Big wolves, small wolves

DOUG By Guest Blogger Doug Rowat

The nine-year US bull market has been looking a bit rickety recently. And the constitutional crisis in Italy has become the latest cause for concern. Italy’s president, who holds a head-of-state position that normally remains politically neutral, has broken from tradition and inserted himself forcefully into the process of appointing and denying key governing positions. It would be a bit like Canada’s governor general suddenly telling Trudeau who he can and can’t have in his cabinet.

Now the cobbled-together coalition government of the populist, anti-establishment Five Star Movement and League parties has been essentially paralyzed. The bottomline: we’re likely to see another Italian election by September with the potential to have the same messy outcome as the one that just occurred in March.

Well, the market clearly doesn’t like what’s happening. European stocks have plummeted almost 5% in the past two weeks, with the Italian market down roughly 10%, and we suddenly have the following situation: A European nation ravaged with debt, its bond yields beginning to soar and an inexperienced, strident (and, frankly, still unformed) government itching to flip the bird to the Eurozone. Sound familiar? Except that this time it’s not Greece, this time it’s a country that’s Europe’s third largest economy with a debt level totaling a massive EUR2.1 trillion (a debt-to-GDP ratio of 132%—Canada, by comparison, sits at about 90%). There ain’t nobody going to forgive that much debt.

So a massive crisis is looming and investors should clearly position portfolios defensively and wait out the imminent market sell-off.

That’s certainly one option. Another is to focus on a broad series of fundamental indicators that have reliably signaled US recessions and market downturns in the past. Bear markets generally coincide with recessions. Currently, the key factors we follow aren’t signaling a problem:

A US Recession not Indicated

Source: Bloomberg, Turner Investments

In a pinch, if you had to rely on only one indicator, the Conference Board’s Leading Economic Index would be a pretty good choice. The Index includes components ranging from S&P 500 equity prices and worker wages to manufacturing levels and unemployment insurance claims. Isolating this one, quite predictive index indicates why we remain unconcerned regarding the US economy:

Conference Board US Leading Economic Index still rockin’

Source: Bloomberg, Turner Investments

But Italy isn’t Greece is the argument of the bears. Italy is more significant with a much larger debt load and a more meaningful banking sector. An economic crisis here is inevitable and would spread quickly.

Perhaps. But recall that many market pundits were expecting an economic disaster for China in 2016. Remember Royal Bank of Scotland (RBS) advising clients to brace for a “cataclysmic year” and to “sell everything except high quality bonds”? China, of course, is the world’s second largest economy with 1.4 billion people and a crisis here would have far eclipsed Italy’s. But we survived. Since the RBS recommendations, the S&P 500 has advanced 47% and even the Shanghai Shenzhen CSI 300 Index is up 24%, including dividends.

We also had the shocking Brexit vote in mid-2016, a decision that was forecasted to devastate the UK economy and lead to a plunge in UK equity markets. The New York Times alarmingly stated just prior to the vote that “‘Brexit’…could sink Britain’s economy”. The UK economy is the world’s fifth largest. Again, this was far more serious stuff than Italy. But, again, we survived. The UK economy has grown nearly 2% in each of 2016 and 2017, a decent growth rate, and the FTSE 100 (London) has advanced 31%, including dividends. And Britain’s exit from the Eurozone seems to be proceeding in an orderly fashion.

Regarding Italy, you’re going to see a lot of headlines in the coming months flashing “crisis”, or some other frightening equivalent, and they will imply that the disaster will soon spread, thus negatively impacting US markets. Ignore these headlines. Block out the fear. Focus instead on the indicators that are most reliable for forecasting the direction of the US economy and its stock markets. These indicators are stable.

Headline risk. It’s the worst. And it’s best summed up in Italian: Si dice sempre il lupo più grande che non è. Translation: The wolf is made bigger than it is.

Doug Rowat, FCSI® is Portfolio Manager with Turner Investments and Senior Vice President, Private Client Group, Raymond James Ltd.

84 comments ↓

#1 For those about to flop... on 06.02.18 at 3:41 pm

Weekend Rewind.

This week in howmuch articles.

Only two fresh articles this week.

Maybe they played a couple of rounds of golf and had a meeting with Kim Kardashian to discuss prison reform…

M43BC

Visualizing the Most Expensive Natural Disasters in the Last 40 Years.

https://howmuch.net/articles/most-expensive-naturals-disasters-in-usa

The Best (and Worst) States for Teacher Compensation.

https://howmuch.net/articles/average-teacher-salary-by-states

#2 Smoking Man on 06.02.18 at 3:41 pm

Globalism is toast, populism is charging back everywere.

Deal with it, adjust portfolios as required.
Short renewable energy, go long on sweat bitifule oil.

Good bye Kathleen Wynee. I appreciated your survive and despise your policies. You got it so wrong. I blame your former occupation. Not the brightests tools I’m the shead.

#3 For those about to flop... on 06.02.18 at 3:42 pm

Pink Pollen falling in Coquitlam.

I have had a couple of cases in this street before and these guys with their latest reduction have joined the same club.

Picked up for 1.19 back in November 2016 when it was only assessed at 909k at the time , the assessment has come up slightly since to 996k but is no where near their ask of 1.29.

They could escape with a Pink Draw as the Dawes shutter down on detached…

M43BC

2180 Dawes Hill Road, Coquitlam paid 1.19 November 2016 ass 996k

May 16:$1,339,000
Jun 1: $1,299,000
Change: – 40000.00 -3%

https://www.zolo.ca/coquitlam-real-estate/2180-dawes-hill-road

https://www.bcassessment.ca/Property/Info/QTAwMDAzWERISw==

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

Feel free to make a donation.

Flop For Fox Fund…

http://www.terryfox.org/get-involved/ways-to-give/

#4 technical analysis?? on 06.02.18 at 4:01 pm

you are correct. stop reading the news and pay attention to what the market is doing.

#5 jess on 06.02.18 at 4:07 pm

A front and an affront’

…”Maybe because no one was looking. AIM is so lightly policed that it’s sometimes known as the “unregulated stock market”. The UK Listing Authority, which monitors the main exchange, has no jurisdiction there.

AIM Regulation, the exchange’s oversight body, isn’t independent either: it’s controlled by AIM’s owners, the privately run London Stock Exchange Group. And in a glaring conflict of interest, the lawyers, stockbrokers and banks that earn fees from companies they bring to market—known as nominated advisers, or Nomads—are entrusted with the role of watchdogs.

The result has been scandal after scandal. AIM Regulation “is just a sham designed to lure investors into a false belief that the LSE’s junior market is policed”, wrote Nigel Somerville, a commentator at the finance website Share Prophets, in August 2015. “It is a front, and an affront.”

The list goes on.
Quindell, an insurance claims manager and another AIM giant, lost more than three-quarters of its value after reports of questionable accounting practices in 2014. And Langbar International collapsed in 2011 after the AIM-listed firm vaunted £370 million of bank deposits that turned out not to exist. The Guardian called it “one of the most audacious, meticulously planned heists ever to take place in Britain”.

Supporters say AIM, with more than 1,000 listed companies worth a combined £71 billion, is flourishing. But the news hasn’t been so good for investors—59 per cent of whom are individuals, and the rest institutional investors which invest on behalf of pension funds and savers’ ISA accounts. Research for the Financial Times in 2015 found that shareholders would have lost money on 72 per cent of all the companies ever listed on AIM, with 30 per cent of cases yielding losses of more than 95 per cent.

==========

https://www.globalwitness.org/thedeceivers/
…”document cache includes a spreadsheet listing bribes to top Liberian officials, messages orchestrating stock market scams through offshore companies, and a forensic report detailing their security agent’s hacking operations. ”

Hailed in the industry press as “resource rock stars with the Midas touch”, Edmonds and Groves deny any allegations of wrongdoing

Press release / 11 May 2016
Former England cricket star used UK tax havens to scam investors out of millions, Global Witness reveals

africa leaks
https://www.icij.org/investigations/west-africa-leaks/officials-businesses-traffickers-hide-billions-cash-starved-governments-offshore/

https://qz.com/1293998/2400-years-ago-plato-saw-democracy-would-give-rise-to-a-tyrannical-leader-filled-with-false-and-braggart-words/

#6 conan on 06.02.18 at 4:30 pm

I am concerned about two things:

1) Italy, banking weakness
2) Trump, what else is new

Someone needs some posts,

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

#7 Kilt on 06.02.18 at 4:33 pm

This is one reason why I can’t understand people who invest in bonds. You go for bonds for stability, but if you look at all the governments involved, they just don’t seem to make sense when looking at the risk/reward.
You are far better off with dividend paying stocks or preferreds.

The Dow looks like it may soon break out of a new down trend. Of course one more low may solidify a continuing of a bearish market. Your indicators don’t suggest an imminent recession? But I think emotion (technicals) and the market is telling you things are going to come grinding to a halt pretty soon. Canada is already headed for recession. I would be surprised if the US can avoid one over the next 18 months.

Kilt.

#8 Victor V on 06.02.18 at 4:38 pm

A facebook update from politico, Robin V. Sears after hearing Wynne’s announcement:

“So if you’re a Liberal candidate or worker your leader just said, “Sorry, guys, but I’ve just led you to defeat – but keep working hard, maybe you’ll survive.”

Great morale booster that.

If you’re a Liberal voter you just heard the message, “Hey it won’t make much difference, but get out and vote, eh?”

And if you’re a New Dem you recall when she said last time, “Vote for me or else! A vote for Andrea will elect Hudak!”

But this time it’s “Vote for me or you’ll give a non-Liberal a majority and Ontario will suffer.

Oh and BTW Andrea and Ford are equally bad! Respectful message to Ontario’s majority of progressive voters.

Only Liberals deserve majorities, I guess.

Political arrogance thy name is….

Unbelievable!”

#9 Sonny on 06.02.18 at 4:41 pm

Is there a “Conference Board US Leading Economic Index” for Canada? If so, can a link for it be provided please?

#10 PeterfromCalgary on 06.02.18 at 5:18 pm

People predict the end of the world a lot. The fact is it can only end once and when it does we won’t have to worry about our investments anymore.

#11 Daniel on 06.02.18 at 5:20 pm

Sorry Doug, you’re a bit behind on the Italian news cycle. A more moderate, non anti euro economy minister was appointed by the 5 Star/league coalition. Also one thing you might want to consider it Italy has essentially no subnational debt, unlike Canada with it’s substantial provincial debt — I suspect if you look into this you’ll find the total debt burden of Italians and Canadian’s to be similar. Also the UK was not in the Eurozone, it was in the EU, different things. Otherwise, good points! Keep up the good work!

#12 Reality is stark on 06.02.18 at 5:28 pm

That whole Kathleen thing was a complete farce. If there ever was a bubblegum politician she was it. Campaigning on gender equality and tons of debt to solve problems.
The people loved it. Ontarians thought it was masterful strategy. Only after she implemented it did they begin to realize the folly of it. Now they want to elect someone who wants to spend far more.
Now we want complete irresponsibility.
Our provincial population is hooked on entitlements. Overweight and undisciplined, health care costs about to explode and a new leader who thinks more debt is the answer.

#13 Kelowna on 06.02.18 at 5:30 pm

Thanks Doug for this very helpful information and your common sense advice. Nice to see a well informed and practical approach to current market events!

#14 Honey Dripper on 06.02.18 at 5:59 pm

When you lose your job we’re in a recession. When I lose my job we’re in a depression. It’s easy this economic stuff!

#15 Shawn Allen on 06.02.18 at 6:27 pm

Predicting Recessions and Market Crashes

A number of analysts have no-doubt predicted about fifty of the last two recessions. David Rosenburg comes to mind and there are many others.

#16 Stan Brooks on 06.02.18 at 6:35 pm

Italy and Europe is doing just fine.

Look at the Euro.
My bet is on 1 Eu = 2 CAD pretty soon.

https://ca.finance.yahoo.com/news/loonie-drop-nearly-us0-70-near-future-cibc-analysts-211136792.html

#17 Conservative Canadian Millenial on 06.02.18 at 6:35 pm

Doug Ford will become Premier of Ontario on July 08, 2018.

This will re-start the housing frenzy, increase corporate profits, increase employment, lower alcohol costs, lower hydro costs and cut unnecessary waste such as public funding for abortions, disability benefits, unemployment insurance, social justice tribunals and universities, among other liberal pet projects.

I cannot wait for Doug Ford to legalize free speech so that I can start up my Alt Right blog without the AG Navdi pressing charges on alt-righters. Canada is a country that has a distinct identity and the Liberals and NDP are destroying our country. I should have a right to say what I want about undesirable groups who don’t belong in Canada. Garth if you support the PCs you should not censor me.

#18 For those about to flop... on 06.02.18 at 6:40 pm

I will put this post up for two reasons.

Firstly,it seems that a few people might be interested in it with today’s topic.

Secondly,I don’t want Robax to join the 59 post club, as it seemed to sting his buddy InfLewenza.

59….. It’s a cherished score in golf.

In blog post numbers,not so much.

Robax,in an emergency, break glass, and I will unleash my entire Pink Snow Folder onto the blog…

M43BC

“Visualizing Your Country’s Unsustainable Debt per Person

National debt levels can be hard to understand, not to mention boring. For example, Puerto Rico is making headlines because it is $74 billion in debt, but the United States is about to reach $20 trillion, and that doesn’t seem like a big deal. How can this make sense, and who cares about all this stuff anyway? We created a new graph to break it down in layman’s terms.

We used new numbers from the Organization for Economic Co-operation and Development (OECD) about per capita national debt. It’s a straightforward metric. For instance, if Americans wanted to completely eliminate their national debt, they would each owe $61,539. We created a series of donut circles: the larger the circle, the higher the per capita debt ratio. We then color-coded each one to correspond with a sliding scale of severity. Dark red means the country is in serious trouble with over $75K in per capita debt, while blue countries on the outside have less than $10K of debt per capita.

Comparing the debt loads of different countries on a per capita basis makes the most sense for a few different reasons. It’s like comparing apples to apples. That’s why the United States can run a $63 billion deficit for the month of October—which barely makes the news on Reuters—but missing $900 million in debt payments from Venezuela causes that country’s entire economy to tailspin. This makes the comparisons between countries fair.

Japan is at the center of our graph because that country has the highest per capita debt anywhere in the world at $90,345. There isn’t a country on earth where average people make nearly that much money on an annual basis. Ireland takes second place at $62,687 followed by the United States in third with $61,539. That’s almost twice as much as the average American taxpayer who files as a single adult makes in an entire year.

Take a look at one country on the far outside of our graph, China. The Chinese government has managed to create so much economic growth (which may finally be slowing down) while only amassing $7,119 in per capita public debt. Granted, China is the most populated country on the planet. That’s still an amazing accomplishment given how much modernization the country has undergone.

Take a look at a list of the top ten countries with the highest per capita debt in the world. Keep in mind that the average for all countries in the OECD is $50,245. And notice how many countries are in Western Europe.

1. Japan – $90,345

2. Ireland – $62,687

3. United States – $61,539

4. Italy – $59,372

5. Belgium – $59,680

6. Austria – $49,975

7. France – $51,768

8. Greece – $49,630

9. United Kingdom – $52,816

10. Portugal – $44,819

Per capita numbers are always a great way to compare different economies from around the world. It doesn’t matter who you are—if every citizen in a country suddenly became liable for paying an equal share of the national debt, there’d by serious problems. And that’s especially true when an individual’s portion of the national debt amounted to more than an entire year’s salary.”

https://howmuch.net/articles/general-government-gross-debt-per-capita

#19 Shawn Allen on 06.02.18 at 6:45 pm

Predicting Market Crashes

I believe Tony of this blog deserves credit for predicting about 100 of the last zero bear markets in stocks. Someday he will be right.

#20 What can I say about that? on 06.02.18 at 7:05 pm

European financial crisis? Ha. The fundamentals don’t count anymore. At least not until we are right up against the debt wall. We’ll all just pile on more debt until the entire global ponzi scheme collapses. Yeah for the global central banksters.

#21 Long-Time Lurker on 06.02.18 at 7:13 pm

Good post but sorry: not enough beard. Just watch.

(Hee hee!)

#22 young & foolish on 06.02.18 at 7:39 pm

“Our provincial population is hooked on entitlements”

That’s the Achilles Heel of democracies … the people always vote for more and more goodies … so, if you want to get elected …..

#23 young & foolish on 06.02.18 at 7:48 pm

” The fundamentals don’t count anymore. At least not until we are right up against the debt wall. ”

Is there a “debt wall” … if so, where is it? I too have noticed that among my peers, the “fundamentals”, raise nary an eyebrow. No debt means no expansion, and who wants that?

#24 Doug Rowat on 06.02.18 at 7:49 pm

#11 Daniel on 06.02.18 at 5:20 pm

Sorry Doug, you’re a bit behind on the Italian news cycle. A more moderate, non anti euro economy minister was appointed by the 5 Star/league coalition. Also one thing you might want to consider it Italy has essentially no subnational debt, unlike Canada with it’s substantial provincial debt — I suspect if you look into this you’ll find the total debt burden of Italians and Canadian’s to be similar.

I have a self-imposed early print deadline because this isn’t, to be blunt, my day job. Don’t read my blog posts for breaking news.

Also, my overall point was don’t worry about Italy. So, you’re agreeing with me?

–Doug

#25 Smoking Man on 06.02.18 at 7:54 pm

@my nefews big fat Sikh wedding. Full report when I sobar up. Sikh nation.Guru’s and the most coolest loving people on the face of the earth. Did bastards know that the temples are open 24/7 food for anyone that is hungy.
Even Aliens.

If I get weak and can’t stand tall as an individual , I’m converting. These people rock….

#26 crowdedelevatorfartz on 06.02.18 at 7:55 pm

@#12 Reality is Stark Naked
“If there ever was a bubblegum politician she was it. ”

++++
Kathleen Wynne? Bubblehead?

Apparently you never suffered through a BC Liberal Christy Clark “presser” interview.
Vapid answers to softball questions handed to her by compliant Global interviewers….and when things got tough she’d smile and jiggle.

#27 crowdedelevatorfartz on 06.02.18 at 8:04 pm

Which politician said.
“There’s the known, knowns. The known unknowns and the unknown unknowns…..”

Which shall we chalk this informative financial blog lecture under?
Only time, and Doug Rowats Chrystal Ball will tell….

#28 mike from mtl on 06.02.18 at 8:19 pm

#7 Kilt on 06.02.18 at 4:33 pm
This is one reason why I can’t understand people who invest in bonds.

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

You obviously haven’t lived through dotcom and ’08 meltdowns. Back then passive ETFs were not around & unheard of, ’08 handed back many asses – myself included. ‘Active’ funds like anyone at the time just made it much worse on the individual investor than any sp500 chart would suggest.

At worst bond funds are near zero to -0.5% /an. Calculated loss and protection besides rates are not ‘tightening’ for much longer.

#29 FOUR FINGERS WATSON on 06.02.18 at 8:19 pm

Lewenza had 115 replies last Saturday….just sayin’.

#30 Newcomer on 06.02.18 at 8:19 pm

Agreed. If you are looking for trouble on the horizon, global business, or at least US and northern European business, does not deserve much attention.

At home, however, especially in YVR and TO, it’s a different story.
http://www.westerninvestor.com/news/opinion/are-people-fleeing-vancouver-census-suggests-exit-trend-becoming-a-stampede-1.10067536

#31 MF on 06.02.18 at 8:44 pm

Stan Brooks on 06.02.18 at 6:35 pm

The EU is on borrowed time. It’s basically about “containing” one crisis after another and lying to ourselves in between.

It will collapse, we just don’t know when.

The reason will be social upheaval, demographics, and of course debt.

Everyone will be effected, it’s going to be rough, but the CAD will still be standing. The EURO not so much.

MF

#32 Fake News Again on 06.02.18 at 9:15 pm

DELETED

#33 crowdedelevatorfartz on 06.02.18 at 9:32 pm

HEY
Whats up with Edmonton running out of gas?
All the Refineries decided to shut down for maintenance at the same time?
Did you Albertans wants some refined fuel via the Kinder Morgan pipeline?
BC promises we wont “shut off the taps” if it flows east……….

#34 Surf City on 06.02.18 at 10:11 pm

#25 Smoking Man on 06.02.18 at 7:54 pm

@my nefews big fat Sikh wedding. Full report when I sobar up. Sikh nation.Guru’s and the most coolest loving people on the face of the earth. Did bastards know that the temples are open 24/7 food for anyone that is hungy.
Even Aliens.

If I get weak and can’t stand tall as an individual , I’m converting. These people rock….

..
Yer bald dome seem to be missing the MAGA hat.

#35 Josh on 06.02.18 at 10:21 pm

Thanks for the informative post Doug. Just out of curiosity why not just maintain equal weightings for your clients? It’s tricky to predict which region will be more successful and where interest rates are going. I know you are paid to manage client’s portfolios, but I believe the 1% you charge clients is much better than high MER mutual funds and reassuring your clients during economic crisis not to sell, the 08 recession for example, will do much more for their portfolios than over or underweight a region by a few percentage points. Also the tax advice and estate planning is invaluable.

#36 NoName on 06.02.18 at 10:27 pm

Now tat we are talking about Italy, GDP per capita
Italy 30.5k USD, Vatican 350 USD. Until today i didn’t know that candles and fridge magnets are that profitable…

#37 Rexx Rock on 06.02.18 at 10:29 pm

The EU will be ok in the end,just a few loser countries will leave.USA is unbelievable,economy so strong 3.85% Unemploymente rate.Good times are here are again!

#38 Cambridge Analytica on 06.02.18 at 10:38 pm

In other election news:
1. Andrea Horwath has started wearing blue colour tops to confuse PC voters. Let’s just mindf*k the mobile phone brain addled/stoned PC zombies to either vote for her or to not vote for Doug Ford because the blue colour is sending mixed messages to them.
2. Kathleen O’Day Wynne has started wearing Orange colour tops to confuse NDP voters to not vote for the Orange colour Candidate because that way she can get a t least a minority.
3. Doug Ford has started making Robo calls from apparently an Organization called Pride Toronto asking people who they are voting for so that people really get pissed off at Kathleen Wynne and vote for him.

With such principled candidates and such lovely election strategists and such lovely and informed electorate, we have such a good choice this election year. I can barely contain my eagerness to see what the next day will bring.

#39 Entrepreneur on 06.02.18 at 10:45 pm

Agree on the “Block out the fear” but sometimes so hard. And the “The wolf is made bigger than it is.” has a calming affect.

Saw the news about Wynne not going to win, but one has to wonder what kind of bubble was she in not to notice the discontent of the people within her province. Just like Clark with all the petitions over the years did she not notice that people were getting upset.

Then Wynne goes on about the other parties like a competition. And this is where I have trouble with because it is the people who should decide who and what passes. All political parties have good and bad points, the people vote for a party close to their desires but political parties have their down side.

Maybe we should be thinking of evolving our political system so that people have more say in issues so leaders would not be so surprised of the outcome.

Automation is coming, hopefully the political control we have now changes with it.

#40 Victor V on 06.02.18 at 11:20 pm

Without Significant Changes, Doug Ford on Track for Majority Government

http://www.ekospolitics.com/index.php/2018/06/without-significant-changes-doug-ford-on-track-for-majority-government/

[Ottawa – June 1, 2018] As we enter the final week of the campaign, the Ontario NDP have started falling back, while the Ford-led Progressive Conservatives have opened up a clear, four-point lead. The Liberals are stuck at 19 points with no plausible path to victory.

#41 ulsterman on 06.02.18 at 11:23 pm

Well, I worked as an RBS graduate trainee in Treasury and Capital markets 1996-98 (London) before they almost destroyed the UK economy. Our TV spokesman “Economist” who used to do the daily market commentary for TV was a guy only a couple of years out of university. He knew about as much as me yet was confidently wheeled out in front of the cameras as if he were Warren Buffet. I’m not surprised RBS nor the rest of the so-called market analysts make such bad calls. They no little more than any informed investor.

#42 Cambridge Analytica on 06.02.18 at 11:24 pm

Doug Ford considered wearing Orange Colour suit to take revenge on Andrea Horwath stealing his colours, but changed his mind after someone told him that he risked being confused with a Pumpkin instead of NDP

#43 Doug Rowat on 06.02.18 at 11:32 pm

#35 Josh on 06.02.18 at 10:21 pm

Thanks for the informative post Doug. Just out of curiosity why not just maintain equal weightings for your clients? It’s tricky to predict which region will be more successful and where interest rates are going.

My background is with HSBC, so I’ve always taken a global view of investing. And we run a global portfolio at Turner Investments, so we have a responsibility to have a view of most major regions.

We’re not perfect, but over time we’ve been able to limit downside and extract a bit of extra upside with our regional positioning.

–Doug

#44 Smoking Man on 06.02.18 at 11:35 pm

When you get to the point of I give no shit any more..
Some how you made it.

#45 Cambridge Analytica on 06.02.18 at 11:38 pm

And President Trump has asked Wilbur Ross to investigate applying 25% Tariff on Orange Colour from Canada because, “No one messes with Daddy’s hair colour”.

#46 majik on 06.02.18 at 11:40 pm

The Italian president is an elected official and an Italian citizen. The same can’t be said for the governor general or our head of state.

In times of constitutional crisis the regularly ceremonial elected heads of states from countries like, Ireland, Germany, Austria and Italy would intervene in the interests of the nation. These powers are clearly outlined in each of these nations constitutions and the president is elected in a transparent manner either through a direct vote, federal convention or electoral college.

Our head of state is British, unelected and does not represent the interest of the nation on the global stage. The governor general is unelected, wasn’t even Canadian until 1952 and is personally nominated by the PM and personally approved by the Crown.

So as you can see an intervention by the GG or Crown in Canadian political life is far more dangerous than what is happening in Italy right now. Canada, a country where kids can’t dream of being the head of state.

#47 Dee on 06.03.18 at 12:51 am

Some day I’d like to read Doug & Ryan’s opinion on housing. Neither have ever chimed in. How over valued are we? What was the cause? Etc

#48 Math is hard on 06.03.18 at 1:32 am

I just discovered something. My wife has been buying the bacon from a friend as a fundraiser for the friend’s kid’s team, in the 5 kg boxes, for $65 each. Supposedly a good deal. Except I was buying the 1.5 kg already packaged bacon at Costco for $15. If you do the math the boxed 5 kg bacon was $15 more per 5 kg and you have to vacuum pack it yourself compared to the same amount of bacon at Costco already packaged in neat 750 gram packages.

Folks, fundraising isn’t cheap. Just give the team the money. Don’t buy their stuff.

Practically everything is a rip off.

#49 stuck in Richmond on 06.03.18 at 2:17 am

Thanks for great post. That’s exactly what I did when markets fell this week- started adding emerging markets ETF to rebalance all my accounts. They fell some more the next day too, but by Friday I was in green with few percent profit. Now waiting for TSX to fall, so I can add some more to portfolios.

#50 Stan Brooks on 06.03.18 at 2:25 am

#18 For those about to flop… on 06.02.18 at 6:40 pm

Take a look at a list of the top ten countries with the highest per capita debt in the world. Keep in mind that the average for all countries in the OECD is $50,245. And notice how many countries are in Western Europe.

1. Japan – $90,345

2. Ireland – $62,687

3. United States – $61,539

4. Italy – $59,372

5. Belgium – $59,680

6. Austria – $49,975

7. France – $51,768

8. Greece – $49,630

9. United Kingdom – $52,816

10. Portugal – $44,819

Cherry picking again?

Here is the stat that you are referring to:

https://www.weforum.org/agenda/2017/10/this-is-how-much-debt-your-country-has-per-person/

It only includes government debt.

Look at total debt, I posted numbers on this blog and you will see that Italy is in much better shape when private debt is included, if you include private wealth things are even much better for them Italy/when compared to Canada.

In addition, as we like to lie to ourselves, as government debt we only consider federal public debt, not the crown corporation debt which is also public debt, nor the provincial debt (as no other country has such levels of non-federal public debt in the world).

You are missing, understandable like ever Canadian who has no clue of Europe the real wealth (not debt driven) per capita in these countries as well as debt per GDP, as well as the structure of the debt. Private debt is excluded from your stats as we are # 1 in the world there, how convenient and naive.

You pick one number out of the hat and then claim proudly you know stuff.

You know nothing.

Typical for a brain frozen member of the populace in canukistan, this is the main reason for us to survive this fall so far, we simply jumped from a higher floor and we still have not hit the ground yet, so there is no ground, right?

Look at the guy, how morally corrupt one can be to laugh when destroying the life savings and retirement of millions of honest people?

https://ca.finance.yahoo.com/news/bank-canada-data-dependent-amid-194215923.html

#51 Stan Brooks on 06.03.18 at 2:43 am

#38 Cambridge Analytica on 06.02.18 at 10:38 pm
In other election news:
1. Andrea Horwath has started wearing blue colour tops to confuse PC voters. Let’s just mindf*k the mobile phone brain addled/stoned PC zombies to either vote for her or to not vote for Doug Ford because the blue colour is sending mixed messages to them.
2. Kathleen O’Day Wynne has started wearing Orange colour tops to confuse NDP voters to not vote for the Orange colour Candidate because that way she can get a t least a minority.
3. Doug Ford has started making Robo calls from apparently an Organization called Pride Toronto asking people who they are voting for so that people really get pissed off at Kathleen Wynne and vote for him.

With such principled candidates and such lovely election strategists and such lovely and informed electorate, we have such a good choice this election year. I can barely contain my eagerness to see what the next day will bring.

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

It will bring more debt for you and your kids.

#52 Oft deleted much maligned stock picker on 06.03.18 at 2:44 am

Wow, what a Canada we might have if Trudeau wasn’t allowed to appoint a rabble of incompetent politically correct morons to leadership positions. Can you imagine Canada as a meritocracy? Taxation would be a tenth of what it is and social services would float on a river of milk and honey. Stopping the wasteful Trudeau pandering to UN boondoggles alone would build schools and hospitals at a rate China builds coal plants and war ships. And BTW….why does Canada still subsidize China with developing country aid? Stupid Trudeau….stupid cabinet. I mean c’mon… Climate Barbie? WTF?

Italy is a non issue….focus on the signal not the noise. If you have globalize your portfolio because the George Soros nonsense has begun to leak out on to your pillow, stop listening to media like the CBC. Focus instead on the blockbuster data coming out of every administrative orifice in the Trumpian USA. Bang a gong….Trump is a resounding success. Even Samantha Bee can’t talk dirty about the facts. BTW, please stop pandering to the malcontents and loser Democratic Party haters….this bull market started Nov 2016 not nine years ago. Obama was a disaster, get over it. The US economy just went kaboom and will continue a melt up when tax cuts and incentives really kick in over the next two years.

In a tell all book released yesterday “The World as it is” by Rhodes, Obamas personal assistant puts Trudeau as an Obama sycophant who promised Obama and Biden to fight Trump regardless of the detriment to Canada. A furious and sometimes violent Obama made Trudeau promise to use Canada to defend Obamas legacy and Trudeau agreed. Millions have poured into Trudeaus foundation since. Bottom line invest in companies that account in USD…. Canada will struggle as long as Trudeau continues to throw up roadblocks to Canada’s success in order to thwart Trump in the American media.

#53 nubbers on 06.03.18 at 4:59 am

‘Britain’s exit from the Eurozone seems to be proceeding in an orderly fashion.’

It might seem orderly now, because nothing has happened. 15 months after article 50, the UK government still doesn’t even know what it wants to negotiate.

Just wait until October, which is the effective deadline for any agreement.

#54 Gravy Train on 06.03.18 at 6:02 am

#2 Smoking Man on 06.02.18 at 3:41 pm
“… Not the brightests tools I’m the shead.”

I know I promised Boots that I’d leave Smokey alone, but come on! I just can’t resist getting my licks in! (I’ve been really good, up until today!)

Smokey, did you mean to write, “Not the sharpest tool in the shed”? Are you describing yourself? You’re not the brightest bulb, either!

Can you say ‘mixed metaphor’? Good! I knew you could! :)

#55 dharma bum on 06.03.18 at 7:37 am

Block out the fear.
——————————————————————–

“There is no illusion greater than fear.”

― Lao Tzu

#56 Reality is stark on 06.03.18 at 8:24 am

The taxman cometh.
The rapists are at the door.
York region needs more of your money. They want to double land transfer taxes just like Toronto. No one seems to be able to reduce costs. Cost reduction is a private sector phenomenon only.
No one has informed politicians that the average Joe has less disposable income than in previous decades. So the politician finds other creative ways to tax.
What is wrong with these lunatics?
We have to elect people who promise to do more with less money.
Running on the Kathleen platform of “we treat everyone fairly, but we are going to rape you to do it”, is not sustainable.
Voting for people who kill you softly is a Canadian epidemic. It has it’s roots in the school system. We have a cultural problem.
Entrepreneurial immigrants think we are crazy. They are right.

#57 B Wilds on 06.03.18 at 8:45 am

The next financial crisis or a meltdown of the euro could bring about a liquidity crisis which could turn into a trap. In a liquidity crisis, people who feel they cannot get reasonable returns on physical or normal financial investments place their assets in short-term cash bank accounts, high-risk stocks, or hoard it rather than making long-term investments.

This could become a liquidity trap which can and often does lead to no growth and deflation but maybe not this time. The wild card, in my opinion, is related to the diminished confidence so many people have towards fiat currencies. The fear money was about to become worthless which is explained in the article below could unleash inflation across the globe.

http://brucewilds.blogspot.com/2018/05/liquidity-traps-wild-potential-to.html

#58 TRUMP on 06.03.18 at 9:01 am

GREAT!!!

You just jinxed the entire market…….

DOWN she goes.

#59 mark on 06.03.18 at 9:45 am

Thanks why indexing beats active management large percentage of time, analysts cant forecast there why out of a paper bag!

#60 crowdedelevatorfartz on 06.03.18 at 10:15 am

@Cambridge Analytica

Sadly.
If the voters of Ontario base their electoral decisions on the color of the candidates’ shirts……..
They get what they deserve.
Mind you.
A choice between a fool, an incompetant fool, and a dolt isnt much of a choice is it….

#61 MF on 06.03.18 at 10:47 am

#56 Reality is stark on 06.03.18 at 8:24 am

Actually the “reality” you describe is not only a Canadian issue, but an issue the entire western world is currently dealing with.

and Lol if you think cost reduction is “only a private sector issue”.

I work in the private sector, large corporations have just as much bloat and bureaucracy as “the public sector”.

Just like always, your post is too simplistic to represent any reality at all.

MF

#62 China on 06.03.18 at 11:00 am

I just read that Trump has been jerking China around about trade with his clown act to win. Trump has a mental disability that nothing matters except to win. China has called his bluff, as he doesn’t understand the Chinese mind. T2 likewise, and his ship of fools could never make a trade deal with China. The right person could easily negotiate a trade deal away from the press and grandstanding with photos in private for Canada. It cannot be an individual who sits in government, but a retired senior civil servant with a wealth of knowledge, experience, and an impressive record of negotiating successes. This has all been done before, and can be done again.

#63 Doug Rowat on 06.03.18 at 11:17 am

#53 nubbers on 06.03.18 at 4:59 am

‘Britain’s exit from the Eurozone seems to be proceeding in an orderly fashion.’

It might seem orderly now, because nothing has happened. 15 months after article 50, the UK government still doesn’t even know what it wants to negotiate.

Just wait until October, which is the effective deadline for any agreement.

—-

If for some reason what’s happening in the UK starts negatively impacting any of the indicators mentioned then we’ll make changes to our clients’ portfolios.

“Just you wait” rhetoric, particularly from an anonymous poster, is exactly what should be ignored.

—Doug

#64 Wrk.dover on 06.03.18 at 11:27 am

I am so naive, I thought Wynne was graciously letting the liberals that weren’t voting liberal only because of her as leader, to have the knowledge she was bailing and to go ahead and vote liberal.

Kind of like how maybe the dems could have won both houses had Hillary pulled out when Comey spilled the beans which were subsequently discarded right after she lost.

I guess I am completely wrong on this? Politics are something that I can’t get a grasp on.

M64NS

#65 AB Boxster on 06.03.18 at 11:38 am

Ryan,

Saw you on BNN the other day talking about preferred shares as a 8-10% total rate of return over 5 years.
You mention CPD as an etf that you own.

In 2017, as rates went up, preferred share etf’s like CPD and XPF did rise so there was capital appreciation in these funds.

However, in 2018 as rates continue to rise, XPF and CPD etfs are now down about 2-2.2%, reducing their annual return to around 2% including dividends.
Not very impressive.

What do you think is driving this and why do you think that preferreds will start to react to interest rate rises in a positive way in the future, when they do not seem to be doing so today?

#66 TurnerNation on 06.03.18 at 11:44 am

65th? Getting a feeling it’s that time in the business cycle, where our elite money changing rulers do just that, via magic: Asset stripping time.
Keep working you never can get ahead.
Ask the people in Italy or Venezuela.

Closer to home we see Hydro One crown corp. Sold off then wake up to find ourselves owners of pipeline.

The taxpayers game.

#67 AB Boxster on 06.03.18 at 11:45 am

Whoops,

Sorry , it was Doug posting today, not Ryan.

My bad.

#68 Dissident on 06.03.18 at 11:56 am

…This reminds me way too much of the scene in Jim Henson’s classic Labyrinth where Jennifer Connelly is choosing between the lying doors only to end up in the chasm of talking hands that give her the choice of going up or down…

Hands: “Well, come on! Up or down!”

JC: “Well, since I’m already pointed that way, I guess I’ll go down.”

Hands: “She chose down? She chose dooooowwwwnnn!!!”

https://www.youtube.com/watch?v=AQUeK7nYxBQ

Lolz

#69 Shawn on 06.03.18 at 12:15 pm

For the last time, the bull market in US equities is not 9 years old. This media induced common misconception has forced many retail investors to remain on the sidelines.

Was the US bull market 9 years old in 1982? (1974-82)

What happened after that?

We’re in the very early stages of this bull market.

VFV in $CAD

QQQ, VOO, IJR, etc. in $US

#70 Reality is stark on 06.03.18 at 12:24 pm

To #61 MF.
Make sure your ducks are lined up.
The day your company gets a new CEO who rationalizes you could be one of the lucky ones to get canned.
Get to know a good wrongful dismissal lawyer now and understand severance rules.
These guys are paid to be ruthless.
Oh yeah. Good luck finding another job that pays well.

#71 akashic record on 06.03.18 at 12:30 pm

Second opinion about Italy:

JPMorgan’s Stunning Conclusion: An Italian Exit May Be Rome’s Best Option

https://www.zerohedge.com/news/2018-06-02/jpmorgans-stunning-conclusion-italian-exit-may-be-romes-best-option

#72 akashic record on 06.03.18 at 12:38 pm

#54 Gravy Train

Wait until you reach Smokey’s age, chances are your memory will be more mixed up, based on what chemical mixes pass now as food in supermarkets. You won’t even need to drink.

#73 NoName on 06.03.18 at 12:47 pm

#61 MF on 06.03.18 at 10:47 am
#56 Reality is stark on 06.03.18 at 8:24 am

Actually the “reality” you describe is not only a Canadian issue, but an issue the entire western world is currently dealing with.

and Lol if you think cost reduction is “only a private sector issue”.

I work in the private sector, large corporations have just as much bloat and bureaucracy as “the public sector”.

Just like always, your post is too simplistic to represent any reality at all.

MF

100 percent correct, bigger the company bigger the top down hierarchy. At one point somewhere it took 3-5 signatures to place order to buy 200a 600v slow blow spare fuses, or god forbid ordering tools or some very expensive parts.

I can just imagine how many people is involved when it comes to approving capital projects.

#74 jess on 06.03.18 at 12:47 pm

has it?

“Streamlining the collateral allocation process
and eliminating the time gap associated with
the unwinding of repos could reduce market
fragility and financial system risk”

Key Mechanics ofThe U.S. Tri-Party Repo Market
https://www.newyorkfed.org/medialibrary/media/research/epr/2012/1210cope.pdf

bell curve reasoning = trump’s “holes”

Niall Ferguson quits Stanford free speech role over leaked emails

British historian resigns after urging ‘opposition research’ be done on a leftwing student

Ferguson had been serving in a senior leadership role on the Cardinal Conversations, a Stanford University programme that has given a platform to contentious speakers including Charles Murray, the controversial social scientist who has claimed that black and Latino genetics are linked to intellectual inferiority.

https://www.vox.com/2018/4/10/17182692/bell-curve-charles-murray-policy-wrong

#75 Fake News Again on 06.03.18 at 12:48 pm

Fake News Again on 06.02.18 at 9:15 pm
DELETED

_____

Really? Hey Doug…..denial is not just a river in Egypt…..

I deleted you. It was richly deserved. – Garth

#76 Fake News Again on 06.03.18 at 12:52 pm

Conservative Canadian Millenial on 06.02.18 at 6:35 pm
Doug Ford will become Premier of Ontario on July 08, 2018.

This will re-start the housing frenzy, increase corporate profits, increase employment, lower alcohol costs, lower hydro costs and cut unnecessary waste such as public funding for abortions, disability benefits, unemployment insurance, social justice tribunals and universities, among other liberal pet projects.

I cannot wait for Doug Ford to legalize free speech so that I can start up my Alt Right blog without the AG Navdi pressing charges on alt-righters. Canada is a country that has a distinct identity and the Liberals and NDP are destroying our country. I should have a right to say what I want about undesirable groups who don’t belong in Canada. Garth if you support the PCs you should not censor me.
_______

Censorship goes way beyond Canada’s border in the planning but the Radical Left will tell you that is a “conspiracy theory” of course. Take a look at Germany right now……it is only a few steps behind the National Socialist Party from the 30s in how the country is run.

#77 NoName on 06.03.18 at 1:05 pm

some time ago i watched ted or goog talk about lateral revolution/evolution in music industry. Dude nicely explained how all that works, from writing songs to composing music in certain way and inserting a beat to “reset” and make us to experience old pattern as new.

INTERESTING READ

The obvious trend is that the Billboard Hot 100 will continue to musically converge, a path that might just be the natural progression of popular culture. Give it enough time and we’ll all be listening to the same thing.

https://pudding.cool/2018/05/similarity/

note
way back in a day AC/DC did similar thing with their song.

https://tonedeaf.com.au/every-song-by-acdc-is-the-same-heres-proof/

#78 James on 06.03.18 at 1:06 pm

Brilliant and brave move by Kathleen. The PCs are derailing themselves every day, even right wing talk radio hosts have gone against Duggy. Every time he talks he makes me seriously wonder (no offence intended to anyone) what kind of intellectual disability he has. Just not a bright guy at all.

For now it looks like an NDP minority with enough Liberals holding the balance of power to keep things on a more or less even keel.

Then there’s the 2019 federal election.

Rinse and repeat?

#79 crossbordershopper on 06.03.18 at 1:27 pm

the reason why ethnics dont do this stock and mutual fund stuff for the most part is that well its a scam. the whole stock market, having people in suits ‘manage’ your money for you like really.
the mer is crazy, absolutely crazy, do you reallly need some money manager with all their crazy printing and legal and cusodial fees etc so they can overcharge you to own some bank stocks?
really? there should be significant economies of scale on money management but there isnt its simple. the more you have the more they charge. the percentage stays the same but it should go down to almost free which is where it is in the usa.
s and p 500 etf is .09% and beates 95% of all canadian based mutual funds with a no brainer no fee approach.
immigrants in which canada has a lot of , love real estate becasue well its real, you can touch it etc.
as anyone out there knows, getting a 3% dividend and seeing your stock go down 20% is complete bs.
thats why they dont do stocks, so even if your real estate goes down 20% well , you still live in it its a psychological thing.
banks insurance and the whole canadian financial markets are a joke. including getting a loan. omg, banks love saying no, its simple for them.
go the usa, so you dont have to live in this weird world called canada where everything costs a lot and opportunities are few and far between.

#80 ulsterman on 06.03.18 at 2:06 pm

#30 Newcomer on 06.02.18 at 8:19 pm
Agreed. If you are looking for trouble on the horizon, global business, or at least US and northern European business, does not deserve much attention.

At home, however, especially in YVR and TO, it’s a different story.
http://www.westerninvestor.com/news/opinion/are-people-fleeing-vancouver-census-suggests-exit-trend-becoming-a-stampede-1.10067536

Newcomer, i think many people hung on and on and on, hoping for a anti-housing miracle. I’m guessing many thought that somehow, someway they’d figure something out and housing would be within their grasp at some point in the future. I believe we’ve reached a tipping point with those who are older but missing their buying opportunity, and the school leaver / university generation who’ve been brought up “knowing” that they’ll either never afford real estate or need to wait 40 years for their parents to die. The past year or two has seen the affordability crisis become mainstream discussion on talk radio, TV, and social media. Everyone knows it’s a disaster for local wage earners and anything short of a 50%+ melt down will do little to get people into homes. They’re taking the only sensible option – leave. Given that the vast, vast majority don’t walk the seawall, hike the north Shore, mountain bike, ski, hang out on a rock beach (all in the same day i may sarcastically add), there are many other places to live. Give most people a job, a house, IKEA, Canadian Tire, Costco, and Netflix, and their lives won’t change wherever they are living. Hire a guy to blow the snow with all the money you’ll be saving!

#81 Barb on 06.03.18 at 4:44 pm

“…Canada’s governor general suddenly telling Trudeau who he can and can’t have in his cabinet.”

———-
that’d likely be an improvement!

#82 DON on 06.03.18 at 6:25 pm

It was a stunning, gutsy, moronic move by a politician who should know it’s not all about her. In a few sentences she cut the legs out from under thousands of volunteers and 124 candidates. It will take a long time to get over that one.

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

That was a stupid move…in it for herself and falling on the sword and taking everyone with her…the anti definition of leadership.

Breath taking – new norms in politics.

In other new former BC Premier Christy Clark has been hired by a law firm as an “Advisor”. I wonder what she is advising on? like really?

#83 Freebird on 06.03.18 at 7:41 pm

Short doc on New Zealand’s housing market/ boom and role of foreign buyers incl China by award winning doc film maker. Covers Vancouver. A few parallels to our own housing situation. Only about 45 min long. No ads.

https://youtu.be/HzSAmOQuyjU

#84 tccontrarian on 06.04.18 at 4:16 pm

“In a pinch, if you had to rely on only one indicator, the Conference Board’s Leading Economic Index would be a pretty good choice. The Index includes components ranging from S&P 500 equity prices and worker wages to manufacturing levels and unemployment insurance claims. Isolating this one, quite predictive index indicates why we remain unconcerned regarding the US economy”
————————–

In my opinion:

– One should never rely on a single indicator.

– Second, how well did this indicator predict past serious downturns in the markets?

Third, when I step back and I look at the chart it just screams ‘danger!!!’ Why risk a 30-50% decline (as happened in 2001-2 and 2007-9), just hoping to squeeze out another 1-5% gain?
Not a risk/reward scenario for my taste.

But that’s me, and what the H#@L do I know?

TCC