Plop

Markets are funking out this week. Why?

Topping the list is interest rates. As explained here earlier, the benchmark US Treasury swelled to more than 3.25%, the highest in seven years. When investors can scoop that return with no risk, money flows from stocks to bonds. Equities drop – especially the over-valued ones (think Tesla).

Also on the list: trade wars. Markets worry about Trump and China’s Xi. Both are take-no-prisoner kinda guys. This will get uglier before it gets solved.

And inflation’s back. Wages in the US are rising by 3%, or 50% faster than the cost-of-living. Amazon just caved to the pressure with a $15-per-hour minimum pay. Meanwhile there are more empty jobs than unemployed people in the US, so competition is on for workers. As corporate payrolls increase, bottom lines retreat. Lower earnings guidance results. Weaker markets.

And oil. Talk of eighty-buck-a-barrel crude is common now as global demand for the black stuff hits a new, historic, never-experienced high. Higher energy costs bite into GDP everywhere, except maybe the Saudis. And they sure have issues. You might have noticed that Irving blew up Saint John this week. The country’s largest refinery belched smoke and flames, then shut down. Six thousand people out of work for a while. And imagine what this will do to prices at the pump.

Of course, investors are locking in gains after a year when markets hit record after record. In fact, it’s useful to remember what US stocks have done over the past five years. If you eschewed this, it was a bad decision…

In Canada some wags are blaming the feds for sub-par performance and a sense of drift in the country. To the south, a quixotic, unpredictable and possibly unhinged leader is racing through a frenzied agenda of tax cuts, deregulation, protectionism and rightist policies which have dropped the jobless rate to a 50-year low and cleaved the country as never before. The result is intense. Explosive. Dangerous and historic.

Here? Well, as academic George Athanassakos wrote in the Financial Post on Wednesday:

Canada’s future looks less than clear under the stewardship of this Liberal government.

Trudeau and his ministers have made it clear they want corporations to become benevolent organizations that put workers before shareholders. They favour taxing corporations and the rich, and adding regulatory impediments and red tape to corporate activity. They are big supporters of income redistribution as opposed to making the pie bigger for everyone. They want to regulate the economy and nudge corporations to submit to the Liberal government’s social views and economic philosophy. Their policies take away economic entrepreneurship and wealth creation and replace it with handouts to every significant lobby and activist group… Canadians are getting the sense that they are governed by a bunch of idealistic and dogmatic college students convinced they will save the world.

Our biggest export – oil – now sells at an unprecedented discount to world prices. One reason is our inability to ship it efficiently. Now there’s talk the $4.5 billion unbuilt pipeline Trudeau bought with public money – bailing out an American company only too happy to dump it – will be gifted to aboriginal groups. Mr. Market is not impressed.

This malaise is certainly affecting people. In Calgary, for example, despite a doubling in world oil prices, the housing market is cascading lower. “We didn’t expect this much of a decline,” says the real estate board’s chief economist, when asked about the slowest sales in a decade.  In BC, as noted here, a leftist government is using new taxes to deliberately crash a property market which accounts for 25% of provincial GDP and in which 70% of people are invested – in the name of social justice.

In Toronto a leading mayoralty candidate wants to rip $80 million per year from the hides of people owning high-end homes in order to gift down payments to renters. In Vancouver local politicians are rezoning traditional single-home neighbourhoods into duplex alleys. In other words, Americans are solving the wealth gap by lifting up the lowly, while we pillage the lofty. Only one approach will work. And it’s not ours.

What should an investor do?

Simple. Stay invested. In a storm, shelter in place. Don’t set off in a new vessel. A balanced, globally-diversified portfolio is the best bet, as it has been for ages – precisely because you’ve no idea what happens next. Do you?

196 comments ↓

#1 The Wet One on 10.10.18 at 4:56 pm

Hmm…

Let the good times roll I say!

BOO YAA!!!!

#2 HoweStreet.com on 10.10.18 at 4:57 pm

Ross Kay on HoweStreet.com Radio:
Housing Market Hatches a Turkey Right after Thanksgiving!
The Deleveraging Myth is already making Headlines.

https://www.howestreet.com/2018/10/09/housing-market-hatches-a-turkey-right-after-thanksgiving/

#3 Bk on 10.10.18 at 4:57 pm

Wow, what a bad day! Think it will recover by Christmas?

#4 jojo on 10.10.18 at 5:00 pm

Took profits 2 weeks ago after 10 years.
Yup locked in nice big tax bill. But PIGS get slaughtered as they say.

My dad taught me one thing..

There is no shame in taking profits…..

Few do.

I can sit in 3% and wait for the apocolypse coming in Cdn real estate. As well as Emerging market real estate that utterly collapsing.

Southeast Asia specifically.

#5 Ex Pat Canuck on 10.10.18 at 5:06 pm

Hmm. It will be interesting to see where the market is a year from now, and whether the contrarian investors post a big win. Time will tell…

#6 Fish on 10.10.18 at 5:09 pm

TSX moves lower for fourth day in a row
CBC News · Posted: Oct 10, 2018 3:58 PM ET | Last Updated: 43 minutes ago

https://www.cbc.ca/news/business/markets-dollar-tsx-dow-jones-1.4857337

#7 Lead Paint on 10.10.18 at 5:09 pm

#123 Earl of Southhampton on 10.10.18 at 8:24 am
#101 Smoking Man

“Life is competition. So true in the animal kingdom. And the human race.”

Cooperation has led to more advances than jungle competition. Your body consists of 50 trillion cells that are cooperating to keep even your alcohol riddled old corpse going…. Your assumption that everyone who disagrees with your drunken and mindless comments is a parasite who lives off the backs of others is pure garbage like everything you spew out on this blog. You are a total mindless fool that is tolerated by the sage that runs this blog because you provide comic relief. Go back to the bar and drink yourself into oblivion you loser.

————————————————————————

That’s a beautiful takedown, I am an admirer of your work.

And for those who claim that humans cannot impact climate or weather, do you think setting off all the planet’s nukes would have an impact? Then admit you’re wrong about your position.

#8 Rob on 10.10.18 at 5:12 pm

Geez whizz! I really dislike the liberals

#9 bdwy sktrn on 10.10.18 at 5:15 pm

precisely because you’ve no idea what happens next. Do you?
————-
got a pretty good idea this isn’t over yet. with that ugly close i see more red by the weekend.

#10 Chris on 10.10.18 at 5:15 pm

Canada has one of the lowest unemployment rates in history. Housing has done impressively compared to the US. Economy is doing well in Canada. Canada’s economic performance has been much better than the US. Thank the liberals and Trudeau for doing a much better job than Harper. We did not waste billions of dollars on unnecessary wars.

#11 Stan Brooks on 10.10.18 at 5:17 pm

Interesting times.

It seems that inflation is starting to be recognized (at least in places that have some sanity left but that matter big time) and the interest rates have actually some much more room to rise than anticipated.

It seems pretty much done deal for the USD 10 years treasuries to go over 4.5, maybe 5 %.

This could trigger 30-50 % decline in developed stock markets, 20-30 % in diversified, balanced portfolio as keep in mind, rising rates make existing bonds (and there is plenty out there including in your portfolio) cheaper as well as stocks cheaper.

So investors need to have the stomach for that.

As for inflation: we are about to see much higher imported inflation (not that the current is not already high enough) due to weaker loonie (5-7 cents down as a minimum), inability to raise interest rates by BoC meaningfully, probably much higher oil prices.

One helluva fun.

The bad news is that mortgage rates are not determined by BoC (they are the small guy with the little balls and the finger in the hole in the dyke), but by USD long term treasuries, so expect to pay much more on that mortgage. Like minimum 2-3 % above current levels. There is nothing BoC or the federal government can do about that.

As consumer are overstretched we will see some fun times at CMHC and in the overall economy as consumers will spend less but on much more expensive items.

The other bad news is that interest on deposits will stay low and the currency will further implode losing any correlation to the price of oil.

20-25 % one time inflation baked in pretty much on top of what we already have.

Keep an eye on gold.

#12 Nineteen84 on 10.10.18 at 5:17 pm

Markets are funking out this week. Why?
———————–

Corrections are normal. And once in a while, they actually crash! This one feels like the early stages of the latter. I’m ready, I think!

1984

#13 Hugh Jassel on 10.10.18 at 5:18 pm

“When investors can scoop that return with no risk”

US T bills are far from no risk. Not sure why no on e sees the US staring down the eye of rising deficits, rising debt and inflation coming down the pike….and you think the Fed can increase without increasing the debt interest payments they need to make.

This is gonna get messy allright – but the U.S. is at the centre of the storm and no one is seeing it…..

#14 Graeme on 10.10.18 at 5:26 pm

Stay invested…in gold miners as a very basic form of insurance for times like these and only for times like these. Otherwise it’s kind of a useless move.

I avoid broker’s trying to sell me at this time as much as I avoid real estate agents talking up real estate.

There are excruciatingly complex and doomed to fail market timing techniques, but this isn’t one of them. This is dirt simple. Get out asap.

Get out in a market correction? This is why DIY investors fail. – Garth

#15 Dolce Vita on 10.10.18 at 5:38 pm

“Canadians are getting the sense that they are governed by a bunch of idealistic and dogmatic college students convinced they will save the world.”

So true.

“…you’ve no idea what happens next. Do you?”

Hint: read 1st paragraph.

#16 Justme on 10.10.18 at 5:55 pm

Garth,

I am curious to hear your opinion on why bonds and stocks are moving down in tandem. I read that a few fund managers sold a lot of their positions in bond etfs.

I came across an article on Bloomberg talking about this sycronized movement downward: Everything That Goes Wrong When Stocks and Bonds Fall Together
https://www.bloomberg.com/news/articles/2018-10-10/two-decade-break-in-stock-bond-link-signals-pain-for-markets

Thanks,

#17 Dolce Vita on 10.10.18 at 5:56 pm

A very interesting conundrum you write about today w.r.t. Left Gov fiscal policy in Canada vs. Right Gov fiscal policy in the US.

Result is: US economy booming and in terms of GDP and job creation, Canada doing well but not booming. Top marks to the Right and a passing grade to the Left.

Though, both are spending money like there is no tomorrow. As you say, who knows when that is going to end.

One thing for certain with all that money being spent and in the end, both will have to pay the piper.

I say next year for Canada and the US, 2 years from now if hedge fund guys like Dalio and his debt cycle theories are correct.

#18 Smartalox on 10.10.18 at 6:03 pm

I’d be interested to hear more about your thesis on how “the US is narrowing the wealth gap by lifting up the lowly”, and why the same thing is not happening here.

I’ve spent two of the last three weekends in the US (Kansas City and New Orleans) and I saw a LOT of people working what would seem to be low-wage, service sector jobs, well past retirement age. Or working more than one job.

The ‘young entrepreneurs’ that I met were running food stalls and micro-breweries, selling over-marketed wares at inflated prices. Five bucks for fries? Ten bucks for a sandwich? Twenty for a too-small pizza? Sure, I’ll try that once, but it’ll have to be a very special experience to make me a repeat customer at those prices.

But those are the prices that they feel they have to charge, in order to keep their businesses going.

And it may well be that those are their legitimate costs of doing business, that ‘factory foods’ and offshoring have yielded economies of scale that are impossible for small entrepreneurs to match.

But isn’t that what free enterprise wanted? I’m invested in McDonald’s, and I am rewarded every time they figure out how to shave a tenth of a cent off the COGS of a hamburger. I don’t have a financial stake in the local food truck.

#19 Blacksheep on 10.10.18 at 6:08 pm

Lead # 7,

“And for those who claim that humans cannot impact climate or weather,”

“do you think setting off all the planet’s nukes would have an impact?”

“Then admit you’re wrong about your position.”
—————————————
Relevance?

This is weakest (and that’s being kind) pro man made climate change comment, I’ve ever read.

The climate is changing. It will and has, always changed. This is fact.

Deal with it.

#20 jess on 10.10.18 at 6:11 pm

A woman whose husband is a jailed state banker in Azerbaijan (Hajiyeva’s husband, Jahangir Hajiyev, was the chairman of the state-controlled International Bank of Azerbaijan from 2001 until his resignation in 2015. He was later sentenced to 15 years on fraud and embezzlement charges, PA reported.)

…has lost a court fight to avoid being named as she seeks to explain how she paid for two properties worth £22 million ($29 million) in total, Britain’s Press Association reported Wednesday.
Zamira Hajiyeva, who is the subject of the first two unexplained wealth orders obtained by the UK National Crime Agency (NCA), also spent more than £16 million over a decade at luxury department store Harrods, a High Court judgment said, according to PA.
The High Court order dismissing her attempt to throw out the NCA case and maintain her anonymity was made last week, when Hajiyeva was named only as “Mrs A,” but her lawyers were given a week to appeal. The anonymity order was lifted Wednesday after a judge ruled that “no good case” had been made for extending it, PA said.
If Hajiyeva cannot explain how she afforded the assets in question, she could lose them. One property, worth around £11.5 million, is in the rich London neighborhood of Knightsbridge, where Harrods is located.

#21 AGuyInVancouver on 10.10.18 at 6:11 pm

What!? Americans are lifting up the lowly? Where? take a look at this graph on income inequality, the USA is pretty much at Third World levels.
https://bit.ly/2CB5ZXY

#22 -M on 10.10.18 at 6:11 pm

Didn’t bond prices fall today as well? What does that mean?

#23 reynolds531 on 10.10.18 at 6:12 pm

Will be gifted?! Yeah cause that’s a great idea.

#24 crossbordershopper on 10.10.18 at 6:13 pm

markets will go down, rates go up, and people who rent second homes with negative cash flow will be shocked at the renewal of their mortgage next year with no increase in rent, double red per month, let them eat their house.
greedy people.
10=20 percent price decrease simple , capitalisation of the rent multipile at a lower multiple due to higher rates simple math for real estate, stocks, bonds etc. etc.

#25 marcus on 10.10.18 at 6:13 pm

Faith for Toronto!

#26 Brian Ripley on 10.10.18 at 6:18 pm

My housing price momentum chart is updated:
http://www.chpc.biz/housing-price-momentum.html

“Vancouver, Calgary and Toronto SFD price momentum retreated below the flat line while the TSX Real Estate Index cash buyer momentum up-ticked to new nearby highs.”

As noted, the TSX Real Estate Index momentum is divergent to house prices, although this is Sept data. The index high was Sept 17th, and since then it has been selling off. So next month, today’s TSX selloff no doubt will be reflected in the chart.

Shades of 2007; by 2009 cash buyers of the TSX Real Estate Index hit the “get me out” bottom.

#27 jess on 10.10.18 at 6:19 pm

‘McMafia’ law: unexplained wealth order (UWO),

UWOs – which have been nicknamed McMafia laws after the hit BBC1 drama – are a new tool to help investigators crack down on the £90bn tide of “dirty money” flooding into London by forcing suspected corrupt government-linked officials to prove their wealth is legitimate

https://www.theguardian.com/uk-news/2018/oct/10/wife-of-mcmafia-banker-with-16m-harrods-spending-habit-named

#28 Drew on 10.10.18 at 6:19 pm

Looking to research ETF’s, is there a site that people recommend? Looking to buy some ETF’s that have conservative (5-7%) returns and/or dividends.

#29 Guy in Calgary on 10.10.18 at 6:21 pm

Smells like February to me. Must be the snow.

#30 Smartalox on 10.10.18 at 6:22 pm

And another thing re: the Liberals,

OK, so say that the Liberals ARE interested in redistributing wealth. We’ve seen how their plans to pillage the lofty have fallen flat, with the recent blog post on how tax avoidance measures by the top earners have resulted in less federal tax being collected, and ALSO how lower taxable incomes – on which provincial income taxes are calculated – mean tax losses in those jurisdictions as well.

Housing surtaxes don’t currently apply to me, because I choose to rent. I don’t own a vacation property, but if I were to buy one, it’d probably be in a different jurisdiction. Or maybe be a boat – no housing surtax on those.

The effects of the social justice policies of the current Federal government are easier to sidestep than some of the effects of the policies of other potential governments.

That pipeline is still going to get built. If the first nations take a stake in it, those who claim to be the stewards of the environment might actually spend what it takes to keep things safe while getting it built. Certainly it would improve the consultation process, if there was some substantial benefit on offer.

But the effects of a policy of a socially Conservative government (particularly one that embraces the same ugly, nativist rhetoric observed in the US), might be harder to side-step. We’ve seen the effects there, and now we’re seeing them again. People marginalized, neglected, rights questions, opportunities squelched.

Fiscal restraint? Not with fat spending on pork barrels like defense, and tax cuts, or jolly great hikes to the TFSA limits.

Don’t get me wrong: tax cuts are nice and all, but sometimes the bad you have to take with the good kind of takes the fun out of it, you know?

#31 Jungle on 10.10.18 at 6:23 pm

Stan weren’t your saying recently no nafta deal will be done, loonie will crater and inflation goes up 20% ? Lol

I’ll keep my prediction that Gta re doesn’t crash.

#32 AK on 10.10.18 at 6:32 pm

“Markets are funking out this week. Why?”
=============================
Also, both the S&P 500 and the Dow set new highs a couple of weeks ago. A correction is very healthy…

#33 common sense on 10.10.18 at 6:38 pm

Boo Hoo…Keep raising those rates.

If a lot of people can’t handle the 10 yr at 3.25%, what can the world handle?

#34 pay your taxes on 10.10.18 at 6:40 pm

It has been opined that the wage increases at Amazon are about crushing the competition rather than generosity or retaining workers. They’re automating rapidly and employ fewer people and with the amount of cash they have 15 bucks an hour is nothing, but it is a big deal to their competitors.

Maybe Trump and the political circus are just a big distraction while Bezos and his pals quietly take over the world. Today’s oligopolies might prove more difficult to break up than Standard Oil was back in the olden days.

#35 MF on 10.10.18 at 6:40 pm

Yawn.

Much needed and expected pullback.

And expect another T2 government. Thank Bernier.

MF

#36 Nonplused on 10.10.18 at 6:48 pm

#7 Lead Paint

Is there anybody out there who thinks setting off all the world’s nukes wouldn’t end life on the planet? Heck a few more Fukashima disasters might be enough to do it.

But comparing nuclear fallout and nuclear winter to a few degrees of warming is a bit of a red herring don’t you think? There is an order of magnitude of difference between them.

There are a host of problems we face that are of more pressing concern, including:

Nuclear war
Nuclear waste
Aging nuclear reactors
Fresh water contamination
The bees are dying for some reason (probably pesticides)
Insect counts are down (also probably pesticides)
Top soil loss due to mechanized farming
Food insecurity
Round up is showing up in our food and we’re eating it
Energy insecurity
Plastic contamination of the oceans
Over fishing
Over population

And that’s just of the top of my head. So I have plenty of reasons I can’t sleep at night before I worry about the amount of CO2 in the atmosphere rising from 270 parts per million in 1900 to about 400 now to maybe 600 when we run out of oil, generating a couple of degrees of warming. Besides, the plants love it. That’s a good thing, because once the oil and gas run out we’re going to need to burn wood again to heat our homes.

The fact of the matter is that if we want to reduce CO2 emissions significantly, the economy must be reduced by the same amount. We cannot maintain our industrialized society without energy. In fact it was the discovery of coal, oil, and gas that led to our industrial society, it would not have been possible without it. Some would argue that when the oil does run out, industrial society will cease with it.

What those who are calling for zero CO2 emissions are in effect calling for is a return to living conditions and population levels from the 1700’s. We don’t have any other alternative at this point and our whole economy is based on growth, which requires growth in energy consumption.

Nuclear is too dangerous, wind and solar don’t scale and are inconsistent, hydro is already built out, biomass doesn’t scale, thorium and fusion haven’t been demonstrated to work. So there just isn’t another option at this point. Unless you want to turn off your lights and computer. That would help a bit.

What we need, if industrial society is to survive more than say the next 100 years, is a Manhattan style project to invent the next energy source, if such an energy source is physically possible, to replace fossil fuels. Building a few windmills and fiddling with carbon taxes isn’t going to do it. Right now the research is going into thorium and fusion, but until they get the reactors to work and start building them on mass we will be burning fossil fuels until we run out of them some 100 years or so from now.

I don’t claim to know exactly when oil and gas will “”run out”, i.e. become uneconomic to extract, but there is only a finite amount of it out there and anything finite eventually reaches the end. Once it takes more energy to extract the oil than the oil contains in energy the party is over. The “energy efficiency” of oil extraction (how much energy there is in a barrel of oil compared to how much energy it takes to produce a barrel of oil) is on decline and has been for years. The party started at about 100:1. The party ends at about 5:1. Stuff like oil sands and shale oil is already down to about 20:1.

#37 The Real Mark on 10.10.18 at 6:51 pm

The TSX index hasn’t gone anywhere in a decade, unemployment is rising in Canada (the official stats are somewhat rigged — youngsters who never were able to enter the workforce due to the lack of jobs aren’t even counted as unemployed), and now the golden goose of the privately owned, non-stock-market listed economy, the RE marketplace is crashing.

Inflation is basically dead. The real battle here for the Bank of Canada is fighting the deflationary tsunami. That may very well be accelerated by a torrent of goods and services that formerly would have been consumed by US consumers flooding into Canada and displacing what remains of Canada’s domestic manufacturing sector. Rate cuts, to 0% and even negative, can’t be too far away.

#38 SoggyShorts on 10.10.18 at 6:54 pm

#157 Stan Brooks on 10.09.18 at 3:01 pm

Wow. You really need to learn how averages and anecdotal evidence works.

Some guy says his insurance went up 32% the last 2 years. Ok, sounds bad but what about my insurance which hasn’t gone up in 7 years?

Then there is the other link you posted where some retard pegs inflation at 7% based on “the burrito index”!?!?
One single Taco truck in one city is a clear indicator of the average rate of inflation on every product across an entire nation?

You might be the most gullible person on the internet.

#39 Habitt on 10.10.18 at 6:55 pm

What will tomorrow bring?

#40 SwanPardis on 10.10.18 at 6:59 pm

@Number27:
This should do, at least as a start:
http://time.com/money/5090801/best-etf-2018/

#41 Figmund Sreud on 10.10.18 at 7:07 pm

Stay invested. In a storm, shelter in place. Don’t set off in a new vessel. A balanced, globally-diversified portfolio is the best bet, as it has been for ages – precisely because you’ve no idea what happens next.
___________________________________

Probably a sage advise, … but onto the subject: what happens next – long term – was outlined (predicted) a long, long time ago, … oh, along the years 1918/1922 by one Oswald Spengler*, in his seminal book, The Decline of the West. Fascinating distraction, …

Best,

F.S.: Calgary, Alberta.

*) https://en.m.wikipedia.org/wiki/Oswald_Spengler

#42 and the budget will balance itself on 10.10.18 at 7:09 pm

can canadians buy US Treasuries at 3.25%?
whats involved? do we get exempt from paying tax if we hold it in our rrsp?

#43 Long-Time Lurker on 10.10.18 at 7:19 pm

#27 Drew on 10.10.18 at 6:19 pm
Looking to research ETF’s, is there a site that people recommend? Looking to buy some ETF’s that have conservative (5-7%) returns and/or dividends.

>www.canadaetfs.ca has a big list of them.

#44 The Real Mark on 10.10.18 at 7:19 pm

“#32 common sense on 10.10.18 at 6:38 pm
Boo Hoo…Keep raising those rates.
If a lot of people can’t handle the 10 yr at 3.25%, what can the world handle?”

The Fed doesn’t control the 10 year rate. They only control the short term rate. If they raise rates too much, the 10 year rate would most likely collapse as tends to happen when the yield curve inverts.

” We’ve seen how their plans to pillage the lofty have fallen flat, with the recent blog post on how tax avoidance measures by the top earners have resulted in less federal tax being collected”

Correlation isn’t causality. The Canadian stock market hasn’t advanced over the past few years meaningfully. And professions that were traditionally high paying like medicine, and even law and engineering, have been under a substantial amount of stress due to oversupply. Such most likely is more explanative of the decline in tax revenues from higher income earners than the minor crackdown of the Trudeau regime upon abusive tax loopholes abused by a small number of small businesspeople. Like doctors paying their wives like an executive for only being a receptionist in their business, for example.

#45 Trumpocalypse2018 on 10.10.18 at 7:20 pm

Stock market chaos. War with China closer than we think, as the White House loses its only balanced player, Nikki Haley. And the UN confirms even if we survive the next year, global environmental disaster is now as close as the next decade.

Billions will soon be in peril.

PREPARE.

#46 LJ on 10.10.18 at 7:21 pm

You forgot to mention that BC environmentalists got their wish with one less active pipeline in the province (due to the Prince George blow-out).

Hope they enjoy not having natural gas for a while as they “save the world” from those evil elements: Oxygen and Carbon. The funny thing is that they are encouraging citizens to use their fireplaces (which, of course, are not subject to a carbon tax).

We should just shut down all the westbound pipelines out of Alberta and have done with it. End of argument.

Enjoy the beautiful Canadian environment this winter!

#47 young & foolish on 10.10.18 at 7:26 pm

It takes a lot of time for equities to climb the “wall of worry”, but only a single afternoon for Mr. Market to knock them off the ladder.

A day, or a week, means little. – Garth

#48 Daveyboy on 10.10.18 at 7:28 pm

Where will the markets be 10 years from now?

Ill just keep investing!

#49 For those about to flop... on 10.10.18 at 7:34 pm

Permission to post.

Permit number 00003

Granted by G. Turner…

M44BC

“Visualize the Entire Global Economy in One Chart

Last week President Trump announced a landmark new trade agreement replacing NAFTA, a deal that he thinks will pour “cash and jobs” into the US economy. We don’t want to debate the merits of Trump’s approach to trade, but the world should always pay attention when the leader of the world’s largest economy starts talking about tariffs. Our newest visualization highlights exactly how big the U.S. economy is compared to the every other country in the world.

Our visualization neatly slices the latest 2017 GDP numbers from the World Bank, released on 21st of September 2018, a few different ways. The underlying idea is that GDP is not a zero-sum game, meaning the pie can continue to grow for every country in the world and not just a few. Each slice represents the total economic output, or GDP, of a country in 2017, the latest year for which definite and complete data are available. The color corresponds to its geographic location, and we included the percentage of the world’s economy each country makes up for easy references. This lets you immediately see which countries and continents dominate the world economy, and which ones lag way behind.
Top 10 Biggest World Economies by GDP

1. United States – $19.39 trillion

2. China – $12.24 trillion

3. Japan – $4.87 trillion

4. Germany – $3.67 trillion

5. UK – $2.62 trillion

6. India – $2.60 trillion

7. France – $2.58 trillion

8. Brazil – $2.05 trillion

9. Italy – $1.93 trillion

10. Canada – $1.65 trillion

An interesting way to understand these numbers is by comparing them to a previous visualization we did last year on the relative size of economies using the same underlying dataset from the World Bank. There are in fact a few changes to note. Looking at the top ten countries overall, India’s economy surpassed France to become the 6th biggest in the world. The UK was the only economy to shrink among the top ten, dropping from $2.86 trillion to $2.62 trillion, not adjusting for inflation. The U.S. is still the biggest both in overall terms and as a share of the global economy (24.32% last year vs. 24.40% this year). China is continuing to rise as a global economic power, accounting for 15.4% of the world’s GDP, up from 14.84%. In short and in general, the world’s heavyweight economies continue to reign supreme.

So how big are they? The combined GDP of the top four countries in the world (U.S., China, Japan and Germany) is greater than the entire rest of the world. The most obvious conclusion is that the U.S., Europe and Asia collectively control an enormous swath of the global economic order, totaling over 87% of the globe’s GDP. As you can see, the Global South barely makes it onto the visualization. Hundreds of countries contribute so little to the world’s GDP that we simply lumped them together into one uncategorized bucket, otherwise the visual would become too crowded.

That’s why every time President Trump threatens to increase tariffs on Chinese goods, theworld’s markets take him seriously. He’s not talking about small economies where trade deals have a only ripple effect around the world. Tariffs worth hundreds of billions in annual revenue would have a serious impact on the global economy. Whether you think the impact would be net positive or net negative is another matter altogether.”

10 October 2018

Visualization
https://howmuch.net/articles/the-world-economy-2017

#50 Shawn Allen on 10.10.18 at 7:35 pm

#41 and the budget will balance itself on 10.10.18 at 7:09 pm asked:

can canadians buy US Treasuries at 3.25%?
whats involved? do we get exempt from paying tax if we hold it in our rrsp?

*****************************
In theory, yes but it might take a pile of money. No tax if held in RRSP.

Easiest is to buy a low cost ETF holding these:

See TLT on New York for 20 year plus treasuries. Prepare for large capital losses as interest rates rise. But enjoy the yield. Or IEF seven to ten year treasuries. You get currency risk as well on both of these.

So it is not quite the free lunch 3.25% that it sounds like. But it may still fit your needs… and have a place in a portfolio if you want. Especially if you think rates will not rise or will fall again.

#51 Chris Sankar on 10.10.18 at 7:37 pm

Tax cuts in the US are going to be a disaster. It only benefits the 1%. Middle class will get enough money to buy an extra cup of Starbucks. And the poor. They are going to get no benefits. Eventually, the tax cuts will lead to cut in medicare, social security etc and will bankrupt the country.

#52 Shawn on 10.10.18 at 7:39 pm

Say goodbye to any further rate hikes until the S&P500 is at new highs.

The Fed doesn’t care. – Garth

#53 Doug t on 10.10.18 at 7:45 pm

2019 the other shoe drops – prepare accordingly

RATM

#54 Long-Time Lurker on 10.10.18 at 7:53 pm

https://www.reuters.com/article/us-venezuela-economy/venezuelas-annual-inflation-hits-488865-percent-in-september-congress-idUSKCN1MI1Y6

(whole article below: short)

BUSINESS NEWS
OCTOBER 8, 2018 / 10:34 AM / 2 DAYS AGO

Venezuela’s annual inflation hits 488,865 percent in September: congress

CARACAS (Reuters) – Venezuelan consumer prices rose 488,865 percent in the 12 months ending in September, a member of the opposition-run congress reported on Monday, as the OPEC nation’s hyperinflation continues to accelerate amid a broader economic collapse.

Daily inflation is now 4 percent, according to opposition legislator Angel Alvarado, with monthly inflation rising to 233 percent in September from 223 percent in August.

In an effort to stabilize prices, President Nicolas Maduro in August cut five zeros off the ailing bolivar currency, boosted the minimum wage by 3,000 percent, and pegged salaries to an elusive state-backed cryptocurrency.

Opposition legislators have become the only source for economic indicators after the central bank stopped publishing such information nearly three years ago as the economy began unraveling.

The International Monetary Fund estimates consumer prices would rise 1,000,000 percent in 2018.

Maduro was re-elected in May in a vote that dozens of foreign governments described as rigged.

He insists the election was free and fair and says the situation is the result of an “economic war” led by the opposition and business leaders who are arbitrarily raising prices.

#55 33¢ Cauliflower on 10.10.18 at 7:56 pm

Well,

At least the $5,- cauliflower is a thing from the past.
Here in East Van the corner-store is now selling 3 cauliflowers for $1,-
Sure, a little bit of mold, but still!

#56 For those about to flop... on 10.10.18 at 8:00 pm

Pink Pumpkins being carved in North Vancouver.

These guys are pulling out their second Pink Pumpkin to carve, as they have been going at it for over a year now.

Purchased for 1.61 in May 2017,the new ask is 1.59.

These guys were in a rush to make a profit and instead they face planted…

M44BC

Now asking 1.59

2803 Trillium Place, North Vancouver paid 1.61 May 2017

Oct 4:$1,759,000
Dec 29: $1,698,000
Change: – 61000.00 -3%

https://www.zolo.ca/north-vancouver-real-estate/2803-trillium-place

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

#57 FOUR FINGERS WATSON on 10.10.18 at 8:00 pm

Our biggest export – oil – now sells at an unprecedented discount to world prices. One reason is our inability to ship it efficiently. Now there’s talk the $4.5 billion unbuilt pipeline Trudeau bought with public money – bailing out an American company only too happy to dump it – will be gifted to aboriginal groups.

Mr. Market is not impressed.
…………………………..

I am not impressed either. One more Turdo Libtard government like this one could put us in a hole so deep we could never dig our way back out.

#58 Ian on 10.10.18 at 8:02 pm

The US is not narrowing the wealth gap by picking up the lowly. The lowly there are doing worse than ever. They have higher inequality than before the Great Depression and that was one of the main drivers of collapse. That’s why any visitor there knows that the low unemployment headlines are nonsense. The main unemployment figure used doesn’t come even close to capturing the true picture.

Secondly, money is not flowing from stocks to bonds. Both are getting murdered. QQQ is down 4.4% today only, and SPY down 3.18% both on triple volume.

Meanwhile, US bond yields have been skyrocketing since last Wednesday. Shouldn’t they be falling on a day like today? Not a chance. And that’s because…

Bonds are NOT a safe haven.

Beware stock / bond balancers. This is where the fatal logical flaw of that model gets exposed.

#59 AB Boxster on 10.10.18 at 8:03 pm

#27 Drew on 10.10.18 at 6:19 pm
Looking to research ETF’s, is there a site that people recommend? Looking to buy some ETF’s that have conservative (5-7%) returns and/or dividends

———————————
Um 5-7% is conservative?

Not this year.
Balanced portfolios will be lucky to make 2% given the year so far.
Pretty much everything is down except us equities and they just took a massive dump today.

Research? Maybe morningstar.

#60 Figure it Out on 10.10.18 at 8:05 pm

Garth, the FP got trolled — and by reprinting it, so did you.

No real prof, not even a lowly adjunct, and not even one from UWO, would take a quarterly return differential between two assets, raise it to the fourth power (to “annualize” it), cite the “annualized” figure, and then sign himself the “Benjamin Graham Professor of Value Investing.” It gave me a chuckle when I read it though. At least, I ASSUME it was a prank. God help us if he actually wrote that, and holds that title.

#61 Sam the Sham on 10.10.18 at 8:08 pm

“Now there’s talk the $4.5 billion unbuilt pipeline Trudeau bought with public money – bailing out an American company only too happy to dump it – will be gifted to aboriginal groups”
————————————————-
I wonder if this gift will do it. Will the Aboriginals finally say: “Thanks for all the billions in hand outs, we can take it from here, we’re square.” No more sniveling and whining about being victims and demanding more pay outs. I’m optimistic, but I’m not holding my breath!

#62 Gravy Train on 10.10.18 at 8:08 pm

#35 Nonplused on 10.10.18 at 6:48 pm
“[…] [O]nce the oil and gas run out we’re going to need to burn wood again to heat our homes.” Why are solar panels not an option?

“[…] wind and solar don’t scale and are inconsistent […].” Please elaborate.

#63 Linda on 10.10.18 at 8:11 pm

While idealistic is not necessarily practical, I do have to give credit to those who are actually implementing changes. Case in point: the much maligned $15 per hour minimum wage. To put that into perspective, my husband commented that his wage in 1983 – some 35 years ago – was $13.85 per hour. So, 35 years – YEARS! – later, the minimum wage is a mighty $1.15 more than that gross hourly wage before tax. Even the most conservative of folks would have to admit that inflation over the past 35 years would have bumped up that 1983 hourly rate far in excess of $15 per hour.

The main issue I have with the outrage over that $15 minimum is that even during ‘the good times’ – & there have been good times over the past 35 years – the minimum wage continued to be kept as low as possible. Garth correctly points out that corporations are not meant to be charities. That having been said, if we want a balanced society we should not permit making profits to trump all other considerations. If I have contracted my irreplaceable time to an employer, my role is to ensure I perform my work to the best of my ability during working hours. In return, I expect to be able to earn enough to ensure I have a decent standard of living. It doesn’t benefit anyone if people are unable to take care of themselves without relying on social assistance.

#64 KLNR on 10.10.18 at 8:26 pm

@#34 MF on 10.10.18 at 6:40 pm
Yawn.

Much needed and expected pullback.

And expect another T2 government. Thank Bernier.

MF
_____________

^truth^

even without madmax

#65 Spectacle on 10.10.18 at 8:33 pm

UN Agenda 21 hiding behind Agenda 2030 – Canada Free Press
https://canadafreepress.com › article › u….

Realy worthy of a read, in relation to the commentary quoted from tonight’s blod::
” They are big supporters of income redistribution as opposed to making the pie bigger for everyone. They want to regulate the economy and nudge corporations to submit to the Liberal government’s social views and economic philosophy. Their policies take away economic entrepreneurship and ….”

Agenda21 is now hiding behind Agenda-30. The U.S. is growing, doing well so far. While Canada is heading for the Stone Age ! Thank You Agenda 30. Now this explains a great amount of the truth of the implosion or destruction happening to Canada!

Ugh.

#66 The Real Mark on 10.10.18 at 8:34 pm

“Bonds are NOT a safe haven.
Beware stock / bond balancers. This is where the fatal logical flaw of that model gets exposed.”

So is this where the precious metals and their miners finally get to shine? Historically they’ve done very well when the stock market has fallen significantly.

Of course almost nobody owns any. Owing to the extreme dogma that has developed against them in the portfolios of “western” portfolio managers.

PMs have broken the hearts and backs of too many investors. – Garth

#67 For those about to flop... on 10.10.18 at 8:40 pm

Race to 900k

The race to 900k for Vancouver detached’s is definitely on.

Already had some go in the early 900’s and one at 875k

These guys had this one listed sub one million at 998k already,and the market said get that garbage outta here.

They’ve come back at 958k and the assessment comes in at 1.16

There isn’t much support at the bottom of the market,houses a few rungs up at 1.5/1.6 that have been well maintained on quiter streets seem to be holding their value better.

Dilapidated properties are no draw for the glass and granite groupies…

M44BC

Was asking 998,800

Now asking
2018-10-09 : $958,800

https://www.zolo.ca/vancouver-real-estate/720-woodland-drive

#68 akashic record on 10.10.18 at 8:49 pm

#60 Sam the Sham on 10.10.18 at 8:08 pm

“Now there’s talk the $4.5 billion unbuilt pipeline Trudeau bought with public money – bailing out an American company only too happy to dump it – will be gifted to aboriginal groups”
————————————————-
I wonder if this gift will do it. Will the Aboriginals finally say: “Thanks for all the billions in hand outs, we can take it from here, we’re square.” No more sniveling and whining about being victims and demanding more pay outs. I’m optimistic, but I’m not holding my breath!

Alternatively you can evacuate their land, take all your stuff with you, all the way back where you or your ancestors came from.

I doubt aboriginals would have much problem taking it from there and you would also be square: free of listening to whining and free of making pay outs.

#69 3s on 10.10.18 at 8:53 pm

I have noticed that you compress the scale on your graph from 2017 onward making the rise in the stockmarket look exponential. I cant say that this is in line with the lecture in credibility you gave only a few entries back…..poor form mate

Not my chart. The source is clearly evident. – Garth

#70 Dave on 10.10.18 at 8:55 pm

Let me first say that I am not a fear monger…

I recently heard some interesting analysis about what’s currently happening with China/USA relations. Essentially the USA is in the first stage of a cold war with China. Although there is virtually zero chance of an actual military war… the impact of the escalation between the 2 super powers will be felt everywhere.

The US Federal reserve and China have been the 2 largest buyers of US treasury bills the last decade. The Fed has tapered and is disappearing from the buy-side and all indications are that China will also reduce it’s purchases as a form of retaliation to Trumps tariffs. Bond yields are going much higher.

This is going to end the bull market. It really is…

Most people should read this comment 2x

#71 roly rutin on 10.10.18 at 9:10 pm

Topping the list is interest rates. As explained here earlier, the benchmark US Treasury swelled to more than 3.25%,”

What are the best ETF’s to take advantage of these increased rates?

#72 Smoking Man on 10.10.18 at 9:19 pm

Who all remembers my Batman and Camel Toe lessons.

Look at the chart.

#73 For those about to flop... on 10.10.18 at 9:19 pm

Pink Pumpkins being carved in Surrey

Featured these guys once before when the lowered the asking from 1.59 to 1.46

After Arnold Schwarzeneggering the listing during the summer and having time to think about things they came back all shiny and new at 1.41

Which is all well and great for a house built when I was starting high school, but not so good when you fork out 1.49 at the detached peak of March 2016

They were originally chasing 1.68 and now they are chasing spirits of buyers past…

M44BC

Now asking 1.41

13052 19a Avenue, Surrey Paid 1.49 ass.1.41

Feb 14:$1,598,000
Jul 27: $1,460,000
Change: – 138000.00 -9%

https://www.zolo.ca/surrey-real-estate/13052-19a-avenue

#74 FOUR FINGERS WATSON on 10.10.18 at 9:21 pm

#67 akashic record on 10.10.18 at 8:49 pm

Alternatively you can evacuate their land, take all your stuff with you, all the way back where you or your ancestors came from.
I doubt aboriginals would have much problem taking it from there and you would also be square: free of listening to whining and free of making pay outs.
…………………………………

Another alternative would be for them to return to the wilderness and live like they did in 1491.Lots of wilderness out there. They could be hunter / gatherers again with no modern conveniences. You could tag along and show them how it is done. If we don’t hear from you by springtime we will say a few prayers and continue on living in the 21st century.

#75 Stan Brook's Psychiatrist on 10.10.18 at 9:33 pm

#37 SoggyShorts on 10.10.18 at 6:54 pm
#157 Stan Brooks on 10.09.18 at 3:01 pm

“Wow. You really need to learn how averages and anecdotal evidence works.Then there is the other link you posted where some retard pegs inflation at 7% based on “the burrito index”!?!?
One single Taco truck in one city is a clear indicator of the average rate of inflation on every product across an entire nation?You might be the most gullible person on the internet.”

Stanley is doing his best, confined to the mental ward as he is. We took him out of his straight jacket on Thanksgiving and let him get a burrito from a truck parked outside the asylum hence his burrito index reference. Go easy on poor Stanley and wish him the best on his upcoming electric shock treatments…

#76 Trojan House on 10.10.18 at 9:36 pm

I learned today that Sweden does not have a minimum wage requirement. Hmmm, you learn something new every day!

#77 crowdedelevatorfartz on 10.10.18 at 9:39 pm

@#38 Habitt
“What will tomorrow bring?”
+++++

Sunrise?

#78 NoName on 10.10.18 at 9:39 pm

#71 Smoking Man on 10.10.18 at 9:19 pm
Who all remembers my Batman and Camel Toe lessons.

Look at the chart.

Tell that to your protege, he seems to think that this is something else.

#79 akashic record on 10.10.18 at 9:40 pm

73 FOUR FINGERS WATSON on 10.10.18 at 9:21 pm

#67 akashic record on 10.10.18 at 8:49 pm

Alternatively you can evacuate their land, take all your stuff with you, all the way back where you or your ancestors came from.
I doubt aboriginals would have much problem taking it from there and you would also be square: free of listening to whining and free of making pay outs.
…………………………………

Another alternative would be for them to return to the wilderness and live like they did in 1491.Lots of wilderness out there. They could be hunter / gatherers again with no modern conveniences. You could tag along and show them how it is done. If we don’t hear from you by springtime we will say a few prayers and continue on living in the 21st century.

Aboriginals would be just fine, as they were just fine back then. I am not sure about you. You need more their land than they need you on their land.

#80 MPAC on 10.10.18 at 9:40 pm

#67 akashic record

Well said my friend!!!

——————————————————————–
I wonder if this gift will do it. Will the Aboriginals finally say: “Thanks for all the billions in hand outs, we can take it from here, we’re square.” No more sniveling and whining about being victims and demanding more pay outs. I’m optimistic, but I’m not holding my breath!

Alternatively you can evacuate their land, take all your stuff with you, all the way back where you or your ancestors came from.

I doubt aboriginals would have much problem taking it from there and you would also be square: free of listening to whining and free of making pay outs.

#81 Shawn Allen on 10.10.18 at 9:41 pm

Misleading? Chart by Investing.com

68 3s on 10.10.18 at 8:53 pm said:

I have noticed that you compress the scale on your graph from 2017 onward making the rise in the stockmarket look exponential.

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

Okay, not Garth’s chart but great point.

The rise in the S&P 500 since 2013 is undeniably spectacular.

And sort of bad that they start it at 11,000 rather than zero, but that’s not egregious.

But yeah that chart looked beyond spectacular.

To compress that scale after 2017 is just weird. Not sure if that was an intentional exaggeration or just a clumsy error. Certainly a red flag on the credibility of investing.com But from past experience I think investing.com is maybe not a bad outfit so maybe just an error or an over zealous employee?

#82 crowdedelevatorfartz on 10.10.18 at 9:41 pm

@Trumpocalypse2018
“global environmental disaster is now as close as the next decade.
Billions will soon be in peril.
PREPARE….”
+++++

Hmmmm, another “decade”?
Trumpocalypse2028?

#83 crowdedelevatorfartz on 10.10.18 at 9:48 pm

@#66…6 The Flop master !
“Race to 900k”
++++

Well well well.
How “deep” will this rout go?
800k?
700k?
500k?
I ……..cant……. wait.

#84 Parker on 10.10.18 at 9:51 pm

Love it when things go sale! Especially Mr Market… It’s shopping time!

#85 the Jaguar on 10.10.18 at 9:52 pm

Meanwhile, back at the Ranch………
Jeepers. Caught a glimpse of this little gem, released yesterday on the website of the Walk Softly & Carry a Big Stick Folks..(think stress test), and felt a little shiver go down my spine. ‘ ‘..ensure this sort of equity lending ceases…’.’ Read the OSFI Pillar- October 2018.
” Ceases”?? Mercy. Was that a shot over the bow, or the plaintive cries of some peeps about to be being taken out behind the woodshed?
The distraction of those who aspire to the Supreme Court Justices of the mightiest nation in the world are such a crashing bore. The real drama often lies in the boring but swaggering press releases of the truly powerful. The anointed ones.
Enough said.
I don’t like dogs being through up in the air for the amusement of those who like to take arresting photographs. A cat photo seems more appropriate here.

“although reduced, there continues to be evidence of
mortgage approvals that over rely on the equity in the
property (at the expense of assessing the borrower’s
ability to repay the loan). OSFI will be taking steps to
ensure this sort of equity lending ceases.”

#86 FOUR FINGERS WATSON on 10.10.18 at 10:06 pm

#78 akashic record on 10.10.18 at 9:40 pm
73 FOUR FINGERS WATSON on 10.10.18 at 9:21 pm

#67 akashic record on 10.10.18 at 8:49 pm

Alternatively you can evacuate their land, take all your stuff with you, all the way back where you or your ancestors came from.
I doubt aboriginals would have much problem taking it from there and you would also be square: free of listening to whining and free of making pay outs.
…………………………………

Another alternative would be for them to return to the wilderness and live like they did in 1491.Lots of wilderness out there. They could be hunter / gatherers again with no modern conveniences. You could tag along and show them how it is done. If we don’t hear from you by springtime we will say a few prayers and continue on living in the 21st century.

Aboriginals would be just fine, as they were just fine back then. I am not sure about you. You need more their land than they need you on their land.
………………………………….

And you need to get in line with Stan for those shock treatments…..By your method of reasoning the ancestors of the first human to walk upright in Africa would own the entire planet. They are gonna be really pissed off when they find out about this.

#87 Terry on 10.10.18 at 10:09 pm

WOW! Nice market drops today! Alot of my investments have been dropping in value for a couple of months now. These capitulation pullbacks from time to time are what I have been waiting for to add more to my positions. I hope we get some more drops! Everything is on SALE! I don’t smell a market meltdown …… I smell money!

Ka Ching !!!! I love the smell of capital gains and profits in the morning!

#88 WUL on 10.10.18 at 10:09 pm

Garth,

Please send my email addy to Belinda Stronach. She needs legal counsel in the lawsuit against her commenced by her Daddy, Frankie.

Tell her I think the suit is without merit and can be “resisted vigorously”. At a reduced hourly rate.

Thx.

#89 For those about to flop... on 10.10.18 at 10:17 pm

#82 crowdedelevatorfartz on 10.10.18 at 9:48 pm
@#66…6 The Flop master !
“Race to 900k”
++++

Well well well.
How “deep” will this rout go?
800k?
700k?
500k?
I ……..cant……. wait.

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

Hey Crowdie,I guess time will tell.

From a timeline point of view it’s seems 2015 purchases are more and more in danger, I have the odd one land on my desk,but nothing like Spring 2016 onwards.

From a documentation point of view I am starting to use b.c assessment less and less as occasionally they have already wiped sales from that time period.

The bulk of the Spring 2016 purchases will no longer be up by March 2019 and Zealty with my realtor buddy Adam Major only goes back four years.

If you want to go way back you have to use REW Insights.

I have been looking at current day cases and seen red ink spilt on the same house in the 80’s and 90’s occasionally.

To the people that pulled the right moves at the right times the gains have been stupendous.

To the half asleep crowd they have been serial stranglers…

M44BC

#90 Ray Skunk on 10.10.18 at 10:24 pm

That $4.5bn will be handed to Aboriginal “groups”, eh?

https://nationalpost.com/news/politics/alberta-chief-and-council-award-themselves-nearly-700000-in-bonuses-from-band-owned-company

#91 Shawn on 10.10.18 at 10:25 pm

The Fed certainly does care. It also cares about the implications of the majority of emerging and international markets deep in bear market territory and what this may be signalling about those economies.

The Fed isn’t going to tip the US bond market into a full on crash while most of Europe is still in negative rate territory.

You will see them slow down and/or stop. You heard it here – just like the US equity contrarian trade.

#92 Yuus bin Haad on 10.10.18 at 10:27 pm

Actually, “In a storm, …” might be a bad analogy here – in Hurricane Michael, those that sheltered in place are probably wishing they had bailed.

It’s no hurricane. – Garth

#93 GOLDENBOY on 10.10.18 at 10:34 pm

Amazon raising wages but reducing benefits

https://www.cbsnews.com/news/amazon-to-cut-bonuses-for-warehouse-workers-and-stock-benefits-as-it-raises-minimum-wage-to-15/

#94 Ace Goodheart on 10.10.18 at 10:37 pm

“Compulsive indulgence
We’re making love out of focus
You’ll always be my white rabbit
My favorite bad habit”

https://www.youtube.com/watch?v=VfyYXW_0hA4

Catchy tune. A song about making love while high on heroin. People sing it walking down the street. A 10 year old was humming it in the elevator.

Millennials on their lot in life:

“As you rightly pointed out, one generation is a response to the previous generation. We build upon each other. Similar to how those who came back from the war built businesses and thrived, boomers grew up on a time of economic and industrial prosperity, built on the labour of their parents and the previous generation. They grew up in an era and time when going to university was a BIG DEAL. A bachelors degree meant everything. It opened doors, guaranteed jobs etc. And when boomers went on to the job market, they held jobs for 20-30 years, back when outsourcing was not common place and you could earn a good wage.

The boomers then had kids, the world changed, and what worked for THEM does NOT work for us. Getting a university/college degree is the minimum these days. It doesn’t guarantee you anything. Keeping a job isn’t guaranteed. Earning a good, stable wage isn’t guaranteed when you are competing against cheap labour in China and India. Companies have evolved to become ever more efficient and effective in what they do, and part of that realization has meant moving jobs away from developed countries because our university educated youngsters, and aging middle class simply can’t compete with people living in India who will work 12-14 hours non-stop, no problem, and who are willing to do it for a fraction of the cost.

These are not complaints by only Millennials. These are deep-rooted complaints that resulted in Brexit and the discontent in middle-America. It is not only Millennials suffering. We are not the only ones being left behind.”

This is the current collective subconscious shared by the generation taking over from us.

They are suffering. Their jobs are being taken by foreigners. They need things like Brexit and Donald Trump to fight for them and take back what is rightfully theirs.

Like our famous earworm song, that means stuff that no one singing it realises, there is a growing collective subconscious that is slowly collapsing our thought patterns as we knew them. What is emerging can only be described as the unknown beast of unrequited desire.

If we all go around thinking we’re hard done by, and we target groups as the cause, then we head back into the sort of thinking that got us into world war 2.

People need to be aware of what the younger generation is focusing on. It is going to effect politics, the world order, interactions between countries, pretty much everything. And it is like an earworm. You sing it and believe in it, without even knowing what it means.

#95 DON on 10.10.18 at 10:45 pm

The following is from Steve’s Twitter (Steve Saretsky @SteveSaretsky Oct 9)

“Thus far, prices have not fallen in any of the 375 largest American cities tracked by the PMI Group. But many are showing a sharp deceleration in price increases, among them Las Vegas, San Diego, Elmira, N.Y., and Lebanon, Pa.” – New York Times, May 2006.
3 replies 0 retweets 19 likes

We’re just lucky ‘it is different this time’ (my realtor told me so) and history has been hoodwinked and we have evolved in terms of human nature. Quite simple really!

or a big Yikes!

#96 Al on 10.10.18 at 11:00 pm

” In other words, Americans are solving the wealth gap by lifting up the lowly, ..”

Which are these Americans that your speak of? Can’t be the ones directly south of us.

#97 commoncents on 10.10.18 at 11:06 pm

Hi, long time follower… never write. I would love to hear how you would invest 200k. I am helping a NPO and we are about to designate future operating budgets to Term GIC’s. There is no interest to make a profit, but idle money is wasted. Our yr end is Dec 31 and our next BOD is Oct 23. I talked to the bank and the juvenille behind the phone (the investment banker) who previously offered us 2.76 is now saying that it may grow approx. .10 to .25 in a month or so. No deadline for investing, so I wonder if its worth waiting until late Nov to sign. Any thoughts ?

#98 DON on 10.10.18 at 11:16 pm

#10 Chris on 10.10.18 at 5:15 pm
” Canada has one of the lowest unemployment rates in history. Housing has done impressively compared to the US. Economy is doing well in Canada. Canada’s economic performance has been much better than the US. Thank the liberals and Trudeau for doing a much better job than Harper. We did not waste billions of dollars on unnecessary wars. ”

Previous advertisement was paid for by the Liberal Party of Canada.

#99 NoName on 10.10.18 at 11:28 pm

Interesting read

related and unrelated to article, few days ago i was reading how some hi end retailers are burning products just to maintain scarcity and price due to decline in sales. ( http://fortune.com/2018/07/19/burberry-burns-millions/ )

https://www.bloomberg.com/news/articles/2018-10-04/japan-retailers-take-hit-after-china-report-on-customs-checks

#100 neo on 10.10.18 at 11:30 pm

Whadda ya know Garth…Something did break after all. The 10 year well north of 3% won’t work short term without a market correction of at least 10%. Just looking at your chart we see a double top on the S&P. It should bottom out short term at around 2,700 but could overshoot for a number of reasons get to 2,600. Then things get very interesting.

#101 DON on 10.10.18 at 11:32 pm

#7 Lead Paint on 10.10.18 at 5:09 pm

#123 Earl of Southhampton on 10.10.18 at 8:24 am
#101 Smoking Man

“Life is competition. So true in the animal kingdom. And the human race.”

Cooperation has led to more advances than jungle competition. Your body consists of 50 trillion cells that are cooperating to keep even your alcohol riddled old corpse going…. Your assumption that everyone who disagrees with your drunken and mindless comments is a parasite who lives off the backs of others is pure garbage like everything you spew out on this blog. You are a total mindless fool that is tolerated by the sage that runs this blog because you provide comic relief. Go back to the bar and drink yourself into oblivion you loser.

————————————————————————

That’s a beautiful takedown, I am an admirer of your work.

And for those who claim that humans cannot impact climate or weather, do you think setting off all the planet’s nukes would have an impact? Then admit you’re wrong about your position.
********

Does this make you feel like a big boy? You and the original poster that is.

and

why such extremes? hopefully before we have the chance to explode all the nukes maybe a solar fare will hit crashing our grid, slowly taking out all the nuke facilities and the resulting cascading chain or events

Or…better yet how about a big rock hits earth and knocks us silly.

Climate is changing and there’s no doubt.
We are currently shit kicking the earth in terms of pollution in our environment – that is increasingly clear.

Big Pipeline explosion outside of Prince George that would have lit us the surrounding forest 8-6 weeks ago.

Baby steps, let’s stop polluting. I can’t believe the human race can’t solve this. Can someone tell me what happens to my carbon tax money?

#102 Katie Champell on 10.10.18 at 11:39 pm

Garth, you heard it here first. The Dow Jones next year will be around 17,000 to 19,000, S&P 500 will be around 2,200 to 2,300 and Nasdaq will be around 6,000 to 6,500.

The TSX will be around 13,000 to 13,750 at most. Interest rates will be lower not higher, 10 year U.S. at 2.6% to 2.7% at most.

Don’t be surprised this will all happen in 2019 first quarter maybe by April-May 2019. The party is over guys, sorry!

I know you will comment with a reactionary, defensive way but hey it is just my opinion but when it comes true it will be fact.

#103 Stan Brooks on 10.10.18 at 11:42 pm

#37 SoggyShorts on 10.10.18 at 6:54 pm

Exactly. Inflation is individual experience.
If you consume toilet paper paper a lot (we can understand why) then the move in it’s prices will affect you, sure.

The links that I posted show experience of the majority of renters in GTA according to official sources.It it statistical info, not made up numbers.
And the guy with the Burrito index is Charles Hugh Smith, it would behoove you to read some of his articles. I offered Jimmy the Greek index. You don’t like that either.

#104 Stan Brooks on 10.10.18 at 11:45 pm

#74 Stan Brook’s Psychiatrist on 10.10.18 at 9:33 pm

Stuffed Turkey with wide open behind. That’s what the future is for real estate agents. Enjoy the diet.

Cheers,

#105 Drew on 10.11.18 at 12:03 am

Thanks Swanpardis, Longtimelurker and AB Boxster!

#106 econsensus on 10.11.18 at 12:09 am

68 3s on 10.10.18 at 8:53 pm
#80 Shawn Allen on 10.10.18 at 9:41 pm

Look at the chart time scale again..
The investing.com Chart is not compressed from 2017 onward…

#107 Stan Brooks on 10.11.18 at 12:12 am

#85 FOUR FINGERS WATSON on 10.10.18 at 10:06 pm

And you need to get in line with Stan for those shock treatments…..By your method of reasoning the ancestors of the first human to walk upright in Africa would own the entire planet. They are gonna be really pissed off when they find out about this.

Oh, but we do.

Funny how ignorant this audience is. But confident.
Scary.

https://science.howstuffworks.com/life/evolution/female-ancestor.htm

Even more impressive, the geneticists concluded that every person on Earth right now can trace his or her lineage back to a single common female ancestor who lived around 200,000 years ago. Because one entire branch of human lineage is of African origin and the other contains African lineage as well, the study’s authors concluded Africa is the place where this woman lived. The scientists named this common female ancestor Mitochondrial Eve.

#108 Stan Brooks on 10.11.18 at 12:22 am

#30 Jungle on 10.10.18 at 6:23 pm
Stan weren’t your saying recently no nafta deal will be done, loonie will crater and inflation goes up 20% ? Lol

I’ll keep my prediction that Gta re doesn’t crash.

———————————-

Those were the indications. T2 caved as he got scared which is actually good news as we got some deal, not good but some.

But all the loonie/(there were no TSX gains)/ ‘gains’ due to signing of new nafta already evaporated, despite of oil rising.

You will get your inflation, just the trigger will be different.

It seems the real estate agents have a day off work today. Not much work I guess.

GTA will tank at least by 50 %. Maybe 70. In depreciating loonie.

First they ignore you, then they laugh at you, then they fight you, then you win. Mahatma Gandhi

We are at stage 3.

#109 infrared dude on 10.11.18 at 12:37 am

#35 Nonplused

We use about 1.9 million barrels/day in Canada, re NRC data.
That’s 693.5 m barrels/year, or 92 million metric tons of oil at 7.5 barrels/metric ton.
By comparison the 2017 BC wildfire season produced 190 million tons of black carbon as reported by CBC, and 2018 season was higher in acreage.
A percentage of fires are lightning strikes, and a % of forests burned are thick with underbrush and deadwood, a process that has continued since the miocene era at least, per soil samples in the prairies. In BC, lightning strikes in remote areas are often left to burn as part of a forest process. Putting them out can cause problems later. We actually have an increase in forestation.
Aersol maps available from NASA show emissions are greatest from West Coast NA, Brazil, Central and Southern Africa and Eastern Asia due to agricultural burning and forest fires. Patterns show up in data depicting 00s of years. European fires in 2018 are showing significantly in imagery this year.
Greenland ice core charts show mostly a warming trend over last 50k years with some major swings due to solar max/mins, tectonic. However last 2000 years show declining temp with a few spikes. Most recent 200 years show spike in temp, but not a trend in comparison with major peaks and valleys in the 50k year charts.
fyi

#110 Smoking Man on 10.11.18 at 12:39 am

You pathetic humans.
You can’t see the obvious. Every electron of every atom is the same.

No worries, aliens are coming to save your arses. I put in a good word for you. In spite of the haters and lunatics.

Dr Smoking Man
Planet Nictonite.
PhD Herdonomics

#111 Myra Andrews on 10.11.18 at 12:53 am

Stats for Greater Vancouver from realtor Paul Boenisch

Oct 10 New 261 Sold 62 TI:13,566
Oct 9 New 376 Sold 128 TI:13,472

Oct 5 New 193 Sold 88 TI:13,425
Oct 3-4 New 421 Sold 197 TI:13,400
Oct 2 New 251 Sold 115 TI:13,360
Oct 1 New 278 Sold 109 TI:13,361

Sept 28 New 153 Sold 77 TI:13,766
Sept 27 New 184 Sold 81 TI:13,755
Sept 26 New 236 Sold 78 TI:13,724
Sept 25 New 270 Sold 127 TI:13,649
Sept 24 New 288 Sold 142 TI:13,586

Sept 21 New 171 Sold 63 TI:13,574
Sept 20 New 218 Sold 81 TI:13,538
Sept 19 New 227 Sold 99 TI:13,472
Sept 18 New 266 Sold 99 TI:13,418
Sept 17 New 360 Sold 93 TI:13,339

Sept 14 New 143 Sold 85 TI:13,239
Sept 13 New 225 Sold 58 TI:13,240
Sept 12 New 268 Sold 90 TI:13,147
Sept 11 New 325 Sold 77 TI:13,057
Sept 10 New 487 Sold 87 TI:12,916

Sept 7 New 197 Sold 87 TI:12,681
Sept 5-6 New 609 Sold 195 TI: 12,653
Sept 4 New 498 Sold 53 TI:12,439

Inventory at the end of August was 12,510

#112 Buy? Curious? on 10.11.18 at 2:40 am

I hate to say it but Canadians are followers. You can see it with the rise of “patriotic” Canadians (angry white men) similar to those in the US. You will see strategies employed by my main man, Donny J Trump, successfully work up here because people just want to be heard. Good luck, Canadians.

#113 OP M Desvolkes on 10.11.18 at 2:51 am

Garth,

Is the Canuckistan government trying to dumb the general public down with the latest opiate of the masses.
First, they hooked people on booze. Then they got them hooked on real estate. Then synthetic opiates. Now ganja.
6 months of winter aside. Is it really that bad to live there that the public’s attention needs to be held captive to some greater addictive force?
Kind of like what the Brits did with opium to the Chinese. Is this a case of déjà vu all over again.

#114 Nonplused on 10.11.18 at 3:15 am

#61 Gravy Train

“please elaborate”.

Happy too. Solar energy is not dense. It takes a whole roof of solar panels just to run the lights and the fridge, and all the folks that say they are “off grid” are still using natural gas to heat their homes and cook their food (or wood). The problem with solar panels is that they aren’t very efficient and they are very expensive, and they don’t work at night or when it’s cloudy.

Maybe solar efficiency will go up dramatically, maybe battery storage will go up dramatically, but with current technology they are very expensive and are a square peg in a round hole. A very expensive square peg. All of the wind farms and solar installations that have been made account for about 2% of our current energy supply yet you already see them everywhere. Imagine what has to be done to bring that to 100% of peak day capacity. And the amount of lithium we would need! (For batteries.) Holy heck it’s not known to exist in anywhere near the quantities required.

#115 When Will They Raise Rates? on 10.11.18 at 5:09 am

Double top reversal on the DJIA:

https://i.imgur.com/2XGyWxJ.jpg

This is it folks. Hope everyone is well positioned. :)

#116 When Will They Raise Rates? on 10.11.18 at 5:25 am

#70 roly rutin on 10.10.18 at 9:10 pm

Topping the list is interest rates. As explained here earlier, the benchmark US Treasury swelled to more than 3.25%,”

What are the best ETF’s to take advantage of these increased rates?
———————-

GDX
GDXJ
NUGT
JNUG

#117 John Kenneth Galbraith on 10.11.18 at 5:32 am

#62 Linda

Good comments Linda and they would have been shared by the late great Canadian economist John Kenneth Galbraith. He called minimum wage the poor person’s equivalent to a union since no private employer (with few exceptions like Amazon) would voluntarily create it. The canard that the classical economists have always spun about minimum wage is that it actually kills jobs because employers will reduce hours, employees to maintain a minimum wage. What they fail to realize is that a minimum wage gives the recipient more spending power individually and as an aggregate so that the net effect is more demand in society, a more vibrant economy, which translates into more jobs not less. Premier Ford is undoing the minimum wage increase on the poorest and most vulnerable in society while backing the rich dairy farmers and their wonderful supply management system that had made them into multimillionaires.

#118 Dolce Vita on 10.11.18 at 5:41 am

#94 DON

Good comment indeed.

San Diego a “canary” indicator of future US RE prices. Recall reading about that in mid-80s article in the US and much later newspaper reports that San Diego RE prices dropping (while rest of nation booming).

Latter about 1.5 years before the Great Recession. Recall a chill down my spine back when I read that.

Big yikes, indeed.

#119 FOUR FINGERS WATSON on 10.11.18 at 6:07 am

#106 Stan Brooks on 10.11.18 at 12:12 am
#85 FOUR FINGERS WATSON on 10.10.18 at 10:06 pm

And you need to get in line with Stan for those shock treatments…..By your method of reasoning the ancestors of the first human to walk upright in Africa would own the entire planet. They are gonna be really pissed off when they find out about this.

Oh, but we do.

Funny how ignorant this audience is. But confident.
Scary.

https://science.howstuffworks.com/life/evolution/female-ancestor.htm

Even more impressive, the geneticists concluded that every person on Earth right now can trace his or her lineage back to a single common female ancestor who lived around 200,000 years ago. Because one entire branch of human lineage is of African origin and the other contains African lineage as well, the study’s authors concluded Africa is the place where this woman lived. The scientists named this common female ancestor Mitochondrial Eve.
……………………………

We knew that. And Africa was part of the super continent called Pangea, which then broke up into smaller continents.And we all have common ancestors. So tell us Stan, does that mean that aboriginals own Canada and the rest of us have no right to be there ?

#120 Howard on 10.11.18 at 6:08 am

What on earth is wrong with rezoning neighbourhoods for higher density housing?

How else do you expect cities to accommodate the massive immigration?

People paid a premium for homes in hoods of single-family dwellings. To rezone and change the nature of those streets, stuffing more families into the same space, is an unfair and punitive action against homeowners. Accommodation may be a human right. Having a house is not. This is a bad action. – Garth

#121 crowdedelevatorfartz on 10.11.18 at 6:21 am

@#110 Myra Andrews

“Oct 10 New 261 Sold 62 TI:13,566
Oct 9 New 376 Sold 128 TI:13,472
Oct 5 New 193 Sold 88 TI:13,425
Oct 3-4 New 421 Sold 197 TI:13,400
Oct 2 New 251 Sold 115 TI:13,360
Oct 1 New 278 Sold 109 TI:13,361
Sept 28 New 153 Sold 77 TI:13,766

++++++

“New listings” are jumping by double digits.
“Sold real” estate is dropping.
Yet “Total Inventory” is dropping?

And here I was hoping Total listings would reach that magical 14,000 before Nov 1st…….

People pulling their listings off the market until next Spring?
March could be a blood bath

#122 Karl on 10.11.18 at 6:31 am

The fall continues this morning. Though I do love a sale.

Garth, you recently wrote that rising rates do not affect equities, only earnings … and that earnings will continue to swell in the right direction.

It seems we are seeing the opposite right now in terms of rising rate relation to markets. Is it not actually “potential for growth” that drives markets and with rising rates that potential is cut down?

I did not state higher rates have no effect on stock markets. I stated the opposite, that higher yields on rick-free bonds draws capital from equities. Higher rates, however, are a byproduct of robust economic growth, which is positive for financial assets. – Garth

#123 Karl on 10.11.18 at 7:05 am

Toronto Condo rents up a whopping 7.6% per month in third quarter.

Source: https://www.bnnbloomberg.ca/toronto-condo-rents-jump-7-6-to-2-385-per-month-in-third-quarter-1.1150775

#124 Shawn Allen on 10.11.18 at 7:56 am

My Mistake on chart scale

105 econsensus on 10.11.18 at 12:09 am said:

68 3s on 10.10.18 at 8:53 pm
#80 Shawn Allen on 10.10.18 at 9:41 pm

Look at the chart time scale again..
The investing.com Chart is not compressed from 2017 onward…

*****************************
You are right thank you, it seems 3s thought that due to it going 2015 then 2017 then 2018 which is odd and when I looked I agreed.

Actually the visual distortion is caused by stretching the Y scale much longer than the X scale. Also by starting at 11,000 rather than zero.

The S&P 500 performance was amazing, but they chose to visually distort some more. I would not do that.

#125 Tater on 10.11.18 at 8:06 am

#15 Justme on 10.10.18 at 5:55 pm
Garth,

I am curious to hear your opinion on why bonds and stocks are moving down in tandem. I read that a few fund managers sold a lot of their positions in bond etfs.

I came across an article on Bloomberg talking about this sycronized movement downward: Everything That Goes Wrong When Stocks and Bonds Fall Together
https://www.bloomberg.com/news/articles/2018-10-10/two-decade-break-in-stock-bond-link-signals-pain-for-markets

Thanks,
—————————————————————
Not Garth, but historically the stock and bond correlation has been positive more often than negative. The last 20 years or so are a strong outlier and a transition back to a more “normal”relationship will cause some pretty intense gyrations.

What to do? Get long volatility, imho. Deep OTM, long term index puts with 3-5% of your portfolio could be a 20x over the next year to 18 months. Looking at you 140 strike SP500 puts in Jan 21.

#126 Another Deckchair on 10.11.18 at 8:07 am

#93 Ace Goodheart

Interesting little quote. Thanks.

What gets me is that:

1) The “Indians” are providing a service. Why can’t North Americans?

… and …

2) Ok, I’m like Smoking Man, but without the endearing habits. I’d like to retire sometime, but, I provide a service, and people want my time.

… and …

3) I get paid. I’m not sure how much I made last year; but it’s not important. We live (well) below our means and want for nothing. The salary is secondary to the enjoyment of doing something with my skill-set that others appreciate.

How did us boomers not pass on the “work well, live beneath your means, and enjoy life” mantra that many of us have?

My Clients enjoy that I provide a computing-related service, and provide updates and reports, and am probably over-enthusiastic on the descriptions in our f2f meetings. BUT, it provides a good feeling for the client – things are happening, software gets written, and thus, I’m allowing THE CLIENT to do THEIR job. Easy.

I don’t know how this all will play out, but, like you, I don’t have a good feeling about it all.

M59ON

#127 Howard on 10.11.18 at 8:23 am

People paid a premium for homes in hoods of single-family dwellings. To rezone and change the nature of those streets, stuffing more families into the same space, is an unfair and punitive action against homeowners. Accommodation may be a human right. Having a house is not. This is a bad action. – Garth

———————————————–

Sorry but this reads like run of the mill NIMBYism.

People buying detached homes in crowded cities with bursting populations have to be prepared for the possibility that smaller, more closely built, and/or attached homes may arrive in the neighbourhood at some point in the near future as municipalities cope with Canada’s extremely high immigration intake (highest per capita in the Western world save New Zealand).

Of course nobody has a right to a house but as long as immigration continues at its current clip and as long as 2/3 of those immigrants settle in just two of our cities, what do you expect provincial and municipal governments to do? House all the new families-of-4 in 500 sq ft 1-bdrm apartments?

If people want lots of space, they can move to Regina or Fredericton, same as your advice for Millennials that complain about TO/Van housing.

Zoning exists for a reason. When you grow up you will understand this better. (Actually Montreal, Ottawa or Halifax would be better choices.) – Garth

#128 crowdedelevatorfartz on 10.11.18 at 8:25 am

@#118 Four Fingerprints Watson

I think what Stan was trying to say is…
It would only be fair if we give the entire planet back to the single celled bacteria that all life on this planet originated from…..

#129 Earl of Southhampton on 10.11.18 at 8:27 am

#7 Lead Paint

“That’s a beautiful takedown, I am an admirer of your work.”

Thanks for the compliment. It’s really too easy to take down Smoking Man but fun nonetheless!

#130 MF on 10.11.18 at 8:29 am

#125 Another Deckchair on 10.11

“Work well and live below your means mantra that many of you have”?

Not sure if this is serious? I see my millennial friends living more like that then the boomers. Big mortgages are the exception, and most of the time are necessary (and have been a good move so far).

As for the correction…ignore the doomsayers. Us economy under trump is booming. Ignore.

MF

#131 crowdedelevatorfartz on 10.11.18 at 8:37 am

hmmmm
Tariffs, trade wars, housing bubbles popping, etcetera, etcetera, etcetera……

If the chinese economy sneezes….will the rest of the world economy catch the asian flu?

https://ca.reuters.com/article/technologyNews/idCAKCN1ML100-OCATC

#132 millmech on 10.11.18 at 9:37 am

#102
Party will just be starting, another great buying opportunity and borrowing at cheap rates to fund that opportunity also, can not wait.
It is funny though when equities go through a minor correction ie 3%(buying opportunity), the headlines use terms like “plunging” “catastrophic” etc. When real estate actually corrects(like it is doing and in some markets around 20%) not a word is mention of “plunging” values or “catastrophic” correction.
I know that in one market a family member has listed their home for sale and their list piece is 18%(plunge) below the next home on their street. The home that is now higher priced has had two price(plunges) drops of 5% so technically 30% off peak price.
Still no headlines of real estate decline.
Interesting though that now OFSI is looking at ceasing through new rules of using just home equity to qualify for a second mortgage Now “investors” will have to qualify for second mortgage not just on the down payment but also on their ability to actually make the monthly payments.
Also expect to see more rules on income verification coming down the pipe soon too.

#133 Howard on 10.11.18 at 9:38 am

Zoning exists for a reason. When you grow up you will understand this better. (Actually Montreal, Ottawa or Halifax would be better choices.) – Garth

——————————————

If I’m not mistaken, and some of the BC-based contributors can confirm or deny, Vancouver has some of the most restrictive zoning rules in North America. Large swaths even very close to downtown are zoned for low density, something that isn’t the case in almost any other city. It seems that BC politicians simply want to make this absurd situation a bit less absurd.

I imagine zoning originally had to do with keeping development sustainable and aligned with what city services could manage, but in times it’s become a political hot potato aggravated by NIMBYs. From my perspective, low density zoning seems to be a way for wealthy progressives to insulate themselves from the consequences of policies they advocate.

#134 Stan Brooks on 10.11.18 at 9:45 am

#119 FOUR FINGERS WATSON on 10.11.18 at 6:07 am

I actually fully agree with you on this topic.

#135 dharma bum on 10.11.18 at 9:50 am

Everybody needs to just relax and take it easy.

In 300 years, a few rebirths and subsequent lives from now, we will all look back on this and have a good laugh!

Wu Wei, baby. Everything’s going to work itself out.

The Universe is perfection. All is as it is supposed to be.

#136 Rob on 10.11.18 at 10:12 am

#62 Linda

Good comments Linda and they would have been shared by the late great Canadian economist John Kenneth Galbraith. He called minimum wage the poor person’s equivalent to a union since no private employer (with few exceptions like Amazon) would voluntarily create it. The canard that the classical economists have always spun about minimum wage is that it actually kills jobs because employers will reduce hours, employees to maintain a minimum wage. What they fail to realize is that a minimum wage gives the recipient more spending power individually and as an aggregate so that the net effect is more demand in society, a more vibrant economy, which translates into more jobs not less. Premier Ford is undoing the minimum wage increase on the poorest and most vulnerable in society while backing the rich dairy farmers and their wonderful supply management system that had made them into multimillionaires.

Another misguided socialist trying to rationalize and justify policy! O the life of a misdirected narcissist.

As an employer for decades I can unequivocally state that minimum wage increases reduce labor hours, destroy capital investment and only retard the growth of an economy.

Look at the Alberta economy for example and what left wing policies have done. There are a plethora of bankruptcies (to say nothing of higher divorce rates, suicides and elected leaders that have not a scintilla of common sense or business sense). The overall malaise in this province is much more than palatable.

When are we as Albertans and Canadian citizens going to realize that socialism is ruining our once great country?

Do not get drawn in by their altruistic narcissistic rhetoric. It is a rampant evil and actually hurts the people they are trying to help.

It matters not what you get paid per hour if there is few or no jobs. When there is no employment demand those that the socialists say they are helping actually get hurt the worst.

Here is a salient fact that socialists can not seem to grasp. Money goes to where it gets its greatest return. You can’t force investors to pay for your artificial boundaries and nonsensical notions.

They simply take their large investment (watch the big corporate dollars return to Alberta next year) capital to where the return is greater.

Who creates greater momentum for an economy and higher paying jobs a developer building a large complex or a teenage worker at Taco Bell now flush with $15 per hour that can now afford to buy two burritos instead of one?

That is just what I have witnessed. With a too high minimum wage in a socialist suppressed Alberta economy the developer has put the multi million dollar project on hold. No socialists its not my investment.

The lemings that get drawn into this nonsense realize only to late what they have done. How many citizens in Alberta now will admit they voted for the narcissists? Not many.

Watch how the pendulum swings dramatically to the right and ushers in a very vibrant economy in Alberta over the next decade then decide where the greatest economic impact is – more burritos or more large scale trickle down investment.

Socialists its not what you can extort but what you can and should be able to earn! It will be ok – get off the couch and put the pot down.

Here is a thought as the boom returns to Alberta employers may at times have to pay more than the minimum wage as a necessary function of a healthy economy. Another thought – they may actually not mind doing it when cash flow has been enhanced. Everyone is happy. Then we get the combined effort of more purchasing power for the employee and the developments etc. Prosperity.

To those of you sitting on the fence ideologically.

Socialism equates to suffering, impaired mediocrity (its actually encouraged) and a very stagnant drab sad society. Capitalism fosters prosperity, higher wages, more jobs and an illustrious affluent society run by A type personalities.

We should be teaching our children to be gregarious(the way we were raised years ago in Alberta) and hard working not to rationalize and justify extortion and laziness.

If socialism is not eradicated in Canada we are going to become second class global citizens. But the altruistic narcissistic misguided thoughts drive the misdirected do-gooders on. Beware the evil snake oil selling socialist.

No I am not a politician. Just an old retired senior that is hoping for better things for my children and grand children. I have the experience to know an evil when I see it.

#137 Doug in London on 10.11.18 at 10:19 am

All this fuss about a small drop in the markets is a tempest in a teapot. So, what should you do in the unlikely event a REAL correction occurs? Go on a buying spree, maybe Black Friday will come early this year. Yahooooo! Let the bargain hunting begin!

#138 Oakville Rocks! on 10.11.18 at 10:22 am

Sometimes the comments section actually contains decent discussions. The back & forth between Garth and Howard regarding Re-Zoning is interesting and important. Personally, I agree with Howard. Rezoning is coming. It has too in order to accommodate a growing population. The fact that it has been put off so long is why we have many of the problems we have.

My neighbourhood in North Oakville contains a good mix of condos (3 story building), towns, semis and single family homes. Taking Oakville as an example, the reluctance to allow rezoning in South Oakville pushes all the growth North. So all the traffic & density problems go North…

But based on land usage, North Oakville carries the higher tax burden. The higher density neighbourhoods end up subsidizing the lower density ones.

Also, watching Oakville, higher density is slowly coming to South Oakville anyway as some property developers are buying multiple lots to build higher density neighbourhoods like mine. And why not?

#139 KLNR on 10.11.18 at 10:35 am

@#136 Rob on 10.11.18 at 10:12 am

Nice diatribe. Couldn’t disagree with you more rob.
Canada is as great now – for the majority – as it has ever been in it’s history. The Trickle down effect is a myth.

#140 Fish on 10.11.18 at 10:37 am

Important announcement about the Canada Savings Bonds Program

https://www.csb.gc.ca/2017/03/important-announcement-about-canada-savings-bonds-program/

#141 John Kenneth Galbraith on 10.11.18 at 10:41 am

#136 Rob

“No I am not a politician. Just an old retired senior that is hoping for better things for my children and grand children. I have the experience to know an evil when I see it.”

Gramps, you don’t even understand the economic system you inhabit which is a mixed market economy. Canada was the first country to implement a Keynesian system right after the Bretton Woods conference in which Mr. Keynes outlined his economic ideas that solved the problems of the Great Depression. The FIRST COUNTRY….

Classical economics was given a mere decade to solve the problems of the Great Depression and it failed miserably. Canada has had a Keynesian system every since and guess what? No Great Depression since then.
When the 2008 financial crisis hit, good ol capitalists decided government intervention, ala Keynes was just what the doctor ordered to the tune of trillions of dollars. Bernanke knew that the failure of classical economics of the 30s would repeat if he and other central bankers did not adopt Keynesian style intervention.
By inference you feel Galbraith was a misguided socialist as well. The most prolific writer on economics in the 20th century, Harvard professor, adviser to the US government during the Great Depression, adviser to JFK, US Ambassador to India, etc., etc… I take it you on are on par with the esteemed Galbraith….

Do some reading gramps, you have time on your hand…

#142 IHCTD9 on 10.11.18 at 10:43 am

#114 Nonplused on 10.11.18 at 3:15 am
#61 Gravy Train

“please elaborate”.

Happy too. Solar energy is not dense. It takes a whole roof of solar panels just to run the lights and the fridge, and all the folks that say they are “off grid” are still using natural gas to heat their homes and cook their food (or wood). The problem with solar panels is that they aren’t very efficient and they are very expensive, and they don’t work at night or when it’s cloudy.
________

Solar has recently garnered some pretty decent numbers. Spectrolab is getting a min avg 30% out of their triple junction panels (double what is typical), and highs at 38-39%. That is starting to get interesting, even if we’re talking about panels for satellites.

Some day, we will see 50% efficiencies at 1-2.00/watt. When this happens, the residential grid in some areas of the globe will be obsolete provided battery technology can keep up.

Us Canucks will probably still need the grid though – at least in the Winter.

#143 Yuus bin Haad on 10.11.18 at 10:43 am

It’s no hurricane. – Garth

I was thinking more about the people in Florida.

#144 Bort on 10.11.18 at 10:46 am

Come on, Garth — you’re better than that Athanassakos piece. I get that you dislike the way Trudeau is governing, and fair enough. But that piece is embarrassing, and it ought to have embarrassed the FP to have published it.

The reason for the outperformance of US indices compared to the TSX is pretty obvious: their sector weightings. Relatively speaking, the TSX is heavy on materials and energy, which didn’t do very well in Q3. And relatively speaking, the S&P 500 is heavy on large cap tech and healthcare, which did.

Trudeau, of course, has nothing to do with the fact that Canada lacks large cap tech and healthcare companies — or that our economy is tilted towards raw materials and energy.

Let’s not blame politicians for the things they can’t control.

The TSX is actually tilted towards financials, where profits have been ballistic. Nice try. – Garth

#145 Bort on 10.11.18 at 10:49 am

Oh, and to the point of Mr. Market not being happy with
the idea of gifting TMX to Indigenous communities? That’s a red herring, but it’s also a bad read of the situation. If gifting (and I suspect “gifting” means “lend at prime and allow Indigenous owners to repay the loan from the pipeline’s toll revenue”) the pipeline to them gets it built and helps get Canadian oil to tidewater, that’s a win for every single upstream producer.

Mr. Market is a fickle and short-sighted guy at the best of times, but even he will figure this out in due course.

#146 n1tro on 10.11.18 at 10:55 am

#117 John Kenneth Galbraith on 10.11.18 at 5:32 am
#62 Linda
Good comments Linda and they would have been shared by the late great Canadian economist John Kenneth Galbraith. He called minimum wage the poor person’s equivalent to a union since no private employer (with few exceptions like Amazon) would voluntarily create it. The canard that the classical economists have always spun about minimum wage is that it actually kills jobs because employers will reduce hours, employees to maintain a minimum wage. What they fail to realize is that a minimum wage gives the recipient more spending power individually and as an aggregate so that the net effect is more demand in society, a more vibrant economy, which translates into more jobs not less. Premier Ford is undoing the minimum wage increase on the poorest and most vulnerable in society while backing the rich dairy farmers and their wonderful supply management system that had made them into multimillionaires.
———————-
This is so flawed. Getting $2 more will not as an aggregate increase demand. Poor people living off $13/hr and then getting $15/hr will not be “balling” with their extra $16 a day unless you think paying overdue bills or buying food adds is a big driver of the economy.

Please get off your Liberal soapbox and realize that majority of politicians do things to help themselves despite saying otherwise. Accept that fact and move on. In fact, if people who depend on minimum wage can accept that a forced $x raise will not change their lives, the world would be a better place.

#147 Stan Brooks on 10.11.18 at 10:56 am

https://www.bnnbloomberg.ca/toronto-condo-rents-jump-7-6-to-2-385-per-month-in-third-quarter-1.1150775

That means 30 % increases on yearly basis for condo rents in Toronto. And yes, yearly inflation is 3 %?

You are ignoring the cash number of rent-controlled units. – Garth

#148 Bort on 10.11.18 at 11:09 am

Hi Garth — you’ll note that I said “relatively speaking”.

Relative to US indices, Canada is yugely overweight energy and materials and underweight tech and healthcare. As of Q3 2018, the S&P was weighted 25.9% to tech and 14.8% to healthcare. Canada? 4% and 1.7% respectively.

Canada’s definitely more heavily weighted to financials — 34% to 13.8%. But the delta between the performance of US and Canadian financials in Q3 is pretty skinny.

But sure, this is Trudeau’s fault.

I did not write the article. But the argument is worth noting. He is an astute observer. – Garth

#149 RyYYZ on 10.11.18 at 11:22 am

#63 Linda on 10.10.18 at 8:11 pm

Case in point: the much maligned $15 per hour minimum wage. To put that into perspective, my husband commented that his wage in 1983 – some 35 years ago – was $13.85 per hour. So, 35 years – YEARS! – later, the minimum wage is a mighty $1.15 more than that gross hourly wage before tax.

===================================
The minimum wage in 1983 was a hell of a lot less than $15. I made $3.40/hr at my first job in 1983, which went up to a whopping 3.55 after the probationary period.

$15/hr, which is about $30k/yr for a full time job, is nearly what I made in my (low paid, but still) first permanent IT job in Ontario 20 years ago.

#150 bdwy sktrn on 10.11.18 at 11:31 am

Us Canucks will probably still need the grid though – at least in the Winter.
– —————-
or cloudy. or at night. or if there is a shadow. or dusk/dawn. or if they get dirty. or snow covered….

solar is GREAT to charge your phone or run small loads.

if you have like 20k$ of panels it can def be used to run a house as long as you have a reliable, on demand 100% backup (like grid power!)

payback is like forever.

solar idiots talk and talk but never seem to install any panels on their own houses???

(i run 2 cabins on 100% solar, i do have decades of exp doing this – it’s NOT cheap either!)

#151 bdwy sktrn on 10.11.18 at 11:35 am

so after selling out at the top, the dow has hit my 25.3 target.

is this the bottom here?????

don’t think so quite yet, but it’s getting close.

#152 Mattl on 10.11.18 at 11:37 am

83 crowdedelevatorfartz on 10.10.18 at 9:48 pm
@#66…6 The Flop master !
“Race to 900k”
++++

Well well well.
How “deep” will this rout go?
800k?
700k?
500k?
I ……..cant……. wait.

———————————————————-

I would love to know why you are so excited about a crash in RE. From your posts I can gleam that you’re an older guy that has been in YVR for a while. This means you had a chance to buy RE at the 500k price point, or at least at a price point much cheaper then today. And money during those years was very cheap. So I have to believe that when money is expensive, credit is tight, and homes are at prices you passed at, you will pass again – or more likely you won’t have access to buy.

So what drives someone in YVR that likely won’t enter the market to cheer for destruction? Envy? You want to see your neighbors go bankrupt? What do you think would happen to a market like YVR if house prices crashed 50% – you think you will come out unscathed?

There are a lot of opportunities I missed out on, including YVR RE – we passed on a Port Moody home at 600K , convinced that was bubble pricing. Good on the folks that bought in, I’d never cheer for the guy that bought that house to get killed in a crash so I could buy in. And how would it make sense to buy in now for the same price I passed at 10 years ago? How would that make any sense? This is what I don’t get about you guys, you missed and you will inevitably miss again.

#153 Ian on 10.11.18 at 11:40 am

Gold up $30, the ONLY safe haven!!

Down 30% over the past seven years. Great haven. – Garth

#154 Dr Talc on 10.11.18 at 11:45 am

People who think re zoning is coming are responding to the UN density push at city halls.
In reality there is very little re zoning going on for existing neighborhoods. Toronto even stamps ‘no second suite’ on people’s residential building plans

#155 PastThePeak on 10.11.18 at 11:51 am

#36 Nonplused on 10.10.18 at 6:48 pm
#114 Nonplused on 10.11.18 at 3:15 am

“…Nuclear is too dangerous..”
+++++++++++++++++++++++++++++++++

I tend to agree with almost all that you post on, but not this one. If global warming due to CO2 increases is indeed a significant problem as the MSM pronounces, then nuclear energy would have to be the primary energy source to replace fossil fuels in electricity generation.

Nuclear is automatically thought of as “too dangerous”, but the fact is, if you look at the time since generation 2 reactors came online (roughly end of the ’60s), there have been only 3 significant events in 50 years:
– 3 Mile Island (Level 6 event)
– Chernobyl (Level 7 event)
– Fukushima (Level 7 event)

3MI was due to operator error, no deaths, and average radiation exposure considered low and not much more than a chest X-ray.

Chernobyl was a huge deal, causing 30 direct deaths, 19 indirect, the increased radiation exposure which may result in ~1000s cancer related deaths, and significant impact on environment. Important to note that the Chernobyl reactor design was a quite poor Soviet design, using a graphite moderator which of course burns.

Fukushima was the result of tsunami following the earthquake. The reactors properly shut down after the quake, but the backup generators hit by tsunami then failed, and could not cool and so the meltdowns. The report of the incident indicated that the failures could have been foreseen, but appropriate precautions & systems not put in place.

My point here is that over 50 years, across 100’s of reactors, there have been no issues. Only two major incidents in those 50 years as a result of:
– Poor Soviet design
– Plant in highly geoactive zone prone to tsunamis (e.g. a bad location).

Generation III+ and 4 designs are far more safe, and if not built on active fault zones, have high probability for safe operation.

More radiation is released from coal plants than the radiation leaks from all nuclear incidents. Solar and wind involve far more impact on the land.

If investment in nuclear fission technology had of been maintained from 40 years ago (instead of becoming the hysterical “environment issue of the day back then” and driving out investment), far more electrical today would come from nuclear than fossil fuels.

Solar is great for residential in the right places to offset usage at peak times, but large solar generation systems are only practical in a few locations that receive consistent sunshine year round.

It is the greens in their opposition to nuclear who have contributed to the current environmental issue that they are now hysterical about…

#156 Rifles on 10.11.18 at 11:55 am

Hard to disagree with Athanassakos’ view. We are governed by a cabal of student union politicians.

I thought Bill Morneau’s rebuke of Evan Solomon on Question Period last Sunday was a classic display of this government’s arrogance (and of course Morneau’s own, well documented, self-regard) when he accused Solomon of not understanding Section 32.10 of the USMCA as he lacked the business experience to do so. Would he say the same of our PM who negotiated the deal but has less business experience than Solomon (or my 11 year old, who has at least run a lemonade stand)? We are governed by the worst type of fools who are in thrall to their own magnificence.

#157 Dogman01 on 10.11.18 at 12:04 pm

18 Smartalox on 10.10.18 at 6:03 pm
I saw a LOT of people working what would seem to be low-wage, service sector jobs, well past retirement age. Or working more than one job.

The ‘young entrepreneurs’ that I met were running food stalls and micro-breweries, selling over-marketed wares at inflated prices. Five bucks for fries? Ten bucks for a sandwich? Twenty for a too-small pizza? Sure, I’ll try that once, but it’ll have to be a very special experience to make me a repeat customer at those prices.

——————————————————

I share your observation, The big established get more efficient the small eak out existence in oddly expensive novelty sectors. I never got the $4 Cupcake but that seems to be the growth portion.

#158 bdwy sktrn on 10.11.18 at 12:04 pm

ok – a few clicks and im back in . you may all rest easy. this is the bottom!

#159 Bort on 10.11.18 at 12:07 pm

It always tickles me to see people criticize our current PM for his lack of job experience when conservatives routinely elect/select leaders (Kenney, Scheer, Harper) whose only job experience is either as conservative staffers or employees of conservative think tanks/advocacy groups and who are literally former student union politicians.

Athanassakos’s view is informed almost entirely by partisanship, and it’s disappointing that an academic would do that. There’s no data in his piece — no actual evidence in support of his theory. It’s just bias confirmation theatre, and business journalism should be better than that.

#160 crowdedelevatorfartz on 10.11.18 at 12:07 pm

@#152 Mattl
“This is what I don’t get about you guys, you missed and you will inevitably miss again.”
++++
Sorry to disappoint.
I bought in 1992 for 238k and sold in 2012 for 800k.
And now I rent. Possibly to never buy again in this ponzie called the Lower Mainland.

I just grow sick and tired of the brainless greedy pricks out there bragging about how much their house is worth as if they’re genius’s .
These idiots that bought in the last 3-5 years are gonna get burned by their own greed
So…..be…..it.

P.S. The “easy” interest rates you refer to back in the early 90’s were double what they are now.

#161 Karl on 10.11.18 at 12:07 pm

Garth, regarding your comment about youth and risk in investing, I am 34 and have a 80/20 balanced portfolio of index funds and bonds.

What else can I do to be more “adventurous” outside of the folly of gambling on individual stocks?

#162 Gerald Bernstein on 10.11.18 at 12:09 pm

I hold 1,000 of gold at a time and just bought 4 days ago and sold for 28 U.S. per ounce profit. This not bad making $28,000 U.S. in 4 days.

I have done this many times during the years. I just love these 15 to 30 U.S. dollar spreads in just a few days.

Speculating is not investing. – Garth

#163 Howard on 10.11.18 at 12:21 pm

#152 Mattl on 10.11.18 at 11:37 am

Fartz may take a different view, but speaking for myself, it isn’t envy. It’s revulsion at the debt-fueled greed. There is a difference.

I don’t necessarily want to see anyone go bankrupt, I simply want assurances that IF housing does finally tumble and people do go bankrupt in the process, that taxpayers won’t be somehow on the hook to bail out bankrupt (former) homeowners.

I think part of the revulsion comes from knowing that government will likely do just that – raid the savers and the renters to bail out the homeowners.

#164 Kiwi-saver on 10.11.18 at 12:44 pm

I get it, I think. But what I don’t get given the explanation (and my limited understanding) is why my bonds and rate reset preferreds are also chilling on the downward slope along with stocks…
ZAG BMO Aggregate bond index
ZPR BMO Laddered preferred share index

#165 IHCTD9 on 10.11.18 at 12:59 pm

#150 bdwy sktrn on 10.11.18 at 11:31 am
Us Canucks will probably still need the grid though – at least in the Winter.
– —————-
or cloudy. or at night. or if there is a shadow. or dusk/dawn. or if they get dirty. or snow covered….

solar is GREAT to charge your phone or run small loads.

if you have like 20k$ of panels it can def be used to run a house as long as you have a reliable, on demand 100% backup (like grid power!)

payback is like forever.

solar idiots talk and talk but never seem to install any panels on their own houses???

(i run 2 cabins on 100% solar, i do have decades of exp doing this – it’s NOT cheap either!)
____

Yep, at 15% efficiency Solar will remain for the enthusiasts and minimalists – even at a a buck or two a watt.

But if we start getting near 40% efficiency at the same 1-2.00/Watt – meanwhile the Hydro One bill is 350.00+/Month – the calculators will definitely be getting dragged out again for a re-crunch of the numbers. Especially for some young guy planning to build from scratch.

It all boils down to the math. We’ve got a long way to go yet, but I think the efficiencies are going to get there over the next couple decades, and no one at OPG is going to taking a pay or DBP cut anytime soon…

#166 James on 10.11.18 at 12:59 pm

Also on the list: trade wars. Markets worry about Trump and China’s Xi. Both are take-no-prisoner kinda guys. This will get uglier before it gets solved.
__________________________________________
Xi is a astute communist. Xi penned the “Thought on Socialism with Chinese Characteristics for a New Era” on his address to the party years ago. He has several degrees form University’s and is quite intelligent. Xi has one thing that Trump does not have in the United States. Xi has total complete power over his country. That power includes everything and anything he desires. Xi can sit and wait this tariff battle out if he wants to and nobody is going to tell him differently to stop it. The Chinese people are used to suffering under totalitarian regimes. He has re-set the Chinese term limit to power as well. At this point Trump does not control the press and there are some checks and balances in place to prevent the whack job from pressing the Nuke button so he is constrained from total control of the USA. Trump is a one term president and his at his age of 72 he is no spring chicken while Xi is 65. Which leads me to the fact that Trumps father Fred Trump had dementia and passed away from it. Alzheimer’s is genetic and it does run in families. Would you want a 74 year old re-elected Trump around until he is 78? Draw your own conclusions.

#167 Fish on 10.11.18 at 1:52 pm

The big chill: A five-year house price forecast for 33 Canadian cities
Michael Babad
MICHAEL BABAD
PUBLISHED OCTOBER 3, 2018

https://www.theglobeandmail.com/business/briefing/article-the-big-chill-a-five-year-house-price-forecast-for-33-canadian-cities/?

https://www.theglobeandmail.com/business/briefing/article-the-big-chill-a-five-year-house-price-forecast-for-33-canadian-cities/?

utm_medium=Newsletter&utm_source=Real%20Estate&utm_type=text&utm_content=RealEstate&utm_campaign=##mailinglogid##

#168 yvrguy on 10.11.18 at 1:54 pm

#161 Karl on 10.11.18 at 12:07 pm
Garth, regarding your comment about youth and risk in investing, I am 34 and have a 80/20 balanced portfolio of index funds and bonds.

What else can I do to be more “adventurous” outside of the folly of gambling on individual stocks?

—————————–

Curious about this too…

#169 I'm A Believer on 10.11.18 at 2:05 pm

#35 MF

I hope you are wrong. T2 for 4 more years will kill our economy. He is not preparing Canada for the huge job losses coming in labour and some information sectors. Mass automation will be here very soon. We will see jobs tied to movement of data replaced by apps; lawyers, real estate agents, and more.

#170 John Kenneth Galbraith on 10.11.18 at 2:06 pm

#146 1ntro

“This is so flawed. Getting $2 more will not as an aggregate increase demand. Poor people living off $13/hr and then getting $15/hr will not be “balling” with their extra $16 a day unless you think paying overdue bills or buying food adds is a big driver of the economy.

Please get off your Liberal soapbox and realize that majority of politicians do things to help themselves despite saying otherwise. Accept that fact and move on. In fact, if people who depend on minimum wage can accept that a forced $x raise will not change their lives, the world would be a better place.”

However marginal their increase is, it will allow them some extra spending power. It is not flawed, your logic is. In aggregate it adds up. Nobody on minimum wage expects to be driving a BMW once it goes up to $15 per hour. It benefits the poorest and most vulnerable in society. I am lucky to be light years away from their lives and I fully support their right to a minimum wage. Guess JKG didn’t have a clue what he was talking about. Harvard should have pointed this out to him and the US government should never have taken his advice for over 40 years…

From your soapbox view please explain this one. How does a Conservative government like Premier Ford support a managed dairy supply system and fixed pricing for rich dairy farmers? How does this fit into a free market conservative view of the world?

#171 John Kenneth Galbraith on 10.11.18 at 2:06 pm

#146 1ntro

“Please get off your Liberal soapbox and realize that majority of politicians do things to help themselves despite saying otherwise. Accept that fact and move on. In fact, if people who depend on minimum wage can accept that a forced $x raise will not change their lives, the world would be a better place.”

Providing a minimum wage is helping those who are in the greatest need. It is what a compassionate society does for its weakest members. I am light years away from the poor folks who have to eke out an existence on minimum wage but I fully support their right to it. It is going to ease their existence slightly but they will be better off than before. Not much as even a minimum wage is poverty level in a city like Toronto. Nobody on minimum wage thinks their lives are going to be dramatically altered by a $15 per hour wage.

Switching gears, from your soapbox would you kindly explain the logic of Conservative Doug Ford showing support for rich dairy farmers who have the beautiful luxury of a managed supply system and fixed prices? How does that fit into your conservative scheme of things? Is that the free market at work in your ideology?

#172 Stan Brooks on 10.11.18 at 2:10 pm

I said yesterday:
#11 Stan Brooks on 10.10.18 at 5:17 pm
Keep an eye on gold.

Miners up over 6 % today and keep climbing, gold up 3 %. And yet nobody listens, nobody is paying attention.

Miners will triple to quadruple from here in the next year or two.

Cheers,

#173 Steven Rowlandson on 10.11.18 at 2:12 pm

“This will get uglier before it gets solved.”

Very much so Garth. Probably not fun but it will be interesting. There are a lot of excesses and errors to be corrected.

#174 MF on 10.11.18 at 2:14 pm

162 Gerald Bernstein on 10.11.18 at 12:09 pm

Lol this comment is the same spam you see in the comment section of most other financial sites:

“I just made 30k purchasing gold from home!”

….sure you did Gerald.

MF

#175 Marco on 10.11.18 at 2:17 pm

And do not forget to eat rich

#176 Scott Cordonea on 10.11.18 at 2:28 pm

We had the Obama, Hilary Democrat socialists that destroyed America and believes in a backward economic system. The dumbing down of America is a sickness in it’s self.

#177 Tater on 10.11.18 at 2:44 pm

#161 Karl on 10.11.18 at 12:07 pm
Garth, regarding your comment about youth and risk in investing, I am 34 and have a 80/20 balanced portfolio of index funds and bonds.

What else can I do to be more “adventurous” outside of the folly of gambling on individual stocks?
—————————————————————–
Learn the basics of valuation. Here’s 3 great books:

https://www.amazon.ca/How-Read-Financial-Report-Wringing/dp/1118735846/ref=asc_df_1118735846/?tag=googleshopc0c-20&linkCode=df0&hvadid=293014791721&hvpos=1o2&hvnetw=g&hvrand=18015957668734206724&hvpone=&hvptwo=&hvqmt=&hvdev=c&hvdvcmdl=&hvlocint=&hvlocphy=9061009&hvtargid=pla-432394037260&psc=1

https://www.amazon.ca/Value-Investing-Graham-Buffett-Beyond/dp/0471463396/ref=sr_1_1?s=books&ie=UTF8&qid=1539283297&sr=1-1&keywords=value+investing+from+graham+to+buffett+and+beyond

https://www.amazon.ca/Financial-Modeling-Valuation-Practical-Investment/dp/1118558766/ref=sr_1_1?s=books&ie=UTF8&qid=1539283367&sr=1-1&keywords=financial+modeling+and+valuation

Then take 10% of your portfolio and invest in 3 companies that you understand and believe to be undervalued. Every quarter update your models when their earnings are released and decide whether you want to continue to hold them.

It’s a reasonable amount of work, but if you like investing, it is more like a hobby than work.

If you’re not willing to put in this work, then just stick with the ETF portfolio.

#178 espressobob on 10.11.18 at 2:56 pm

Funny, the markets slides a bit and the goldbugs awaken.

Commodity and sector plays on this metal has proven to be a disaster over the years. Compare that to the returns global index investors have been enjoying in the meantime. Oh right, we already own the miners.

But at least AU is nineteen times heavier than water.

https://www.blackrock.com/ca/individual/en/products/239848/ishares-sptsx-global-gold-index-etf

#179 Wrk.dover on 10.11.18 at 3:03 pm

Lot of rabies and distemper in your dog pack, Garth.

A stroll through the comment section is getting to be like a walk by the junkyard fence off hours…snarling, growling and fierce barking.

And then there is the rest of the world out there.

#180 n1tro on 10.11.18 at 3:04 pm

#170 John Kenneth Galbraith on 10.11.18 at 2:06 pm

From your soapbox view please explain this one. How does a Conservative government like Premier Ford support a managed dairy supply system and fixed pricing for rich dairy farmers? How does this fit into a free market conservative view of the world?
————————

Seems you picked up some tidbits on economics 101 and like to quote economists. Great.

From my soapbox…to say it again…”majority of politicians do things to help themselves despite saying otherwise.”

You bringing up what (insert politician) does to make (insert group) richer is moot because in the end, it is just pandering for votes or bribes. I’ve moved beyond picking political sides and understand human behaviour.

#181 n1tro on 10.11.18 at 3:22 pm

#171 John Kenneth Galbraith on 10.11.18 at 2:06 pm
#146 1ntro
Providing a minimum wage is helping those who are in the greatest need. It is what a compassionate society does for its weakest members.
——————————–
Nice strawman argument implying that anyone who doesn’t support a minimum wage isn’t compassionate.

As a society, the best we can do for the people with the greatest needs is to give them the opportunity to not be dependent on others. I think Canada does a wonderful job at that where an immigrant that comes to the country with nothing can make something more of themselves. Their secret? A lot of hard work and tenacity whether it be their jobs pays them $5/hr or $15/hr.

“I am light years away from the poor folks who have to eke out an existence on minimum wage but I fully support their right to it.”

^^ it’s this kind of bullshit that annoys me. You are “light years” away from the poor folks….implying you are rich or at least well off…but you “fully support their right to it”….

Like what the F*ck do you know about what poor people go through day to day to make a grandiose statement about supporting their rights to anything?? Having come from poor immigrant parents, not one day did my folks bitch and moan about not getting paid more per hour or how a few more dollars was going to make anything better. Instead, they instilled the mentality in us kids that nothing comes to you without hard work.

#182 Thomas on 10.11.18 at 3:23 pm

FYI the Washington Post reported that wages in the US are actually less than inflation: https://www.washingtonpost.com/business/2018/08/10/america-wage-growth-is-getting-wiped-out-entirely-by-inflation/?noredirect=on&utm_term=.ca99e16ffb60

That article is two months old and does not include the latest statistics, to which I referred. And why did you use two screen names to post these two outdated articles? Are you an unemployed realtor? – Garth

#183 T Kalmer on 10.11.18 at 3:24 pm

The Globe reported that wage growth in Canada was up 3.6%- https://www.theglobeandmail.com/business/economy/article-canada-sees-best-wage-growth-in-six-years/

That article is five months old and the latest numbers show otherwise. – Garth

#184 Fish on 10.11.18 at 3:37 pm

If households are this financially stressed now, how much misery is …

https://www.theglobeandmail.com/investing/per

#185 James on 10.11.18 at 3:37 pm

#155 PastThePeak on 10.11.18 at 11:51 am

#36 Nonplused on 10.10.18 at 6:48 pm
#114 Nonplused on 10.11.18 at 3:15 am

“…Nuclear is too dangerous..”
+++++++++++++++++++++++++++++++++

I tend to agree with almost all that you post on, but not this one. If global warming due to CO2 increases is indeed a significant problem as the MSM pronounces, then nuclear energy would have to be the primary energy source to replace fossil fuels in electricity generation.

Nuclear is automatically thought of as “too dangerous”, but the fact is, if you look at the time since generation 2 reactors came online (roughly end of the ’60s), there have been only 3 significant events in 50 years:
– 3 Mile Island (Level 6 event)
– Chernobyl (Level 7 event)
– Fukushima (Level 7 event)

3MI was due to operator error, no deaths, and average radiation exposure considered low and not much more than a chest X-ray.

Chernobyl was a huge deal, causing 30 direct deaths, 19 indirect, the increased radiation exposure which may result in ~1000s cancer related deaths, and significant impact on environment. Important to note that the Chernobyl reactor design was a quite poor Soviet design, using a graphite moderator which of course burns.
Fukushima was the result of tsunami following the earthquake. The reactors properly shut down after the quake, but the backup generators hit by tsunami then failed, and could not cool and so the meltdowns. The report of the incident indicated that the failures could have been foreseen, but appropriate precautions & systems not put in place.
My point here is that over 50 years, across 100’s of reactors, there have been no issues. Only two major incidents in those 50 years as a result of:
– Poor Soviet design
– Plant in highly geoactive zone prone to tsunamis (e.g. a bad location).
Generation III+ and 4 designs are far more safe, and if not built on active fault zones, have high probability for safe operation.
More radiation is released from coal plants than the radiation leaks from all nuclear incidents. Solar and wind involve far more impact on the land.
If investment in nuclear fission technology had of been maintained from 40 years ago (instead of becoming the hysterical “environment issue of the day back then” and driving out investment), far more electrical today would come from nuclear than fossil fuels.
Solar is great for residential in the right places to offset usage at peak times, but large solar generation systems are only practical in a few locations that receive consistent sunshine year round.
It is the greens in their opposition to nuclear who have contributed to the current environmental issue that they are now hysterical about…
__________________________________________
Could not agree more, Nuclear is clearly the safest and most practical power generating source other than liquefied natural gas. LNG is a finite resource while uranium is also a finite resource we could never use all of it in our lifetimes plus another 500 years.
While clean Nukes are 38% efficient, dirty coal is 38% efficient and LNG is now approaching 60% efficiency. Wind turbines are the most efficient at 85-90 % however they only generate power when enough wind is blowing and that is the downfall. Solar is only in the 20% efficiency range and same problem as wind. You can not count on it! The tree huggers need to get a grip on supporting a clean practical power source that will get us to the next level in technology. Until then suck it up buttercup! Oh and BTW if your green, stop driving, flying and heating your home with green house producing gases. See how that works when you walk to work in the dark on a cold day when it is minus 30 C.

#186 Mattl on 10.11.18 at 3:39 pm

#163 Howard on 10.11.18 at 12:21 pm
#152 Mattl on 10.11.18 at 11:37 am

Fartz may take a different view, but speaking for myself, it isn’t envy. It’s revulsion at the debt-fueled greed. There is a difference.

—————————————————————–

Of course it is. Fartz did pretty well on his YVR shack and I’d bet a lot of money that sale represents a large part of his retirement savings.

He’s cheering for the next generation to get killed on their home values – cause he is already out, and he probably thought he was pulling a fast one on the guy that bought for 800K. Why is the next buyer greedy? He bought a house he could afford for 800K and its now worth 1.6, so what, who cares.

A middle class old guy that already did very well on RE cheer leading a crash is pathetic. Karma is a bitch – he will most likely be a casualty of any dramatic crash. His savings will get hit or if he is still working he may lose his job.

Just be happy you lived in a home for 20 years in YVR and sold it, tax free, for 3.5 times. Anything else is bitterness and envy.

#187 jess on 10.11.18 at 3:55 pm

Director

The Director of the Office of Financial Research is appointed for a 6-year term. He has announced that he is leaving the agency at the end of CY2017. To the extent that her or his duties are exclusively focused on the Council and the Office of Financial Research, the Director is in effect the executive director of the Council. The Director, in consultation with the Chairman of the Council (who is the Secretary of the Treasury) proposes the annual budget of the Office.[5] The Director may set salaries of the Office’s employees “without regard to chapter 51 or subchapter III of chapter 53 of Title 5 of the United States Code, relating to classification of positions and General Schedule pay rates”.[6]
Authority

The Director has Subpoena power and may require from any financial institution (bank or non-bank) any data needed to carry out the functions of the office.[7]

https://en.wikipedia.org/wiki/Office_of_Financial_Research

cut the OFR’s budget by 25 percent to around $76 million, the person said.

Trump administration cuts staff at financial markets watchdog: source
Trump administration to cut government finance employees | 2018 …
https://www.housingwire.com/…/46409-trump-administration-to-cut-40-government-f…

Aug 8, 2018 – The OFR isn’t the only organization to see budget and employee cuts during this administration. One of Mick Mulvaney’s first actions after he

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

…”The basic math is this: for every derivative trade on the books of these banks, there has to be a counterparty taking the opposite side of the bet. There are simply not enough large financial institutions to serve as counterparties to these trades so the banks are counterparties to each other’s trades, along with the big U.S. insurance companies and a handful of big European banks – with Deutsche Bank being a key focal point of risk according to the IMF.”

The 2017 Financial Stability Report included this cautionary text:

“…some of the largest insurance companies have extensive financial connections to U.S. G-SIBs [Global Systemically Important Banks] through derivatives. For some insurers, evaluating these connections using public filings is difficult. Insurance holding companies report their total derivatives contracts in consolidated Generally Accepted Accounting Principles (GAAP) filings. Insurers are required to report more extensive details on the derivatives contracts of their insurance company subsidiaries in statutory filings, including data on individual counterparties and derivative contract type. But derivatives can also be held in other affiliates not subject to these statutory disclosures, resulting in substantially less information about some affiliates’ derivatives than required in insurers’ statutory filings.”
==========================
The Office of Financial Research is an independent office within the Department of the Treasury. Our primary responsibilities are to assess and monitor threats to the financial stability of the United States; improve the scope, quality, and accessibility of financial data; perform essential financial system research; and evaluate policies designed to improve the resilience of the financial system.
This 2016 Financial Stability Report provides Congress and the public with an in-depth analysis of our outlook for U.S. financial stability. In the first chapter, we frame our assessment of financial stability risks in five risk categories that we monitor regularly. In the second chapter, we analyze seven key vulnerabilities in depth”

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

Berner to Leave Office of Financial Research
The veteran Wall Street economist led Treasury’s financial-stability research arm since its post-Dodd-Frank inception.

Monday, November 20, 2017

By Jeffrey Kutler
https://www.garp.org/#!/risk-intelligence/all/all/a1Z1W000003rQ9rUAE

At the time of its 2016 annual report to Congress, the OFR had 214 employees and an annual budget of just over $100 million. There is also a 30-member Financial Research Advisory Committee, consisting of industry practitioners and academic experts who contribute to collaborative efforts.

https://www.financialresearch.gov/

#188 KLNR on 10.11.18 at 3:58 pm

@#176 Scott Cordonea on 10.11.18 at 2:28 pm
We had the Obama, Hilary Democrat socialists that destroyed America and believes in a backward economic system. The dumbing down of America is a sickness in it’s self.
__________________

LOL

#189 Fish on 10.11.18 at 4:14 pm

SORRY, here the link

If households are this financially stressed now, how much misery is coming as rates rise?

https://www.google.ca/amp/s/www.theglobeandmail.com/amp/investing/personal-finance/household-fin3 ances/article-if-households-are-this-financially-stressed-now-how-much-misery-is/

#190 jess on 10.11.18 at 4:22 pm

stronach group
The lawsuit says that in November 2016, Belinda Stronach, and Ossip looked to cut off funding for her father’s projects, including the farming business, and took the position that he had no authority to act of behalf of any Stronach Group businesses or have access to corporate funds.

It alleges that “corporate documents were falsified as part of a scheme … to limit or eliminate Frank’s role in running the Stronach family business,” and that there has been a breakdown in the relationship between Belinda and family members because of the repeated breaches of trust.

She has denied the allegations.

https://www.cbc.ca/news/business/stronach-lawsuit-family-dispute-1.4858838

#191 Gravy Train on 10.11.18 at 4:36 pm

#114 Nonplused on 10.11.18 at 3:15 am 3:15am? Are you on night shift? Or somewhere in Europe? If not, get some sleep! (Your health is important.) :)

“Happy to [elaborate]…. The problem with solar panels is that they aren’t very efficient and they are very expensive, and they don’t work at night or when it’s cloudy.” I’ve just ordered 27 solar panels for our roof—with a system size of 9.1 kW DC, guaranteed for 25 years with 5% total degradation. The estimated net cost after rebates and discounts is $16,407. Estimated annual power saved is 11,911 kWh AC, and—and at an average annual all-in charge of $0.16565 per kWh by my power company—estimated annual cost savings are $1,973.

I’ve calculated that the internal rate of return is 11.18%—a nominal 14.18% if there’s 3% annual inflation in power costs—and the payback is 8.32 years. (These calculations don’t take into account salvage value or asset enhancement.)

“[…] And the amount of lithium we would need! (For batteries.) Holy heck it’s not known to exist in anywhere near the quantities required.” Agreed. As Neil deGrasse Tyson has written,* “Like hydrogen and helium, lithium was made in the big bang, but unlike helium, which can be manufactured in stellar cores, lithium is destroyed by every known nuclear reaction.[…] [W]e can expect no more than one percent of the atoms in any region of the universe to be lithium.”

Maybe you—and others here in the steerage section with the requisite technical proficiency—can work at making a better battery! (You’d make a fortune.) :)

*Astrophysics for People in a Hurray (New York: W.W. Norton & Company, 2017), 119-120.

#192 conan on 10.11.18 at 4:49 pm

Is every index going to go red for the year? I think it is looking that way. Not sure where the buy in levels are for the peeps who market time. Another 10 percent haircut is likely. Several months ago I thought the buy in for the Dow should be about 21k. That’s just a guess.

#193 Gravy Train on 10.11.18 at 5:14 pm

#155 PastThePeak on 10.11.18 at 11:51 am
“Nuclear is automatically thought of as ‘too dangerous’, but the fact is, if you look at the time since generation 2 reactors came online (roughly end of the ’60s), there have been only 3 significant events in 50 years:
– 3 Mile Island (Level 6 event)
– Chernobyl (Level 7 event)
– Fukushima (Level 7 event)”

No, you overlooked the Rocky Flats Plant. Read up!
https://en.m.wikipedia.org/wiki/Rocky_Flats_Plant

“At levels of 10 mg/m3, uranium is immediately dangerous to life and health.”
https://www.cdc.gov/niosh/npg/npgd0650.html

See also the following references:
https://en.m.wikipedia.org/wiki/Uranium#Human_exposure
https://en.m.wikipedia.org/wiki/Uranium_in_the_environment
https://en.m.wikipedia.org/wiki/Plutonium_in_the_environment
https://en.m.wikipedia.org/wiki/Actinides_in_the_environment

“More radiation is released from coal plants than the radiation leaks from all nuclear incidents. Solar and wind involve far more impact on the land.” What impacts? Source? Evidence?

#194 KLNR on 10.11.18 at 6:56 pm

@#180 n1tro on 10.11.18 at 3:04 pm
#170 John Kenneth Galbraith on 10.11.18 at 2:06 pm

From my soapbox…to say it again…”majority of politicians do things to help themselves despite saying otherwise.”

You bringing up what (insert politician) does to make (insert group) richer is moot because in the end, it is just pandering for votes or bribes. I’ve moved beyond picking political sides and understand human behaviour.
___________________

^the absolute truth^
funny how folks pick their political stripe like its some kind of sport – this is MY team I’ll never not root for them no matter what. If people would just educate themselves they’d learn that nothing is ever just black and white.

oh, and ford appears to be a next level panderer.
even less scrupples than your average politico

#195 Remembrancer on 10.11.18 at 11:36 pm

#191 Gravy Train on 10.11.18 at 4:36 pm
Maybe you—and others here in the steerage section with the requisite technical proficiency—can work at making a better battery! (You’d make a fortune.) :)
—————————————————————-
Hydrogen Fuel Cell

#196 Linda on 10.12.18 at 2:12 am

#149 RyYYZ – I didn’t say my husband earned minimum wage in 1983. I said his hourly wage in 1983 was $13.85 per hour.

#136 Rob – at a guess, you vote Conservative or a variant of that platform. The economic downturn you refer to was already well underway when they lost power in Alberta in 2015. Nor did they leave the fiscal cupboard brimming over with funds – a deficit situation occurred under their rule & was inherited by the NDP. 40 years in power, most of which were economic boom times though to be fair there were some spectacular busts along the way. Have the NDP spent & borrowed during their tenure & has the deficit they inherited grown as a result? Yes, it has – & if in the 2019 election the NDP are replaced I predict the winner will continue to borrow & spend in order to stimulate the Alberta economy. As for reducing or eliminating the deficit, energy prices including oil have been increasing so there may yet be an oil & gas white knight to the rescue.