Recession monitor

RYAN  By Guest Blogger Ryan Lewenza

We are not “market timers” at Turner Investments, aggressively shifting in and out of equities. Instead we employ a disciplined, long-term approach, using the benefits of balance (mix of equities and fixed income) and diversification through broad-based ETFs. We do this for a few key reasons. First is it very difficult to consistently time markets as you need to get both the sell and buy just right. Second is that over the long run equity markets rise so you’re basically trying to bet against this long-term trend and human progress. Third is that by employing our balanced approach this should generate returns of 6-7% annually which, if you start early and stay committed to the plan, will be what most need to achieve their financial goals.

While we don’t make big bets getting in and out of the markets we will from time to time reduce risk in the portfolio and make tweaks if we believe we are heading into a bear market. Having studied the markets for over two decades I have found that there are two main drivers of bear markets – recessions and exogenous shocks. Since I can’t predict exogenous shocks, today we focus on the outlook for a recession, which I’m happy to say looks remote over the next 9-12 months.

Below is a table of key leading economic and market indicators that historically have done a decent job of predicting recessions. Now there’s a lot to digest, so before you break out into a cold sweat and move on to Brietbart for you ardent Trump supporters, or the New York Times for you pot-smoking hippies, let’s review some of these indicators and what they signal for the US economy.

First is employment data, including initial jobless claims, the unemployment rate and wage growth.

As an economy picks up, wage growth begins to accelerate as employees have more pricing power, which in turn drives up inflation. Central banks then respond by aggressively hiking interest rates in an attempt to curb inflation. In the last six recessions dating back to the 1970s, wage growth has averaged 5.8% Y/Y at the beginning of each recession. Currently wage growth is just 2.5% Y/Y, which is an important reason why overall inflation remains benign and why the Fed and other central banks are being very gradual in hiking interest rates.

Typically we see a spike in jobless claims prior to and during recessions with jobless claims at 367,000 on average at the beginning of recessions. Currently, jobless claims remain at historically low levels of 258,000. Similarly, the unemployment rate begins to move higher at the start of recessions, historically averaging 5.6% versus the very low level of 4.2%. So none of our labour indicators are suggesting an imminent recession.

Next up is my favourite economic statistic (yes I said favourite….Garth doesn’t let us out much), the Institute for Supply Management (ISM), which measures manufacturing activity in the US. This is my favourite economic indicator given its long track record, its high correlation with the S&P 500, and that it typically leads important changes in the US economy.

Typically it peaks ahead of the overall economy and on average is 49.4 at the start of recessions. Currently it sits at 60.8, recently hitting over a decade high. This great leading indicator is suggesting strength in the US economy, not one on the precipice of a recession.

Turner Investments Recession Monitor

Source: Bloomberg, Turner Investments

And then we get to the mother of all recessionary indicators – the US yield curve. The yield curve measures the difference between short dated government bonds (91-day Treasury bill) and long dated government bonds (10-year Treasury bond yield).

When the US economy begins to heat up, the Fed responds by hiking interest rates, which pushes up the 91-day T-bill. The Fed has no control over the 10-year bond yield, which is determined by market participants and its level is based on a number of factors including inflation expectations, economic growth rates, term premium, etc.

When the Fed pushes up the 91-day T-bill yield to the same level of the 10-year bond yield we get what’s called an “inverted yield curve”. Basically when we see this, we need to be preparing ourselves for a recession since an inverted yield has correctly predicted every recession since the 1960s. From the table above you will see that the average spread between the 91-day T-bill and the 10-year bond yield is -22.5 bps at the beginning of recessions. While we have seen a flattening of the yield curve over the year as the Fed has hiked interest rates, the yield curve remains positive at 129 bps and nowhere near levels suggesting a recession. But once this goes inverted, look out!

US Yield Curve – Best Predictor of Recessions

Source: Bloomberg, Turner Investments

And finally, the Federal Reserve publishes a probability recession model and it currently stands at an incredibly low 0.18%, so based on the Fed’s models, a recession doesn’t look to be in the cards over the next 6-9 months. Now we all know the Fed’s economic projections are, how do we say, crappy, but when we combine their models with our tested indicators, we conclude that a recession is highly remote over the next 6-9 months. So stop freaking out about the all-time market highs as a recession is what’s going to end this current bull market, and that’s just not in the cards at present. And now is the time for my weekly flogging by some of the blog dogs in the comments section as they rip this analysis apart and tell me we’re already in a recession (because government statistics are a lie) or are on the cusp of recession any day now.

Fed Probability Recession Model at Just 0.18%

Source: FRED, 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.

112 comments ↓

#1 crowdedelevatorfartz on 10.28.17 at 2:51 pm

“…..or the New York Times for you pot-smoking hippies…”
++++++

Im too young to be a Hippie and I dont smoke pot……

#2 FOUR FINGERS WATSON on 10.28.17 at 3:19 pm

(because government statistics are a lie)
……………………….
So the Canadian inflation rate for 2017 really is 1.4% ?
Give yer head a shake.

#3 ALFRED E. NEUMAN on 10.28.17 at 3:36 pm

“And now is the time for my weekly flogging ..”

Flu, worry not.

The dogs only flog you on a bi-weekly basis.

Its your younger brother Doug who they really enjoy flogging. Who can ever understand his made-up charts.

This is an excellent post, by the way ..!!

#4 Jungle on 10.28.17 at 3:38 pm

Awesome post, thanks for all this information-Very well done, again.

#5 Victor V on 10.28.17 at 3:48 pm

‘This loonie’s going down’: CIBC’s Tal

http://www.bnn.ca/dovish-bank-of-canada-u-s-uncertainty-will-push-loonie-lower-benjamin-tal-1.898240

CIBC Deputy Chief Economist Benjamin Tal says the loonie is mispriced, and that it’s likely to head lower.

In an interview with BNN on Friday, Tal argued a dovish Bank of Canada and uncertainty south of the border would push the Canadian dollar to 75 cents U.S. in the first quarter of 2018.

“For some reason – I don’t know why – the market is still attaching close to 30 per cent probability for a move by the Bank of Canada in December,” Tal told BNN. “I’m not sure what the market is smoking when it comes to that because it doesn’t make any sense.”

“This Bank is telling us: ‘We are not going to move in December,’ basically. So, I think that this is an easy trade and over the next few weeks you will see this probability going from 30 to zero and that’s, of course, negative for the Canadian dollar.”

#6 waiting on the westcoast on 10.28.17 at 3:53 pm

Ryan – great post!

Do you think inflation in US as low as they are claiming? My businesses are under significant wage pressure and we have conceded to that pressure a few times over the past couple of years.

Our operations are still experiencing double digit growth throughout the US. But that growth is lower at mid to high teens now. We had been growing consistently at low to mid twenties for the past 5 years.

#7 Matthaeus on 10.28.17 at 3:56 pm

Could you please provide direct links to the charts? They are quite helpful!

#8 NoName on 10.28.17 at 3:59 pm

#112 Ace Goodheart on 10.28.17 at 1:44 pm

Everything you wrote make sense, but there is one thing that is somewhat wrong, for last little while there is/was very low negative correlation between market and bonds.
market (snp500-spy)
bonds (spab-barclays agregate bond index)
i used those two because its easy to compare.

In a last few ears they for the most part bonds stock folowwed a same path, up. My chart goes only 5 yrs back, so definition of few is 5yrs.

I hate to say this but only after trupm was elected, some sanity was brought back to market, but unfortunatly it was temporary. What happen was that market went up and barclays agregate bond index went oposite way, but by the looks of it it was just temporary…

And i dont thin you are crazy, you are bottom feed light, and thats good, in my books.

#9 mike from mtl on 10.28.17 at 4:05 pm

We have reached a permanently high plateau.

#10 Ace Goodheart on 10.28.17 at 4:20 pm

Re #8 NoName

The investing model I use is very simple.

I look for high quality assets in distressed asset classes.

That is it.

Back in late 2008 I bought $50,000 of RBC stock for around $26.00 per share. Banks at that time were a distressed asset class. I found one I liked the most and bought in. I ended up doing quite well.

It’s not a hard model to follow. It requires little intelligence, no economic knowledge or training and little start up capital.

All I am doing is buying stuff no one else wants.

If people start dumping an entire asset class (like bonds right now) I investigate, locate what I believe to be high quality bond ETFs and I buy them.

It is really the opposite of the way most people invest. Instead of trying to figure out how high an asset will go (market timing) I am buying in an environment where everything is discounted and being fire saled.

That is it. No secret. Nothing complex. I share my method freely with everyone.

It has made me wealthy

#11 not so liquid in calgary on 10.28.17 at 4:21 pm

brilliant note, Ryan. Yield Curve is something I have been following, for Canada, since the late 90’s. Excellent predictor for what lies, economically, in about a year.

#12 Yanniel on 10.28.17 at 4:26 pm

Hi Ryan,

Great article. One question: I get all those indicators are in rosy territory today, but how can you predict they wound not be crossing the red line in let’s say: 2 months?

How can you say “no recession in the next 6-9 months”?

I just don’t understand where the 6-9months number comes from? Is this number made out of the blue or is there a methodology to produce such numbers?

Thanks.

Yanniel.

#13 Ryan Lewenza on 10.28.17 at 4:33 pm

waiting on the westcoast “Do you think inflation in US as low as they are claiming? My businesses are under significant wage pressure and we have conceded to that pressure a few times over the past couple of years.”

Inflation is always a controversial topic especially on this blog. I find peoples perception of inflation is very personal, meaning if they are paying more for things they buy like food or rent that they believe inflation is high everywhere. For example, home prices and rents in Toronto have risen significantly in recent years but in other places like my home town of Windsor they’ve barely budged in years. So a persons experience in Toronto is completely different than someone in a smaller town. I can point to lots of items like TVs, computers and other electronics that are cheaper today than 5 years ago for example. So when looking at inflation you have to consider everything, not just what you consume or see. With respect to US inflation, I know the median personal income is the same level that it was in the 90s, and that the average worker hasn’t seen a large increase in their pay in years so a major component of inflation (wages and salaries) has barely budged in years. This offsets things like iPhones at $1,400 or the high food prices we encounter at the grocery store. So yes I generally believe in the inflation levels. But according to an earlier comment I need to give my head a shake. – Ryan L

#14 DG on 10.28.17 at 4:35 pm

Ryan, are there any cases when a Mutal Fund will be prfered over and ETF?

#15 Penny Henny on 10.28.17 at 4:36 pm

Wage growth increases while unemployment increases?
sounds contradictory??

#16 just a dude on 10.28.17 at 4:41 pm

Ryan,

Great post. Thanks for sharing these valuable stats & insights. Super informative (and reassuring!).

Cheers

#17 Ryan Lewenza on 10.28.17 at 4:47 pm

Yanniel How can you say “no recession in the next 6-9 months”? I just don’t understand where the 6-9months number comes from? Is this number made out of the blue or is there a methodology to produce such numbers?”

I say 6-9 months for three key reasons. First, I can’t make forecasts more than 6-9 months out with much confidence. So economists believe they can but they really can’t and I wish they would recognize this. Second, as I tried to convey in this post the economic data is just so solid right now that it would take a huge deterioration in the economy for it to fall into a recession and that wouldn’t happen in just two months. It doesn’t go from very strong to very week in just a few months. Finally, the stock market is a leading indicator of the economy, typically leading changes in the economy by 6-9 months. With the S&P 500 hitting new all time highs, this tells me we would have at least 6-9 months from now before a recession hit, assuming the S&P 500 peaked today, which I don’t see happening. So the 6-9 months is based on a number of factors. – Ryan L

#18 NoName on 10.28.17 at 4:49 pm

#10 Ace Goodheart on 10.28.17 at 4:20 pm
Re #8 NoName

The investing model I use is very simple.

I look for high quality assets in distressed asset classes.

That is it.

Back in late 2008 I bought $50,000 of RBC stock for around $26.00 per share. Banks at that time were a distressed asset class. I found one I liked the most and bought in. I ended up doing quite well.

It’s not a hard model to follow. It requires little intelligence, no economic knowledge or training and little start up capital.

All I am doing is buying stuff no one else wants.

If people start dumping an entire asset class (like bonds right now) I investigate, locate what I believe to be high quality bond ETFs and I buy them.

It is really the opposite of the way most people invest. Instead of trying to figure out how high an asset will go (market timing) I am buying in an environment where everything is discounted and being fire saled.

That is it. No secret. Nothing complex. I share my method freely with everyone.

It has made me wealthy

—-

I remember 2008, at my old job me and friend of mine debating of buying ford for 2 and change. We were in lab i remember that day ford treaded 1and 3/4. banks… td was 18-is and second one bmo or bns 22-ish something cant remember which one. I wish i had 50k in 2008… Its bit unfortunate i stronlgly believe that i will not have an oportunity of 2008 in my life time, again…

I like your style of investing!

#19 Ryan Lewenza on 10.28.17 at 4:52 pm

Matthaeus “Could you please provide direct links to the charts? They are quite helpful!”

There are no “links” to these charts as I’ve personally created them in excel using bloomberg data and some external sources. For the Fed’s probability model you can google it and find the site, data and chart. All other charts are in my excel files stored in an underground bunker next to Jimmy Hoffa. – Ryan L

#20 mark on 10.28.17 at 4:54 pm

Ryan, wish you would reconsider a example of a all equity(or damn close) for us youngsters who have a set!

I am going to suggest a 4 way split equally of US/EAFE/Canada/Emerging markets.
25% each.

I notice that if gold is put in a asset mixer it will lower volatility and reduce my worst losing year by over 18 percent!

Thanks

#21 Yanniel on 10.28.17 at 5:05 pm

Thank you Ryan for your answer and have a lovely weekend.

#22 macro-man on 10.28.17 at 5:06 pm

The picture at the beginning of the article says it all.

#23 dakkie on 10.28.17 at 5:07 pm

The Most Unaffordable Housing Markets in North America

http://investmentwatchblog.com/the-most-unaffordable-housing-markets-in-north-america/

#24 Loonie Doctor on 10.28.17 at 5:27 pm

Hi Ryan,

Increased wages and subsequent inflation usually happen due to demand in a hot economy as you say. Do you think wage manipulation like increasing minimum wage and increasing distributions of money to lower earners will artificially have that effect and lead to the tightening response to cool things off?
Thanks

#25 Penny Henny on 10.28.17 at 5:38 pm

#20 mark on 10.28.17 at 4:54 pm
Ryan, wish you would reconsider a example of a all equity(or damn close) for us youngsters who have a set!

I am going to suggest a 4 way split equally of US/EAFE/Canada/Emerging markets.
25% each.

I notice that if gold is put in a asset mixer it will lower volatility and reduce my worst losing year by over 18 percent!
\\\\\\\\\\\\\\\\\

You said that you have a set so if time is on your side then GO FOR IT!!!

Gold to lower volatility? You could do that too but make sure you rebalance.

#26 Doghouse Dweller on 10.28.17 at 5:45 pm

Federal Reserve publishes a probability recession model . Lets rip this analysis apart.

“It bears emphasis that not a single postwar recession was predicted a year in advance by the Fed, the federal government, the International Monetary Fund or a consensus of forecasters”.~Lawrence H. Summers

“not a single major central bank could provide an example of an accurate “a priori” recession forecast. The silence from the Federal Reserve, European Central Bank, BOE, BOJ and the Bank of Canada is deafening.”~ Peter Diekmeyer

Bernanke = 100% wrong 100% of the time.
https://www.youtube.com/watch?v=INmqvibv4UU

If things were so honky dory rates would be normal. Plain and simple . no phony stats, charts or forecasts required.

#27 Grey Dog on 10.28.17 at 5:46 pm

Ugh…2008 leads to January 2009 when my husband was given the golden (really more like a bronze) handshake after 33 loyal years and 4 sick days that entire time. FYI One does NOT qualify for EI with a settlement handshake either.
Keep saving you young pups…compounding eventually pays off.

#28 Lost...but not leased on 10.28.17 at 6:02 pm

Invest in Elon(Musk) !!!

His Solar City scam just laid off approx. 1200 employees. (He bought the company in 2016 from his cousins for over $2 billion)

He allegedly got a large interest free loan from Gov’t…..then loaned his company the remainder at 10% interest plus stock options .

He’s learned the classic scam of suckering Gov’ts for nebulous “Go Green” scams concurrently with junk science projects.

#29 Penny Henny on 10.28.17 at 6:11 pm

#29 Penny Henny on 10.28.17 at 6:07 pm
#27 Grey Dog on 10.28.17 at 5:46 pm
Ugh…2008 leads to January 2009 when my husband was given the golden (really more like a bronze) handshake after 33 loyal years and 4 sick days that entire time. FYI One does NOT qualify for EI with a settlement handshake either.
//////////////////////

if the ‘handshake’ was for less than 24 months than he still could have made a claim for EI

////////

Maybe different rules now

#30 Nice read on 10.28.17 at 6:13 pm

But you’re a market timer . Semantics . You change allocations based on perception . Using fundememtal /technical information .

A non market timer is someone who buys the index and sits .
Market timing is done in attempt to provide alpha to clients

With that said – use the word ‘tactically balanced /dynamic ‘, sounds better ?

#31 Tony on 10.28.17 at 6:17 pm

Good luck with the stock market maybe the DOW will go to 500,000 without any correction only to implode to 5,000. This unfortunately is how ponzi’s progress in time until their ultimate demise.

#32 Ryan Lewenza on 10.28.17 at 6:17 pm

DG “Ryan, are there any cases when a Mutual Fund will be prfered over and ETF?”

Mutual funds and ETFs are really just structures and how you purchase them. The better question is does it sometimes make sense to purchase an actively managed fund or ETF versus a passively managed fund/ETF? Yes we believe it sometimes does makes sense to pay a higher MER and purchase an actively managed ETF. We do this for areas of the market that are inefficient like preferred shares or high yield bonds. Here we would prefer to have a manager select specific preferred shares or high yield bonds then buy a passive index based ETF because often they can add valued. In contrast of large efficient markets like the US we just buy low cost passive ETFs because the S&P 500 is just so darn hard to beat consistently. – Ryan L

#33 NoName on 10.28.17 at 6:19 pm

Machine is striking back, funy thing dude on podcast is calling it revolution… What says you SM.

http://www.wnyc.org/widgets/ondemand_player/freakonomics/#file=json/807589

Pilot project social experiment us election, now something more sirius.

#34 Ryan Lewenza on 10.28.17 at 6:20 pm

Penny Henny “Wage growth increases while unemployment increases? sounds contradictory??

The unemployment rate lags wage growth hence why this happens. So first you get high wage growth, then the Fed tightens, and then the unemployment rate begins to move up. – Ryan L

#35 Trump on 10.28.17 at 6:25 pm

This a very great analysis …. Typical economics 101 classroom jargon.

I’d never have to invest if I was handed a dollar from every economist who wrote an article on how great the economy is doing and within weeks our lives are turned upside down from a financial train wreck.

Ryan, you might want to get in on this bet with me …. And quickly!!!!

There goes your flogging that you asked for.

#36 FOUR FINGERS WATSON on 10.28.17 at 6:28 pm

But according to an earlier comment I need to give my head a shake. – Ryan L
……………..
You need to get out more too. Go grocery shopping, buy some underwear, pay a few hydro bills, stay in a hotel. Bank of Canada rate has doubled in 2017,making borrowing more expensive. Housing up 30%. Is that 1.3% inflation? You are an “advisor”, maybe u can ‘splain to little moi how that math works cuz i pay way too much in taxes. I would like to reduce my taxes down to say….1.3%. Waiting………

#37 Tony on 10.28.17 at 6:31 pm

Re: #2 FOUR FINGERS WATSON on 10.28.17 at 3:19 pm

They only do that so they can fleece you on your income tax each year as it’s indexed to inflation. That’s the number one reason almost everyone is getting poorer each year.

#38 Stone on 10.28.17 at 6:35 pm

Hi Ryan,

I agree on your point that a recession does not appear imminent. When it should rear its ugly or (from an opportunistic view) lovely head, what would be the recommendation to take. I would imagine that the 60/40 split between equities and fixed income would get a shakeup to take advantage of the situation. Just wondering what you consider the best approach. I’m thinking a reverse 40/60 split could be pretty good but then, maybe not. Would you mind sharing your thoughts on the subject?

Thanks.

#39 Ryan Lewenza on 10.28.17 at 6:37 pm

Loonie Doctor “Increased wages and subsequent inflation usually happen due to demand in a hot economy as you say. Do you think wage manipulation like increasing minimum wage and increasing distributions of money to lower earners will artificially have that effect and lead to the tightening response to cool things off?”

Yes the higher minimum wage in Ontario and redistribution of income to lower income earners will help to drive inflation up. One economic concept I’ve always liked is the marginal propensity to spend and it is applicable here. You can argue that a tax cut in lower income levels has a larger impact than at higher income levels given our marginal propensity to spend. Meaning, would some hedge fund millionaire go out and buy a bunch of new suits if he got a tax cut (I think not) than someone earning $40,000 a year and got a similar tax cut? Basically people with less income are more willing to spend if they got a tax cut (or government benefit) then someone in a high income bracket. Someone should explain this concept to Trump. – Ryan L

#40 crowdedelevatorfartz on 10.28.17 at 6:49 pm

@#23 dakkie
“The Most Unaffordable Housing Markets in North America’
+++++++++

Finally Vancouver is finally #1 at something!
Well. In the very near future…… we’ll also have the most expensive car insurance in Canada.

https://www.google.ca/url?url=https://globalnews.ca/news/3830106/icbc-most-expensive-insurance-ctf/&rct=j&frm=1&q=&esrc=s&sa=U&ved=0ahUKEwj9z_SHs5TXAhVK82MKHRSpBowQqQIIFzAA&usg=AOvVaw0omsQ9KX4Tv8YOAsPHw4mz

Not to mention Regular Gas is selling this weekend in the Lowerbrainland for $1.42 a litre…….

https://www.google.ca/url?url=https://www.reddit.com/r/vancouver/comments/65wil0/most_expensive_gas_in_canada/&rct=j&frm=1&q=&esrc=s&sa=U&ved=0ahUKEwjB9P-gs5TXAhVJ92MKHWipAb0QFggnMAM&usg=AOvVaw1mXCXjJ2ipIgorlJZP77we

#41 For those about to flop... on 10.28.17 at 6:49 pm

Pink Pumpkins being carved in Coquitlam.

The owners of this relatively affordable house by Vancouver standards is having difficulty getting their money back.

Picked up for 1.23 in April 2016 ,if it goes for this number it will end up being a Pink Draw.

As yet the next guy has yet to find his Milford I’d like to buy…

M43BC

1508 Milford Avenue, Coquitlam

Jun 22:$1,399,000
Oct 26: $1,328,000
Change: – 71000.00 -5%

https://www.zolo.ca/coquitlam-real-estate/1508-milford-avenue

evaluebc.bcassessment.ca/Property.aspx?_oa=QTAwMDAzWExYTQ==

#42 simple question on 10.28.17 at 6:50 pm

How do financial market billionaires make their wealth?

#43 Soviet Capitalist on 10.28.17 at 6:51 pm

The analysis seems correct to me.

#44 Hana on 10.28.17 at 6:52 pm

Thanks Ryan for the great post.
Do you still advise having small percentage of Europe etf, fo example VE?
Asking because of the current situation in Spain.

#45 greyhound on 10.28.17 at 6:54 pm

Markets are increasingly fragile. Year-end bonuses loom large for the paid-to-play folks, so “Everybody” is expecting a melt up into year’s end, is short volatility & long tech. _Really_ long tech. Ask an old guy what happened in December 1972…

#46 re., 20 mark on 10.28.17 at 6:55 pm

Ryan, wish you would reconsider a example of a all equity(or damn close) for us youngsters who have a set!

I am going to suggest a 4 way split equally of US/EAFE/Canada/Emerging markets.
25% each.

I notice that if gold is put in a asset mixer it will lower volatility and reduce my worst losing year by over 18 percent!

Thanks

…………….

why 20% in Canada? Home bias? Or tax adv in a non-registered account?

#47 Keith on 10.28.17 at 6:55 pm

@#28 Maybe Musk is accomplishing more/better than you think.

http://www.npr.org/sections/thetwo-way/2017/10/25/560045944/tesla-turns-power-back-on-at-childrens-hospital-in-puerto-rico

#48 Catalyst on 10.28.17 at 6:59 pm

Thanks for the post. I like your graph based presentation style.

It begs the question, if short term rates spike due to fed moves have triggered every recession for decades, why have they not learned to very slowly move rates or not move them at all.

#49 DON on 10.28.17 at 7:11 pm

With the emergence of the contract economy who can’t claim EI – how are these folks captured in job losses?

#50 BobC on 10.28.17 at 7:22 pm

Great. Now if you would just tell me exactly which ETF’s to buy…….

#51 FOUR FINGERS WATSON on 10.28.17 at 7:28 pm

. One economic concept I’ve always liked is the marginal propensity to spend and it is applicable here.
…………………….
Once the diverted yield curve metastasizes will I have the marginal propensity to buy that new donkey i telling you about yesterday?

#52 older than a boomer on 10.28.17 at 7:29 pm

Just what I wondered. Are you Ken’s boy? Great guy.

#53 Ryan Lewenza on 10.28.17 at 7:35 pm

Don “With the emergence of the contract economy who can’t claim EI – how are these folks captured in job losses?”

I believe in some cases contract workers can still apply for EI. Regardless this will still hold. People will continue to apply for EI just prior to and into recessions. – Ryan L

#54 Smoking Man on 10.28.17 at 7:38 pm

I’m really confused about the Canadian economy. I mean with T2 at the controls it will surely hit an iceberg and yet for a year now could not find a gig. Mind you wasent trying that hard. Now all of a sudden I get a really good gig no interview. My inbox is exploding with new gigs. From Canadian and US mega companies.

What the hell is going on Ryan?

#55 Ryan Lewenza on 10.28.17 at 7:42 pm

Catalyst “Thanks for the post. I like your graph based presentation style. It begs the question, if short term rates spike due to fed moves have triggered every recession for decades, why have they not learned to very slowly move rates or not move them at all.”

That’s an easy one. If they don’t hike rates and just let it go then we get an overheated economy, hyperinflation and then Zimbabwe in the 1990s. https://www.bloomberg.com/news/articles/2016-10-21/new-zimbabwe-currency-stirs-memory-of-500-000-000-000-inflation
There is no perfect system or central bank policy. We do the best we can with what we have and know at the time, and then try to improve on this in the future. – Ryan L

#56 Crazy millennial on 10.28.17 at 7:56 pm

#noonecaresaboutstresstests

#57 acdel on 10.28.17 at 7:58 pm

Excellent blog with your best honest projections, thanks.

#58 Nonplused on 10.28.17 at 8:01 pm

I am pretty sure North America is already in a recession due to the hurricanes, if it wasn’t already.

The broken glass fallacy is just that, a fallacy. You don’t get more cars because you have to replace old cars that got wrecked. You don’t get more houses because you have to replace old houses. All you do is convert a lot of productivity into replacing destroyed capital. This means less productivity is available to “grow”, build new things.

Sure, it looks good for GM, who will see some increase in demand because there are a lot of wrecked cars. And we can measure GM. But what about all the people who now need a new car and won’t be going on vacation or to NFL games because they don’t have the money? As compulsory expenditures go up, discretionary spending falls.

Let’s test it at the extreme. Take a 20 dollar bill out of your pocket, hopefully a US bill so it’s still paper. Now burn it. Did that somehow increase economic productivity or in fact destroy the last hour and a half you spent working at the new minimum wage? It’s even worse when applied to capital structures and equipment.

Every power line that hit the ground in Florida, every car that got flooded in Texas, and every house that burned down in California represents a loss of capital. But the GDP as it is measured thinks this is great, because it is measuring the replacement efforts. In reality GDP would have been the same either way, but more would have been spent on new things, not fixing old things.

All capital depreciates with a few exceptions like land. Your car needs new tires. Your house needs a new roof. But this is not the same thing as destroying your car and house before their time.

Cash for Clunkers was one of the most wasteful policies the US ever undertook. You don’t destroy a car that still has 5 good years in it and expect to come out ahead. Well, the way they are talking about the hurricanes is the same mistake. “Oh, the pollution!” they said. Well, yes, but it was going away soon enough on it’s own and now you forced a new car to be built and that process alone caused as much or more pollution as the old car had left in it. Cash for clunkers was a self inflicted hurricane in the auto market.

Want even more thought experiments? Go into your garage right now and throw out all the hammers, screwdrivers, wrenches, and snowblowers you have but don’t ever use very often, then go tomorrow and buy all new ones. Feel richer? I didn’t think so. It’s best to only have to buy a hammer once and then move on to other purchases.

We have arrived in our society at a point where a soda can when discarded will never go away, but a car properly cared for is valueless in 10 years. (I stole that a bit.)

#59 Whipster on 10.28.17 at 8:13 pm

For those about to flop….some more data from tsawwassen
1424 54 street delta bc….
Sold for 1.190 million in 2016 feb 15; now listed for 1.198 million .
Assessed at 1.125900million. So in two years, 8k added to price for listing and I’m pretty sure it will sell for less. Again, would need huge reduction to be attractive to most.
Really wish our MLS was more transparent to include this data; I do have fun looking it up though.

#60 Smoking Man on 10.28.17 at 8:29 pm

Wow, Roger Stone’s Twitter account gets broomed.

It’s heating up, the polarization of logic vs emotionalism.

Economic Nationalist vs Globalists.

The demented Globalists got the schools, the MSM, the global corporations. and now Social Media.

It’s not about left or right anymore. It’s about Globalist vampires lusting for more power and will stop at nothing to keep what is slipping through their fingers. Just look at what’s happening in Spain right now. The brutality of the state.

Fellow deplorables stay off the streets on Nov 4th. Don’t take the bait.

#61 Doghouse Dweller on 10.28.17 at 8:43 pm

#55 Ryan Lewenza
re: Your Bloomberg link
To continue reading this article you must be a Bloomberg Professional Service Subscriber.
~~~~~~~~~~~~~~~~~~~~~~~
We don`t get access to the first class commentary here in steerage.

#62 SWL1976 on 10.28.17 at 8:52 pm

As someone pointed out earlier.

It sure is refreshing to see the quality of the comments here are getting back to the quality standard we’ve come to expect from this pathetic blog

Thanks everyone

#63 conan on 10.28.17 at 9:02 pm

Jason Kenney has been elected the first leader of Alberta’s United Conservative Party.

https://www.youtube.com/watch?v=p9D36cZvufQ

The NDP probably like this, same with the Liberals.

#64 For those about to flop... on 10.28.17 at 9:06 pm

Whipster 13 pm
For those about to flop….some more data from tsawwassen
1424 54 street delta bc….
Sold for 1.190 million in 2016 feb 15; now listed for 1.198 million .
Assessed at 1.125900million. So in two years, 8k added to price for listing and I’m pretty sure it will sell for less. Again, would need huge reduction to be attractive to most.
Really wish our MLS was more transparent to include this data; I do have fun looking it up though.

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

Hey Whipster,you are becoming a solid little assistant.

It doesn’t hurt to share a bit of information, this is what I have been trying to encourage and painstaking trying to build a rapport with the realtors on here so the average Canadian can make an educated decision on the most likely expensive decision in their lives.

To me it doesn’t matter if no one is interested in buying that house in Tsawwassen it’s just about building a culture of sharing information and in the end trusting the information flowing from each other and less on the real estate board.

Even though I try to be diligent and give timely information, with a full time job and the need to have some sort of life I am only able to track less than 5 % of the market.

It has been suggested and insinuated multiple times that I am only doing this to try and affect the market so I can by when it gets lower.

A few of points on this ,the market doesn’t care what a dickhead from Tasmania thinks about it.

Two, although I have resided here in Canada the last 15 years or so ,I am just as likely if not more likely to buy real estate in Australia,Fiji or New Zealand if the new rules don’t put an X through Australian eligibility to live and buy property there.

Three, anyone who thinks that doing all this work and sharing it with all you guys just to one day pay a bit less for a rotten,mouldy bungalow needs their heads read.

I don’t mind helping out people that are looking to buy but I am not looking to buy in this city or this country for that matter.

My situation might change in the next 10 years or so but at the moment a real estate purchase is not on the radar…

#65 thestealthmc on 10.28.17 at 9:53 pm

This was a very helpful and educational post, thank you!

#66 Millmech on 10.28.17 at 9:57 pm

#39 Mr Lewenza
This is also why the poor are poor a lot of times,when benefits come their way they “consume” them.I wonder how many people are socking away the child tax benefits that they are receiving.Most of the families I know now go out for dinners more often and buy newer consumables(they can’t wait for the iPhone X).
You are also correct about the person who has a better understanding of finance who would through financial knowledge and savvy/habits, would seek to grow that money and consume it later when it has grown more in value rather than now.
Those who understand compounding profit from it,those who don’t pay it!

#67 Quantum Economics? on 10.28.17 at 9:58 pm

The probability of recession plot is less than 100% DURING the first two recessions. Is it a Heisenberg uncertainty or a poor model?

#68 Doghouse Dweller on 10.28.17 at 10:00 pm

#58 Nonplused
Great insight into the epidemic of Fed PHD economists and all the Bloomberg Professional computer forecasting power producing a little hot gas of alpha, and more often than not economic disasters.

All the weather satellites and the global array of sensor probing meteorologists can only get accuracy to three days out. Something a Polynesian sailor could easily do sitting in a canoe looking at the horizon 200 years ago..
Progress or illusion ?

#69 akashic record on 10.28.17 at 10:05 pm

Would some hedge fund millionaire go out and buy a bunch of new suits if he got a tax cut (I think not) than someone earning $40,000 a year and got a similar tax cut? Basically people with less income are more willing to spend if they got a tax cut (or government benefit) then someone in a high income bracket. Someone should explain this concept to Trump.

====

I suspect that conservative Paul Singer gave Trump a good lesson about how a hedge fund billionaire “can go out and buy a bunch of research” teaming up with the Democratic party to produce a potential election or election result altering smear campaign.

#70 FahtCoot on 10.28.17 at 10:37 pm

#6 waiting on the westcoast on 10.28.17 at 3:53 pm
Ryan – great post!

Do you think inflation in US as low as they are claiming? My businesses are under significant wage pressure and we have conceded to that pressure a few times over the past couple of years.

Our operations are still experiencing double digit growth throughout the US. But that growth is lower at mid to high teens now. We had been growing consistently at low to mid twenties for the past 5 years.

——————————————————————–

Most, if not all gov statistics are manipulated.

Inflation numbers are no different. This is great website to get a better understanding…

http://www.chapwoodindex.com/

#71 Al on 10.28.17 at 10:58 pm

“we will from time to time reduce risk in the portfolio and make tweaks if we believe we are heading into a bear market.”

That’s called market timing. See #30 nice read above.

#72 Last of the Boomers on 10.28.17 at 11:08 pm

Excellent post Ryan. Am going to use this post in a teaching moment with the kids! Your professionalism is commendable! Love Greater Fool Saturdays!

#73 Lobster Man on 10.28.17 at 11:23 pm

Ryan,

You may find the following link (Dynamic Yield Curve) useful:

http://stockcharts.com/freecharts/yieldcurve.php

LM

#74 Lost...but not leased on 10.28.17 at 11:37 pm

#60 Smoking Man is correct

..Left vs Right is and always has been a sham.

It was NYC bankers that funded the Russian Revolution.

HUH you say? Capitalist Bankers support the dreaded Commies?

There is and never was any difference. Who do you think really runs the world?

Russia was on its way to becoming another free enterprise power , moreso via the Czar’s land reforms.

As Rockefeller said..competition is a sin.

These multinational oligarchical entities think likewise…they simply fool the sheeple otherwise.

During the Cold War..CIA and KGB agents often met for beers…ROTFLAO at the suckers in both countries.

#75 For those about to flop... on 10.29.17 at 12:35 am

Exuberance…yeah, I know what it means.

You and your Uberance are no longer together…

M43BC

“Canadian real estate has another indicator showing prices may have detached from fundamentals. The Federal Reserve Bank of Dallas (a.k.a. the Dallas Fed), publishes a housing index that’s little known outside of the banking world – the Exuberance Indicator. The indicator isn’t often used, because the documentation is highly technical. Today I figured I would break it down into plain English, for all of you Millennials looking to understand the market. This way you’ll have a better read than most people in the real estate industry.

“Exuberance… I Totally Know What That Word Means, But Why Don’t You Explain It.

#76 Nonplused on 10.29.17 at 1:29 am

#68 Doghouse Dweller

The Fed PHD’s measure what they can tax, not actual economic growth.

Every single flooded car in Texas means one or more less iPhones. The people cannot afford to do both, or they would have been buying something else more already.

(Not like I think we disagree.)

The hurricanes indicate recession, as productivity now needs to be diverted to rebuilding what was already there. That is not growth even though the GDP will say it is.

#77 Pulp Faction on 10.29.17 at 1:38 am

Why does Bill Morneau still have a job ??

This government is just as corrupt as the American one.

#78 213 fool on 10.29.17 at 2:09 am

This was lovely. Thank You.

#79 crowdedelevatorfartz on 10.29.17 at 3:37 am

@#36 Four Fingers Watson
“I would like to reduce my taxes down to say….1.3%….”
+++++

Use your thumb and hitchhike to a tax free haven?
Oh.
Right.
You only have four fingers

#80 Asiakid on 10.29.17 at 6:40 am

Uhh is this a joke? The fed recession monitor?

Seems kinda pointless given that it goes from. 18 to 100 in 1quarter or less. Basically its almost a binary function. In the three cases where a recession occurred the lag time was, at best (squinting my eyes here) maybe 6 months.

#81 Asiakid on 10.29.17 at 6:43 am

also have to add to the above. If considering that a technical recession doesn’t occur until (I believe) two consecutive quarters of declining gdp that means the first trigger for a possible recession is actually 3 MO this before with the first quarter of declining gdp. If that’s the case the real lag period of a recession is 0 to maybe 2 to 3 months {being super generous here).

#82 Mr. Market on 10.29.17 at 8:05 am

For some time I’ve been trying to find good indicators to monitor the health of the market. What you have done in this post is, effectively and concisely laid down the exact information in an easy to understand fashion.
Value of this information is priceless.
Keep up the good work.
Mr. Market is happy :)

#83 Dharma Bum on 10.29.17 at 9:14 am

Sooooo…..another recession in about 2 years?
Based on the pattern indicated in that yield curve chart?

#84 phil on 10.29.17 at 9:32 am

Has anyone looked into the ETF HXD lately? In 2008, it peaked at over $70. This may be an interesting inverse leverage play for the next downturn…

#85 Mel on 10.29.17 at 9:51 am

Check this out for a good laugh.

http://www.owensoundsuntimes.com/2017/10/24/hudak-talks-real-estate-reform

#86 Ryan Lewenza on 10.29.17 at 9:59 am

Mr. Market “For some time I’ve been trying to find good indicators to monitor the health of the market. What you have done in this post is, effectively and concisely laid down the exact information in an easy to understand fashion. Value of this information is priceless. Keep up the good work.”

I’m glad you found this post helpful. Thank you for your kind feedback. – Ryan L

#87 Ryan Lewenza on 10.29.17 at 10:02 am

older than a boomer “Just what I wondered. Are you Ken’s boy? Great guy.”

If you’re referring to Ken Lewenza, ex President of CAW, he is my uncle. And yes he’s a great guy. We don’t agree on much politically, but anyone who fights for the common man day and day out, is good in my books. – Ryan L

#88 Ryan Lewenza on 10.29.17 at 10:18 am

Al “we will from time to time reduce risk in the portfolio and make tweaks if we believe we are heading into a bear market.” That’s called market timing. See #30 nice read above.

There are numerous ways to reduce risk in portfolios. First we could sell higher risk positions like high yield debt, small cap equities etc and replace these positions with low risk securities like government bonds. We could also consider switching our equity exposure for low volatility equity ETFs, to help further reduce downside. And yes we could consider reducing our overall equity exposure from 60% to say 50-55% during those dreaded bear markets that occur roughly every 6 years. This is active management and what our clients pay for it. If you want to call this market timing then fine. But note that I’m talking about making tweaks ahead/during bear markets then going 100% to cash because the markets may encounter a 10% pullback. That was the main point. – Ryan L

#89 LivinLarge on 10.29.17 at 10:21 am

NoName…”It’s not a hard model to follow. It requires little intelligence…”. I have used the same methodology since the early ’80s and over time it has make me wealthy too.

RBC and BMO are both back over $100 as of Friday and still not at a 52 week high yet.

Buyng historical quality in a depressed market and waiting for the tide to rise is old school and and still a time proven road to wealth. As long as we have the time, it’s as close to a “no-brainer” as I know of. Oh, and buying Canadian banks when depressed is just adding to the near guaranteed growth. None of the big 5 have ever cut their dividends. Frozen them for a few years sure but never missed or cut their divs so evn a 50% plummet in SP had been offset by a rapidly growing div yield.

Knowing that the world actually has to come to an end before a Canadian bank will miss or cut a div pmt gves us an enormous advantage when it comes to reducing risk. My personal magic wand in major market contractions is “buy RBC and BMO and just ride it out”. If there comes a day when those two suspend or cut their divs then then the world is so screwed that my portfolio is the least of my worries.

#90 For those about to flop... on 10.29.17 at 10:28 am

Check out these bunkers with swimming pools , gyms and cinemas ,it is a little bit more ritzy than my plan to build a cabin out of Spam cans and then start eating from the inside out to eventually find out if everything is still o.k.

These guys seem a little bit confused as to whether ww2 has happened yet ,but it is just the Daily Star, a British tabloid that I started reading after I discovered I enjoy hanging around with seedy people like the ones on this blog…

M43BC

“REVEALED: Inside the luxury nuclear bunkers wanted by super rich as WW2 threat grows
DEMAND for luxury bunkers to protect the super rich from nuclear armageddon is growing thanks to war fears with North Korea.”

https://www.dailystar.co.uk/news/latest-news/655980/ww3-nuclear-war-North-Korea-bunker-USA-Donald-Trump

#91 PastThePeak on 10.29.17 at 10:29 am

Thanks for the information Ryan. Always appreciate your in depth analysis.

My concern in the modern era is not the classic recession brought on by the factors you note, but due to asset bubbles and resulting instability. By my reading of history, the last two recessions did not trigger stock market declines. The recessions were partially or wholly caused by asset bubbles ending (internet/tech stocks and housing/finance).

The stock market peaked in 2000 but the recession didn’t occur until the following year. There was great euphoria in the market and media right up until spring that year when it started to turn south.

The housing crash and then financial crisis triggered the 2008/9 recession. Equities didn’t actually have crazy valuations then, but were brought down by the panic and uncertainty of the financial issues.

Ever since 2009, the Fed and many othe central banks have had their foot on the liquidity / easy money accelerator, both in printing money and ultra low interest rates. This is still the case 8 years after the end of the recession. This hasn’t caused inflation in these economies with the traditional measurements as thought. In fact that inflation is quite low still. However, we do see significant price increases in areas like the stock market with the strongest bull market in history, even while over these 8 years the global economic growth was mediocre at best, and corporate profitability was not great (hitting some strides now, but after share prices had already climbed a lot). This alongside massive housing market increases in some markets.

Not so sure the traditional recession indicators are what we need to be concerned about

#92 abros on 10.29.17 at 10:33 am

Maybe our national employment is at an all time low due to fact that everyone has so much debt (170% of annual income) and the average Canadian spends more than they make, that everyone has to work now. It will be interesting to watch when interest rates ratchet and house prices level or fall. House of cards!

#93 crowdedelevatorfartz on 10.29.17 at 11:01 am

@#90 Floppie
“,it is a little bit more ritzy than my plan to build a cabin out of Spam cans and then start eating from the inside out to eventually find out if everything is still o.k.”
++++++

Hahahaha.
Well if you’re looking for solid wall material at a great price ….Safeway has large, stackable tins of Maple Leaf Cooked Ham for half price right now…..and they come with keys that you can join together as a necklace and gift to the wife at Christmas 2019…..

#94 For those about to flop... on 10.29.17 at 11:02 am

Exuberance…yeah, I know what it means.

You and your Uberance are no longer together…

M43BC

“Canadian real estate has another indicator showing prices may have detached from fundamentals. The Federal Reserve Bank of Dallas (a.k.a. the Dallas Fed), publishes a housing index that’s little known outside of the banking world – the Exuberance Indicator. The indicator isn’t often used, because the documentation is highly technical. Today I figured I would break it down into plain English, for all of you Millennials looking to understand the market. This way you’ll have a better read than most people in the real estate industry.

“Exuberance… I Totally Know What That Word Means, But Why Don’t You Explain It”

$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$

A repeat of my post at #75, this time with the link.
I put it up twice but it magically disappeared…

M43BC

https://betterdwelling.com/us-federal-reserve-indicator-shows-canadian-real-estate-is-way-overpriced/amp/

#95 Freebird on 10.29.17 at 11:33 am

#20 Mark 10/28
Ryan, wish you would reconsider a example of a all equity(or damn close) for us youngsters who have a set!

I am going to suggest a 4 way split equally of US/EAFE/Canada/Emerging markets.
25% each.
——————
Try this…

https://personal.vanguard.com/us/insights/saving-investing/model-portfolio-allocations

Maybe Ryan can comment on this info.

#96 crowdedelevatorfartz on 10.29.17 at 11:34 am

@#85 Mel

Re the Ontario Real Estate Ass. or OREA ( yeah almost like the cookie) not to be confused with Canuck Real Estate Ass.

Tim Hudak sez

“……..It also has a political action plan, led by a committee it calls the Ontario Realtor Party, to encourage realtors to rub shoulders with political decision-makers and ultimately, to elect more realtors to Queen’s Park.
Hudak said his government experience has shown him that having realtors as government caucus members would offer OREA the best chance of influencing government policy………blah blah blah.”

Thanks!
That WAS a good laugh.
So Hudak wants MORE Real Estate interference in political decision making when their political contributions and lobbying isnt enough….they still want more.
He wants to double the fines for Realtors caught in illegal deals ( two slaps on the wrist is better than one when the commision in $50k).
Barely mentions their monopoly aka stranglehold on real estate information or their dreadful reputation with the public…

What the hell. Its made them obscenely rich so far…..

All Politicians take note.
We’re watching and waiting …for the next election

#97 crowdedelevatorfartz on 10.29.17 at 11:50 am

Hmmm.
This Globe and Mail article bares repeating…..written in July…. and by a Realtor no less….and excellent summation of the insanity of Vancouvers’ market and what lies ahead.

It flies in the face of what the Real Estate Cartel is saying

https://www.google.ca/url?url=https://www.theglobeandmail.com/opinion/in-british-columbia-real-estate-investors-need-to-seek-shelter/article35688341/&rct=j&frm=1&q=&esrc=s&sa=U&ved=0ahUKEwik_dTalZbXAhVL2WMKHTO-Ao0QFghJMAg&usg=AOvVaw1l-j_85h86y21aoi_CLWAo

#98 Victor V on 10.29.17 at 12:02 pm

#87 Ryan Lewenza on 10.29.17 at 10:02 am
older than a boomer “Just what I wondered. Are you Ken’s boy? Great guy.”

If you’re referring to Ken Lewenza, ex President of CAW, he is my uncle. And yes he’s a great guy. We don’t agree on much politically, but anyone who fights for the common man day and day out, is good in my books. – Ryan L

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

Life imitates art: https://youtu.be/DHoHX7aGtIo

#99 Doghouse Dweller on 10.29.17 at 12:06 pm

#76 Nonplused
That is not growth even though the GDP will say it is.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
And inflation is not 1.3% even though the CPI will say it is.
Yet the financial product marketeers would have us believe their precious data is actually something more than stock market voodoo.
I always remember BNN`s star Brian Acker of Acker Finley and his magic laptop computer. Boy was he naked when the tide went out.
A dog and pony show par excellence.

#100 TurnerNation on 10.29.17 at 12:09 pm

Kanada: already divided into Profit Zones by the billionaires.

Want food? On the Wet Coast you give your money to Jimmy Pattison.
Middle part I pay to the Weston family (Loblaws and Shoppers Drug mart)
Least Coast goes to Sobeys family.

– Want a phone? Out west give to the Shaw family. Here I pay the Rogers billionaires.
Least coast…I imagine the Irving family empire owns everything.

Now, Google will build a smart city within Toronto. The coming supra national techno state. Next in office it looks like the buffoonery of another Ford Brother is in hand. We don’t stand a chance.

M41ON

#101 TurnerNation on 10.29.17 at 12:27 pm

From the Greenwashing dept – and good news for TSX.

Warren Buffet doubled down his investment into largest USA’s Truck stop chain.
– He bought into Suncor few years back.
– Did I hear he or Gates own via a holdco some of our railway?

Drill baby drill it’s all oil. Follow our elites with their money.

#102 For those about to flop... on 10.29.17 at 12:31 pm

Working on luxury housing on the Westside of Vancouver,this house caught my attention this morning.

It is houses like this one that are likely to be problematic and cause some consternation for my development buddies on the Westside.

They just lopped over 1.1m off the price to get some attention.

Yes ,still outrageously priced but I have knockdowns asking more and some of the developers I work for were up until recently ( Spring 2016 ) paying this for a block of land in certain parts.

If you have a quick look at the link you will see they have a desirable looking house in a cherished part of town which although 9 years old will provide some stiff competition to the newcomers especially to those people who value the tax assessments which at this price is basically 25% less.

The market compression continues…

M43BC

3858 W 1st Avenue, Vancouver, BC V6R 1H5
2017-09-25 : $5,699,000

Originally asking $5,699,000, new price $4,588,000. Tax Assess $5,741,000.

https://www.zolo.ca/vancouver-real-estate/3858-w-1st-avenue

#103 Penny Henny on 10.29.17 at 12:58 pm

Blog dogs your help is needed.
Ryan is not allowed to go home until there has been 100 comments made.

#104 Bottoms_Up on 10.29.17 at 1:01 pm

#35 Trump on 10.28.17 at 6:25 pm
———————–
That’s because you give more weight to those (inaccurate) comments when a recession actually hits, but the hundreds of times those comments are (accurately) made (and no recession hits), you give no weight to that.

I would bet the former applies today.

#105 Bottoms_Up on 10.29.17 at 1:10 pm

Latter, definitely meant latter (sorry Ryan).

#106 akashic record on 10.29.17 at 1:38 pm

#77 Pulp Faction
Why does Bill Morneau still have a job ??

Because you are not out on the street protesting like other groups when they want to achieve something.

You didn’t call to express your outrage to your elected representatives, you didn’t start social media campaign, you don’t call in for talk shows.

You are waiting for some old stock Canadian moral guidance to kick in magically and do it for you.

Good luck with that.

#107 meslippery on 10.29.17 at 2:15 pm

#49 DON on 10.28.17 at 7:11 pm

With the emergence of the contract economy who can’t claim EI – how are these folks captured in job losses?
—————
I agree with Don EI only counts people receiving EI.
If you only worked for Sears for three months you most likely wont qualify for EI. But your are still unemployed.
If your benefits run out and you dont have a job?
EI number is almost meaningless.

#108 Stan Brooks on 10.29.17 at 2:29 pm

One economic concept I’ve always liked is the marginal propensity to spend and it is applicable here.

———————————–
I respectfully disagree.

1. For the Business the 15 $/h minimum wage will require cuts in the number of jobs, specially part time jobs. Many Businesses are on the brink of bankruptcy already, even before the federal government hitting them with higher taxes.

2. The expected rise in spending due to increase of minimum wage will not materialize due to point # 1 above. Even if it does magically materialize somehow (huge government deficits at all levels) it will not compensate for the credit shrinking.

Economic fundamentals 101:
1. The money in the system will shrink due to cuts in credit growth.
The credit internal and external was growing with 100-150 billion yearly in the last decade!

2. The shrinking of the money supply will reduce government revenue.

Higher revenue/taxes and higher salaries are not possible in a situation of reduced money supply when credit shrinks.
That could happen only in the minister of fairness and Poloz’s heads.

We are at current conditions at top liquidity and the only way to continue somehow ahead is to introduce QE and asset purchases by BOC in addition to huge government deficits.

Or we will hit the wall at 100 miles per hour.

With BM and Poloz at the helm I am highly skeptic.

#109 Stan Brooks on 10.29.17 at 2:32 pm

Or we will hit the wall at 100 miles per hour.

With BM and Poloz at the helm I am highly skeptic.
———————
And when they finally act we will see what the real inflation is.

#110 maxx on 10.29.17 at 2:48 pm

#93 crowdedelevatorfartz on 10.29.17 at 11:01 am

Hysterical! Fartz, you missed your calling as a first-rate comedian. Keep ’em coming.

#111 Steve Stoy on 10.29.17 at 11:34 pm

Just a quick question, hedged ETF or not?
Because in the long run it might make a huge difference.

Thanks, Steve

#112 TRUMP on 10.30.17 at 9:03 pm

To #104 Bottoms_Up…..

Canadians at record debt levels with almost half not able to handle a couple hundred dollar a month increase in bills.

You call that a healthy economy????

I guess we’ll will find out who’s been swimming naked when the tide finally goes out……. And trust me it will. It always does.