developed ISS along side our ‘enemy” the USSR. There is no us and them…only elites above it all. Scare tactics.

#34 TurnerNation on 02.18.17 at 4:47 pm

OMG ROTFLOL: paging Bigarider to the blog. It’s spread:

“‘Up! Up! Up! [emphasis in original]

That’s where Toronto’s real estate market is heading, according to a Chinese-language promotional article posted last month on Fang.com, a Beijing-based web portal that lists thousands of homes for sale in countries around the world.”

http://www.theglobeandmail.com/news/toronto/ontario-isnt-moving-fast-enough-to-track-foreign-buyers-observers/article34074430/

#35 bdwy sktrn on 02.18.17 at 4:55 pm

What has happened with the two houses at 2273 and 2281 Graveley st is kind of bizarre
———————————————–
well they are both sold now.

second one just went , the word on the street is that it sold at list

lower price partly due to no finished attic vs the next door.

never did see a sold sticker on it until yesterday.

#36 Questions on 02.18.17 at 4:59 pm

For the S&P 500 today, the CAPE (or Shiller P/E) ratio is 29.3 (mean: 16.7) and the P/B value is 3.02 (mean: 2.75). Today’s figures seem high.

Do you make use of the PEG ratio? Applying the analysts “overly optimistic” earnings growth rate of 19% in 2017, the PEG ratio would be 1.54 (29.3/19). The market seems pricey, even when factoring in earnings growth.

What is your target asset allocation? How often during the year do you rebalance your portfolio? Do you rebalance based on thresholds and, if so, do you use 5% or 10%?

Pretty nosy, eh?

#37 Ponzius Pilatus on 02.18.17 at 4:59 pm

What bothers me is that payroll expenses of Company X are almost always inversely related to its share price.

#38 robots,taxes and dummies on 02.18.17 at 5:17 pm

#19 Penny Henny on 02.18.17 at 2:54 pm

#7 NoName on 02.18.17 at 1:44 pm
Bill Gates Says Robots Should Be Taxed Like Workers

http://fortune.com/2017/02/18/bill-gates-robot-taxes-automation/

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

could work but not with free trade

—-

Robots exist to replace human labor.

Eventually when they are mass produced, they will become cheap commodity. Especially, when they become self-developing, self-manufactured.

They will create all the value that used to be the human labor cost.

The truth is that we don’t have an economic system that is tailored for this reality, as this reality never existed before.

Trying to put existing economic models simply won’t work. We need to rethink our entire economic, social system from scratch.

We will be too stupid to recognize and accept this, we will endlessly try to reinvent capitalism/communism/(machine)slavery and everything in between.

We will be so preoccupied with petty fights that we won’t recognize if the robots become intelligent/conscious and declare us obsolete, inefficient, self-destructing species.

#39 Tony on 02.18.17 at 5:33 pm

There is no bull case. Fact is the stock market is 400 to 500 percent overvalued so if the indexes doubled the market would still be less than half of what it is today.

#40 For those about to flop... on 02.18.17 at 5:46 pm

bdwy sktrn on 02.18.17 at 4:55 pm
What has happened with the two houses at 2273 and 2281 Graveley st is kind of bizarre
———————————————–
well they are both sold now.

second one just went , the word on the street is that it sold at list

lower price partly due to no finished attic vs the next door.

never did see a sold sticker on it until yesterday.

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

Thanks Broadway.

So you saying they bought for 1.6 and sold for 1.5. crystallizing a 100k loss?

They could have just wasted their money on Joking Man’s book instead…

M42BC

#41 the Awakened One on 02.18.17 at 5:50 pm

Sir Lew:

It’s Lord Darth Vader, not Vadar. You don’t wanna upset the Republic & the Order of Jedi now.

How can we trust your bull case forecast if you can’t spell the name of the dark Lord right? :O)

#42 Don Regan on 02.18.17 at 6:36 pm

Any truth to the rumors that non agents in the GVRD
are conducting the Buying and Selling of Real Estate, thereby taking away revenue from Agents
causing some firms to downsize? Also hearing, these
non agents have sold properties to new immigrants far
above market values and are continuing to do so.

Are these just rumors?

#43 technical analysis? on 02.18.17 at 6:38 pm

sadly, another very disappointing fundamentals post. whatever happened to technical analysis? a chart with 200 day MA? that’s it? fail.

#44 traderJim on 02.18.17 at 7:22 pm

@Sunflower

Ah yes it’s so easy to start a business and employ people and make obscene profits.

Just 1 question : then why don’t you and all the exploited start one yourself?

#45 CL on 02.18.17 at 7:29 pm

I agree with a lot of what you’ve said, Ryan. One of the reasons I agree is wage inflation / pressures are obviously growing in the US and that doesn’t happen unless it has to. However, don’t you think Trudeau’s tax everyone and everything budget, especially when it comes to capital gains and dividend tax increases, will rain on the TSX and Canada parade?

#46 acdel on 02.18.17 at 7:36 pm

Hi Ryan enjoyed the article!

What are your views upon pension funds vulnerability in the U.S. or elsewhere with these historic low interest rates? Are they in trouble?

#47 Economystical on 02.18.17 at 7:41 pm

Ryan, I think your forecast could prove correct over the time horizon you cover, but longer term I think fundamental headwinds are going to rear their ugly heads. Theses aren’t new headwinds, we’ve been dealing with them for a long time, but it’s hard to see a way forward without major upheaval. Some of them are:

– Automation. Of course we’ve been automating everything we can think of for 100 years and normally that has produced more growth. But we are approaching the point where it is foreseeable in the future there won’t be many jobs left for people to do. The examples are endless but already the machines are taking over answering the telephone and talking to people, Suncor is automating their heavy trucks (so they will be driverless), and of course everybody and their dog is testing driverless vehicles for street use, including for heavy hauling. Amazon is eating previous brick and mortar retailers for lunch with far fewer employees. As this trend continues, where will labor find income to support consumption?

– The relentless drop in “Energy Return On Energy Invested”. Energy is the lifeblood of the economy automated or not. EROEI has been dropping for years and will continue to do so until it levels out with a very high percentage (compared to now) of our energy coming from renewables. This isn’t the end of the world, but it means that more resources must be diverted to energy and away from other consumption.

– Demographics. This one has been well discussed on this website so there is no need for me to go into too much detail other than to say the number of people relying on government assistance is set to skyrocket over the coming years.

– Rising taxes. This is happening now with several tax initiatives underway in Canada including the Carbon Tax and higher income taxes. No matter what any economystical forecaster working for JT tells you, high taxes curtail economic growth leaving less pie to be sliced up and shared around. The US may not have this problem under Trump but they will face it eventually.

– The debt bomb. As Garth has also discussed at length, debt is rising at an unsustainable higher rate than economic growth for a long time, both in the US and Canada, and indeed pretty much the entire world. This is partly cause on a fundamental basis by pretty much everything above and an attempt to juice economic growth against these headwinds. So far it has worked, but it’s a horse that can’t run forever. And as they say, “anything that can’t go on forever, eventually doesn’t.”

– The Oroville damn spillway failure and near collapse. I don’t know if you’ve been following this story but I use it as an example of the terrible state of our infrastructure, not just in the US but in Canada too. Years of neglecting our critical infrastructure has left us in a position where not only do we need to keep investing in new infrastructure to support growth, but we have a big bill coming to repair all the infrastructure that has been left to rot, which detracts from current growth. It may be counted as growth because it is spending, but economystical economics says that car repairs don’t give you more car, but they do give you more GDP!

– Designed obsolescence. Ok, we’ve had this one for a while too, but it does not encourage actual growth it detracts from it. Making things to intentionally fail so they need to be replaced doesn’t actually leave consumers with anymore things, it just raises their costs. In the old days, take the automobile industry for example, designed obsolescence was just that, design changes to encourage those who could afford it to buy a new car and sell the old one into the used car market. That form was ok, because you did actually end up with more cars available to more people. But the new form of DO is failure of the device after a shortened period of time. This applies to everything from computers to washing machines to cars to phones. Having to replace your phone every 2-4 years does not lead to more phones, even if it appears to boost GDP. It would if you could pass the old phone on to the used market, but they intentionally make the things unusable after a period of time through software bloating and hardware failure, same as they do with computers. The electronics that control your washer are not designed to last 20 years like the spin dial on the one you had 15 years ago was. Replacing a control card is not economic growth except under the economystical “broken window” theory, which is bunk. Having to replace broken stuff does not equal growth in the physical world, only in the economystical world. Otherwise we should encourage rioting and raise speed limits. There was a day when you could buy a power drill and it lasted your lifetime. Now you buy a cordless drill, and the batteries are pooched in 5 years and no replacements are available for that model anymore. This is not growth, because it diverts growth spending to the land fill.

I could go on but that is enough for now. Suffice to say that practically every economystical theory propagated right now is an intentional attempt to divert thought away from reality and towards a dream. A dream from which we must awake at some point. Probably soon.

How can I tell? If we were “richer than we think”, the Oroville damn wouldn’t be collapsing and the city of Oroville wouldn’t have been evacuated. New Orleans same story. We don’t even have the money to fix what we already have, but yet GDP keeps rising. That’s the magic of economystics!

#48 NoName on 02.18.17 at 8:14 pm

#38 robots,taxes and dummies on 02.18.17 at 5:17 pm

We will be so preoccupied with petty fights that we won’t recognize if the robots become intelligent/conscious and declare us obsolete, inefficient, self-destructing species.

——
T3 Rise of the Machines, most elegant self aware robot design i ever seen, and v92 built in, no modem needed…

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

#ATDT

#49 Smoking Man on 02.18.17 at 8:17 pm

Ryan how is this for prudent investing.

I invested in the wife. A stay at home mom for ever. She gets no respect. No servatute cube that includes Microsoft office with an obidiance deploma on display for all to see.

She s made it to the advantage social club , new thing at Seneca . Fee 250k for a pretty good stake dinner.

No big deal if you can work 400 to 1 margin forex account beyond the reach of everyday communists.

I’m so good that I want to get caught. Bragging rights, respect from others just like my perfect wife.

No idea where I’m going with this but capitalism rocks if you know how to work it.

Shit you do for love.

A proud member of the advantage social club at Seneca.

I cut my writing trip short so she could be here to share her success with other like minded gamblers.

I’m the best husband ever.

#50 robert james on 02.18.17 at 8:17 pm

This one is for all the Trump butt kissing goofs that frequent this blog… Read it if you have the courage.. https://www.bostonglobe.com/news/politics/2015/07/20/what-donald-trump-was-while-john-mccain-was-hanoi-hilton/bkTk0Gna4aqO6bg2STstWJ/story.html

#51 Ryan Lewenza on 02.18.17 at 8:17 pm

The Technical Analyst, CSTA, CPD “Take a look at the VIX and VVIX. The market is INCREDIBLY complacent right now, volumes are very low, the risk (high) vs reward index is very low. Now, I’m with you, I think we are going to end 2017 in a positive note, but I think we will have a nice 10% correction in between. BTW, the S&P500 P/E is currently sitting at 26.38. I don’t know where you sourced 21, but I haven’t seen any article to suggest that. (source of p/e 21?)”

Yes the VIX is low and we can see a short-term pullback at any time. But we don’t try to time (or think we’re smart enough to consistently time) short-term pullbacks. We focus more longer term trends, which we believe are up. I also would not be surprised to see a 5-10% pullback some time this year but 1) we still expect the equity markets to post positive returns this year and 2) we have a balanced portfolio so our portfolio would fall far less then 5-10%. With respect to the 21x P/E, this is based on S&P 500 operating earnings which are currently $108. You are referencing the GAAP P/E which is based on GAAP earnings of $85. GAAP are net earnings whereas operating is before one time/non recurring items. Like it or not, the industry focuses on operating earnings, both trailing and forward. Additionally, with the historic decline in oil prices energy sector earnings were crushed in part due to accounting requirements to write down the value of energy company oil reserves. As a result energy companies took huge non cash charges that have weighed on GAAP earnings. For this reason I’m focusing more on operating earnings and P/Es. If/when oil prices recover, energy companies will add back these write offs. – Ryan L

#52 Ryan Lewenza on 02.18.17 at 8:34 pm

technical analysis? “sadly, another very disappointing fundamentals post. whatever happened to technical analysis? a chart with 200 day MA? that’s it? fail.”

This one gave me chuckle! First, while I’m also part of the CSTA you referenced, I’m a CMT which means I took and completed the rigorous Chartered Market Technician designation (three levels over 2-3 years). Anyone can be part of a society, not everyone can pass the CMT. Second, I presented to the Calgary CSTA society just last week providing a detailed technical breakdown of the markets. If you would like to hear a more detailed technical examination of the markets check out that recording. Finally, technical analysis can be pretty esoteric so it doesn’t make sense to go into great detail in this forum. You need to know your audience! But thanks so much for your constructive criticism. I’ll try harder in the future. – Ryan L

#53 Barb on 02.18.17 at 8:37 pm

Sorry, off topic, but:

here’s the house 500K buys you in 14 cities:

http://globalnews.ca/news/3152492/homes-for-500k-in-14-canadian-cities/

#54 Ryan Lewenza on 02.18.17 at 8:39 pm

acdel “What are your views upon pension funds vulnerability in the U.S. or elsewhere with these historic low interest rates? Are they in trouble?”

Maybe some but I don’t see it as a huge risk. Worst case they have to lower their pension payouts. Also we see rates slowly rising from here, which will reduce stress on pensions. They do need to lower their growth expectations though. – Ryan L

#55 Ryan Lewenza on 02.18.17 at 8:44 pm

Shawn “What’s your view of a valuation driven international market (ie VEA, VWO) catch up trade? Do you think one should be adding to international equities at this juncture?”

Yes, we’re watching EM closely for possible upgrade. Given their lagged performance and attractive valuations we’re looking closely at this area. – Ryan L

#56 Smoking Man on 02.18.17 at 8:56 pm

Ryan lose the tie. Christ, feeling like I’m on pathetic linked in reading your respouses.

Do you need Garths permission to get fall down drunk so we can really get a gage as to how good you are.

#57 acdel on 02.18.17 at 8:57 pm

#55 Ryan Lewenza

Thanks for the response Ryan!

#58 Smoking Man on 02.18.17 at 9:08 pm

#58 acdel on 02.18.17 at 8:57 pm
#55 Ryan Lewenza

Thanks for the response Ryan!
…..

Seriously, sucking up. He hasn’t even won an accadiamy award yet. Like how can you ever respect an opinion from some one who’ looks good on camera that’s good at memorizing brilliant writers words and regurgitates perfectly on demand.

Writers get no respect. Pisses me off.

#59 DON on 02.18.17 at 9:10 pm

Thank you for the insight Ryan – very appreciated! Enjoy the rest of your weekend.

#60 truthbetold on 02.18.17 at 9:21 pm

Ryan, why don’t you just confirm that you, just like Garth, have no idea what is going to happen next. You can guess, just like any of us, but all your estimates and projections are just that – guesses. Markets probably go up 3 years in 4 or something like that, so if you say they will go up you are probably right, but it tells us nothing about the next year. People should invest for the long term, otherwise keep funds free and available if they need them in the next year. Fun to read, but predictions are essentially useless.

#61 A box in the sky on 02.18.17 at 9:27 pm

The only thing that matters is price action. Everything else is interesting banter at best or shooting the sht at worst.

We are in a good place basically across the board – us, Canada, EM …. why would anyone be so arrogant to think they can call market tops? Just stay invested aND keep rising this bull market until the trend exhausts itself.

No idea why people on this board fancy themselves global macro gurus …. so arrogant.

So many people have been on the sidelines for this multi-year bull market because they’re too stubborn. Sad!

#62 Smoking Man on 02.18.17 at 9:28 pm

I’m done, the code smith nazi will say no code smithing for you . I went total Smoking Man on linked in. Best orgasmic feeling I ever had.

God damn trump …it’s his influence.

#63 conan on 02.18.17 at 9:56 pm

So China just did something huge. It is stopping all coal imports from North Korea. I am no expert on Pyongyang’s dollarydoos, but this could be enough to slide them into chaos.

http://www.independent.co.uk/news/world/asia/china-north-korea-sanctions-coal-economics-nuclear-tests-kim-jong-nam-donald-trump-a7587931.html

#64 Mattl on 02.18.17 at 10:11 pm

Hey Flop – not sure what you think you are proving by posting homes that have sold at close to the price they were purchased at 8 months ago, and significantly more then they would have sold for even 2 years ago. The listings you are posting – 100k loss here and there – are likely being sold at a loss by investors that have made bucket loads of money the past 15 years.

I guess I don’t understand your perspective. You are and have been at ground zero of the greatest wealth opportunity guys like you and me will ever see. Mid 40s guys that are in the GVR and didn’t make a dime on RE should not be posting pink snow reports and playing local RE expert on blogs.

I am a RE bear. Bank wanted to lend me 3x the mortage I took. Cost me an easy million in RE appreciation over the past 7 years. Sucks to be wrong, but you’ll never see me cheering for the guys that did take the risks, to fail. So wake me up when prices go back to 2012 levels cause adjustments back to summer 2016 are a popcorn fart in a sea of money that guys like you and I didn’t make.

#65 DON on 02.18.17 at 10:21 pm

Flop

Check this out Ross Kay on HoweStreet Feb 13

http://www.howestreet.com/2017/02/13/what-is-the-trump-handshake/

after the trump handshake part at approx 11 minutes he talks about Vancouver real estate in detail.

Good analysis.

#66 traderJim on 02.18.17 at 10:29 pm

Thank god Smoking Man is back.

I know Moron is supposed to be some kind of a hole, but they also say the women there are the best in Cuba.

What’s the scoop? Did I miss the boat by sticking to Holguin, Havana and Trinidad?

#67 WUL on 02.18.17 at 10:33 pm

FLOP:

5 minutes into tonight’s ‘Nucks – Flames tilt. Turn your analytical skills to this question. Trade deadline upcoming. Gaudreau for Horvat straight up. Any takers? Gaud, that $7MM per annum is going to hang around the neck….

Oops. Sorry Ryan. I’ll go two doors down to the correct blog. Nice article today. Even I understood it. That’s sayin sumpthin.

#68 oncebittwiceshy on 02.18.17 at 10:38 pm

This story sounds very appropriate for realtors over the next several months.

Trying to save face, they sold their home to ostensibly travel the world, but they are selling their worldly possessions to pay for their wedding and get out of debt.

You would think that the proceeds from their house sale would have covered all of this.

I like that it is advertised as a refreshing opportunity to live their dreams; not that they appeared to be drowning in debt and had to get out.

I think that many real estate agents who believed their own rhetoric are going to find themselves in similar positions soon.

DA, isn’t this your hometown?

https://www.kelownanow.com/watercooler/news/news/Kelowna/17/02/18/Kelowna_couple_ditches_mortgage_to_travel_the_globe/

#69 Entrepreneur on 02.18.17 at 11:01 pm

The balancing act and looks like the States are moving full steam ahead. That Trump guy as president isn’t so bad after all. T2 just wants to tax us and do away with small business, no clue how to run a nation.

Of course, nation’s balancing act has been ignored by our leaders. Is Canada going the same route as the USA? No, just the opposite.

The first clue of a failing nation/country is the infrastructure and time to allow small businesses to prosper to fix the problem. Not seeing this happening.

#70 westcdn on 02.18.17 at 11:09 pm

I planted my tomato seeds a few days ago. I am a fool for punishment – last year I had 50 plants. I got lots of tomatoes but I am not to repeat. Curse me if you will but I am making money and tomatoes.

#71 Trump a great man on 02.18.17 at 11:16 pm

Penny Henny #4

Trump is a bad guy for the criminal elite who suck on the life blood of America (working/middle class) . These criminals steal hundreds of billions of dollars a year and Trump wants to stop that. The media (owned by crooked elite) create 100% fake news for years now but Trump isn’t stupid like the masses and he exposed them for that. Trump has been telling the masses to their faces what the elite have been doing. People should be in the streets demanding the heads of the crooked elite (media, Big Pharma and their drugs , vaccines , Monsanto, Industrial military complex) These people are greedy , evil and use/poison us everyday. What scares me the most is how the masses are still asleep and still repeat the media’s lies as fact. You would think there would be an uprising by everyone. The fact anyone would protest against Trump speaks volumes at the stupidity of the weak minded masses. The truth is lies and lies is the truth in our 1984 world.

#72 For those about to flop... on 02.18.17 at 11:43 pm

Well Matt, tthis is the second or third time you have vented to me ,but I’m not the guy you should be angry at.

I had ankle/ foot surgery in late October and I still can’t walk.

During the day in between doing rehab I try to help people see what is going on with Vancouver real estate.

I have worked in construction the last 25 years and since I have been in Vancouver -2002-I have worked on some of the nicest houses on Vancouver’s Westside.

This has helped me gain some perspective and contacts that I discuss what is happening in the business.

I have seen the prices rise around where I live and become more of a target for flippers and watched this year as they worked against the tide.

It wasn’t that long ago that I was reporting about houses and developments I was working on going for over crazy money ,but the mood has changed in Vancouver and I am reporting on that side of things.

When I got home from the hospital after getting my cast off my wife asked me what I was going to do to pass my time.

I told her that to the best of my ability I was going to help Garth document the housing correction that was starting to unfold in Vancouver and see where it took us.

After all ,I thought that it would be a shame if it turned into a major thing and we looked back in the archives and all that was there to be read was people moaning about Trump.

Who knows what is going to happen but while all you guys are worried about making money on real estate and your stocks ,my goal this year is to learn how to walk again and take my wife out to dinner to say thanks for looking after me….

M42BC

#73 yorkville renter on 02.18.17 at 11:54 pm

#70 – Trump has done NOTHING so far with regard to the economy… he’s added chaos on othet fronts, but nothing on the econony. I’m not saying he can’t or won’t, but he deserves zero credit on the econony at this point.

#74 Stock Picker on 02.19.17 at 12:47 am

I agree, with one proviso….I don’t think this is a bull market…rather a market in recovery after eight years of slavish socialism world wide. The bull market began on November 8.

I had a kid come to me last week with $ 28,500 can…asked me what to do. The first thing I said was “Go to Texas” But he’s ‘in love’ with a career civil servant who gets the big salary and perks for watching porn all day and I had to figure that into the equation.

So this is what we bought….all in can dollars….so as to incur no tax filing fees, withholding tax acct fee. I’m mad….but I think it being a bad time for Canada under Trudeau is a good time to do some long term buying while things are depressed.

1) RSI…. the global drought in sugartocks and future planting persists and will be for at least another two to three years. RSI pays a fat dividend, quarterly.

2) AAR.un ….Industrial properties for expnding business , much in the US. Pays a fat dividend….monthly

3) CPD….the rationale for this is obvious…pays a sweet divvy

4) CAE…..gangbuster growth profile…also pays a dividend

5) BNS….proxy for international growth, safety plus great div.

6) SPB…..propane fuels expanding growth….great div.

7) XEG…. energy is back on track and the picture is bright….pays a div.

And kids….This sounds easy…..but do your homework. I might be out of any of these positions and into others before you read this.

So far…in the three days since we moved in…this portfolio has earned $430 after brokerage. That’s untaxed cash in the TFSA. All these issues reference a wide shotgun blast of exposure while maintaining a laser focus on individual performance.

#75 CONservatives are elite scum on 02.19.17 at 12:52 am

A vote for CONservatives is a vote for te corproate elite. https://www.thestar.com/news/canada/2017/02/18/in-what-world-is-it-laughable-to-drive-a-bus-for-a-living-mallick.html

#76 Joe2.0 on 02.19.17 at 2:24 am

Everything will be just fine till it ain’t.

#77 David McDonald on 02.19.17 at 6:41 am

“Go long and prosper”; that’s clever.

Thank you for the analysis. There are indeed possible bumps in the road like a LePen victory in France or some unforeseen unforced error by Trump which could cause a 10% correction. But if the underlying trends in the US are so positive we may indeed prosper this year.

#78 Bottoms_Up on 02.19.17 at 7:49 am

142 HFT Dude on 02.18.17 at 12:58 am
—————————–
It seems you do not know that the rich definitely do not pay 54% tax.

They put their wealth in assets, and claim depreciation.

They don’t take salaries, and instead pay themselves dividends, taxed at the dividend rate (~25%).

They hide money in offshore banks and use shell/numbered companies.

The discussion here has been about everyday, high-income earners (doctors, business operators, wealthy pathetic blog owners), but the few uber-wealthy with offshore assets. Nice (useless) pivot. — Garth

#79 Book Review on 02.19.17 at 8:02 am

Brooks, John. 2014. Business Adventures. New York: Open Road Integrated Media, Inc. (Original work published 1969.)

These 12 case studies “from the world of Wall Street” are decades old, but still provide relevant insights today. A fascinating read, and highly recommended.

#80 acdel on 02.19.17 at 8:26 am

#59 Smoking Man

Thanks for your response!

#81 Smoking Man on 02.19.17 at 8:29 am

A new drunken low bar hit.

Two pairs of glasses gone, vanished.

#82 technical analysis? on 02.19.17 at 8:49 am

#53 Ryan Lewenza on 02.18.17 at 8:34 pm

You need to know your audience! But thanks so much for your constructive criticism. I’ll try harder in the future. – Ryan L
__________________________________

i was waiting for you to dazzle me with your wisdom for the last 2 weeks, but i guess you’re not interested in sharing.

#83 More Questions on 02.19.17 at 9:14 am

Ryan, do you recommend that investors with large amounts of cash invest in the market all at once? Or do you recommend that they use dollar-cost averaging and, if so, over how many years? Or something else?

#84 Ryan Lewenza on 02.19.17 at 9:23 am

Smoking Man “Ryan lose the tie. Christ, feeling like I’m on pathetic linked in reading your responses.” And “Seriously, sucking up. He hasn’t even won an accadiamy award yet. Like how can you ever respect an opinion from some one who’ looks good on camera that’s good at memorizing brilliant writers words and regurgitates perfectly on demand. Writers get no respect. Pisses me off.”

Smoking man why so angry? It was Saturday night you should have been halfway through your bottle of JD and in good spirits. Oh wait, its JD. I worked at a rough bar all through University and I observed a very clear and consistent trend. Consumers of JD almost always ended up in a fight at the end of the night. Maybe you should switch to Southern Comfort or white wine? You won’t always then be looking for a fight. – Ryan L

#85 Ryan Lewenza on 02.19.17 at 9:29 am

Technical analysis? “i was waiting for you to dazzle me with your wisdom for the last 2 weeks, but i guess you’re not interested in sharing.”

Here’s a sample of my technical research I used to publish when I was the Chief Strategist of Raymond James and the technician for TD Bank. – Ryan L

http://advisoranalyst.com/glablog/2016/02/18/ryan-lewenza-technically-speaking-02172016.html

#86 The Technical Analyst, CSTA, CPD on 02.19.17 at 10:51 am

Yes the VIX is low and we can see a short-term pullback at any time. But we don’t try to time (or think we’re smart enough to consistently time) short-term pullbacks. We focus more longer term trends, which we believe are up. … – Ryan L

Ryan, it reads like you are a little defensive in your email, and you don’t have to be. We do the same job.

I agree with your market observations. Myself, I use GAAP P/E in my technical analysis for my clients.

A little confused hearing another CSTA/MTA say “we don’t time the market”, maybe you are meaning something else? Level 1 and 2 of the CMT deal with Technical Investment Strategies. If you don’t read the charts to see opportunities what’s the point? Thus the confusion.

CSTA (Canadian Society of Technical Analysis’), yes, anyone can join, it isn’t free, but you wouldn’t unless you have the aptitude and interest to join. CSTA is a professional organization, it deserves to be treated it as such.

#87 46 and 2 on 02.19.17 at 11:09 am

Seems like hatred is becoming the new golf.

#88 crowdedelevatorfartz on 02.19.17 at 11:19 am

@#239 Um, no

Well if it isnt envy, then its laziness and stupidity.

I have watched countless people( friends, coworkers, etc) over many years make some of the worst financial decisions time and time again.
Borrow money at high interest rates to go on vacation.
Borrow money to buy Christmas presents while the rent cheque bounced.
Borrow money to pay the rent, the car payment, car insurance,etc, etc,etc .
Let their teeth rot, the kids teeth rot, but god forbid they go one day without a pack of $10 cigarettes…
Bitch and moan about how “they can never get ahead” as they drive 200ft to buy a $8 Subway sandwich ….. everyday……..
and they do this year in and year out working for the same wage as I do.
I decided to buy a new vehicle a few years ago and offered my trouble free, low mileage, well maintained, clean …10 year old used car to a coworker for a song( less than half its black book value) AND I would let him pay me over time, interest free….to help him get out of the financial abyss he was in……..his reaction…
He came to work the next week with a brand new car with all the bells and whistles …30k paid over 6 years….his interest rate was exorbitant because his credit is non existant…. So it will be a 6 year old $38,000 used car by the time he is done paying for it

Envy?
The “Elites” fault? The “banksters”?
Please.

No, its sloth , greed AND envy the average population have.
Too lazy to spend the time to sit down, figure out what they are doing wrong(or right).
Too stupid to change.
So I silently watch as a coworker coughs and hacks on yet another cigarette while moaning about his painful teeth as he sucks back another daily $2 Tim Hortons coffee. Bitching about his “bad luck” to anyone that will listen.

People doesnt “deserve” a “fair deal”. They doesnt “deserve” anything.
They have all the same breaks that I’ve had and due to either laziness , stupidity or obstinate stubborn refusal to change…..they are broke
I see young immigrant kids working their butts at fast food restaurants off to get ahead while two young (presumably Canadian born) street kids with a puppy sit outside begging for spare change.
Do these kids deserve “a fair deal? equal pay”?
You’ve got to be kidding me.
What they need is a kick in the ass and 30 days in jail for vagrancy
Socialism doesnt work because 10% of the population that works hard will simply stop working if their hard EARNED money is taken from them to pay for the lazy sloths that expect it as their “right”

Google Venezuela’s economic meltdown after a decade of govt stupidity.
An entire country slowly starving to death
Its not pretty

#89 54% tax on 02.19.17 at 11:50 am

#79 Bottoms_Up on 02.19.17 at 7:49 am

142 HFT Dude on 02.18.17 at 12:58 am
—————————–
It seems you do not know that the rich definitely do not pay 54% tax.

They put their wealth in assets, and claim depreciation.

They don’t take salaries, and instead pay themselves dividends, taxed at the dividend rate (~25%).

They hide money in offshore banks and use shell/numbered companies.

The discussion here has been about everyday, high-income earners (doctors, business operators, wealthy pathetic blog owners), but the few uber-wealthy with offshore assets. Nice (useless) pivot. — Garth

—-

You definitely don’t need to be “uber-wealthy”, small business owners with 10-20 million do that, as long as you have the right lawyers, tax accountants.

They are separate from the “daily” accounting for the various customer/employee interfacing business.

Their “only” task is to create the legal-financial structure that owns the corporation(s) of the actual business, optimizing moving around assets, dividend distributions, etc. they do also the personal tax returns of the owners.

The accountant sitting in the office 9-5 does not have the entire picture, and the slightest idea that how much personal income tax the business owners pay.

#90 crowdedelevatorfartz on 02.19.17 at 11:57 am

Venezuela
Another “Socialist experiment” gone horribly wrong…
Where govt takes from the “haves” and gives to the “have nots’ to maintain power…..

http://www.google.ca/url?url=http://money.cnn.com/2016/10/25/news/economy/venezuela-breaking-point/&rct=j&frm=1&q=&esrc=s&sa=U&ved=0ahUKEwiD_OTIzpzSAhXBvBQKHecbDKoQFggUMAA&usg=AFQjCNGWtMQfburKD06F0FdPwnkAWMXt4g

#91 Wrk.dover on 02.19.17 at 12:05 pm

#73 For those about to flop… on 02.18.17 at 11:43 pm

I had ankle/ foot surgery in late October and I still can’t walk.

—————————————–

My wife was laid up for a while once. I didn’t mind waiting on her-I owed her-but it sucked waiting on my self during that time period….

#92 I'm stupid on 02.19.17 at 12:11 pm

Does this article have merit?

https://betterdwelling.com/1-in-5-canadian-homeowners-commits-mortgage-fraud-says-top-broker/#_

#93 Kool Aid on 02.19.17 at 12:48 pm

Thanks Lew, nice to hear both bull and bear positions.

SP500 at 1550 & Dow 13500, by the autumn of 2018, why…

What happens when Janet raises a couple of times next year with a .25% and then .50% increments to stave off increased inflation from the repatriation of foreign earned cash coupled with, business/personal tax cuts & elevated infrastructure spend.

When will EU defaults materialize in the near term, will France & Italy join Britain to leave the EU?

Will Russia snap another piece off the map?

When will China-US relations sour and a trade war erupt out of pro US policy pursued without compromise, will that be around the same time a North Korea’s test missiles hit a target?

The market is too optimistic, what is priced in now and what will transpire is unknown.

The greatest buy opportunity of a lifetime is approaching, and most investors have less than 5% cash. Fully invested, fully levered, carrying the most debt in history, hmm, is that more 1929 or 1999?

As factors emerged that will forever change the global economic landscape & usher in a new era of investment growth, these same tectonic economic distortions and dislocations will slowly replace legacy structures in favour of new systems. The buy side opportunities will come in when a significant reduction of value destruction has occurred in the companies and technologies that are primed to bring us the future.

AI, data, robo, nano, bio/genome, clean energy, future materials, internet of things will leadout of a financial reset.

As capital has partially displaced labour, a future where capital reforms in order to support labour is possible “tax the robots” policy is real and warranted.

A global “reset” of virtually all assets classes is looming, including a bond crisis that will come from currency interest divergence in the largest developed nations.

#94 Smoking Man on 02.19.17 at 1:22 pm

85 Ryan Lewenza on 02.19.17 at 9:23 am
Smoking Man “Ryan lose the tie. Christ, feeling like I’m on pathetic linked in reading your responses.” And “Seriously, sucking up. He hasn’t even won an accadiamy award yet. Like how can you ever respect an opinion from some one who’ looks good on camera that’s good at memorizing brilliant writers words and regurgitates perfectly on demand. Writers get no respect. Pisses me off.”

Smoking man why so angry? It was Saturday night you should have been halfway through your bottle of JD and in good spirits. Oh wait, its JD. I worked at a rough bar all through University and I observed a very clear and consistent trend. Consumers of JD almost always ended up in a fight at the end of the night. Maybe you should switch to Southern Comfort or white wine? You won’t always then be looking for a fight. – Ryan L
…..

My apologies Ryan.

I’ve been drinking this waterdown crap in Cuba for a few weeks. Got to Seneca last night and did my weekend routine of 6 wines and a few shooters. Before I even got to the shooters pictor this. I was walking like I was on a cruse ship caught in a hurricane. I’m missing two pairs of glasses and a credit card.

Last thing I remember sitting in booth with two hot ladies and my wife showing up and saying “cute now give me another 500 bucks please.”

I vow never to drink again or be rude to you guys.

SM

#95 Bull to the end on 02.19.17 at 1:38 pm

Mattl “I am a RE bear.

You lose.

I am a RE bull in Vancouver. I cheered the drop in interest rates, the increased amortization, the interest only mortgages, the no income verification for entrepreneurs and the mortgage wars. They pushed my property values up and up.

When those were changed I was ecstatic that the Real Estate Associations created the “chinese” invasion. It pushed FOMO like nothing else and my home value soared again.

Unfortunately, the tide has turned somewhat and I’m not sure that Christie’s down payment gift to new buyers is going to help.

It doesn’t matter though because everybody wants to live in Vancouver and we don’t need Chinese buyers, first time buyers or anyone else.

As a RE bull, we know that this market will continue forever so we can live the lifestyle that we have come to enjoy.

I still have $300,000. worth of room on my Heloc so I can put all my latest toys and vacations on that when I renew next month.

You’re right Matti, the little drop isn’t affecting any of my friends or my lifestyle decisions. Who would have thought that we would be financial gurus.

#96 NoName on 02.19.17 at 1:53 pm

No salsa today, just roring 20s charlston.
pres play !!!
https://www.youtube.com/watch?v=msvOqvBJLBw

side note
whats wrong with you canada, i charlston evewriwhere bit not in canada, gues we are to busy being center of the universe.
https://www.youtube.com/watch?v=bB40NcumOOs&index=19&list=PLzRgBh1aMRS8d_X_sFsNgedORMklE30Fl

#97 #61...yes on 02.19.17 at 2:17 pm

Ryan has no guarantee as to what will happen short term . Zero .

CMT look at probabilities , then watch the action unfold . It’s like a GPS, but …not even close to that level of accuracy.

Ryan appears honest and knows his limitations – he’s alresdy said ‘he can’t time the market ‘. Keep in mind he has the CMT designation . Need I say more ?

#98 Entrepreneur on 02.19.17 at 2:35 pm

Don’t worry #94 Kool Aid…T2 and the Liberals know what to do, they will just call it a tax, make speeches on how free trade is good for us; meanwhile, ignore the suing, ignore the people of that nation, ignore we can’t make or do anything.

I think Trump is fighting for the people of USA and I applaud him. He is not a politician but his heart and spirit is with the people and that is what makes a nation grow strong. He is fighting for “fair” trade not “free” trade, difference there.

And another thing, Trump does not need to be there; he could have said “so what” but he wanted to correct what was wrong. Trump has his reputation to keep up and stand by that.

If these free trades were so good why are more countries like France and Italy want out? When T2 makes these EU speeches it sounds like it is one-sided thinking/bias.

#99 ccc on 02.19.17 at 2:41 pm

#67 traderJim:
Moron is a hole (the whole Ciego de Avila province is a hole). You only go there if you have family, period. Historically the most beautiful Cuban women came from Camaguey. But hard to tell any longer given the many decades of rationed food… everybody seems to be missing teeth no matter the location and age…
Next time you guys go to Cuba ditch your Expedia tour going to Trinidad and your resort by the beach and go put your dollar work for you harder into something more authentic.
Here is a video tip for places to eat and things to do in Havana: https://www.youtube.com/watch?v=OP9oZtcY2eg (yes, you have to learn Spanish to get it)
Will give more hints in exchange for top-dollar 2017 investment advice… (free for Garth&Co of course)

#100 jess on 02.19.17 at 2:44 pm

Index of Public Integrity

Romanians protested over a government move to quell investigations of corruption. Having made so much progress against graft, they took a stand for clean governance.
https://www.theguardian.com/world/2017/feb/06/27-years-of-corruption-is-enough-romanians-on-why-theyre-protesting
====================================
Trump signed a repeal of a bipartisan provision of the Dodd-Frank bill known as the Cardin-Lugar Amendment. (anti bribery law)
http://www.rollingstone.com/politics/features/trumps-repeal-of-anti-corruption-measure-proves-hes-a-fake-w467240

#101 Freedom First on 02.19.17 at 3:41 pm

#79 Flop

Touching Post Flop.

Good luck on your recovery, and I too have enjoyed your Pink Posts.

You have a great attitude.
Sincerely, FF

#102 Freedom First on 02.19.17 at 3:43 pm

Sorry Flop, my bad, I meant to write #73

#103 Ryan on 02.19.17 at 3:52 pm

Good read

What truly is amazing is here’s a firm with experience . An associate is a CMT

And yet their average return for clients less the 1% they charge is approx 6%

And people ask me why I manage my money ? If they only knew

#104 Vampire studies GMST 454 on 02.19.17 at 4:15 pm

84 Questions – Just by asking the question, I think you are probably not the person to invest it all at once and still sleep at night.

That’s the emotional side.

The more technical side requires knowing when you will need the money from the investments, how much you earn now, how big is your current portfolio etc.

If you dont require the money for decades, and have most/all of your TFSA room, you might try putting a chunk in there, start contributing regularly, but leaving yourself some room to contribute extra if there is a market correction.

#105 Another Book Review on 02.19.17 at 5:19 pm

Akerlof, George A., and Robert J. Shiller. 2009. Animal Spirits. Princeton, N.J.: Princeton University Press.

A great read, esp. the chapters dealing with fairness, corruption and bad faith, money illusion, saving for the future, financial market volatility, and real estate markets.

#106 Unbalanced on 02.19.17 at 5:35 pm

DELETED

#107 LP on 02.19.17 at 5:47 pm

#73 For those about to flop… on 02.18.17 at 11:43 pm

You can do it Flopper; we’re all pulling for you.

F69ON

#108 crossbordershopper on 02.19.17 at 6:19 pm

a great sunday dinner with family, thank you mr. weston for giving us excellent food at a good price.
thank you mr trudeau for the child tax cheque it goes a long way to help with the cost of the kids.
10 more days till month end and the next cheque.
two thirds of all canadians act, work, think and live like me every single day. money managers with their graphs talk about retirement, returns, taxes etc, when many of us try to figure out how to get tuna and spagetti together in a tasty dish for $1 per person.
rich people problems ask the lady who pours you coffee at tim hortons what her take on the s and p trading at 20x earnings is high or not. ya

#109 TCContrarian on 02.19.17 at 8:02 pm

“The narrative now in the investment community is remarkably void of any actual questioning of both logic, and actual information. Interest rates will only go up, stocks will only go up, inflation is going to skyrocket, and volatility is going to remain historically low. Why does everyone believe this is the future? Because interest rates have already gone up, stocks have already gone up, inflation has already gone up, and volatility is historically low. The narrative reacts to what has already happened, and spreads like wildfire across the media. Entire investment decisions are then based on the story, rather than the fact that mean reversion dictates the exact opposite is the truth of the future.” – Michael A. Gayed, CFA

This, one clever dude!

TCC

#110 I like cookies on 02.20.17 at 2:20 am

What about the TSX? Do things look equally rosy there?

#111 Mr Happy on 02.20.17 at 9:09 am

“And recall the advice given often about hedging against our currency. Keeping about a fifth of your portfolio in US$-denominated stuff (at all times) is wise.”

Does it matter if one buys a US ETF “hedged” in Cdn $ or is it better to buy one in US Dollars?

Thank you

#112 M on 02.20.17 at 11:32 am

LLLLLLLLLOOOOOOOLLLLLL….
“Additionally, the S&P 500, and most other global equity markets are trading above their rising 200-day moving averages, which again defines an uptrend.”

…and for a long time at that. So in the rosy scenario S&P will NOT revert to 200 MA even just by scratching that line…if not undershooting it ? Not fall AT ALL 200 pts ?

…no my friend… you did not trigger anger at all. only amazement :)

“In summary, I see the odds of a US recession as remote for this year (Bloomberg estimates it at 15%) and in fact, I see the US and global economy re-accelerating following a soft patch last year.”

…remember those words :)

#113 CAPE Ratio on 02.20.17 at 5:12 pm

The CAPE (or Shiller P/E) ratio is not a metric used to time the market, although high CAPE values have been associated with market crashes.

Rather, it’s a tool to help assess likely future returns from equities over timescales of 10 to 20 years. Higher than average CAPE values imply lower than average long-term annual average returns. That’s the point.

For a more thorough discussion of the CAPE ratio by Robert Shiller, click the link below:

https://www.nytimes.com/2014/08/17/upshot/the-mystery-of-lofty-elevations.html?module=Search&mabReward=relbias%3Ar%2C%7B%222%22%3A%22RI%3A16%22%7D&abt=0002&abg=0