There were some heart palps on this blog yesterday as the news spread people in Denmark have free mortgages. Well, almost free. The growing plop in global interest rates has pushed home loans just below zero in that country, while bank fees have brought them back up to about one-half of one per cent. Still pretty rad. A thirty-year borrowing at less than inflation. Essentially gratis money.
(Before you reach for your passport be aware home-owning Danes are taxed extra just because they have houses – which is, the government says, unfair to renters. What a socialist utopia!)
But this isn’t about Denmark, despite its gooey pastry and Metallica roots. Instead we need to discuss the sinister side of rates.
As you know the Fed cut its key level in the US the other day. Markets think there’s a lot more to come. On Wednesday New Zealand’s bank shocked people by slashing its rate by a full half-point. Thailand cut. India cut. Australia will soon cut.
Yield curves are inverted in multiple countries. That’s when the return on a long-term bond is less than what short deposits pay. This is the result of investors (and Mr. Market) believing central banks will chop the cost of money even more in the future. Why? Because they forecast a recession.
So, weirdly, 30-year bonds give less than 90-day bills. Every recession in the last 50 years has been preceded by an inversion. But not every time yields have flipped has there been a recession. So let’s cut the drama. A slowdown is not a certainty. But as this blog has said a few times lately, one is inevitable. Given the events of the past week, it’s closer.
Trump shocked markets with his announcement of a fat new tariff on China, just after the two sides had started talking again. The Chinese refused to cave, let their currency slip and stopped buying more US stuff. Stock investors scrambled to take risk off the table. Billions has flowed into the safety of bonds, driving prices up and yields down. It could all get worse if China starts buying Iranian oil – a nightmare scenario. All Trump’s doing. Then add in Brexit, tanks headed for the streets of Hong Kong and a Yankee-Sino trade war that could beggar both economies.
So money looks for safety and central bankers start turning on the taps. Rates fall. In Canada the yield on 10-year government bonds is almost half a point below what 3-month bills pay – the biggest gap in twenty years. So the market here is also betting on cheaper money from the Bank of Canada. A global slowdown, after all, will depress oil (it’s already on the skids) which is still our No.1 export. Sucks.
One concern – even ten years after the credit crisis central banks have not been able to hike rates back to ‘normal’ levels. The ascent of Trump changed everything. At the same time he’s been fighting the Fed for rate cuts, the quixotic president has impacted the entire global economy with a return to 19th Century protectionism, tariffs and nationalism. ‘Trade wars are easy to win,’ he famously tweeted as he started this one. But financial markets print the opposite. Said former US Treasury Secretary Larry Summers this week: “You can often play with fire and not have anything untoward happen, but if you do it too much you eventually get burned.”
Some people think Trump’s a genius for creating this conflict and forcing China to reform its predatory trade practices. Besides, all this Asian-bating and wall-building suits his political base. But others see danger in deliberately fraying a global system of freer trade and rising prosperity. So now the war is not just between America and China, but between nationalists and globalists. Both can’t win.
So, stocks down and bonds up. If the standoff continues, companies may scale back on investments and growth, curbing revenues while facing higher input costs. Central banks will drop the cost of money and bring back QE – quantitative easing. Ultimately hiring cools and the North American jobs juggernaut ends. Consumer spending, which makes up 70% of the economy, slacks off. Mortgages may dip to 2%, but in a far different world than we occupied a decade ago. And what if Trump wins another four-year term in 2020?
If you have eschewed our advice and kept an all-stock portfolio, put on your helmet and Big Boy pants. You’ll need them. If you’re a saver, you may face years of negative returns as the banks pay you far less than inflation. Hope your pot of money is a big one. If you have a balanced and diversified portfolio, expect volatility but resist the temptation to tinker or bail. Losses are blunted and recovery time made short. History is on your side.
And history is bigger than Trump.
113 comments ↓
Trump will keep adding tariffs to China and will force the Fed to reduce rates. He wants big rate cuts not small ones.
We are headed in a global slow down…a world recession.
When everyone is distracted, another American war will start and economies will boom again. Guaranteed Trump will get reelected.
It could all get worse if China starts buying Iranian oil – a nightmare scenario. All Trump’s doing.
I thought that China had signed a multi-year pact to buy their oil from Russia. Isn’t that why Russia pays people to protest new pipeline projects in Canada and the US?
Hey, the TSX is up today! Get back in!
Word via excellent inside source on CNBC is that the Chinese dropped 50 critical pages of their 250 page agreement with the US at the last minute essentially negating all critical matters to the US.
This left Trump no alternative to walk away from talks like any true leader would.
Of course, the POTUS bashers line up having no clue what really went on.
The Fed rate futures consensus now is seeing the Fed rate dropping 100 points by January 2020.
We are heading into that GREY ZONE occupied by Japan and Europe where no text books begin to explain what in the world is going on or about to happen next.
Reckless millennial with an all-stocks portfolio… not worried. My biggest investing regret is not having money to invest during the 2008 crisis.
Sure, there’s temporary downside in a recession, but if you’ve got cash flow, there’s also significant upside potential to continuing to invest through a downturn
Does rail traffic suggest a slower economy.
All this year the U.S. rail car traffic has been running noticeably below 2018 and bouncing above and below the 2017 level.
Latest weekly data is out today and there is very little change to that. Traffic running noticeably below 2018 and slightly below 2017. That does suggest a slower economy and is a bit strange given the higher U.S. GDP this year. Trade wars are part of the reason.
For Canada, rail traffic all of 2019 to date has been about equal to and sometimes a little higher than 2018. Right now we are just equal to 2018. So okay but not great.
For Canada, petroleum rail hauling is WAY up (same in the U.S.) Intermodal is above 2018 and shot up this latest week. Consumer spending… Grain is down but was up earlier so it just got moved earlier this year. Motor vehicles and parts, surprisingly are higher this past two weeks versus the prior three years. (Whether that is movement into, out of or across the country I can’t say).
Forest products, WAY down. (down also in the U.S.)
Overall, the rail traffic growth is stronger in Canada versus the U.S. and shows no sign of problem in Canada but supports recession fears in U.S.
You can play with this…
https://www.aar.org/data-center/rail-traffic-data/
Central banks continue to insist on new bank-issued-loan ‘money’ made up from nothing and not backed by deposits.
Denmark actually has negative mortgages:
https://www.bloomberg.com/news/articles/2019-05-23/bankers-stunned-as-negative-rates-sweep-across-danish-mortgages
That is right, they pay you to take a mortgage, you return less than you take as a loan.
Have you seen the latest action in gold?
As I warned: junior miners up 30-40 % in the last few months. More to come.
Even bitcoin is up against ‘currencies’.
Of course we need to consider what current ‘money’ really is but it surely has nothing to do with and do not behave like money as of lately. More like coupons with short expiration dates.
The word is that FED will cut 3 more times this year and then introduce QE4 in Q4 of this year.
That in ‘hot smoking’ economy with low unemployment.
As ‘there is no inflation’.
Fun times ahead. Brace up for impact.
ANY NON CASH INVESTMENT will do just fine.
Cheers retirees and people on fix income.
Invest in lubricant companies.
The good news is that wages are stagnant and as inflation roars (6-8 % +) with zero rates a nice (balls) squeeze develops as cost of living and taxes skyrocket while real incomes decline…
Watch the crime exploding folks, 13 shootings in one weekend in GTA! Unheard of. More to come.
Ah, and if oil indeed goes to 30 bucks due to China buying Iran’s oil .. watch for the looooooooooooooooooonie folks.
50-ish cents against quickly depreciating USD? Seems like a sure bet.
But remember: there is no inflation.
how many billions ?
…the powerful gun lobby has successfully stifled research on gun violence at the federal level. Privacy laws also limit the types of data that the government is willing to release.
A new study released today in the scientific journal PLOS ONE may help: It calculated the average cost of hospital visits and readmissions for patients who suffered firearm injuries.
https://journals.plos.org/plosone/article?id=10.1371/journal.pone.0209896
“If you have eschewed our advice and kept an all-stock portfolio, put on your helmet and Big Boy pants.”
My time horizon is twenty years. Helmet on. Big Boy pants on. Bring it on.
#4 Kelly on 08.07.19 at 5:05 pm
Japan and Europe have pretty good public pension systems. Way better than ours. Even with that their retirees struggle. Now factor in the already sky high cost of living and the expected decades of close to zero or negative rates combined with stellar inflation…
and imagine what a retirement in GTA or Vancouver is doing to look like.
Mission impossible, pretty much. As for the young generations.. amen folks.
Interesting take on the Toronto Real Estate affordability problem:
R. Scott Davie: “The GTA Affordable Home Ownership Crisis”
His thesis is basically that high house prices in Toronto are NOT caused by foreign buyers, or speculators, or greedy Baby Boomers screwing over Millenials.
Nope.
They are predominately the result of taxation. Development fees, levies, carbon taxes, education and park levies, land transfer tax (double in Toronto).
1/4 of the price of a Toronto home is tax.
Who would have thought?
If you talk to the Federal Government, taxes are the solution to all of our problems. Tax housing enough, and it will become affordable for everyone.
This guy has a different solution: Slash these taxes, and allow American Banks to offer stress-test free mortgages up here.
The result – more affordable houses.
Who would have thought? Taxes make things MORE expensive, not LESS expensive? What a weird idea!
Here’s a relatively current paper (Mar, 19) that may help one understand what the hell is going on with interest rates. It is co-authored by Larry Summers. I have not read, but browsed – looks very technical.
What is going on with interest rates is inconsistent with my understanding and maybe just maybe I am using old ideas to understand where they could be going, so this paper may help if I can find the time.
“On Falling Neutral Real Rates, Fiscal Policy, and the Risk of Secular Stagnation Łukasz Rachel, LSE and Bank of England Lawrence H. Summers, Harvard University”
https://www.brookings.edu/wp-content/uploads/2019/03/On-Falling-Neutral-Real-Rates-Fiscal-Policy-and-the-Risk-of-Secular-Stagnation.pdf
The Globalists will lose. Trust Trump. The Moon Landing was a Hoax and Flat Earthers are insane
“But not every time yields have flipped has there been a recession.”
True.
Not a single one due to an inverted yield curve. Review of Past Recessions since 1937 (Investopedia) with Reasons and Causes:
https://www.investopedia.com/articles/economics/08/past-recessions.asp
Canadian Recessions since 1929, no Reasons or Causes (typically Canadian: see no evil, hear no evil, …):
https://www.thecanadianencyclopedia.ca/en/article/recession
Uncle Sam gets a cold, Canada gets the flu.
This inverted yield curve theory arises from voodoo statistics. With voodoo statistics you can pretty much lay a set of numbers out on a table and do what you want with them, just like:
StatCan.
Inverted yield curve theorists confuse Effect with Cause (still, better than StatCan, they can’t get either correct).
But others see danger in deliberately fraying a global system of freer trade and rising prosperity.
——————————————-
Rising prosperity for whom, Garth? Certainly not middle class Canadians, Americans, really any middle class in the Western world.
To be a bit undiplomatic, but why should we care about prosperity in the third world? They are responsible for making their own countries skilled and competitive and Western governments must not forsake their middle class to transfer wealth to the third world. Wouldn’t that be a kind of global socialism anyway?
‘Global’ is ‘global’. As stated. If everyone thought like you, we’d be feudal. – Garth
Since early last year I thought for certain we would be in Recession by May of this year but the plucky Canadian economy proved me wrong (well generally speaking e.g., recession if you are an AB Pipeline Worker or a YVR Realtor).
All eyes on the US now. How they go, we go.
What a messed up World with Trump at the helm…the guy that can decimate your investments with a single Tweet or double decimate them another Tweet later.
I mean like it that he has delivered on promises to his faithful, but too much bravado and instability for me.
These are the arguments that sank e-voting in Switzerland
By Renat Kuenzi
This content was published on August 2, 2019 11:36 AM Aug 2, 2019 – 11:3
https://www.swissinfo.ch/eng/e-voting_these-are-the-arguments-that-sank-e-voting-in-switzerland/45136608
Missing the forest from the trees GT. Youre not seeing the next few moves down the road.
This isnt about China, this is about a slowdown in all the data coming out ISM, RE, etc
Finally, you recognize that QE4 is coming and when it does, USD will be equal to 2-ply, rightfully so.
You’ve changed your position from pro US to skepticism and for that you’re correct. Now read 4 noves down the line. 2008 was a breeze compared to what comes next this time.
Bunk. – Garth
Garth,
Can’t say it enough – thank you for this latest great post and for all that you do. I’ve said it before: you rock, Sir.
I’m inundated with newsletters from a Gold Bug YouTuber who tells me that the US economy is collapsing, currencies are falling against gold, gold is an all-time record high, gold is not only 6 years old, and gold will make an all-time record high.
We are now in a period of gobal currency weekness, WW3 is coming….but I can buy $chiff’s gold from his villa in Puerto Rico!
This is all B.S. This is global socialism with interest rates is where they have their power. Stocks are up because central banks are pumping them up with printed fake money. This is the truth because years back nobody at the Bank of Japan was admitting to buying up JGB’s and they finally told everyone they did and do now for years.
Keep picking on savers because when there are no more of us the money will truly be worthless like Venezuela.
My Vancouver vs Toronto housing chart with July data:
http://www.chpc.biz/compare-toronto–vancouver.html
Taxes are not responsible for the FOMO mania of the last decade in Vancouver.
HIGHER PRICES
42% more for a SFD in VAN
17% more for a Town House in VAN
12% more for a Condo in VAN
1.3 more Listings in TOR than VAN
3.4 x more Sales in TOR than VAN
Monthly Absorption Rate TOR:VAN = 2.3
Ratio of SFD to Strata
1 VAN SFD = 1.8 VAN Town Houses
1 TOR SFD = 1.5 TOR Town Houses
1 VAN SFD = 2.2 VAN Condos
1 TOR SFD = 1.7 TOR Condos
10 Year SFD Inflation Rate:
VAN = 99% and TOR = 103%
Earners needed to buy an average SFD:
VAN = 2.3 and TOR = 1.6 earners (based on 2016 StatsCan Census Median Household Income)
Population 2016 Census Projection
VAN = 2.46 mil or 1004 /Km2
TOR = 5.93 mil or 855 /Km2
ps: Garth,
over the previous 2.5 years (not including the major bull run of the last 2 months), GDX has provided me an average annualised return of 9%. Not bad.
(I’m based in Australia so using the local Van Eck offering).
Anyone noticed all this chatter about bitcoin as possibly being used a safe haven in murky times?
Someone have any insights?
P.S. Garth you were right (obv) about bonds from the other day touché
Trust history? Yap. In a currency war, the underdog always wins. A Harvard history said that, all global conflicts in the last 800 years were the result of a currency or debt wars.
I am worried very little about my investment but I am shit scared as to the outcome of the Asian American economic conflict.
A pair of sneakers sold in USA for $120 were made in China for $20 before shipping to the Nike warehouse in LA. A 10% tariff is $2… big deal.
The elephant in the room is the massive unprecedented ever growing unpayable global debt, so systemic that the only direction for interest rates is down lest it collapse everything in its sight.
Naturally I dumped the SnP 500 for gold and silver shares which have been just ripping the face off everything else this year.
A balanced portfolio should contain precious metals, just sayin…
Bank created money
#7 Stan Brooks on 08.07.19 at 5:25 pm
Central banks continue to insist on new bank-issued-loan ‘money’ made up from nothing and not backed by deposits.
*******************
Stan, you should know that the bank-issued money IS deposits. We have been over how the banks together with their customers create money via loans. They need minimum share owner equity ratios to do it.
As Garth says most of us really enjoy having said money. Most of us are not experiencing the 8% inflation you see, but it depends on what you buy.
Standard of living is excellent for people around me and getting better.
China is already importing oil from Iran.
https://www.zerohedge.com/news/2019-08-06/chinas-largest-oil-company-caught-importing-iranian-crude
Also keep an eye on what is happening with India and Pakistan. This is a very important development.
Is that not a SIGN for me or what?? (Pic)
Got an email just this morning from a FIRE department in Ontario inviting me to write the apptitude test.
I have a 150k corporate paying job that I hate and I am sick and tired of working just to make more money to buy more sh#t that I really don’t need.
OFF TO THE GYM I GO.
“It could all get worse if China starts buying Iranian oil – a nightmare scenario.”
Any country should be able to trade with whomever they wish, on whatever terms and in whatever currency or commodity they agree upon. If the Anglo-American empire wants to start trouble over it then it will only be themselves to blame. I hope that China does start buying Iranian oil in Yuan or gold. Things must change.
Shawn Allen, they always lie about inflation statistics because it is in their best interest. C.P.P. OAS and other benefits are all C.P.I. numbers. Also, Trudeau and Morneau like their $30 billion deficits and $24 billion child welfare benefits, socialism train wreck so lower interest rates savings billions a month with only 2% government stated inflation, lies all lies.
Get ready for $75 to $100 billion annual deficits if Trudeau, Morneau Liberals win the fall election and a $1 trillion national debt by 2024. All pigs at the trough.
Does China have protectionist, nationalist trade policies, tariffs against the USA, Canada? Is history bigger than China – or the other way around?
#2 Smartalox
Ha, China has been buying Iranian oil thru Russia for payola for years now. Quelle surprise!
What I find most disturbing that it is not front page news; most are being so dumbed down that it is almost comical. Thank God for the smart one’s on this blog!
The most recent developments re the yield curve is extremely bullish for US growth stocks historically. It is less bullish for Canada and international stocks. Bonds are exhibiting the most risk in a generation – especially long term bonds.
You have probably noticed that Trump’s domestic opponents have not been overly critical of his trade war with China. Indeed, a recent commentary on CNBC by Jim Cramer (OK, I can only imagine what you think of him), suggested that China would get a much better deal under Trump than President Warren, who would end ALL TRADE with China. With China now allegedly having 1 million Muslim citizens in “concentration camps”, it can safely be assumed that irrespective of who wins in 2020, the trade picture with China will be permanently altered. The portion of your investment portfolio dedicated to bonds is looking quite good right about now.
#30 TRUMP on 08.07.19 at 7:27 pm
..tired of working just to make more money to buy more sh#t that I really don’t need…
—————————–
Enjoy the comedy
https://www.imdb.com/title/tt8129794/
If you’re looking for something worth buying, US small cap equities are trading at their biggest PE discount to large caps in many years. Note the discount can get even bigger, historically. However, if you are looking for a point where you could diversify your large cap heavy S&P500 index US exposure to include small caps, you might not find a better time.
Interesting read, it does looks like or pise that was written by gargler employee but steel interesting. Only question is how long before level 4 self driving car.
https://pcon.blog/2019/08/08/the-roadside-premium/amp/?__twitter_impression=true
Being enjoying some extra unanticipated ‘juice’ in ZSB as part of the investment split…
This could take some time to sort out (2021?). Be mindful on the rally days/weeks this is a ‘dog’ so I don’t day trade it just been holding as a counter to volatility.
Canadian Government to add to debt?
#32 Sandy Weston on 08.07.19 at 7:46 pm said:
Get ready for $75 to $100 billion annual deficits if Trudeau, Morneau Liberals win the fall election and a $1 trillion national debt by 2024. All pigs at the trough.
*******************************
Maybe so. And I am starting to think it would be a wise move. Why not take full advantage if you can borrow at 1.43% (as of yesterday) locked in interest-only for 30 years.
Let’s say the government has the choice to raise your taxes by $1000 or could instead borrow and tax you instead $14.30 per year for 30 years and then at the end borrow again to “roll over” the debt. Which are you going to choose?
If you are a government, able to borrow at ridiculously low rates, then it is raining money. So, you grab the largest wash tub you can find and run outside to collect almost free money. This is not your grandpa’s national debt since it is now almost free to service it.
Just as Garth said why pay off a mortgage at like 2 or 3% when you can get more investing, why should a government even think of reducing debt at this time?
Never bet against America – or China?
https://www.zerohedge.com/news/2019-08-07/china-fixes-yuan-weaker-7-first-time-over-11-years
‘Off topic’, I find the Instagram photo of the woman in the garden in Spring Garden, Halifax disturbing. I think I may have glimpsed her through the portal. It’s an unearthly thing.
There seems little doubt that Trump will be re-elected. He could behave even worse than he has, but without a credible challenger it’s “curtains” for the Dems. They haven’t produced anyone who could even get elected dog catcher, and there is plenty of scandal to go around in their whereabouts. Bad Bill and his proximity to Epstein should be sufficient to keep a lid on any philandering accusations they might wish to make. Every candidate lacks charisma except the one who is so extremely ‘left’ as to only be referred to (by me), as ‘beyond the pale’. (Cortez).
Our compass fails us. I feel we are in some modern day version of the hippy, dippy, Haight Ashbury, drug infested, dillusional times of the late 1960’s. But with technology and social media. No wonder Tarantino has made that movie ‘Once Upon A Time in Hollywood’. The self indulgence, posturing, self deception and unspeakable corruption are everywhere.
Today the news that the two fugitive’s remains may have been found. I suspect one held captive by the other. Probably shot him before he killed himself. A sad ending. At least the end arrived.
October ‘Black Monday’ may arrive earlier this year.
September seems the perfect time to exit the madness and recharge in anticipation of new opportunities. They are always there for those who are attentive and watchful. ‘Never has so much been owed to so few’.. .. The few being Garth and his like of course. Hope you were all paying attention these past years…….
Bonds. Dollars. Bitcoin and Gold.
Which institutions borrow and which lend at the Bank of Canada policy rate?
Bank of Canada says: “The overnight rate is the interest rate at which major financial institutions borrow and lend one-day (or “overnight”) funds among themselves; the Bank sets a target level for that rate. This target for the overnight rate is often referred to as the Bank’s policy interest rate.”
**************************
Okay, so how much money is being loaned and borrowed? Presumably the big 5 are generally all lenders at that rate? Who are the borrowers? Who counts as a major financial institution and which of them needs to borrow?
Banks mostly have funds to lend but do some of them need to borrow from others at the 1.75% policy rate?
Insurance companies usually are cash rich so they would not borrow at that rate?
Looking at Royal Bank’s 2018 year-end balance sheet it looks like they had $294 billion loaned out under “reverse repurchase agreements” which could be lending to financial institutions at the policy rate?
But they also have $207 billion borrowed under repurchase agreements. It may that some of its many subsidiaries borrow (from a different bank) and some loan to other banks but in the net they appear to be lenders at the policy rate at least as of October 31, 2018.
Have not witnessed it in Canadian news; go figure?? But a certain news site from abroad can confirm that two lost souls that decided to take the lives of great souls have met there outcome. I do not know; what argument can one defend this? Mental illness; lost souls, bad parenting, or parents that did everything possible with little or no help? Is it the economy and pressures on young or all lives by people who lead us that should not?
Too far to the left is just a society of slave labour; to the mid socialist it is unrealistic; there are no so called libs any longer; strong right are only in it for themselves.
Yet the terrible outcome of what we read each day (or not) on how many lose their lives to ideology, greed, drugs, etc, not hard to see where the pattern lies!
Dawgs, let us just move forward, appreciate the free blog and advice and especially the comment section where Garth still allows us to vent or view our different opinions; it is a rare gift nowadays! :)
Forgot the link.
My sincere condolences to the victim families, dam!
https://www.dailymail.co.uk/news/article-7334569/Canadian-teen-murdered-American-backpacker-Australian-boyfriend-DEAD.html
#28 Shawn Allen on 08.07.19 at 7:21 pm
Bank created money
………
Standard of living is excellent for people around me and getting better.>
Keep living an imaginary life.
You are not eating GMO and pesticides and there is no growth hormones in the cheap meat that you are loading on in order to align your expenses with the CPI increases.
No, it is all good (but cheap) quality organic food and of course your clothes and socks are from organic cotton like our dear (deer in headlights) leader.
You are living in high quality dwellings with no mold, that glass wall condos are excellent (no mj smoke in it), you live in a city with a great public transportation, no traffic, everyone is happy, beautiful, lives extraordinary interesting life and helps through own actions to eradicate all wrong in the world.
Kids out of schools have excellent prospects (not that you have any, as then one could not allow to be THAT stupid).
After all this is what you are told, why would you argue?
Of course people have to pay for the privilege to live such life through a commitment to be skinned alive on loans, have no savings, kids or retirement.
When you said that being in debt would motivate you to be productive and is actually good, it sounded delusional and ignorant enough but hey, you keep digging new holes.
And let’s not forget that the rest of the world is a dark medieval place, with no improvement in the standard of living whatsoever, that 3-4 % yearly world growth is primarily due to our sub 1 % (inflation understated, with 1 % increase by immigration yearly) growth.
Press play, one of the better tunes in a while, definitely.
https://youtu.be/r7qovpFAGrQ
Been investing in the markets since I was 18.
Before that, paper round and various after school jobs profit was put in the bank.
Not sure, but I think the bank was giving me 5-6% in interest back then anyway.
As a Blue Collar Bum I’ve only got a paltry amount compared to the heavy hitters on this blog.
If you are always invested in the market you never really get to have the last laugh until you exit, as anything can happen at any time.
Watching your money grow at least puts a smile on your face…
M45BC
Cracks will appear in China.
The people of Hong Kong are willing to die to fight the central government. Some will be killed. This will be a catalyst for mainland Chinese to fight back. Some will die.
A taste of honey is worse than none at all. Telling the people that they need to take a lower standard of living just so the politburo can stand up to Trump will not go over well.
Their has to be some bloodshed before any meaningful negotiations start. Trump is banking on it. He is right and Americans will give him four more years.
Perhaps an alternative theory.
The markets are starting to panic and price in the possibility of the Democrats winning the 2020 election and the freak-show chaos that will create.
There are other possible reasons that are well articulated by Garth’s post.
But a little fiddling around with the incredibly evil trade practices of China really do not support the idea that we are heading into a world-wide recession.
The something or others are coming home to roost with regard to the quantitative easing by the Fed during the Obama administration. None of the central banks have any bullets left to flood the market with money and credit.
I make a pretty awesome tomato sauce every once in a while. I use nice fresh Roma tomatos to make it. Last year they cost me around a buck a pound, now they are double that. Oil prices are down, but gasoline prices are up relative to the feedstock costs. That is what inflation looks like.
When President Clinton led the world into the idea that we were measuring price inflation incorrectly, and that people would ‘modulate’ their spending habits to reflect their lower expectations for things like food and energy he promulgated a political myth that inflation did not exist and that, we could melt printing presses and issue credit and nothing bad would happen.
Meanwhile, Mr. Turner has been watching house prices rise at alarming rates in Canada but not thinking that those prices were inflationary.
We are going to have some sort of reckoning eventually. The question is; where are the opportunities going to be, and how can we make money when the events take place?
I doubt we are there yet, but we might seem some wild market bone-headedness first. Maybe rebalance to a bit more long bonds.
Wow, headlines lead with crazy talk by desperate Obama/Globalist led Trump Hate lickspittles. The US economy is firing on all cylinders, so put aside the recession talk. Such babble is Trump smear and campaign bafflegab.
China can’t import Iranian oil , what teleportation? The Chinese navy is the size of the Seattle fire department, get serious. If the US decides to embargo the equator, it can. China can’t survive without exports to the US. Why did they back down on the currency screw up a few days ago? Because the braintrust called Xie and told him flat out that although China is 15% of global GDP than 1% is settled in Yuan. Xie is all bluster. China can’t import Iranian oil, period.
EU imports sagging? Duh, Teump and US companies are threatening to reduce export subsidies. Germany and France are as equals to China in thier pathetic parasitic whining about preferential trade surpluses built up over 70 years. US taxpayers , through Trump are expressing themselves on the uneven trade and security EU enjoys gratis. There’s a full court media barrage of Trump Hate coming from all sides as this president attempts to balance the table towards fair.
Rates in Thailand were not adjusted because of recession/deflation fears, totally wrong. The Thai Baht is soaring against all other currencies ( including Canada) and cutting into Thai exports and tourism . There is no recession in SE Asia. In fact business has been strong as export manufacturers flood out of China for a variety of reasons.
China has inflated its GDP for decades. Without the artificial US $ peg the Yuan would likely fall 40%. At which point the US would raise tariffs 100% or more. If you believe that China is a happy cohesive commune you’re naive. The Red Army keeps peace at gunpoint. Unemployment and peace go together with building ghost cities in exchange for no revolution. China’s economy is crumbling. How long will the false claim of Chinese strength last? Is Hong Kong in flames with Red Army jackboots on every corner and an independent Taiwan going to support the false narrative that China has become the New Orders nice guy? Opprobrium !! Is what Chinese propaganda authors fear the most. Still think they’ll run a US blockade in the SC Sea? Under Obama maybe, but never under Trump.
As an investor you have to think, the Trump Hate headlines aren’t helping you. There’s so much more that isn’t being reported by Canadian media. But, the truth is out there. Disinflation talk, recession, all Trump Hate media balderdash. Well financed and coordinated balderdash, but balderdash all the same.
Hey, it’s August, the dog days of summer. Don’t conflate one thing with another. Understand why the volitility exists and relax. When New Jersey traders see frost on thier front lawns it will be business as usual. Relax.
Sorry dawgs; one of these nights; last post!
I rest my case to my previous posts; how is this even allowed to be show cased? What youngster would not be intrigued by this especially with today’s tech?
Bonne nuit!
https://www.dailymail.co.uk/news/article-7332373/Trailer-violent-movie-Hunt-pulled-wake-triple-mass-shootings.html
#26 AnonDude
Me too. But I hope we’re wrong.
Preff. were very low today, so I sold them all
on my margin account, realized the loss and then bought them again.
If I understand things properly, it should bring me some tax benefits. Does anyone have a similar experience?
Reports of tankers filled with Iranian oil at Chinese ports. Sure they have a pipeline to Russia but they also choose to strategically diversify.
TRUMP IS NO LEADER…HE IS IN THIS FOR HIMSELF.
@acdel …yup the blog keeps us sane.
The world seems to be shifting, winds of change. We have elected are jokes and hopefully we will reset without wars breaking out. Looks like Africa is the next battlefield/cold war.
When alcoholism gets the best of you.
Don’t be ashamed. Enjoy the unfocused ride down..
Write about it.
Because every other story is boring….
Shawn Allen does not get it. Liberals and the left, socialists are never satisfied. They will borrow, spend, tax to death us all no matter what. They don’t think about saving or paying less or being more efficient with tax dollars.
The more rope you give these socialist, liberal, lefty politicians the more they will ruin us all and leave us hanging in the coming years.
When you figure it out.
https://youtu.be/Etns5DS3Txo
I got my big girl pants on. Studies have shown that those who are lucky enough to have a recession hit early on in their investing (as opposed to later when they are close to or in retirement) tend to have the best performing portfolios over time. I’m talking about index investing of course, not individual stocks. Because basically they get to start out by buying when everything is on sale. Who doesn’t love a good sale! Time to stock up – rebalance by buying more, not selling.
Dogs
https://youtu.be/VcGruMAIzRs
48 Stan Brooks on 08.07.19 at 10:16 pm
#28 Shawn Allen on 08.07.19 at 7:21 pm
Bank created money
———————————————-
Standard of living is excellent for people around me and getting better.
———————————————–
Keep living an imaginary life.
You are not eating GMO and pesticides and there is no growth hormones in the cheap meat that you are loading on in order to align your expenses with the CPI increases.
No, it is all good (but cheap) quality organic food and of course your clothes and socks are from organic cotton like our dear (deer in headlights) leader.
————————————————–
Who left the door open?
After loading up on equities as the market declined in late 2018 I was up to 90% equities in January 2019. I sold about 1/3 of my equities from March to June (Europe and Canada) and bought treasuries and gold stocks. Kept my US equities in USD. Today bullion and treasuries hitting new 52 week highs. USD up. Wow what a move.
CPD pref share etf close to a 52 week low today. Ouch! Rate reset prefs are toxic waste. They go down in every market it seems.
#48 Stan Brooks on 08.07.19 at 10:16 pm
#28 Shawn Allen on 08.07.19 at 7:21 pm
Bank created money
………
Standard of living is excellent for people around me and getting better.>
Keep living an imaginary life.
*************************
What a sad sad life you must have Stan.
Over here it really is great.
Apartment in a brand new building very reasonably priced with rent & utilities all in costing less of my paycheck as a % than ever. The building has a Zero Tolerance policy for smoking BTW (MJ or otherwise)
5-minute commute to work
As for food, farmers markets and healthy food is becoming more popular= more competition and so it is also costing less of my paycheck as a % than ever before despite being better tasing and more nutritious.
Portfolio growing at a very nice clip, massively outstripping any cost of living increases (of which there are almost none)
Maybe things are just better out west? Or maybe the failure is just you?
Garth what do you recommend for dealing with China as a super power bully who doesn’t seem to care about anything other than financial domination? I am not saying I agree with the way things are being handled I’m just wondering what type of message it would take for China to understand they need to be a bit more accountable for their actions… Its obvious as the world’s largest population we need them as a trading partner and an ally but it seems like they are testing the limits all over the place.
#16 Howard on 08.07.19 at 6:10 pm
But others see danger in deliberately fraying a global system of freer trade and rising prosperity.
——————————————-
Rising prosperity for whom, Garth? Certainly not middle class Canadians, Americans, really any middle class in the Western world.
To be a bit undiplomatic, but why should we care about prosperity in the third world? They are responsible for making their own countries skilled and competitive and Western governments must not forsake their middle class to transfer wealth to the third world. Wouldn’t that be a kind of global socialism anyway?
‘Global’ is ‘global’. As stated. If everyone thought like you, we’d be feudal. – Garth
—————————————-
Yes but this alleged “global prosperity” hasn’t reached the Canadian middle class. As soon as it appears a small temporary labour shortage may give workers a chance for wage growth, the elites in government dash those hopes by swamping the country with TFWs to maintain the glut in job hunters. Globalism has been a boon to the rich and the 3rd world, and a disaster for the middle class of the developed world. Isn’t feudalism characterized by a tiny elite and a massive underclass?
Denmark is not socialist. Move on.
“…the Center for Political Studies (CEPOS), issued a 20-page report telling Americans that Denmark is not a socialist nation…
The 20-page report notes that, by some measures, Denmark and the Nordic “socialist” countries have more economic freedom than the United States…”
So go live there. Enjoy the pablum society and high tax rates. – Garth
Renter horror stories, oft not talked about on this blog because apparently renting is all roses and sunshine…
“The dreaded N12 and N13 eviction notices are supposed to be used by landlords who want to sell, move in or renovate. But in this overheated, low-vacancy market, unscrupulous owners often use them to force tenants out and raise the rent.”
Article: https://torontolife.com/city/evicted-horror-stories-recently-ousted-renters/
Not everyone can, or should, own real estate. The black-and-white nature of your arguments makes you appear clownish. The curly wig and red rubber nose certainly do not help. – Garth
#64 BS on 08.08.19 at 2:16 am
After loading up on equities as the market declined in late 2018 I was up to 90% equities in January 2019. I sold about 1/3 of my equities from March to June (Europe and Canada) and bought treasuries and gold stocks. Kept my US equities in USD. Today bullion and treasuries hitting new 52 week highs. USD up. Wow what a move.
Cool story. Now keep it up for 30-50 years.
CPD pref share etf close to a 52 week low today. Ouch! Rate reset prefs are toxic waste. They go down in every market it seems.
Except when rates rise, but whatever, you seem to have chosen your narrative.
Am I the only one who finds it ironic that protectionism in general is being flagged as bad but in reality, most people belong to unions which in effect share many of the ideologies of anti-globalists?
If we’re truly one great open world with free borders we should be looking at ways of replacing our big government unions with cheaper alternatives like offshore labour, transient labour and technology.
Why is that only a cohort of our population has to compete against global pressures whereas the other cohort is basically guaranteed a lifestyle ala escalating guaranteed pay grids and defined benefit pension plans.
“Goebbels was in favor of free speech for views he liked. So was Stalin. If you’re really in favor of free speech, then you’re in favor of freedom of speech for precisely the views you despise. Otherwise, you’re not in favor of free speech.”
-Noam Chomsky-
Socialists (newly minted as Progressives) love to profess admiration of diversity and inclusion. Until of course it comes to diversity of objective (rational) thought. All of which they deem as mere opinion when it conflicts with their spurious agenda. Their reaction (ironic but unsurprising) is to orchestrate a debilitating array of extremely subjective propaganda rooted in intolerance. The purpose? Conformity of mind (i.e. thought control).
“Miss Michigan (Kathy Zhu) stripped of title over ‘offensive’ social media posts”
https://www.newsmax.com/t/newsmax/article/926205?
“So go live there. Enjoy the pablum society and high tax rates. – Garth”
——————————————————————–
So I cannot make factual points that challenge your views without you huffing and puffing to “go live there”? That is something little children do.
I like reading your blog, but your pettiness is off-putting.
D
“Not everyone can, or should, own real estate. The black-and-white nature of your arguments makes you appear clownish. The curly wig and red rubber nose certainly do not help. – Garth”
When did I say everyone should own a home? I am simply showing sides of renting that are not favorable, as you and others here do with home ownership.
#30 TRUMP
I have a 150k corporate paying job that I hate and I am sick and tired of working just to make more money to buy more sh#t that I really don’t need.
——————————————————————–
When people figure that out, they’ll be happier.
Ditch the rat race, dogs!
Summer time…and the bumming is easy.
#46 acdel on 08.07.19 at 10:05 pm
Have not witnessed it in Canadian news; go figure?? But a…
————————————
Not sure / don’t care for whatever agenda you intend to push (or vent) with this post or where you get your version of information, but, whatever, that’s not terribly interesting… In this case, based on your timestamp, you are either wrong, intentionally lying or both…
Published Wednesday, August 7, 2019 2:51PM EDT
Last Updated Wednesday, August 7, 2019 6:01PM EDT
https://www.ctvnews.ca/canada/rcmp-find-bodies-believed-to-be-b-c-murder-suspects-1.4540067
CBC News · Posted: Aug 07, 2019 1:38 PM CT | Last Updated: 9 hours ago
https://www.cbc.ca/news/canada/manitoba/bodies-found-manhunt-fugitives-1.5239053
All over the Canadian news yesterday regarding probable remains being located as well as about the search area focus in the days leading up to this…
#66 PHMIKE on 08.08.19 at 3:38 am
Garth what do you recommend for dealing with China as a super power bully who doesn’t seem to care about anything other than financial domination? I am not saying I agree with the way things are being handled I’m just wondering what type of message it would take for China to understand they need to be a bit more accountable for their actions… Its obvious as the world’s largest population we need them as a trading partner and an ally but it seems like they are testing the limits all over the place.
————————————————-
Did you ever watch the movie “Ender’s Game”?
An alien race is deemed a critical threat to Earth, so all humankind’s warmaking skill is deployed until the aliens are decimated and their species virtually eradicated.
Turns out in the end that the aliens were not the aggressors.
This just in from the “Nope, not the Beaverton” Department…
https://www.cbc.ca/news/business/chase-bank-amazon-visa-marriott-credit-card-debt-1.5239411
The former customers’ quotes alone could be kibble for a few days of blob posts…
#56 MaryEn on 08.07.19 at 11:39 pm
Preff. were very low today, so I sold them all
on my margin account, realized the loss and then bought them again.
If I understand things properly, it should bring me some tax benefits. Does anyone have a similar experience?
==================================
Be sure to observe the rules on Superficial Losses:
https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/personal-income/line-127-capital-gains/capital-losses-deductions/what-a-superficial-loss.html
Terry Glavin:
As the Democrats show, America lost its way long before Trump
Peter Beinart, a journalism professor at the City University of New York, writing about the contestants for the Democratic Party: It was almost as if they were running for prime minister of Canada. This was not intended as flattery.
https://ottawacitizen.com/opinion/columnists/glavin-as-the-democrats-show-america-lost-its-way-long-before-trump
While something unquestionably needed to be done about China, Trump’s game of chicken may be playing out at the wrong time. i.e. ever increasing debt levels, stifled growth and the prospect that the Fed won’t have any bullets left when the next real downturn arrives. Tend to agree that gold/precious metals will have a role to play in balanced portfolios moving forward. No easy solutions if the world enters a prolonged period of stagnation a la Japan.
#56 MaryEn on 08.07.19 at 11:39 pm
Preff. were very low today, so I sold them all
on my margin account, realized the loss and then bought them again.
If I understand things properly, it should bring me some tax benefits. Does anyone have a similar experience?
—————————–
Mary, you moved too fast and it is actually illegal for you to claim the loss under wash sale rules. You must wait a set period of time before repurchasing stocks if you intend to claim the loss- the wording is a bit ambiguous, but 61 days is safe.
If stocks could be sold to claim a loss then immediately repurchased, everyone would be doing it. Chalk this up as a learning experience and next time ask the question before acting.
And don’t claim it. Don’t even think about it.
#82 Sail Away on 08.08.19 at 10:29 am
#56 MaryEn on 08.07.19 at 11:39 pm
Preff. were very low today, so I sold them all
on my margin account, realized the loss and then bought them again.
If I understand things properly, it should bring me some tax benefits. Does anyone have a similar experience?
—————————–
Mary, you moved too fast and it is actually illegal for you to claim the loss under wash sale rules. You must wait a set period of time before repurchasing stocks if you intend to claim the loss- the wording is a bit ambiguous, but 61 days is safe.
If stocks could be sold to claim a loss then immediately repurchased, everyone would be doing it. Chalk this up as a learning experience and next time ask the question before acting.
And don’t claim it. Don’t even think about it.
—————————————-
You beat me to it.
I can’t believe people are trading stocks or ETFs without knowing the superficial loss rules!
Just one more way DIY investors get creamed. Selling the prefs at this point was a classic fool move, let alone having no tax relief. – Garth
The beginning of the “Debt Jubilee”?
https://www.cbc.ca/news/business/chase-bank-amazon-visa-marriott-credit-card-debt-1.5239411
One day they may realize MMT and just forgive all the Debtors…..
Or will negative interest rates take care of that…pay me to have debt (and spend to stimulate the economy).
#68 Captain Uppa on 08.08.19 at 6:35 am
Denmark is not socialist. Move on.
“…the Center for Political Studies (CEPOS), issued a 20-page report telling Americans that Denmark is not a socialist nation…
The 20-page report notes that, by some measures, Denmark and the Nordic “socialist” countries have more economic freedom than the United States…”
___
You should do a little reading on Denmark. Danes pay out the whazoo in taxes, and you are correct – they don’t mind.
I’m thinking the only folks giving the high taxes a thumbs up are those who are or plan to get married and have kids – because this demographic are the only ones getting some bang for their tax dollar buck.
They get the free health care and pensions along with everyone else, plus they get the hugely subsidized day care, paid maternity leave, free education for their kids, family allowance for each kid till 18, and all kinds of others stuff.
Read up on folks who work there but were born in the UK or USA. Single hard working Professionals who lose over half of their paycheque to taxes, and then pay 20+% more on sales taxes when they spend what little they have left over. For what? Health care, a crap pension, and EI? You can fill your boots – I’ll pass.
Some dude just bombed their Federal Tax building. What does that insinuate?
Do a little reading and you’ll find that anyone who was born outside Denmark who moves there to work, but not raise a family – is a fool.
Looks to be headed for a seven figure loss in West Vancouver
1080 Eyremount Drive, West Vancouver
Bought 2016 $4,708,000
Now asking $3,998,800
2018 Assessed: $3,877,000
2017 Assessed: $4,681,000
#61 Jessica, right on sister. Buy when there’s blood in the streets. My inspiration was straight talkers like Jim Cramer yesterday. I went back in with new cash and bought two fisted, income and garp growth, ( to increase income for buying while adding capital gain, sweet) no selling, left everything as it was. No panic, no frozen knickers, took guts to buy. Licked the blood off my fingertips.
Great result, all issues that went soft had perked right back up and put my new purchases into the black. I’m better than even, thanks Mr Cramer.
A couple of resource plays picked up, metals and machinery, a good sign, transports confirmed. A YUGE spike for BKNG after expected earnings broke out. $123 bucks on a single stock is a good day, made mine.
Ah Business Controls, are a pretty important function of every viable operating business… at least in my experience. Would it not be logical, to suggest Business Controls, in general are not prevalent, when decision makers, agree to artificially remove the time value of money for one half of the Credit market balancing act… Credit is after all someone’s income when extended… but what about the Lender… no interest income, but a small cost to the Borrower…. so how is the control of Revenues, being managed… Well it is not… being controled with Market Forces… a lot of nice incompetent Policitians, and bureaucrats… ultimately digging their own demise, as that Interest rate income balance, long term, ensures Pension revenues… etc.. One side of the balance sheets, is out of balance.. and time is ticking.
Monday evening I decided to meander into town to grab a coffee and wash the truck. On the way, I passed under the 401, and took note that once again, the holiday weekend Westbound traffic was doing 30-40 km/hr.
I was surprised by the slow traffic a few years back on a Labour Day weekend. First time ever that Toronto traffic was backed up this far. Now it’s pretty much every long weekend.
This is 150 km East of Toronto – at this speed, these schmucks are looking at a 5 HOUR drive home if they have to get past the 400, and that’s just from where I’m at.
How bad does Toronto have to be for folks to endure this just for a couple days away?
#53 Jenny Wang on 08.07.19 at 10:56 pm
The Chinese navy is the size of the Seattle fire department, get serious. If the US decides to embargo the equator, it can. China can’t survive without exports to the US. Why did they back down on the currency screw up a few days ago?
____
Indeed. What should not be forgotten is, that when all the moves on the chess board have been made – the USA still has one more.
They get to move last, no matter who they’re up against.
#85 IHCTD9 on 08.08.19 at 11:05 am
#68 Captain Uppa on 08.08.19 at 6:35 am
Denmark is not socialist. Move on.
“…the Center for Political Studies (CEPOS), issued a 20-page report telling Americans that Denmark is not a socialist nation…
The 20-page report notes that, by some measures, Denmark and the Nordic “socialist” countries have more economic freedom than the United States…”
___
You should do a little reading on Denmark. Danes pay out the whazoo in taxes, and you are correct – they don’t mind.
I’m thinking the only folks giving the high taxes a thumbs up are those who are or plan to get married and have kids – because this demographic are the only ones getting some bang for their tax dollar buck.
They get the free health care and pensions along with everyone else, plus they get the hugely subsidized day care, paid maternity leave, free education for their kids, family allowance for each kid till 18, and all kinds of others stuff.
Read up on folks who work there but were born in the UK or USA. Single hard working Professionals who lose over half of their paycheque to taxes, and then pay 20+% more on sales taxes when they spend what little they have left over. For what? Health care, a crap pension, and EI? You can fill your boots – I’ll pass.
Some dude just bombed their Federal Tax building. What does that insinuate?
Do a little reading and you’ll find that anyone who was born outside Denmark who moves there to work, but not raise a family – is a fool.
——————————————————————Duly noted and some points made.
However, it does not equate to Denmark being a socialist country, nor does it affect their happiness (for the majority) as you mentioned.
I say boo-hoo for the foreign young professional. Go to Dubai.
“Some people think Trump’s a genius for creating this conflict” ………. and they are right. Nationalism will win over Globalism. It will be ugly but the controllers have overplayed their hand big time.
#84 Dogman01 on 08.08.19 at 11:02 am
The beginning of the “Debt Jubilee”?
———————–
Or maybe just the business was so small and their clients overall too representative of the quotes in the article to bother spending dollars to chase nickels…
Certainly a more graceful exit than Target and maybe (hopefully) a sign of peak Affinity Credit Card Offer whose signup forms are approaching AOL CD-ish proportions of ridiculousness…
#90 IHCTD9 on 08.08.19 at 11:59 am
#53 Jenny Wang on 08.07.19 at 10:56 pm
The Chinese navy is the size of the Seattle fire department, get serious. If the US decides to embargo the equator, it can. China can’t survive without exports to the US. Why did they back down on the currency screw up a few days ago?
____
Indeed. What should not be forgotten is, that when all the moves on the chess board have been made – the USA still has one more.
They get to move last, no matter who they’re up against.
************
To IHCTD9 and Jenny Wang, USA is invincible.
But what about the wars in Korea, Vietnam, Afghan, just to name a few
China holds this hand against USA. One only had to read all the pages of imports USA needed from China. I was shocked by it all during the first tariff round. Parts that cannot be replaced, control everything in America.
Based of the stated premise of this blog, if the cost of money is going back down, then real estate prices should be going Up Up Up !!
How much more can an indebted society borrow? – Garth
How much more can an indebted society borrow? – Garth
——————————————————————–
You’d be surprised.
#94 S.BBY on 08.08.19 at 12:46 pm
To IHCTD9 and Jenny Wang, USA is invincible.
But what about the wars in Korea, Vietnam, Afghan, just to name a few.
___
The USA kicked ass and took names of course. Kill ratios were a murderous: 4,5,10,20X and more in favour of US forces. Not to mention all the damage done contained to these same countries. Millions and Billions of assets, infrastructure, and equipment destroyed. Zero damage in the USA. Every Civilian death was non- US.
If the USA had not pulled out of those conflicts, there would have been nothing left of the armed forces, populations or cities in those countries.
Everyone likes to apply different rules to what constitutes a win, but I stick with facts. Waging war is killing and destroying. Whoever inflicts the most of these on their enemy is the winner.
That’d be the USA, pretty much every time.
Interesting manner in which things are playing out today in the markets.
We have the makings of very low interest rates, with Canada being really the only hold out to a rate decrease.
Rate decreases will result in an “inverted yield curve” which will be used by all of the major financial commentators to predict a recession on the horizon.
One guy is doing all of this. His name is Donald Trump. He has artificially created an economic downturn by engaging in “emergency tariffs”, particularly with China. He has repeatedly attacked the US Federal Reserve and its chairman, in order to force it to reduce interest rates, even though the economy is doing fine and there is no reason for this.
Any country that does not walk in lock step with the USA’s interest rate decisions, will artificially increase the value of its currency, making its exports more expensive.
Over in Canada, where our Central Bank will have to follow the USA’s example (or risk making our exports too expensive by artificially increasing the value of our currency), we will have a very unusual problem:
Housing: People will have to qualify for stress tested mortgages, in a declining rate environment, where a recession is forecast. This is really a messed up situation. There is no way, based on the current trajectory of interest rates, that anyone is going to be paying anything close to the stress test rate on a mortgage in the next five years.
So you have this massive pool of money available for residential mortgages, at bargain basement prices, and no one can borrow it.
This is what happens when our overseeing bodies attempt to play around with market forces. You get very weird results.
Like a mortgage pool full of sub 2% loans, available to no one, because of the high bar of a “stress test” that borrowers must meet before they can access the money.
Interestingly enough, if the current negative rhetoric about a recession continues, we may end up with artificially depressed equity prices, as a result of tariffs and monetary policy designed to appease a “fearless leader” rather than deal with actual economic indicators.
These sorts of artificial depressions in equities can have a nice little “pop” when the numbers come out.
100th!
the pentagon report
https://ssi.armywarcollege.edu/pdffiles/PUB1358.pdf
“it no longer can… automatically generate consistent and sustained local military superiority at range.”
Pentagon planners find, the “self-image of a matchless global leader” provides a “flawed foundation for forward-looking defense strategy… under post-primacy conditions.”
=====================
Tuesday, August 6, 2019
Mississippi Man Pleads Guilty to Federal Hate Crime for Crossburning
The Department of Justice announced that Graham Williamson pleaded guilty yesterday to federal charges related to the commission of a crossburning on Oct. 24, 2017, in Seminary, Mississippi. Specifically, Williamson, 38, pleaded guilty to one count of interference with housing rights, a federal civil rights violation, and one count of conspiring to use fire to commit a federal felony.
In his plea, Williamson admitted that he and a co-conspirator planned and carried out a racially motivated crossburning in a predominantly African-American residential area of Seminary, Mississippi. Specifically, Williamson admitted that he and the co-conspirator constructed a cross using materials from in and around the co-conspirator’s residence, placed the cross near the home of African-American residents of that area, including the home of a juvenile victim identified as M.H., and lit the cross on fire. Williamson further admitted that he built and burned the cross to threaten, frighten, and intimidate M.H. and other African-American residents because of their race and color of their skin, and because those individuals lived in the Keys Hill area of Seminary, Mississippi. Williamson acknowledged that he knew burning crosses have historically been used to threaten, frighten, and intimidate African-Americans.
Williamson faces a maximum total sentence of 30 years in prison and a $500,000 fine on the two charges. Sentencing has been scheduled for Nov. 5.
compare to :
the bank, which announced 4,000 job losses and parted ways with CEO John Flint on Monday.
HSBC fined $336m to repay Belgium after huge tax fraud
HSBC set up illegal schemes to help investors funnel money through tax havens and launder cash, said prosecutors.
6 Aug 2019
By Gaspard Sebag
August 7, 2019,bloomberg
The former chief executive officer of HSBC Holdings Plc’s Swiss private bank pleaded guilty to helping wealthy clients hide assets worth at least 1.6 billion euros ($1.8 billion) as French prosecutors flex their muscles to tackle white-collar crime.
Peter Braunwalder was fined 500,000 euros and given a one-year suspended jail sentence, according to a Paris court ruling on the plea. The 68-year-old admitted that he took part in helping clients evade taxes between 2006 and 2007 by opening clandestine Swiss bank accounts and setting up offshore trusts or providing fake loans.
#97 Captain Uppa on 08.08.19 at 1:41 pm
How much more can an indebted society borrow? – Garth
——————————————————————–
You’d be surprised.
++++++++++++++++++++++++++++++++
IMO, those who think that dropping the central bank rates from 1.75% to 1% will spur on heavily indebted consumers to rescue the economy will be the ones surprised.
Ditto for south of the border.
Some fools may jump into the RE game with a huge max $1M mortgage, but glad I am not the one to try and sleep with that debt.
Have fun everyone!!!
#100 Ponzius Pilatus on 08.08.19 at 2:18 pm
100th!
++++++++++++++++++++++++++++++
About the only factual post you have made…
#98 IHCTD9 on 08.08.19 at 1:59 pm
Everyone likes to apply different rules to what constitutes a win, but I stick with facts. Waging war is killing and destroying. Whoever inflicts the most of these on their enemy is the winner.
————————–
That’s some real Clausewitz meets Sun Tzu level analysis there – sure your criteria may work for a bar brawl or a video game but smashing the place up from a distance is one thing, holding ground, especially with an unwelcoming population or “winning” and sustaining a peace that is to your benefit is quite another…
@#89 IHCTD9 on 08.08.19 at 11:40 am
Monday evening I decided to meander into town to grab a coffee and wash the truck. On the way, I passed under the 401, and took note that once again, the holiday weekend Westbound traffic was doing 30-40 km/hr.
I was surprised by the slow traffic a few years back on a Labour Day weekend. First time ever that Toronto traffic was backed up this far. Now it’s pretty much every long weekend.
This is 150 km East of Toronto – at this speed, these schmucks are looking at a 5 HOUR drive home if they have to get past the 400, and that’s just from where I’m at.
How bad does Toronto have to be for folks to endure this just for a couple days away?
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Even us urban folk like to spend some time in true nature here an there. Having said that, i’m glad i didn’t purchase that serene algonquin cottage this past spring for that very reason. stick to renting a couple weeks a summer
#95 Royal Flush on 08.08.19 at 1:08 pm
China holds this hand against USA. One only had to read all the pages of imports USA needed from China. I was shocked by it all during the first tariff round. Parts that cannot be replaced, control everything in America.
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That’s a bold statement. Please give a couple of example imports you think would be game-changers to the extent they would control America.
#79 Renter’s Revenge! on 08.08.19 at 9:47 am
#82 Sail Away on 08.08.19 at 10:29 am
#83 Howard on 08.08.19 at 10:41 am
Thank you guys very much. This was valuable lesson, still on time. I’ll not claim the loss and then, hopefully, my repurchase should be ok.
Followed a link I saw on here…. Interesting take & solid thesis: Real estate positioned near major roadways is at risk of losing value with the rise of autonomous cars
https://pcon.blog/2019/08/08/the-roadside-premium/
https://www.justice.gov/usao-sdfl/pr/mastermind-13-billion-investment-fraud-ponzi-scheme-one-largest-ever-charged-south
“According to the indictment and court documents, Shapiro spearheaded and concealed an enormous Ponzi scheme through his business, Woodbridge. Woodbridge employed approximately 130 people and had offices located throughout the United States, including in Boca Raton, Florida; Sherman Oaks, California; Colorado; Tennessee; and Connecticut. The scheme ran from at least July 2012 to December 2017, when Woodbridge filed for Chapter 11 bankruptcy and defaulted on its obligations to investors.
Throughout the conspiracy, Woodbridge’s main business model was to solicit money from investors and, in exchange, issue investors promissory notes reflecting purported loans to Woodbridge that paid high monthly interest rates. Woodbridge falsely claimed that these investments were tied to real property owned by third parties and that the third parties would be making the interest payments to Woodbridge and its investors; it was portrayed as an investment in a hard-money lending business. Using high pressure sales tactics, Shapiro and his co-conspirators marketed and promoted these investments as low-risk, safe, simple, and conservative. And at minimum, investors were made to believe that Woodbridge’s real estate dealings would generate the funds used to pay the return on their investments.
Despite Woodbridge’s claims that these investments would be backed by properties owned by third-parties, in fact, to the extent that the properties existed, they were secretly owned by Shapiro. Unbeknownst to investors, Shapiro created and controlled a network of more than 270 limited liability companies, which he used to acquire and sell the properties pitched to investors.
In total, Shapiro and his co-conspirators convinced more than approximately 9,000 investors to invest more than $1.29 billion to Woodbridge.
According to the Indictment, at least 2,600 of these investor victims invested their retirement savings, totaling approximately $400 million.
Of that, Shapiro misappropriated approximately $25 million to $95 million in investor money for himself and for the benefit of his immediate family members
August 8, 2019
Pleads Guilty to Conspiracy and Tax Evasion Charges
@JSS, post #3:
Get back in to the TSX you say? You should never have gotten out. If anything you should have taken advantage of that momentary bump and bought more equities. I think that momentary bump was to celebrate the Civic Holiday.
“Not a single one due to an inverted yield curve. Review of Past Recessions since 1937 (Investopedia) with Reasons and Causes”
Not true for USA. 3 month 10 year inversion has preceded every recession within about two years, since WWII. No false positives either.
So go live there. Enjoy the pablum society and high tax rates. – Garth
You taking notes from the Trump? Danish society is insipid now? And that’s a charitable interpretation of pablum.
#94 S.By
The US hasn’t fought an all out war since Japan. Yours mentioned , Korea-Vietnam were Americas political wars fought in the media and college campuses. Trump is not a political president. He’s mean as shit.
Total war is what he speaks about. He just stated that he could wipe Iran out in three minutes. Do you think he misspoke? And I believe he would. Trump is the first president since Eisenhower who WOULD push the button. Total War is Americas domain. America is Trumps America.
The Globalists have set the stage for war, domestic and international. Dupes like Obama and Trudeau are slathering after a one world order. Trump is here to preserve democracy, warts and all. God Bless America.